Wednesday, January 5, 2011

Balancing Budgets

Dismally, governments will never balance budgets. Perhaps it is disheartening to read that sentence as the opening line of an essay, but it synthesizes the further analysis I will undertake. As society continues to ponder the various methods of give and take which will eliminate the debt and prevent deficits, the one most prevalent aspect of the dire circumstance is rooted deeply in the undertakings of the central planners. The reasons for wishing upon select elite to create us success, is the desire to find a method of rational planning. Planning of course, and in a rational sense best molded to the life of an individual, can best be done by the individual themselves. Hayek explained this best: "Planning" owes its popularity largely to the fact that everybody desires, of course, that we should handle our common problems as rationally as possible and that, in so doing, we should use as much foresight as we can command. In this sense everybody who is not a complete fatalist is a planner, every political act is (or ought to be) an act of planning, and there can be differences only between good and bad, between wise and foresighted and foolish and shortsighted planning.[i]

In so implementing a central government, whom carries out the tasks an individual can perform on their own, society narrows the amount of choice available to them, and thus promotes lethargy and corruption; something that undoubtedly grows like a cancer. For this reason, humans need the largest amount of freedom to be able to make their own rational plans. The dispute between the modern planners and their opponents is, therefore, not a dispute on whether we ought to choose intelligently between the various possible organizations of society; it is not a dispute on whether we ought to employ foresight and systematic thinking in planning our common affairs. It is a dispute about what is the best way of so doing. The question is whether for this purpose it is better that the holder of coercive power should confine himself in general to creating conditions under which the knowledge and initiative of individuals are given the best scope so that they can plan most successfully; or whether a rational utilization of our resources requires central direction and organization of all our activities according to some consciously constructed "blueprint.”[ii]

Indeed Hayek made great points on the negative ramifications of central planning (relying on government) to attempt to rationally plan for individuals by majority rule, something which inevitably leads to tyranny upon individuals, yet he missed the fact that a government cannot plan even one dynamic of a society. If government attempts to simply plan the laws or defense, his theories of tyranny radically apply as well. Hayek’s theories were correct, but his ideas were incorrect. Hayek, like a minarchist, idealized a government making up for what the private sector slowly gathered its muster to concoct. In this case, government by quickly encroaching on a burgeoning market, sadly destroys it or creates a monopoly; its own or otherwise.

Rothbard, on the other hand, was a man that was keen on showing us in an empirical way, the pertinence of letting the market organize a society. With a market freely functioning, individuals had choice, as well as the freedom of interpersonal contractual arbitration. This spontaneous order was only planned by individuals whom wanted to survive; and with a plethora of choice, things become more local and natural law pervades the crevices of productivity. In a contractual society, each individual benefits by the ex­change-contract that he makes. Each individual is an actor free to make his own decisions at every step of the way. Thus, the relations among people in an unhampered market are "symmet­rical"; there is equality in the sense that each person has equal power to make his own exchange-decisions. This is in contrast to a hegemonic relationship, where power is asymmetrical-where the dictator makes all the decisions for his subjects except the one decision to obey, as it were, at bayonet point.

Thus, the distinguishing features of the contractual society, of the unhampered market, are self-responsibility, freedom from violence, full power to make one's own decisions (except the decision to institute violence against another), and benefits for all participating individuals. The distinguishing features of a hegemonic society are the rule of violence, the surrender of the power to make one's own decisions to a dictator, and exploitation of subjects for the benefit of the masters.[iii]

Mises seriously concurred with the expertise of Rothbard’s Anarcho-Capitalism. If every human were left free to take care of one’s private property, then swiftly yet precisely resources would be allocated based upon one’s rational planning, not that of a government that only exudes complacency. In the market society, the proprietors of capital and land can enjoy their property only by employing it for the satisfaction of other people's wants. They must serve the consumers in order to have any advantage from what is their own. The very fact that they own means of production forces them to submit to the wishes of the public. Ownership is an asset only for those who know how to employ it in the best possible way for the benefit of the consumers.[iv] Surely it would only serve individuals to favor a system where wanton choice allows for the selection of a proper order suited to each individual.

It would not be a sufficient statement for one to even quip that if this harmonious system worked, which evidently it would, to claim that before a radical change of removing government can take place, those rendering a debt at the time must be compensated for their unpaid dues. This was the case during the revolution, which exploded the power of the idea of forging a central bank, and gave the founding fathers more fortitude to build a hegemonic union of tyranny. The genuine libertarian, then, is, in all senses of the word, an "abolitionist"; he would, if he could, abolish instantaneously all invasions of liberty, whether it be, in the original coining of the term, slavery, or whether it be the manifold other instances of State oppression. Powered by justice, he cannot be moved by amoral utilitarian pleas that justice not come about until the criminals are "compensated." Thus, when in the early 19th century, the great abolitionist movement arose, voices of moderation promptly appeared counseling that it would only be fair to abolish slavery if the slave masters were financially compensated for their loss. In short, after centuries of oppression and exploitation, the slave masters were supposed to be further rewarded by a handsome sum mulcted by force from the mass of innocent taxpayers! The most apt comment on this proposal was made by the English philosophical radical Benjamin Pearson, who remarked that "he had thought it was the slaves who should have been compensated"; clearly, such compensation could only justly have come from the slaveholders themselves.[v]

The question of compensation for debt is only relevant upon the method which the system has rendered such debt. If in fact the government has created its own debt, then those vacuums of complacent services must be abolished. One could interpret this as government spending, but in a more radical and indeed more rational sense, this would mean to downsize, dissolve and abolish government altogether. Contracts are indicted between individuals and entrepreneurs to fortify a voluntary exchange and to flourish natural economic progress. Contracts are not written down by governments to fortify natural law and human rights. Evidently contracts made by governments that indict and affirm these precious human consistencies, destroy them by enforcing them in a uniform manner (which goes against biology, uniqueness and the division of labor), and extort monies from the producers to render this tyranny and destruction. All of which in the end dilapidates the human consistencies, making them completely inconsistent and chaotic; thus creating bubbles, debts and deficits.

[i] F. A. Hayek, The Road to Serfdom, Text and Documents--The Definitive Edition, pg.85

[ii] F. A. Hayek, The Road to Serfdom, Text and Documents--The Definitive Edition, pg.85

[iii]Murray Rothbard, Man, Economy, and State:

[iv]Ludwig Von Mises, Human Action:

[v]Murray Rothbard, Why Be Libertarian?: