Democracy: The God That Failed

Today we trample sacred ground… trumpet a message of heresy… and offend the wrathful gods…

In 2001, academic Hans-Hermann Hoppe scribbled a book bearing the soaring title Democracy: The God That Failed. Hoppe’s work amounts to a one-man war dance against that most holy of secular divinities.

Hoppe’s primary tort against democracy?

It wastes. It exhausts its capital. It forever takes the short view. Hoppe uses the economic concept of time preference to nail home his point.

A Jill with low time preference delays her gratification until the future. She is disciplined. She is willing to have her cake later — after she’s seen to her business.

But a Jack with high time preference orients toward present consumption. He wants it now — and the future can go scratching.

Democracy, in Hoppe’s regard, “wants it now.” It is a spendthrift; a profligate; a child at large in a candy store.

As the wino cannot see beyond the next drink… democracy cannot see past the next election.

The problem, says Hoppe, is that democratic leaders do not own the machinery of government. It is theirs on temporary loan. The democratic politician is a placeholder.

But is that not our system’s cardinal virtue — that power is not permanently lodged in a single vessel? A rotating roster of rogues is far superior to one alone, you counter.

Otherwise the American Revolution was a vast swindle and the Fourth of July is a blackguard’s holiday.

But because a leader under democracy does not own the government apparatus, argues Hoppe, he has no incentive to maximize its value. Instead, he tends to deplete it. His limited time horizon forces him toward immediate gratification.

That is, he must get while the getting is there to be gotten.

Consider the aspiring democratic official who seeks the franchise of a demanding public. He may feel the tug of fiscal conscience. But should he fail to gratify the crowd’s clamorings, he knows the other fellow will. And our democratic aspirant will lose his election.

So he offers up the requisite sweets.

If Social Security benefits must increase to sweep him into office, then they will increase. Will it take more Medicare benefits, more unemployment insurance, more welfare? Then these you will see.

His election represents a pre-arranged raid upon the Treasury. If the national purse is thin, if the burden cannot be met from existing stocks, then it will go on the credit card.

Is the business sordid? Might it bankrupt the Republic eventually?

Well, eventually is a long way off, he says. Let it be the next fellow’s bellyache. Besides, we’ll simply grow our way out of it.

This is the office seeker under modern democracy.

Compare, for a moment, democratic government with a rented vehicle. The renter does not own the auto. He therefore has no regard for its long-term health. So he guns the engine. He pounds on the brakes. Down its gullet he pours the lowest-test gasoline. Would he ever check the oil?

And who, by the by, has ever washed a rental car?

In this way, economist Thomas Woods explains democratic government suffers the so-called “tragedy of the commons” — overuse, exhaustion, inadequate maintenance, etc.

A privately owned fishing pond, for example, is unlike a public fishing pond open to all.

Woods:

A tendency to overfish would exist with a pond available in common to all comers; a private owner, on the other hand, thinks not simply of what can be profitably extracted from his property in the short term but also of the need to maintain a stock of fish to reproduce for next year and the year after that.

Here Hoppe applies the theory to democratic government:

It must be regarded as unavoidable that public-government ownership results in continual capital consumption. Instead of maintaining or even enhancing the value of the government estate, as a king would do, a president (the government’s temporary caretaker or trustee) will use up as much of the government resources as quickly as possible, for what he does not consume now, he may never be able to consume… For a president, unlike for a king, moderation offers only disadvantages.

Hoppe speaks of a king.

Unlike democracy, Hoppe contends, monarchy takes the long view. The monarch owns the apparatus of government. As will his heirs. So he naturally inclines to policies that increase the value of his property over time.

If Social Security, Medicare and the rest begin to deplete the government’s long-term wealth, you can bet the monarch will call off the show.

“It’s welfare you want, citizen? I understand the church runs a charity.”

“Social Security, you seek? Begin planning early for your retirement. And remember to save up against the rainy day.”

“You say you want health care. I hope you don’t smoke or drink too much. And let me mention it now — sugar is a far-from-healthy substance. Besides, you can find your health insurance on the private exchanges.”

Is such a system undemocratic? Certainly.

Callous, perhaps? We cannot dispute it.

But is it fiscally stable? Yes, it is.

Would it incur massive debts it could never repay? It would not.

In brief, monarchy is better with money. It is a superior steward of wealth — at least in theory.

Once again, Hoppe:

While a king is by no means opposed to debt, he is constrained in this “natural” inclination by the fact that as the government’s private owner, he and his heirs are considered personally liable for the payment of all government debts (he can literally go bankrupt, or be forced by creditors to liquidate government assets).

In distinct contrast, Hoppe argues, we find the democratic president:

A presidential government caretaker is not held liable for debts incurred during his tenure of office. Rather, his debts are considered “public,” to be repaid by future (equally nonliable) governments.

Perhaps this explains — at least in part — why the national debt of the United States runs to some $21 trillion?

It is a capital fact beyond all argument:

Most democratic nations groan beneath bloated government… extortionate taxation… and Himalayan levels of debt.

How does this lovely, lovely state compare with the barbarous age of monarchs, Mr. Hoppe?

During the entire monarchical age until the second half of the 19th century… the tax burden rarely exceeded 5% of national product. Since then it has increased constantly. In Western Europe it stood at 15–20% of national product after World War I, and in the meantime it has risen to around 50%.

Fuerthermore, government spending ran to roughly 10% of GDP prior to World War I. It currently nears 50% in many democratic countries.

Total government spending in this Land of the Free amounts to 36% of GDP — nearly 40%.

Perhaps in retrospect… the world might have been made safe for monarchy in 1917.

And maybe our Colonial forefathers should have let old King George be in 1775. His tax bite was so light… it failed to break the skin.

Our researches reveal that American Colonial taxation ran to about 1% of total income — 1%.

And between 1764 and 1775, claims political scientist Alvin Rabushka:

The nearly 2 million white Colonists in America paid on the order of about 1% of the annual taxes levied on the roughly 8.5 million residents of Britain, or 1/25th, in per capita terms…

As traitorous as it may appear… we are half-tempted to disinter King George and parade his innocent bones down Broadway.

But let us entertain no more thoughts of heresy.

Hoppe’s book is actually no call for monarchy. As the author himself states at the onset — “I am not a monarchist and the following is not a defense of monarchy.”

His primary purpose is to diagnose an illness — not to prescribe a cure.

Hoppe’s sins against democracy are nonetheless of the mortal variety. And mainstream academics put him under excommunication for his heresies.

But to repeat, Hoppe does not call for monarchy. Nor do we.

Beneath our sinister motley beats the heart of an American patriot… and our blood runs true under red, white and blue.

Besides, a king could be every inch the scoundrel as an American president. And since he doesn’t face election… how could we possibly count upon him to say amusing and idiotic things?

Let us therefore not discount the comedic value of democratic government. Regardless, it matters little…

Hoppe’s utopia will never be — a pure monarchy has the snowball’s chance in today’s democratic age.

But does it soften his case?

Winston Churchill famously quipped that democracy was the worst form of government except for the rest.

But who knows… maybe monarchy is the worst form of government… except for the rest…

Regards,

Brian Maher
Managing editor, The Daily Reckoning