China and the End of the Deng Dynasty
By Matthew Gertken and Jennifer Richmond
Beijing has become noticeably more anxious than usual in recent months, launching one of the more high-profile security campaigns to suppress political dissent since the aftermath of the Tiananmen Square crackdown in 1989. Journalists, bloggers, artists, Christians and others have been arrested or have disappeared in a crackdown prompted by fears that foreign forces and domestic dissidents have hatched any number of “Jasmine” gatherings inspired by recent events in the Middle East. More remarkable than the small, foreign-coordinated protests, however, has been the state’s aggressive and erratic reaction to them.
Meanwhile, the Chinese economy has maintained a furious pace of credit-fueled growth despite authorities’ repeated claims of working to slow growth down to prevent excessive inflation and systemic financial risks. The government’s cautious approach to fighting inflation has emboldened local governments and state companies, which benefit from rapid growth. Yet the risk to socio-political stability posed by inflation, expected to peak in springtime, has provoked a gradually tougher stance. The government thus faces twin perils of economic overheating on one side and overcorrection on the other, either of which could trigger an outburst of social unrest — and both of which have led to increasingly erratic policymaking.
These security and economic challenges are taking place at a time when the transition from the so-called fourth generation of leaders to the fifth generation in 2012 is under way. The transition has heightened disagreements over economic policy and insecurities over social stability, further complicating attempts to coordinate effective policy. Yet something deeper is driving the Communist Party of China’s (CPC’s) anxiety and heavy-handed security measures: the need to transform the country’s entire economic model, which carries hazards that the Party fears will jeopardize its very legitimacy.
Deng’s Model
Former paramount leader Deng Xiaoping is well known for launching China’s emergence from Mao’s Cultural Revolution and inaugurating the rise of a modern, internationally oriented economic giant. Deng’s model rested on three pillars.
The first was economic pragmatism, allowing for capitalist-style incentives domestically and channels for international trade. Deng paved the way for a growth boom that would provide employment and put an end to the preceding decade of civil strife. The CPC’s legitimacy thus famously became linked to the country’s economic success rather than to ideological zeal and class warfare.
The second pillar was a foreign policy of cooperation. The lack of emphasis on political ideology opened space for international maneuver, with economic cooperation the basis for new relationships. This gave enormous impetus to the Sino-American detente Nixon and Mao initiated. In Deng’s words, China would maintain a low profile and avoid taking the lead. China would remain unobtrusive to befriend and do business with almost any country — as long as it recognized Beijing as the one and only China.
The third pillar was the primacy of the CPC’s system. Reform of the political system along the lines of Western countries could be envisioned, but in practice would be deferred. That the reform process in no way would be allowed to undermine Party supremacy was sealed after the mass protests at Tiananmen, which the military crushed after a dangerous intra-Party struggle. The People’s Liberation Army (PLA) and the People’s Armed Police would serve as Deng’s “Great Wall of steel” protecting the Party from insurrection.
For three decades, Deng’s model remained mostly intact. Though important modifications and shifts occurred, the general framework stands because Chinese-style capitalism and partnership with the United States have served the country well. Deng also secured his policy by establishing a succession plan: He was instrumental in setting up his immediate successor, Jiang Zemin, and Jiang’s successor, current President Hu Jintao.
Hu’s policies have not differed widely in practice from Deng’s. China’s response to the global economic crisis in 2008 revealed that Hu sought recourse to the same export- and investment-driven growth as his predecessors. Hu’s plans of boosting household consumption have failed, the economy is more off-balance than ever, and the interior remains badly in need of development. But along the general lines of Deng’s policy, the country has continued to grow and stay out of major conflict with the United States and others, and the Party has maintained indisputable control.
Emergent Challenges
Unprecedented challenges to Deng’s model have emerged in recent years. These are not challenges involving individuals; rather, they come from changes in the Chinese and international systems.
First, more clearly than ever, China’s economic model is in need of restructuring. Economic crisis and its aftermath in the developed world have caused a shortfall in foreign demand, and rising costs of labor and raw materials are eroding China’s comparative advantage even as its export sector and industries have built up extraordinary overcapacity.
Theoretically, the answer has been to boost household consumption and rebalance growth — the Hu administration’s policy — but this plan carries extreme hazards if aggressively pursued. If consumption cannot be generated quickly enough to pick up the slack — and it cannot within the decade period that China’s leaders envision — then growth will slow sharply and unemployment will rise. These would be serious threats to the CPC, the legitimacy of which rests on providing growth. Hence, the attempt at economic transition has hardly begun.
Not coincidentally, movements have arisen that seek to restore the Party’s legitimacy to a basis not of economics but of political power. Hu’s faction, rooted in the Chinese Communist Youth League (CCYL), has a doctrine of wealth redistribution and Party orientation. It is set to expand its control when the sixth generation of leaders arrives. This trend also exists on the other side of the factional divide. Bo Xilai, the popular Party chief in Chongqing, is a “princeling.” Princelings are the children of Communist revolutionaries, who often receive prized positions in state leadership, large state-owned enterprises and the military. This group is expected to gain the advantage in the core leadership after the 2012 transition. Bo made himself popular by striking down organized-crime leaders who had grown rich and powerful from new money and by bribing officials. Bo’s campaign of nostalgia for the Mao era, including singing revolutionary songs and launching a “Red microblog” on the Internet, has proved hugely popular. It also has added an unusual degree of public support to his bid for a spot on the Politburo Standing Committee in 2012. Both sides appeal to the inherent value of the Party, rather than its role as economic steward, for justification.
