I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.- Thomas Jefferson.

debt clock

Thursday, November 24, 2011

Be Thankful If You Were Not Born in the US

By: Jeff Berwick | Wed, Nov 23, 2011
Being born in America at anytime between 1623 and 1970 would have been quite a stroke of luck. You would have lived in one of the freest, most productive, and because of that, most prosperous regions on Earth. Luckily, America got its heavy socialism out of the way right from the get-go.
In 1621, the pilgrims who landed at Plymouth Rock, had initially imposed a form of managerial socialism. The concept, like it is today, was for no one to have private property rights and to donate the fruits of your labors into a pool with everyone else and to then distribute those labors by need. The experiment, like every other experiment in socialism, ended in nearly everyone starving to death.
Faced with starvation or changing, they saw the error of their ways and let everyone take possession of their own plots of land and enjoy the proceeds for themselves. According to Jeffrey Tucker, of Whiskey & Gunpowder, "This led to trade, honesty, hard work, and eventually bounty. This is why the crop yields of 1621 were catastrophic and the yields of 1623 were bountiful. The celebration of Thanksgiving really dates from a market produced bounty. (The entire story is related by Bradford himself.)"
What followed was truly something spectacular. This region, who had as its most cherished philosophy, freedom and liberty, went on to be the most amazing area on Earth. It attracted all the best from most other countries - mostly because those countries did not have the freedom, liberty and the subsequent prosperity of the US.


Unfortunately, by 1913, America had fallen into a trap that has occurred so often throughout history. First, it forgot what made it so prosperous in the first place and, secondly, it forgot the warnings of its early founders about, "Peace, commerce, and honest friendship with all nations-entangling alliances with none."
And so, in 1913, with the advent of the Federal Reserve bank, the future for the US was set. It only took twenty years for this new system to bankrupt the US Government in 1933, resulting in the US Government confiscating gold from US citizens. Then, less than forty years later, the US Government was bankrupted again, this time resulting in any link to gold being removed from the US dollar in 1971.
The years of 1970 and 1971 should especially be remembered as terrible years... interestingly, all under the Nixon years, although not all of it was completely his fault. On April 22, 1970, the first Earth Day was founded... a despicable, anti-human idea that still haunts us to this day with the "global warming" scam. To see literally hundreds of shocking, genocidal quotes emanating from the environmental moment, check out this website: green-agenda.com. Here is just one, "Isn't the only hope for the planet that the industrialized civilizations collapse? Isn't it our responsiblity to bring that about?" - Maurice Strong, founder of the UN Environment Programme.
Then, on June 17, 1971, Richard Nixon launched the heinous "war on drugs" which, to date, has killed and incarcerated millions and spent over a trillion dollars in the process while making the world a much less free place. The triumvirate was fulfilled with gold backing being completely removed from the US dollar on August 15, 1971. Since then, the fate of the US has been written in stone. After 1970, we never refer to the US as "America" anymore... because it isn't.
It took nearly another forty years for the effects of all these events to destroy the viability of the US. And now, Americans, in many ways, are more indebted and enslaved than any other people in the history of the world.


The US Government, which under Generally Accepted Accounting Principles (GAAP), has $75 trillion in debts and liabilities, meaning that for each American, there is over $245,000 in federal government debt and liabilities. Or, nearly $1 million per family of four. And this does not take into account state, municipal and personal debt. By this measure, no other people in history has ever been more indebted.

Dorli Rainey, 84, Pepper Sprayed in Seattle
And, with the Patriot Act and literally thousands of other acts, rules, regulations and laws, Americans also can make a case for being the most enslaved in human history. You could say North Koreans are more enslaved in that they are not allowed to leave their own country. But, at least once they escape their own country they will have the option and ability to open a financial account anywhere else in the world... unlike Americans, whose IRS and Government have made it so onerous for international brokerages and financial institutions to open an account for an American that most US citizens are persona-non-grata outside of their own borders.
Inside their borders, as Americans get tazed, pepper sprayed, beaten and caged on a regular basis, they are beginning to realize that the land of the free and home of the brave was a catchy jingle from centuries ago. It is now the land of the fee, home of the slave.


Today, as the American government works to erect a wall and conducts unmanned drone flights on the border with Canada, many in the US are awakening to the fact that they are becoming trapped.
The US Government has even made it so all student debt is now completely inextinguishable in bankruptcy... meaning that for students who wasted 4-8 years of their life getting what is often a worthless piece of paper and six figures of debt, they will be enslaved for life and, as we are predicting at TDV, will be forced into the military to pay off their obligations.


In an erstwhile change of fortune, what was once the best place to be born, between 1623-1970 has now become one of the worst. Only those born in North Korea and Cuba, and a handful of other despotic regimes, can be said to be much worse off.
Take this Thanksgiving holiday to re-assess how and where you want to live. The US still allows international travel and does not have complete capital controls in place - although the ever-present "customs officials" hiding down every walkway to most international flights and cash sniffing dogs in many US airports now hints to the fact that the infrastructure is now in place to restrict capital.
Give thanks, this year, to free-market technologies such as the internet which allow many of us to live wherever we are best treated and to establish our finances and affairs in such a way so as to not be under direct assault by government at every twist and turn.
Take this opportunity to internationalize your IRA, move your financial assets into hard assets like gold and silver, and get a foreign passport. And, if possible, investigate expatriating to almost any other country in the world. Almost any other country, with a few exceptions, is sure to be freer and less indebted than the US at this point.
By looking to leave the US at this point you will be following in the footsteps of America's founders who fled countries in which they were heavily oppressed or enslaved or where there were no opportunities of creating a successful life. Take time this year to remember this spirit and remember what John Milton stated in 1666, "Our country is wherever we are well off".

Wednesday, November 23, 2011

Stop 'Selling' Cancer Screening, Says Critic

Publicize Harms and Benefits

Nick Mulcahy
November 22, 2011 — Medical professional organizations and cancer advocacy groups need to "refocus on educating, rather than persuading," the public about cancer screening, according to a commentary published online November 21 in the Journal of the National Cancer Institute.
Most important, public information must highlight the "harms and benefits" of cancer screening, writes Michael Edward Stefanek, PhD, associate vice president of collaborative research in the office of the vice president at Indiana University in Bloomington.
In the past 30 years, the harms of screening have been largely unmentioned as various organizations have "maintained a focus on establishing who should be screened and promoting recommendations for which age groups should be screened," he says.
Organizations have done a dismal job of accurately informing the public.
Overall, mainstream organizations have done "a dismal job of accurately informing the public" about cancer screening, he contends. "The public still lacks basic knowledge about the harms and benefits of screening."
"It is easy to 'sell' screening," writes Dr. Stefanek. "Just magnify the benefit, minimize the cost, and keep the numbers less than transparent."
"Truth and clarity" are needed now, including messages that "reflect the complexity" of screening, he argues.
This commentary is the latest declaration in the ongoing debate about cancer screening. In one of the recent exchanges, a group of experts accused some of those expressing doubts as being "antiscreening."
Shared Decision Making
Dr. Stefanek explores evidence for the harms and benefits of lung, breast, and prostate cancer screening, and concludes that the best way forward is to engage patients in "shared decision making" about screening. To do so, he advocates for the use of decision aids with patients. "Informational resources" might include "simple 1-page balance sheets or brief texts that frame the trade-off of harms and benefits in absolute terms."
Dr. Stefanek falls short of explaining just how clinicians would implement shared decision making with patients; suggestions on how to implement the reform ideas are lacking.
Other experts have observed that today's practice environment presents few incentives or support tools for clinicians and patients who prefer a discussion rather than, for example, checking a box for prostate-specific antigen (PSA) testing on a laboratory requisition form.
For shared decision making about PSA testing to take place broadly in the United States, many things are needed, Steven H. Woolf, MD, MPH, and Alex Krist, MD, MPH, from Virginia Commonwealth University in Richmond, wrote in a 2009 editorial (Arch Intern Med. 2009;169:1557-1559). Required elements include reimbursement for discussion time and tort reforms to protect clinicians who present informed choice.
Paternalistic Stance
Dr. Stefanek also suggests that paternalism is at play in the United States.
Both breast and prostate cancer screening suffer from a "similar ambiguity of evidence," he points out. However, guidelines "have typically recommended that men make informed decisions about prostate cancer screening," whereas women have been summoned to breast cancer screening. "We have unintentionally adopted a very paternalistic stance," he writes.
The sex-based difference here is in need of review, says Dr. Stefanek.
"We must...question whether our practice of summoning women to have mammograms, while providing men informed choice for prostate cancer screening, is consistent with a scientific analysis of the relative harms and benefits," he writes.
Dr. Stefanek's commentary comes after what has been, more or less, a major defeat for one cancer screening effort in the United States.
In October, the US Preventive Services Task Force (USPSTF) issued draft recommendations against routine screening for prostate cancer using the PSA test in the United States. However, the PSA story did not erupt in the media like the outrage that followed the USPSTF breast cancer screening recommendations in 2009, and there were no press statements from prominent oncology organizations. In the end, urologists seemed to be alone in their fight against the recommendation.
Public Perceptions
Professional organizations and disease advocacy groups have "spent a staggering amount of time and energy over the past several decades developing, discussing, and debating guidelines," says Dr. Stefanek.
However, he asks: What does the public really know about screening?
Research says that the public "embraces the idea of screening," but is that support for screening based on solid evidence and understanding? Dr. Stefanek thinks the answer is no.
"One study found that 73% of respondents would prefer to receive a total-body CT scan than receive $1000 in cash. They are sold on the benefits of screening and are biased toward it even in circumstances without evidence of benefit," he writes.
These misunderstandings are understandable, given the lack of balanced discussion about harms and benefits. "We know that many women overestimate their risk of breast cancer, and in scientific articles about mammography, as well as patient-oriented brochures, there is a tendency to emphasize benefits much more than harms," says Dr. Stefanek.
The American Cancer Society Web site is a good example of this imbalance, he says. It "recommends and advocates strongly for mammography," but there is "very little transparent" educational information about the harms of mammography. Similar criticisms has been made about the information on mammography provided in the United Kingdom; the outcry there has led to a review of the national screening program.
Dr. Stefanek comes up with his own take on what balanced harm/benefit information should look like.
He writes: "About 5 in every 1000 women aged 50 to 59 years will die of breast cancer over the next 10 years. Annual screening over those 10 years would reduce that number to about 4 deaths, meaning that 999 women screened for 10 years will have gained nothing, and may have been subject to as many as 50% false-positive tests, unnecessary biopsies, overdiagnosis, and overtreatment for breast cancer."
Similar suggestions for more balanced information have been made by others — notably Gilbert Welch, MD, MPH, from the Dartmouth Institute for Health Policy and Clinical Practice, Dartmouth Medical School, Lebanon, New Hampshire, who even designed a poster for mammography for Medscape Medical News.
Dr. Stefanek has disclosed no relevant financial relationships.
J Natl Cancer Inst. Published online November 21, 2011. Abstract

