One of the Great Proposals by Great Philosophers
Viewing the outcomes of socialist and communist societies, would you have desired to be part of any one of them? Even so, today you still encounter people that claim that communism is better than having a free market. This is said because capitalism has been utterly misunderstood by the great majority of its oppositions, beginning from Karl Marx.
Karl Marx stated that communism would inevitably replace capitalism. With this we find that all ideas are contradictory, ones say fascism is the conclusion of capitalism and others say that communism supersedes capitalism. Ultimately, which is correct? The reality of it is that neither of them is true. Actually, it seems that people are afraid of inhabiting in a society full of free will, but that is our God-given right. He formed us with a will for a purpose, and that is to live in liberty, choosing and doing what we prefer without the control, manipulation, or intervention of others.
When a free volition is part of our real nature, the result of trying to thwart it will be catastrophic. Yet, many “great philosophers” have intended to invent different persuasive arguments that distort the truth and enable the convincing of people to live under political systems that limit their freedom.
One of those “great philosophers” was Karl Marx. Marx made socialism and communism expand to the world. These two systems are very similar. Socialism is an earlier stage of communism, where the only difference is that socialists are paid more if they work hard, whilst communists all get paid an equal share and are given more responsibilities instead of higher wages, when performing good toil. Both systems, however, sustain the control over the means of production. The means of production are not privatized and they all belong to the government.
As explained in “Basic Free Market Principles: A Price System”, when there is private property in the means of production, then those companies will know which resources are highly or little demanded. Therefore, through a system of prices they will receive feedback, and this will allow other companies to comprehend the price of the final product. If firms did not know how much their primary resource costs, then how would they know at what price to establish their final product?
Marx answered to that question using a reasoning known as the labor theory of value. He exposed that what determines the exchange of value between commodities is the distinct ratio of labor that went into the production of each one of them. For example, if you have a pair of shoes and a rolling chair, and the shoes are worth twice as much as the rolling chair, what makes the pair of shoes be valued twice as much? Marx’s answer is the amount of labor pain placed in the shoes in comparison to the one suffered to make the chair. If, you were to trade something for a pair of shoes, that thing would have to be worth an equal quantity of labor pain as the shoes.
Nevertheless, there is no equal sign in exchange. When you purchase a pair of shoes for 65 dollars, this does not signify that the shoes are worth equally the same to you as the dollars. If that were to be the case, then why would someone buy the shoes when they already have the 65 dollars? The truth is that he or she prefers the footwear than the money, so they are not equally valuable to the individual.
The same is proper for determining prices. Prices are resolved by the people’s valuation of things, not by the labor that was used to produce them. What if someone intended to vend an oak tree or an irreplaceable work of art, how much toil did they perform to acquire the commodity? None, hence the price of those and all goods is designated by the people’s estimation of things.
However, Marx still uses the labor theory of value to prove his point in that capitalism “exploits” workers by squeezing the “surplus value” out of them. In other words, capitalism does not pay you according to the quantity of labor you produce, but only “enough to keep you alive”. Therefore, capitalism will always make workers worse off in absolute terms, says Marx. But when you are wrong in a theory, the reasoning you develop out of it will most likely be incorrect.
Marx declares that capitalism supposedly deteriorates the working conditions of employees, and at some point, workers would have to engage in drudgery. When this occurs, the proletariat, who now live in destitution and are somehow virtually the owners of an advanced capitalist society, will spontaneously gain class consciousness and revolutionize from capitalism into communism. The revolution will not be plotted, but come about through historical circumstances.
First of all, would you like to work in the conditions of someone of 1850? You would not desire that unless the reward was suffice to compensate the terrible conditions. Karl Marx never explains what would befall if the people actually preferred the drudgery for very high wages, than the better working conditions. How would Marx react to that? That it is incorrect to engage in drudgery even when you want to do it? If so, Marx would be taking away the autonomy of the people. Also, when you live in destitution, almost in the verge of starvation, how can you manage to participate in a revolution to form a temporary extra-legal institution before a new constitution can be established? Marx never explains, but continues with his reasoning.
He states that all economic forms of organization can only survive if they can have the ability to thoroughly utilize society’s resources. Capitalism undergoes the business cycle and this demonstrates that this system cannot maintain the full use of society’s resources. To make good use of resources in a communist society, the workers will elect managers and public officials who will administer society and the economy with an economic central plan. After this, the instrument of the exploitation of one class by another (the state) will fade away.
This last argument proves that Karl Marx did not comprehend capitalism. A free market economy has nothing to do with business cycles. This system always tries to utilize resources in the most efficient manner and elects those that will manage them successfully. In “Money, Government, Prices, and Concealed Corruption” it is exposed how the provoker of business cycles is the government and its central bank when it intervenes in the matters of the economy.
When you have a democratically regulated economic central plan determining what to produce, says Marx, people will be less selfish, more versatile, more creative, and more autonomous. The people’s full potential will be encouraged, because they will have an overall control of what and how to produce. Under communism, people will not have to specialize in one single area, thus the division of labor will be abolished and everyone will be free to move among different occupations. With communism, everyone is entitled to goods based on their need. This leads people to work, not because they have to, but because they want to and in whatever sphere of activity they desire. Through this whole process, work becomes an outlet for creative self-expression. In the morning, one can be an architect, at noon a lawyer, and at night an actor.
Having the opportunity to decide whether or not you will work maximizes your leisure time, because people can choose to do nothing. Marx thinks that capitalism leads to unconscious economic decisions. Producing only what the market wants is unpleasant, monotonous, and dehumanizing, because you do not produce what you want, but what others want. Greed and selfishness are what guide human beings in the free market, but in communism goods are distributed to people, each according to their need and want for them.
Every single thing that Marx says is incorrect and contradictory. How can the state wither away when you have a central plan? Ultimately, a minority of people would end up making decisions for millions that have different ideals, different point of views, different philosophies, etc. Would this increase autonomy? Absolutely not, actually the general public would become less free in having a small group of people, whom do not know every single citizen of the nation, making economic decisions for the entire country.
A centrally planned economy, would not allow people to use work as an outlet for self-expression. How can your central economic plan function when everyone is doing whatever they want? How will you have resources to distribute when people can choose to work or not to work? Doesn’t it make you self-centered when you want to produce what you desire, and not what the market needs or wants? People might have more leisure time under communism, but at the expense of starvation.
The free market increases leisure time along with the standard of living. It is by capitalism that a truly rich man can fly on his own jet and a poor person fly on coach, but they can both fly. Capitalism increases the productivity of labor and this makes free time possible. Also, people can choose no free time in exchange for higher wages in the free market. The free market increases individuals’ autonomy and freedom, communism stifles both of them. Communism is another “great proposal” made, by “great philosophers” who only prove they really do not know anything.
