Libertarianism vs. Statism

All of us have been born and raised within a statist box, one in which the federal government’s primary roles are to take care of people, regulate their economic activities, and maintain an overseas military empire that intervenes in the affairs of other countries.

Both liberals and conservatives have come to accept this statist box as a permanent feature of American life. Even worse, they have convinced themselves that life in this statist box is actually freedom.

What makes libertarians different from liberals and conservatives is that, although we too have been born and raised within the statist box, we have broken free of it, in an intellectual and moral sense. Moreover, unlike liberals and conservatives, we recognize that statism isn’t freedom at all. It’s the opposite of freedom. Genuine freedom, libertarians contend, entails a dismantling of the statist box in which we all live.

Let’s set aside, for the purposes of this discussion, the warfare state, and consider the welfare state, which is an economic system in which the federal government taxes people in order to transfer the money to other people, after deducting hefty administrative costs associated with making those transfers.

Welfare-state programs include Social Security, Medicare, Medicaid, grants, subsidies, foreign aid, and bank bailouts. Every one of those programs involves the federal government’s forcible taking of people’s money in order to give it to other people.

Most people living today have been raised with all or most of those programs. They are considered a core element of American life. While people often call for reforming the programs, hardly anyone other than libertarians questions the propriety of their existence. The attitude seems to be that the welfare state is here to stay and that we just need to continue devoting our efforts to trying to make it work and continue telling ourselves that it is equivalent to the free society.

It is not surprising that most people view the welfare state as freedom. From their earliest years, American children are taught that they live in a free country. The message that America is a free country is repeated and reinforced in school five days a week for 12 years. Those who are sent into government schools (i.e., public schools) receive an extra-strength dose of the freedom message, oftentimes beginning with the Pledge of Allegiance every morning. Those who resist the message are inevitably provided with such drugs as Ritalin or Adderall to make their minds more receptive to the official freedom message.

So by the time American children are 18 years old, the vast majority of them have no doubts that they live in a free country. They may even find themselves singing, “I’m proud to be an American where at least I know I’m free.” At some events, they stand to proudly recite the Pledge of Allegiance, which of course all of them will know by heart, even if they’re not aware that it was authored by an avowed socialist. Those who go to church on Sunday are exhorted by the minister to pray for the troops who are somewhere overseas protecting and defending the freedoms enjoyed by Americans.

In the mindset of the average American, freedom entails having the government take care of people, which it does by having the IRS take money from those who own it and giving it to others. Presumably, the more the government takes care of people (and, therefore, the more money it takes from people), the freer Americans are. In other words, the more people are taken care of with Social Security, Medicare, Medicaid, grants, subsidies, and aid, the freer the American people become.

North Korea, Venezuela, and America

Suppose we asked Americans whether, in their opinion, people living in North Korea are free. Most would say no. When asked why, most of them would respond, “Because North Korea is a communist dictatorship, not a democracy.”

Very few Americans would focus on North Korea’s socialist economic system in framing their answer.

Now, suppose Americans were asked the same question about people living in Venezuela. They might be tempted to say that Venezuelans are free because there are elections in Venezuela, ignoring the fact that a democratically elected ruler can be a dictator.

Again, few Americans would focus on Venezuela’s socialist economic system in responding to a question that asks whether Venezuelans are free. It simply would not enter their minds.

The fact is that North Korea and Venezuela have the same welfare-state programs as the United States: Social Security, Medicare, Medicaid, grants, subsidies, and aid. And people in those countries are as convinced that all that welfare-statism is freedom as the average American is.

This is one of the things that distinguish libertarians from statists. We oppose all welfare-state programs, including the crown jewels of the welfare state — Social Security, Medicare, and Medicaid. We favor the immediate termination of all those socialistic programs.

The Libertarian Concept of Freedom

Libertarians view freedom differently from statists. Our concept of freedom, in an economic sense, is as follows:

We believe that people should be free to engage in any occupation or profession without any government-issued license, permit, or other form of official permission. Let consumers, not the government, decide who engages in different lines of work.