A Case for Free-Market Bank Regulation

Mises Daily: Wednesday, November 23, 2011 by
Bank of America (BAC) has rescinded its plan to charge customers a $5 monthly debit-card fee. Shall we praise bank regulators for their swift action in preventing the exorbitant charge? Well, no. Then we'll credit politicians for legislating against greedy, big-bank profiteering, right? Wrong again. The free market drove BAC to drop the debit-card fee.
Several banks have floated similar debit-card fees — some already assess the monthly charge — and each met the same fate as BAC. Customers informed their financial institutions that they would rather pull their assets than pay the fee. Banks responded in predictable fashion. Banks need customers in order to remain solvent; therefore they heed their customers' complaints and outrage, whether or not they are reasonable. That's the free market in action. Unpopular fees and programs are abandoned just as surely as profits are taken. Everything depends on what the market will bear.
The $5 debit-card charge was never a product of free-market capitalism. It was the result of political machinations, most notably on the part of Senator Dick Durbin. Durbin's amendment to the Dodd-Frank bank reform legislation placed an arbitrary cap on debit-card interchange fees, which banks impose on retailers for each swipe of a customer's card.
Banks collect this fee to maintain their electronic networks, retailers distribute the fee among their customers, and customers enjoy the convenience of cashless transactions. Such business-customer relationships aren't invariably perfect, but they are at least agreeable between the involved parties. Once politicians meddle in that relationship, as Durbin did, unintended consequences become the norm. Enter the debit-card fee. Yet the fact that Durbin made matters worse didn't stop him from telling BAC customers to "vote with their feet."
Well, bank customers have voted with their feet — or have threatened to do so. I'll wager that not a single disgruntled customer walked into their bank and said to the teller, "Dick Durbin told me to withdraw my money." Blowhard politicians aren't necessary for customers to decide what fees they should or shouldn't accept. Customers needn't occupy public parks for banks to hear their complaints. The only thing necessary to kill the monthly debit-card fee was for customers to exercise their free choice in an open marketplace.
Markets compel businesses to please their customers or risk losing them to more amenable competitors. Banks couldn't collude on behalf of debit-card fees, even if they so wanted, because they're more interested in retaining current customers and attracting new ones from institutions that assess unpopular charges. The mere threat of losing customers was enough to render debit-card fees a poor business decision. When market forces reign there's no need for protests, tents, and signs; nor is there a need for pandering politicians with superhero complexes to deliver customers from corporate evil.
However, markets move both directions. Just as the market wouldn't tolerate debit-card fees, which are noticeable, the market may tolerate other fees that aren't as noticeable, just as it once tolerated the higher interchange fees. No one considered the interchange fees retailers paid on debit-card transactions until government placed price controls on them. The banks then looked to other areas to recoup the lost revenue, which led to the debit-card fee. Since the market has rejected the debit-card fee, banks will look for another way to boost revenue.
Frankly, a $5 debit-card charge is benign in and of itself. If a customer uses their card 50 times per month, the average cost per transaction is a paltry 10 cents, a rather innocuous expense for the convenience of using a debit-card system. And make no mistake: customers aren't paying the banks for the privilege of using their own money, as the populist argument holds. Customers pay for the use of the bank's computer and network systems, all of which cost money to purchase, operate, and maintain.
There's little purpose in defending or criticizing the banks, their customers, or the debit-card fee. The marketplace spoke and a verdict was rendered. Customers preferred to seek new institutions rather than pay their banks a monthly debit-card stipend. Banks would rather have more customers paying smaller, less recognizable fees than have fewer customers paying larger, high-profile charges. Both entities weighed their options and arrived at a conclusion with which they could live. Markets may not always react as swiftly as they did in this case. But they will always react, and they will produce the best compromise in any given situation.
All businesses attempt to maximize profits while all customers seek the best value for their money. These interests combine in a free market, making astute businesses profitable while rewarding prudent customers with quality services, all at an agreeable price. Government interference upsets that balance, imposing undesirable results on everyone.

Tuesday, November 22, 2011

Government is unsustainable.

