Yesterday I asked if libertarianism has failed as a political theory. The question is merited: in a world where government is involved in everything from health care and education to “saving” for your retirement, and where government involvement is increasing, one has to wonder why the libertarian movement has not been able to move the needle in the right direction.
Despite this pessimistic review of the lack of libertarian accomplishments, the answer to yesterday’s question is actually: No.
The libertarian movement has not failed. But its list of accomplishments is way too short. If all libertarians share the common goal of saving – and restoring – individual and economic freedom, then our combined efforts thus far have missed the target by a big margin. If we are going to reach the ultimate goal of a minimal state with a maximum of freedom, we need to reboot our operations and get back to work, but do so under two very important conditions.
Before we get to the two conditions, though, let us acknowledge what is actually on the list of libertarian accomplishments. Globally, the movement helped bring down the Soviet empire. It provided moral inspiration to liberty-minded people from Greifswald to the Black Sea. Economic literature on free-market Capitalism were studied behind the Iron Curtain long before the Wall fell in Berlin. Even Robert Nozick, who himself had Polish ancestry, influenced thinkers and inspired people to challenge the prevailing communist order.
Domestically, though, the accomplishments in Thatcher’s Britain and Reagan’s America were more of a temporary nature. They are in fact difficult to see today. The United States reaped the harvests of the Reagan tax cuts all the way through the 1990s, but unrelenting growth in government spending eventually neutralized and overwhelmed the positive effects of the tax cuts.
In retrospect, the Reagan era and its surge in the intellectual, political and economic pursuit of liberty looks less and less like a corner turned in modern American history. In the context of the decades before and after his presidency, Reagan appears to have inspired a temporary halt to, but not a termination of, a very long trend of welfare statism.
The first condition for future success is that libertarians revise their political methodology. the need for revision is well explained by the Niskanen Center, a newly founded libertarian think tank in Washington, DC. In their conspectus, declaring their raison d’etre, the Center explains:
Despite having invested tremendous time, energy, and resources in achieving political change, libertarians have produced little policy change. Of the 509 significant domestic legislative policy changes since World War II, more than half (265) expanded government while only four percent (20) contracted government. When policymakers act, they have, on balance, acted to expand state power.
They also analyze the “mechanics” of policy change in Washington, DC and how libertarians, despite major investments, thus far have failed to correctly identify and successfully use those mechanics to turn libertarian ideas into legislative practice.
In addition to misunderstanding the legislative mechanics, libertarians have also failed to fully comprehend the nature of government spending. This brings us to the second condition for future success. The Reagan-era tax cuts were accompanied by 7+ percent annual federal spending increases; the George W Bush administration repeated the pattern, combining tax cuts with 6.7-percent annual spending increases. The libertarian movement has failed to fully comprehend the reasons behind, and the complexity of, those spending increases. Therefore, they have lost the debate over government spending to the welfare statists.
This is a general observation; there are bright exceptions to it who pursue actionable reforms to welfare-state entitlement programs. But they are just that – exceptions. Their voices are simply not strong enough to set the tone for the libertarian movement in general. Instead, libertarians tend to fragment their analysis and policy approach, and in too many cases they leave the entitlement sector of our society altogether. Those who do tend to end up fighting the battle of eclectic flea killing, a.k.a., legalization of recreational drugs.
While some libertarians turn on, tune in a and drop out of the fight for economic freedom, the welfare state eats its way deeper into the flesh of the free market. The time to change course is now – and it begins with:
a) following the advice of aforementioned Niskanen Center, i.e., revising the political methodology and learning to master legislative mechanics; and
b) studying and intellectually conquering the welfare state.
I cannot stress enough how important the second condition is. Libertarians in general – again, there are exceptions – dismiss the welfare state by saying either that “just cut spending darn it” and the welfare state will go away; or by refocusing on issues that are not as intellectually intimidating or hard to navigate in terms of policy and actionable reform legislation.
In other words, there is an enormous amount of work to be done. But all is not lost. On the contrary, looking at the young generation in this great country, there are glimmers of hope. A fledgling libertarian grassroots movement has risen as a result of the Tea Party reaction. It consists for the most part of regular Americans whose interest in politics and willingness to become activists are fueled by clearly visible government over-reach.
More specifically, the Obama presidency is actually a gift to the libertarian movement. After having promised “hope” and “change” and rallied millions of young voters and activists, the 44th president burdened job creators with massive regulations that made it very difficult for young workers and professionals to find jobs; he put health insurance out of reach for many of those who got jobs; and he vigorously defended government surveillance programs, invading the electronic integrity of a young generation who takes the privacy of their cell phones as seriously as the privacy of their own pockets.
Young voters turned away from Obama in his re-election bid. Thanks only to an unbelievably out-of-touch Romney campaign, Obama managed to prevail. But this has not made disappointment among the young go away – on the contrary. When today’s 20-somethings look at the career opportunities their parents had, and when they know that the government is intercepting and storing their text messages, their minds are open to arguments on government over-reach, individual freedom – and libertarianism.
The growing interest in individual liberty is a promising platform for a renewed effort to end America’s slow but steady transformation into a European welfare state. High school and college students are flocking in growing numbers to internships and educational offerings by liberty-promoting organizations. Dedicated donors provide financial support, and sharp minds at think tanks and advocacy groups can turn that money into intellectual firepower.
Only two pieces are missing. One of them is the right use of the legislative mechanics. Explains Niskanen Center president Jerry Taylor, whose operational credo “terrain dictates tactics” sets the prelude for his verdict:
The political terrain could not be clearer. Despite our best efforts, America is a center-left nation. Libertarians constitute no more than 5 percent of the public. And if a Republican manages to win the White House in 2016, the recent erosion in the public support for more government will almost certainly reverse.
Europe’s record is even more disappointing. Anyway, Taylor continues:
Until some political tectonic plate shift occurs, radical libertarian policy change is not in the cards. Repealing the Great Society, much less the New Deal, is unlikely. Business regulation of some sort is not going away. The EPA, FCC, SEC, etc. will not be abolished. Less radical improvements in public policy are possible. But to do that, we need to stop making “the better” the enemy of “the best” and cease complaining that the former commits the unpardonable sin of “compromising on principle.” By definition, advocating anything short of the night watchman state “compromises on principle,” and the night watchman state—for now anyway—is a fantasy.
While Taylor unintentionally overlooks the rekindled interest in libertarian ideas during the Obama years, he is correct in that the road from today’s welfare state to the night watchman state is long and littered with road bumps and uphill battles. But if libertarians can intellectually conquer the welfare state, and if they can learn to master the legislative mechanics that Taylor points to, then no road bump or uphill will stand in their way.
In a four-part series I presented the current state of the U.S. economy. Overall, things look relatively good here: growth is moderately good, private consumption is moderately healthy, business investments are stabilizing at a good rate and government consumption and investment spending is under control.
Generally, the private sector of the U.S. economy is in fairly good shape. So what is there to complain about?
First of all, the growth rates that I refer to as “moderately good” are at least a full percentage point below what we should have at this stage of a recovery, even from a deep recession. There are reasons why we are not at higher growth, one of them being the kind of government spending that does not show up in GDP: entitlements. Another reason is the Obama administration’s affinity for regulations. Without big entitlements and invasive regulations we could easily be growing at 3.5-4 percent per year.
Secondly, the biggest strength of the U.S. economy is relative, not absolute. As I continuously report on this blog, Europe is in a perennial state of stagnation and industrial poverty. The Chinese economy is in what looks like a relatively serious recession; add to that a real estate bubble that they still don’t know how to handle and the growing trend of job migration from China to lower-cost countries like Vietnam. Japan is fledgling but not much more than that.
And third – well, there is always Obamacare… Fortunately it looks like that reform, well-intended as it was, is being reshaped into something more palatable and manageable. It takes time, though, and while the president understandably holds on to his trademark legislative achievement he, too, must come to the conclusion that not all is good in America’s most complicated piece of legislation ever. When that happens, another ball and chain around the ankle of the American economy will fall off and allow free-market Capitalism to grow even bigger.
Bottom line: the U.S. economy is not very impressive when compared to itself a couple of decades ago, but at least from an international perspective it is the best place to be for job seekers, families and businesses.
The big question is why we can’t do better. What is holding us back? As a libertarian my conclusion is “big government”. As an economist my conclusion is “it depends, but big government is a strong candidate”. But that does only begs another question: how is it that the United States, a constitutional republic born from the yearnings of freedom, has fallen for the temptation of the big welfare state?
