All posts by Bryan Kavanagh
“THE AGE” AT ITS BEST TODAY
Just as I like to explain the shadowy recesses of the land market–otherwise known as the ‘property’ (sic) market–there occasionally comes a journalist who is prepared to speak out on the goings-on in the inner sanctum of the Australian share market.
Congratulations, Michael West, in THE AGE today: “For dark pools, just wade into the ASX”.
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Mind you, former Victorian Premier, John Cain, doesn’t do a bad job on the Reserve Bank of Australia, either: “Parliament should show brazen bank who’s boss”.
I think John Cain harbours strong inklings that it was also the RBA’s delinquency during the last property boom–the commercial bubble of the late 1980s–that had him overthrown as leader of the ALP government in 1990, and replacement leader Joan Kirner tossed out on her ear in 1992 (to be replaced by the Kennett Liberal government selling off the state of Victoria’s heritage, Ayn-Randian style).
Of course, John Cain also needs to accept a great portion of the blame himself for the woeful excesses of Tricontinental, The State Bank of Victoria’s investment arm. (333 Collins Street and all that.) But where was the RBA during THAT bubble?
There are indeed BIG questions to be asked of the ASX and the RBA and it’s about time these two bastions of ‘rectitude’ were stormed. Neither institution should be allowed any longer to get away with its many misdeeds, as the system slowly implodes from within.
Regulatory bodies? Bah!!
ONE OF THE BENEFITS OF HAVING YOUR OWN BLOG
Maybe they thought I was out of line, so that’s why Business Spectator didn’t publish my comment on Robert Gottliebson’s article “Blame CEOs for a National Cost Explosion” yesterday.
I wasn’t out of line.
As Business Spectator usually publishes my comments, maybe I was getting a bit too close to the bone in criticising how analysts–such as they?–were wrong in either condemning the Henry Tax Review’s recipe for reforming of an out-of-control tax system or else damming the report with faint praise.
I consider the Henry panel’s recommendations for Australia’s Future Tax System to be world’s best revenue reform practice. They provide an urgently needed template for making the necessary shift from taxes to resource rents if we are to negotiate our way our way out of the debt deflation that’s currently grinding world economies to a halt.
I’ll let you draw your own conclusions. This is what I said:-
No, Robert. I blame the blindness and shortsightedness of those business analysts who refused to see what Ken Henry’s tax inquiry tried to make clear.
Businesses can’t cope with the deadweight of the myriad inefficient taxes and burgeoning requirements they are all required to face.
Henry’s panel wanted more than 100 taxes ABOLISHED and a quid pro quo of an all-in (instead of selective) land tax, plus all Australians to share in the surplus rents (not profits) from the mining boom.
The tricks to which the real estate industry often resorts ….
…. in order ‘to keep prices up’.
I’m reminded of the over-supply of office accommodation in Melbourne in the commercial bubble of the early 1990s when there were twenty Melbourne Cricket Grounds of new office space available for lease. That’s one million square metres of carpeted and airconditioned offices.
Nominal asking rental rates of $650 per square metre per annum for accommodation in these new buildings translated to as low as $120 per square metre per annum once it was discounted back for estimated letting up periods and the rent free periods of up to ten years and free office fit outs being offered. But developers and agents refused to drop their highly imaginative asking rental rates.
Get real guys. You’re only fooling yourselves and people ignorant of the facts. Oh, but then you like to keep as many people as possible ignorant of the facts as you can, for ulterior motives, don’t you?
QUESTIONS AND ANSWERS
I caught the ABC’s “Q & A” on TV last night. Panelists were Judith Sloan, Kevin Rudd, Malcolm Turnbull and Heather Ridout.
There were a number of wry jokes about deposed party leaders Rudd and Turnbull having greater popularity than current leaders Julia Gillard and Tony Abbott, of course.
“You’re both popular and liberal-minded; why not join together and form your own party?” (or something to this effect) inquired one audience member.
Mention was made that the MRRT designed by Julia Gillard and selected big miners yields literally nothing in comparison to Kevin Rudd’s proposed RSPT. (Surprise, surprise!)
Greater productivity was the one thing that’s going to save us, they all agreed.
The show transitioned from tax reform onto IR – almost as though tax reform hasn’t anything to do with industrial relations.
Don’t both labour AND capital have a great common interest in getting rid of all the taxes that Ken Henry’s panel of inquiry showed were inefficient, and in clawing back some of their earnings, by making the switch towards land and natural resource-based revenues?
“Flexibility will get people into work”, opined Turnbull, hinting at a swing back in the direction of WorkChoices (because Labor’s swung the pendulum back too far in favour of the unions again Ridout, Sloan and Turnbull all agreed).
“It’s not just labour’s productivity” (on which we need to concentrate) countered Rudd.
You’re quite correct, Kevin. And as Malcolm’s wife, Lucy, has spoken publicly in favour of the positive affects land value taxation has on development and productivity, I think you may be biting your lip on this point, Malcolm, because you don’t want to ‘scare the horses’ before a federal election.
That’s because there’s a great educational void about resource-based revenues as an alternative to taxes on labour and capital, isn’t there?
But why not take the lead and help educate people to the point, Malcolm? You do have real leadership, statesman potential in you? Winston Churchill did. David Lloyd George did. On this very point.