Chris Graviss

Monday, November 21, 2011

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 Table of Contents


1. Introduction: Praxeological Criticism of Ethics
Praxeology—economics—provides no ultimate ethical judgments: it simply furnishes the indispensable data necessary to make such judgments. It is a formal but universally valid science based on the existence of human action and on logical deductions from that existence. And yet praxeology may be extended beyond its current sphere, to criticize ethical goals. This does not mean that we abandon the value neutrality of praxeological science. It means merely that even ethical goals must be framed meaningfully and, therefore, that praxeology can criticize (1) existential errors made in the formulation of ethical propositions and (2) the possible existential meaninglessness and inner inconsistency of the goals themselves. If an ethical goal can be shown to be self-contradictory and conceptually impossible of fulfillment, then the goal is clearly an absurd one and should be abandoned by all. It should be noted that we are not disparaging ethical goals that may be practically unrealizable in a given historical situation; we do not reject the goal of abstention from robbery simply because it is not likely to be completely fulfilled in the near future. What we do propose to discard are those ethical goals that are conceptually impossible of fulfillment because of the inherent nature of man and of the universe.
     We therefore propose to place a restriction on the unlimited validity of anyone’s ultimate ethical valuations. In doing so, we still are not pushing beyond the bounds of praxeology to function as ethicists, for we are not here attempting to establish a positive ethical system of our own or even to prove that such a system is attainable. We believe only that praxeology should have the right of veto, to discard any ethical propositions that fail to meet the test of conceptual possibility or internal consistency.
     Furthermore, we maintain that whenever an ethical goal has been shown to be conceptually impossible and therefore absurd, it is equally absurd to take measures to approach that ideal. It is illegitimate to concede that X is an absurd goal, and then to go on to say that we should take all possible measures to approach it, at any rate. If the end is absurd, so is the approach toward that end; this is a praxeological truth derived from the law that a means can obtain its value only by being imputed from the end.[1] A drive toward X only obtains its value from the value of X itself; if the latter is absurd, then so is the former.
     There are two types of ethical criticisms that can be made of the free-market system. One type is purely existential; that is, it rests on existential premises only. The other type advances conflicting ethical goals and protests that the free market does not attain these goals. (Any mixture of the two will here be placed in the second category.) The first type says: (1) The free market leads to consequence A; (2) I don’t like consequence A (or consequence A is objectively unlikable); (3) therefore, the free market should not be established. To refute this type of criticism, it is necessary only to refute the existential proposition in the first part of the argument, and this is, admittedly, a purely praxeological task.
     The following are brief summaries of very common criticisms of the free market that can be refuted praxeologically and that, indeed, have been refuted, implicitly or explicitly, in other writings:
     (1) The free market causes business cycles and unemployment. Business cycles are caused by the governmental intervention of bank-credit expansion. Unemployment is caused by unions or government keeping wage rates above the free-market level. Only coercive intervention, not private spending, can bring about inflation.
     (2) The free market is likely to bring about monopoly and monopoly pricing. If we define “monopoly” as the “single seller of a product,” we founder on insoluble problems. We cannot identify homogeneous products, except in the concrete day-to-day valuations of consumers. Furthermore, if we consider such monopoly as wicked, we must regard both Crusoe and Friday as vicious monopolists if they exchange fish and lumber on their desert island. But if Crusoe and Friday are not wicked, how can a more complex society, one necessarily less monopolistic in this sense, be at all wicked? At what point in the reduced scope of such monopoly can it be considered evil? And how can the market be held responsible for the number of people inhabiting the society? Moreover, every individual striving to be better than his fellows is thereby trying to be a “monopolist.” Is this bad? Do not both he and the rest of society benefit from his better mousetrap? Finally, there is no conceptually identifiable monopoly or monopolistic price on the free market.
     Hence, a monopoly price and a monopoly by any usable definition arise only through the coercive grant of exclusive privilege by the government, and this includes all attempts to “enforce competition.”[2]
     (3) The government must do what the people themselves cannot do. We have shown that no such cases can exist.
     There are other criticisms, however, which infuse various degrees of ethical protest into the argument. This chapter will be devoted to a praxeological critique of some of the most popular of these antimarket ethical contentions.
2. Knowledge of Self-Interest: An Alleged Critical Assumption
     This criticism of the market is more existential than ethical. It is the popular argument that laissez faire, or the free-market economy, rests its case on the crucial assumption that every individual knows his own self-interest best. Yet, it is charged, this is not true of many individuals. Therefore, the State must intervene, and the case for the free market is vitiated.
     The free-market doctrine, however, does not rest on any such assumption. Like the mythical “economic man,” the Perfectly Wise Individual is a straw man created by the critics of the theory, not implied by it.
     First, it should be evident from our analysis of the free market and government intervention throughout this work that any argument for the free market rests on a far deeper and more complex doctrine. We cannot enter here into the many ethical and philosophical arguments for freedom. Secondly, the laissez-faire or free-market doctrine does not assume that everyone always knows his own interest best; it asserts rather that everyone should have the right to be free to pursue his own interest as he deems best. Critics may argue that the government should force men to lose some ex ante or present utility in order to gain ex post utility later, by being compelled to pursue their own best interests. But libertarians may well reply in rebuttal: (1) that a person’s resentment at coercive interference will lower his ex post utility in any event; and (2) that the condition of freedom is a vital, necessary prerequisite for a person’s “best interests” to be attained. Indeed, the only lasting way to correct a person’s errors is by persuasive reasoning; force cannot do the job. As soon as the individual can evade this force, he will return to his own preferred ways.
     No one, certainly, has perfect foresight into the uncertain future. But free entrepreneurs on the market are better equipped than anyone else, by incentive and by economic calculation, to foresee and satisfy the needs of the consumers.
     But what if the consumers are mistaken with regard to their own interests? Obviously, they sometimes are. But several more points must be made. In the first place, every individual knows the data of his own inner self best—by the very fact that each has a separate mind and ego. Secondly, the individual, if in doubt about what his own true interests are, is free to hire and consult experts to give him advice based on their superior knowledge. The individual hires these experts and, on the market, can continuously test their helpfulness. Individuals on the market, in short, tend to patronize those experts whose advice proves most successful. Good doctors or lawyers reap rewards on the free market, while poor ones fail. But when government intervenes, the government expert acquires his revenue by compulsory levy. There is no market test of his success in teaching people their true interests. The only test is his success in acquiring the political support of the State’s machinery of coercion.
     Thus, the privately hired expert flourishes in proportion to his ability, whereas the government expert flourishes in proportion to his success in currying political favor. Moreover, what incentive does the government expert have to care about the interests of his subjects? Surely he is not especially endowed with superior qualities by virtue of his government post. He is no more virtuous than the private expert; indeed, he is inherently less capable and is more inclined to wield coercive force. But while the private expert has every pecuniary incentive to care about his clients or patients, the government expert has no incentive whatever. He obtains his revenue in any event. He is devoid of any incentive to worry about his subject’s true interests.
     It is curious that people tend to regard government as a quasi-divine, selfless, Santa Claus organization. Government was constructed neither for ability nor for the exercise of loving care; government was built for the use of force and for necessarily demagogic appeals for votes. If individuals do not know their own interests in many cases, they are free to turn to private experts for guidance. It is absurd to say that they will be served better by a coercive, demagogic apparatus.
     Finally, the proponents of government intervention are trapped in a fatal contradiction: they assume that individuals are not competent to run their own affairs or to hire experts to advise them. And yet they also assume that these same individuals are equipped to vote for these same experts at the ballot box. We have seen that, on the contrary, while most people have a direct idea and a direct test of their own personal interests on the market, they cannot understand the complex chains of praxeological and philosophical reasoning necessary for a choice of rulers or political policies. Yet this political sphere of open demagogy is precisely the only one where the mass of individuals are deemed to be competent![3][4]
3. The Problem of Immoral Choices
     Some writers are astute enough to realize that the market economy is simply a resultant of individual valuations, and thus they see that, if they do not like the results, the fault lies with the valuations, not the economic system. Yet they proceed to advocate government intervention to correct the immorality of individual choices. If people are immoral enough to choose whiskey rather than milk, cosmetics rather than educational matter, then the State, they say, should step in and correct these choices. Much of the rebuttal parallels the refutation of the knowledge-of-interests argument; i.e., it is self-contradictory to contend that people cannot be trusted to make moral decisions in their daily lives but can be trusted to vote for or accept leaders who are morally wiser than they.
     Mises states, quite rightly, that anyone who advocates governmental dictation over one area of individual consumption must logically come to advocate complete totalitarian dictation over all choices. This follows if the dictators have any set of valuational principles whatever. Thus, if the members of the ruling group like Bach and hate Mozart, and they believe strongly that Mozartian music is immoral, they are just as right in prohibiting the playing of Mozart as they are in prohibiting drug use or liquor consumption.[5] Many statists, however, would not balk at this conclusion and would be willing to take over this congenial task.
     The utilitarian position—that government dictation is bad because no rational ethics exists, and therefore no person has a right to impose his arbitrary values on someone else—is, we believe, an inadequate one. In the first place, it will not convince those who believe in a rational ethics, who believe that there is a scientific basis for moral judgments and that they are not pure whim. And furthermore, the position involves a hidden moral assumption of its own—that A has no right to impose any arbitrary values on B. But if ends are arbitrary, is not the end “that arbitrary whims not be imposed by coercion” just as arbitrary? And suppose, further, that ranking high on A’s value scale is the arbitrary whim of imposing his other values on B. Then the utilitarians cannot object and must abandon their attempt to defend individual liberty in a value-free manner. In fact, the utilitarians are helpless against the man who wants to impose his values by coercion and who persists in doing so even after the various economic consequences are pointed out to him.[6]
     The would-be dictator can be logically refuted in a completely different way, even while remaining within Wertfrei praxeological bounds. For what is the complaint of the would-be dictator against free individuals? That they act immorally in various ways. The dictator’s aim, therefore, is to advance morality and combat immorality. Let us grant, for the sake of argument, that an objective morality can be arrived at. The question that must be faced, then, is: Can force advance morality? Suppose we arrive at the demonstrable conclusion that actions A, B, and C are immoral, and actions X, Y, and Z are moral. And suppose we find that Mr. Jones shows a distressing propensity to value A, B, and C highly and adopts these courses of action time and again. We are interested in transforming Mr. Jones from being an immoral person to being a moral person. How can we go about it? The statists answer: by force. We must prohibit at gunpoint Mr. Jones from doing A, B, and C. Then, at last, he will be moral. But will he? Is Jones moral because he chooses X when he is forcibly deprived of the opportunity to choose A? When Smith is confined to a prison, is he being moral because he doesn’t spend his time in saloons getting drunk?
     There is no sense to any concept of morality, regardless of the particular moral action one favors, if a man is not free to do the immoral as well as the moral thing. If a man is not free to choose, if he is compelled by force to do the moral thing, then, on the contrary, he is being deprived of the opportunity of being moral. He has not been permitted to weigh the alternatives, to arrive at his own conclusions, and to take his stand. If he is deprived of free choice, he is acting under the dictator’s will rather than his own. (Of course, he could choose to be shot, but this is hardly an intelligible conception of free choice of alternatives. In fact, he then has only one free choice: the hegemonic one—to be shot or to obey the dictator in all things.)
     Dictatorship over consumers’ choices, then, can only atrophy morality rather than promote it. There is but one way that morality can spread from the enlightened to the unenlightened—and that is by rational persuasion. If A convinces B through the use of reason that his moral values are correct and B’s are wrong, then B will change and adopt the moral course of his own free will. To say that this method is a slower procedure is beside the point. The point is that morality can spread only through peaceful persuasion and that the use of force can only erode and impair morality.
     We have not even mentioned other facts that strengthen our argument, such as the great difficulty in enforcing dictatorial rules against people whose values clash with them. The man who prefers the immoral course and is prevented by the bayonet from acting on his preference will do his best to find ways to circumvent the prohibition—perhaps by bribing the bayoneteer. And, because this is not a treatise on ethics, we have not mentioned the libertarian ethical theory which holds that the use of coercion is itself the highest form of immorality.
     Thus, we have shown that would-be dictators must necessarily fail to achieve their professed goal of advancing morality because the consequences will be precisely the opposite. It is possible, of course, that the dictators are not really sincere in stating their goal; perhaps their true purpose is to wield power over others and to prevent others from being happy. In that case, of course, praxeology can say no more about the matter, although ethics may find a good deal to say.[7]
4. The Morality of Human Nature
     It is very common to assert that the advocates of the purely free market make one fundamental and shaky assumption: that all human beings are angels. In a society of angels, it is commonly agreed, such a program could “work,” but not in our fallible world. The chief difficulty with this criticism is that no libertarian—except possibly those under Tolstoyan influence—has ever made such an assumption. The advocates of the free market have not assumed a reformation of human nature, although they would certainly have no objection to such a reformation if it took place. We have seen that libertarians envision defense services against predators as provided by private bodies rather than by the State. But they do not assume that crime would magically disappear in the free society.
     Statists concede to libertarians that no State would be required if all men were “good.” State control is allegedly required only to the extent that men are “evil.” But what if all men were “evil”? As F.A. Harper has pointed out:
Still using the same principle that political rulership should be employed to the extent of the evil in man, we would then have a society in which complete political rulership of all the affairs of everybody would be called for. . . . One man would rule all. But who would serve as the dictator? However he were to be selected and affixed to the political throne, he would surely be a totally evil person, since all men are evil. And this society would then be ruled by a totally evil dictator possessed of total political power. And how, in the name of logic, could anything short of total evil be its consequence? How could it be better than having no political rulership at all in that society?[8]
     Is this argument unrealistic because, as everyone agrees, human beings are a compound, capable of both good and evil? But then, at what point in this mixture does State dictation become necessary? In fact, the libertarian would reason that the fact that human nature is a mixture of both good and evil provides its own particular argument in his favor. For if man is such a mixture, then the best societal framework is surely one in which evil is discouraged and the good encouraged. The libertarian maintains that the existence of the State apparatus provides a ready, swift channel for the exercise of evil, since the rulers of the State are thereby legitimated and can wield compulsion in ways that no one else is permitted to do. What is considered “crime” socially, is called “exercise of democratic power” when performed by an individual as a State official. The purely free market, on the other hand, eliminates all legitimated channels for the exercise of power over man.
5. The Impossibility of Equality
     Probably the most common ethical criticism of the market economy is that it fails to achieve the goal of equality. Equality has been championed on various “economic” grounds, such as minimum social sacrifice or the diminishing marginal utility of money (see the chapter on taxation above). But in recent years economists have recognized that they cannot justify egalitarianism by economics, that they ultimately need an ethical basis for equality.
     Economics or praxeology cannot establish the validity of ethical ideals, but even ethical goals must be framed meaningfully. They must therefore pass muster before praxeology as being internally consistent and conceptually possible. The credentials of “equality” have so far not been adequately tested.
     It is true that many objections have been raised that give egalitarians pause. Sometimes realization of the necessary consequences of their policies causes an abandonment, though more often a slowing down, of the egalitarian program. Thus: compulsory equality will demonstrably stifle incentive, eliminate the adjustment processes of the market economy, destroy all efficiency in satisfying consumer wants, greatly lower capital formation, and cause capital consumption—all effects signifying a drastic fall in general standards of living. Furthermore, only a free society is casteless, and therefore only freedom will permit mobility of income according to productivity. Statism, on the other hand, is likely to freeze the economy into a mold of (nonproductive) inequality.
     Yet these arguments, though powerful, are by no means conclusive. Some people will pursue equality anyway; many will take these considerations into account by settling for some cuts in living standards in order to gain more equality.
     In all discussions of equality, it is considered self-evident that equality is a very worthy goal. But this is by no means self-evident. For the very goal of equality itself is open to serious challenge. The doctrines of praxeology are deduced from three universally acceptable axioms: the major axiom of the existence of purposive human action; and the minor postulates, or axioms, of the diversity of human skills and natural resources, and the disutility of labor. Although it is possible to construct an economic theory of a society without these two minor axioms (but not without the major one), they are included in order to limit our theorizing to laws that can apply directly to reality.[9]Anyone who wants to set forth a theory applicable to interchangeable human beings is welcome to do so.
     Thus, the diversity of mankind is a basic postulate of our knowledge of human beings. But if mankind is diverse and individuated, then how can anyone propose equality as an ideal? Every year, scholars hold Conferences on Equality and call for greater equality, and no one challenges the basic tenet. But what justification can equality find in the nature of man? If each individual is unique, how else can he be made “equal” to others than by destroying most of what is human in him and reducing human society to the mindless uniformity of the ant heap? It is the task of the egalitarian, who confidently enters the scene to inform the economist of his ultimate ethical goal, to prove his case. He must show how equality can be compatible with the nature of mankind and must defend the feasibility of a possible egalitarian world.
     But the egalitarian is in even direr straits, for it can be shown that equality of income is an impossible goal for mankind. Income can never be equal. Income must be considered, of course, in real and not in money terms; otherwise there would be no true equality. Yet real income can never be equalized. For how can a New Yorker’s enjoyment of the Manhattan skyline be equalized with an Indian’s? How can the New Yorker swim in the Ganges as well as an Indian? Since every individual is necessarily situated in a different space, every individual’s real income must differ from good to good and from person to person. There is no way to combine goods of different types, to measure some income “level,” so it is meaningless to try to arrive at some sort of “equal” level. The fact must be faced that equality cannot be achieved because it is a conceptually impossible goal for man, by virtue of his necessary dispersion in location and diversity among individuals. But if equality is an absurd (and therefore irrational) goal, then any effort to approach equality is correspondingly absurd. If a goal is pointless, then any attempt to attain it is similarly pointless.
     Many people believe that, though equality of income is an absurd ideal, it can be replaced by the ideal of equality of opportunity. Yet this, too, is as meaningless as the former concept. How can the New Yorker’s opportunity and the Indian’s opportunity to sail around Manhattan, or to swim in the Ganges, be “equalized”? Man’s inevitable diversity of location effectively eliminates any possibility of equalizing “opportunity.”
     Blum and Kalven lapse into a common error[10] when they state that justice connotes equality of opportunity and that this equality requires that “the contestants start from the same mark,” so that the “game” be “fair.” Human life is not some sort of race or game in which each person should start from an identical mark. It is an attempt by each man to be as happy as possible. And each person could not begin from the same point, for the world has not just come into being; it is diverse and infinitely varied in its parts. The mere fact that one individual is necessarily born in a different place from someone else immediately insures that his inherited opportunity cannot be the same as his neighbor’s. The drive for equality of opportunity would also require the abolition of the family since different parents have unequal abilities; it would require the communal rearing of children. The State would have to nationalize all babies and raise them in State nurseries under “equal” conditions. But even here conditions cannot be the same, because different State officials will themselves have different abilities and personalities. And equality can never be achieved because of necessary differences of location.