The second challenge to Deng’s legacy has arisen from the military’s growing self-confidence and confrontational attitude toward foreign rivals, a stance popular with an increasingly nationalist domestic audience. The foreign policy of inoffensiveness for the sake of commerce thus has been challenged from within. Vastly more dependent on foreign natural resources, and yet insecure over prices and vulnerability of supply lines, China has turned to the PLA to take a greater role in protecting its global interests, especially in the maritime realm. As a result, the PLA has become more forceful in driving its policies.
In recent years, China has pushed harder on territorial claims and more staunchly defended partners like North Korea, Iran, Pakistan and Myanmar. This trend, especially observable throughout 2010, has alarmed China’s neighbors and the United States. The PLA is not the only institution that seems increasingly bold. Chinese government officials and state companies have also caused worry among foreigners. But the military acting this way sends a particularly strong signal abroad.
And third, Deng’s avoidance of political reform may be becoming harder to maintain. The stark disparities in wealth and public services between social classes and regions have fueled dissatisfaction. Arbitrary power, selective enforcement of the law, official and corporate corruption, and other ills have gnawed at public content, giving rise to more and more frequent incidents and outbursts. The social fabric has been torn, and leaders fear that it could ignite with widespread unrest. Simultaneously, rising education, incomes and new forms of social organization like non-governmental organizations and the Internet have given rise to greater demands and new means of coordination among dissidents or opposition movements.
In this atmosphere, Premier Wen Jiabao has become outspoken, calling for the Party to pursue political reforms in keeping with economic reforms. Wen’s comments contain just enough ambiguity to suggest that he is promoting substantial change and diverging from the Party, though in fact he may intend them only to pacify people by preserving hope for changes in the unspecified future. Regardless, it is becoming harder for the Party to maintain economic development without addressing political grievances. Political changes seem necessary not only for the sake of pursuing oft-declared plans to unleash household consumption and domestic innovation and services, but also to ease social discontent. The Party realizes that reform is inevitable, but questions how to do it while retaining control. The possibility that the Party could split on the question of political reform, as happened in the 1980s, thus has re-emerged.
These new challenges to the Deng approach reveal a rising uncertainty in China about whether his solutions are adequate to secure the country’s future. Essentially, the rise of Maoist nostalgia, the princelings’ glorification of their Communist bloodline and the CCYL’s promotion of ideology and wealth redistribution imply a growing fear that the economic transition may fail, and that the Party therefore may need a more deeply layered security presence to control society at all levels and a more ideological basis for the legitimacy of its rule. Meanwhile, a more assertive military implies growing fears that a foreign policy of meekness and amiability is insufficient to protect China’s access to foreign trade from those who feel threatened by China’s rising power, such as Japan, India or the United States. Finally, a more strident premier in favor of political reform suggests fear that growing demands for political change will lead to upheaval unless they are addressed and alleviated.
Containing the Risks
These emerging trends have not become predominant yet. At this moment, Beijing is struggling to contain these challenges to the status quo within the same cycle of tightening and loosening control that has characterized the past three decades. Though the cycle is still recognizable, the fluctuations are widening — and the policy reactions are becoming more sudden and extreme.
The country is continuing to pursue the same path of economic development, even sacrificing more ambitious rebalancing to re-emphasize, in the 2011-15 Five-Year Plan, what are basically the traditional methods of growth. These include massive credit expansion fueling large-scale infrastructure expansion and technology upgrades for the export-oriented manufacturing sector, all provided for by transferring wealth from depositors to state-owned corporations and local governments. Modifications to the status quo have been slight, and radical transformation of the overall growth model has not yet borne fruit.
In 2011, China’s leaders also have signaled a swing away from last year’s foreign policy assertiveness. Hu and Obama met in Washington in January and declared a thaw in relations. Recently, Hu announced a “new security concept” for the region. He said that cooperation and peaceful negotiation remain official Chinese policy, and that China respects the “presence and interests” of outsiders in the region, a new and significant comment in light of the U.S. re-engagement with the region. The United States has approved China’s backpedaling, saying the Chinese navy has been less assertive this year than the last, and Washington has since toned down its own threats. China’s retreat is not permanent, and none of its neighbors have forgotten its more threatening side. But China has signaled an attempt to diminish tensions, as it has done in the past, to avoid provoking real trouble abroad (while focusing on troubles at home) for the time being.
Finally, the security crackdown under way since February — part of a longer trend of security tightening since at least 2008, but with remarkable new elements — shows that the state remains committed to Deng’s general deferral of political reform, choosing strict social control instead.
The Deng model thus has not yet been dismantled. But the new currents of military assertiveness, ideological zeal and demand for political reform have revealed not only differences in vision among the elite, but a rising concern among them for their positions ahead of the leadership transition. Sackings and promotions already are accelerating. Unorthodox trends suggest that leaders and institutions are hedging political bets to protect themselves, their interests and their cliques in case the economic transition goes wrong or foreigners take advantage of China’s vulnerabilities, or ideological division and social revolt threaten the Party. And this betrays deep uncertainties.
The Gravity of 2012
As the jockeying for power ahead of the 2012 transition has already begun in earnest, signs of vacillating and conflicting policy directives suggest that the regime is in a constant state of policy adjustment to try to avoid an extreme shift in one direction or another. Tensions are rising between leaders as they try to secure their positions without upsetting the balance and jeopardizing a smooth transfer of power. The government’s arrests of dissidents underline its fear of these growing tensions, as well as its sharp reactions to threats that could disrupt the transition or cause broader instability. Everything is in flux, and the cracks in the system are widening.