“We’ve got to use taxpayers’ dollars efficiently” expounded Malcolm, now invoking statements in favour of motherhood.
Yes, but it’s from whence you draw your revenues that’s key to the world’s current problems, Malcolm.
Learn from Lucy, Malcolm. Stand up and be counted.
ABILITY TO FORECAST ACCURATELY = SCIENTIFIC EXPLANATION
Modern economists are lost because, although they occasionally like to speak of economic rents in the abstract, they have absolutely no idea of the sheer volume of land rent within the economy. It’s some 33% of GDP. It seems the vast majority of economists are able to turn a blind eye to what happens to one-third of the economy.
Georgists comprehend the damage taxes wreak upon the economy and that whilst their deadweight destroys business and employment, a charge on land rents does not. In fact, it not only helps the efficient allocation of natural resources, but assists in conserving the environment.
Georgist economists were well represented amongst those who predicted the global financial collapse. Those accurate forecasters who were not Georgist, such as Nouriel Roubini, had a grasp of the destruction aberrant real estate markets could work upon economies, so theirs also remains scientific explanations of why we are where we are.
Once you understand the role of land and its rent within the economy, you can have worthwhile discussion abut how to fix the current depression. Not until then.
Do you understand, Barack Obama, Wayne Swan, et al?
LINDSAY FOX
I listened to Lindsay Fox on Geraldine Doogue’s “Saturday Extra” program this morning.
He spoke common sense.
[You may have noticed that politicians, burdened by the requirement to appease either the left or right, aren’t particularly big on common sense.]
The Fox Transport Group has now established itself in Thailand and is looking to expand throughout Asia and the sub-continent.
Lindsay’s approach is to speak to a handful of a country’s key politicians and businessmen to solve his–and usually their–problems.
Fox told Doogue there’s also a need to attend to Australia’s regional areas better than we currently do.
“Give businessmen free land to move into the regions, and abolish their payroll taxes”, he suggested.
Now Lindsay, did you know there’s an international movement that wants EVERYBODY to have free land and abolish ALL taxes?
They’re called Georgists – and they forecast this global financial collapse.
[And I’m sorry, Ron Paul, but you might have to allow just one more ‘ism …. because it actually works.]
Thanks, Geraldine, I enjoyed the program!
Ron Paul, man of integrity
His Farewell Speech to Congress (November 14, 2012)
“This may well be the last time I speak on the House Floor. At the end of the year I’ll leave Congress after 23 years in office over a 36 year period. My goals in 1976 were the same as they are today: promote peace and prosperity by a strict adherence to the principles of individual liberty.
It was my opinion, that the course the U.S. embarked on in the latter part of the 20th Century would bring us a major financial crisis and engulf us in a foreign policy that would overextend us and undermine our national security.
To achieve the goals I sought, government would have had to shrink in size and scope, reduce spending, change the monetary system, and reject the unsustainable costs of policing the world and expanding the American Empire.
The problems seemed to be overwhelming and impossible to solve, yet from my view point, just following the constraints placed on the federal government by the Constitution would have been a good place to start.
How Much Did I Accomplish?
In many ways, according to conventional wisdom, my off-and-on career in Congress, from
1976 to 2012, accomplished very little. No named legislation, no named federal buildings or
highways—thank goodness. In spite of my efforts, the government has grown exponentially,
taxes remain excessive, and the prolific increase of incomprehensible regulations continues.
Wars are constant and pursued without Congressional declaration, deficits rise to the sky,
poverty is rampant and dependency on the federal government is now worse than any time in
our history.
All this with minimal concerns for the deficits and unfunded liabilities that common sense tells
us cannot go on much longer. A grand, but never mentioned, bipartisan agreement allows for
the well-kept secret that keeps the spending going. One side doesn’t give up one penny on
military spending, the other side doesn’t give up one penny on welfare spending, while both
sides support the bailouts and subsidies for the banking and corporate elite. And the spending
continues as the economy weakens and the downward spiral continues. As the government
continues fiddling around, our liberties and our wealth burn in the flames of a foreign policy
that makes us less safe.
The major stumbling block to real change in Washington is the total resistance to admitting that
the country is broke. This has made compromising, just to agree to increase spending,
inevitable since neither side has any intention of cutting spending.
The country and the Congress will remain divisive since there’s no “loot left to divvy up.”
Without this recognition the spenders in Washington will continue the march toward a fiscal
cliff much bigger than the one anticipated this coming January.
I have thought a lot about why those of us who believe in liberty, as a solution, have done so
poorly in convincing others of its benefits. If liberty is what we claim it is- the principle that
protects all personal, social and economic decisions necessary for maximum prosperity and the
best chance for peace- it should be an easy sell. Yet, history has shown that the masses have
been quite receptive to the promises of authoritarians which are rarely if ever fulfilled.
Authoritarianism vs. Liberty
If authoritarianism leads to poverty and war and less freedom for all individuals and is
controlled by rich special interests, the people should be begging for liberty. There certainly
was a strong enough sentiment for more freedom at the time of our founding that motivated
those who were willing to fight in the revolution against the powerful British government.
During my time in Congress the appetite for liberty has been quite weak; the understanding of
its significance negligible. Yet the good news is that compared to 1976 when I first came to
Congress, the desire for more freedom and less government in 2012 is much greater and
growing, especially in grassroots America. Tens of thousands of teenagers and college age
students are, with great enthusiasm, welcoming the message of liberty.