This is a big question to answer. A good way to start is to ask what has happened to the most freedom-loving movement in recent American history – the libertarian movement – and why it has failed to turn the tide on big government. After all, modern libertarianism is now almost half-a-century old. The intellectual groundwork was laid in part by economists like Milton Friedman and Friedrich von Hayek (who, by the way, allegedly did not get along with one another…) and partly by the great moral philosopher Robert Nozick. In his Anarchy, State and Utopia, originally published in 1971, Nozick challenged the prevailing wisdom of redistributive justice and – by implication – the theoretical foundations of the welfare state. His vision of the minimal state was close in theory to the small government that would be necessary for Hayek’s and Friedman’s free-market Capitalism to work.
The Reagan presidency marked a surge for libertarianism in America. Similarly, the Thatcher era unleashed libertarian thinking and activism in Britain. While its success on continental Europe was more limited, the libertarian movement made its footprints, especially in Scandinavia and eastern Europe, where it helped inspire the liberation from the Soviet empire.
But what looked like a success story back then never translated into policy success. Why?
The question is highly relevant. In a world where government consumes 40 percent or more of GDP; when taxes can take away more than half of a man’s earnings; when government controls or wants to control the education of all children and the health care of all citizens; in that world, libertarianism seems to be little more than a topic for esoteric dinner conversations.
Where are the libertarian victories? Can libertarianism even be saved?
Yes, it can. But only under some very important conditions. For more on this, check in tomorrow.
The United States of America is a wonderful country to live in. Contrary to the laments of most of my conservative and libertarian friends, this country is still among the most free and opportunity-friendly places on Earth. Americans are strong individuals, they are friendly yet have a lot of integrity, they celebrate winners and have compassion for losers. There is less racism here than in Europe, and we are more prosperous than they are, and deep down in the fertile soil of Middle America, the roots of freedom and democracy stand firm even when the political storms rage viciously through the legislative hallways of our country. Our constitution, while twisted and tweaked and bent and stretched, is still working.
Our deeply rooted sense of individuality – as opposed to individualism – and freedom is currently helping America through one of the toughest periods in her almost 250-year long history. This country is the last place on Earth where totalitarianism would take over. But our freedom, prosperity and peace are at least to some degree dependent on what is going on in the rest of the world.
This is why in the 20th century the United States established itself as a global power. Throughout most of that time, Europe has been a major scene for our foreign policy and military engagements. A big reason is that Europe has long been, and still is, a central stage for the fight against totalitarianism.
With the rise of totalitarian nationalism in primarily Germany, Italy and Spain in the 1920s and ’30s, Europe became the world’s most important battle ground between freedom and tyranny. Freedom won the war, but once the bullets had stopped flying a more polished version of the values that drove Hitler, Mussolini and Franco to power began setting roots in Western Europe. The idea of collectivism, which is in the DNA of Naziism and fascism, is also prevalent deep into the segments of European politics that are generally considered democratic. The notion that government can and should shape a nation, socially, culturally and economically, has taken seemingly more palatable forms than the swastika.
Today, nationalists no longer use the sense of patriotism as their first and foremost voter recruitment tool. The new gateway to nationalism is the welfare state.
More on that in a moment. First, a quick look back at how nationalism – and totalitarianism – is once again able to rise to political prominence in Europe.
In 1960, in one of the most revealing books on the subject, titled Beyond the Welfare State, Swedish economist Gunnar Myrdal explains how the idea of central economic planning without political dictatorship has conquered Western Europe and is slowly but relentlessly replacing Capitalism as the prevailing economic model. The welfare state, for short, would soon spread its intellectual tentacles across the Atlantic and peacefully defeat the American free-enterprise system. Myrdal was partly right: with considerable help from John Kenneth Galbraith’s Economics and the Public Purpose and The New Industrial State the American left made a major effort during the 1960s and ’70s to establish the European notion of collectivism and indicative economic planning as the new normal for the New World.
They never quite succeeded. The Obama administration represents the last effort of the collectivist left to “fundamentally remake” America (as Obama put it during his campaign). But while the welfare state is finally reaching its peak as a socio-economic model here in the United States, the Europeans are holding on to it for dear life. The entire fiscal struggle during the Great Recession has been about saving Europe’s ailing welfare states with every means possible – even at the expense of years of declining GDP, at the cost of 30, 40, 50 and even 60 percent youth unemployment. Ill-designed austerity, motivated not by a desire to shrink big government but to save it, has taken more from people in the form of higher taxes and given less back.
Instead of conceding that the welfare state is a lost cause; instead of repealing the welfare state and giving economic freedom a chance; the political leadership in Europe has doubled – no, tripled – down in their defense of collectivism, high taxes, income redistribution, entitlements, socialized health care and deep, stifling regulations of the labor market.
In countries with the biggest, most intrusive governments this has resulted in a dangerous political backlash. When voters feel betrayed by the government that promised to take care of them cradle to grave, and there is no alternative there presenting a case for economic freedom, voters turn their back on the established political institutions that gave them the welfare state. Those institutions also happen to be parliamentary democracy. Feeling that parliamentary democracy has let them down and left them out to dry, both financially and politically, large groups of voters are now turning to another form of collectivist parties.
The modern totalitarians.
When the European welfare state swept through Western Europe in the ’50s and ’60s its collectivist principles appealed to people whose cultural background was a straight line from late Medieval collectivism through undemocratic monarchies to the nationalist movements of the early 20th century. Europe may have been the birthplace of the concept of the individual, but the continent never quite unleashed what they had discovered. Unlike America, the roots of Europe’s political culture are still firmly in the notions of nationalism, collectivism and – almost for a century now – the welfare state. It was a smooth transition for Europe to go from nationalism to the welfare state: instead of being part of an ethnically, racially or culturally defined group along nation-state lines, the Europeans became part of a mildly Marxist dichotomy between taxpayers and entitlement recipients.
While the technical difference is considerable, the cultural difference is minor. The individual shrinks and crawls in under the group banner, hoping that the group will care for him. By giving legislative power to political parties that promise more entitlements, Europe’s voters have reaffirmed and reinforced the collectivist principles that guide the welfare state.
Those collectivist principles, however, are easily transferrable, from the welfare state onto another collectivist vehicle. Now that the welfare state has proven, beyond a shred of a doubt, that it can no longer keep its entitlement promises, Europe’s voters have begun listening to the old nationalist tunes again.
The difference between today’s nationalists and those that ultimately paved the way for Naziism and fascism after World War I, is that today they know how to use the welfare state to appeal to people. Every nationalist party in Europe, from the Danish People’s Party and the Swedish Democrats to the far uglier Front National in France, Fidesz and Jobbik in Hungary and Golden Dawn in Greece, promises to preserve the welfare state in one form or another. They have learned to capitalize on people’s frustration with the failing welfare state. But instead of rightly pointing out that the statist economic model is flawed, the modern nationalists – and especially the totalitarians among them – have projected the blame onto centrist, social-democrat and liberal political parties. Ultimately, this blame falls on parliamentary democracy itself.
So far, only the outer rim of the modern nationalist surge has pointed finger squarely at parliamentary democracy. However, as Golden Dawn, Jobbik and similar parties gain ground, antipathy toward the parliamentary system will grow. France will be one of the key battle grounds between nationalism and parliamentarism: if Le Pen follows in the early footsteps of her father it is entirely possible that her rise to the presidency in 2017 could mark the beginning of the end of De Gaulle’s Fifth Republic. If the radicals in her movement set the tone, the new France that would emerge – the Sixth Republic – could become a catalyst for a new, broad nationalist surge across Europe.
There are already movements around the continent hard at work to create a fascist “Gross-Europa”. They are probably not going to gain more than marginal political influence, at least not in the near future. But it is important to remember that a decade ago, the idea of a President Le Pen in France was laughable. Furthermore, the idea of a resurrection of European communism was ridiculed. I know, because I warned about it in an article in Front Page Magazine back in 2006 and got more than a few sarcastic comments from more established “thinkers”. Even a cursory look at the results in the EU Parliament election in late May shows how frighteningly right I was back then.
And I did not even consider that nationalism would be a competing force. But with two competing, and growing, totalitarian movements now procreating in Europe’s political landscape, the continent is facing a dark future. Independently, these movements will reinforce Europe’s collectivist culture and cling to its dying welfare state for as long as they can, and then some. Most of all, they are going to use it to entice people into crossing the line, from parliamentary democracy into a totalitarian political system Europe has supposedly left behind it.
Using the welfare state as an economic gateway drug, the modern totalitarians are going to try to reshape the continent that, for a century, has been America’s most costly foreign-policy problem. Given that both the nationalists and the communists now rising to political prominence are negative, in some cases outright hostile, toward America, that foreign-policy problem may soon come back knocking on the doors of the U.S. State Department – and the Pentagon.
In a great article in the Wall Street Journal, former vice president Dick Cheney and his daughter, former senatorial candidate Liz Cheney, explain how Obama’s failures on the foreign-policy front are transforming the Middle East into a new major headache for America. They are correct, but it is crucial for America’s future that our foreign policy does not overlook the radical transformation taking place in Europe right now.
The European mockery of U.S. politics continues. The latest contribution comes from two talking heads at Der Spiegel – a magazine I thought would hold itself to higher standards than this. Sadly, I was wrong. In a piece that reeks of ignorance and demagoguery, Sebastian Fischer and Mark Pitzke, current and former U.S. correspondent for Der Spiegel, embark on a journey that is more revealing of the German political culture they hold dear than any insights into American politics and society. Here is how they start:
The United States has temporarily avoided federal default. As the Republicans lick their wounds, the Democrats are triumphant.
Well, not exactly. The Democrats are increasingly worried about the implementation of Obamacare, with costs of health insurance going up dramatically for most Americans. The roll-out has been an abysmal failure and there is no improvement in sight. By the time the primary elections start in the lead-up to the 2014 midterm elections, there is going to be a whole new crop of candidates out there to challenge the incumbents who voted for, or otherwise have endorsed, Obamacare.
Long-term, the funding fight that just ended could turn out to be a home run for the Republicans, just as the debacle with Hillarycare prepared the ground for Republicans to take Congress in 1994.
Back to Fischer and Pitzke:
But no one should be happy, because the debacle has exposed just how broken the American political system truly is. The president kept things short, speaking for only three minutes on Wednesday night to praise the debt compromise reached by Congress. After he finished, a reporter called after him: “Mr. President, will this happen again in a couple of months?” Barack Obama, who was on his way out the door, turned and answered sharply, “No.”
First of all, the funding fight actually shows how strong the American democracy is. Our political scene allows disputes, differences in opinion and analysis, and diverging ideologies to fight for the approval of their voters. By encouraging intellectual pluralism the U.S. democracy usually takes the American society in a healthier direction than Europe. Or, as I put it in an article on free debate and prosperity earlier this month:
There is a prevailing idea in Europe, again with the exception of Britain and to some degree Denmark, that politics is about bringing everyone to the consensus table. The construction of the EU has reinforced the institutional structures that favor consensus over a free, vigorous debate. Where American politicians can end a debate on a note of disagreement, Europeans often get nervous over the lack of consensus and agreement. I am not going to speculate as to where Europe got its consensus extremism from, though the parliamentary system itself may have been biased in favor of compromise and consensus rather than principled disagreement. But what really matters is that a political system that favors compromise and consensus gradually erodes, and eventually eliminates, principled debate. As part of the convergence toward a compromise the European parliamentary system implicitly establishes a value norm that then becomes the attractor point for all future political discourse.
The pursuit of consensus puts the European parliamentary system on autopilot in one direction, and one direction only. As the current economic crisis demonstrates, this can have disastrous effects, both for outer-rim states like Greece and for core euro-zone economies like France.
Where dissent is viewed as a bump in the road to consensus, democracy ultimately loses its meaning.
Furthermore, and actually as a result of Europe’s consensus extremism, the debt problems are worse in the EU than they are here in the United States, a fact that Der Spiegel carefully evades talking about. But even more worrisome is that the lack of dissent in Europe’s political discourse is about to put the entire continent on a very dangerous path to heavy restrictions on free speech.
However, none of this is of any consequence to Fischer and Pitzke as they continue to mock the most vigorous democracy in the industrialized world:
With his re-election in 2012, Obama thought he could break the Republican “fever.” Instead, the conservatives paralyzed the government and risked a federal default just so they could stop Obama’s signature project: health care reform. And this despite the fact that “Obamacare” had been approved by a majority of both houses of Congress, was upheld by the US Supreme Court, and was endorsed by the American people in the voting booths
Well… Obama lost ten million votes in 2012 compared to 2008. He also lost two states that he won in ’08. Republicans increased their hold on state legislatures. There are now more Republican governors than ever in recent history. That is hardly an endorsement of Obamacare. And the fact that the law has been upheld as constitutional has nothing to do with whether or not it is good for the American health care system. On the contrary, being constitutional is an absolute minimum requirement for any law to even be considered by Congress.
Does Der Spiegel really believe that ignorance is bliss among its reporters? Fischer and Pitzke again:
[The] political crisis has turned out to be a systemic crisis. America’s 237-year-old democracy is approaching its limits. Its political architecture was not designed for long-lasting blockades and extortion, the likes of which have been enthusiastically practiced by Tea Party supporters for almost the last four years. The US’s founding fathers proposed a system of checks and balances, not checks and boycotts.
These two German gentlemen are apparently very poorly educated on the history of American politics… Our constitutional republic has survived far worse things than this. It has survived presidential impeachments, it has functioned during wars and deep economic crises. That is a sign of tremendous strength, not a democracy at its limits.
Or do Fischer and Pitzke suggest that we here in America should follow the German tradition of replacing democracy with a strong leader when times get tough?
In hardly any other western democracy are the minority’s parliamentary rights as strongly pronounced as they are in the US, where a single senator can delay legislation, deny realities, and leverage the system. In Germany, the government is built from a majority in parliament. In America, the president and his allies in Congress have to organize majorities for each new law. But for a long time Obama has hardly been able to find any — not for immigration reform, or new gun control laws, or even for the budget, as the world’s largest economy has been making do with emergency spending measures since 2009.
More than 400,000 Americans died as a result of the German preference for majority rule.
Scarcely 50 right-wing populists, led by Tea Party Senator Ted Cruz, have been pushing their once proud Republican party into a kamikaze course. Why are the other Republicans letting them do this? They are afraid of radical challengers within their own party in their local districts. Meanwhile, the Democrats hardly pose a threat, because over the past several years the borders of the congressional districts have been manipulated in such a way that they almost always clearly go Republican or Democratic.
How predictable. When nothing else works, you throw in the standard argument against our constitutional republic – congressional redistricting. Again, Fischer and Pitzke are sadly uneducated. The redistricting process is extremely closely monitored, and “manipulation” is almost impossible. There are experienced legislators involved; there are lawyers involved; courts; journalists; political scientists and demographers…
But never mind all that. Let’s do things the German way. Let’s not care about the fact that people move, that the economic and social geography changes; let’s not worry about how representative our elected officials are. All we should do is create a party system where people vote for parties, not candidates, and where conservatives and social democrats rule together as if there were no differences between them.
Which, in Germany, there aren’t. Back when Adenauer was around, Germany got off on a good start with a federal constitution that promised true democracy and political vitality. Then the Germans decided they wanted a welfare state instead, and all of a sudden their country was run from the top down, with Bonn – now Berlin – running an increasing part of the budgets in states and cities. With more and more entitlement programs, funded and mandated by the federal government, lower German governments gradually changed from being true representations of their voters’ will to what is now little more than federal spending agencies.
Is that the kind of democracy that Fischer and Pizke want?
As a result, America loses the representative nature of its representative democracy. In the congressional elections in 2012, Democrats won 1.17 million more votes than Republicans, but Republicans got 33 more seats in the House of Representatives. Changes in majority rarely exist anymore.
Oh, dear… In 1994 Republicans took both chambers in Congress, under a Democrat president. In 2000 the senate was split evenly, the House in Republican hands and the president a Republican. In 2006 Democrats won both chambers under a Republican president. In 2008 they held on to Congress and the president was a Democrat. In 2010 Republicans re-took the House under a Democrat president.
No changes in majority?? I am frankly disappointed in Der Spiegel for publishing something so pathetic.
During the recent debt ceiling fight, Tea Party hotheads called their colleagues who were willing to talk with Democrats the “surrender caucus.” Anybody who would vote for a compromise “would virtually guarantee a primary challenger,” Kansas Republican Tim Huelskamp threatened on Tuesday.
Here we go again. Our two German friends go ballistic over the fact that there are – OMG – differences in opinion, values, ideology woven into the American political landscape. But let’s not kick them around too much. After all, in their own backyard, consensus is king, and who are they to risk their careers by promoting dissent in Germany? As is glaringly obvious from the emerging coalition in Berlin between conservatives and social democrats, the German democracy is cleansing itself of differences in opinion. One people, one majority, one chancellor.
Adding to this is the almost unlimited flow of campaign contributions, which finance the increasingly brutal mudslinging during congressional elections every two years. Behind those donations are often radical groups or interested billionaires, such as the brothers David and Charles Koch, who have financed the Tea Party and are thought to have helped plan and direct the most recent crisis.
Why don’t Fischer and Pitzke mention George Soros and the billions he has been pouring into American politics for the past 15 years?
And then, inevitably, these two German clowns sink to the mud-and-gutter level of demagoguery:
At the same time, the US is undergoing huge demographic shifts, which were recently evident in Obama’s re-election. The old “white majority” is slowly shrinking into a minority. One of the consequences has been the rise of the Tea Party, which is loudly pushing back against change, Obama and the government itself. Tea Party protagonists such as former Alaska governor Sarah Palin beguile their followers with folksy language they can understand and proudly hold up ignorance and stupidity as badges of honor in their battle against the “elite” and their intellect.
