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Economics

America: A threat to liberty?

“Politics, as hopeful men practice it in the world, consists mainly of the delusion that a change in form is a change in substance,” as the incomparable H.L. Mencken observed more than 80 years ago. His observation applies to the United States of today in two ways. On one level, and the level Mencken intended, it reminds us of the fact that any form of government, whether democratic- republican or monarchical, is ultimately oppressive at heart. Every state is, qua state, a central depository of legalized violence, and thus stands in direct and unending opposition to individual freedom. Or, in the words of Ludwig von Mises: Government is essentially the negation of liberty.

But Mencken happened to use the words ‘hopeful’ and ‘change’ in this sentence, and the choice of words brings us quickly to the administration of Barack Obama and his promise – proclaimed particularly noisily for his first term – that his policies would mark a distinct change from the policies of his predecessor, George W. Bush. Assessing the situation now at the start of his second term, there is no escaping the fact that whatever change Obama brought was predominantly in appearances rather than in fundamentals, and that the most worrisome and offensive trend that characterized the Bush administration not only continued under President Obama, it even accelerated.

This trend is the rise of the American leviathan, the rapid expansion of state power and the ubiquitous curtailment of individual rights, whether they are rights to fair and open trial, property rights, or rights to privacy. The trend, everywhere in U.S politics, has been and still is towards big and interventionist government. While the media keep droning on about the apparently insurmountable divisions in US politics, the fact remains that a substantial de-facto consensus exists in Washington when it comes to giving the state more power. The increasingly expansive and expensive warfare-welfare state has been growing under Republican and Democrat presidents alike and is the one project that enjoys vast support across ‘the aisle’. The idea of limited government under the rule of law, historically a defining feature of America’s image of itself, lies dying, critically wounded by Baby Bush and now finished off by Obama. What Americans are destined for is an increasingly unconstrained government largely accountable to nobody but itself.

Leviathan rises

After 9/11, the Bush-Cheney White House considerably expanded the powers of the executive branch, mainly via the Patriot Act, arguing that the nation was now at war and that specific war-powers had to be granted, among them detention without trial and surveillance without warrants. These enlargements of state authority coupled with the hyper-interventionist economic policy that began after the financial crisis hit in 2007, have fundamentally changed the relationship of the American state with its citizenry.

Under Bush, Americans witnessed the weakening, if not outright suspension, of habeas corpus, the legal requirement that a prisoner be brought in front of a court or judge. This essential safeguard against unlawful detention without evidence has been a cornerstone of English common law for 800 years and of American law since the birth of the nation. Furthermore, Americans saw their country engage in new overseas wars, saw the launch of a new major federal agency, the unapologetically-Orwellian ‘Department of Homeland Security’ which now has a staff of 240,000 and an annual budget of $60 billion. They witnessed the arrival of the $1 trillion dollar federal deficit, the ongoing expansion of the federal payroll, massive bank-bailouts and the nationalization of car companies and home finance, the injection of taxpayer funds into Wall Street, in some cases by force. They witnessed the arrival of zero interest rates and large-scale debt-monetization by the US central bank.

This vast accumulation of state power came with a slogan, the belligerent ‘We will do whatever it takes’. Hardly any proclamation could be more at odds with the American tradition of a strictly limited state, of individual freedom and free markets. Besides, all the grave problems facing America today are the result of politics, of previous policy errors committed by the very same Washington elites that are now robustly demanding more power from the American people ‘to fix this,’ and that want us to believe that ‘the ends justify the means’.

Any hope that Obama would take a different road, or any notion that, as his numerous supporters keep telling themselves, he simply needs more time to fix the mess that Bush left behind, now lies in tatters, destroyed by four years of actions that tell a different story: In the case of habeas corpus, the Obama administration has generously granted itself the wide interpretation of powers that Bush-Cheney had probably implicitly assumed but never spelled out. Since Obama signed the National Defence Authorization Act of 2012, it should be clear to every American that the U.S. military has indeed the right to indefinite detention — or detention until the end of hostilities, but as the War on Terror is as open-ended as ‘quantitative easing’ or the War on Drugs – or, as Doug Casey calls it more accurately, The War on Some Drugs – this means for all practical purposes indefinite detention without trial. Americans must also realize that this includes detention of American citizens on American soil. Additionally, the Obama administration has granted itself extensive freedoms for the surveillance of U.S. citizens. Thus, dear reader, 11 years after 9/11 and with Osama bin Laden dead, the US government keeps giving itself more powers to spy on its citizens, to detain them and interrogate them.

