Who Is John Galt?

Find out in ten days

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But Without the Government

…who would warn us that hot water is hot?

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A Libertarian Down Under

I’ve been spending a lot of time in Australia over the past few months, and now I learn from Reason.com that they’ve gone and elected an avowed libertarian, David Leyonhjelm, to their Senate (as if the friendly people and beautiful landscapes weren’t reason enough to like the place).

Here’s the video of his debut speech:

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Use a Sharpie, Go to Jail

I got carded today, which came as a surprise since I wasn’t even trying to buy alcohol. I was buying a Sharpie marker. It turns out that in the great nanny state of California, one must be at least eighteen years old to buy a Sharpie pen. An age requirement for markers would be laughable in of itself, but seems even more so given the fact the California public school system lists them on the recommended school supplies list for second graders – many of whom are younger than eighteen. Apparently California’s youth are free to possess and use Sharpies, they just aren’t allowed to purchase them with their allowance. I will sleep soundly tonight knowing my child is being protected from a danger that before today I didn’t even know existed (and still don’t fully understand).

The cashier also informed me that buyers must be at least eighteen to purchase White Out, spray paint, or any of the small fishing or pocket knives located in sporting goods (but there is no age restriction on kitchen knives of any size or sharpness as long as they are purchased from the housewares department).

Somewhere in Sacramento is a bureaucrat making more money than I am to come up with these rules. He should probably stay there, since I doubt anyone in the private sector would willingly pay him for such stupidity.

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Libertarian Utopias Are Always Childless

On July 14, 2014, Michael Gerson of The Washington Post published an editorial titled, “Corrupting Citizens for Fun and Profit.” In the article he suggests that libertarian opposition to the government’s restrictions on gambling and its prohibition of marijuana actually plays into the government’s hands. Were these prohibitions removed, the government would have access to additional sources of tax revenue, which would enable the government to grow. Paradoxically therefore, libertarians who care about protecting and expanding individual liberty should actually support the government’s ceaseless efforts to curtail individual liberty in those areas (yes, the article really is that convoluted).

Two of the larger social trends of our time — the growth of payday gambling and the legalization of marijuana — have two things in common: They are justified as the expansion of personal liberty, and they serve the interests of an expanding government.

The ideological alliance behind these changes is among the strangest in U.S. politics. Libertarians seek to lift governmental restraints on consensual acts. State governments seek sources of revenue without the political inconvenience of requesting broad tax increases. Both find common ground in encouraging and exploiting the weaknesses and addictions of citizens. (And business interests and their lobbyists, of course, find new ways to profit from reliable vices.)

I’m not going to bother taking apart each of the arguments put forward in the article. It’s all basic stuff that anyone with the slightest understanding of the consequences of prohibition has seen and refuted a million times. With regard to the claim that legalization will enable the government to grow, I would argue that prohibition has also enabled the expansion of government power – it’s just done so in ways Mr. Gerson may not have considered. To name but a few:

The prison-industrial complex: The country formerly known as “The Land of the Free” now imprisons more people than any other nation on the planet. Not just on a per-capita basis, but also in the absolute number of human beings warehoused in cages. Almost half of those people are there not because they brought actual harm to others, but simply because they violated the government’s commandment against the use or possession of certain substances. Aside from the immediate damage done to them by their imprisonment, the criminal record they carry for the rest of their lives does lasting harm to their legitimate economic prospects and deprives society as a whole of the productive contributions they would otherwise be able to make. Does anyone really believe the world would have been better off if Steve Jobs had been busted for possession?

The deformation of the police: The phrase “war on drugs” is no mere metaphor. Police forces are now fully militarized, with SWAT teams conducting over one hundred raids each and every day, usually for drug-related crimes. Asset forfeiture laws, allegedly passed to fight the war on drugs, have transformed our so-called “protectors” into roving bands of pirates who can steal cash and property from American citizens regardless of whether any crime has been committed.

Loss of privacy: Americans’ financial transactions are no longer private in any meaningful sense of the word. Have you ever wondered why you have to declare how much cash you are carrying outside the country, or why banks must report any electronic transactions that exceed some arbitrary amount, or why that should be anyone’s business but yours? This is also due in large part to the war on drugs.