I have spoken at Tea Party events. I know many people who are involved in that movement. Fischer and Pitzke would be shocked to see how many regular, middle-class people there are in this movement. Some of those who became active early on are now elected officials at the state and local level. One of them is state representative Lynn Hutchings, a black woman with a long, honorable military career behind her. Never having been in politics before, she decided after Obama’s election that it was time for her to do what she could to fight for the values that she holds dear.
I’d like to see Fischer and Pitzke come to a meeting with representative Hutchings and tell her that she is holding up “ignorance and stupidity as badges of honor”.
The truth is that Germans in general, and German political elitists in particular, are culturally and economically programmed against political dissent. Everywhere a welfare state shapes people’s lives, intellectual conformity follows in its footsteps. One reason for this is that the political machinery, as I explained earlier, aligns itself along a path of consensus to preserve the welfare state; anyone who opposes it is thrown out of the political parties because any opposition to entitlements means losing the voters who depend on them. And since, in Germany as well as everywhere else in the EU, half or more of all citizens critically need entitlements to make ends meet, the welfare state effectively becomes the dictator of consensus in the parliamentary system.
Another reason why political dissent makes Germans uncomfortable is that they have not learned to separate person from opinion. This is a symptom of a society with truncated individuals – another effect of the welfare state. A society where government provides lots of goodies to people is also a society where government standardizes the life of the individual. In order to get the most out of what the welfare state provides, people need to conform their lives to the entitlements. This means doing things government condones, and not doing things government (often implicitly) discourages. With everyone conforming to the welfare state’s template life, individualism becomes uncomfortable. The more the welfare state shapes people’s lives, the more uncomfortable people become with individualism.
Those who stick their neck out and break the ranks become unwelcome reminders of what life could really be like. As a result, society develops cultural codes and behavioral patterns where individualism is punished. Conformity and consensus win the day.
We certainly have our problems and challenges here in America. We are still in a very modest recovery from a long, tough recession. But at least we are making economic progress. Germany, on the other hand, is going the same way as the rest of the EU: back into the dungeons of depression, stagnation and industrial poverty.
In five years time, the U.S. economy will be churning on forward. Germany, on the other hand, will be in the midst of a transformation into an economic wasteland. The transformation will be spearheaded by a government thoroughly clean of political dissent.
I don’t often agree with President Obama – in fact, I almost never agree with him – but he has gotten one thing right: America’s future foreign policy, military and economic interests are not primarily trans-Atlantic, but trans-Pacific. Asia’s economies are still on the rise, even though China is wrestling with an inflation problem slowing its growth. But compared to Europe, Asia is a miracle of economic health and a promising outlook on the future.
When contrasted against Asia – from South Korea to China to India – Europe comes across as more and more of a museum over the 20th century: big, manufacturing corporations protected from local competition by costly labor-market regulations, governments desperately trying to preserve whatever they can of their welfare states and generations growing up to a void of opportunities, overshadowed by perpetual unemployment.
Speaking of unemployment, no other economic phenomenon is as long-term destructive as youth unemployment. It shatters hopes and aspirations, it depresses ambitions and robs generation after generation of the ability to start a life, build their own prosperity and even feed themselves. In place of a bright outlook on the future, youth unemployment gives the young despair, depression and cynicism.
Youth unemployment discards our children already before they have set their foot in the world of self determination. As a direct consequence, over time it destroys the interest among our children to inherit our society. The consequences of that are formidable. As a first glance at what this means, consider the latest numbers on unemployment among Europe’s young:
When young people are disenfranchised in the numbers shown here, it should come as no surprise that many of them will turn their backs on society. The very social and economic institutions they have been brought up to like and appreciate have, in their minds, let them down and thrown them on the macroeconomic garbage pile. What reason do they have to be loyal to a society that does not provide them with opportunities to build their own lives?
There are fiscal and monetary policy solutions to this problem. Doing away with unemployment is not hard – all it takes is some solid knowledge of macroeconomics, some fiscal fortitude and a healthy dose of disrespect for political conventionalism. But as things are now in Europe, conventionalism is the biggest enemy the young face today. Political conventions that say “defend the welfare state” get in the way of healthy economic policies that otherwise would pave the way for massive job creation.
But even more serious is the proliferating notion among Europe’s political leaders that there should not even be a debate over policy solutions. A clear witness of this is in the dictatorial fashion by which the leaders of the EU spearheaded the austerity assault on troubled member states. There was never a debate about the virtues and vices of austerity, never any questions about the soundness of crushing the welfare state in Greece while preventing the private sector from providing alternative solutions. There has been no discussion about why it would be a good idea to scale back, massively, poverty relief in depression-ridden countries like Greece and Spain, while at the same time cracking down on private organizations trying to fill the void left by an increasingly austere government.
In Spain, the depression has turned young professionals into food scavengers. In Greece, the neo-Nazis have challenged government by setting up poverty-relief systems and food distribution networks. This has raised their voter support to where they are now the third biggest party in Greece.
If the Eurocrats in Brussels had invited to a vigorous debate about austerity, both its economic and social consequences, and if they had solicited alternative strategies, then anti-democratic organizations such as neo-Nazi Golden Dawn in Greece would not be where they are today. But instead of realizing how utterly dangerous their monotheistic approach is, the Eurocracy reinforces its campaign to eradicate debate. The latest addition to their toolbox is the new, European “tolerance” campaign which I reported on two weeks ago. Superficially it is aimed at going after expressions of extremist political views, but in reality it serves as yet another tool to stifle policy debate in general.
In view of Europe’s steadily rising youth unemployment, this is exceptionally serious. When one in five young European is left idle, at least these young men and women must be granted a chance to voice their criticism of existing social and economic structures, of political conventions that they see favoring others than themselves. And even though the aforementioned “tolerance” campaign is not explicitly aimed at stifling debate in general, it seriously narrows down the spectrum of what debate is permissible and what is deemed intolerant and therefore banned, either de facto by social stigmata or de jure by new speech-stifling legislation.
Where free speech is thrown out, prosperity will exit as well. It will take a long time for Europe’s political leaders to realize this. In the meantime, let’s listen to what Dispatch International has to say about the “tolerance” campaign:
Powerful organizations specializing in humanism and paid by the EU have embarked on a new offensive to standardize national legislation. … professional human rights activists … mean business when they demand a ban on, e.g., criticism of feminism.
You may wonder what this has to do with solving the problem of youth unemployment. Directly, there is no connection. But there is an indirect one that we will get to in a moment. For now, back to Dispatch, which reports that the new “tolerance” directive from the EU includes a proposed ban on forms of speech that are deemed to be “anti-feminist”:
[Anti-feminism] must be banned and combated according to “A European framework national statute for the promotion of tolerance – submitted with a view to being enacted by the legislatures of European states”. This document has been circulating in the EU’s paper-lined labyrinths and will probably be approved by a majority in the European Parliament. The statute – intended to be imposed as law in the member states – proposes “concrete action to combat intolerance, in particular with a view to eliminating racism, colour bias, ethnic discrimination, religious intolerance, totalitarian ideologies, xenophobia, anti-Semitism, anti-feminism and homophobia”.
First, the usual disclaimer. As a libertarian I am opposed to any statist ideology, from American liberalism through European social liberalism to social democracy. I am a staunch defender of individual freedom for all humans, regardless of whether they are Australian Aboriginies, Shaolin monks in China or struggling farmers in Siberia. I don’t care about a person’s skin color, ethnic background, religious affiliation or gender identity – so long as they are willing to respect their fellow citizens on the same terms, we can all live in peace and pursue our individual goals in life.
This means, of course, that I am vehemently opposed to racist and totalitarian ideologies, such as Nazism, Communism and Islamism. I abhorred Apartheid in South Africa and I pray for the freedom of the people in North Korea. And I am thoroughly disturbed by the fact that Nazis hold democratically elected seats in a parliament in Europe for the first time since the 1930s.
That said, I do not believe that you fight any of this by stifling free speech. People are not drawn to totalitarian ideologies for random reasons; young men and women do not line up behind movements like Golden Dawn or the British National Party because they were born to hate. They do so because at some point they have drawn the conclusion that society as they were told it worked, does not offer them a path to the future. Somewhere along the line they have been discouraged in their efforts to believe in democracy, and instead turned to its very antithesis.
As a result, young men and women in Europe become radicalized. They turn their backs on the society they were supposed to inherit. For a while, the radicalization process was contained by the welfare state, as swaths of young Europeans went from school to dependency on tax-funded entitlements. But as the welfare state bled taxpayers dry, and budget deficits ran rampant across Europe, the last-resort solution for young Europeans to feed themselves began dissipating. Austerity destroyed the firewall that kept people from severing their moral ties to parliamentary democracy.
