‘Economics and Liberty are Fun!’

There is a time and place for more scholarly and rigorous books, for example, Hoppe's A Theory of Socialism and Capitalism and Mises's Socialism, but there is also a time and place for more popular works.

The Economics of Liberty edited by Llewellyn H. Rockwell, Jr. is one of those books, filled with little treasures.

Mr. Rockwell in this 1990 book collected essays from a variety of authors, including essays authored himself. (His articles are a little more "punchy" than the normal article Rockwell writes today.) The essays range from "the truth about economic forecasting," "the source of the business cycle," "government garbage," to ending "the war on drugs." And for only $5 at the Mises Institute's online store it is a bargain.

Below are a few topics from the book, with an emphasis on the importance of why markets and its price system must exist. (The reason I did not review or summarize any of Rothbard’s essays is because I read them before. I decided to review/summarize "new" material.)

Free-Rider
[“The Free-Rider Confusion” by Tom Bethell, pp 35-41.]

A common attack on free markets is the alleged "free-rider" problem. The irony is, however, when the issue is looked at wholly it clearly is a government problem dealing with collective, public ownership and areas of the market where undefined or ambiguous private property rights exist.

Certain goods, it is said, on the market produce "positive externality" because their benefit is difficult to restrict to those directly paying for them. They therefore produce free-rider problems, and State or collective ownership is claimed to be the solution.

What is never looked at or talked about in statist textbooks, argues Bethell, is how this condition applies in spades to collectivism, not capitalism. A community that is communally owned allows men to benefit from those communally owned goods while not contributing to production. They can "free-ride" at the expense of everyone else. This kind of community will make laziness less expensive and those inclined to be lazy will increase. Why work, if you can get the good for free?

In contrast, environmentalists complain that the overutilization of fishing lakes is a free-rider problem in the free market. But it is precisely that they are owned collectively that causes these kinds of problems. No one suffers capital loss if fish disappear. The only ownership of the fish is the fish one person or company takes right now. Someone that does not take as many fish as they can get now might not have the opportunity in the future. Thus, overutilization.

Solution? Privatize----"internalize the externalities." A private owner would then not just own the value he can derive from the lake in the present but also in the future. The incentive would then be to derive present income without destroying the capital (future) stock. It is only private ownership and private calculation that makes this possible.

Commercial radio gets along just fine in the market place, even though it would be classified as producing "positive externality." Lighthouses have historically been private, despite the misleading propaganda.

So instead of statist textbooks talking about market failure, why not government failure? Even, hypothetically, if it is a large problem in society, it seems the State can only compound the problem by doing what States do, i.e., collectivizing. Moreover, these textbooks often claim "market failures" using examples which are government failures: e.g., overutilization of fishing lakes---a clear government failure!

Road Socialism
[“What To Do about Traffic Congestion” by Walter Block, pp 207-211.]

Walter Block, no coward he of the free market, is the libertarian authority on privatizing the highways and streets. An entire book, by the way, on the subject is coming out from the Mises Institute this year by Block.

In Rockwell's book, Block argues that congestion "is not unique" to traffic. On the market we are dealing with different forms of congestion at different places all the time. When we go to a restaurant, bowling alley, movie theater, etc. we are dealing with congestion. So are the owners of these private establishments, who have to pander to consumer demand.

We have to choose between private establishments which offer low costs but high congestion of people to ones that offer low congestion but high costs. Most of them have "peak-load congestion." Meaning there are certain times of the day or days of the week where they are busiest. Bowling alleys, Block says, cut prices "during the less busy hours" to solve this. "The fast-food restaurant," he writes, "with long lines hires additional workers." A movie theater charges according to peak-loads. And if that is not enough to meet all of the consumer demand, the owner seeks additional profits by expanding it. There is always a drive to meet the needs, and then reap the awards, of consumers.

Thus for the free market, unlike governmentally run operations, "'congestion' is a golden opportunity for expansion of output, sales, and profits." The trouble with State roads is that they do not have to meet the demands of the consumers. There is no way that they can register those demands because there are no market prices or competition. Without this, it is impossible. There cannot be a real market test to see if there are some consumers that are willing to pay more for less congestion and see if some would be willing to save money by paying less for more congestion. And there is no way to see if running roads one way is more efficient (more profitable) than other ways.

Drug War
[“End the War on Drugs” by Joseph Sobran, “Drugs and Adultery” by Llewellyn H. Rockwell, “Would Legalization Increase Drug Use?” by Lawrence W. Reed, pp 221-234.]

There was a time, a freer time, when hard painkillers and other drugs were readily assessable to the public on the open (legal) market, and there was no discussion of any major national problem or crisis.