The book of Genesis exposes the origin of all things. Before there were the heavens and the earth and all that is within them, there was Elohim (God). God formed the heavens and the earth and it says that the earth was shapeless and empty. Darkness was on the surface of the deep and the Spirit of God hovered above the waters. Then God said, “let there be light” and there was light. The instant God commanded light to be, He released his order (organization or government) to the whole universe and that opened the path for His good creation to be made. God’s government over all things began through the light and before the foundation of time, in eternity, in Him. (See Genesis 1:1-4)
God inhabits in a different dimension than man. He lives in eternity. His understanding of everything is not compatible to the reasoning of the current mankind. (See Isaiah 55:8) God created all things from His dwelling (eternity). In seven days He did all things, and when the days finished, God rested from everything He had created and made in the sanctified seventh day. It is interesting that the bible never mentions that the seventh day ended. I believe that the seventh day is eternal. The seventh day is the only holy day that was sanctified by God. He is in the seventh day, God is the seventh day. When Jesus was on earth, all the works He made, most of them He did on the Sabbath day. Does that mean that Jesus, a Rabi and creator of the law, did not respect the law? No, it means Jesus is the Sabbath day.
You see, the bible says in John 14:10 that Jesus is in the Father and the Father is in Him. Jesus is God. Jesus is the Beginning and the End. (See Revelation 21:6) This signifies that in Jesus everything has already begun and everything has already ended. God does not inhabit in linear time. He dwells outside of time, He is eternity.
Light made all things, because Jesus or God is the Light. “This then is the message which we have heard of him, and declare unto you, that God is light, and in him is no darkness at all.” (1 John 1:5)
The Light shines over the darkness and the darkness cannot prevail or comprehend it. The knowledge of Light is different than that one of the darkness that covers the deep. In Isaiah 60:2 it is mentioned that darkness cover the earth and darkness cannot understand God, Eternity, the Light, and everything that was made by the Him. The knowledge, reasoning, thought, etc. of this world is bound to darkness and thus it is lassoed to not comprehend Eternity.
The knowledge of the Light is life and the one of darkness is death. Life is not compatible to death and vice versa. God defeated death or darkness, through the light before everything else was made. Everything was made by the Light. (See John 1:3-5) Therefore, everything had the touch of life and eternity in them.
The spiritual realm is the realm of God and of Eternity. God is spirit and everything came out of Him. God is the sovereign above all. This ultimately means that the spiritual realm is the one that determines the physical realm. The entire universe came out of a Being who is spirit and lives in the realm of it, thus, the entire universe depends on the realm of the spirit, the reality of Elohim. The spirit realm is invisible. Even science says that we cannot see light, but we only see the reflection of it. This material world is the reflection of the spiritual one. If the sun, moon, and stars would all be gone, there would still be light. God is the Light.
And God formed man out of the dust of the ground and breathed into man’s nostrils the Breathe of Life. In the original scripture the word used to describe “Breathe of Life” is “Ruach.” Ruach in Hebrew has two meanings, “spirit” and “breathe”. Elohim breathed His Holy Spirit into man and this made man a living being. Something very interesting to note is that the book of Genesis says that God made man to His image and likeness. God is spirit, God is holy, God is light, God is life, God is eternal, God is divine, God is love, etc. God does not have a body made of flesh. With this we can come to the conclusion that the likeness in the image that God gave man was in the spirit of man through the unity of the Holy Spirit of God, or Breathe of God.
I believe that God also made all of the animals out of the ground, but it was man whom was the unique created being to have received the unity of the Holy Spirit. God placed the man and the woman in the East of the Garden of Eden. In the center of the garden there were two trees, the tree of the fruit of Life and the tree of the fruit of the knowledge of good and evil. God commanded man to not eat from the tree of the knowledge of good and evil for on the day he did so, man would certainly die.
As mentioned previously, what made man receive the life was the entrance of the Ruach into the spirit of man. The Spirit of God was nurturing man with the life and causing man to be the image of God. Elohim gave man authority through a will to choose in whom or what to believe in and act according to that faith.
The two trees represented the knowledge of Light, which is and brings life, and the knowledge of Darkness, which is and brings death. Good AND evil are the way of thought of darkness. Life OR death are the way of thought of God. The thoughts of Elohim are of freedom and of peace. God’s thoughts are of life and not of death.
“For I know the thoughts that I think toward you, saith the Lord, thoughts of peace, and not of evil, to give you an expected end.” (Jeremiah 29:11. Notice that it says “of peace” and not “of good”.)
Adam and Eve had the way of thought of Elohim. Through the Ruach they viewed things the way God did. Adam had a similar creativity to God’s and he understood things as God did. In this manner, Adam knew every single characteristic that Elohim had placed in the animals and that is how he was able to name each one according to their specific traits.
Man had the fullness of the light in him while being in Eden with God. As long as man prevailed in obedience to God’s command and in belief of what God had warned the sanction would be, man would enjoy all the fruits of the Light and eternity. In God’s righteousness, man would have the Ruach of God and stay in the life with all the benefits that the Ruach gave man which were the knowledge of the Light, the Eternal Life, the image of God, etc.
That is when the adversary of God (Satan) came into play. The snake was in the Garden wanting to injure God’s heart by trying to convince man into separating from all that the Light is and die. The snake lied and told the woman that God had said that they could not eat from every single tree of the garden. The woman answered and corrected the snake in telling it that what God had really said was that they could eat from all the trees in the garden, except from the one that bared the Knowledge of Good and Evil. The snake lied again and told Eve that they could eat from the tree of good and evil, and when they did so, they would be like God. (Other translations, that are not the King James Version, refer to “gods”) (See Genesis 3:1-6)
What does this mean, “be like God or gods”? To fully understand this we have to see what took place with Satan, before he was the adversary of God. Satan was Lucifer, a beautiful angel made by God. At the instant the angel knew how beautiful he was and how good he was in the multitude of his contracts, he got filled with ego, pride, arrogance, and felt he could be like God and sit on His throne to rule over all, receive the praise, and create his own laws. Lucifer desired to be the sovereign above all. When God saw this, He cursed the angel and expelled him out of Elohim’s dwelling. (See Ezekiel 28-14-19)
This time Satan was in Eden using the same desire he had when he was in the heavens (to be God) to persuade Adam and Eve into disobeying God, losing faith in His word, and dying.
After speaking with the snake, Eve saw the tree and attracted her, so she ate from it and gave some of it to her husband. Man chose to believe the lie of the snake, instead of believing in God. Through his unbelief, man disobeyed God and allowed the knowledge of darkness to enter his life. Light and darkness, life and death, righteousness and evil, God and the devil, do not go together. Therefore, the moment man ate from good and evil, the life of God given by the Ruach of God left man. Eternity, left man, and from that time on, the days of man on earth would now be counted.
God cursed man and told him that he would return to dust. That through the hard work of his hands and the sweat of his brow, man would toil the ground in order to eat. As God had done with Lucifer, He did with man, and expelled them from Eden and took them apart from the tree of Life. However, God gave them a promise of redemption.