As Thomas Jefferson (a hemp farmer of some renown) once wrote, “The natural progress of things is for liberty to yield, and government to gain ground.” Such is the nature of any parasitic organism. To my mind, this renders Mr. Gerson’s inverted “bootleggers and Baptists” argument invalid. In a perfect world, the government would neither restrict nor tax these activities. But since perfection is not an option in the real world, legalization and taxation would at least ameliorate the most pernicious effects of the current prohibition-fueled government growth.

It was neither a terribly interesting article nor a particularly convincing argument. Had that been all there was I wouldn’t have bothered writing about it. But what really got my attention was the following passage:

Parents no longer expect much help from government in reinforcing the cultural and moral norms necessary to the raising of responsible, successful children. But now some states are profiting from actively undermining those norms. Apparently, only consenting adults matter. Libertarian utopias are always childless. [Emphasis mine].

I found that last sentence to be particularly insulting. One of the reasons I’m a libertarian is precisely because I have children. Like any parent, I want them to grow up in a safer and more prosperous society. Mr. Gerson is correct that I do not expect much help from the government in raising them. The more important something is, the less I want the government involved in it – and there’s nothing more important to me than my family. One need only read a newspaper to see just how the government’s war on drugs “helps” people. It cages them, steals from them and ruins their lives. My children and I can do without that kind of help, thank you very much, and I reject the false morality that seeks to legitimate that kind of violence.

As I have written before, I do not use illegal drugs and I do not want my children using them either. I know of no serious libertarian writer who claims, as Mr. Gerson wrote in his article, that pot is harmless. There are many things in this world that cause harm, but that is not in and of itself a reason to criminalize them. As a parent who routinely argues in favor of a more libertarian society (but makes no promises of Utopia), I demand the right to “reinforce the cultural and moral norms necessary to the raising of responsible, successful children” myself from a place of love and understanding as their father – a place the state does not and cannot occupy. And unlike the government, I am confident in my ability to do so without resorting to imprisoning them in jail cells with rapists and murderers, throwing flash-bang grenades in their cribs as they sleep, or shooting their grandparents dead in the middle of the night.

A more libertarian society would be neither utopian nor childless. It would, however, be less violent – which is far more than I can say for the statist utopia espoused by Michael Gerson and The Washington Post.

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Unsustainable Inter-Generational Theft: The Greatest Government Policy Ever?

The Atlantic is running a twelve-part series by Derek Thompson titled Economics in Plain English. The latest installment is Social Security: The Greatest Government Policy Ever? Hit the link, watch the video, and then we’ll talk.

To summarize the argument:

“Some people claim Social Security is a Ponzi scheme. Others claim it’s bankrupt or close to it. But Social Security is really great because it takes money from people and then gives some of it back to them later. It is solely responsible for lifting 22 million Americans out of poverty. And even though people who have paid into the system all their working lives will soon not receive the benefits that were promised them, that’s not a problem because all the government has to do is ‘tweak’ the system just one more time. And it should probably start doling out even more money than it already does because Americans are too stupid to save on their own, so they need the government to do it for them. It’s socialism that saves us from our human nature.”

I cannot wait to watch the other eleven installments of this series. And although the production value of the video is excellent, I felt like Mr. Thompson glossed over some of the objections to Social Security in his haste to praise it.

For example, the claims by Governor Rick Perry and Judge Andrew Napolitano that “Social Security is a Ponzi scheme” went completely unchallenged, which may have been intentional since Social Security is a Ponzi scheme. The payroll taxes extracted by force from workers are not put into individual accounts assigned to each worker. Instead, the money flows into the Social Security fund and is removed to pay current retirees. What little Social Security money I receive if and when I retire will not come from my own earnings. It will be extracted from my children’s and grandchildren’s earnings instead. This is the very definition of a Ponzi scheme – returns to earlier investors come from the money paid into the fund by newer investors, and not from any profit earned by the fund. That’s why the government always needs another generation of suckers to fleece. The only way Social Security differs from a traditional Ponzi scheme is that it’s not illegal when the government does it.

As Professor Gary Galles wrote,

“After Social Security’s creation, those in or near retirement got benefits far exceeding their costs (Ida Mae Fuller, the first Social Security recipient, got 462 times what she and her employer together paid in ‘contributions’). Those benefits in excess of their taxes paid inherently forced future Americans to pick up the tab for the difference. And the program’s almost unthinkable unfunded liabilities are no less a burden on later generations because earlier generations financed some of their own benefits, or because the government has consistently lied that they have paid their own way.

