Augustine2004's opinions on Lew Rockwell, Plato, and assorted other subjects

[Augustine2004]

Agree or disagree? If disagree, why?

Copyright © 2012 by LewRockwell.com. Permission to reprint in whole or in part is gladly granted, provided full credit is given.

Democracy Is Destroying Your Wealth and Freedom

by Frank Karsten

Although almost every democratic country suffers from bloated government, over-regulation, heavy taxation and enormous public debts, few people see a causal connection between these problems and the democratic system itself. For many, the solution to these problems is more democracy, not less.

Democracy tends to be equated by many people with prosperity, equality, fairness, togetherness and liberty. There is no evidence for any of this. Democracy rests on three main principles: you have the right to vote, you have the right to run for office, and the majority rules. That’s it. Nowhere is it written for instance that democracy guarantees the right to free speech, a right that many people link with democracy. Nor is there any reason why democracy should lead to prosperity.

In fact, the very principles of democracy give rise to processes that lead society to the opposite of freedom and prosperity.

The most important of these processes are the following.

1) Short-termism

As Hans-Hermann Hoppe explained in his 2001 book Democracy, The God That Failed, democracy leads to high time preference, both among rulers and citizens. Since democratically elected politicians are only temporarily in office, and since they are not the owners of the resources at their disposal, they have a strong incentive to spend money on projects that make them popular, with little regard for the future. The problems they create along the way, such as massive public debts, they leave for their successors to solve. A democratic society is like a rental car – or worse: a car that is owned by no one and used by everyone. It is quickly run down.

2) Parasitism and social strife


Democracy is a system in which people vote for politicians whom they hope will favor them with handouts and privileges, for which the bill will be sent to other people. It sets groups up against each other: farmers versus urban dwellers, the elderly versus the young, immigrants versus residents, employers versus employees, etc. This leads to parasitical behavior and social strife. This is the result of the democratic principle that all important decisions are subject to majority rule, i.e. rule by the State, which makes everyone a cog in the collective political system. In a free society, based on individual rights, people with different views and goals do not become each other’s potential enemies. They may cooperate with each other, trade with each other, or leave each other alone – but they have no coercive means to use others for their own ends.

3) Meddling and interfering

Although many people associate democracy with freedom, in reality no liberty is safe from democracy. If the majority (or often some small influential group) wants it, they can intervene into any kind of voluntary action, transaction or relationship – and that’s what they do. They forbid people to drink booze, burn flags, speak out against wars, watch particular movies, ‘discriminate’, and so on. Democratic governments continually intervene in voluntary transactions between sellers and buyers, employers and employees, teachers and students, doctors and patients, renters and landlords, service providers and customers, et cetera. They also meddle in people’s personal choices: their choice to smoke, to use drugs, to engage in a particular profession (without a ‘license’), to ‘discriminate’ (i.e. to choose with whom they want to associate), to make particular products (for which others have been granted a ‘patent’, i.e. a government monopoly), et cetera. There is no limit to how far this meddling can go. The little freedom we still have in western societies we owe not to democracy, but to our freedom loving heritage.

4) Collectivism and docility

In pre-democratic times rulers tended to be distrusted and every new tax was seen as an infringement of liberty. But democratic decisions are seen as fundamentally legitimate because they are supposed to have been made by the people themselves. In monarchical times few could ever hope to gain power, so most were suspicious of the ones in power. But democracy leaves, at least in theory, the door open for everyone to gain power. This makes people believe that they ought to subject themselves to the rule of the majority. They might not agree with specific laws and regulations but they feel they ought to abide by them. But naturally they then will try to get a party in power that adopts laws and doles out money for their own benefit. This is how state spending grew from roughly 10% of GDP prior to the First World War to almost 50% now in most democratic countries. And why we have so many laws on the books now that it’s safe to say there is a law for everything under the sun.



5) Corruption and abuse


Although rule by the majority is bad enough in itself, the reality of a democracy is much more sordid. Since the elected government has virtually unlimited power and controls virtually all of society’s resources, all sorts of interests and lobby groups are at work behind the scenes to influence government to bend laws to their advantage. One obvious example are the banks and financial interests that together with the government have set up a paper money system which they control and manipulate to their own advantage. But there are many powerful interests that use the system at the expense of the rest of the people: labor unions, NGO’s, pharmaceutical companies, farmers, the military-industrial complex. Individual citizens can do very little about this. They usually don’t have the means or the time to find out what is going on. All they can do is vote every once in a while, but they cannot hold their rulers accountable for their actions.