One major question is how long the Party will be able to maintain the current high level of vigilance without triggering a backlash. The government effectively has silenced critics deemed possible of fomenting a larger movement. The masses have yet to rally in significant numbers in a coordinated way that could threaten the state. But the regime has responded disproportionately to the organizational capabilities that the small Jasmine protests demonstrated, and has extended this magnified response to a number of otherwise-familiar spontaneous protests and incidents of unrest.
As security becomes more oppressive in the lead up to the transition — with any easing of control unlikely before then or even in the following year as the new government seeks to consolidate power — the heavy hand of the state runs the risk of provoking exactly the type of incident it hopes to prevent. Excessive brutality, or a high-profile mistake or incident that acts as a catalyst, could spark spontaneous domestic protests with the potential to spread.
Contrasting Deng’s situation with Hu’s is illuminating. When Deng sought to step down, his primary challenges were how to loosen economic control, how to create a foreign policy conducive to trade, and how to forestall democratic challenges to the regime. He also had to leverage his prestige in the military and Party to establish a reliable succession plan from Jiang to Hu that would set the country on a prosperous path.
As Hu seeks to step down, his challenges are to prevent economic overheating, counter any humiliating turn in foreign affairs such as greater U.S. pressure, and forestall unrest from economic left-behinds, migrants or other aggrieved groups. Hu cannot allow the Party (or his legacy) to be damaged by mass protests or economic collapse on his watch. Yet, like Jiang, he has to control the process without having Deng’s prestige among the military ranks and without a succession plan clad in Deng’s armor.
More challenging still, he has to do so without a solid succession plan. Hu is the last Chinese leader Deng directly appointed. It is not clear whether China’s next generation of leaders will augment Deng’s theory, or discard it. But it is clear that China is taking on a challenge much greater than a change in president or administration. It is an existential crisis, and the regime has few choices: continue delaying change even if it means a bigger catastrophe in the future; undertake wrenching economic and political reforms that might risk regime survival; or retrench and sacrifice the economy to maintain CPC rule and domestic security. China has already waded deep into a total economic transformation unlike anything since 1978, and at the greatest risk to the Party’s legitimacy since 1989. The emerging trends suggest a likely break from Deng’s position toward heavier state intervention in the economy, more contentious relationships with neighbors, and a Party that rules primarily through ideology and social control.
Existing home sales rose 3.7% in March
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Existing home sales rose 3.7% in March
Brian S. Wesbury - Chief Economist
Robert Stein, CFA - Senior Economist
Date: 4/20/2011
Existing home sales rose 3.7% in March to an annual rate of 5.10 million units, above the consensus expected pace of 5.00 million units. Existing home sales are down 6.3% versus a year ago.
Sales in March were up in the Northeast, Midwest, and South, but down in the West. Sales rose for both single-family homes and condos/coops.
The median price of an existing home rose to $159,600 in March (not seasonally adjusted), but is down 5.9% versus a year ago. Average prices are down 3.5% versus last year.
The months’ supply of existing homes (how long it would take to sell the entire inventory at the current sales rate) fell to 8.4 from 8.5 in February. The drop in the months’ supply was due to faster sales pace, which offset an increase in inventories.
Implications: Just when you started to believe the pundits were right and housing would never come back, the data have made a nice turn to the upside. After pulling back in February (by less than first estimated), existing home sales increased to a 5.10 million unit annual pace in March. This is the fourth strong monthly gain in the past five months and existing home sales are now 32.1% above their low of 3.86 million in July 2010. Sales gains were widespread, increasing in most major regions of the country. On the price front, the median price of an existing home rose to $159,600, although prices are still down 5.9% in the past year. The rebound in housing data in the past few days is positive, but does not signal a miraculous return to pre-crisis conditions. There are many positive developments (higher wages, job growth, low interest rates, and great prices), but credit conditions remain tight. So, while we expect the sales of existing homes to climb back to their long-term trend of about 5.5 million units annually, the process will remain volatile.
Three More Attacks on Civilization
Three More Attacks on Civilization
by Jeffrey A. Tucker
Thank goodness we’ve got a global marketplace where banned and nearly banned products can be purchased with a click. This is how I obtained a box of Savogran Trisodium Phosphate, which sounds like an explosive but is really just a cleanser that was in every dish-washing soap until last year. It is made of phosphorous, an element from bone ash or urine that was discovered in Germany in the 17th century. It is also the reason that dishwashers once cleaned dishes perfectly, leaving no residue or spots.
Remember the old Calgon commercial that showed food falling off plates and glasses left gleaming at the end of a wash? That was phosphorous at work.
It is still a must in commercial establishments like restaurants and hotels. But 17 states have already banned the product for consumers, causing most all makers of the detergent to remove it from their product, which vastly degraded its value. The detergent makers saw the writing on the wall and this time decided to get out in front of the regulatory machine, anticipating a federal ban before it actually takes place.
Most consumers are clueless as to how sometime in the last year, their dishwashers stopped working properly. They call in the repairman, who fiddles with things and announces a fix. But it is not fixed. The glass are gritty and the plates often need to be rinsed again after washing. Many households have bought new machines or resorted to just running the dishes through twice.
The creation of phosphorous-free detergent is the real reason. As Jonathan Last explains in the Weekly Standard, the anti-phosphate frenzy began in Washington State, which was attempting to comply with a Clean Air Act mandate that a certain river be swimable and fishable. This was a problem because tests found inordinate amounts of phosphate in the river. As part of the effort to comply, the state banned phosphates from detergents. That was in 2008, but the way politics works these days, the banning spread to state after state – again with the backing of federal law.