When God was cursing the woman, He said that she would step on the head of the snake and it would bruise her heel. This was a symbol of what took place with Jesus on the cross. Jesus stepped on the head of Satan and on the cross all the blood accumulated on his heel. God also made skin clothing for man, because through sin they knew they were naked. God sacrificed an animal foreshadowing what was to be done by Jesus Christ on earth; the light shining over darkness.
Man did die, because he left the immortality of eternity and eternity, by the Ruach, left man. Man prostituted himself and sold all he was for a mere satanic lie to sin. The root of sin, which is evil or iniquity, now was in the DNA of man. This DNA would now make man live for sin, which is darkness and which is death. This evil entered man’s DNA through the eating of the fruit if the knowledge of good and evil. For there to be redemption of the DNA, Jesus poured his own blood, and it is written that the LIFE of the body resides in the blood. (Leviticus 17:11)
“Fascism is capitalism in decay.” – Lenin
Fascism is a structure of government that rots the beauty of liberty and crushes the diversity that exists within every person as an individual. All is centered in a benign, supreme, venerated, and charismatic mortal man that captivates the heart of the people with illusionist ideals. This man becomes the leader of the whole and subjugates the people under his will.
Every decision is made by the central government of the nation and the leader is the wise custodian of his homeland. He is like a god, one that along with his followers encourages death and violence. They convince the people that there is no greater glory than to die for your nation and battle in favor of your land. You should not care about your life, necessities, family, and desires when it comes to your nation and the single will of your custodian. You shall go to war and fight for there is no greater pride than to kill others for the glory of your flag. As Mussolini would say, “Everything for the state, nothing outside the state, nothing above the state.” You, citizen, are not important, your ideas, your property, etc. does not matter, just the nation and its unity depending on the constitution of the will of your leader. Verily, your individual rights are subordinate to the good of the country. It is about what the public (government) is interested in, not you.
All followers of fascism consider it to be the third way between the “incorrect” communism and the “dog-eat-dog” capitalism. The Italian Benito Mussolini, whom was a socialist, became a well-known fascist after Lenin’s economic fiasco. He supported the involvement of his nation into World War I and came to hold the maximum authority of Italy in 1922. In the beginning of his governing, he did not yet create a secret police or abolished parliament. Italy’s press continued to enjoy freedom and the liberty of his opposition’s leaders had not yet been compromised. However, during 1924, the most vigorous leader of Mussolini’s opposition, Giacomo Matteotti, was murdered. Benito Mussolini proceeded towards the extremists of his camp and in 1925, he announced the initiation of fascism. Some time later, his competition’s newspapers would be banned and his contraries would be confined to an island.
Fascism only brought slavery to Italians, a slavery with a false sensation of patriotism. The press would foster the cult of the personality of the leader and lassoed the people’s minds to not believe anything different. The year of 1931 invaded with fear many professors, as they were required (forced) to sign an oath that declared loyalty to the government. Merely, just eleven professors refused to write their signatures. Different economic groupings were brought together under the supervision of the central government. Each group had government’s workers and employers that had specific fascist leaders assigned to each one of them. This is known as the corporate state, one that is characterized by a secret police, a fascist salute, etc. How was economy altered in Italy? The output per capita declined during the era of fascism and by 1940, wages, in both the industry and the agriculture were down. The end result of government manipulation and totalitarianism will always be poverty in the general public of the nation.
Doing business under fascism was practically made impossible, if you desired to practice it in freedom. State auditors would visit industrialists with orders to examine the balance sheets, book entries, etc. of the companies. Nevertheless, the concealed truth was that this was just a pretext to expropriate the capitalists. Supervisory boards would estimate how much iron, steel, rubber, and other raw materials were needed by the entire country to be able of carrying out certain production programs. Once again, this was a case of price controls that just lowered the product’s quality to cope with the price ceilings established by the government. The people were not just getting what they did not want, but they were also not getting what they needed. To make things worse, authorities would approach businessmen in the guise of being normal consumers to try to make the entrepreneurs violate the price policies and have something to accuse them of. The priorities of the government, stepped on the heads of the priorities of the individuals, and this ruined the economy.
In conclusion, Lenin’s claim does not understand capitalism. Fascism is not the end of a system that favors the individual FREE will of every single human being. The free market proposes an economy with none or the tiniest amount of government intervention possible. It is a system that is based in exchange, were one person trades off something for another they prefer and vice versa. Capitalism encourages decentralization and does not believe in the falseness of prosperity in war, but in the “seen and unseen” of Frederic Bastiat. A free market economy does not rejoice in having taxation, false interest rates, unbacked paper money, and price ceilings or price floors. This economy believes in commodity money as a medium of exchange, little or no taxation, real savings pushing interest rates down, the protection of private property, and in fluctuating prices that depend on the demand and the value given to products by the will of the people. Unlike fascism, the free market opposes slavery, death, war, and a controlling totalitarian central government that believes in nationalism. Declaring that capitalism is a late stage of fascism is nothing else than lack of knowledge and comprehension of what these two systems truly are.
We are possessors of a will with which we choose the paths we want to follow and the things we desire to do. Our will enables us to govern ourselves correctly or incorrectly and we suffer the consequences of the decisions we make. Without a will we would not be capable of governing our beings. No one can touch or use our will, but us and only us. We always have the decisive call. If someone tried to control or manipulate us and attained to place a yoke of servitude upon our shoulders, this would be a guide for us to desperately desire freedom and be willing to do anything to obtain it. Once we acquired that long desired liberty, we would find the means of securing it to not allow someone else to have the absolute power to govern us ever again.
Just as we yearn for the freedom of our volition, the states, during the times of colonization, also sought independence. They wanted to be autonomous and self-governed. They had a need to feel the certainty in that their rights and liberties would be secure and enforced, but why?
The colonists found an opportunity and fled from the oppressive British government to the “New World”. When they arrived to the land, they established different colonies that would later become independent states. These states would all be ruled by different predictable norms and predictable laws that would constitute distinct predictable sanctions over the people. The states wished to have a government that functioned differently than the British government.
The British way of government had an unwritten constitution based on tradition. Having an unwritten constitution began to cause various problems between the colonies and the British government. Britain commenced to act with the colonies in manners that were not accompanying tradition. Those actions, however, were justified by the British in saying that they were constitutional if a group of men, known as Parliament, said they were. A tiny band of men is easy to influence and convince to fulfill the things that are favorable to one side or the other, but a group of states is not.
As exposed in Longing for Liberty, when there is a diversity of states that enforce separate policies, there exists competition between them. The people can flee from one state to the other if the first is becoming very suffocating in its policies. Therefore, the states have an incentive to govern and treat their citizens more righteously. That is the reason why the colonists fled to America. They wanted freedom and opportunities to prosper and follow a new way of life, one that would not be interfered by with government.
There was a necessity in the states to find the protection of the rights and liberties of the people. The Revolution was fought for this purpose. It was battled against an unpredictable and volatile constitution that had no written foundation and thus, no predictable continuity in its interpretation and tradition. Britain’s constitution was found in the mouths of a merely small number of living and breathing men that held the complete authority to rule over the country and the states as they pleased.