Obama has, of course, continued the overseas wars and maintained the Guantanamo Bay detention and interrogation camp. He ordered the killing of at least one American citizen without trial.

In the field of economic policy we also see nothing but a continuation of the policies of hyper-active interventionism. Zero interest rates and debt-monetization by the US central bank have, of course, continued, and not only have they continued they are now officially declared ‘open-ended’. Continued, too, has the mad Keynesian ‘stimulus’ policy of deficit-spending with Democrat hack, Paul Krugman, formerly known as a Nobel-prize winning economist, shouting, ‘more, more, more’ from the sidelines. Naturally, the $1 trillion budget deficits have also continued|. Indeed, Obama implemented even bigger ‘stimulus’ packages than Bush.

Of course, none of this has ended America’s depression, although short-term statistical growth spurts of barely 2 percent that persistent 8-10-percent deficits may help generate from time to time have allowed bean-counting economic statisticians to proclaim that a recovery was indeed in place. Only a handful of die-hard Keynesians, such as Krugman and Richard Koo, and a few financial writers believe in this absurd policy. Most business people know better, which is why they keep hunkering down. These policies are as likely to end America’s economic malaise as the War on Terror is likely to end terrorism, or the War on Drugs to end drug taking and thus the creation and distribution of drugs.

However, I suspect that the ends are no longer what matters. The means have become ends in themselves. Vast federal bureaucracies obtain resources, power and influence through the pursuit of these policies. These policies will not end because the people who are in charge of them do not want them to end. Their income, their power, their prestige, their careers depend on them.

Appearances

I do not want to advance conspiracy theories here but if you just imagine, simply as a mental exercise, the existence of a Big-Government-War-Party that operates in the background, you would have to agree that, if such a party existed, it would be the party that had been calling the shots in the United States for the past 11 years and the party still in ascendancy today. Furthermore, it seems that such a party does better in many ways when fronted by a well-spoken cool African-American lawyer from Chicago than a rich, white and angry born-again Christian from Texas, or a white, rich Mormon ex-Wall Streeter. After all, there are many people to whom appearances seem to matter more than substance, not least among them the ‘liberal’ Hollywood crowd.

About 8 or 9 years ago, I was invited to the Baftas awards ceremony in London. For those of you who are not into movies, the Baftas is an awards ceremony as close to the Oscars as Britain got. Filmmakers and actors from Europe and plenty of movie royalty from Hollywood were in attendance, and as the Iraq war had just started, it was fashionable among the glitterati to demonstrate their sorrow, concern and disapproval at every opportunity. Pedro Almodovar treated us to a rendition of his most beloved Spanish poem. I think you get the idea. But all of this self-important indignation has now stopped. Since the Obamassiah has landed and has taken over the war effort, Hollywood has made peace with American militarism. George Clooney is a fan, so is Sarah Jessica Parker. Obama enjoys the support of Jay-Z and Beyonce. In 2010, at a time when Obama had already received the Nobel Peace prize for not being George W. Bush, the Washington Post reported that “Obama has ordered a dramatic increase in the pace of CIA drone-launched missile strikes into Pakistan in an effort to kill al-Qaeda and Taliban members in the ungoverned tribal areas along the Afghan border. There were more such strikes in the first year of Obama’s administration than in the last three years under President George W. Bush, […].” But let us not quibble over such details. For Hollywood, Obama is still our ‘Lord and Savior’, as actor Jamie Foxx proclaimed only last week.

