Debunking Keynes

When Bastiat described, in his famous Broken Window analogy, what he called "What is seen, and what is not seen," he was really describing the entirety of what would later become the field of Keynesian economics. Keynes' macroeconomic theory of government intervention is indeed a bloated form of the same broken window analogy.

What is this broken window analogy I keep repeating?  In short, it says that destruction does not create profit.  This should be obvious to most poeple, but then it is not usually stated so clearly.  It is dressed up generally as follows: destruction of property necessitates repair - the payment for the repair is profit for the workman, and as he will then spend it on some other service or merchandise, the initial destruction is thus profitable for the economy as a whole.  It sounds almost reasonable when put this way, but you miss the rest of the picture - the unseen.  The owner of the destroyed property was unable to spend his money on something else - in other words, some other industry lost out because he needed to make repairs instead.  This other industry you might have supported is "what is not seen."  In reality, the owner loses wealth - his savings - and another industry he may have supported loses that support. 

Now for the reason I equate this to Keynesian market intervention.  In society, it is the people who hold the wealth.  We create, we earn, we save.  Government cannot do this - government creates no products, earns nothing, and saves nothing.  All government can do is confiscate property and redistribute it in some way. 

So let us now apply these two concepts to one of the obvious government interventions in the free market - bailouts.  When government wants to bail out a failing industry, it first must confiscate your wealth - it will do this with higher taxes or by borrowing money that you later have to pay back.  Next it directs these funds towards a that industry it wishes to prop up.  What it has done, then, is taken your wealth, and prevented you from choosing where to spend it.  You are the property owner who has lost his wealth, the bailed out industry is the workman who now has your money.  Further, "what is not seen" are those industries that you can no longer support because you "needed to make repairs."

Keynesians would have you believe that government spending is the same as individual demand; that when government spends a dollar, it is equivalent to you spending a dollar.  This quite clearly cannot be true, for when you spend a dollar, you also gain property!  When the government spends your dollar, you do not gain property. 

Contemporary economists, even nobel prize winners, push this ridiculous concept.  Paul Krugman said that a military buildup in anticipation of an alien invasion would end the recession.  This fits perfectly into the Broken Window analogy.  What industries would benefit from the huge confiscation of citizens' wealth?  Which ones would suffer?  Would you gain property?  In this case the military industrial complex would most certainly benefit - they would be the workmen.  You, on the other hand, would not be able to support another industry you might have otherwise supported.  Perhaps you won't buy that new car.  You gain no material wealth by the deployment of a surface to space missile either.

With this all said, I hope you will take it upon yourself to try to see all of "what is not seen" when some bureaucrat or politician pushes his latest intervention plan.

Dangerous Precedents

I said it months ago - allowing the President to ignore Congress and unilaterally go to war with Libya unchecked, unquestioned and unpunished was setting a horrible precedent.  I said that once a President grabs a bit of power, and the Congress lets it go, he will never relinquish it.  I said that if he does it once, he will do it again, and again, and again.

I have been proven right - Obama has sent ground forces into Africa to fight against the Lord's Resistance Army.  He has ordered combat-equipped U.S. forces to deploy to central Africa. It is yet another war he has started, for which the Congress will hassle him very little, if at all.  It's Libya all over again.

It was illegal when Obama invaded Libya; after 60 days the Congress made a halfhearted effort to force him to explain himself.  He responded by insisting what he did was legal and thanking the Congress for supporting his actions.  He broke the law by attacking them - he broke the law by not getting Congress' approval for continued aggressions.  And now he's doing it again, almost word for word, he still insists what he does is legal.  This time he says it is within his Constitutional authority!  He finishes up by telling the Congress that he "appreciates their support."

First of all, the United States does not go to war without the Congress declaring the war.  It is very explicitly laid out in the Constitution - the power to declare wars lies solely with the Congress, not the President!  This is a fundamentally important part of the separation of powers that the founders set up to protect us from despotism.  Even the War Powers Resolution, which grants far more authority to the President, is limited to defensive actions!

Yet our President now exercises the authority - with regularity - to start aggressive wars against nations that have done us no harm.  He sits in his high throne and sends our fathers, brothers, and sons off to fight wars of his choosing.  He bypasses the courts and declares citizens dead men walking.  The Congress does virtually nothing to stop it - the few who band together to try are labelled as crackpots and attacked as "unpatriotic."

We're on the road to ruin folks, and let me tell you that I for one don't think there's any way back.  I think it has gone too far, and within the next decade, perhaps two, we will see a full fledged dictator take control.

The Rule of Law, humanity’s greatest achievement

Historians can, more easily than the rest of us due to their training, look back over the past and compare it to the present.  Thus they have a unique perspective on current events.  If you make your own study of history, you will find that over the many centuries of human experience true Liberty and the Rule of Law is a very rare occurance.  Totalitarianism makes up the vast majority of governments that have existed, and even many contemporary governments tend towards totalitarian systems.