Since its creation, Social Security has been expanded multiple times. Each expansion meant those already retired paid no added taxes, and those near retirement paid more for only a few years. But both groups received increased benefits throughout retirement, increasing the unfunded benefits whose burdens had to be borne by later generations. Thus, each such expansion started another Ponzi cycle benefiting older Americans at others’ expense.”

If you or I engaged in this kind of inter-generational theft we’d be sharing a prison cell with Bernie Madoff right now. Fortunately FDR pardoned us all by implementing the kind of socialism that “saves us from our human nature.”

As to whether or not Social Security is bankrupt, it is important to note that there is no Social Security “lock box” in any meaningful sense. The loot expropriated from the working class can be raided at any time to be spent by the government for any purpose whatsoever. When that happens, those funds are replaced by IOUs that will only be paid back through additional taxation later. From the Cato Institute’s Michael Tanner:

“The Social Security Trust Fund is not an asset that can be used to pay benefits. As the Clinton administration’s Fiscal Year 2000 Budget explained it:

‘These [Trust Fund] balances are available to finance future benefit payments and other Trust Fund expenditures—but only in a bookkeeping sense. …They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures. The existence of large Trust Fund balances, therefore, does not, by itself, have any impact on the Government’s ability to pay benefits.’

Even if Congress can find a way to redeem the bonds, the Trust Fund surplus will be completely exhausted by 2033.”

We can quibble over the degree to which the program is bankrupt, but let’s face it – if you’re paying your MasterCard bill with your Visa card and whatever small change you find in your kid’s piggy bank, you’re broke.

And those were just the objections that were mentioned in the video. Another would be the woefully inadequate returns Social Security provides. Just about any rational investment strategy would beat Social Security’s returns hands-down, providing retirees with a much larger nest egg.

Again, from Cato’s Michael Tanner:

“Opponents of allowing younger workers to privately invest a portion of their Social Security taxes through personal accounts have long pointed to the supposed riskiness of private investment. The volatility of private capital markets over the past several years, and especially recent declines in the stock market, have seemed to bolster their argument.

However, private capital investment remains remarkably safe over the long term. Despite recent declines in the stock market, a worker who had invested privately over the past 40 years would have still earned an average yearly return of 6.85 percent investing in the S&P 500, 3.46 percent from corporate bonds, and 2.44 percent from government bonds.

If workers who retired in 2011 had been allowed to invest the employee half of the Social Security payroll tax over their working lifetime, they would retire with more income than if they relied on Social Security. Indeed, even in the worst-case scenario—a low-wage worker who invested entirely in bonds—the benefits from private investment would equal those from traditional Social Security.”

Another objection is the “tweaking” of the system that was recommended so casually in the video. Mr. Thompson is correct that it has happened many times before, and can certainly be done again. But what this means is that the US government is unilaterally changing the terms of the “bargain” ex post facto by either reducing benefits or pushing back the retirement age (or both). Again, if you or I were to do that in the productive sector, we’d be in breach of contract.

So is Social Security the greatest government policy ever? If we define “great government policy” as unsustainable inter-generational theft, then absolutely it is. But God save us from any more great policies.

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A Great Civics Lesson

Just a quick police state update – I first saw this story on the invaluable Photography Is Not a Crime website. I’m not exactly sure which part of me is most offended by the news. The photographer? The parent of a Cub Scout? The rational human being living in the United States? Who could choose just one?

According to the news report, a group of Boy Scouts from Iowa were going into Alaska for a camping trip. One of the Scouts committed the non-crime of snapping a picture of an on-duty Border Patrol agent (a public servant [sic] who was in the process of doing his taxpayer-funded job…in public). Despite numerous court rulings upholding the rights of citizens to photograph people (government workers included) in public, police forces around the country routinely threaten and intimidate those same citizens for doing just that. In this case, the agent threatened to charge the teenager with a felony, punishable by a $10,000 fine and 10 years in prison (again, for taking a picture). He then ordered the entire troop to undergo a search. In the course of submitting to the search, one Scout began unloading his luggage, at which point the agent pulled his weapon from its holster and pointed it at the kid’s head.

When asked for comment, Charles Vonderheid of the Mid-Iowa Council of the Boy Scouts of America said, “We want to make sure they follow the rules. A Scout is a good citizen. It would be a great lesson in civics for that young man and that troop.”

A great civics lesson, indeed, and perhaps the Boy Scouts of America’s definition of “good citizenship” should be amended accordingly – obey the arbitrary made-up rules barked out by the man with the badge or he might shoot you just for taking his picture.

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