The result? A growing political movement across Europe that despises democracy, rejects liberty and fights for a “Great Europe” united under a fascist banner. So far they are fringe movements, but that will very likely change – and change soon. The “tolerance” campaign by the EU is going to exacerbate the radicalization of Europe’s voters, especially the young. The same government that has let the young down; the same society that has deprived them of economic opportunity; is now going to try to regulate their speech.
Instead of engaging and including those who are being marginalized, the Eurocracy is trying to rally its member-state governments behind yet another measure that will disenfranchise even more people. And just to drive home the point of how serious this “tolerance” directive is, Dispatch International reports:
Governments must take concrete steps to prosecute persons who “make defamatory comments … in public and aimed against a group … or members thereof – with a view to inciting to violence, slandering the group, holding it to ridicule or subjecting it to false charges”.
In my analysis of this “tolerance” directive I noted, with reference to the “holding to ridicule” part:
The prevailing interpretation seems to be that it is now going to be illegal in Europe to poke fun at someone. While seemingly harmless, the true meaning of this is that the Europeans are going to outlaw satire as a means to criticize in politics. Perhaps one should expect hostility toward political satire from the members of the European Commission. It is hard to find a group of human beings who take themselves more seriously than the EU Commissioners. That aside, the intention behind the ambition to make “group libel” charges available against humorists is to turn the table on freedom of speech. By adding such serious infringements as are suggested here, the European Commission effectively changes the default settings on freedom of speech: if this does become the law of the land in the EU it will shift the balance between what is permitted and what is banned so that the permitted forms of speech are now enumerated.
In short: this directive could lead to a situation where speech that is not explicitly allowed is banned by default.
This is nothing short of an authoritarian straitjacket on the free exchange of ideas in Europe. It will most certainly drive more people into the arms of totalitarian movements – after all, if a government that is supposed to be democratic can put this kind of draconian restrictions on a basic individual freedom, then how big is really the difference between democracy and totalitarianism? If legislators elected by the people can severely rein in the liberty of that same people, then why should people endorse the process that elected those lawmakers?
But it does not stop there. This new “tolerance” directive will have repercussions for the debate over how to solve the problem with youth unemployment. How do you make the argument that Europe needs less government and must do away with its welfare state when at the same time the government you are criticizing could label you intolerant for doing so? Far fetched? Not at all. The only thing government has to do is make the case that your policies of reducing the size of the welfare state would hurt certain minorities. If, say, a majority of African immigrants in France live on welfare, and you advocate the elimination of tax-funded welfare, then under this new “tolerance” directive you could be charged with intolerant speech.
Even more obvious is the link between Europe’s irresponsible immigration policies and the high youth unemployment rates across the EU. Many people make the arithmetically based argument that when immigration adds to the labor supply in times of high unemployment, then unemployment will rise, not fall. Since this argument ties immigration to unemployment, it would be banned as intolerant speech under this new “tolerance” directive.
Absurd? Absolutely not. Keep in mind that the EU does not have anything like the U.S. First Amendment in its constitution. There is, simply, no constitutional protection of your right to free speech in Europe. Nor does Europe have the open court system that we have in the United States. Therefore, infringements on freedom like this directive can pass unchallenged.
Europe’s arrogant political leadership is digging the grave of democracy. As they dig, they shorten the distance from Brussels in 2013 to Unter den Linden in 1933.
This is to all of you around the world who are laughing at the shutdown of the federal government here in the United States. Especially European media have portrayed this as a farce, and with the exception of the British press there are virtually no attempts at understanding the underlying issue.
What led to the shutdown was not some political posturing, but indeed an ideological rift that runs right through U.S. Congress. This is at the end of the day a fight between conservative and liberal, not to say social-democratic, values. Over the past two elections, 2010 and 2012, the conservative flank of the Republican party grew stronger and has solidified its presence in both chambers of Congress. By contrast, Obama-leaning radicals have made inroads in the Democrat party. This has widened the ideological span in Congress, making our legislature one of the most pluralistic in the industrialized world.
And right here is where most foreign commentators are led astray by their own prejudices. There is a prevailing idea in Europe, again with the exception of Britain and to some degree Denmark, that politics is about bringing everyone to the consensus table. The construction of the EU has reinforced the institutional structures that favor consensus over a free, vigorous debate. Where American politicians can end a debate on a note of disagreement, Europeans often get nervous over the lack of consensus and agreement.
I am not going to speculate as to where Europe got its consensus extremism from, though the parliamentary system itself may have been biased in favor of compromise and consensus rather than principled disagreement. But what really matters is that a political system that favors compromise and consensus gradually erodes, and eventually eliminates, principled debate. As part of the convergence toward a compromise the European parliamentary system implicitly establishes a value norm that then becomes the attractor point for all future political discourse.
The European welfare state is a good example. Consuming 45-55 percent of GDP, depending on where you go in the EU, the welfare state has transferred crucial decisions on people’s lives from individuals and families to government. Through the welfare state, Europeans have handed over their health care, their retirement planning, their children’s daycare and education, their decisions when to be home sick or when to be home with infants, and much more, to government. It is almost easier to list the parts of their lives that Europeans have not entrusted government with.
This heavy socialization of everyday life is universally accepted in most of Europe. So called conservatives such as former French president Sarkozy or just-re-elected German chancellor Merkel are just as good stewards of the welfare state as their socialist competitors. in Sweden, a welfare-state Mecca for American liberals and European social-democrats, the ideological rifts over the welfare state that still existed in the 1980s are now long gone. The Moderate Party, once known as a solid conservative force in Swedish politics, has morphed into a clever copy of the Social Democrats, being at least as good stewards of the welfare state as those who once created it.
Europe’s gravitation toward a consensus around the welfare state has effectively eradicated ideological differences, both in the public discourse and in the parliamentary system. This is visible all through European society, from German cities which, under “conservative” Angela Merkel’s administration, are spending half their money on redistributive entitlement systems, to the fierce efforts by the Eurocrats in the European Union to preserve the welfare state by means of austerity.
Questioning the big-government project is akin to political suicide in the European political culture. By contrast, questioning big government in America is very much part of the established political discourse. This is exemplified by several ideologically driven fights in U.S. Congress in recent years, especially since Obama was elected. The Obamacare issue is perhaps the most fervent of them, with Tea Party-supported conservatives in the Republican Party clashing with exceptionally statist Obama Democrats.
The government funding issue is another one where a vigorous ideological difference comes to full display. Americans may sigh and shake their heads over the battles being fought in Congress, but they themselves are not alien to expressing their political viewpoints and agreeing to disagree with friends, coworkers and even the occasional stranger encountered on an airplane or at Arby’s over lunch.
I am the first to recognize that the ideological rifts in American society have grown, and not always for the better, during the Obama administration. But those rifts have always been there, and it is a sign of health for American democracy that those rifts remain. Sometimes they get in the way of the regular operations of government, such as right now, but if the issue is principled enough the fight is worth it. Opinion polls also show that Americans are – yes – opinionated about the shutdown: while they tend to disagree with the shutdown itself they tend to agree with the Republicans on trying to stop (or at least delay) Obamacare.
In other words, the ideological spectrum in American politics remains wide and vibrant. That is healthy for the future of American society and democracy. The contrast to Europe is formidable, and not to the favor of the Europeans. In fact, there is a growing fear in Europe over disagreements even on minor issues such as immigration, a fear that manifests itself in the redefinition of stigmatizing political labels like “Racism” or “Fascism”. The end result is a further narrowing-down of the political spectrum until it becomes entirely two-dimensional: either you agree completely and you are accepted, or you express even minor disagreements with the main political discourse, and you immediately become an outcast.
When the art of disagreement is sacrificed at the altar of political consensus, the long-term consequences are unfathomable. One of the first major sacrifices is economic freedom and prosperity. When the political culture and the public discourse are alien to open and vigorous debate, which prevents people from questioning the purpose behind policies that are destroying large parts of the European economic landscape.
Here in America, we still operate on the premise that debate and disagreement lead to the best argument winning – and that the best argument comes with the best policy solutions. That is why we still have a good chance to avoid following Europe down the path to industrial poverty.
Europe is sinking into a dark age of industrial poverty. The current crisis has already destroyed the lives, jobs, prosperity and future of millions upon millions of families, from the Aegean Sea to the Atlantic shore. Slowly but without mercy, an economic wasteland is crawling north, from devastated middle-class neighborhoods of Athens; it seeps through Spanish back streets where young, unemployed professionals scavenge for food after restaurants close. The economic wasteland conquers government-funded hospitals, sending patients home without proper treatment; it pushes young men and women out of work and into the arms of an ever stingier welfare state.
Despite massive protests, the Eurocrats in charge of the European Union and the European Central Bank have teamed up with the IMF to force state after state in the EU into accepting destructive austerity policies. The purpose behind those policies is not to restore economic growth and full employment, but to save the welfare state and make it fit within a tighter tax base.