Of course, none of these policies would have changed – in essence – if Romney had won. His supporters may tell themselves that a Romney vote was a vote for liberty and capitalism, as Romney wanted to cut taxes and attack the budget deficit. Yet, Romney promised to not cut military spending (of course not), and also to adopt a hard line on Iran, a potential next step to yet another war. By the same token, Obama supporters might believe that they voted for tolerance and freedom by rejecting Romney’s social conservatism. But I fear that political tribalism prevents most voters from seeing the big-government forest for all the gay-rights and abortion-rights trees.

If you are of a neo-con persuasion, you might want to argue that the militarism of presidents of all political stripes is only proof of the severity of the terrorist menace, that whatever their previous notions and beliefs, once they get into the White House and receive their first CIA briefing they realize how grave the threat really is, that all of us lesser mortals “can’t handle the truth”, and that it is therefore up to the president and his Col. Nathan R. Jessups to do what is needed, and by the way, sod those civil liberties.

Maybe. Maybe not.

One thing is certain: that the executive branch would ever have such vast powers was never part of the original idea of American government, the concept of a limited state, and of the American people living under the rule of laws and not the rule of men. If you want to argue along the lines that the reality of today’s world requires extensive government privileges, you have to argue that America’s political principles and founding ideas are now outdated and that they should be openly discarded. I am not convinced that this is necessary but this is certainly what is happening.

But then ask yourself, if you really believe that everlasting peace requires everlasting war, and that prosperity comes from printing money and accumulating debt, and that individual freedom has to be curtailed to be protected.

But maybe there is another explanation:

The military-industrial complex

When I grew up in Germany and became politically aware in the late 70s, I always thought that the term ‘military-industrial complex’ was an invention of the Left, mainly used to tar capitalist enterprise with the brush of warmongering and war-profiteering. I was surprised to learn that the phrase had been coined and most effectively used by an American president, Dwight D. Eisenhower, who was a Republican, a West Point graduate and a general. Eisenhower was no Lefty and he wasn’t a small-state libertarian conservative either, having opposed the isolationism of Taft and then, as president, expanding social security and the interstate highway system. Yet, when he left office, he warned his fellow Americans in a televised farewell address of the rise of what he termed the military-industrial complex, the sizable military infrastructure that the wars of the 20th century had bestowed on American society, consisting of the military itself and the sprawling defence industry. You can see excerpts of his speech on YouTube. Here is one quote:

“In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.”

The recent 18-month, $6 billion mega-version of American Idol, also known as the U.S. presidential election, had to do without a general, as it pitched the Community-Organizer-in-Chief against the slick ex-private-equity millionaire. Yet, notably, the military didn’t have to fear anything from either candidate. At this stage, the US military is all but untouchable, and I suspect that a majority of Americans are in sympathy with this. One can easily envision that as America continues to decline economically, the US public will embrace the military even more, as one last glorious reminder of the nation’s former vitality and global superiority. There is a ready analogy in Britain: Although nothing provides better short-hand for the type of hopelessly statist policies that killed British industry in the decades after the Second World War than the country’s socialist National Health Service, born in 1948 out of the then widespread belief that anything can be solved by the victorious British state organizing it centrally, the NHS is to this day the one institution that stirs national pride in the hearts of Britons, even those belonging to a younger generation. It has become an unmovable part of the British political landscape, and any reform-minded Prime Minister will attack it at his peril. The US military and the NHS are not just symptoms of their respective country’s maladies, they are among the causes, yet have moved beyond the reproach of serious political debate.

Arbitrary government

Speaking of socialist health services, the beginning nationalization of health care in America under Obama fits rather seamlessly into the overall picture of an increasingly assertive, hyperactive federal government that gets involved in every part of its citizens’ lives. It is simply another addition to the welfare-warfare-big-state project and not the ‘progressive’ policy outlier and symbol of a more caring and empathic government that Obamacare supporters want to see in it. This is naïve but maybe not as naïve as the hope that this project will make health care cheaper for the public. Nothing ever got cheaper by having the federal bureaucracy take control of it.