Those are the dangers of having a government where the power to make decisions has been centered in a few people. Governments already have a monopoly in the initiation of the application of force and with no restrictions to resist them, their power could and would be utterly endless. There must be borders between governments for them to fear the fleeing of those that provide their income through taxation, and persuade those outside their territory that they are least oppressive. This is why there were different states in the “New World”. However, those states, when obtaining their independence and having been victorious in the Revolution, they united. The unity gave birth to a written constitution that would establish the limits on the central government in telling them what they could or could not do and who would do it.
A hierarchical system of various authorities that delegated different tasks in society was protected by the new constitution. If an individual could not fulfill a task, he or she went to the family. If the family was not capable of resolving the mission, they went to the community. If the community could not delegate the job, they went to the city’s government. If the city’s government was not able to solve things, then they went to the state’s government. If the state’s government could not do something about it, they went with the central government. Finally, the central government could only accomplish the task if the states had agreed to it in the constitution. If the constitution’s articles did not mention the central government could do such things, then they amended the constitution, of course, with the permission of every state. This process ensured the freedom and autonomy of the states and protected the rights of every citizen in the United States.
In other words, the central government would not hold all power to make decisions. There would actually be flexibility in the enforcement of policies because the needs of every state were taken into account. If one state did not agree with the policy, it had the right to not obey it. In extreme cases, if the state did not coincide with every single norm, it could nullify all of them and separate from the union. Dividing political authority prevented the engagement of wicked policies that subjugated the people. Nothing that could be solved by an individual, family, etc. was delegated to the state or central government.
We do not find the same case in accordance to self-governed states and the respect of the written constitution, today. It is now declared that “it is unreasonable to confine ourselves strictly to the text of the Constitution. We should interpret the Constitution broadly to allow the Federal government to exercise powers we need it to exercise, even if they are not actually listed in the document. The Constitution is a ‘living and breathing’ document which changes along with the times. If we are going to perform something, let us explicate the Constitution, not by intending to understand its original signification, but by adapting it to the standards of the present.”
This is proclaimed as of 2014 and practically ignoring that if something was not written in the Constitution, because it was forgotten or whatever, you have the possibility of amending the document. Think about it, if you can construe something in which ever fashion you want, you will do so in a way that such interpretation favors you, or the side you support. Judges today have a monopoly to understand the Constitution by their own means, and favor the Federal government. Hence, judges in the Supreme Court will comprise the Constitution in ways that give tremendous power to the central government. Then people say, “Of course, Judges can only know what the Constitution signifies. How would you know what the Constitution was intended to mean?” And the normal answer is, “No one can really know, so… let’s do whatever we want.” People like these disregard the fact that Thomas Jefferson and James Madison said that the document can be comprehended using the State Ratifying Conventions.
Besides, if you must apply the Constitution to the changes of society, then you utilize the amendments to reflect the transformations. Some states might approve the amendment and others might not, but that is when people within the states that do or do not want the addition can go to those states that will or will not use it. As Thomas Jefferson said, “I had rather ask an enlargement of power from the nation, where it is found necessary, than to assume it by a construction (interpretation) which would make our powers boundless. Our peculiar security is in the possession of a written constitution. Let us not make it a blank paper by construction (interpretation).”
Nevertheless, that is what has occurred, it has indeed become, if not a blank paper, then one close to that reality. You do not find the Tenth amendment put into application any longer. It is Thomas Jefferson who called it the “cornerstone” of the Constitution for it safeguarded the liberty and autonomous government of the states. It reads, “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States are reserved to the States respectively, or to the people.” With this addition, the states were basically telling the central government that if they had failed to mention anything else in the document that the United states could not render, then the central government should not do that either unless the states allowed it to.
In those days the states chose very meticulously what powers the central government could and could not have. They had fought a revolution to not continue receiving a “living and breathing” constitution with volatile interpretation and violator of tradition, giving the government infinite power and unpredictability. The states wanted to sustain the power to nullify the things the Federal government was able to do and even withdrawal from the union, if necessary. We find historical cases when they used the power of nullification to not apply the government’s policies.
Before I expose the historical facts, I hope you have now known that the Constitution was not a contract between the states and the Federal government, but it was actually a compact between the states themselves. The Federal government was created by the compact and was not a party to it. The central or Federal government was the result of the agreement of the states in the compact. Therefore, being the result of the compact, the states could nullify the central government’s declarations, and even use secession. Secession is not like insurrection, for it does not necessarily involve violence.
When Thomas Jefferson became president, he made an embargo and many states nullified it. In the month of January of the year of 1809, the state of Massachusetts declared the embargo unconstitutional and did not comply. In the same year, in the month of February, Connecticut’s governor ordered state officials to not cooperate with it. Lastly, in the month of March, Rhode Island declared that its government would protect its people against the Federal government’s unconstitutional exercise of power and the official ban of trade was not carried out in the states.
This was a limited government, one that did not possess a monopoly in power and was absolutely controlled by the will of the states. Liberty was ensured, but we have slowly been losing it, allowing the Federal government to expand and interpret the Constitution as ‘living and breathing’. Construing in this way spits in the face of the patriots that fought and died during the Revolution to have a firm constitution that endowed freedom and secure rights to the people in the land. The free will of the citizens has little by little been obstructed. But remember, we always have the decisive call.
VERY IMPORTANT NOTE: Coincidentially, today is 4th of July. I did not write this essay referring to this day. Therefore, I am not writing it in a pessimist attitude towards today’s celebration.
Why do we long for freedom? The simplest and most logical answer I can find is because we have not yet acquired it. Today, many boast in that they reside in a free land, but at the same time they are glad to be ruled by a central government that intervenes in almost all of society’s matters. We are accustomed to live in such a way that we assume things are to be done in a no different manner. Our minds have become partakers of a structure that hides in plain sight and is rooted deep within the heart of our society. A structure that manipulates, controls, and darkens our understanding, not allowing us to see a different and more righteous path to take. It stays long enough from generation to generation that it filters within our DNA, not permitting us to achieve different results, but only worsen the conditions of our circumstances. Yes, indeed, it all begins inside our families.
“In that day the Lord with his sore and great and strong sword shall punish leviathan the piercing serpent, even leviathan that crooked serpent; and he shall slay the dragon that is in the sea.” – Isaiah 27:1
In the year 1651 a man named Thomas Hobbes published a book titled “Leviathan”, presenting forth his model of political life. In it he basically described that society is a single whole, a mass of individuals that simply endow a central government with the power to rule over them. No other social authority precedes this central government. Therefore, it cannot be denied when it monopolizes the engaging of force and coercion over its citizens. This model’s efficiency was proved wrong during the 20th Century, when the world saw the totalitarian Modern States committing genocide, facing fewer and fewer obstacles to their controlling power, and having conscription and income taxes pierce rooftops. Even so, this system persists in present time, avoiding exposure and delivering the same results less noticeably. However, to the world’s relief there exists a different view and model of political life.