In order to get there, the Eurocrats and national leaders have teamed up. In every way possible without abolishing parliamentary democracy, they have dictated to voters and taxpayers that their protests against austerity do not count. The Eurocrats have even appointed prime ministers in EU member states, blatantly disrespecting Europe’s deeply rooted system of parliamentary democracy.
The heavy hand of Brussels has created a sense of abnormality in Europe. Under its shadow, the economic wasteland is moving north into France and may soon threaten the economic epicenter of the European Union. The French socialist government is nearing budget panic while fiscal dictates from the Eurocracy to all economically “troubled” EU states supersede the normal operations of democratic government. In more and more ways, the super-state structure also known as the European Union is suppressing the voice and expression of the people to push its own agendas deeper and deeper into the lives of private citizens.
Nigel Farage, leader of the United Kingdom Independence Party, often mentions that 75 percent of all the laws that apply to Britain are made in Brussels. If this applies across the board, in all EU member states, then parliamentary democracy is already under siege in Europe. Austerity dictates from the Eurocracy increase the pressure on the representative state to a point where not much of it is left.
At this point, when freedom and democracy are becoming scarcities, the Eurocracy invents yet another way of suppressing half-a-billion Europeans. In a grossly misguided, recklessly ambitious document on “tolerance”, the European Commission – de facto the government of the EU – wants to invade people’s everyday lives with a new level of speech dictates. Even more serious is the fact that the Commission wants to disguise its new, Orwellian-on-steroids ambition in the shiny wrapping paper of promoting “tolerance”.
The terrifying new report, aiming to severely restrict speech and debate in European society bears the ominous title “A European Framework National Statute for the Promotion of Tolerance”. It pushes government speech regulation to an entirely new level in two ways: by regulating “group libel” and by enforcing a terrifyingly invasive definition of tolerance. Let’s start with “group libel”:
“Group libel” means: defamatory comments made in public and aimed against a group … with a view to inciting to violence, slandering the group, holding it to ridicule or subjecting it to false charges. Explanatory Notes: (i) This definition covers “blood libels” and anti-Semitic slurs, as well as allegations that, e.g., “gypsies are thieves” or “Moslems are terrorists”. (ii) It must be understood that the “group libel” may appear to be aimed at members of the group in a different time (another historical era) or place (beyond the borders of the State).
The highlighted part has caught the attention of many bloggers. The prevailing interpretation seems to be that it is now going to be illegal in Europe to poke fun at someone. While seemingly harmless, the true meaning of this is that the Europeans are going to outlaw satire as a means to criticize in politics.
Perhaps one should expect hostility toward political satire from the members of the European Commission. It is hard to find a group of human beings who take themselves more seriously than the EU Commissioners.
That aside, the intention behind the ambition to make “group libel” charges available against humorists is to turn the table on freedom of speech. By adding such serious infringements as are suggested here, the European Commission effectively changes the default settings on freedom of speech: if this does become the law of the land in the EU it will shift the balance between what is permitted and what is banned so that the permitted forms of speech are now enumerated.
Granted, this “tolerance” proclamation is limited to speech about ethnic groups and other constructed collectives of people in our society. Therefore, it could be said to have only limited influence on the freedom of speech in Europe. However, the point is not the actual application – in this case to ethnically different groups – but the ambition of the infringement. By adding humor to a long list of stigmatized – and illegal – form of expression, the EU Commission sets a precedent for de facto blanket-banning of speech forms in other areas as well.
Going back to the “tolerance” report we find that the proposed legislation also wants to…
condemn all manifestations of intolerance based on bias, bigotry and prejudice [and take] concrete action to combat intolerance, in particular with a view to eliminating racism, colour bias, ethnic discrimination, religious intolerance, totalitarian ideologies, xenophobia, anti-Semitism, anti-feminism and homophobia.
An obvious question how the EU Commission believes it is going to enforce the anti-Semitism part without entering the mosques where radical islamism is preached.
But beyond that, the addition of anti-feminism is yet another paradigm shifter, and a serious new incursion into the freedom of speech. Feminism is neither a religion nor an ethnic or racial belonging. Feminism is a political ideology, and by criminalizing its criticism the European Union leadership opens for speech infringements against critics of other ideologies. An example: the support for the welfare state is widespread among Europe’s leading politicians, as is the misguided idea that the welfare state somehow is good for people. It is not at all far fetched to assume similar restrictions on speech regarding the welfare state as are now being proposed against “anti-feminism”.
Now for the second part of the Commission’s attack on free speech:
Tolerance does not mean that a group can segregate itself from society as a whole, repudiating the need to interface with other groups.
This sentence, which reveals the practical meaning of “tolerance”, is a horrifying statement to what the Eurocrats have in mind. In today’s European cities there are ghettos, poor neighborhoods, middle-class neighborhoods and wealthy neighborhoods. Just like here in America, people who work hard to put money aside and buy themselves a better home can migrate up the neighborhood ladder. They can put their kids in better schools, lower the risk of being crime victims and overall enjoy a better quality of life.
There is an ethnic parallel to the economic stratification – used descriptively – of Europe’s cities. The ghettos are typically dominated by non-European immigrants while the share of ethnic Europeans rises as you move toward the top of the neighborhood ladder. While some people may pay attention to this when looking for a home, the decision where to live is for most people a predominantly economic one. A home is the biggest economic commitment most families make, in Europe as well as in North America. Therefore, it is simply wrong to add a racial or ethnic dimension to the housing market; it comes with the presumption that ethnic Europeans who move to more affluent neighborhoods do so based on ethnic preferences, not economic considerations.
In its “tolerance” proclamation, the European Commission now wants to define the clustering of an ethnic group in one neighborhood as “intolerance”. Based, again, on the presumption that people’s housing decisions are racially motivated and not driven by economic variables, the Commission then makes clear that all Europeans have a “need to interface with other groups.” The wording of this is a thinly disguised dictate that Europeans have an obligation “to interface with other groups”, which of course gives a whole new meaning to their definition of “tolerance”: instead of simply being respectful of other people, the European Commission wants people to be tolerant by residing in neighborhoods with a different ethnic majority.
But even worse, if this “tolerance” proclamation became the law of the land in Europe – as is the Commission’s intention – government would have the legal authority to force people to move where their own ethnicity is in minority.
This could play out in two ways: either well-to-do ethnic Europeans are forced to move to ghettos dominated by non-European immigrants, or non-European immigrants are given heavy subsidies on taxpayers’ tab to be able to buy a house in an affluent “white” neighborhood.
It goes without saying that hard-working immigrants in Europe can make their way into an affluent neighborhood on their own, just like everybody else. Again, the decision on where to live is an economic one more than anything else. But according to this “tolerance” decree, a poor immigrant in an immigrant-dominated neighborhood cannot remain segregated, and since he or she lacks the means to buy a house in an affluent neighborhood someone is going to have to buy the house for her.
This opens up an entirely new dimension to “public housing”. But far more than that, it brings life in the European Union a few steps closer to the east side of the Berlin Wall. One generation after the Wall came down and people from Sachsen to Sakhalin were liberated, the EU Commission is suggesting new policies that in many ways revive the old Communist dictatorships.
They are not there yet, but the speed toward open intolerance is far too fast for comfort.
As my good friends at the Center for Freedom and Prosperity have been explaining for many years now, an international campaign is trying to take away a big chunk of our individual and economic freedom. Spearheaded by big governments and statist front groups like the OECD, the campaign aims to make it impossible for you and me to choose where we want to live, work, invest and pay our taxes. Technically, the coalition behind the campaign does not want to stop you from moving across national borders, nor do they want to stop you from moving your money across national borders; their goal is to make sure that you cannot do so and keep more of your own money in the bargain.
In other words, the goal behind the campaign is to end tax competition. This would be a monumental loss to the free world, as Cato Institute senior fellow Dan Mitchell explains very well in these articles:
It is easy to under-estimate the role that tax competition plays in preserving economic freedom. When there are no geographic restrictions of how you dispose of your money, governments are forced to behave just like any sellers of products: they have to give their buyers (taxpayers) a good reason why the buyers (taxpayers) should choose to pay their taxes to one government over another.
Behind the notion of tax competition lies a well-defined, solid natural-rights based principle of property rights. Excellently explained by Robert Nozick in his perennially relevant Anarchy, State and Utopia, this principle says – very briefly – that whatever you earn through work or trade that does not violate the life, liberty and property of another person, is yours and yours only. No one has the right to your property anymore than they have a right to your time, or your body.
Originally a Lockean idea, this property-rights principle has a long history through both the Enlightenment and modern libertarian theory. It has shaped Capitalism and the free market system, thus being an indispensable component in the social and economic success of the Western world.
