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Interview
by Louis James, Editor, International
Speculator)
L:
Hi, Doug. I got the Alan
Colmes article you sent. I can see why it got your goat – guess
you've got a good rant in mind?
Doug:
I don't approve of rants. It's true that I have strong opinions, and I'm not
afraid to express them – but a considered and defensible opinion, even
if it's delivered with conviction, is essentially different from an emotional
outburst.
L:
Okay, sorry. No rants. But if the other side starts name-calling, we can be
forgiven for a little emotion on our side – how does one answer a
snarky dismissal of anyone who doesn't agree with so-called progressives,
labeling them "regressives"?
Doug:
I'm certainly not above delivering an appropriate and well-deserved insult. An
insult is really all that the lame attempts of progressives to shame people
into voting for Obama deserve. From a long-term perspective, it certainly
doesn't much matter who wins the coming election; Romney would be just as
great a disaster for what's left of America as Obama, just in slightly
different ways, with different rhetoric.
It's
interesting how certain breeds of statist are now re-labeling themselves as
"progressives." I guess they like the sound of the root word
– progress – even though they only want progress towards
collectivism. They used to call themselves "liberals," a word which
in America used to stand for free minds and free markets. But they
appropriated it and degraded it – classical liberals had to rechristen
themselves "libertarians." World-improvers, political hacks, and
busybodies in general are excellent at disguising bad ideas with good words,
ruining them in the process.
It's
said that "Sticks and stones may break my bones, but words can never
hurt me." But that's actually untrue; propaganda is a very effective
weapon. As Orwell pointed out, if you control the language, you control
people's thinking; and if you control people's thinking, you control their
actions. So I despise the way these types manipulate words.
As
for the case at hand, one of the things that annoys me most about Colmes'
vapid article is his dishonest and misleading, albeit conventional, defense
of the New Deal – America's first great lurch towards socialism. He
defends all the harm it's done as a wonderful thing. He repeats the fiction
that the New Deal rescued the economy from the last depression. It actually
made the Depression deeper, and made it last longer.
L:
Do tell.
Doug:
Well, to start with, Colmes, a self-appointed whitewasher of American
socialism, begins by resting his case on the claim that it is American
socialism that has made America exceptional. It's quite a bold assertion,
since socialism as well as fascism are antithetical to everything that was
good about America. He really is a cheeky bastard.
L:
He calls his socialism "liberalism."
Doug:
Yes, but that too is an Orwellian perversion. As always, we should start with
a definition. Around the world, you ask people what a liberal is, and they
say something that at least relates to the word's original meaning: liberals
favor liberty. And that's not just the civil liberties defended by the ACLU,
but also economic liberty – meaning freedom to engage in free trade
with others. The free market.
But
back in the 1930s, socialists like Norman
Thomas started to realize that they were never going to persuade the
majority of Americans to accept socialism outright, so they changed the name
and embarked on a deliberate campaign to implement their agenda, one piece at
a time, calling it liberalism. And who could be against that?
L:
I've read that most of Thomas'
1932 platform has now become law in the US.
Doug:
I believe that's true. Take a look at this Word
document [it will download automatically]. Actually, the same is
true of Marx's Communist
Manifesto. But back to today, Colmes' claim is absolutely ridiculous.
Social Security, Medicare, and progressive income taxes have not made America
exceptional, but just the opposite; they've made it like all the other
socialist and fascist countries that cover the face of the globe like a skin
disease. They are burdens that have slowed the economy and distorted people's
incentives and ideas.
These
programs have, perversely, hurt the poor – the very people they're
supposed to help – the most. They've acted to corrupt them and cement
them to the bottom of society. They've destroyed huge amounts of capital,
which would otherwise have raised the general standard of living, redirecting
it from production toward consumption. These coercive ideas all originated
and were first implemented in Europe before so-called liberals foisted them
on Americans, in the name of freedom. It's quite Orwellian, the way they've
twisted concepts to mean the opposite of what they once did.