I have a few thoughts as to why the people of a country like ours, once the freest and most
prosperous, allowed the conditions to deteriorate to the degree that they have.
Freedom, private property, and enforceable voluntary contracts, generate wealth. In our early
history we were very much aware of this. But in the early part of the 20th century our
politicians promoted the notion that the tax and monetary systems had to change if we were to
involve ourselves in excessive domestic and military spending. That is why Congress gave us
the Federal Reserve and the income tax. The majority of Americans and many government
officials agreed that sacrificing some liberty was necessary to carry out what some claimed to
be “progressive” ideas. Pure democracy became acceptable.
They failed to recognized that what they were doing was exactly opposite of what the colonists
were seeking when they broke away from the British.
Some complain that my arguments makes no sense, since great wealth and the standard of
living improved for many Americans over the last 100 years, even with these new policies.
But the damage to the market economy, and the currency, has been insidious and steady. It
took a long time to consume our wealth, destroy the currency and undermine productivity and
get our financial obligations to a point of no return. Confidence sometimes lasts longer than
deserved. Most of our wealth today depends on debt.
The wealth that we enjoyed and seemed to be endless, allowed concern for the principle of a
free society to be neglected. As long as most people believed the material abundance would
last forever, worrying about protecting a competitive productive economy and individual
liberty seemed unnecessary.
The Age of Redistribution
This neglect ushered in an age of redistribution of wealth by government kowtowing to any and
all special interests, except for those who just wanted to left alone. That is why today money in
politics far surpasses money currently going into research and development and productive
entrepreneurial efforts.
The material benefits became more important than the understanding and promoting the
principles of liberty and a free market. It is good that material abundance is a result of liberty
but if materialism is all that we care about, problems are guaranteed.
The crisis arrived because the illusion that wealth and prosperity would last forever has ended.
Since it was based on debt and a pretense that debt can be papered over by an out-of-control
fiat monetary system, it was doomed to fail. We have ended up with a system that doesn’t
produce enough even to finance the debt and no fundamental understanding of why a free
society is crucial to reversing these trends.
If this is not recognized, the recovery will linger for a long time. Bigger government, more
spending, more debt, more poverty for the middle class, and a more intense scramble by the
elite special interests will continue.
We Need an Intellectual Awakening
Without an intellectual awakening, the turning point will be driven by economic law. A dollar
crisis will bring the current out-of-control system to its knees.
If it’s not accepted that big government, fiat money, ignoring liberty, central economic
planning, welfarism, and warfarism caused our crisis we can expect a continuous and
dangerous march toward corporatism and even fascism with even more loss of our liberties.
Prosperity for a large middle class though will become an abstract dream.
This continuous move is no different than what we have seen in how our financial crisis of
2008 was handled. Congress first directed, with bipartisan support, bailouts for the wealthy.
Then it was the Federal Reserve with its endless quantitative easing. If at first it doesn’t
succeed try again; QE1, QE2, and QE3 and with no results we try QE indefinitely—that is until
it too fails. There’s a cost to all of this and let me assure you delaying the payment is no longer
an option. The rules of the market will extract its pound of flesh and it won’t be pretty.
The current crisis elicits a lot of pessimism. And the pessimism adds to less confidence in the
future. The two feed on themselves, making our situation worse.
If the underlying cause of the crisis is not understood we cannot solve our problems. The issues
of warfare, welfare, deficits, inflationism, corporatism, bailouts and authoritarianism cannot be
ignored. By only expanding these policies we cannot expect good results.
Everyone claims support for freedom. But too often it’s for one’s own freedom and not for
others. Too many believe that there must be limits on freedom. They argue that freedom must
be directed and managed to achieve fairness and equality thus making it acceptable to curtail,
through force, certain liberties.
Some decide what and whose freedoms are to be limited. These are the politicians whose goal
in life is power. Their success depends on gaining support from special interests.
No More ‘isms’
The great news is the answer is not to be found in more “isms.” The answers are to be found in
more liberty which cost so much less. Under these circumstances spending goes down, wealth
production goes up, and the quality of life improves.
Just this recognition—especially if we move in this direction—increases optimism which in
itself is beneficial. The follow through with sound policies are required which must be
understood and supported by the people.
But there is good evidence that the generation coming of age at the present time is supportive
of moving in the direction of more liberty and self-reliance. The more this change in direction
and the solutions become known, the quicker will be the return of optimism.
Our job, for those of us who believe that a different system than the one that we have had for
the last 100 years, has driven us to this unsustainable crisis, is to be more convincing that there
is a wonderful, uncomplicated, and moral system that provides the answers. We had a taste of
it in our early history. We need not give up on the notion of advancing this cause.
It worked, but we allowed our leaders to concentrate on the material abundance that freedom
generates, while ignoring freedom itself. Now we have neither, but the door is open, out of
necessity, for an answer. The answer available is based on the Constitution, individual liberty
and prohibiting the use of government force to provide privileges and benefits to all special
interests.
After over 100 years we face a society quite different from the one that was intended by the
Founders. In many ways their efforts to protect future generations with the Constitution from
this danger has failed. Skeptics, at the time the Constitution was written in 1787, warned us of
today’s possible outcome. The insidious nature of the erosion of our liberties and the
reassurance our great abundance gave us, allowed the process to evolve into the dangerous
period in which we now live.