The activists behind the statist campaign against tax competition do not see things quite the same way. Their view of property rights is a world away from what helped build our modern-day prosperous societies. At best, the statist notion of property is that people have the right to what they earn up until they have satisfied a basic basket of “needs”. This usually means that once you have put food on the table, paid rent for a standard apartment, bought the basic clothes you and your kids need, and paid your monthly mass transit pass to get to work, you have no right to the rest of your income. The fact that governments in today’s Europe do not confiscate everything above that level is a good indication of just how strongly the principles of free-market economics have worked their way into the Western culture.
That does not mean the statists won’t keep trying. I have written repeatedly about the disastrous, purely confiscatory French 75-percent hate tax. Another example of blatant disrespect for property rights is the Cyprus Bank Heist, where the Cypriot government confiscated, Soviet style, large amounts of people’s private bank deposits.
A third example of the ongoing statist attack on private property rights is the campaign against tax competition. That campaign is heating up, as is evident from a recent article in Euractiv.com:
Developing countries will not have access to a new system of automatic exchange of tax information agreed in St Petersburg by the world leaders over the weekend due to their lack of administrative efficiency, a decision that was not welcomed by many development experts. After two days of tense meetings, which focused largely on the Syrian crisis, world leaders agreed that the automatic exchange of fiscal information must become an international standard.
In this particular case the attack on tax competition is tied to the notorious inability of developing countries to maintain a stable tax administration. A push to expand the sharing of private citizens’ information across national borders is motivated with an allegedly noble ambition to improve government funding in developing countries. But the two issues have nothing to do with one another. The drainage of money from developing countries is often driven by pure corruption and the theft of public funds by dictators, their cronies and their family members. (Jean-Bedel Bokassa is a notorious example; Yasser Arafat another.) But the fact that corruption is keeping some developing countries in a deplorable state of poverty and tyranny is no reason for governments in Europe and North America to expand general information sharing on individuals and their financial whereabouts.
It is a sad but crucially important fact that if the campaign against tax competition eventually wins, there is little doubt that we would lose our freedom to invest wherever we want. More than that, we may even lose our freedom to move our money with us as we migrate from one country to another. it would become illegal for anyone to invest anywhere except in the country where he or she lives. At that point government has effectively monopolized itself and can set whatever tax rates it desires. French high-income earners can still escape the confiscatory hate tax, but if champions of economic freedom lose to the anti-tax competition crowd, there is a very high probability that governments in Europe – and the U.S. government through elaborations of FATCA – would completely lock in your money under their jurisdiction.
The 19 member states of the international organisation and the EU expect the start of automatic exchange of fiscal information to be operational at the end of 2015, according to the summit’s final declaration. The G20 also accepted the Organisation for Economic Co-operation and Development’s proposal against the manipulation of transfer prices of multinational enterprises, a technique that consists in changing the selling or buying prices of the same enterprise in order to transfer the benefits to a tax haven. “Unfortunately this decision doesn’t concern developing countries, who are the first victims of tax evasion,” says Mathilde de Dupré from CCFD-Terre Solidaire, a development campaign group. Global Financial Integrity, another NGO, estimates that developing countries lose around $100 billion a year due to the manipulation of transfer prices of enterprises. “They lose three times more money that they gain with development aid”, wrote Melanie Ward form Action.
This is another twist to blur the line between lawful, entirely moral tax planning and unlawful, entirely corrupt stealing of public funds that is so pervasive in many developing countries. It is exceptionally deceptive to argue that because there is very weak rule of law in some countries in the Third World, we need to make it harder for law-abiding citizens in Europe and North America to invest their money based on centuries-old principles of private property.
As for the criticism of transfer pricing, the hunt for more tax revenues from internationally active corporations is having a depressing effect on international trade. This was well demonstrated by Mansori and Weichenrieder already in 1999. In other words, by trying to squeeze more money out of a given tax base, governments are shrinking that same tax base. The end result may very well be a net loss of tax revenue.
The campaign against tax competition has been going on for well over a decade now. There is a lot more at stake than just the ability of wealthy investors to allocate their capital as they please. A government with full tax monopoly is a government with no restraints on either side of its budget.
Imagine if government told you what clothes you had to wear every day. Imagine that the clothes were the same outfit regardless of the season. Or if government – as it does in Cuba – gave you food rations. The same ration to everyone regardless of how big or small you are, what kind of work you do, how often you exercise, etc.
That would be inconvenient, would it not? Some people, like us libertarians, might even go so far as to call it intrusive… you know, a violation of individual freedom. That pesky little thing that so many millions of people living under dictatorships dream of when they go to bed at night.
It may not seem like much of an incursion into people’s freedom to force them to eat government-dictated food rations. After all, we are all going to be fed, right? After all, government apportions health care among the citizens in most countries, and often takes a monopoly on educating the kids. Why should not government control our food intake as well?
This rhetorical question is obviously yet another version of the standard question that should go out to all American liberals, European social democrats, statists, socialists and collectivists all over the world: when is government big enough for you? If the past 75 or so years has taught us anything, it is that those who want more government will always want more government, regardless of how much more government they get.
The British newspaper The Telegraph reports on another example of government’s relentless extension of its tentacles into our lives:
All cars could be fitted with devices that stop them going over 70mph, under new EU road safety measures which aim to cut deaths from road accidents by a third. Under the proposals new cars would be fitted with cameras that could read road speed limit signs and automatically apply the brakes when this is exceeded.
Many years ago I got pulled over for speeding in Colorado. It was a weekend morning on an interstate, and not a car within a mile going in my direction. The weather was perfect, there was no roadwork and farmland opened up on both sides of the freeway. In other words, the best thinkable conditions for driving.
I accidentally set the cruise control at 11mph above the speed limit, as opposed to the eight miles above that virtually guarantees you won’t get pulled over. Sure enough, hidden behind a bridge span is a state trooper, which cost me $168.
The speed limit was 70mph, a speed that was far too low for what the road and traffic conditions permitted. But since speed limits are set by government they are cemented in bureaucracy. Given what kind of unforgiving winter conditions you can encounter in eastern Colorado, a constant speed limit of 70mph (about 120kph, for you who need ten fingers to keep track of distance) is downright reckless. Not pulling people over for going 60mph in harsh winter conditions is like begging for accidents.
Let’s keep this in mind as we continue to listen to the Telegraph story about what the bureaucrats in Europe are up to:
Patrick McLoughlin, the [British] Transport Secretary, is said to be opposed to the plans, which could also mean existing cars are sent to garages to be fitted with the speed limiters, preventing them from going over 70mph. The new measures have been announced by the European Commission’s Mobility and Transport Department as a measure to reduce the 30,000 people who die on the roads in Europe every year.
Speed is almost never the cause of a fatal accident. What causes accidents on high-speed freeways like the Autobahn is the brutal shift in actual speed between segments of the highway. I have logged a few miles on the Autobahn myself, so I have seen this: you cruise along at 100mph or so, and suddenly come upon a congested section. Those who are not alert enough will break too late.
But this can happen just as easily on highways with limited speeds. I recently drove into Seattle on I-90 through the Snoqualmie. Traffic was modest, road conditions pretty good, so everyone was cruising along at 75-80. All of a sudden, out of the blue, around a bend there is a stand-still congestion. No one crashed into those cars but it was pretty darn close in the lane to my left.
In this case, government was actually the cause of the congestion, but that is a minor point. The main point is that roads can be built to allow for high speeds under safe conditions.
These are of course well-known facts. The problem is not that we cannot build safe, high-speed expressways. The problem is that our politicians are too focused on other things than what really matters. Instead of making sure that we can all travel in freedom, from point A to point B or wherever we want to go, our elected officials and tax-paid bureaucrats spend their time trying to squeeze our transportation needs into some sort of bigger model of what kind of society they want us to live in.
This is especially obvious in Europe where the Eurocracy is expanding its powers almost logarithmically. This is making some British politicians nervous, not because they have anything against more government, but because they know that more EU incursions into people’s lives will drive more voters into the arms of Nigel Farage and UKIP. The Telegraph again:
A Government source told the Mail on Sunday Mr McLoughlin had instructed officials to block the move because they ‘violated’ motorists’ freedom. They said: “This has Big Brother written all over it and is exactly the sort of thing that gets people’s backs up about Brussels.“
I’d like to see them try to take away the remaining free-speed segments on Germany’s Autobahns.
The scheme would work either using satellites, which would communicate limits to cars automatically, or using cameras to read road signs. Drivers can be given a warning of the speed limit, or their speed could be controlled automatically under the new measures. A spokesman for the European Commission said: “There is a currently consultation focusing on speed-limiting technology already fitted to HGVs and buses. “Taking account of the results, the Commission will publish in the autumn a document by its technical experts which will no doubt refer to ISA among many other things.”