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Now, it is clear that the law’s proponents knew exactly what the results would be. It would increase dishwasher use and even end up leading people to abandon dishwashers altogether, and either solution leads to much more water and energy use. In other words, even by the goofy environmentalists own standards, this is no savings. It might end up in the reverse.
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Studies since the ban have even shown that phosphorous reduction in the Washington State river is entirely due to a new filtering system and, further, that it turns out that the phosphorous in the river was not even a problem in the first place!
Of course the facts don’t matter. Our conveniences like clean plates and machines that makes them so must be sacrificed to the false gods of environmentalism. One of the great innovations in human history must be reverted because governments are enthralled by the witchdoctors of mother earth. And thus must mankind take yet another step background on the trajectory toward social progress. And to heck with your fetish for clean things!
A similar impulse is driving the new attack on ice makers. Jeffrey Kluger writes in Time Magazine a typically hectoring piece that claims that one way to say the earth is to "buy a couple of ice trays. To the long list of human inventions that are wrecking global climate – the internal combustion engine, the industrial era factory – add the automatic ice maker."
Of course we don’t use ice makers for completely arbitrary reasons. It is because it is a pain in the neck to carry a full tray across the room, spill a bit here and there, and then balance it carefully in the freezer. And then when you take it out, your fingers stick to the trays and you have to break the tray and dump the cubes into something and re-freeze what you do not use, and then the cubes stick together and so on. That’s why we use ice makers.
But, still, the Department of Energy hates them. And so it has warned all makers of freezers that it will lower the energy-compliance rating of any freezer that keeps them. Or, another way to make a freezer with an ice maker is to degrade the refrigerator and freezer itself, leaving most of the energy use for the ice maker.
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This whole model forgets a perfectly obvious point: having an ice maker often means that you have an ice dispenser on the outside of the fridge, meaning that you do not have to open the door to get your ice. This is surely an energy saver. Having to open the freezer far more often only ends up wasting energy, which is another reason for the ice maker in the first place (saves on electrical bills).
Here again, facts don’t matter. If there is something you like and makes your life better, you can bet that some bureaucrat somewhere has targeted it for destruction. Saving the planet is the most convenient excuse around. Time Magazine would contribute more to "Saving the Planet" by putting an end to its print publication.
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We can see where this is headed. Just as people hoard old toilet tanks and old washing machines that actually use water to wash clothes, so too people will now have to hoard their old refrigerators because they work. We are becoming like the Cubans with their 1950s model cars, holding on to them for dear life if only to preserve some elements of civilization in the face of government attacks.
Now let’s talk drain openers. Everyone knows that the best chemical drain opener is lye, or solium hydroxide. It is wicked stuff that cuts through grease, hair, or just about anything else. It was burn right through human flesh and leaving terrible scarring. But for drains, nothing else compares.
Now that less and less water is flowing through our homes, thanks to regulatory attacks on water use, and the water we use is ever more tepid, thanks to regulatory attacks on hot-water heaters, it is no surprise that clogged drains are ever more common, thus making lye an essential household chemical.
If you can get it. The mainstream hardware stores have stopped carrying the stuff. So have the grocery stores. When I asked around, I thought I would hear stories involving liability for injuries, but no: instead the excuse is the drug war. It turns out that this stuff is an ingredient in the making of methamphetamine, and hence it too is on the regulatory hit list.
Fortunately you can still buy it through Amazon, but how many people know this? How many people are buying liquid drain openers only to discover that they don’t actually work? Surely millions are doing this. So far as I can tell, there is nothing but hush hush about the strangely disappearance of lye-based crystal drain openers from our shelves.
So there we go: we must also live with clogged drains, so that not even the pathetic drizzles of tepid water that come out of our faucets can flow down the drain, and we must stand in pools of bacteria-breeding water as we take our short, cold showers. It’s back to the 19th century for all of us!
In these three examples, we can see the model at work: puritans and paranoids work with bureaucrats to unravel all the gains that markets have made for civilization. And they do this not with persuasion or an attempt to convert us to their primitive faith. Instead, they do it by force, driving us back to the compost pile, the river for cleaning, and, eventually, having to hunt and gather for our food that we take back to our caves, which serve as domestic environs for those lucky enough to survive their regime of coerced poverty.
'US To Recoup Libya Oil From China'
'US To Recoup Libya Oil From China'
Interview with Paul Craig Roberts
Press TV has interviewed Dr. Paul Craig Roberts, former assistant secretary of US Treasury from Panama City, who gives his insight on the revolution in Libya and why US President Barack Obama needs to overthrow Qaddafi when no other US presidents did.
Press TV: Russia has criticized NATO for going far beyond its UN mandate. In other news a joint Op Ed is going to be written by Obama, Cameron and Sarkozy who have said that “leaving Qaddafi in power would be an unconscionable betrayal to the Libyan people”.
We do know that the mandate does not call for regime change; the Obama administration has been saying they are not in there for regime change; but things seem a little different now don't they?
Roberts: Yes they do. First of all, notice that the protests in Libya are different from the ones in Egypt or Yemen or Bahrain or Tunisia and the difference is that this is an armed rebellion.
There are more differences: another is that these protests originated in the eastern part of Libya where the oil is – they did not originate in the capital city. And we have heard from the beginning credible reports that the CIA is involved in the protests, and there have been a large number of press reports that the CIA has sent back to Libya its Libyan asset to head up the Libyan rebellion.
In my opinion, what this is about is to eliminate China from the Mediterranean. China has extensive energy investments and construction investments in Libya. They are looking to Africa as a future energy source.