L:
Some people would argue that things like Social Security liberate them
– free them from fear of poverty in old age.
Doug:
That claim shouldn't be worth answering – but it must be answered,
because Boobus americanus believes it. It's a classic "big
lie." Say it often enough, and people think it's true. In fact, Social
Security acts to impoverish the country, by destroying the incentive to save.
L:
How so?
Doug:
By taking almost 15% of a person's wages right off the top, Social Security
makes it much harder for a poor person to save money. Worse yet, it makes
people think they don't need to save for themselves; it gives them a false
sense of security. Even worse is that the money never really belongs to the
presumed recipient; it's simply another unsecured obligation of a bankrupt
government.
Social
Security payments should at least be set aside as discrete accounts in each
person's name, and become assets for them. If that money were placed in an
individually owned pension plan, with just average management, the results
would be many times what people now hope to get. And the plan wouldn't be a
burden to future taxpayers. Social Security is, in fact, just a gigantic
Ponzi scheme, where the next generation of young people is forced to support
the last generation of old people.
Worst
of all, the program causes people to be irresponsible. This is a disaster,
because a free society can only exist when everyone takes personal
responsibility seriously. It's a swindle, and it corrupts everyone. No wonder
parents can no longer rely on their own children to support them in old age.
Maybe the Chinese will lend the US government the money it needs to pay its
Social Security obligations…
But
the numerous practical failures of a program like Social Security are not the
main problem.
The
primary problem with a scheme like Social Security is that it's not
voluntary; it's coercive, which makes it unethical. You can't force people to
do what you think is right and then claim to be liberating them. Alleged
freedom from fear of poverty in old age in exchange for theft of wages in the
present – and the correct word for taking people's money without their
consent is "theft" – is not liberal in any defensible meaning
of the world. It's brute, "might-makes-right" power clothed in
noble-sounding words.
L:
Colmes says that Social Security keeps 40% of seniors above the poverty line
today, and "helps families with disabilities and those who have lost
loved ones." That's a bad thing?
Doug:
No one seriously thinks they'll be able to have a decent quality of life on
Social Security retirement income alone. Why do you think so many senior
citizens are working at Walmart or the like? Colmes is committing the same
error Bastiat pointed out 200 years ago; choosing to value immediate, direct,
and visible benefits, but ignoring the delayed and indirect costs, which only
become obvious later.
The
long-term costs of Social Security, Medicare/Medicaid, food stamps, and so
forth include bankrupting the country, among other economic consequences. But
even more disturbing and damaging is the degradation of once self-reliant
people to subservience and dependence, which is what happens when government
assumes responsibilities that adult individuals should bear themselves.
For
example, Social Security disability benefits are being used as an alternate
income source by the unemployed. As of August, 2012, there were about 10.8
million people collecting disability income – that's a larger number
than the entire population of most US states, and up from 8.1 million in
2007, when the Greater Depression began. It can be a great scam, claiming
PTSD, unprovable back pain, or a mood disorder. There's a whole class of
ambulance-chasing lawyers that takes these cases on contingency.
L:
What about the individuals who try and can't bear the responsibilities of
adulthood?
Doug:
The programs exist and have not prevented that from happening; there are
plenty of homeless people today. I would argue that most of them are in that
position because they've developed bad habits. There would be a lot fewer of
them if they didn't get taught from childhood that assuring their own lives
and well-being is really the state's responsibility, not their own. The
system is failing these people, but again, that's beside the point; two
wrongs don't make a right. The whole idea of a government "safety
net" is wrong, in principle and practice.
Ideas
have consequences in the physical world, and lies, twisted words, and
self-contradictory, impossible claims can be extremely damaging. You can't
liberate people by putting them in financial chains.