Dependency on Government Largesse
Today we face a dependency on government largesse for almost every need. Our liberties are
restricted and government operates outside the rule of law, protecting and rewarding those who
buy or coerce government into satisfying their demands. Here are a few examples:
• Undeclared wars are commonplace.
• Welfare for the rich and poor is considered an entitlement.
• The economy is over-regulated, overtaxed and grossly distorted by a deeply flawed
monetary system.
• Debt is growing exponentially.
• The Patriot Act and FISA legislation passed without much debate have resulted in a
steady erosion of our 4th Amendment rights.
• Tragically our government engages in preemptive war, otherwise known as aggression,
with no complaints from the American people.
• The drone warfare we are pursuing worldwide is destined to end badly for us as the
hatred builds for innocent lives lost and the international laws flaunted. Once we are
financially weakened and militarily challenged, there will be a lot resentment thrown our
way.
• It’s now the law of the land that the military can arrest American citizens, hold them
indefinitely, without charges or a trial.
• Rampant hostility toward free trade is supported by a large number in Washington.
• Supporters of sanctions, currency manipulation and WTO trade retaliation, call the true
free traders “isolationists.”
• Sanctions are used to punish countries that don’t follow our orders.
• Bailouts and guarantees for all kinds of misbehavior are routine.
• Central economic planning through monetary policy, regulations and legislative
mandates has been an acceptable policy.
Questions
Excessive government has created such a mess it prompts many questions:
• Why are sick people who use medical marijuana put in prison?
• Why does the federal government restrict the drinking of raw milk?
• Why can’t Americans manufacture rope and other products from hemp?
• Why are Americans not allowed to use gold and silver as legal tender as mandated by
the Constitution?
• Why is Germany concerned enough to consider repatriating their gold held by the FED
for her in New York? Is it that the trust in the U.S. and dollar supremacy beginning to
wane?
• Why do our political leaders believe it’s unnecessary to thoroughly audit our own gold?
• Why can’t Americans decide which type of light bulbs they can buy?
• Why is the TSA permitted to abuse the rights of any American traveling by air?
• Why should there be mandatory sentences—even up to life for crimes without victims—
as our drug laws require?
• Why have we allowed the federal government to regulate commodes in our homes?
• Why is it political suicide for anyone to criticize AIPAC ?
• Why haven’t we given up on the drug war since it’s an obvious failure and violates the
people’s rights? Has nobody noticed that the authorities can’t even keep drugs out of the
prisons? How can making our entire society a prison solve the problem?
• Why do we sacrifice so much getting needlessly involved in border disputes and civil
strife around the world and ignore the root cause of the most deadly border in the world
-the one between Mexico and the US?
• Why does Congress willingly give up its prerogatives to the Executive Branch?
• Why does changing the party in power never change policy? Could it be that the views
of both parties are essentially the same?
• Why did the big banks, the large corporations, and foreign banks and foreign central
banks get bailed out in 2008 and the middle class lost their jobs and their homes?
• Why do so many in the government and the federal officials believe that creating money
out of thin air creates wealth?
• Why do so many accept the deeply flawed principle that government bureaucrats and
politicians can protect us from ourselves without totally destroying the principle of
liberty?
• Why can’t people understand that war always destroys wealth and liberty?
• Why is there so little concern for the Executive Order that gives the President authority
to establish a “kill list,” including American citizens, of those targeted for assassination?
• Why is patriotism thought to be blind loyalty to the government and the politicians who
run it, rather than loyalty to the principles of liberty and support for the people? Real
patriotism is a willingness to challenge the government when it’s wrong.
• Why is it is claimed that if people won’t or can’t take care of their own needs, that
people in government can do it for them?
• Why did we ever give the government a safe haven for initiating violence against the
people?
• Why do some members defend free markets, but not civil liberties?
• Why do some members defend civil liberties but not free markets? Aren’t they the same?
• Why don’t more defend both economic liberty and personal liberty?
• Why are there not more individuals who seek to intellectually influence others to bring
about positive changes than those who seek power to force others to obey their
commands?
• Why does the use of religion to support a social gospel and preemptive wars, both of
which requires authoritarians to use violence, or the threat of violence, go unchallenged?
Aggression and forced redistribution of wealth has nothing to do with the teachings of
the world’s great religions.
• Why do we allow the government and the Federal Reserve to disseminate false
information dealing with both economic and foreign policy?
• Why is democracy held in such high esteem when it’s the enemy of the minority and
makes all rights relative to the dictates of the majority?
• Why should anyone be surprised that Congress has no credibility, since there’s such a
disconnect between what politicians say and what they do?
Is there any explanation for all the deception, the unhappiness, the fear of the future, the
loss of confidence in our leaders, the distrust, the anger and frustration? Yes there is,
and there’s a way to reverse these attitudes. The negative perceptions are logical and a
consequence of bad policies bringing about our problems. Identification of the problems
and recognizing the cause allow the proper changes to come easy.
Trust Yourself, Not the Government
Too many people have for too long placed too much confidence and trust in government and
not enough in themselves. Fortunately, many are now becoming aware of the seriousness of
the gross mistakes of the past several decades. The blame is shared by both political parties.
Many Americans now are demanding to hear the plain truth of things and want the
demagoguing to stop. Without this first step, solutions are impossible.