"Informal social sanctions, as always," writes Sobran, "did most of the work of governing society." Then the so-called "war on drugs" became a priority for the State. Like the war on poverty, it is only a "war" in an abstract sense. This gives it the benefit of eluding a definition of "victory." (Sound familiar?)

But now there is talk of a national crisis. And, despite trying, society is not a fairy tail where drugs can be waved away by the State or any other institution. "The choice," as Rockwell writes, "is not between a society that is drug-free or drug-ridden." A drug-ridden society is what we already have.

Instead of eliminating them, all the State has done is surged the price of these drugs making drug dealing artificially more lucrative. Even within prisons, the pure essence of socialism in action, the drug war has failed. A conservative or liberal seeking evidence of the futility of this war should look no further.

And the State will always fail, because its attack is on the supply side, to lessen drug usage because it is a demand problem. Because it is a demand problem attacking the supply side will only worsen the issue.

Prohibition did not evaporate the supply of alcohol, but instead pushed it into the black market, much to the delight of Al Capone and other friendly characters. Lawrence Reed, in the book, reports that in Rochester, NY the number of licensed saloons numbered 500 and during Prohibition the number of underground speakeasies was twice that. In Detroit, he says, "drunkenness arrests increased steadily."

Liquor was made "much more potent (as with drugs today)." "Alcohol-induced deaths," in addition, "increased." And, naturally, crime rates went up.

More or less it has been the same with today's Prohibition.

If the drug war were to be ended, then, in a free market, the prices of these newly legalized drugs would fall to their market price and move out of the black market's criminal aspect. That means away from the hands of gangs and thugs, and would restore a healthy hierarchy of wealth. Addicts would be less likely to enter the criminal world to get their "fix" with lower prices. (Wealthy drug users, Rush Limbaugh for example, generally do not enter criminal activity to pay for their drugs and are able to live productive lives.) This would also give them a greater chance to seek help.

Cutting crime down alone should justify ending this needless and evil war. Also note that the usage of such narcotic drugs generates less violence from individual users than alcohol. Narcotics lower these tendencies and alcohol raises them.

As for children, tobacco and alcohol often is more difficult for the young to get than hard illegal drugs. Reintroducing these drugs to the free market would likely bring the same (relative) result because the price would plummet making the risk of public backlash too high.

Finally, we must all understand that there is a difference between morality and legality. It may be immoral to waste one's life away using drugs (and it is), but this is true for other things as well which are considered legal. We cannot make all immoral acts illegal. This is a recipe for tyranny.

Enforcing morality, says Rockwell, should be "the job of families and churches" and not the State. The importance of their authority and responsibility should be restored. (Collectivizing it, I say, only leads to increased immorality, the "freeing" of the individual from these institutions into unnatural atomism, increased hedonism, and increased all-around social decay.)

(One question I have asked myself is if drug usage would increase. While I believe the answer, if history on the Prohibition, the market incentives against high time preference lifestyles and the increased role of intermediate institutions under less statism are to be any judge, is a definite no in the long-run; it is also true that there probably would be some initial "blowback" if the war were to be ended tomorrow. So short-term usage might indeed increase, but that is what happens when the State gets into this business in the first place.)

Civil Rights
[“Civil Rights and the Politics of Theft” by Sobran, pp 182-187.]

Civil Rights and its logical consequence, affirmative action, introduce a new type of discrimination. This makes voluntary discrimination the only kind of discrimination the left (and neoconservatism) hates. They are thus all for discrimination, as long as it is based on State compulsion.

Now granting some of the premises of the left, the left becomes all wet on the idea that somehow affirmative action can "correct a wrong." Something, for instance, that is truly evil----i.e., violence against man's person and property----is to be outlawed, period. Slavery, of course, was one of those things. It was a grand deficit in our originally classically liberal society. But the point is that we must end and not redirect evil.

Accordingly, when murder happens the murderer is gone after. We do not try to "correct a wrong" by redirecting evil to allow descendants of the victim to create a "balance" by murdering a descendant of the murderer.

Here we see the folly of the left's view. Their goal is not to "end" discrimination or something of this nature, but seek, what Sobran calls, "tribal revenge." Moreover, their attempt at redirecting what they consider evil is not even analogous to the murder example. Instead they wish this tribal revenge to be enforced collectively on those who do not all fit the permanents of this redirected revenge attack. And obviously trying to "correct" the truly evil history of slavery today could only be done on people who were born far after slavery.

Anti-Human Environmentalism
[“Government Garbage” by Rockwell, “The Environmentalist Threat” by Rockwell, pp 197-201 & 289-312.]