L:
I understand the principles, but many people don't – or just don't
care. People like Colmes see the parks built by the Civilian Conservation
Corps and the infrastructure built by the Works Progress Administration as
unmitigated goods, the work given to all the millions employed by the
government as life-saving, and the idea of helping those in need to be a
moral imperative they don't question.
Doug:
The average person has been handed this party line throughout his life, from
teachers in government schools to talking heads on TV. He's been discouraged
from thinking critically or independently. We have two widely shared myths
– that Roosevelt's New Deal cured the Depression and Johnson's Great
Society cured poverty – although both beliefs are counterfactual. It's
pretty much as Will Rogers liked to say: "It isn't what we don't know
that gives us trouble; it's what we know that just ain't so."
Now
a new myth is being hatched, that Obama and Bernanke's quantitative easing
saved the economy. But that will never catch on; it will be totally debunked
over the next few years as they destroy both the dollar and the economy.
Colmes
seems completely unaware that government programs have costs. The money used
to pay the Civilian Conservation Corps and Works Progress Administration
workers had to come from somewhere – where? It's either forcibly taken
from current taxpayers, who then can neither enjoy it nor invest it as they
prefer – or it comes from taking on debt, which means future taxpayers,
who are thereby turned into indentured servants. That money was redirected
from whatever uses those who earned it had for it, and put to uses government
employees deemed best.
The
political process, of course, has a perverse tendency to result in
"pork" spending on the most useless, wasteful, and idiotic programs
imaginable. It goes for things that are politically productive for the people
who control the state, not necessarily economically productive for either
society or the taxpayers. But again, this is all secondary to the ethics
of the matter; that is vastly more important.
Parks
are nice, but should the money to build them have been taken from
entrepreneurs struggling to build businesses in the 1930s? Or single mothers
in, say, Harlem, struggling to feed their families? It's the little people
who can't afford the lawyers and accountants needed to cut tax bills who
suffer the most.
Coercing
people to do what politicians decide is simply unethical.
L:
What about the argument that it's not coercion if the people voted for the
politicians who passed the laws that created these programs?
Doug:
Essentially another big lie. In the first place, people vote for politicians
– who rarely keep promises – not for laws at the federal level.
None of these laws were enacted by the people. Second, unless you could get
unanimous consent of every person affected, it would still be coercive to
people who have committed no crime and want no part of it, and thus
unethical.
If
51% of the people vote to enslave 49% of the people, that doesn't make that
slavery right. If 99% vote to enslave 1% – something many of the
ignorant, torch-wielding masses seem to be clamoring for these days –
it's still wrong. Ethics is not a matter of popularity contests.
Anything
that society wants or needs can, should, and will be provided by
entrepreneurs working for a profit.
L:
Can you elaborate on that? It's all fine to criticize stupid ideas, but
unless you offer a constructive alternative, what's the point?
Doug:
Indeed. We're talking about products and services that people regard as
necessary or beneficial for society as a whole, but which they say private
enterprise wouldn't provide adequately. Roads, schools, and post offices are
frequently cited examples.
Government
post offices were a bad idea to begin with – even back in the 1800s
when most people thought they were vitally important, a man named Lysander
Spooner set up a private company to deliver mail – and do so for
less than the government charged. This superior service upset the apple cart,
and was outlawed and shut down. Today, everyone knows that UPS and FedEx do a
better job than the post office; no sensible person trusts the government
when it absolutely, positively has to get there. Between that and email, the
post office should have been shut down, rather than propped up, long ago. It
now costs taxpayers on the order of $12 billion a year.
Similarly,
there's a history of private roads going back to previous centuries. The fist
transcontinental highway, the old Route
66, was paved with private money. There are private roads in the US and
around the world today. It's simply not true that you need a government to
build things that people actually need. You need government roads about as
much as you need government cars.
We've
covered schools
and education. The schools are absolutely the last thing the state should
do…
L:
What about things like the military, police, and courts?