Seeking the truth and finding the answers in liberty and self-reliance promotes the optimism
necessary for restoring prosperity. The task is not that difficult if politics doesn’t get in the
way.
We have allowed ourselves to get into such a mess for various reasons.
Politicians deceive themselves as to how wealth is produced. Excessive confidence is placed in
the judgment of politicians and bureaucrats. This replaces the confidence in a free society. Too
many in high places of authority became convinced that only they, armed with arbitrary
government power, can bring about fairness, while facilitating wealth production. This always
proves to be a utopian dream and destroys wealth and liberty. It impoverishes the people and
rewards the special interests who end up controlling both political parties.
It’s no surprise then that much of what goes on in Washington is driven by aggressive
partisanship and power seeking, with philosophic differences being minor.
Economic Ignorance
Economic ignorance is commonplace. Keynesianism continues to thrive, although today it is
facing healthy and enthusiastic rebuttals. Believers in military Keynesianism and domestic
Keynesianism continue to desperately promote their failed policies, as the economy languishes
in a deep slumber.
Supporters of all government edicts use humanitarian arguments to justify them.
Humanitarian arguments are always used to justify government mandates related to the
economy, monetary policy, foreign policy, and personal liberty. This is on purpose to make it
more difficult to challenge. But, initiating violence for humanitarian reasons is still violence.
Good intentions are no excuse and are just as harmful as when people use force with bad
intentions. The results are always negative.
The immoral use of force is the source of man’s political problems. Sadly, many religious
groups, secular organizations, and psychopathic authoritarians endorse government initiated
force to change the world. Even when the desired goals are well-intentioned—or especially
when well-intentioned—the results are dismal. The good results sought never materialize. The
new problems created require even more government force as a solution. The net result is
institutionalizing government initiated violence and morally justifying it on humanitarian
grounds.
This is the same fundamental reason our government uses force for invading other countries at
will, central economic planning at home, and the regulation of personal liberty and habits of
our citizens.
It is rather strange, that unless one has a criminal mind and no respect for other people and their
property, no one claims it’s permissible to go into one’s neighbor’s house and tell them how to
behave, what they can eat, smoke and drink or how to spend their money.
Yet, rarely is it asked why it is morally acceptable that a stranger with a badge and a gun can do
the same thing in the name of law and order. Any resistance is met with brute force, fines,
taxes, arrests, and even imprisonment. This is done more frequently every day without a proper
search warrant.
No Government Monopoly over Initiating Violence
Restraining aggressive behavior is one thing, but legalizing a government monopoly for
initiating aggression can only lead to exhausting liberty associated with chaos, anger and the
breakdown of civil society. Permitting such authority and expecting saintly behavior from the
bureaucrats and the politicians is a pipe dream. We now have a standing army of armed
bureaucrats in the TSA, CIA, FBI, Fish and Wildlife, FEMA, IRS, Corp of Engineers, etc.
numbering over 100,000. Citizens are guilty until proven innocent in the unconstitutional
administrative courts.
Government in a free society should have no authority to meddle in social activities or the
economic transactions of individuals. Nor should government meddle in the affairs of other
nations. All things peaceful, even when controversial, should be permitted.
We must reject the notion of prior restraint in economic activity just we do in the area of free
speech and religious liberty. But even in these areas government is starting to use a backdoor
approach of political correctness to regulate speech-a dangerous trend. Since 9/11 monitoring
speech on the internet is now a problem since warrants are no longer required.
The Proliferation of Federal Crimes
The Constitution established four federal crimes. Today the experts can’t even agree on how
many federal crimes are now on the books—they number into the thousands. No one person
can comprehend the enormity of the legal system—especially the tax code. Due to the ill-advised
drug war and the endless federal expansion of the criminal code we have over 6 million
people under correctional suspension, more than the Soviets ever had, and more than any other
nation today, including China. I don’t understand the complacency of the Congress and the
willingness to continue their obsession with passing more Federal laws. Mandatory sentencing
laws associated with drug laws have compounded our prison problems.
The federal register is now 75,000 pages long and the tax code has 72,000 pages, and expands
every year. When will the people start shouting, “enough is enough,” and demand Congress
cease and desist.
Achieving Liberty
Liberty can only be achieved when government is denied the aggressive use of force. If one
seeks liberty, a precise type of government is needed. To achieve it, more than lip service is
required.
Two choices are available.
1. A government designed to protect liberty—a natural right—as its sole objective. The
people are expected to care for themselves and reject the use of any force for interfering
with another person’s liberty. Government is given a strictly limited authority to enforce
contracts, property ownership, settle disputes, and defend against foreign aggression.
2. A government that pretends to protect liberty but is granted power to arbitrarily use force
over the people and foreign nations. Though the grant of power many times is meant to
be small and limited, it inevitably metastasizes into an omnipotent political cancer. This
is the problem for which the world has suffered throughout the ages. Though meant to
be limited it nevertheless is a 100% sacrifice of a principle that would-be-tyrants find
irresistible. It is used vigorously—though incrementally and insidiously. Granting
power to government officials always proves the adage that: “power corrupts.”
Once government gets a limited concession for the use of force to mold people habits and plan
the economy, it causes a steady move toward tyrannical government. Only a revolutionary
spirit can reverse the process and deny to the government this arbitrary use of aggression.
