PART III

HOW DO WE GET THERE?

“If the revolution comes by violence, and in advance of light, the old struggle will have to be begun again.”

—Benjamin R. Tucker.

 

Chapter 15

From Government to Laissez Faire

The prospect of real freedom in a laissez-faire society is a dazzling one, but how can such a society ever be brought about? Through the decades, government has silently grown and spread, thrusting insidious, intertwining tentacles into nearly every area of our lives. Our society is now so thoroughly penetrated by government bureaucracy and our economy so entangled in government controls that dissolution of the State would cause major and painful temporary dislocations. The problems of adjusting to a laissez-faire society are somewhat like those facing an alcoholic or heroin addict who is thinking of kicking the habit, and the difficulties and discomforts involved may make some people decide that we’d be better off just staying as we are.

It is naive, however, to assume that we can “just stay as we are.” America, and most of the rest of the world, is caught in a wave of economic decay and social upheaval which nothing can stop. After decades of governmental “fine tuning,” our economy is now so distorted and crippled that we have a tremendous and ever growing class of hopeless and desperate poor. These poor and dispossessed feel a very well-justified (if usually misdirected) resentment which they express in demonstrations and riots. Governmental attempts to aid them, even if such attempts could be free of bureaucratic pork-barreling and pocket-lining, merely make the situation worse. After all, government can only get its “aid” money by bleeding it from our already sick economy, thereby weakening the economy still further and creating more poor to be aided. As the poor see their lives becoming increasingly miserable in spite of all the political promises of help, their resentment must grow more violent.

Meanwhile, the bureaucrats’ attempts to save an economy dying of governmental controls by imposing more and more controls are pushing us swiftly down the path of financial ruin. If they aren’t stopped in their frantic efforts to cure our collectivist poisoning by forcing us to swallow more collectivism, they will sooner or later push us over the brink into total economic collapse—the kind of collapse where government money loses all its value and people starve to death in the streets.

The choice is not laissez-faire vs. the status quo, because we cannot possibly keep the status quo anyway. Tremendous socioeconomic forces, set in motion long ago by governmental plundering and power-grabbing, are sweeping the present order out from under our feet. We can only choose whether we will allow ourselves to be pushed into economic chaos and political tyranny or whether we will resist the bureaucratic tyrants and looters and work to set up a free society where each man can live his own life and “do his own thing.”

Whichever we choose, the road ahead will probably be rough; but the important question is, “What kind of society do we want to arrive at in the end?”

How soon a laissez-faire society can be established and exactly what conditions may accompany a transition from government to freedom are impossible to predict because of two important variables—the rapidity with which the idea of freedom can be spread and how much longer our economy can withstand the effects of governmental meddling.

The economies of all the major nations are in various states of disintegration. For decades, governments have been inflating their currencies in order to siphon more money into the government treasuries than they could get by taxation alone. But the extra paper money pumped into the economy by inflation distorts the economy by causing malinvestments. This is the “boom” part of the dreaded business cycle. Governments don’t mind a boom at all, since inflation enables them to collect more revenue without antagonizing the taxpayer (the bureaucrats can always lay the blame on “the wage-price spiral” or “Big Business” or “greedy unions”). But as soon as the effects of an inflationary input wear off, people see the error of the malinvestments and abandon them and the “boom” is replaced by a “bust.” The only way a government can avoid the painful readjustment of a “bust” is to continually increase inflation, which continually decreases the value of each monetary unit in the economy. When the value of the paper dollar falls below the value of the gold dollar, the people are forbidden to own gold and the government sets an artificial “price on gold,” which eventually leads to recurring gold crises. When the value of the paper dollar falls below the value of the silver in four quarters, people hoard the quarters and the government has to put out low-value cupro-nickel coins to alleviate the “coin shortage.”

In this way the value of your money is gradually eroded until all you have in your pocket is unbacked paper and low-value cupro-nickel. (Although the dollar is nominally backed by gold, this does us no good, since the Government forbids us to own that gold!) The economy continues to operate on this fake money simply because people are used to believing that it has real value. But, as the government is forced to inflate more and more to avoid an ever more severe depression, hyper-inflation sets in and the value of the monetary unit falls with increasing speed. The resulting soaring prices force people to recognize the shrinking value of the money. Then there is a mad scramble to spend money quickly before it loses any more of its value. People rush to buy durable goods of any kind as storers-of-value in the place of the nearly worthless money. These frantic attempts to get rid of money and hold onto goods quickly reduce the trading value of the dollar to zero, and the economy is left without any medium of exchange and must fall back on barter. Since barter is completely insufficient to support an industrialized economy (how would General Motors pay its employees on a barter basis? how would your grocer pay the wholesaler from whom he buys the food?), there is mass unemployment, destitution and starvation.

So the bureaucrats’ attempt to avoid the depression caused by their inflationary policies only succeed in making the depression far more severe when it does come. If they resort to hyper-inflation, the ensuing depression will involve the complete collapse of the monetary structure of the country, as in Germany after World War I. Germany was able to recover from its monetary collapse fairly quickly because many of the other nations still had fairly sound currencies to which Germans could turn for media of exchange. The collapse toward which we are slipping will be much harder to recover from. Most of the currencies of the world have no more actual value behind them than does America’s, and furthermore, the major currencies are all tied to each other and to the dollar, so that if the dollar goes, they all go. Such a world-wide monetary collapse would leave us without any medium of exchange except for the gold and silver which a few far-sighted individuals have horded, and even this might have to be exchanged on a black market basis due to governmental prohibitions. Before this gold and silver could become sufficiently spread through the economies of the world to lift them from barter back to a monetary basis, millions may have starved to death. Governments can’t create money out of paper, ink, and promises. Once they destroy their currencies, they can only wait for the processes of the market to re-establish a medium of exchange.

Since the state of our economy depends largely on the whims of bureaucrats and politicians, it is impossible to predict whether our currency will continue to function for several more months or for several years before going into hyper-inflation and final collapse. Similarly, it is impossible to say whether the collapse will happen rather suddenly, as in 1929-32, or whether it will come as a long-drawn-out series of fiscal crises, each worse than the last. The only thing we can say with certainty is that a day of reckoning must come for the badly inflated dollar and for all the other shaky currencies of the world, and that governments will inevitably pursue policies designed to put off that day of reckoning, thereby making it far more disastrous when it does come.

In making the transition from government control to a laissez-faire society, then, our first concern should be to minimize the effects of the inevitable economic breakdown caused by the politicians’ fiscal meddlings. There are several measures which would greatly help, all of which involve abolishing existing laws and regulations—that is, they involve a return to freedom of the market.

First and foremost, the economy should be provided with media of exchange to replace the dying dollar. Since gold and silver have proved themselves through centuries of trading to be the most acceptable monetary media, this means that we must get as much gold and silver into the hands of as many private individuals as quickly as possible. All restrictions on the ownership and importation of gold in any form whatever should be gotten rid of as soon as possible, and Americans should be encouraged to exchange their dollars for all the gold and silver left in the Treasury at whatever price ratio the free market sets. All the many restrictions on gold mining should be dispensed with so that the demand for hard money could be partially met with newly mined gold.

Along with getting monetary metals into the hands of private individuals, there should be an end to all laws preventing private coinage of money. Businessmen should be as free to manufacture coins for exchange as they are to manufacture vacuum cleaners. In both cases, the processes of the free market will encourage those with the best products and eliminate the frauds.

The monopoly of the Federal Reserve System on banking should be broken so that entrepreneurs could set up completely private banks regulated by nothing but the processes of the market. It is through the mechanism of the Federal Reserve that the Government inflates the currency, and special privilege laws permitting banks to hold only fractional reserves against their demand deposits add to the problem. Private coinage and private banking will put a permanent end to inflation, depression, and monetary crises.