Years before Hobbes created his model, in 1603 a man named Althusius wrote a book titled “Politica”, and in it presented a more rational model of political life. He said that the basic unit of society, and for that reason of government, is the family. Then, families may form villages, and the villages will form provinces, and the provinces constitute a kingdom. In other words, society is much more than a group of people put together and being governed by a ruler. This is what becomes known as a Federative Polity, which is a society in which power is distributed and shared by various social authorities. Power is not held monopolistically by a central government, but by many different social authorities placed in a specific hierarchy that possess rights and liberties of their own. Their rights and their liberties cannot be arbitrarily interfered with, preceded, or cancelled by a central government.
The Althusius’ and Hobbes’ ideas of how society is organized are in each polar end. They are also perfect to place the setting of the two theories that exist about the American Union. The compact theory states that the union was created by the collection of self-governed States whom all in one accord gave power to a central government. The nationalist theory, says that the union is not a collection, but a single whole and that the Union came before the States. The States are just parts of the union, but the union is the original unit, not the States. In simpler terms the compact theory would call the USA, “The United States are” and the nationalist theory would call the USA, “The United States is.”
A false sensation of patriotism conceals the consequences that the nationalist theory of the union faces. Individuals basically do not have a will. It is like saying, “the marriage came first and after came the bride and the bridegroom. The man and the woman had no choice if they wanted to get married or not, or if that was the person they wanted to marry with. The marriage already existed, so the bride and the bridegroom must deal with it. And do not worry, even though we are going against their will now, they will feel love once their children are born. Meanwhile, they will have to live together and not separate, even if they disagree with each other to death.” How would you feel, with a union like this? That is how the states would have felt with the nationalist theory of the union, but now are filled with a sensation of “patriotism” and “unity” that is planted from the cradle to the grave and allows all sort of control to be enforced.
Nevertheless, the Declaration of Independence clearly favors the compact theory of the union. The declaration calls the states “free and independent states” that “have full power to levy war, conclude peace, contract alliances, establish commerce, and to do all other acts and things which independent states may of right do.” The states came together and one by one willingly ratified the Constitution of the United States. In 1776 it was declared that the crime of treason would be thought of as being perpetrated not against the states united into an indivisible blob, but against the states individually. Also, Article II of the Articles of Confederation written seven years before the union says that the “states retain their sovereignty, freedom, and independence.” Finally, in the treaty of Paris made in 1783, the British acknowledged the independence, not of a single whole, but of a group of states, which they proceeded to list one by one.
As this American history clearly evidences, the compact theory of the union was used by the States to demonstrate that they came before a central government. The states are the ones who have the sovereignty and the power, not the central government. The states have the ability to resist a central government, separate from it, and/or dismantle it, for they were the ones who formed it from the beginning. If the compact theory is correct, then the United States initially defied Hobbesian ideas.
The veracity of it is that the greater the expansion of the government is, the more capability it will have to pursue its interests by subtly controlling the people to its favor. If all power is situated on a central government’s shoulders, this one will be able to treat the people as it pleases without giving them the opportunity to have options and flee to other governments that provide more freedom in the economy and other areas in society.
Imagine a family in which the father is the only one who can make decisions and the mother and the children cannot do anything regarding it. They have no voice against the father, even if everything he decides goes against the will, desires, or needs of the mother and children. The woman cannot escape along with her children to someone else. Society is in favor of the father and no one would ever listen to the oppressed and defenseless woman. This would be a horrible situation of control and despair, where anyone would feel powerless. Sometimes, we have to run away because we cannot stand against people or circumstances. But if we cannot flee, what will we do?
As the previous example clearly demonstrates when only one institution, agency, or any kind of authority sustains the central and absolute power to conduct decisions, without having any sort of competition around it for people to flee to, it can do whatever it wants and society will inevitably support it. The oppression of taxes, regulations, etc. will be stronger and greater as the state continues to expand.
On the other hand, if we have an organized society that distributes the power of making decisions between each social authority, the people will be able to have righteous resolutions. For example, the central government only chooses what the union says it can. The states do what the groups of communities say they can do. The communities do what their particular churches, clubs, or whatever say they can do. The churches, clubs, etc. do what the families allow them to do. The families do what the father, mother, and child of each family has decided and agreed to do. Finally, each member of a family will do what they have acquired from God to do, being God the base and sovereign authority over all and the supplier of human rights, liberties, and norms.
The smaller the state, the easier it will be represented. Today, we see the complete opposite of “small” in the United States of America. The House of Representatives have 435 members, each representing about 713,000 Americans. How difficult do you think it is to represent 713,000 people? If you represent someone, it means you know their philosophy, necessities, point of views, desires, etc. How will someone know all of these characteristics in 713,000 people? It is impossible. Even if they knew who every single person was, it would extremely complicated to place forth a solution that satisfied every single being.
Shocking as it may seem, in the year of 2014 just 435 representatives, 100 senators, and one president decide on the spending of about $3 trillion. Only 536 people decide for a nation of about 300 million citizens on how and where to spend its money, without the worries of being punished if they use the money to favor their own interests. It is very important to ask, for the sake of liberty, “How did the government obtain the money?” And the answer would be, “Through the involuntary, non-contractual, and coercive transfer of the wealth of the people from their hands to government favored institutions.” As Donald Livingston says, “Never has so much financial power been controlled by so few.”
If the power of the states is not going to be enforced and respected to the point of allowing it to separate of a nation, what sense is there in having states? If a central government will decide for the whole, what point is there in having different levels of supposed authority within a nation? The family is not respected anymore, the authority of the parents over the children to educate and raise them is being thwarted by public and government affiliated private schools today. What sense, then, is there in having a family, if the supposed authorities within it will not be respected? Family is the basis of society, the system we live in today recognizes this, and that is why it has spent so much time attacking this base to make it stumble and try dismantling it. In this way it will be able to hold the ability of maintaining control and expanding it much easier. Dear reader, is this freedom?
Developing a Price System
The beginning of paper money resides in the direct trade of goods. Society used barter before money came into existence and it directly exchanged one good for another, like a towel for a pillow. As time went by, people commenced to realize that through barter it is complicated to acquire what you desire or have a necessity of when you are not certain that someone is willing to give away their good for what you offer them. For instance, you need a pair of shoes and to obtain them you are willing to trade a blanket. You must travel around your town to find someone who needs or wants a blanket and to obtain it has decided they will give a pair of shoes. If they are not willing to give away the shoes, you have to make the intent in convincing them. This requires much effort, energy, and perhaps resource, which altogether make trade by barter an exhaustive and/or inefficient manner of doing things.