The US is countering this by organizing the United States African Command (USAC), which Qaddafi refused to join. So that's the second reason for the Americans to want Qaddafi out.
And the third reason is that Libya controls part of the Mediterranean coast and it's not in American hands.
Press TV: Who are the revolutionaries. The US say they don't know who they're dealing with, but considering the CIA is on the ground in contact with revolutionaries – Who are the people under whom Libya will function in any post-Qaddafi era?
Roberts: Whether or not Libya functions under “revolutionaries” depends if the CIA wins – we don't know that yet. As you said earlier, the UN resolution puts constraints on what the European and American forces can achieve in Libya. They can have a no fly zone, but they are not supposed to be in there fighting together with the rebels.
But of course the CIA is. So we do have these violations of the UN resolution. If NATO, which is now the cover for the “world community,” succeeds in overthrowing Qaddafi, the next target will be Syria. Syria has already been demonized.
Why are they targeting Syria? – Because the Russians have a very large naval base in Syria. And it gives the Russian navy a presence in the Mediterranean; the US and NATO do not want that. If there is success in overthrowing Qaddafi, Syria is next.
Already, they are blaming Iran for Syria and Libya. Iran is a major target because it is an independent state that is not a puppet of the Western colonialists.
Press TV: With regards to the expansionist agenda of the West, when the UN mandate on Libya was debated in the UN Security Council, Russia did not veto it. Surely Russia must see this expansionist policy of the US, France and Britain.
Roberts: Yes they must see that; and the same for China. It's a greater threat to China because it has 50 major investment projects in eastern Libya. So the question is why did Russia and China abstain rather than veto and block? We don't know the answer.
Possibly the countries are thinking to let the Americans get further over- extended, or they may not have wanted to confront the US with a military or diplomatic position and have an onslaught of Western propaganda against them. We don't know the reasons, but we know they did abstain because they did not agree with the policy, and they continue to criticize it.
Press TV: A sizeable portion of Qaddafi's assets have been frozen in the US as well as some other countries. We also know that the Libyan revolutionaries have set up a central bank and that they have started limited production of oil and they are dealing with American and other Western firms. It begs the question that we've never seen something like this happen in the middle of a revolution. Don't you find that bizarre?
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Roberts: Yes it's very bizarre and very suggestive. It brings back the fact of all the reports that the CIA is the originator of this so-called revolt and protest and is fomenting it and controlling it in a way that excludes China from its own Libyan oil investments.
In my opinion, what is going on is comparable to what the US and Britain did to Japan in the 1930s. When they cut Japan off from oil, from rubber, from minerals; that was the origin of World War II in the pacific. And now the Americans and the British are doing the same thing to China.
The difference is that China has nuclear weapons and it also has a stronger economy than do the Americans. And so the Americans are taking a very high risk not only with themselves, but with the rest of the world. The entire world is now at stake on American over-reach; American hubris – the drive for American hegemony over the world is driving the rest of the world into a World War.
Press TV: In the context of America's expansionist policies, how far do you think the US will stretch beyond the UN mandate? Are we going to see boots on the ground?
Roberts: Most likely – unless they can find some way of defeating Qaddafi without that. Ever since we've had Bill Clinton, George W. Bush and now Obama, what we've learned is law means nothing to the executive branch in the US. They don't obey our own laws; they don't obey international law; they violate all the civil liberties and buried the principal of habeas corpus, no crime without intent, and the ability for a defendant to be legally represented.
They don't pay any attention to law so they're not going to pay any attention to the UN. The UN is an American puppet organization and Washington will use it as a cover. So, yes, if they cannot run Qaddafi out they will put troops on the ground – that's why we have the French and the British involved. We're using the French elsewhere in Africa also; we use the British in Afghanistan – they're puppets.
These countries are not independent. Sarkozy doesn't report to the French people – he reports to Washington. The British PM doesn't report to the English people he reports to Washington. These are puppet rulers of an empire; they have nothing to do with their own people and we put them in office.
Press TV: So these other countries would welcome having NATO troops on the ground?
Roberts: Of course. They are in the CIAs pocket. It's a CIA operation, not a legitimate protest of the Libyan people. It's an armed rebellion that has no support in the capital city. It's taking place in the east where the oil is and is directed at China.
Press TV: Where do you see the situation headed? There seems to be a rift between NATO countries with Britain and France wanting to increase the momentum of these air strikes, but the US saying no, there is no need.
Roberts: The rift is not real. The rift is just part of the cover, just part of the propaganda. Qaddafi has been ruling for 40 years – he goes back to Gamal Abdel Nasser (before Anwar Sadat) who wanted to give independence to Egypt.
He (Qaddafi) was never before called a brutal dictator that has to be removed. No other president has ever said Qaddafi has to go. Not even Ronald Reagan who actually bombed Qaddafi's compound. But all of a sudden he has to go. Why?
Because he's blocking the US African Command, he controls part of the Mediterranean and he has let China in to find its energy needs for the future. Washington is trying to cripple its main rival, China, by denying China energy. That's what this is really about; a reaction by the US to China’s penetration of Africa.
If the US was concerned about humanitarianism, it wouldn't be killing all these people in Afghanistan and Pakistan with their drones and military strikes. Almost always it's civilians that are killed. And the US is reluctant to issue apologies about any of it. They say we thought we were killing Taliban or some other made-up enemy.
Press TV: Who will benefit from all of this other than the US? The other countries that comply with US wishes – What do they stand to gain from this?