Critics will object that without the restrictions preventing private individuals from owning gold and coining their own money, nearly everyone would rush to exchange their paper dollars for gold and silver coins and certificates backed by such coins. This would precipitate a crisis for governmental money and a severe de facto devaluation of the dollar. And the critics are right—this is what would happen. But an economic crisis will come anyhow; the politicians have already made it inevitable. The crisis will be far less severe, and recovery far more rapid, if it comes as a result of people deserting the dollar for a truly valuable medium of exchange than if the dollar collapses from hyper-inflation, leaving them no money commodity at all. By forcing us to use an inflated and increasingly devalued currency, the bureaucrats are denying us our only chance to rescue our economy and our own private savings from the government-created fiscal chaos. The dollar can’t be saved—it’s already dying of governmental interference. Let’s not let the bureaucrats kill the whole economy along with it in the name of trying to save their decaying, totalitarian monetary system.

The preceding discussion has assumed that the transition to a laissez-faire society can be gotten well underway before the economy collapses. If the economy collapses first, all of the above measures will still apply in order to facilitate recovery, but, of course, the recovery will be much more difficult and slower.

In making the transition to a laissez-faire society, many governmental institutions which have been an integral part of society for years or decades or centuries will have to be abolished. Taxes present the least problem—obviously, they should be abolished immediately. Taxation is theft, and there is never any justification for continuing theft. The abolition of all taxes would stimulate an immediate and rapid spurt of growth throughout the whole economy as money formerly drained into bureaucratic boondoggles and political pocket-books became available for productive use. Imagine what it would do for your own personal prosperity to have your real income almost doubled overnight (taxes, including all hidden taxes, take over one-third of the average man’s income). This same prosperity would be felt by the whole economy. As each productive man’s real income shot upward, there would be a sharp increase in both consumption and investment. The consumption would mean a greater demand for all products and services, and the investment would provide the capital structure necessary to meet that demand. New products would be marketed, new jobs created, and the general standard of living would rise. (It is true that government both spends and invests tax revenues, but it always allocates these revenues differently from the way their rightful owners would have allocated them, thus distorting the market. Also, government investments are notably wasteful and counterproductive. For example, the U. S. Government once formed an Abaca Production and Sales bureau to take over the growing of hemp in four Central American countries, on the theory that hemp, which is used for the manufacture of rope, was vitally strategic. But this government-produced hemp was of such inferior quality that it couldn’t be sold, even to the Government’s own rope factory. To get out of its embarrassment, Abaca Production and Sales sold the worthless hemp to another Government agency, the Strategic Stockpile. The hemp was then stored, at taxpayers’ expense, in specially built warehouses. Each year the previous year’s crop was shoveled out and destroyed to make room to store the new crop. Total loss to the taxpayers averaged $3 million a year.1

Government employees would have to find jobs in private enterprise if they wanted to work. There are two major kinds of governmental employees—those whose services would be in demand in the free market (teachers, librarians, secretaries, firemen, etc.) and those who perform no useful function but simply keep the governmental machinery running (lawmakers, tax collectors, bureaucratic record keepers and paper shufflers, executives in the military-industrial complex, the President and the Vice President, etc.). The first kind would probably find only minor difficulties in adjusting to a free society. A forest ranger in Yellowstone National Park might find his job almost unchanged, as the Park was taken over by a private corporation to be run for profit. Those lawyers and judges whose minds were young and flexible enough to adjust to freedom instead of statutory law could sell their services to free enterprise arbitration agencies. On the other hand, men who had spent their lives as tax collectors for the Internal Revenue Service or as Federal narcotics agents would find no demand for their “services” and would have to change careers in order to survive—perhaps even to that of garbage collector or janitor (honorable work, for a change). In a sense, this would be a partial penality for having been willing to make a career of ruling over others.

Switching to a laissez-faire society would certainly require large adjustments in the lives of many people. It’s amazing, though, how swiftly and efficiently adjustments can be made in a free-market situation. When some men want to sell their services, other men want to buy services to manufacture a product, and still other men want to buy the product, nothing can stop them from getting together in a mutually beneficial exchange except the interference of government. So, while the birth of a free society would bring temporary hardships to many, the period of adjustment would be fairly brief. In the end, all would be better off than they had been when ruled by government (with the possible exception of such parasites as Presidents, White House advisors, and Pentagon Generals).