As part of Obamacare the state now boldly assumes the power to force citizens into commercial transactions, the purchases of health insurance, under a rather generous interpretation of the constitution that was recently approved by the Supreme Court. And while the government forces Americans to enter some contracts it also appropriates to itself the power to arbitrarily rip up others. When Obama bailed out Chrysler he simply tossed aside the legal rights of a group of bondholders that – entirely legally and perfectly justifiably – wanted to enact bankruptcy proceedings to protect their investments. Rather than protecting private property and securing legally binding contracts, as is one of the acknowledged primary tasks of any civil government, Obama chose to break contracts and to take money from bondholders to give it to the auto workers union. Political expediency and the wishes of the executive branch of government now trump the sanctity of private contracts in America.

What is coming

Wars, extensive surveillance, bailouts, ‘stimulus’, nationalized health care – all of this costs money, and the American state increasingly sees its citizenry as cash cows. The signs are everywhere. The US is the only country I know that has worldwide taxation for all its citizens. As long as you are a US citizen you have to file a US tax return, even if you live abroad and have not set foot in the country for years or decades. It remains your obligation to keep abreast of all changes to the tax code and those changes are numerous. As of recently, Americans have to report all foreign bank accounts – even if they are not income-generating – to the Internal Revenue Service, the powerful US tax authority. But it doesn’t stop there. As of next year, the infamous Foreign Account Tax Compliance Act (FATCA) will come into effect, which requires any bank anywhere in the world that invests in US securities or conducts business in the US to collect data on American customers overseas and pass this on to the IRS.

Doug Casey made an excellent observation: If you want to get an idea of what our future society will look like you can easily do so by visiting your nearest airport. The modern airport is the model-village of our society, the Orwellian theme park that gives you a glimpse into what will take shape in society at large in coming years, not only in the US, of course, but also in the EUSSR and elsewhere. It is a controlled environment, pleasingly temperate with lots of opportunities for harmless and pointless consumption but where you are under constant surveillance, where your every move is being monitored and recorded forever, increasingly with the use of face-recognition technology, where you will occasionally be searched, where you can’t smoke, and where the calming background music is frequently interrupted by loudspeaker messages that remind you to stay alert and to report any suspicious behaviour to the authorities.

So far, the public is happy to go along with this. I am frequently amazed by the sheepish obedience on display at airports where long lines of travellers stand quietly and patiently, taking off their shoes, calmly observing security personnel rummaging through their luggage, carefully making the prescribed moves in the new scanners as if they are about to enter a nuclear plant. If you see movies of the 1970s or 1980s, or even 1990s, with scenes at airports in them, you will find that they give you an impression of almost frivolous free-spiritedness by comparison. These procedures could not have been introduced in one big swoop. The public would have objected. They had to be introduced piecemeal, one new regulation and procedure at a time.

The same procedure applies to tax surveillance and capital controls. The screws will be tightened slowly so that the public gets used to ever tighter monitoring and ever closer controls. And fear remains an important factor. Large sections of the public believe that their prosperity and their economic future are at risk from unregulated bankers and tax-cheating millionaires who do not pay ‘their fair share’, and they believe that their very lives are constantly at risk from terrorist attacks. They see the government as their guardian and as the necessary regulator, and being under the democratic delusion that as voters they ultimately remain in control of the government, they are happy to sign their freedoms away. As Frank Karsten and Karel Beckman astutely observed, voting is the illusion of influence in exchange for the loss of freedom.

Maybe this statist nightmare will end at some point. Maybe Americans will rediscover their tradition of independence, self-reliance and personal freedom, and of suspicion of any form of state authority. Germany does not have a great sense of personal freedom in its national DNA. Britain has, and America even more so. Maybe recent developments will one day look in retrospect as strange as the prohibition era or the confiscation of private gold in 1933 and the suppression of gold ownership until 1974 do today: blots on the CV of a nation that sees itself as the land of the free. Maybe. But for the foreseeable future I remain pessimistic. For our generation the American Dream may be dead.

This article was previously published at DetlevSchlichter.com.

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