     Thus, the egalitarian must not be permitted any longer to end discussion by simply proclaiming equality as an absolute ethical goal. He must first face all the social and economic consequences of egalitarianism and try to show that it does not clash with the basic nature of man. He must counter the argument that man is not made for a compulsory ant heap existence. And, finally, he must recognize that the goals of equality of income and equality of opportunity are conceptually unrealizable and are therefore absurd. Any drive to achieve them is ipso facto absurd as well.
     Egalitarianism is, therefore, a literally senseless social philosophy. Its only meaningful formulation is the goal of “equality of liberty”—formulated by Herbert Spencer in his famous Law of Equal Freedom: “Every man has freedom to do all he wills, provided he infringes not the equal freedom of any other man.”[11] This goal does not attempt to make every individual’s total condition equal—an absolutely impossible task; instead, it advocates liberty—a condition of absence of coercion over person and property for every man.[12]
     Yet even this formulation of equality has many flaws and could profitably be discarded. In the first place, it opens the door for ambiguity and for egalitarianism. In the second place, the term “equality” connotes measurable identity with a fixed, extensive unit. “Equal length” means identity of measurement with an objectively determinable unit. In the study of human action, whether in praxeology or social philosophy, there is no such quantitative unit, and hence there can be no such “equality.” Far better to say that “each man should have X” than to say that “all men should be equal in X.” If someone wants to urge every man to buy a car, he formulates his goal in that way—“Every man should buy a car”—rather than in such terms as: “All men should have equality in car buying.” The use of the term “equality” is awkward as well as misleading.
     And finally, as Clara Dixon Davidson pointed out so cogently many years ago, Spencer’s Law of Equal Freedom is redundant. For if every man has freedom to do all that he wills, it follows from this very premise that no man’s freedom has been infringed or invaded. The whole second clause of the law after “wills” is redundant and unnecessary.[13] Since the formulation of Spencer’s Law, opponents of Spencer have used the qualifying clause to drive holes into the libertarian philosophy. Yet all this time they were hitting at an encumbrance, not at the essence of the law. The concept of “equality” has no rightful place in the “Law of Equal Freedom,” being replaceable by the logical quantifier “every.” The “Law of Equal Freedom” could well be renamed “The Law of Total Freedom.”
6. The Problem of Security
     One of the most common ethical charges levelled at the free market is that it fails to provide “security.” It is said that the blessings of freedom must be weighed against the competing blessings of security—to be provided, of course, by the State.
     The first comment to make is that this world is a world of uncertainty. We shall never be able to forecast the future course of the world with precision. Every action, therefore, involves risk. This risk cannot be eliminated. The man who keeps cash balances suffers the risk that its purchasing power may dwindle; the man who invests suffers the risk of loss; and so forth.
     Yet the free market finds ways of voluntarily relieving risk as much as can possibly be done. In a free society there are three prime ways that men can alleviate uncertainty about the future:
     (1) By savings. These savings, whether invested in production or kept in cash balances, insure money for future needs. Investing in production increases one’s future assets; cash balances insure that funds will be immediately available.
     (2) By entrepreneurship. The entrepreneurs, i.e., the capitalist-entrepreneurs, assume the bulk of the risks of the market and concomitantly relieve laborers of a great deal of risk. Imagine the universal risk if laborers could not be paid until the final product reached the consumers! The pain of waiting for future income, the risk in attempting to forecast consumer demands in the future, would be almost intolerable, especially for those laborers toiling in the most remote processes of production. It is difficult to see how anyone would embark on longer processes of production if he were forced to wait the entire length of the production period to earn any income. But the capitalist-entrepreneur pays him, instead, immediately and himself adopts the burden of waiting and forecasting future wants. The entrepreneur then risks loss of his capital. Another method of entrepreneurial assumption of risk takes place in futures markets, where hedging allows buyers and sellers of commodities to shift the risk of future price changes onto a body of specialized traders.
     (3) By insurance. Insurance is a basic method of pooling and abating risks on the market. While entrepreneurs assume the burdens of uncertainty, insurance takes care of actuarial risks, where stable collective frequencies can be arrived at and premiums can be charged accordingly.
     The State cannot provide absolute security. The slaves may have believed that their security was guaranteed by their master. But the master assumed the risk; if his income fell, then he could not provide security for his charges.
     A fourth way to provide security in a free society is by voluntary charity. This charity, of necessity, comes out of production. It has been maintained that the State can provide security for the people better than the market because it can guarantee a minimum income for everyone. Yet the government can do no such thing. The State produces nothing; it can only confiscate the production of others. The State, therefore, can guarantee nothing; if the requisite minimum is not produced, the State will have to default on its pledges. Of course, the State can print all the money it wants, but it cannot produce the needed goods. Furthermore, the State cannot, in this way, provide security for every man alike. It can make some secure only at the expense of others. If A can be made more secure only by robbing B, B is made more insecure in the process. Hence, the State, even if production is not drastically reduced, cannot provide security for all, but only for some at the expense of others.
     Is there no way, then, that government—organized coercion—can provide security? Yes, but not in the absolute sense. Rather, it can provide a certain aspect of security, and only this aspect can be guaranteed to every man in the society. This is security against aggression. In fact, however, only a voluntary, free-market defense can provide this, since only such a non-Statist type of defense agency does not itself engage in aggression. With each man acquiring security of person and property against attack, productivity and leisure are both immeasurably increased. Any State attempt to provide such security is an anachronism, since the State itself constantly invades individual liberty and security.
     That type of security, then, which is open to every man in society, is not only compatible with, but is a corollary to, perfect freedom. Freedom and security against aggression are two sides of the same coin.
     It might still be objected that many people, even knowing that slavery or submission to dictation cannot bring absolute security, will still wish to rely on masters. But if they do so voluntarily, the libertarian asks, why must they force others, who do not choose to submit to masters, to join them?
7. Alleged Joys of the Society of Status
     One common related criticism of the free market and free society (particularly among intellectuals who are conspicuously not craftsmen or peasants) is that, in contrast to the Happy Craftsmen and Happy Peasants of the Middle Ages, it has “alienated” man from his work and from his fellows and has robbed him of his “sense of belonging.” The status society of the Middle Ages is looked back upon as a Golden Age, when everyone was sure of his station in life, when craftsmen made the whole shoe instead of just contributing to part of its production, and when these “whole” laborers were enmeshed in a sense of belonging with the rest of society.
     In the first place, the society of the Middle Ages was not a secure one, not a fixed, unchanging hierarchy of status.[14]There was little progress, but there was much change. Dwelling as they did in clusters of local self-sufficiency, marked by a low standard of living, the people were ever threatened by famine. And because of the relative absence of trade, a famine in one area could not be countered by purchasing food from another area. The absence of famine in capitalist society is not a providential coincidence. Secondly, because of the low living standards, very few members of the population were lucky enough to be born into the status of the Happy Craftsman, who could be really happy and secure in his work only if he were a craftsman to the King or the nobility (who, of course, earned their high status by the decidedly “unhappy” practice of permanent violence in domination over the mass of the exploited population). As for the common serf, one wonders whether, in his poverty-stricken, enslaved, and barren existence, he had even sufficient time and leisure to contemplate the supposed joys of his fixed post and his “sense of belonging.” And if there were a serf or two who did not wish to “belong” to his lord or master, that “belonging,” of course, was enforced by violence.
     Aside from these considerations, there is another problem which the society of status cannot surmount, and which indeed contributed a great deal to breaking up the feudal and mercantilist structures of the precapitalistic era. This was population growth. If everyone is assigned his appointed and inherited role in life, how can an increased population be fitted into the scheme? Where are they to be assigned, and who is to do the assigning? And wherever they are allocated, how can these new people be prevented from disrupting the whole assigned network of custom and status? In short, it is precisely in the fixed, noncapitalistic society of status that the Malthusian problem is ever present, at its ugliest, and where Malthusian “checks” to population must come into play. Sometimes the check is the natural one of famine and plague; in other societies, systematic infanticide is practiced. Perhaps if there were a modern return to the society of status, compulsory birth control would be the rule (a not impossible prognosis for the future). But in precapitalist Europe, the population problem became a problem of an ever increasing number of people with no work to do and no place to go, who therefore had to turn to begging or highway robbery.
     The proponents of the theory of modern “alienation” do not offer any reasoning to back up their assertions, which are therefore simply dogmatic myths. Certainly, it is not self-evident that the craftsman, or better still, the primitive man who made everything that he consumed, was in some sense happier or “more whole” as a result of this experience. Although this is not a treatise on psychology, it might be noted that perhaps what gives the worker his sense of importance is his participation in what Isabel Paterson has called the “circuit of production.” In free-market capitalism he can, of course, participate in that circuit in many more and varied ways than he could in the more primitive status society.