So the cause of our economic and social ills is not that the wrong politicians are in power. It’s the democratic system itself that causes the problems. What we need to do is start changing the system so it becomes less rather than more democratic. The most important way to do this is by taking away the government’s powers and decentralizing decision-making processes.

[Epoetker]

As Hans-Hermann Hoppe explained in his 2001 book Democracy, The God That Failed, democracy leads to high time preference, both among rulers and citizens.

Only when you let high time-preference people (women, equatorial minorities,) vote. Democracy works perfectly well in a responsible adult male population unless you insist on importing irresponsible/disconnected people and giving them suffrage.

But then again, I'm not a blank-slatist who thinks that all human behavior anywhere can be predicted by ignoring widely observable characteristics of men and women of the different human races in the world, calling the resulting units 'human beings', and making hasty generalizations that ignore the fact that people behave very much according to their gender and race a large majority of the time. You cannot talk effectively about democracy among 'citizens' until you've compared and contrasted it at least between a society of Spartans and a society of Amazons, and then you have to take race into account. (If you can't do this, then you should probably rethink any future careers in writing comedy, drama, science fiction or fantasy, to name a few fields.)

[Augustine2004]

Peter Schiff accuses Warren Buffett of having counted on government bailouts. Several years ago, Buffett bought Goldman Sachs, Wells Fargo, Bank of America, and General Electric, which all subsequently got bailed out. Schiff said he thought then that those companies were insolvent. In a free market Buffett might still have gotten wealthy, but would ordinary folks be this poor today?


Headline from the Daily Crux (March 09): "You're still paying for the GM bailout... And it just got worse."

[Augustine2004]

Moderator, would you please remove Epoketer's posting privilege? Just look at his last post and you can quickly see why. Also remove that, please.

[Augustine2004]

The Morgan group had floated one and a half billion dollars in loans to Britain and France. With the fortunes of war turning against them, investors were facing the threat of a total loss. (p. 239)

On April 16, Congress declared war at the behest of Woodrow Wilson. "Eight days later," Griffin writes, "Congress dutifully passed the War Loan Act which extended $1 billion in credit to the Allies." (p. 258) (Remember that $1 billion was real money in those days; the Fed had been in the counterfeiting business for only a few years.)

-------------- http://www.thornwalker.com/ditch/indispensable_05.htm

[Augustine2004]

China and Iceland . . . what do they have in common? Both are enemies of the US dollar. China seems to be trying to turn the yuan into a gold-backed money, like what we had before the Fed started operations. A money that the world would turn to away from the tottering dollar. Iceland just won't touch it, and people there are talking about using the Canadian dollar as the Icelandic money unit.


Those are recent cracks in the almighty dollar dike. Maybe it will give away altogether. For decades, we've been living high on the hog of the reserve status of the US dollar. Now we seem to be on the edge of losing it. Poverty!

[Augustine2004]

Historic moment? http://lewrockwell.com/wile/wile48.1.html

[seanD]

China and Iceland . . . what do they have in common? Both are enemies of the US dollar. China seems to be trying to turn the yuan into a gold-backed money, like what we had before the Fed started operations. A money that the world would turn to away from the tottering dollar. Iceland just won't touch it, and people there are talking about using the Canadian dollar as the Icelandic money unit.


Those are recent cracks in the almighty dollar dike. Maybe it will give away altogether. For decades, we've been living high on the hog of the reserve status of the US dollar. Now we seem to be on the edge of losing it. Poverty!

China and Russia are definitely strategically moving away from the sinking dollar, but right now, China is trying to survive the repercussions of the EU collapse, and in the process, there's a private and rather fierce trade war between China and US. Either this or the EU may be the black swan that deflates this current stock market bubble we're in right now even before we hit crazy inflation, and I think that's what China is bracing for, though I don't think they're going to be in the clear as most people think they are.

[Augustine2004]

Inflation or deflation?