Efficacy and accuracy are achieved in exchange when you discover a good that all people desire. This good has to be one that is utile in itself and can be divided in a form people will continue to find it attractive. Gold becomes a medium of exchange and eventually into money through this encounter. Gold is a rare precious metal that has many uses, many people would appreciate having, and unlike a hat can be divided into smaller pieces or turned into bigger ones to trade anything with it in accordance to its value. Therefore, whether you need gold for your personal uses or not, you value it and find it attractive because with it, you can acquire anything you want or need. The more gold you have, the more things you can obtain and the less gold you have, the less things you can procure.
A price system then begins to develop as people begin to find a good more valuable (you need more gold to purchase it) than the other. Imagine an auction, where people bid and the highest bid takes the product home. An auction is the model that represents how a price system begins to unfold along with the market. When people are trading a hat, maybe one will offer ten gold coins for it, another 12 coins, and the final will bid 15 gold coins. All hats of its type might now be worth 15 gold coins because there are people that value the hats in that quantity. Perchance later in the future, the type of hats might become more or less valuable to the people, but it is the demand of the product and the volition of the people that will always determine the price of all things.
Origin of Paper Money
Metals, like gold, can require much space and be difficult to carry, that is until banks are created. A bank was utilized as an area to conserve the gold of others safe. In the past, when people took their gold to the bank, this one gave them a piece of paper that proved and contained the amount of gold they had stored. Whenever a person wished, they could go to the bank, present the paper, draw the sum of gold it represented, and use the gold to exchange. Similar to what took place with barter, people noticed that much time, energy, and maybe resource are required to fulfill this process. Instead of going through the whole process of traveling to the bank to use the gold for exchange, people began to only trade the paper depicting a quantity of gold.
Money (including the one made of paper) exists through a natural and spontaneous process in which the will of people began to devise a medium of exchange and use it for trade in the need of achieving accuracy in the market. The government did not create money. They did not come in and say, “We must now put to use gold during trade and in the near future, pieces of paper called ‘dollars’ with the portraits of the nation’s leaders on them. If you have ‘this amount’ of dollars, you will be rich or poor.” That would be simply absurd. Just suppose that someone comes toward you and gives you a yellow paper with their picture on it and said, “Here, have ‘ten Jacky Ops’, you are now rich.” How would you know you are rich? If he or she gave “ten Jacky Ops” to everyone and told them, “This is your new money.” How would they know their value and use them for trade? You simply cannot. However, if “ten Jacky Ops” were backed up by 50 kilograms of gold, then you would know how much they are worth and how to use them.
Commodity and Fiat Money
Today, the money we use is not backed up by gold and the government did not create it for the reasons just described. There exist two types of money, commodity and fiat money. Commodity money is based in a medium of exchange or good that is valued generally, like gold. On the other hand, fiat money is something more complex to describe.
Society accepts commodity money through the natural process of finding a medium of exchange. Then, the government monopolizes the production and certification of the generally valued good. The government begins to issue out paper notes that can be redeemed in a given weight of gold and begin to circulate as a convenient substitute for carrying gold coins. These money certificates are finally given different names like dollars, yens, pounds, pesos, etc. Naming the paper notes conditions the public to think of the dollar (or whatever) rather than the gold itself as the money. In the end, the government confiscates all the gold of the people in exchange for the paper note, leaving the people with unbacked paper money.
In simpler terms, fiat money begins as certificates redeemable into a commodity (like gold), and then the government takes the gold away, leaving only the paper. The paper money, though, continues to circulate because people recall the past structure of prices, so the paper money, in this case is not being imposed out of nowhere by the government.
Disadvantages of Fiat Money
Many complications accompany fiat money. Gradually fiat money is created more and more and in this becomes less and less based on gold, until it ultimately is not. When the government increases the supply of money, prices rise to a substantially high level. Because, when there exists more money to bid with, the value of things increments, like in an auction. These increasingly high prices disserve people on fixed incomes for they are receiving, say 500 dollars weekly, but the price of things keeps rising, making the 500 dollars worth less and less.
Fiat money is easy to produce for it is not based in a commodity. Therefore, its production cannot be controlled, which contributes to an uncontrollable and ever growing raise in prices. However, those who receive the newly printed money first are the fortunate ones. Because prices have not yet risen, the first recipients have the possibility to buy the things at a more economical price making them richer. The people who later appropriate the newly printed money that has already worked its way through the economy and has also raised prices are least fortunate, because the money is already less valued.
This means that paper money and paper money inflation artificially encourage consumption over saving. Hyperinflation is an extreme example pf this. Let us pretend that you have purposed yourself to buy something worth 10,000 dollars at the end of the year. Little by little you save your money, but you do not recognize that the government is printing millions of dollars each day, and every month prices are increasing by 50%. The end of the year comes and you notice that the 10,000 dollar product you had saved up to buy is now worth an outrageous 70,000 dollars. Your saved 10,000 dollars are worth practically nothing in this circumstance.
In normal inflation conditions, the results are the same, only less outrageous. This takes people to rationalize and come to understand that it is more convenient to spend their money instantly before it is less valuable. A situation like this one is compatible to business cycles, In these cycles, interest rates fall artificially because the government keeps creating money out of thin air and giving it to banks, not allowing the savings of the people (which are made impossible to have with fiat money) to be the ones that push interest rates down.
Other disadvantage of having fiat money is that it gives more power to the government of controlling the people. When the government has the ability to create money out of air, it becomes easier for them to get hold of the resources of the private sector. It will not matter whether we have high taxes or not, the government will still be able to get hold of your wealth and through inflation control your prosperity.
It all involves prices, our demand and value of products or services and our personal interests in preferring one thing for the other. Notwithstanding, apart from inflation (increasing production of paper money), the government also tries to get its involvement in prices to control them, especially in times of crisis.
Price controls are efforts by the government to limit the ability of prices to move up or down, creating either price ceilings or price floors. Prices always fluctuate because tomorrow there might be less or more demand of a product being less or more valuable to the people. Usually, when speaking about price controls, most people refer to price ceilings.
Just as most of the things the government does and intervenes in, price ceilings are also accompanied by many issues. If firms cannot sell a product above a certain price, the demand of the product might increase and the production of it will not suit the quantity and speed of the demand. The result of this will obviously be shortages. Shortages will damage the economy and in an overwhelming manner in times when resources are extremely urgent.
Imagine a sudden disaster impacts a random city. The people must now seek temporal residence in hotels, leading to a crescent request of rooms available in them. To prevent prices from rising, the government intervenes to keep them at the same value as they were before the destruction.
Now, a family of four normally rents two rooms. And because they see prices at a relatively low price in the crisis, they choose to rent rooms as usual, not counting the other hundreds of people that have a necessity of refuge. Rooms are valued greater in this time and have a truly high demand, not by desire, but by necessity. Therefore, prices must reflect the circumstance taking place and cause people to be prudent and leave resource for the others to utilize. If the prices would have been high, the family of four could have thought twice before buying the rooms and settled with just one. Doing this, they would have left an empty room for another family in need.
Nevertheless, government intervention has created price ceilings for the hotels and perhaps an uncounted family of four will be left out of a hotel room and ultimately of refuge. Government control in prices creates great misbalances in the economy and causes shortages.
Economy today is a puzzle. Even if the government did not control prices, companies would still end up ruined with the existence of false interest rates caused by unbacked paper money. In sequence to this printing, prices inevitably rise because there is more money circulating in the market. Yet, the government insists in prices to not be risen. They say this ignoring that things are valued greater, have higher demand among the people, and their money printing continues to unavoidably raise prices.
Firms purpose themselves to do long-term projects, but they cannot save resources when the people are consuming greatly and not saving money in the bank. Saving is not convenient when inflation is raising prices constantly. Therefore, to conclude I cannot find better words to describe this system than calling it an upside-down, intersecting, contradicting, self-tangled, and corrupt system that alters the economy, making people poorer and giving those that are in control the privilege of becoming richer.
On the contrary, if gold were used today, the value of saving it would increase. As time passes by, gold is worth more or the same, but never less. This would give people the incentive to save for the future, keep interest rates down, consume fewer resources and allow firms to invest in long-term projects successfully. Prices would eventually stay low and follow the voluntary value and demand people give to things. Finally, gold is hard to find and acquire, thus, sooner or later, society would have to conform to a finite quantity. Causing a society of 100 people using 1,000 gold coins, which has an increase in population by the double, to use the same amount of gold, but dividing prices in half, making everything more economically accessible.
In order to survive, organisms need energy. Without energy our bodies would not be able to function and death would be the ultimate result. Up to what we have known, most of the earth’s energy originates from the sun. This energy is divided and distributed among organisms and possesses a perfect function in each ecosystem to maintain the correct balance they require to prevail.
Different organisms carry a unique characteristic that enables them to acquire energy. There are organisms that directly use the sun’s energy to survive and also create other forms of energy, like carbohydrates for other organisms to utilize. These organisms are denominated autotrophs or primary producers. The most commonly known primary producers are plants. Through photosynthesis, plants get energy and also create new for other organisms to consume. Organisms that consume autotrophs are heterotrophs or primary, secondary, and tertiary consumers. Heterotrophs include all sorts of herbivores, detrivores, and carnivores.
Autotrophs, herbivores, detrivores, and carnivores all consume quantities of energy within an ecosystem leaving less and less energy to consume within each level of the food chain. About 10% of energy is consumed within the levels that belong to primary producers, primary consumers, secondary, and tertiary consumers. These levels of energy consumption are known as trophic levels. The population of a species within each trophic level will determine the population of the next.
Imagine a perfectly balanced community with the trophic levels of plants, crickets, mice, snakes, and hawks. As mentioned, plants absorb the energy form the sun and likewise provide food for the crickets. When the crickets consume the plants, a percentage of the energy the plants provided will be lost within the crickets. To make things simple, let’s suppose the plants contained 100% of energy and now that the crickets have consumed a certain amount of the population of the plants, the crickets have 90% of the energy. This means that the crickets made the community lose 10% of the energy by eating some plants. Then, mice come and eat a number of the crickets consuming another 10% of the energy to leave the mice with 80% of the energy. The trophic levels left are snakes and hawks. These two can compete against each other to consume mice. However, the hawks have an advantage in their ability to also eat snakes.
If the population of snakes and hawks is considerably large, the one of snakes would have to be a bit greater than the one of hawks, because the snakes are potential food for the hawks. Notwithstanding, if the population of snakes is big, the one of mice has to be even vaster to feed both snakes and hawks. In this way, the population of crickets must be larger than the one of snakes, hawks, and mice combined in order to deliver the correct amount of energy for hawks, snakes, mice, and the crickets themselves need to not face extinction. Lastly, the population of plants would be the largest of them all, for they are the base of energy production to sustain a community like this one.
Pretending that a group of hawks immigrated to this community and made the population of hawks larger than the one of snakes, what do you think would happen to the community? I believe there are two possible outcomes, an optimist one and a pessimist one.
The pessimist one says that the hawks would eventually end up wiping out the snakes and the mice. This would lead to an ever growing population of crickets that would wipe out all the plants. In the end, the hawks and the crickets would both die of starvation. I think, though, that this is not a good manner of reasoning.
On the other hand, the optimist one says that hawks distribute the eating of snakes and mice about equally. There are hawks that prefer snakes than mice on the menu and vice versa. The mice population is still larger than the one of hawks, so they have no chance of running out and the density of the snake population is not condensed but dispersed. Therefore, being dispersed, snakes would be harder to find, making the hawks that prefer snakes to migrate to another place, leaving the community to continue to be balanced in the distribution of energy. Perhaps the population of hawks would be larger than before, but it would be good enough to conserve the energy consumption in a way that both the autotroph and heterotroph populations in this community do not die out.
Everyone knows that when it is due, (which is almost all the time) taxing is a heavy burden. The people must unwillingly give their money to the government who coercively forces them to surrender great amounts of it. The money is distributed from hand to hand until it arrives to those the government has determined. Then, these hands will use the taxed money in something its original owner never would have. Instead of having used the money to engage in one pattern of spending, now the government will spend it in something else, in this way, contributing to a change in the allocation of resources.
Spending money is something most people like to do. By counting the amount spent and earned in the things or services, we can obtain the productivity and economic growth of the nation. However, there are several things here that need to be considered.
When people use their wealth, they do this voluntarily and spend it in products or services they have a necessity of or a preference for. Doing this, we notice that the volition of the people chooses the correct allocator of resources or seller. When this takes place, the buyers are happy with what they acquired and the sellers rejoice in their winnings. In other words, there exists no burden.
The moment a seller starts to not give the people what they want or need, their productivity in the economy will drop to zero. He or she cannot go after people with a weapon to force them to buy their product or service. This would bring the weight of the law on such merchant and greater discontent to the people of what he or she does. If the entrepreneur is obstinate and continues to produce things the people do not buy, the productivity will still continue to be zero. Will there be any contribution to the economy? No, as a matter of fact the consequence of such actions will obstruct or hinder economic growth because valuable resources will be wasted.
This is what the government does. It plunders the money of the people, allocates resources in a way the people do not want, claims they improve the life of people with what they produce and give , and boasts in that they have increased the economy. Governmental authorities say that they are productive, if we were to assume this, their productivity would be measured by their spending. Ultimately, this means that the government’s capacity is measured by how much they tax from their people.
Progressive taxation is the policy vindicated by the benefit principle. This type of taxation retrieves a percentage of money relevant to the annual income one earns. If you earn more, the higher the percentage of your tax will be. Earning extra income loses its meaning in this system. Who charges a person who earns $60,000 annually 30% more for a hot dog, than a person who earns $30,000 annually? Logic would soon tell us that it would be more reasonable to earn one cent a year to get everything for free in a price system with this functioning.
Ignoring this, the government continues to declare that everybody has to be taxed according to their ability to pay. Nevertheless, you cannot know with certainty that a person who earns $60,000 yearly is less able to pay than someone who has an annual income of $100,000. In order to be correct and righteous in this judgment, you must know the savings and expenditures of each person. Having higher savings and fewer expenses makes someone more eligible to pay than someone who has few or no savings and high expenses.