We believe that people should be free to enter into mutually beneficial transactions with anyone else in the world, without interference by the government. That includes such things as hiring a housekeeper from Mexico and selling food to a Cuban.

We believe that people should be free to accumulate unlimited amounts of wealth and, equally important, to decide for themselves what to do with it — spend, save, invest, or donate it. Thus, we hold that people should be free to plan for their own retirement (or not), to donate to their church or other causes (or not), and to help out their elderly or ailing parents (or not).

For us libertarians, that is what genuine freedom is all about, in terms of economic activity.

Compare the statist interpretation of freedom, an interpretation that libertarians consider to be false, fraudulent, and counterfeit. The statist version of freedom holds that government, not the individual, is sovereign and supreme. If people want to engage in a line of work, they’ve got to ask the government for permission. The government restricts them from engaging in mutually beneficial transactions with others, through such devices as minimum-wage laws, trade restrictions, and immigration controls. Everybody’s income is subject to being taxed in any amount deemed proper by government officials and redistributed to others. People are forced to share their money with others, be it the elderly, the sick, or simply the politically privileged.

Thus, when libertarians are asked whether they live in a free country, our answer is opposite to that of liberals and conservatives. Our answer is “no,” because an essential aspect of freedom is economic liberty. If people in a society don’t have economic liberty, then they cannot truly be considered free. And statists are not free merely because they think they are. A denial of reality, no matter how severe, doesn’t affect reality itself.

It is how libertarians view freedom that befuddles and confuses, and sometimes even angers, American statists. They’re simply unable to comprehend how libertarians are able to honestly believe that Americans are not free. That’s because in the minds of American statists, it’s obvious that Americans are free. Everyone knows that the United States is a free country.

The reason for this phenomenon is, again, that, while all of us are living within a statist box, most Americans have not been able to break out of the box, mentally speaking, and question and challenge the legitimacy of the statist box itself. Undoubtedly, that is in large part because of the powerful indoctrination that takes place in people’s formative years — a period in which their minds are molded so that they believe that the welfare state is, in fact, freedom. Thus, when a statist encounters a libertarian, who wants to bring freedom to America, the statist becomes confused, befuddled, and even angry because in his mind he’s already free, thanks to the welfare state.

The Managed Economy

Here’s another example of how different libertarians are from statists in the realm of economics — the concept of the managed economy. What is the standard debate that takes place between liberals and conservatives in the political arena? It is that the party in power has “mismanaged the economy.” Most of the time, the accusation is directed at the president. When President George W. Bush was causing federal spending and debt to soar through the roof, what did the Democrats say? “He’s mismanaging the economy!” And what have Republicans been saying about President Obama’s exorbitant federal spending and borrowing ever since he took office? “He’s mismanaging the economy!”

The entire process is simply a game in which voters transfer power back and forth between the two wings of what is really just one big political party — the Statist Party.

Sometimes, liberals and conservatives will ask libertarians, “What’s your plan for managing the economy?” Our answer: “We don’t have a plan for managing the economy,” which causes statists to go ballistic. They respond, “Oh, you libertarians are so impractical. How do you expect to win elections if you don’t have a plan for managing the economy?”

Well, there is a very simple reason that libertarians don’t have a plan for managing the economy. We don’t believe that it’s a rightful role of government in a free society to manage the economy. We believe that people should be free to manage their own economic activity and that government should stay out of the process entirely.

Thus, there are fundamental differences between libertarians and statists over the concept of freedom and the role of government in a free society.

Statists hold that freedom entails the government’s having the power to seize money from people in order to take care of others and to manage and control economic activity.

Libertarians, on the other hand, hold that freedom entails people’s having the right to manage their own economic activity in any way they want, including engaging in enterprise free of government control, accumulating unlimited amounts of wealth, and deciding for themselves what to do with it.