Recycling, to its most basic level, is a question of economics, which is the social science of human action and his allocation of finite resources. To separate or not to separate is a question of economics, nothing more. For the question to be answered there must be in place the pricing system to allocate resources in efficient ways. But, as you guessed, the only way this can be done is to privatize the whole operation first. So if it is best to allocate paper (or anything else) away from landfills and into recycling, then there will be a market price that shows it. It will show the costs involved---that is what is needed.

This is lost on environmentalists because their philosophy is socialist at heart.

The history of environmentalism and politics started with Teddy Roosevelt, according to Rockwell, with the help of special interest groups. "[T]imber and railroad interests associated with J. P. Morgan, Roosevelt's mentor," he writes, "cheered on establishing national parks because this, neighboring the lands of these interest groups, artificially increased their values."

Like all areas of life politics gets its hand into, this was not enough political involvement, and another Republican administration opened the door wider. This was Richard Nixon. By executive order he (unconstitutionally) created the Environmental Protection Agency. "Not surprisingly," says Rockwell, "the EPA's budge has been dominated by sewage-treatment and other construction contracts for well-connected big businessmen."

Different governmental programs, for example, the Clean Water Act, puts Mother Nature, the goddess Gaia, ahead of humans. Wetlands have been made sacrosanct by it, as an immigrant from Hungary found out. By buying some old junkyard land and putting topsoil on it, he "face[d] three years in prison and $200,000 in fines" because it has been "classified as wetlands under" this act.

The much talked about topic of conservation of resources is also an economic issue. Free markets act like traffic signals with their prices. Something that become scarcer, i.e., the supply lowers, results in higher prices signaling consumers to conserve. If oil (one of the most heavily regulated and statist areas of the economy, btw) is about to run out, then, without any statist interventionism, prices will go up and force consumers to be more fiscally wise and give businessmen an incentive signal to look for substitutions. That is to say, the market will direct people out of oil, if needed.

And no matter what the merit of, for example, acid rain as a subject, its primary causes, and its impact the issue of this and cases like this have to be dealt as private property issues. It was government and big business alliances that took pollution off the table as being an issue of property and trespassing. But government is the place that these environmentalists want to turn to?!

(Say, for example, that a stream of water runs through my property. Later a factory moves into town and then dumps waste in this stream. Now if this waste enters my property then the issue is one of trespassing. Likewise, if I am a farmer and then a factory moves into town and its pollution destroys my property [some of my crops], the issue comes back to being a property issue. But these natural property laws were deliberately changed by the State---the supposed solution to environmental issues.)

There is, however, one good thing about environmentalists, says Rockwell:

The environmentalists are forever telling us to be poorer and use less water, less gasoline, less toilet paper, etc. But if they reduce their consumption, it lowers the price for the rest of us, and we can use more. (P.S.: don't pass this on to the environmentalists; it's the one favor they do the rest of us.)

America First!
[“A New Nationalism” by Patrick J. Buchanan, “Time for An American Perestroika” by Robert Higgs, pp 363-368 & 211-216.]

Buchanan says that today we have an "extra-national" agenda from left-liberals and neoconservatives that extends our national interests into other nations and their internal affairs. It uses "our Republic as a means to some larger end." Instead, he says, we must return to a nationalism of the founding fathers.

The advice from George Washington, Ben Franklin, and John Quincy Adams was basically taken until the Philippines. Making the world safe for democracy led the U.S. to join the ranks of empire. The world wars came and went. Demands from the public called for the return to an America First position. Next the Cold War came.

That too ended and the justification of American troops in Europe diminished. Likewise in Korea---the South, FYI, "has twice the population, five times the economic might of North Korea." But troops are still there.

Economic resources continually bleed for empire, spending that includes bases in economically wealthy nations. Propping up dictators here and there also continues---a recipe for "endless conflict." Nonetheless, empire is still excused. A chief reason being the "democratist temptation."

"Like all idolatries," writes Buchanan, "democratism substitutes a false god for the real, a love of process for a love of country."

Even with the Cold War ended (which was when this book was published) empire was still pushed by special interests dependent on the war machine. Cutting back military spending, for them, would put them out of a job.

The "military-industrial congressional complex" (MICC), which includes congressmen, contracting firms that sell weapons and the military, could not have that, as Robert Higgs writes. . . . There must be a bogyman to justify the MICC!

The MICC is a statist operation. After all, it's fully dependent on the government and, hence, has nothing to do with the free market or capitalism. They give millions to the campaigns of politicians and do other special favors to those in power in their symbiosis relationship.

This has pushed defense spending out of genuine national security. No one, though, can say exactly to what extent or degree. Some money has been squandered into weapons that are not needed. There is money that goes directly into defense and other that just benefits the MICC. The result being a poorer society with rich and powerful special interest groups.