     Furthermore, the status society is a tragic waste of potential skill for the individual worker. There is, after all, no reason why the son of a carpenter should be particularly interested or skilled in carpentry. In the status society he faces only a dreary life of carpentry, regardless of his desires. In the free-market, capitalist society, though he is of course not guaranteed that he will be able to make a livelihood in any line of work that he wants to pursue, his opportunities to do work that he really likes are immeasurably, almost infinitely, expanded. As the division of labor expands, there are more and more varieties of skilled occupations that he can engage in, instead of having to be content with only the most primitive skills. And in the free society he is free to try these tasks, free to move into whatever area he likes best. He has no freedom and no opportunity in the allegedly joyful society of status. Just as free capitalism enormously expanded the amount and variety of consumers’ goods and services available to mankind, so it vastly expanded the number and variety of jobs to be done and the skills that people can develop.
     The hullabaloo about “alienation” is, in fact, more than a glorification of the medieval craftsman. He, after all, bought his food from the nearby land. It is actually an attack on the whole concept of the division of labor and an enshrining of primitive self-sufficiency. A return to such conditions could mean only the eradication of the bulk of today’s population and complete  impoverishment for those remaining. Why “happiness” would nonetheless increase, we leave to the mythologists of status.
     But there is one final consideration which indicates that the vast majority of the people do not believe that they need primitive conditions and the slave’s sense of belonging to make them happy. For there is nothing, in a free society, to prevent those who wish from going off in separate communities and living primitively and “belongingly.” No one is forced to join the specialized division of labor. Not only has almost no one abandoned modern society to return to a happy, integrated life of fixed poverty, but those few intellectuals who did form communal Utopias of one sort or another during the nineteenth century abandoned these attempts very quickly. And perhaps the most conspicuous nonwithdrawers from society are those very critics who use our modern “alienated” mass communications to denounce modern society. As we indicated at the end of the last section, a free society permits any who wish to enslave themselves to others to do so. But if they have a psychological need for a slave’s “sense of belonging,” why must other individuals without such a need be coerced into enslavement?
8. Charity and Poverty
     A common complaint is that the free market would not insure the elimination of poverty, that it would “leave people free to starve,” and that it is far better to be “kindhearted” and give “charity” free rein by taxing the rest of the populace in order to subsidize the poor and the substandard.
     In the first place, the “freedom-to-starve” argument confuses the “war against nature,” which we all conduct, with the problem of freedom from interference by other persons. We are always “free to starve” unless we pursue our conquest of nature, for that is our natural condition. But “freedom” refers to absence of molestation by other persons; it is purely an interpersonal problem.
     Secondly, it should also be clear that it is precisely voluntary exchange and free capitalism that have led to an enormous improvement in living standards. Capitalist production is the only method by which poverty can be wiped out. As we stressed above, production must come first, and only freedom allows people to produce in the best and most efficient way possible. Force and violence may “distribute,” but it cannot produce. Intervention hampers production, and socialism cannot calculate. Since production of consumer satisfactions is maximized on the free market, the free market is the only way to abolish poverty. Dictates and legislation cannot do so; in fact, they can only make matters worse.
     The appeal to “charity” is a truly ironic one. First, it is hardly “charity” to take wealth by force and hand it over to someone else. Indeed, this is the direct opposite of charity, which can only be an unbought, voluntary act of grace. Compulsory confiscation can only deaden charitable desires completely, as the wealthier grumble that there is no point in giving to charity when the State has already taken on the task. This is another illustration of the truth that men can become more moral only through rational persuasion, not through violence, which will, in fact, have the opposite effect.
     Furthermore, since the State is always inefficient, the amount and direction of the giving will be much different from what it would be if people were left free to act on their own. If the State decides from whom to take and to whom to give, the power residing in the State’s hands is enormous. It is obvious that political unfortunates will be the ones whose property is confiscated, and political favorites the ones subsidized. And in the meantime the State erects a bureaucracy whose living is acquired by feeding off the confiscation of one group and the encouraged mendicancy of another.
     Other consequences follow from a regime of compulsory “charity.” For one thing, “the poor”—or the “deserving” poor—have been exalted as a privileged caste, with an enforceable claim to the production of the more able. This is a far cry from a request for charity. Instead, the able are penalized and enslaved by the State, and the unable are placed on a moral pedestal. Certainly, this is a peculiar sort of moral program. The further consequence will be to discourage the able, to reduce production and saving in all of society, and beyond this, to subsidize the creation of a caste of poor. Not only will the poor be subsidized by right, but their ranks will be encouraged to multiply, both through reproduction and through their moral exaltation and subsidization. The able will be correspondingly hampered and repressed.[15]
     Whereas the opportunity for voluntary charity acts as a spur to production by the able, coerced charity acts as a drain and a burden upon production. In fact, in the long run, the greatest “charity” is precisely not what we know by that name, but rather simple, “selfish” capital investment and the search for technological innovations. Poverty has been tamed by the enterprise and the capital investment of our ancestors, most of which was undoubtedly done for “selfish” motives. This is a fundamental illustration of the truth enunciated by Adam Smith that we generally help others most in those very activities in which we help ourselves.
     Statists, in fact, are really opposed to charity. They often argue that charity is demeaning and degrading to the recipient, and that he should therefore be taught that the money is rightly his, to be given to him by the government as his due. But this oft-felt degradation stems, as Isabel Paterson pointed out, from the fact that the recipient of charity is not self-supporting on the market and that he is out of the production circuit and no longer providing a service in exchange for one received. However, granting him the moral and legal right to mulct his fellows increases his moral degradation instead of ending it, for the beneficiary is now further removed from the production line than ever. An act of charity, when given voluntarily, is generally considered temporary and offered with the object of helping a man to help himself. But when the dole is ladled out by the State, it becomes permanent and perpetually degrading, keeping the recipients in a state of subservience. We are not attempting to argue at this point that to be subservient in this way is degrading; we simply say that anyone who considers private charity degrading must logically conclude that State charity is far more so.[16] Mises, furthermore, points out that free-market exchange—always condemned by statists for being impersonal and “unfeeling”—is precisely the relation that avoids all degradation and subservience.[17]
9. The Charge of “Selfish Materialism”
     One of the most common charges levelled against the free market (even by many of its friends) is that it reflects and encourages unbridled “selfish materialism.” Even if the free market—unhampered capitalism—best furthers man’s “material” ends, critics argue, it distracts man from higher ideals. It leads man away from spiritual or intellectual values and atrophies any spirit of altruism.
     In the first place, there is no such thing as an “economic end.” Economy is simply a process of applying means to whatever ends a person may adopt. An individual can aim at any ends he pleases, “selfish” or “altruistic.” Other psychic factors being equal, it is to everyone’s self-interest to maximize his monetary income on the market. But this maximum income can then be used for “selfish” or for “altruistic” ends. Which ends people pursue is of no concern to the praxeologist. A successful businessman can use his money to buy a yacht or to build a home for destitute orphans. The choice rests with him. But the point is that whichever goal he pursues, he must first earn the money before he can attain the goal.
     Secondly, whichever moral philosophy we adopt—whether altruism or egoism—we cannot criticize the pursuit of monetary income on the market. If we hold an egoistic social ethic, then obviously we can only applaud the maximization of monetary income, or of a mixture of monetary and other psychic income, on the market. There is no problem here. However, even if we adopt an altruistic ethic, we must applaud maximization of monetary income just as fervently. For market earnings are a social index of one’s services to others, at least in the sense that any services are exchangeable. The greater a man’s income, the greater has been his service to others. Indeed, it should be far easier for the altruist to applaud the maximization of a man’s monetary income than that of his psychic income when this is in conflict with the former goal. Thus, the consistent altruist must condemn the refusal of a man to work at a job paying high wages and his preference for a lower-paying job somewhere else. This man, whatever his reason, is defying the signalled wishes of the consumers, his fellows in society.
     If, then, a coal miner shifts to a more pleasant, but lower-paying, job as a grocery clerk, the consistent altruist must castigate him for depriving his fellowman of needed benefits. For the consistent altruist must face the fact that monetary income on the market reflects services to others, whereas psychic income is a purely personal, or “selfish,” gain.[18]
     This analysis applies directly to the pursuit of leisure. Leisure, as we have seen, is a basic consumers’ good for mankind. Yet the consistent altruist would have to deny each worker any leisure at all—or, at least, deny every hour of leisure beyond what is strictly necessary to maintain his output. For every hour spent in leisure reduces the time a man can spend serving his fellows.
     The consistent advocates of “consumers’ sovereignty” would have to favor enslaving the idler or the man who prefers following his own pursuits to serving the consumer. Rather than scorn pursuit of monetary gain, the consistent altruist should praise the pursuit of money on the market and condemn any conflicting nonmonetary goals a producer may have—whether it be dislike for certain work, enthusiasm for work that pays less, or a desire for leisure.[19] Altruists who criticize monetary aims on the market, therefore, are wrong on their own terms.
     The charge of “materialism” is also fallacious. The market deals, not necessarily in “material” goods, but in exchangeable goods. It is true that all “material” goods are exchangeable (except for human beings themselves), but there are also many nonmaterial goods exchanged on the market. A man may spend his money on attending a concert or hiring a lawyer, for example, as well as on food or automobiles. There is absolutely no ground for saying that the market economy fosters either material or immaterial goods; it simply leaves every man free to choose his own pattern of spending.
     Finally, an advancing market economy satisfies more and more of people’s desires for exchangeable goods. As a result, the marginal utility of exchangeable goods tends to decline over time, while the marginal utility of nonexchangeable goods increases. In short, the greater satisfaction of “exchangeable” values confers a much greater marginal significance on the “nonexchangeable” values. Rather than foster “material” values, then, advancing capitalism does just the opposite.

