Imagine a world government, democratically elected according to the principle of one-man-one-vote on a world wide scale. What would the probable outcome of an election be? Most likely, we would get a Chinese-Indian coalition government. And what would this government most likely decide to do in order to satisfy its supporters and be reelected? The government would probably find that the so-called Western world had far too much wealth and the rest of the world, in particular China and India, had far too little, and hence, that a systematic wealth and income redistribution would be called for. Or imagine, for your own country, that the right to vote were expanded to seven year olds. While the government would not likely be made up of children, its policies would most definitely reflect the ‘legitimate concerns’ of children to have ‘adaequate’ and ‘equal’ access to ‘free’ hamburgers, lemonade, and videos.
In light of these ‘thought experiments’, is there any doubt about the consequences which resulted from the process of democratization that began in Europe and the U.S. in the second half of the nineteenth century and has come to fruition since the end of World War I? The successive expansion of the franchise and finally the establishment of universal adult suffrage did within each country what a world democracy would do for the entire globe: it set in motion a seemingly permanent tendency toward wealth and income redistribution.
One-man-one-vote combined with ‘free entry’ into government — democracy — implies that every person and his personal property comes within reach of — and is up for grabs by — everyone else. A ‘tragedy of the commons’ is created. It can be expected that majorities of ‘have-nots’ will relentlessly try to enrich themselves at the expense of minorities of ‘haves’. This is not to say that there will be only one class of have-nots and one class of haves, and that the redistribution will be uniformly one from the rich onto the poor. To the contrary. While the redistribution from rich to poor will always play a prominent role everywhere, it would be a sociological blunder to assume that it will be the sole or even the predominant form of redistribution. After all, the ‘permanently’ rich and the ‘permanently’ poor are usually rich or poor for a reason. The rich are characteristically bright and industrious, and the poor typically dull, lazy, or both. It is not very likely that dullards, even if they make up a majority, will systematically outsmart and enrich themselves at the expense of a minority of bright and energetic individuals. Rather, most redistribution will take place within the group of the ‘non-poor’, and frequently it will actually be the better-off who succeed in having themselves subsidized by the worse-off. Just think of the almost universal practice of offering a ‘free’ university education, whereby the working class, whose children rarely attend universities, is made to pay for the education of middle-class children! Moreover, it can be expected that there will be many competing groups and coalitions trying to gain at the expense of others. There will be various changing criteria defining what it is that makes one person a ‘have’ (deserving to be looted) and another a ‘have-not’ (deserving to receive the loot). At the same time, individuals will be members of a multitude of groups of ‘haves’ and/or ‘have-nots’, losing on account of one of their characteristic and gaining on account of another, with some individuals ending up net-losers and others net-winners of redistribution.
The recognition of democracy as a machinery of popular wealth and income redistribution, then, in conjunction with one of the most fundamental principles in all of economics — that one will end up getting more of whatever it is that is being subsidized — provides the key to an understanding of the present age.
All redistribution, regardless of the criterion on which it is based, involves ‘taking’ from the original owners and/or producers (the ‘havers’ of something) and ‘giving’ to non-owners and non-producers (the ‘non-havers’ of something). The incentive to be an original owner or producer of the thing in question is reduced, and the incentive to be a non-owner and non-producer is raised. Accordingly, as a result of subsidizing individuals because they are poor, there will be more poverty. In subsidizing people because they are unemployed, more unemployment will be created. Supporting single mothers out of tax funds will lead to an increase in single motherhood, ‘illegitimacy’, and divorce. In outlawing child labor, income is transfered from families with children to childless persons (as a result of the legal restriction on the supply of labor, wage rates will rise). Accordingly, the birthrate will fall. On the other hand, by subsidizing the education of children, the opposite effect is created. Income is transfered from the childless and those with few children to those with many children. As a result the birthrate will increase. Yet then the value of children will again fall, and birthrates will decline as a result of the so-called Social Security System, for in subsidizing retirees (the old) out of taxes imposed on current income earners (the young), the institution of a family — the intergenerational bond between parents, grandparents, and children — is systematically weakened. The old need no longer rely on the assistance of their children if they have made no provision for their own old age, and the young (with typically less accumulated wealth) must support the old (with typically more accumulated wealth) rather than the other way around, as is typical within families. Parents’ wish for children, and children’s wish for parents will decline, family breakups and dysfunctional families will increase, and provisionary action — saving and capital formation — will fall, while consumption rises.