But what about government obligations such as the national debt—who will see that they are met? Those who ask this question have never stopped to analyze what is meant by “government obligations.” Morally, the government is no more than a well-organized band of robber barons. In order to maintain itself in power, it borrows money, grants special privileges, and makes promises to certain groups and individuals. But where does it get the money to pay its debts and keep its promises? By the theft of taxation. Obviously, the victims of a hoodlum gang cannot be morally required to give up their honestly earned money in order to pay debts incurred by the gang in its attempts to stay in power over them. No government obligation of any sort is morally binding on the citizen-subjects (or former citizen-subjects) of that government. Those who voluntarily loaned money to the government were at fault for sanctioning and supporting the activities of the hoodlum gang, and justice demands that they must take their losses and make the best of it.

Of course, many who have “loaned” money to the government, expecting to be paid back later, have had no choice in the matter (Social Security is the prime example of this point). Others who have never voluntarily paid into, government treasuries have been made dependent on governmental welfare payments when political meddling strangled the economy and denied them decent jobs. These people are among the most tragic victims of the power-grabbers. But to continue collecting money by force in order to make payments to them would simply be to perpetuate the system which enslaved them in the first place. In a newly born laissez-faire society, these people would have to either find jobs (which would be plentiful after the adjustment period) or depend on private charity. This may seem harsh, but it is far less terrible than what will happen to the poor, the sick, and the old if we allow government to continue in power until it brings us to economic collapse and mass starvation.

When considering the hardships which people such as Social Security recipients would undergo during the transition to a laissez-faire society, it is well to remember that most of these people are guilty of at least passively consenting to the politicians predations. If enough of them had raised a protest a few decades ago, we wouldn’t be facing this governmentally induced crisis today. People who meekly consent to wrongs because no one else is objecting to them, instead of identifying and condemning the corruptions, are filling up a reservoir of hardship. If the dam breaks and they are engulfed in the flood, they shouldn’t be too surprised. The hardships, after all, are partly due to their guilt of consent.

One of the most important considerations raised in connection with the abolition of government is what should be done with government wealth and property. As far as monetary wealth goes, this is no problem … since the government doesn’t have any (as a look at the national debt figures will show). The government does, however, possess a tremendous amount and variety of “property” in the form of land, buildings, roads, military installations, schools, businesses such as the Post Office, Government Printing Office, and hundreds less well-known, prisons, libraries, etc., etc. Though these items are in the temporary possession of whatever bureaucrats happen to be in charge of them, they are not actually owned by anyone. “The public” is unable to own them, since nothing can be owned by a collective myth like “the people.” Politicians and bureaucrats don’t own them for the same reason that a thief doesn’t rightfully own the property he has stolen. “Public property” is actually unowned potential property.

Since valuables in the possession of government are not actually owned, it would be perfectly proper for anyone to take possession of any piece of “public property” at any time that the government became too weak or careless to prevent him from doing so. The man who took possession of a piece of former “public property,” claiming it and marking it as his own for all to see, would become the rightful owner of that property.

It has been proposed that the process of disposing of “public property” should be made orderly by selling the items to the highest bidder, rather than simply allowing them to be claimed by any comer. The money thus collected, it is held, could then be given back to the taxpayers in the form of income tax rebates, or it could simply be destroyed (assuming it to be in the form of paper currency or similar fiat money) in order to reverse the process of inflation and restore some value to the dollar.

Several objections can be raised to this plan, however. First it would be next to impossible to prevent a great deal of graft as the money from “public property” sales rolled in. Given a stream of money, a bureaucrat can always figure out a way to divert some of it into his own pocket, and who would there be to police the bureaucrats and politicians except other bureaucrats and politicians? Second, this system is definitely biased toward large firms and wealthy individuals. This would not be objectionable if the rich were rich largely because of their own merit and the poor were poor solely because of their incompetence and laziness, as would be the case in a long-established laissez-faire society. But in our governmentally controlled society, many of the poor are poor because bureaucratic regulation and taxation robbed them of a chance, and many of the rich are rich because of political pull.