Last time I got pulled over was in Alaska.
I was on the last leg of my five-day drive from Cheyenne to Anchorage (most of which meandered its way through vast wilderness) and frankly getting tired of driving. I just wanted to get there, so yes, I was going a little bit faster than the 55mph speed limit. The trooper told me that he was just a bit concerned about a stretch further down the highway where road conditions were too poor for even going 55. “Try not to go faster than 45 when you get there” he said and let me off with a warning.
That’s the kind of speed limit enforcement we need more of! (And yes, I did slow down!)
To begin with, for all you socialists and liberals reading this blog: there is a difference between tax avoidance and tax evasion. Tax evasion is when you do not pay taxes that you are legally mandated to pay. Tax evasion is a crime and should be duly punished (though it is worth pointing out that tax evasion should never be punished on par with any crime against a person).
Tax avoidance is when you take measures within the law to reduce your tax burden. The difference is monumental: it is illegal to drive faster than the speed limit but it is not illegal to take a detour around the city to avoid low downtown speed limits.
In the international debate over low-tax jurisdictions, castigated as “tax havens” by high-tax advocates, tax avoidance and tax evasion are often lumped together. The so called “investigative journalism” project that I mentioned the other day is a case in point. In a global effort to make private bank records public, the “International Center for Investigative Journalism” has shown great disdain for the privacy of their fellow citizens. Here is how one person involved in the project puts it:
“I don’t think we should be worried about the sensitivities of the poor banker and poor criminals whose criminal activities are being exposed,” he said. “If there are people who are doing nothing wrong and their information is being exposed, then it’s collateral. It’s a price to be paid.”
I wonder if this person has the same attitude toward the National Security Agency listening in on all our e-mails and phone calls. After all, if you have nothing to hide, what do you have to worry about…?
The revelation of financial data for law-abiding citizens and the suggestion that such publication is merely “collateral”, is very serious indeed. The people who pry into their fellow citizens’ private affairs with this attitude are dangerous individuals. It is disturbing, to say the least, that they seem to have such deep disrespect for the integrity of other people that they are willing to expose law-abiding citizens – tax avoiders – in the same context as criminals – tax evaders. Again the comparison to government eavesdropping comes to mind, but there is an even broader issue at work here.
High-tax advocates who criticize tax avoidance as being no different than tax evasion – the aforementioned “investigative journalism” project is a case in point – generally go after so called “tax havens”, more appropriately referred to as low-tax jurisdictions. The purpose is to prevent citizens of country A from choosing to move their money to country B and pay lower taxes.
The premise behind the defense of tax avoidance is that I as an individual citizen have earned that money through my own work or the investment of my own rightfully earned money. High-tax advocates do not see it that way. They do not share the premise that my earnings and my wealth are in fact mine.
This is a fundamental, philosophical difference that extends beyond being mere premises for tax policy. By suggesting that my income is not necessarily mine, and by focusing on the transfers of money around the world for the purposes of tax avoidance (and tax evasion) they imply that there is a legitimate distinction between what is truly mine of my property and what is not mine. The premise is that whatever assets I can move from one country to another for the purposes of lower taxes are assets that I really do not need – with “need” of course defined by the high-tax advocates.
Which brings us to the core of the controversy. High-tax advocates build their reasoning on the false idea that there is a debatable, externally definable and imposable maximum to what a person needs. The roots of this belief is in 19th century Marxism, which claims that a person’s needs are defined by his ability to reproduce his labor. In plain English, your needs are what you need to be able to go back to work tomorrow and do the same job all over again.
To the best of my recollection, Marx never explicitly listed those needs. He came close to defining them by suggesting what part of a work day a person needs to work in order to earn enough to pay for his needs. The rest of the time, Marx said, the person works for the white, evil, heterosexual, baby-eating, Christian Capitalist. (OK, he didn’t say “white”…) This definition of needs is a core principle of Marx’s application of the labor theory of value, and its original purpose was to identify the so called Capitalist surplus. The point was to “return” that surplus to the worker so that the worker could enjoy a higher standard of living.
Even if Marx’s theory was fundamentally flawed already from the outset, his biggest problem was that government got in the way. Fast forward to the mainstream European welfare state, the Marxist concept of “need” has now become public policy in two directions: spending on entitlements to give people their “needs” and taxation in order to take away the excess of “needs” from those who have earned a bit more.
This is where the high-tax pundits go to work on stopping international financial planning. They consider the very existence of money for that purpose a sign that the owners have an excess of what they need. Therefore, if I invest money in a low-tax jurisdiction (Puerto Rico is one, conveniently accessible to Americans) then they see that investment as illegitimate property on my end and a legitimate target of taxation – preferably of the confiscatory kind.
This is the theoretical foundation of the attacks on low-tax jurisdictions. There is obviously one big fault in this foundation: its theory of need, work and the individual. The very idea that someone else can define your needs is an open disrespect for you as a sovereign individual. You and I are free to define what we need without anyone else intervening. As independent persons we are free to pursue the resources for our needs within the framework of respecting other people’s life, liberty and property. I am free to define a brand new Mercedes E-class as part of my needs (though as an automotive purist I might do with my Honda Accord…) while my neighbor can take the completely ascetic route through his life.
My neighbor and I are then free to work as much or as little as we want, entirely in accordance with our own definition of what we need.
As for the concept of “work”, we once again clash with the high-pitched proponents of high taxes. When I work for my employer, I put in all of my time into that work. It is my effort, my skills and my talents that produce the product that my employer has contracted me to deliver. That contract, in turn, is a deal between me and my employer and absolutely nobody else. Therefore, the proceeds – the salary – are mine and mine alone.
This may seem trivial to us with common sense, and it is. However, high-tax pundits do not share our view of this contract between an employer and an employee. Their view of work is based on the same Marxist theory from which they derive their ideas regarding needs. In their view, the work day is split up between the work that I need to put in to reproduce myself for tomorrow, and the work that – in statist theory – is my boss’s profit. (Since I work for a non-profit, that concept is rather ironic…)
Since my boss will not give up that “profit” voluntarily, high-tax activists turn to government for help. They use taxation as a means to confiscate as much as they dare to confiscate of the alleged profit. The confiscation takes place on several levels: in a regular, for-profit business both the employer and the employee pay a slew of taxes that are all aimed at raking in the “Capitalist surplus” to government.
The problem for the statist comes when the individual entrepreneur decides that he wants a cut of the money that his business is generating. Tired of paying high taxes he moves his business or just his own money to a low-tax jurisdiction, out of reach for the tax-greedy statist. This angers the tax-to-the-max crowd because by their playbook, for reasons just outlined, the Capitalist has no moral right to that money.
In other words, the witch hunt against low-tax jurisdictions and people who use them is founded in a radical, Marxist philosophy that is not just detached from reality but directly dangerous as a means for public policy. The danger lies primarily, but far from solely, in that this Marxism-in-disguise constitutes a platform for a political assault on individual and economic freedom. By splitting the work day of the individual employee into two parts – one where he works for himself according to what other people define and one where he works for others – the statist effectively splits the individual’s life into two parts. The first part is private and recognized as such, namely the time he works for his own needs as the statist has defined them, and where he gets to satisfy those needs (eating, sleeping, doing maintenance work on his dwelling, washing his clothes and teaching his children the virtues of Marxism). The second part is public and subjects the individual to the state. This is the part where he works to pay taxes so government, not his employer, can enjoy the surplus of his work.
By dividing the individual’s existence into these two parts, the Marxist/statist reduces him to a subject under the authority of government. This subjection – or subjugation – characterizes everything the government does at the hands of the statist. Furthermore, depending on the needs of government, the statist can move the dividing line between “needs” and “evil profits” as he pleases. In a situation such as the one currently holding Europe’s welfare states in a tight grip the line tends to move rather sternly in the direction that favors government.
This means tax hikes.
It also means an increased aggressiveness against those who plan their finances based on a desire to pay less taxes. It is with this in mind that we should resist the urges of the statists to eradicate low-tax jurisdictions and the freedom of individual citizens (as well as corporations) to choose where to invest their money, for what purpose and why.
If the high-tax advocates succeed in eliminating low-tax jurisdictions – either explicitly or implicitly by preventing people from investing abroad – then they have won a big moral victory on behalf of big government over the individual. Their underlying philosophical agenda, a revived Marxist notion of the individual as being a subject of government, will set deeper roots in our public policy arena. It will open for more restrictions and confinements on individual freedom.
How do we know this? When was the last time you heard a coherent answer from a statist to the question: when is government big enough for you?
We also know it because both European and American history over the past 75 years show us that once government starts growing, it will continue to grow uninterruptedly – until its sheer size and burden on the private sector destroy government’s host organism.
For all these reasons together it is very important that we, friends of freedom, do not let the statists get away with their assault on tax avoidance and low-tax jurisdictions.