In subsidizing the malingerers, the neurotics, the careless, the alcoholics, the drug addicts, the Aids-infected, and the physically and mentally ‘challenged’ through insurance regulation and compulsory health insurance, there will be more illness, malingering, neuroticism, carelessness, alcoholism, drug addiction, Aids infection, and physical and mental retardation. By forcing non-criminals, including the victims of crime, to pay for the imprisonment of criminals (rather than making criminals compensate their victims and pay the full cost of their own apprehension and incarceration), crime will increase. By forcing businessmen, through ‘affirmative action’ (‘non-discrimination’) programs, to employ more women, homosexuals, blacks, or other ‘minorities’ than they would like to, there will be more employed minorities, and fewer employers and fewer male, heterosexual, and white employment. By compelling private land owners to subsidize (‘protect’) ‘endangered species’ residing on their land through environmental legislation, there will be more and better-off animals, and fewer and worse-off humans.
Most importantly, by compelling private property owners and/or market income earners (producers) to subsidize ‘politicians’, ‘political parties’, and ‘civil servants’ (politicians and government employees do not pay taxes but are paid out of taxes), there will be less wealth formation, fewer producers and less productivity, and ever more waste, ‘parasites’ and parasitism.
Businessmen (capitalists) and their employees cannot earn an income unless they produce goods or services which are sold in markets. The buyers’ purchases are voluntary. By buying a good or service, the buyers (consumers) demonstrate that they prefer this good or service over the sum of money that they must surrender in order to acquire it. In contrast, politicians, parties, and civil servants produce nothing which is sold in markets. No one buys government ‘goods’ or ‘services’. They are produced, and costs are incurred to produce them, but they are not sold and bought. On the one hand, this implies that it is impossible to determine their value and find out whether or not this value justifies their costs. Because no one buys them, no one actually demonstrates that he considers government goods and services worth their costs, and indeed, whether or not anyone attaches any value to them at all. From the viewpoint of economic theory, it is thus entirely illegitimate to assume, as is always done in national income accounting, that government goods and services are worth what it costs to produce them, and then to simply add this value to that of the ‘normal’, privately produced (bought and sold) goods and services to arrive at gross domestic (or national) product, for instance. It might as well be assumed that government goods and services are worth nothing, or even that they are not “goods” at all but “bads”; hence, that the cost of politicians and the entire civil service should be subtracted from the total value of privately produced goods and services. Indeed, to assume this would be far more justified. For on the other hand, as to its practical implications, the subsidizing of politicians and civil servants amounts to a subsidy to ‘produce’ with little or no regard for the well-being of one’s alleged consumers, and with much or sole regard instead for the well-being of the ‘producers’, i.e., the politicians and civil servants. Their salaries remain the same, whether their output satisfies consumers or not. Accordingly, as a result of the expansion of ‘public’ sector employment, there will be increasing laziness, carelessness, incompeence, disservice, maltreatment, waste, and even destruction — and at the same time ever more arrogance, demagogery, and lies (‘we work for the public good’).
After less than one hundred years of democracy and redistribution, the predictable results are in. The ‘reserve fund’ that was inherited from the past is apparently exhausted. For several decades (since the late 1960s or the early 1970s), real standards of living have stagnated or even fallen in the West. The ‘public’ debt and the cost of the existing social security and health care system have brought on the prospect of an imminent economic meltdown. At the same time, almost every form of undesirable behavior — unemployment, welfare dependency, negligence, recklessness, uncivility, psychopathy, hedonism and crime — has increased, and social conflict and societal breakdown have risen to dangerous heights. If current trends continue, it is safe to say that the Western welfare state (social democracy) will collapse just as Eastern (Russian-style) socialism collapsed in the late 1980s.
However, economic collapse does not automatically lead to improvement. Matters can become worse rather than better. What is necessary besides a crisis are ideas — correct ideas — and men capable of understanding and implementing them once the opportunity arises. Ultimately, the course of history is determined by ideas, be they true or false, and by men acting upon and being inspired by true or false ideas. The current mess is also the result of ideas. It is the result of the overwhelming acceptance, by public opinion, of the idea of democracy. As long as this acceptance prevails, a catastrophy will be unavoidable, and there is no hope for improvement even after its arrival. On the other hand, once the idea of democracy is recognized as false and vicious — and ideas can, in principle, be changed almost instantaneously — a catastrophy can be avoided.