Finally, selling “public property” to the highest bidder would inevitably involve a long delay before many of the items could be put to productive use. This delay would make the transition period to a laissez-faire society longer and more difficult, since a delay in production means a delay in available jobs and in produced items to consume. And if the process were not to be dragged on indefinitely, many items would have to be abandoned, to be simply claimed in the future (how many people do you know who want 100 acres ten miles from the nearest road in the middle of the Mojave Desert?). Of course the politicians would try to keep the sale business going indefinitely, in order to prolong their power and would thereby make themselves harder to get rid of.

From a moral point of view, items which aren’t owned can’t be rightfully sold, anyway. Sale is one means of disposing of property, and property is that which is owned. If something isn’t owned, it can’t be sold, and “public property” isn’t owned by anyone, either the public or the politicians.

It has been objected that if “public property” were thrown open to ownership by anyone who claimed it, there would be a welter of confusing, contradictory claims, and possibly violence and bloodshed. It is true that this might happen initially, especially if government lost its power to hold onto its possessions all at once. Societies have survived a sudden flood of claims to some particular wealth on a smaller scale (gold rushes being a notable example). While there is a great deal of confusion and some injustice in the beginning, things usually settle down in a fairly short period of time, especially when there is a large amount of desirable, potential property to be claimed, as is the case with present “public property.” And, it must be noted that such a situation of conflicting claims would certainly stimulate the growth of private enterprise services of protection, defense, and arbitration. This positive side effect would help the infant laissez-faire society get underway and gain strength quickly. It has also been objected that if anyone could lay claim to any piece of former “public property,” many valuable items might be claimed by undeserving bums and bureaucrats. Again, it’s certainly true that this might happen in many cases. But the operations of the free market always penalize the incompetent, causing them to lose properties which they are incapable of operating effectively. If a drunken bum claimed the Chicago Main Post Office, what would he do with it? If he lacked the skill to operate the facility, he would have to simply hold on to it while someone else started a profitable private mail service in some other Chicago building, or he would have to sell it. If he sold it, it would then be put to productive use and he would be left with a sum of money to squander on liquor. Either way, the market would soon reach a condition of maximum productivity and the fate of the bum would become irrelevant to everyone but himself.

But, while incompetents would be shunted aside by the workings of the free market, those with ability and initiative would be given a chance to make their fortunes, regardless of their previous social and financial status. Not only would this wide-open claiming system at last give worthwhile opportunities to the poor and victims of discrimination, it would also help counteract the effects of eliminating welfare and government jobs.

There would certainly be difficulties and temporary dislocations involved in making the transition from government slavery to laissez-faire freedom, but they could be overcome by free men acting in a free market. And when the transition has been made, new opportunities would open up for everyone. There would be more and better jobs, better pay, a multitude of new ideas, inventions and business opportunities, and countless chances to “strike it rich.” Inflation could not threaten society, because there would be a sound monetary system. Consumer goods would multiply, living standards rise, and the hopeless and degrading poverty of today’s slums become a thing of the past. Most important of all, there would be freedom. No one would be taxed, or regulated, or forced to live his life according to someone else’s standards. No one would need to fear that his peaceful and private pastimes would bring the police with a warrant for his arrest. No one would be forced to bow to the whim of a power-hungry bureaucrat.

On the other hand, if our society continues to be governmentally controlled, we can expect a steady increase in economic troubles, unemployment, inflation, crime, poverty, and, eventually, a complete collapse of the governmental monetary system, bringing widespread starvation. We can also expect a steady decrease in our government-permitted “freedoms” as more and more bureaucrats find more and more ways of taking care of us and exercising power over us.

A laissez-faire society is worth the thought, effort, and struggle necessary to achieve it, because liberty is the answer to all of our societal problems.

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1. For this and other examples of ridiculous government waste, listen to “Hayfoot, Straw-foot,” an LP record by Willis Stone, available from Key Records, Box 46128, Los Angeles, California.

 

 

– L & M Tannehill