Roberts: We are only talking about NATO countries, the American puppet states. Britain, France, Italy, Germany, all belong to the American empire. We've had troops stationed in Germany since 1945. You're talking about 66 years of American occupation of Germany. The Americans have military bases in Italy – how is that an independent country? France was somewhat independent until Washington put Sarkozy in power. So they all do what they're told.
Washington wants to rule Russia, China, Iran, and Africa, all of South America. Washington wants hegemony over the world. That's what the word hegemony means. And Washington will pursue it at all costs.
The Government Gambling Monopoly
The Government Gambling Monopoly
On April 15, the federal government busted online poker behemoths Pokerstars, Full Tilt Poker, and Absolute Poker. The Department of Justice issued a 57-page indictment against the owners, accusing them of such crimes as "Operation of an Illegal Gambling Business." The FBI also seized their domains.
US players are now restricted from playing on the two largest US online poker sites, Pokerstars and Full Tilt, with the status of many millions of dollars in online poker balances in limbo. Even for sites allowing players to withdraw this money, many worry it will be seized or indefinitely delayed if cashed out.
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There is widespread outrage within the poker community concerning these events, among both professional and recreational players, as well as those in the extensive poker media and side businesses. After all, online poker is a voluntary activity. Participants choose to devote their own time and risk their own money when playing, and willingly pay the house rake for this privilege. So how do we understand the government’s aggressive actions in this case?
By definition, the US government has a monopoly on the use of force in the US. They may therefore claim a monopoly on any industry they wish, such as protection or the sale of alcohol. For instance there are government-run liquor stores. For private restaurants and businesses wishing to sell alcohol, however, the only option is expensive licensing for the privilege of competing with the government. If you don’t make the right payoff to get one of these licenses, you’re running an illegal operation and risk being shut down.
Similarly, the US government has a monopoly on gambling. If you want to gamble in the US, you can participate in a state-run lottery or play in a government-licensed casino. But despite poker being a game of skill, the government treats it as part of this gambling monopoly. Just try running a raked homegame and see what happens.
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While the DOJ indictment against the poker site owners has many counts, including money laundering, the core of the bust is clearly protecting the gambling monopoly. After all, 8 of the 9 counts pertain to gambling that the government has deemed unlawful. Pokerstars, based in the Isle of Man, is not part of the US government, nor licensed by the US government, and therefore violates the gambling monopoly. Meanwhile a recent estimate has the company generating daily revenue of $1.37 million. For the government, this situation is unacceptable.
Government-approved solutions have been proposed, such as last month’s H.R. 1174:
If enacted, this legislation would allow the Director of the Financial Crimes Enforcement Network (FINCEN) to adopt a framework for legal internet gambling. Specifically, FINCEN would be authorized to license online gambling sites annually and require the sites to use age identification technologies and pay the appropriate licensing fees, which would cover the cost of monitoring online gambling sites. Importantly, online gambling sites which are not licensed by FINCEN would be considered illegal…
Indeed, the standard stance among the more optimistic US players is that now that the government has forced out the major sites which allowed US players, the next step is a site that does comply with the US monopoly.
As a player, I have no choice but to hope for this outcome as well, as the alternative is to play on smaller and dodgier sites, where it is increasingly difficult to deposit and withdraw. It’s important for us to remember, however, that the government monopoly-approved outcome would only be a victory in terms of allowing poker players to continue playing the game they love. When it comes to the basic principle that businesses and individuals should be allowed to participate in voluntary transactions without violent interference, we all lose.
The Myth of Debt-Free Living
The Myth of Debt-Free Living
by Gary North
Recently by Gary North: The Billion-Dollar Loser
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I have set up a free website for people who are deep in consumer debt.
I am a great believer in getting out from under the burden of consumer debt. But I am not a believer in getting out of debt. There is a reason for this. The only way to get out of debt is to die.
Here are two great myths of the American dream: (1) financial independence; (2) debt-free living.
Why are they myths? Because life involves both.
Finances require money. Money involves the division of labor. We are all interdependent. Even a hermit is dependent on others: the owners of the land he secretly lives on and secretly poaches on.
People say "financial independence" when they really mean "no dependence on a salary." They can achieve this if they own lots of income-generating assets. They do not have to show up at a job. But they are not financially independent. They are dependent on all those people whose productivity enables companies or governments to keep paying on the assets that the job-free people have invested in. This is not financial independence. It is independence from a salaried job. Let's keep our terminology clear.
Trust fund kids are not financially independent. They are dependent on the decisions of their trust funds' managers, who are in turn dependent on the productivity of the companies whose shares and bonds they have purchased.
In a division of labor economy, there is no independence.
Second, what about debt-free living? Why is it a myth? Let me offer an example.
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FEAR OF DEBT
One of my subscribers has a problem. He must overcome his young wife's fear of debt. He wants to invest in real estate. But he faces a problem: "My wife is very risk-averse. She doesn't like debt."
She is 27. He is 32. It is clear that his wife does not understand debt. She is in debt up to her ears.
She is five years younger than he is. On average, American wives outlive their husbands by 4 years. So, in terms of statistical probability, she will have no financial support from him in her last nine years of life. If he retires early, they will live off of their savings. Then he will die, leaving her with reduced capital for her final years. She may have no capital remaining by age 80.
In those not-so-golden years, she will be physically weaker than she is today. She will probably be unable to earn money in the labor market. She will be dependent on others.
She has lifetime obligations that are inescapable: she will consume resources. That is what life requires. If she ceases to be able to work to pay those obligations, she will become dependent on others to pay. For her to think that she can safely live debt-free is to think that others are in some way in debt to her: the government, the pension fund asset managers, or her children. Maybe all of them.