The central task ahead of those wanting to turn the tide and prevent an outright breakdown is the ‘delegitimation’ of the idea of democracy as the root cause of the present state of progressive ‘decivilization’. To this purpose, one should first point out that it is difficult to find many proponents of democracy in the history of political theory. Almost all major thinkers had nothing but contempt for democracy. Even the Founding Fathers of the U.S., nowadays considered the model of a democracy, were strictly opposed to it. Without a single exception, they thought of democracy as nothing but mob-rule. They considered themselves to be members of a ‘natural aristocracy’, and rather than a democracy they advocated an aristocratic republic. Furthermore, even among the few theoretical defenders of democracy such as Rousseau, for instance, it is almost impossible to find anyone advocating democracy for anything but extremely small communities (villages or towns). Indeed, in small communities where everyone knows everyone else personally most people cannot but acknowledge that the position of the ‘haves’ is typically based on their superior personal achievement just as the position of the ‘have-nots’ finds its typical explanation in their personal deficiencies and inferiority. Under these circumstances, it is far more difficult to get away with trying to loot other people and their personal property to one’s advantage. In distinct contrast, in large territories encompassing millions or even hundreds of millions of people, where the potential looters do not know their victims, and vice versa, the human desire to enrich oneself at another’s expense is subject to little or no restraints.
More importantly, it must be made clear again that the idea of democracy is immoral as well as uneconomical. As for the moral status of majority rule, it must be pointed out that it allows for A and B to band together to rip off C, C and A in turn joining to rip off B, and then B and C conspiring against A, etc..This is not justice but a moral outrage, and rather than treating democracy and democrats with respect, they should be treated with open contempt and ridiculed as moral frauds. On the other hand, as for the economic quality of democracy, it must be stressed relentlessly that it is not democracy but private property, production, and voluntary exchange that are the ultimate sources of human civilization and prosperity. In particular, contrary to widespread myths, it needs to be emphasized that the lack of democracy had essentially nothing to do with the bankruptcy of Russian-style socialism. It was not the selection principle for politicians that constituted socialism’s problem. It was politics and political decision-making as such. Instead of each private producer deciding independently what to do with particular resources, as under a regime of private property and contractualism, with fully or partially socialized factors of production each decision requires someone else’s permission. It is irrelevant to the producer how those giving permission are chosen. What matters to him is that permission must be sought at all. As long as this is the case, the incentive of producers to produce is reduced and impoverishment will result. Private property is as incompatible with democracy, then, as with any other form of political rule. Rather than democracy, justice as well as economic efficiency require a pure and unrestricted private property society — an ‘anarchy of production’ — in which no one rules anybody, and all producers’ relations are voluntary, and thus mutually beneficial.
Lastly, as for strategic considerations, in order to approach the goal of a non-exploitative social order, i.e., a private property anarchy, the idea of majoritarianism should be turned against democratic rule itself. Under any form of governmental rule, including a democracy, the ‘ruling class’ (politicians and civil servants) makes up only a small proportion of the total population. While it is possible that one hundred parasites may lead a comfortable life on the products of one thousand hosts, one thousand parasites cannot live off of one hundred hosts. Based on the recognition of this fact, it would appear possible to persuade a majority of the voters that it is adding insult to injury to let those living off of other peoples’ taxes have a say in how high these taxes are, and to thus decide, democratically, to take the right to vote away from all government employees and everyone who receives government benefits, whether they are welfare recipients or government contractors. In addition, in conjunction with this strategy it is necessary to recognize the overwhelming importance of secession and secessionist movements. If majority decisions are ‘right’, then the largest of all possible majorities, a world majority and a democratic world government, must be considered ultimately ‘right’ with the consequences predicted at the outset of this article. In contrast, secession always involves the breaking away of smaller from larger populations. It is thus a vote against the principle of democracy and majoritarianism. The further the process of secession proceeds — to the level of small regions, cities, city districts, towns, villages, and ultimately individual households and voluntary associations of private households and firms — the more difficult it will become to maintain the current level of redistributive policies. At the same time, the smaller the territorial units, the more likely it will be that a few individuals, based on the popular recognition of their economic independence, outstanding professional achievement, morally impeccable personal life, superior judgement, courage, and taste, will rise to the rank of natural, voluntarily acknowledged elites and lend legitimacy to the idea of a natural order of competing (non-monopolistic) and freely (voluntarily) financed peacekeepers, judges, and overlapping jurisdictions as exists even now in the arena of international trade and travel — a pure private law society — as the answer to democracy and any other form of political (coercive) rule.
November 17, 2000
Hans-Hermann Hoppe is professor economics at the University of Nevada, Las Vegas, and a senior fellow of the Ludwig von Mises Institute in Auburn, Ala.