There’s no in-between. Sacrificing a little liberty for imaginary safety always ends badly.
Today’s mess is a result of Americans accepting option #2, even though the Founders attempted
to give us Option #1.
The results are not good. As our liberties have been eroded our wealth has been consumed.
The wealth we see today is based on debt and a foolish willingness on the part of foreigners to
take our dollars for goods and services. They then loan them back to us to perpetuate our debt
system. It’s amazing that it has worked for this long but the impasse in Washington, in solving
our problems indicate that many are starting to understand the seriousness of the world -wide
debt crisis and the dangers we face. The longer this process continues the harsher the outcome
will be.
The Financial Crisis Is a Moral Crisis
Many are now acknowledging that a financial crisis looms but few understand it’s, in reality, a
moral crisis. It’s the moral crisis that has allowed our liberties to be undermined and permits
the exponential growth of illegal government power. Without a clear understanding of the
nature of the crisis it will be difficult to prevent a steady march toward tyranny and the poverty
that will accompany it.
Ultimately, the people have to decide which form of government they want; option #1 or option
#2. There is no other choice. Claiming there is a choice of a “little” tyranny is like describing
pregnancy as a “touch of pregnancy.” It is a myth to believe that a mixture of free markets and
government central economic planning is a worthy compromise. What we see today is a result
of that type of thinking. And the results speak for themselves.
A Culture of Violence
American now suffers from a culture of violence. It’s easy to reject the initiation of violence
against one’s neighbor but it’s ironic that the people arbitrarily and freely anoint government
officials with monopoly power to initiate violence against the American people—practically at
will.
Because it’s the government that initiates force, most people accept it as being legitimate.
Those who exert the force have no sense of guilt. It is believed by too many that governments
are morally justified in initiating force supposedly to “do good.” They incorrectly believe that
this authority has come from the “consent of the people.” The minority, or victims of
government violence never consented to suffer the abuse of government mandates, even when
dictated by the majority. Victims of TSA excesses never consented to this abuse.
This attitude has given us a policy of initiating war to “do good,” as well. It is claimed that war,
to prevent war for noble purposes, is justified. This is similar to what we were once told that:
“destroying a village to save a village” was justified. It was said by a US Secretary of State
that the loss of 500,000 Iraqis, mostly children, in the 1990s, as a result of American bombs and
sanctions, was “worth it” to achieve the “good” we brought to the Iraqi people. And look at the
mess that Iraq is in today.
Government use of force to mold social and economic behavior at home and abroad has
justified individuals using force on their own terms. The fact that violence by government is
seen as morally justified, is the reason why violence will increase when the big financial crisis
hits and becomes a political crisis as well.
First, we recognize that individuals shouldn’t initiate violence, then we give the authority to
government. Eventually, the immoral use of government violence, when things goes badly,
will be used to justify an individual’s “right” to do the same thing. Neither the government nor
individuals have the moral right to initiate violence against another yet we are moving toward
the day when both will claim this authority. If this cycle is not reversed society will break
down.
When needs are pressing, conditions deteriorate and rights become relative to the demands and
the whims of the majority. It’s then not a great leap for individuals to take it upon themselves
to use violence to get what they claim is theirs. As the economy deteriorates and the wealth
discrepancies increase—as are already occurring— violence increases as those in need take it
in their own hands to get what they believe is theirs. They will not wait for a government
rescue program.
When government officials wield power over others to bail out the special interests, even with
disastrous results to the average citizen, they feel no guilt for the harm they do. Those who take
us into undeclared wars with many casualties resulting, never lose sleep over the death and
destruction their bad decisions caused. They are convinced that what they do is morally
justified, and the fact that many suffer just can’t be helped.
When the street criminals do the same thing, they too have no remorse, believing they are only
taking what is rightfully theirs. All moral standards become relative. Whether it’s bailouts,
privileges, government subsidies or benefits for some from inflating a currency, it’s all part of a
process justified by a philosophy of forced redistribution of wealth. Violence, or a threat of
such, is the instrument required and unfortunately is of little concern of most members of
Congress.
Some argue it’s only a matter of “fairness” that those in need are cared for. There are two
problems with this. First, the principle is used to provide a greater amount of benefits to the
rich than the poor. Second, no one seems to be concerned about whether or not it’s fair to those
who end up paying for the benefits. The costs are usually placed on the backs of the middle
class and are hidden from the public eye. Too many people believe government handouts are
free, like printing money out of thin air, and there is no cost. That deception is coming to an
end. The bills are coming due and that’s what the economic slowdown is all about.
Sadly, we have become accustomed to living with the illegitimate use of force by government.
It is the tool for telling the people how to live, what to eat and drink, what to read and how to
spend their money.
To develop a truly free society, the issue of initiating force must be understood and rejected.
Granting to government even a small amount of force is a dangerous concession.
Limiting Government Excesses vs. a Virtuous Moral People
Our Constitution, which was intended to limit government power and abuse, has failed. The
Founders warned that a free society depends on a virtuous and moral people. The current crisis
reflects that their concerns were justified.