She is saying that she is offering credit today – FICA taxes, pension investments, care for her children – and that these investments will pay off. If they don't, she will die in a hovel, unless she and her husband invest wisely.
Debt is inescapable for as long as we live. We will owe others whatever our support in old age will require.
We can begin to prepare now to deal with this in mind, or else we can roll the statistical dice and say, "I'll pass this debt onto someone else. I hope they pay off." In short, the person tries to get his future debt paid by others.
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GETTING STIFFED
Politicians around the West have made promises to their entire populations regarding retirement living. They have promised voters that, in their old age, the government will take over their medical expenses. In most Western European nations, the government already pays for most medical costs.
This expense will bankrupt all nations without exception. The governments' statisticians have known this for at least two decades, but the politicians keep this hidden from public view as much as possible.
Voters are like rich, ugly heiresses: they want to be lied to. If they didn't, they would not re-elect politicians who do not publicly announce the inevitable bankruptcy of socialized medicine and old-age retirement programs. They reject any candidate who tells the truth about Medicare. In short, "Don't tell me I'm a rich, ugly woman. Tell me I'm beautiful, and you just can't live without me." Her wish is their command.
Voters do not want to save enough money for their retirement. They want to eat, drink, and be merry, and then go onto a tax-funded life-support system. They do not want to hear about "tomorrow we die." They reply: "That's old-fashioned thinking. That's mere accounting. That's ideology." They do not want to count the cost. They want their cake, and they want to eat it, well into their nineties. And they want someone else to fund it.
This desire is universal in the West. Voters look at the costs of old age, which are very high for most people, and they want to pass on the Old Maid's expenses to younger voters.
So, politicians make a promise: "Pay taxes today that fund the expenses of oldsters, and we promise to pass on the costs of supporting you to younger voters when you're old." In short, "You're beautiful, and I just can't live without you."
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The voters forget the obvious: younger voters giveth, and younger voters taketh away. When the existing arrangement seems to be front-loaded with costs and back-loaded with benefits, younger voters are going to pull the plug. They are going to say, "We won't pay." In short, "You've spent your inheritance, you ugly old hag. I'm outta here."
All the talk about burdening out children and grandchildren with enormous debt is naive. Talk changes nothing. There are no revisions in the programs. When older voters hear the words, "burdening our children with debt," the vast majority conclude: "Yea! Stick it to them good and hard! We deserve everything we can squeeze out of them."
This reliance on politicians' promises will backfire on the oldsters who vote for them today and expect to be paid. The kids – all grown up – will have the votes to elect a new generation of Congressmen and Senators, who will announce revisions in the programs. The revisions will come at the expense of new entrants onto the rolls of the old-age welfare programs.
The modern welfare state began in Prussia in the 1880s, when conservative Chancellor Otto Von Bismarck got the legislature to provide government-funded old age programs. The modern welfare state will abandon those programs. The state giveth, and the state will take away.
RUNNING UP THE TAB
Oldsters think they are in the catbird's seat politically. They can get politicians to keep the Ponzi scheme rolling. They do not save as much as they should. They borrow from the future politically. They buy the good life today on the assumption that the state will take care of them in their old age.
They are running up the tab. They think that younger voters will pay off their tab.
As they get closer to the day of reckoning, they refuse to change their habits. They do not look at a retirement calculator. They do not estimate how much income they will need, and for how long, and at what rate of price inflation, to live in comfort in the last 15 years of their lives (men) or 29 years (women). Here is one. Are you willing to do the homework? Your peers aren't.
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They think they are not going in debt, but they are. They think others will pick up their tab. They think they have the votes to coerce others to pay their tabs. They do have this power today; they will not have it a decade from now, let alone two decades from now.
They do not think of themselves as accumulating debts. They think they will get through old age by passing on the debts of old age to others. Because they do not understand that future voters will renounce their obligations, either openly (national default) or by hyperinflation, or by raising the age for access to collect these benefits.
They are adding to their debts, yet they do not perceive this. Why not? Because they really believe the mantra: "We're passing these debts to our grandkids." They are not incensed by its implications. They rejoice in its implications.
It started with our parents and grandparents in 1935: Social Security. The mindset of the New Deal was to get something at the expense of someone else. It escalated in 1965: Medicare. This has become the outlook of the West. It has accelerated.
China is taking advantage of this. China has no developed welfare programs for oldsters. So, their people save for the future. Their supply of capital increases. Their output increases. They are not burdened with FICA taxes. They are not expecting anyone to care for them in their old age, other than their one son. Half of them have no son.
Westerners stick it politically to everyone's children and grandchildren. The Chinese assume that they will be responsible for aged parents and themselves, so they save close to half of their income, if we are to believe the statistics provided by the Chinese government. This generation of Chinese does not expect the state to care for them in their old age. They are working hard to accumulate capital, so that they will not fall into poverty in old age. They do not expect everyone else's children to pick up their tab in old age.
REAL ESTATE AS A SOLUTION
When people ask me what the best way to retire is, I say "With a new career."
Most of them reply: "That's not what I mean. I do not want to work after age 65."
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I ask them to go through the following mental exercise. First, estimate how much monthly income it would take today for them to be comfortable if they lost their job and could not get a new one.
They come up with a figure. Let's say that it's $5,000 a month before taxes.
Second, I tell them that they need about six 3-bedroom, 2-bath houses that generate $1,000 a month net income before income taxes.
It is possible to get this in some regions from a house that costs under $150,000.
Their goal should be to own six debt-free houses at age 65.