Any form of justification does not defeat the negative facts that encounter taxing and government spending. The government provides all sorts of public goods and services to try in making the lives of people better. But because taxation is done coercively and not voluntarily, we do not know if the desire of the people is being catered and if the place were resources have been assigned is where the people would have wanted them to be. With these policies the people only use what the government provides because they have no other choice. Their money was used to proportion what the government offered, thus they must use it or nothing at all.
Public goods and services, which are offered at the expense of others, are thought to be free by many people. When something is “free”, the demand of it will increase. The growth of requests to use public resources creates shortages and gives greater frustration to taxpayers because the amount of taxing also increments. In the occurring of these events, there will be incessant reclamations of inadequate number of supply, congestion, and so on. Consumers will be accused of being the cause of the negative impacts and inefficiencies in the accommodation of resources, not those that are responsible of supplying them. In the end, the government will tell consumers to be patient and use less of a resort (water, electricity, gas, streets, etc.) to stop causing trouble.
You would think that the things in the public sector are owned by the public, but you would be wrong. If one tried to sell his or her shares in a post office, it would be useless. None of us owns a public good or service. It is the temporal government officials whom own the public sector. Owning something for a short term means you have to exploit it to its maximum in order to secure something out of it. It also means that the government officials are the ones who have the full transitory range of control over the use of the “public’s” goods and services. Therefore, the whole public sector’s capital value will be lost and there will be unprofitable depletion because there is no personal benefit to the partial owner in conserving the resource for the future. The people are worst off because they profit little or nothing at all.
Subsidized people and Welfare participants are the only true beneficiaries, which are mainly poor people, middle-class people, and bureaucrats. However, if the benefit principle would truly be applied, no one would benefit. This principle requests that you have to pay the amount equivalent to your governmental benefit. Today, the rich are taxed to transfer the money to the poor. If no government protection existed, the rich could easily pay for it and it would be cheaper to guard the property of the prosperous in a vault, than the 100 acre household of poor people. Hence, the poor benefit more than the rich from the government. Additionally, to pay according to the benefit principle would literally mean that bureaucrats need to pay back their salaries and everyone receiving a subsidy and participant of the Welfare State would have to pay back what they acquired from the government, which is an absurdity.
The Welfare State is a system that causes a downfall in society. The wellbeing of the general nation is hampered through the concealed truth of the Welfare State. Those that benefit the greatest are ones that prefer the receiving of money without performance of labor and at the expense of others. These are people that spend their time, energy, and resources in convincing the government they need welfare policies. Bureaucrats handle the lobbying and in the end, the government finds it convenient to keep the operation of the system. A system that detriments the people and for this motive, should not remain.
When a government rests on the hands of a bureaucracy, we notice that the best decisions (those that truly benefit the whole people) are not taken. Primarily, because when someone is not using resources efficiently, they should shift into producing something consumers demand to increase the standard of living, and not go after the “big government” persuading it to give them a subsidy gathered with the property of others. Secondarily, because the welfare system gives people the incentive to enter the circumstances that make them eligible to receive the provision. This does not solve problems faced by the people, like poverty, but only increases the conformity of people to prevail in their problem in the receiving of free sustainment. Lastly, because the resolutions made by the lobbied government do not seek the wellbeing of the people, but only perpetuate the bureaucracy, which can use audacious maneuvers like the “Washington Monument Syndrome” to obtain what it wants.
We cannot rely in the welfare state to resolute the difficulties society encounters. We also cannot rely in the government officials filled with personal interests and bureaucrat convictions to deliver us from the struggles we face. As we may notice, this way of thought only depends in a corrupt system that does not take into account the will or the property of the people, but only controls and coerces to obtain anything it wants at no personal expense and not caring about the individual rights of many citizens. This system does seek welfare, but the one of the politicians, not of the people.
Why is the economy sometimes up then down and up and down again? Why does the economy seem to go in circles? Why do many businesses suddenly go bankrupt all at the same time? Today, most people assume that the problem is inherent in capitalism or in the free market, but the problem’s root lies somewhere else.
The Austrian School of Economics developed a reasonable theory considering business cycles. This theory explains why there are many firms in trouble at once in the market when this one only selects the best entrepreneurs to allocate resources and produce the people’s preferences.
This theory basically says that when we save more, the bank has more to lend, and therefore interest rates go down. When interest rates are down, businesses will borrow from the bank to finance long-term projects. If the public is saving more, it will mean that they are buying less. If we are buying less of something, there will be less production of that thing and companies will be able to save the resources they use to create those products or services for the future. Now, why do we save money? The most obvious reason is because we will use it in a time later. Hence, if firms are able to borrow with low interest rates, save resources and use them to create something for the future through a long-term project, the money you also saved for the future will be used on the new things the companies produce for you in the times to come.
This smooth coordination between saving, borrowing, producing, and consuming can only take place when interest rates are real and not messed with. Nevertheless, today there is too much government intervention.
The central bank pushes interest rates down by creating money out of thin air and giving it to banks. The savings of people did not push interests down because they are not saving, but consuming everything today and not postponing it for the future. While some might rebuke this action, it is actually very reasonable to do. As the government produces more money, there is more to bid with and prices rise gradually, like in an auction (highest offer wins). When prices are steadily being raised, our money little by little becomes worth less. Therefore it is more convenient to spend things now, than in the future, where things will be costlier.
When we consume more, we make companies also waste their resources to create the products we want and need, thus they do not save resources for the future. The lower order industries (these create the raw material far away from the outcome product e.g. led to make the tip of a pencil) will not release resources fast enough for firms to use in their long-term projects. Even so, these companies continue to borrow from the bank to enforce their projects. In the end, all businesses will realize that they are misallocating resources and they cannot complete their projects profitably. But it will be too late because there will already be a shortage of material. In other words, resouerces were utilized to make long-term projects, instead of satisfying the present demand of the people. Ultimtely, the economic result in these circumstances will be a recession or a depression.
The economy cannot have long-term production and short-term consumption. Ambitiousness would be the perfect word to describe an economy that attempts to do something like this. Firms do not have sufficient resources to complete their long-term projects and end up owing fortunes to the bank. Resources go to the wrong areas and a recession takes place. The public needs the economy to sort itself out and solve these things alone. However, we find the hand of the government intervening in all things and pushing interest rates artificially lower by printing money based on nothing.
This is what occurred in the year of 2001. The central bank pushed interest rates lower eleven times and caused the economy to continue doing the same thing (borrowing to produce things for the future, while having large consumption in the present). In 2008 the economy almost went into a recession because the interest rates were kept low by the government and were artificially telling businessmen that they could engage their long-term projects. People were not saving money and resources! Wouldn’t that create shortage in the economy a few years later? The economy must be left alone to fix itself, interest rates have to be real and the economy will stop exhibiting a cyclical pattern.