Readers need to understand "standard money" as defined by George Reisman
http://mises.org/daily/3556


Perhaps two examples will suffice--or at least help. In a free-market gold system gold things would be used as standard money such as gold coins of a defined purity, gold bars of a defined purity, gold jewelry (perhaps!), etc. The other example is the complicated United States system. We have coins (pennies, nickels, dimes, etc.), paper money, and checking deposit liabilities. I now explain the last item. The Federal Reserve central bank maintains checking accounts in many banks. If payment of a particular check is demanded, the central bank can create dollars (better called digital dollars now?) out of thin air and redeem the check with those dollars. To each check for which payment is not yet demanded, there corresponds a liability on the books of the bank.

Readers also need to understand "fiduciary media" as defined by Reisman. These are instruments that are used as money, but are not standard money, nor are backed by reserves of standard money. The complete definition is, "money representing transferable claims to standard money, payable on demand by the various banks that issued them, accepted in commerce as the equivalent of standard money, but for which no standard money actually existed." (I think "but for which no standard money actually existed" means "neither standard money nor backed by reserves of standard money.") You should realize that in the free market credit should normally be 100% backed by standard money. People save money and part of that may be deposited in banks, which then makes loans based on that part (I think? I will check Rothbard on that).

According to Reisman, as of December 2007, standard money in the United States totaled $836.4 billion, but fiduciary media dwarfed that, totaling $6065.5 billion.

I just saw a graph of bank credit of all commercial banks (adjusted in a way that need not concern us). The credit reached a peak of more than 9T dollars in about 2009. Then it collapsed in the worst recession since WWII. It is now recovering since bottoming at a little less than 8.5T dollars (funny, writing 'a little less' here) in 2011.

There it is, we did have deflation for a while. Keep in mind that increases or decreases in the part of the money supply that are currently involved in trades have effects are not immediate (effects lag the increases or decreases by months or even years).

I have a feeling I should say more. For one thing, how did the stock market and the bond market behave? Later, perhaps.

[Augustine2004]

Possibly I am oversimplifying here. The money supply in regions like the USA and Europe is essentially bank credit. The monetary base IS an essential component, but in percentage terms is a small fraction of the supply. Now, how can hyperinflation occur? One kind does start when people suddenly loathe their standard money. But credit is extended only when someone applies for a loan and a bank approves it. If people stopped asking for loans or banks tightened their approval policies, credit would contract--deflation! If on the other hand banks did become rather loose with their "assets" people would not be scornful. But if otherwise, credit will, again, contract.


Anything wrong with my reasoning?

[Augustine2004]

Is Obama indeed the "Undertaker of the US Empire"? http://lewrockwell.com/douglas/douglas53.1.html Anything wrong with that essay? I am surprised that Shias would ally with Sunnis to the extent the author assumes.

[Augustine2004]

Today I read that Bank of America reported first quarter results yesterday. Loans outstanding fell 3% year-to-year. If that is not extraordinary, then as per post #1435 we should not expect hyperinflation soon.

[Augustine2004]

Someone summarized the results of this study
http://www.sitemaker.umich.edu/eob/f...ilarothers.pdf
thus:

Politics make people mean (they lose empathy)

Specifically, if a Democrat is reading a story about a Republican who is suffering, he may have less empathy than if he read about a Democrat suffering the same way. Things are pretty much the same vice versa--Republicans feel less empathy for Democrats, etc.

Let's get rid of our governments, pronto!

[Augustine2004]

I sure want to know what explanation Paul Krugman can come up with for this

http://mjperry.blogspot.com/2012/05/...e-tax-and.html

High comedy, I guess. I mean Krugman's explanation (if ever) not the article.

[Augustine2004]

Today I read that Bank of America reported first quarter results yesterday. Loans outstanding fell 3% year-to-year. If that is not extraordinary, then as per post #1435 we should not expect hyperinflation soon.

I just discovered a statistic that we could use to forecast runaway inflation, thanks to Dr. David Eifrig: the M1 Money Multiplier. The St. Louis Federal Reserve publishes data for it http://research.stlouisfed.org/fred2/series/MULT


Runaway inflation is not likely as long as the multiplier is below 1.