Most politicians and pundits are aware of the problems we face but spend all their time in
trying to reform government. The sad part is that the suggested reforms almost always lead to
less freedom and the importance of a virtuous and moral people is either ignored, or not
understood. The new reforms serve only to further undermine liberty. The compounding effect
has given us this steady erosion of liberty and the massive expansion of debt. The real question
is: if it is liberty we seek, should most of the emphasis be placed on government reform or
trying to understand what “a virtuous and moral people” means and how to promote it. The
Constitution has not prevented the people from demanding handouts for both rich and poor in
their efforts to reform the government, while ignoring the principles of a free society. All
branches of our government today are controlled by individuals who use their power to
undermine liberty and enhance the welfare/warfare state-and frequently their own wealth and
power.
If the people are unhappy with the government performance it must be recognized that
government is merely a reflection of an immoral society that rejected a moral government of
constitutional limitations of power and love of freedom.
If this is the problem all the tinkering with thousands of pages of new laws and regulations will
do nothing to solve the problem.
It is self-evident that our freedoms have been severely limited and the apparent prosperity we
still have, is nothing more than leftover wealth from a previous time. This fictitious wealth
based on debt and benefits from a false trust in our currency and credit, will play havoc with
our society when the bills come due. This means that the full consequence of our lost liberties
is yet to be felt.
But that illusion is now ending. Reversing a downward spiral depends on accepting a new
approach.
Expect the rapidly expanding homeschooling movement to play a significant role in the
revolutionary reforms needed to build a free society with Constitutional protections. We cannot
expect a Federal government controlled school system to provide the intellectual ammunition
to combat the dangerous growth of government that threatens our liberties.
The internet will provide the alternative to the government/media complex that controls the
news and most political propaganda. This is why it’s essential that the internet remains free of
government regulation.
Many of our religious institutions and secular organizations support greater dependency on the
state by supporting war, welfare and corporatism and ignore the need for a virtuous people.
I never believed that the world or our country could be made more free by politicians, if the
people had no desire for freedom.
Under the current circumstances the most we can hope to achieve in the political process is to
use it as a podium to reach the people to alert them of the nature of the crisis and the
importance of their need to assume responsibility for themselves, if it is liberty that they truly
seek. Without this, a constitutionally protected free society is impossible.
If this is true, our individual goal in life ought to be for us to seek virtue and excellence and
recognize that self-esteem and happiness only comes from using one’s natural ability, in the
most productive manner possible, according to one’s own talents.
Productivity and creativity are the true source of personal satisfaction. Freedom, and not
dependency, provides the environment needed to achieve these goals. Government cannot do
this for us; it only gets in the way. When the government gets involved, the goal becomes a
bailout or a subsidy and these cannot provide a sense of personal achievement.
Achieving legislative power and political influence should not be our goal. Most of the change,
if it is to come, will not come from the politicians, but rather from individuals, family, friends,
intellectual leaders and our religious institutions. The solution can only come from rejecting
the use of coercion, compulsion, government commands, and aggressive force, to mold social
and economic behavior. Without accepting these restraints, inevitably the consensus will be to
allow the government to mandate economic equality and obedience to the politicians who gain
power and promote an environment that smothers the freedoms of everyone. It is then that the
responsible individuals who seek excellence and self-esteem by being self-reliance and
productive, become the true victims.
Conclusion
What are the greatest dangers that the American people face today and impede the goal of a
free society? There are five.
1. The continuous attack on our civil liberties which threatens the rule of law and our
ability to resist the onrush of tyranny.
2. Violent anti-Americanism that has engulfed the world. Because the phenomenon of
“blow-back” is not understood or denied, our foreign policy is destined to keep us
involved in many wars that we have no business being in. National bankruptcy and a
greater threat to our national security will result.
3. The ease in which we go to war, without a declaration by Congress, but accepting
international authority from the UN or NATO even for preemptive wars, otherwise
known as aggression.
4. A financial political crisis as a consequence of excessive debt, unfunded liabilities,
spending, bailouts, and gross discrepancy in wealth distribution going from the middle
class to the rich. The danger of central economic planning, by the Federal Reserve must
be understood.
5. World government taking over local and US sovereignty by getting involved in the
issues of war, welfare, trade, banking, a world currency, taxes, property ownership, and
private ownership of guns.
Happily, there is an answer for these very dangerous trends.
What a wonderful world it would be if everyone accepted the simple moral premise of rejecting
all acts of aggression. The retort to such a suggestion is always: it’s too simplistic, too
idealistic, impractical, naïve, utopian, dangerous, and unrealistic to strive for such an ideal.
The answer to that is that for thousands of years the acceptance of government force, to rule
over the people, at the sacrifice of liberty, was considered moral and the only available option
for achieving peace and prosperity.
What could be more utopian than that myth—considering the results especially looking at the
state sponsored killing, by nearly every government during the 20th Century, estimated to be in
the hundreds of millions. It’s time to reconsider this grant of authority to the state.
No good has ever come from granting monopoly power to the state to use aggression against
the people to arbitrarily mold human behavior. Such power, when left unchecked, becomes the
seed of an ugly tyranny. This method of governance has been adequately tested, and the results
are in: reality dictates we try liberty.
The idealism of non-aggression and rejecting all offensive use of force should be tried. The
idealism of government sanctioned violence has been abused throughout history and is the
primary source of poverty and war. The theory of a society being based on individual freedom
has been around for a long time. It’s time to take a bold step and actually permit it by
advancing this cause, rather than taking a step backwards as some would like us to do.