Another big difference between libertarians and statists relates to morality. Liberals and conservatives see nothing wrong, in a moral sense, with government’s forcibly taking money from people in order to give it to other people. In fact, for both liberals and conservatives, the welfare state is the epitome of morality. The forcible seizure and redistribution of wealth, they say, actually reflects how good, caring, and compassionate the American people are.

Libertarians hold the contrary. We say that it’s wrong for government to forcibly take money that belongs to one person in order to give it to another person. We call that stealing. And we say that stealing is immoral even when the thief puts what he steals to good use, such as funding the education of a poor student, helping a destitute elderly couple, or paying for a medical operation for a sick person.

Interesting enough, statists would agree with libertarians when the stealing is done by a private thief. They would say that such theft is morally wrong, even when the money is used for some good purpose.

The difference arises when government enters the picture. For the statist, what would ordinarily be considered to be an immoral act is suddenly converted into a moral act when the government is doing it. In other words, if the thief is a private person, the statist joins the libertarian in condemning the act. If the thief is the government, the statist praises the act, while the libertarian condemns it.

Finally, we must consider the economic consequences of the welfare state and the managed economy. Imagine a spectrum that has libertarianism at one end and total statism at the other end. At the statist end, the government owns and controls everything, and everyone is working for the state. At the libertarian end, people engage in free enterprise (that is, enterprise free of government control or management), have the right to accumulate unlimited amounts of wealth (that is, no income taxation), and are free to decide what to do with their own money (that is, no Social Security, Medicare, Medicaid, grants, subsidies, or other welfare-state programs).

Drifting to Total Statism

What liberals and conservatives fail to realize is that the totally statist society will be one that is on the verge of starvation. At the other end of the spectrum — the libertarian end — people will be enjoying the benefits of a rapidly growing, prosperous economy, one in which people are using their resources in different ways — consumption, saving, donating, et cetera.

The reason for this economic outcome lies in savings and capital. When people are free to keep everything they earn, they inevitably save a part of it. Their savings provides the capital that businesses use to expand their operations. The expansion produces higher revenues and profits, enabling firms to pay higher wages. In that way, standards of living rise. In the totally statist society, where the state owns everything, private savings and capital are squeezed out of existence, thereby dooming everyone to a life of extreme impoverishment, possibly even starvation.

In the middle of the spectrum are the welfare state and the managed economy, whereby the state attempts to extract sufficient wealth from the private sector to sustain its ever-growing welfare sector. What inevitably happens, however, is that the welfare sector becomes so large and so voracious that the private sector shrinks to a point where it cannot sustain the burden. The result is an environment of crisis and chaos, one in which people in the parasitic sector are demanding that the government do something to save them.

Because statists are convinced they’re free, they inevitably blame the economic woes on freedom and free enterprise rather than on the government’s socialistic redistributive programs and its interventionist economic policies. Thus, statists call on the government to move further along the spectrum toward more government control over economic activity and wealth.

It comes as no surprise then, that libertarians have an entirely different diagnosis of the problem. It’s the welfare-state programs and the interventionism that are the root of the economic woes, libertarians hold. The solution lies not in more government control but rather in more freedom. The solution lies in repealing the welfare-state programs and separating economy from the state.

For decades, libertarians have been telling Americans that the welfare state is not freedom and that it would inevitably lead to economic hardship, maybe even destitution. Americans haven’t listened, in large part because their minds have been trapped within the statist mindset that was mostly molded during their 12 years of childhood schooling.

Today, an increasing number of Americans are asking questions and challenging out-of-control federal spending, debt, and even inflation. Time will tell whether they’re able to do what libertarians have done — recognize the statist box for what it is, break free of it, and call for its dismantling rather than for its reform. If so, we libertarians will have a much better chance of overcoming the decades of statism under which our nation has suffered and restore a free, prosperous, and harmonious economic system to our land

Jacob G. Hornberger
Whiskey & Gunpowder

May 23, 2011

The Daily Reckoning