Obstacles to Liberty and the Path to It
[“Back to First Principles” by Sobran, “Why Government Grows” by Rockwell, “Breaking Up the Opinion Cartel” by Rockwell, “Mises’s Blueprint for the Free Society” by Sheldon L. Richman, pp 159-174 & 280-284 & 359-362.]

Ronald Reagan has been presented in public discourse, by both conservatives and liberals, as a revolutionary president who turned the tide of big government and its growth. Yet during his administration "Federal spending," Sobran writes, "had doubled across the board." There was not the hint, in action, of anti-statism. (Reagan was not an improvement from Carter, but deterioration.)

Nevertheless presenting Reagan as a "radical" was beneficial for the powers that be in two ways. First, it was beneficial for Reagan himself. He got the glory of being a radical who accomplished something. Reagan could also continue to lull the public with his pseudo rhetoric of limited government. Second, it was beneficial for the establishment of statists because now they had a "bogeyman." Someone that they could point to and say "additional" cutting (or deregulation) of any program would go too far and that there needs to be a cooling down period from the "radical" Reagan administration.

As a whole anti-statist ideology has become complacent with left-liberal philosophy, reasons Sobran. Supply-side economics is a perfect example. It presents the goal of lower taxation and increase government revenue. In this way anti-statist conservatism and libertarianism presents its ideology as a "superior methods for achieving collectivist goals."

Today a liberal program is matched by a conservative one. For this reason the goals of leftism are not challenged principally, and consequently conservatism has helped spread left-wing ideology and the growth of government. Instead what is needed is "an independent rival principle to collectivism."

(For those that want that, look no further than the tradition to be found in the libertarianism of Lew Rockwell and company.)

A number of other things have insulated the growth of statism, you will read in the book.

Earning wealth can happen in two basic ways: voluntarily in the free market or coercively through politics.

Special interest groups have chosen the second method so they can use the government to fund their own interests at the expense of everyone else. They will fight tooth and nail if their funding is to be cut.

Indeed, 8% of the money in politics goes to the poor directly and the rest goes to the politically well-connected and the bureaucrats in on the deal. (Power is a rich man's game, despite left-wing fantasies of a pure egalitarian State.) And that which does go to the poor, and (mainly) the bureaucrat managers, has created a dependent class, and, Rockwell writes, "[t]hanks to [this] welfare state, there is virtually no social mobility from the bottom."

Those filling the seats of bureaucracy want to increase their position, wealth, and power authority. But by not operating in a free market they do not need to respond to profit and loss. Overspending is not penalized. In fact, it is encouraged. So what is the expected result from that? Bureaucracy increasing in size!

States have also grown in power "thanks" to times of crisis.

Politicians can claim that they need more money and power from society and the public, looking for answers, is easier to be lulled in. Opposition is crushed, since power and money is on the side of the State and its friends. (Interestingly enough if it is an economic crisis, when people have less money on hand, the government demands more money! And when government fails to protect "its" citizens the government then demands a bonus of more money. Imagine if private enterprise worked that way.)

Obviously the media franchise, a pro-establishment franchise, is another contributor to the increasing power of the State, since they generally work hand-in-hand. Talking points and press releases they are dependent on. Government officials patronize the media outlets that give soft-ball interviews and who propagate statism.

Through the process of increased statization come distortions in the pricing system and a host of unintended consequences. Politicians then use this to call for more interventions. One intervention is followed by another.

And finally the trends of growth are shaped by the government in the education system. They are the masters of opinion making----education and State should then be viewed as a dangerous thing.

What must be done to fight for liberty?

Rockwell writes, that we (1) must relentlessly show all government crimes and abuses; (2) understand that compromise and moderation doesn't defeat evil, instead abolishment of government programs must be fought for; (3) support alternative news sources and not the mainstream media; (4) get free market thought in higher education.

The only way to beat today's "opinion cartel," displayed in the media, is to spread ideas around it.

It then might be possible to move to a truly (classically) liberal society.

What would that look like? For Ludwig von Mises, writes Sheldon Richman, this means an understanding that private property is the foundation to society.

As Mises wrote, "the program of liberalism . . . if condensed into a single world, would have to be property, that is, private ownership of the means of production. . . . All the other demands of liberalism result from this fundamental demand."

This means, as a necessary result, the freedom for man to interact with others in a voluntary setting.

In addition, a liberal society means the backdrop of peace and impartiality of law.  It is only under peace that a division of labor is possible. Tolerance must be a cultural trait. And for tyranny, from the left and right, to be limited a liberal society thrives at applying justice and law to all men equally.

Governance that goes beyond protection of property will let loose oppression, wrote Mises:

We see that as soon as we surrender the principle that the state should not interfere in any questions touching on the individual's mode of life, we end by regulating and restricting the latter down to the smallest detail.