Today the principle of habeas corpus, established when King John signed the Magna Carta in
1215, is under attack. There’s every reason to believe that a renewed effort with the use of the
internet that we can instead advance the cause of liberty by spreading an uncensored message
that will serve to rein in government authority and challenge the obsession with war and
welfare.
What I’m talking about is a system of government guided by the moral principles of peace and
tolerance.
The Founders were convinced that a free society could not exist without a moral people. Just
writing rules won’t work if the people choose to ignore them. Today the rule of law written in
the Constitution has little meaning for most Americans, especially those who work in
Washington DC.
Benjamin Franklin claimed “only a virtuous people are capable of freedom.” John Adams
concurred: “Our Constitution was made for a moral and religious people. It is wholly
inadequate to the government of any other.”
A moral people must reject all violence in an effort to mold people’s beliefs or habits.
A society that boos or ridicules the Golden Rule is not a moral society. All great religions
endorse the Golden Rule. The same moral standards that individuals are required to follow
should apply to all government officials. They cannot be exempt.
The ultimate solution is not in the hands of the government.
The solution falls on each and every individual, with guidance from family, friends and
community.
The #1 responsibility for each of us is to change ourselves with hope that others will follow.
This is of greater importance than working on changing the government; that is secondary to
promoting a virtuous society. If we can achieve this, then the government will change.
It doesn’t mean that political action or holding office has no value. At times it does nudge
policy in the right direction. But what is true is that when seeking office is done for personal
aggrandizement, money or power, it becomes useless if not harmful. When political action is
taken for the right reasons it’s easy to understand why compromise should be avoided. It also
becomes clear why progress is best achieved by working with coalitions, which bring people
together, without anyone sacrificing his principles.
Political action, to be truly beneficial, must be directed toward changing the hearts and minds
of the people, recognizing that it’s the virtue and morality of the people that allow liberty to
flourish.
The Constitution or more laws per se, have no value if the people’s attitudes aren’t changed.
To achieve liberty and peace, two powerful human emotions have to be overcome. Number
one is “envy” which leads to hate and class warfare. Number two is “intolerance” which leads
to bigoted and judgmental policies. These emotions must be replaced with a much better
understanding of love, compassion, tolerance and free market economics. Freedom, when
understood, brings people together. When tried, freedom is popular.
The problem we have faced over the years has been that economic interventionists are swayed
by envy, whereas social interventionists are swayed by intolerance of habits and lifestyles. The
misunderstanding that tolerance is an endorsement of certain activities, motivates many to
legislate moral standards which should only be set by individuals making their own choices.
Both sides use force to deal with these misplaced emotions. Both are authoritarians. Neither
endorses voluntarism. Both views ought to be rejected.
I have come to one firm conviction after these many years of trying to figure out “the plain
truth of things.” The best chance for achieving peace and prosperity, for the maximum number
of people world-wide, is to pursue the cause of LIBERTY.
If you find this to be a worthwhile message, spread it throughout the land.”
RENT-SEEKING CASE AT ICAC (NSW)
The name of the game, as I’ve just mentioned, is rent-seeking. It’s hard to make a fast buck anywhere else. There’s an uplift in land rent from zero to you-name-it the moment a community comes into existence.
No one individual creates the land rent, it simply arises around any community.
So, although this is the natural source for our revenue, rentiers tell us land rent’s inadequate. There’s not enough of it. That’s rubbish, of course. But even the economics textbooks repeat it, because they’re either complicit or ignorant about the true extent of land rent. Taxes on labour and capital are essential, they say. [And doesn’t the rentier class promote this arrant nonsense with glee?]
If there are minerals in the land, that’s even better. Just claim the resource, pay a bit of tax and royalty …. and, bingo! the “super profits” [another way of saying the people’s rent] is yours – yours as an individual, even though land and natural resource rents are owed equally to ALL the nation’s citizens.
This stealing, this rent-seeking, has become accepted practice. It’s wrong, because it is stealing but, in the case of land and natural resource rents, this form of stealing permitted, if not encouraged. You’re regarded as an “entrepreneur” and a “job-creater” if you’re into this form of theft. It has received an imprimatur; it’s OK.
So everybody has their ear to the ground, so to speak, to see if there’s any easy rent to be had.
And there often is, of course.
You should see how all the smart guys get onto it. Indebted governments, sometimes even governments fearful of running a temporary deficit, are sometimes prone to sell the silverware, the public assets our forebears worked and paid for. You know, reticulated services such as gas and electricity, freeways (becoming private tollways), railways, airports, etc.
PPPs are a great way to privatise community infrastructure. You raise everybody’s land values, but don’t try to recoup any of it (as Robin Smith described in the previous piece). Once, we used to pay for these public works over a period from our rates and taxes, or a bond issue, but that’s now become passe because it doesn’t get them into private hands so someone can make a killing at the community’s expense, you see?
But then they draw a sort of line between this form of theft from the public and theft obtained from “inside information”. That’s just going a bit too far. So, if you first got onto your rent-seeking in “hush, hush” circumstances, you’ve got to be a little cautious.
And that’s what some are claiming has got Eddie Obeid into the poo.
So now it’s the lawyers turn to dine out on rent-seeking. There ought to be a good six months in this one, eh boys?
I’m looking forward to the day when ALL rent-seeking is seen for what it is – thieving from the public.