[1]In short, we are saying that the means must be justified by the end. What else but an end can justify a means? The common conception that the doctrine, “the end justifies the means,” is an immoral device of Communists, is hopelessly confused. When, for example, people object to murder as a means to achieve goals, they are objecting to murder, not because they do not believe that means are justified by ends, but because they have conflicting ends—for example, the end that murder not be committed. They may hold this view as an end-in-itself or because it is a means to other ends, such as upholding each man’s right to life.
[2]For further discussion, see Man, Economy, and State, chapter 10.
[3]Interventionists assume the political (but no other) competence of the people even when they favor dictatorship rather than democracy. For if the people do not vote under a dictatorship, they still must accept the rule of the dictator and his experts. So the interventionists cannot escape this contradiction even if they give up democracy.
[4]Ludwig von Mises has been active in pointing out this contradiction. Thus, see his Planning for Freedom (South Holland, Ill.: Libertarian Press, 1952), pp. 42–43. However, the remainder of Mises’ criticism of this antimarket argument (ibid., pp. 40–44) rather differs from the one presented here.
[5]Mises, Human Action, pp. 728–29. The same total dictatorship over consumer choice is also implied by the knowledge-of-interest argument discussed above. As Thomas Barber astutely says:
It is illegal for pleasure-boaters to fail to carry a life preserver for every person on board. A great number of young men are publicly employed to go about and look for violators of this law. Pleasant for the young men, of course. But is it really any more the government’s business that a man goes canoeing without a life preserver than that he goes out in the rain without his rubbers? . . . The law is irritating to the individual concerned, costly to the taxpayers, and turns a lot of potential producers into economic parasites. Perhaps the manufacturers of life preservers engineered its passage. (Barber, Where We Are At, p. 89)
[6]It is true that we do not advocate ends in this volume, and in that sense praxeology is “utilitarian.” But the difference is that utilitarianism would extend this Wertfrei injunction from its proper place in economics and praxeology to embrace all of rational discourse.
[7]Mises often states that interventionary measures in the market, e.g., price controls, will have consequences that even the government officials administering the plans would consider bad. But the problem is that we do not know what the government officials’ ends are—except that they demonstrably do like the power they have acquired and the wealth they have extracted from the public. Surely these considerations may often prove paramount in their minds, and we therefore cannot say that government officials would invariably concede, after learning all the consequences, that their actions were mistaken.
[8]F.A. Harper, “Try This on Your Friends,” Faith and Freedom, January, 1955, p. 19.
[9]For a further discussion of these axioms, see Rothbard, “In Defense of Extreme Apriorism,” Southern Economic Journal, January, 1957, pp. 314–20.
[10]Blum and Kalven, Uneasy Case for Progressive Taxation, pp. 501ff.
[11]Spencer, Social Statics, p. 121.
[12]This goal has sometimes been phrased as “equality before the law,” or “equality of rights.” Yet both formulations are ambiguous and misleading. The former could be taken to mean equality of slavery as well as liberty and has, in fact, been so narrowed down in recent years as to be of minor significance. The latter could be interpreted to mean any sort of “right,” including the “right to an equal income.”
[13]“. . . the opening affirmation includes what follows, since, if any one did infringe upon the freedom of another, all would not be equally free.” Clara Dixon Davidson in Liberty, September 3, 1892, as quoted in Benjamin R. Tucker, Instead of a Book (New York: Benjamin R. Tucker, 1893), p. 137. Davidson’s formulation has been completely neglected.
[14]The present section is meant more as a logical critique of the theory of status than as a detailed account of society in the Middle Ages. For a critique of a recent expression of the Happy Peasant myth, see Charles E. Silberman, The Myths of Automation (New York: Harper & Row, 1967), pp. 98–107.
[15]See the readings referred to in footnote 3 of the preceding chapter.
[16]The devotion of government to charity may be gauged by its universal repression of mendicancy. A direct gift to a beggar helps the recipient directly and leaves no opportunity for large bureaucratic organizations to live full-time off the transaction. Harassment of direct aid, then, functions as a grant of monopolistic privilege to the “official” charity organizations. Isabel Paterson points out that the American government imposed a requirement of minimum cash assets for immigrants as an alleged way of helping the poorer immigrants! The actual effect, of course, was to keep the poorest immigrants, who could not meet the requirement, from American shores and economic opportunity.
[17]On various aspects of the problem of charity and poverty, see Paterson, “The Humanitarian with the Guillotine” in God of the Machine, pp. 233–50; Spencer, Social Statics, pp. 317–29; Mises, Human Action, pp. 831–36; F.A. Harper, “The Greatest Economic Charity” in Sennholz, ed., On Freedom and Free Enterprise, pp. 94ff.; and Leonard E. Read, “Unearned Riches,” ibid., pp. 188–95.
[18]W.H. Hutt actually goes this far in his article, “The Concept of Consumers’ Sovereignty,” Economic Journal, March, 1940, pp. 66–77.
[19]It is also peculiar that critics generally concentrate their fire on profits (“the profit motive”), and not on other market incomes such as wages. It is difficult to see any sense whatever in moral distinctions between these incomes.