Thus the statement that the Rule of Law is humanity's greatest achievement.  The Law binds not people but government; it is put in place to ensure that liberty is protected, that honest men remain free and can persue their own activities and reach their own goals.  It binds government for one simple reason - it is government that is the greatest threat to individual liberty.  Not a mugger, not a banker, not a terrorist.  Government.  The Rule of Law brought justice to the people.  Before we had the Rule of Law, any strongman could take over and extort, pillage, rape, murder and otherwise suppress a people.  This happened everywhere.  In time these guys became feudal lords. 

Feudal lords, then, were the government - they owned everything, including you.  They controlled the coin, they controlled the land, they ran the justice system, they operated the prisons and police.  One man would run the entire show from the top.  He was answerable to no one, and had the ultimate power of life and death over the people.  The stronger his power became, the more he covetted it - the feudal lord raised armies, conquered lands, became a king.  Law was a farce - in that situation it really meant the will of the king.  If his whim was to take your daughter and give her to a vassel, that was the law of the day.  If you should be executed for not paying enough in taxes, so be it.  Dissent was never tolerated, spies were often everywhere. 

The Rule of Law changed this.  The Rule of Law set the previous rulers, the Kings, the feudal lords, the strong men, below the law and subject to oversight, review, and indeed, justice.  The Rule of Law is humanity's greatest achievement because it made men free.

Think about this when your government, be it your local police, your state senators, or your President, throw away the law that they are sworn to obey, in the name of false security or even simply expedience. 

Terrorism and Treason

I want to clarify something about my earlier post - I am not saying al-Awlaki was not a bad man or that he should not have been killed. I am saying that ends do not justify means. The end always needs to be justified, but just as importantly, the means also need to be justified - on its own.

Let's take al-Awlaki's case. He's a citizen, and presumably we have evidence that he's joined a terrorist organization and is working against the United States.   The Constitution gives a definition that seems to fit him pretty well.  We should try him in absentia, convict him, and sentence him. That is the justification for the end - his execution.

Article III. Section. 3.Treason against the United States shall consist only in levying War against them, or in adhering to their Enemies, giving them Aid and Comfort. No Person shall be convicted of Treason unless on the Testimony of two Witnesses to the same overt Act, or on Confession in open Court.

The Congress shall have Power to declare the Punishment of Treason, but no Attainder of Treason shall work Corruption of Blood, or Forfeiture except during the Life of the Person attainted.

Now for the means, Congress can issue letters of Marque and Reprisal, the modern day version of this is essentially putting a price on someone's head right? We did it for bin Laden and for Hussein, it can be done for al-Awlaki. Or, if we want to use the military to take him out, we should determine, does the law allow the military to be used against a traitor citizen? If no, maybe the law allows a traitor's citizenship to be stripped. Then he would be a foreign national who perhaps could be legally, ethically, and morally targeted by the military.

I am arguing now, and will always argue against the power to unilaterally declare that a citizen is an enemy and summarily kill them without due process. Due process means that we operate on the presumption of innocence, that we produce evidence, that we allow for a defense, and that a judge looks at the evidence and the counter-evidence and determines the outcome of the case.  Guilt must be proven before punishments are undertaken. Ei incumbit probatio qui dicit, non qui negat. (Latin: The burden of proof rests on who asserts, not on who denies).

I can see an American citizen inciting Muslims to jihad as traitorous to our country. The Constitutional definition of treason, quote above, seems to apply quite well.  However, in addition to defining treason, it also says that no one can be convicted of such without a trial.  Furthermore, the 5th Amendment to the Constitution states:

No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a grand jury, except in cases arising in the land or naval forces, or in the militia, when in actual service in time of war or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.

Thus, for executions to be lawful, traitors must be indicted, tried and convicted by a grand jury.  If he was tried and convicted then his due process would be upheld - his execution (the end) would be legal and justified.  So again, the only question that would remain is, do we want to place that execution in the hands of the military (the means), who shoot missiles into civilian neighborhoods?

I think we can maintain a high ethical and moral position and still bring justice to the bad guys.

In fact, I think we MUST approach justice this way.  According to Bastiat, the purpose of the law is to prevent injustice from reigning...Law is justice. And it would indeed be strange if law could properly be anything else! Is not justice right? Are not rights equal?

If we do not maintain a high standard of ethics and morality, we will eventually degrade into a dictatorship where everyone is afraid, all the time; afraid of the government, and of everyone else.  If you put the tools in place that a tyrant can use to eliminate his political opposition, one day you will get one who does just that. I will always argue, loudly, against putting those tools in place.