Doug:
Well, I would argue that even those should
be handled by the private sector, but I understand that many people can't
get away from the idea that these services are core government functions that
should not be privatized. That's because they fear they would not be fair and
impartial – though it's a cruel joke to think that government courts
today are fair and impartial. At any rate, I could live with it if government
were limited to these core functions; but police and courts are only a tiny
fraction of what government does today.
There's
great danger in having the government do anything, quite frankly. But it
could be better if more people like Ron Paul or
my friend Marc Victor were in
office. Check out Victor; he has the potential to be the next Ron Paul
– on steroids.
L:
Understood: if no one can make a buck providing some good or service, how
vital can it be? Anything people actually want will be provided by
entrepreneurs, making a profit. And like you, I too like to start by asking
what is right, before I ask how much it costs. But most people just don't
seem to think this way. That's why I keep coming back to the practical
arguments. It seems that, regardless of one's politics, it should matter that
the state's coffers are empty.
Colmes
argues that by 2022 Obama's Affordable Care Act "will provide coverage
to 33 million Americans who would otherwise be uninsured." He doesn't
mention that mandated government spending and interest payments have already taken over the entire federal
budget. Even now, with a $1.5 trillion deficit, most of the $700 billion
for the military, the $227 billion for interest on the national debt and the
$646 billion for regular government services is borrowed every year. The
whole thing is an impossible pipe dream that absolutely ensures the
bankruptcy of not just the US government, but American society itself.
Doug:
It seems insane – people wouldn't believe us if we'd written this into
a story some years ago.
But
you can see the scary truth in the news every day; people in Europe's totally
broke and failing economies protest violently in the streets for their
governments to spend more money those governments don't have and won't be
able to borrow. Colmes exhibits this same breathtaking unwillingness to face
the facts. He talks about one in seven people being on food stamps, as though
it were a good thing. He talks about how politicians voted to extend
unemployment benefits with money they don't have as though that's an
unquestionably good thing to do.
L:
So is Colmes an evil manipulator or a misguided dupe?
Doug:
I don't see how any intellectually honest person can write a long article
praising a whole alphabet soup of government agencies without ever once
admitting their failure, asking how much they cost, or examining the ethical
basis for their existence. So I suspect he's both a knave and a fool.
Colmes'
article encapsulates wrong-headedness and willful ignorance in exactly the
same way that Paul Krugman and Thomas
Friedman invariably do. They're all very destructive people. Since they
don't appear to be stupid – in the sense of having low IQs – I'm
forced to assume they're ill-intentioned.
L:
So… What's in it for him to circulate such obviously biased and misleading
opinions?
Doug:
Perhaps he's simply a sociopath who gets pleasure from destruction. Or
perhaps he's just motivated by fame and money and has found a profitable gig.
Despite being an apologist for socialism, the man hosts a talk show and
writes books which make him money; he doesn't do it pro bono. He has
identified a market and is making money, pursuing his own self-interest,
deliberately or unwittingly to the detriment of society.
L:
Just like a politician.
Doug:
He sees the government as the solution to every problem. But since government
is pure coercion by its very nature, you can count on it to do the wrong
thing – and often even the exact opposite of the right thing.
L:
It's perverse.
Doug:
[Laughs] Took the words out of my mouth.
L:
Investment implications?
Doug:
Nothing specifically related to Colmes. He's just another sign of the
degradation of America, yet another data point supporting my view that the US
is probably past the point of no return. The place that was once America is
going through the wringer, and so is the rest of the world. And the way to
deal with that is what we've been saying for some time now: rig
for stormy weather.
L:
Liquidate, consolidate, speculate, create – and internationalize.
Doug:
Right.
L:
Okay, well, thanks for another interesting conversation. Maybe we can record
another at the upcoming New
Orleans investment conference – we'll both be there.
Doug:
It'll be fun. I love New Orleans and enjoy Brien Lundin's annual
extravaganza. I'll be there for the whole three days. Let's do it.
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