Thursday, November 17, 2011

My Life in the BLS

[October 24, 2000]
The Washington Post recently reported that the nation's largest statistical organization, the United States Bureau of Labor Statistics (BLS), has been miscalculating the consumer price index for over a year. Their headline read "Inflation Higher than Reported."
My first reaction was to think, "And this is news?" I then began to bring back memories of the two years I spent in Washington, DC, working for the BLS as an economist. At least they called me an economist. I was actually a glorified trainer, training newly hired "field economists" (read data collectors) to collect wage and benefit information. Part of my job also included coordinating various conferences for the office. Recalling those days, I am reminded of several lessons I learned during my tenure there.
The best thing about my experience with the BLS is exactly that it is in the past. However, while there I did gain valuable knowledge from the inside regarding the nature of government-generated statistics and bureaucracy. Life with statistics is not as glamorous as Al Gore makes it sound.
While working at the BLS, it was affirmed again and again how government statistics are practically useless at best and downright destructive at worst. I quickly learned that what I was doing at the bureau had nothing to do with economics, my major field, and frankly had little importance whatsoever.
During my first training trip, I was sent to Philadelphia where I bought and began to read Ludwig von Mises's The Ultimate Foundation of Economic Science. What Mises wrote about the uselessness of statistics for solving economic problems was demonstrated again and again. With the exception of the OSHA statistics (with which I had nothing to do), the BLS surveys are voluntary and rely on the goodwill of businesses to participate.
One thing the bureau could offer in return was a copy of the bulletin featuring the published results of the survey. The bulletin, however, turned out not to be such a hot item, because so much time passed between the market conditions that the survey described and those that existed by the time the bulletin was actually published and sent to the participants. It was common, for instance, for industry-wage survey bulletins to be sent to participants a full year after the survey was completed. With business environments changing as fast as they do, year-old wage data is useless to an entrepreneur who is trying to figure out what he should pay his workers now, as opposed to what he should have paid them a year ago.
Although taking money from citizens to produce useless information is bad enough, in fact, government-generated statistics are used to destroy our liberties on a daily basis. It turns out that government statistics are useless for almost everything except to expand the power of the state. The BLS has an entire survey, the Service Contract Act survey, devoted to establishing "prevailing wages" that entrepreneurs must pay their employees if they do business with the federal government.
For instance, fast-food-restaurant owners on military bases cannot pay below the wages set by government based on BLS data. If the market wage happens to be below the mandated wage, then that's just too bad for the restaurant. The usefulness of government statistics for promoting state aggrandizement was blatantly illustrated by the recent campaign to get everyone to fill out their census forms. The government tried to sell the census by giving the public a laundry list of income-redistribution schemes the recipients of which are determined in large part by census numbers. In this way, government statistics can run cover for the state's wealth-confiscation and redistribution activities.
"It turns out that government statistics are useless for almost everything except to expand the power of the state."
Beyond what I learned about government statistics, my time at the BLS was a two-year course in the theory and practice of bureaucracy. A friend of mine from college once told me that clichés become clichés because they are true. My time at the BLS affirmed my friend's observation. The bureaucracy really is terribly wasteful, corrupting, and a killer of souls.
Upon arrival at my new job I immediately saw that everything that I'd heard about the evils of big government was not only true but it was even worse than I imagined. When word of the BLS's recent mistake calculating the CPI made it to the Dismal Scientist, a website devoted to economic statistics, a commentator there said that to make sure this never happens again the BLS needs more money.
What are they thinking? As it is, tax dollars flow into and out of the bureaucracy like blood from a stuck pig. This is due primarily to the BLS and the bureaucracy in general not having to make a profit. As Mises writes in his work Bureaucracy, which I also read during my stay inside the Beltway, "In public administration there is no connection between revenue and expenditures." And how!
The word was, "If money is in the budget, spend it." It took me a while to learn this. Being raised by a frugal mother in Iowa, I very diligently saved every meal receipt during my first taxpayer-funded trip and asked to be reimbursed for only the amounts that I actually spent on food. I was quickly instructed by my superior to simply declare the entire maximum allowance for food for each day, because it was easier for our people in accounting to make sense of the travel vouchers. Cheating by declaring false taxi fares was commonplace.
As a coordinator of various conferences, one of the smoke-and-mirror games I was told to play was financially justifying having the prestigious conferences wherever the associate commissioner wanted to go. In an effort to make it appear that the BLS was economizing on its conference expenditures, we were required to do a three-city comparison to demonstrate that we were holding the conference in the most economical spot.
Of course, this was pure skullduggery. If the BLS really wanted to save on meeting costs, they would hold every national conference in Kansas City, where the government hotel rates are among the cheapest, the food per diem is the lowest, and, being a central location, air fares are lower. In reality, I was told where the bureau was having the conference and it was up to me to find two other cities where it would be even more expensive for comparison. With New York City and Los Angeles as foils, I could justify any other location my superiors wanted.
Beyond the financial dishonesty, of course, is the taxpayer money wasted on a bloated staff allowed to be ineffectual due to the tenure system. When I was hired by the BLS, I was told that I was on probation for a year, during which the bureau could fire me for almost any reason they wanted. However, after one year, I received tenure and would have to do something pretty bad in their eyes for them to force me out. Inevitably, some employees who should be let go within that first year make it to the tenure stage.
A management experiment tried by the BLS that also proved to be a boondoggle was TQM, "total quality management." This is a theory of management that supposedly encourages an organization to provide better service if all employees at all levels are involved in setting the goals and making the policies for the entire organization. In reality TQM proved to be another sleight of the managerial hand designed to placate the underlings.
The BLS had a two-tiered bureaucratic culture that featured a mass of dinosaurs simply going through the motions and the associate commissioners and project managers who seemed to find fulfillment only in carving out mini-empires for themselves. These little Napoleons were constantly seeking to conquer and protect their turf.
One supervisor was not, and knew he was not, the best qualified applicant for that position. He was promoted into the job because the associate commissioner trusted him to go to meetings, spy on what other offices were doing, and report back to her. Again the message was clear: if employees played political ball with the associate commissioner, they could go far. If not, well then forget that promotion.
When I related this story to the wife of my college philosophy professor one day, she, being somewhat of a leftist, replied, "Yes, but there are a lot of good people in bureaucracy too." Well. That is not the point. No matter how many good people one finds in the bureaucracy, the result will always tend toward the same end because, as my good friend and mentor at the bureau forlornly told me on several occasions, "We don't have to make a profit."
I later worked for a bank that is similar in organization and had a lot of the same attributes, but it still had to make a profit to continue in business. Consequently, if a person could add value to the bank in a noticeable way, he would get compensated for his efforts and get promoted when appropriate. If he was not adding value, he was ushered out the door.
"Government-generated statistics are used to destroy our liberties on a daily basis."
Beyond the destructive effect bureaucracy has on efficiency is the corruption of the soul that bureaucracy fosters. It is Mises again who points out that the bureaucrat is not ruled by how well he can serve his fellow man, but by the budget allotted him. Additionally, because in a democratic society the bureaucrat is also a voter, he is an employer as well as an employee.
Mises writes, "The bureaucrat as voter is more eager to get a raise than to keep the budget balanced. His main concern is to swell the payroll." During the 1990 budget deal featuring George Bush's "no-new-taxes" betrayal, the true colors of the bureaucracy were shown as the majority of employees became concerned only with keeping as much money as possible in their budget. Some even picketed the summit meetings between the Bush administration and Democratic leaders in Congress, demanding that they should not lose even a penny.
From the bureaucrat's perspective, a vote for constraint is a vote for elimination. The only time that frugality was really emphasized was when the government was in danger of being shut down and we literally did not know how much money we would have for the month. This episode illustrates what most of us instinctively know: the executive branch will spend everything they are given and will then lobby Congress for more. If you are skeptical, listen to the debate over what to do with the "budget surplus."
In the midst of the fight over the budget in 1990 that came close to shutting down the government, Congress passed the Pay Reform Act of 1990. This law was a huge pay increase for all federal workers and was designed to bring federal salaries "in line" with those in the private sector.
I would regularly hear statements like, "I would be making a lot more if I were in the private sector," implying that what was keeping them in the bureau was their public spirit. The fact of the matter is that in the private economy, no one could get paid the dollar amounts bureaucrats were getting paid for doing the type of nonwork they do. Those in the bureau were especially eager for the pay-reform law to pass, because it guaranteed them a job. The BLS would be collecting the data Congress used to see if federal salaries were high enough.
Perhaps the most destructive feature of the bureaucracy is how it kills the human spirit. Upon employment a new hire soon learns that his task is to follow rules, not to do his job particularly well. One of the most frequently used phrases at the bureau was "Good enough for government work."
The primary reason for this lack of drive is the elimination of incentive to do your best. There is no reward for either effort or success. Promotions are not based on the quality of your work, but on how useful you are to the powers that be in building their empires. There is also no penalty for incompetence. Consequently, bureaucrats have little incentive to better themselves through increasing their knowledge base or skill levels. This is because, in government, contrary to conventional wisdom, knowledge is not power. Knowledge is work. Why work hard at learning more and doing your job better when it will only mean more work at the same salary? Any work ethic a person has when he comes to Washington is devoured by a plague of bureaucratic locusts.
Pretty soon, these mid-to-low-level bureaucrats get trapped. They hate their jobs, because they see that rarely does effort or ability count for anything. They find themselves out of the political loop and, hence, cut off from the best route to promotion. They are stuck. They despise their jobs, yet it is too costly for them to leave and forge their way in the private sector. As I read a passage from Mises about the security of the bureaucrat, I was stunned by the truth of his observation.
Government jobs offer no opportunity for the display of personal talents and gifts. Regimentation spells the doom of initiative. The young man has no illusions about his future. He knows what is in store for him. He will get a job with one of the innumerable bureaus, he will be but a cog in a huge machine the working of which is more or less mechanical. The routine of a bureaucratic technique will cripple his mind and tie his hands. He will enjoy security. But this security will be rather of the kind that the convict enjoys within the prison walls. He will never be free to make decisions and to shape his own fate. He will forever be a man taken care of by other people. He will never be a real man relying on his own strength. He shudders at the sight of the huge office buildings in which he will bury himself.