If they buy one house per year for six years, using owner-financed financing, they can then sit back and let renters pay off the mortgages.
They could buy one a year for a decade. They may want to own ten. Or maybe they can sell two or three of them and pay off the others.
This is the strategy recommended by John Schaub.
My view is that it's better to take on real estate investment debt today, when you are young, and let renters pay it off. Then, at age 65, you have a portfolio of ten debt-free houses or more. Your renters will pay you until you die.
You now have motivated people to pay your expenses. They don't pay you because they have a contract with you. They pay because they want a roof over their heads. They are highly motivated to pay your debts.
You have spread your risk. You will not be heavily dependent on government. Your children will not regard you as a burden. You will not be dependent on a pension fund, which may or may not fulfill its obligations.
We cannot escape debt. Debt is basic to life. It is therefore a question of how we secure income to pay off our debt.
Taking on real estate debt at low rates to buy a bargain-priced home is a way to build up a portfolio of houses that will provide income when you are old and infirm.
CONCLUSION
There is no escape from debt. Anyone who tells you that you can ever live debt-free has not thought through the implications of what he is saying.
It is possible to live debt-free on a net basis. You can have monthly income that more than pays for your monthly debt. But there is always the possibility that your income will disappear.
I contend that it is more likely to disappear if it comes from the government than from renters.
Ronald Reagan: An Autopsy
Ronald Reagan: An Autopsyby Murray N. Rothbard
Eight years, eight dreary, miserable, mind-numbing years, the years of the Age of Reagan, are at long last coming to an end. These years have surely left an ominous legacy for the future: we shall undoubtedly suffer from the after-shocks of Reaganism for years to come. But at least Himself will not be there, and without the man Reagan, without what has been called his "charisma," Reaganism cannot nearly be the same. Reagan’s heirs and assigns are a pale shadow of the Master, as we can see from the performance of George Bush. He might try to imitate the notes of Reagan, but the music just ain’t there. Only this provides a glimmer of hope for America: that Reaganism might not survive much beyond Reagan.
Reagan the Man
Many recent memoirs have filled out the details of what some of us have long suspected: that Reagan is basically a cretin who, as a long-time actor, is skilled in reading his assigned lines and performing his assigned tasks. Donald Regan and others have commented on Ronald Reagan’s strange passivity, his never asking questions or offering any ideas of his own, his willingness to wait until others place matters before him. Regan has also remarked that Reagan is happiest when following the set schedule that others have placed before him. The actor, having achieved at last the stardom that had eluded him in Hollywood, reads the lines and performs the action that others – his script-writers, his directors – have told him to follow.
Sometimes, Reagan’s retentive memory – important for an actor – gave his handlers trouble. Evidently lacking the capacity for reasoned thought, Reagan’s mind is filled with anecdotes, most of them dead wrong, that he has soaked up over the years in the course of reading Reader’s Digest or at idle conversation. Once an anecdote enters Reagan’s noodle, it is set in concrete and impossible to correct or dislodge. (Consider, for example, the famous story about the "Chicago welfare queen": all wrong, but Reagan carried on regardless.)
In the early years of Reagan rule, the press busily checked out Reagan’s beloved anecdotes, and found that almost every one of them was full of holes. But Reagan never veered from his course. Why? God knows there are plenty of correct stories about welfare cheats that he could have clasped to his bosom; why stick to false ones? Evidently, the reason is that Reagan cares little about reality; he lives in his own Hollywood fantasy world, a world of myth, a world in which it is always Morning in America, a world where The Flag is always flying, but where Welfare Cheats mar the contentment of the Land of Oz. So who cares if the actual story is wrong? Let it stand, like a Hollywood story, as a surrogate for the welfare cheats whom everyone knows do exist.
The degree to which Reagan is out of touch with reality was best demonstrated in his concentration camp story. This was not simply a slip of the tongue, a Bushian confusion of December with September. When the Premier of Israel visited Reagan at the White House, the President went on and on for three quarters of an hour explaining why he was pro-Jewish: it was because, being in the Signal Corps in World War II, he visited Buchenwald shortly after the Nazi defeat and helped to take films of that camp. Reagan repeated this story the following day to an Israeli ambassador. But the truth was 180-degrees different; Reagan was not in Europe; he never saw a concentration camp; he spent the entire war in the safety of Hollywood, making films for the armed forces.
Well, what are we to make of this incident? This little saga stayed in the back pages of the press. By that point the media had realized that virtually nothing – no fact, no dark deed – could ever stick to the Teflon President. (Iran-Contra shook things up a bit, but in a few months even that was forgotten.)
There are only two ways to interpret the concentration camp story. Perhaps Reagan engaged in a bald-faced lie. But why? What would he have to gain? Especially after the lie was found out, as it soon would be. The only other way to explain this incident, and a far more plausible one, is that Ronnie lacks the capacity to distinguish fantasy from reality. He would, at least in retrospect, have liked to be filming at Buchenwald. Certainly, it made a better story than the facts. But what are we to call a man who cannot distinguish fantasy from reality?
It is surely frightening to think that the most powerful position in the world has been held for eight years by a man who cannot tell fact from fancy. Even more frightening is the defection of the media, who early lost heart and played the role of a submissive receptacle for photo opportunities and press-release handouts. One reason for this defection was the discovery of Reagan’s Teflon nature. Another likely reason was that journalists who were too feisty and independent would be deprived of their precious access to the Presidential plane or to inside scoops or leaks from the White House. And a third reason was probably the desire not to dwell on the vital and hair-raising fact that the President of the United States, "the leader of the free world" and all that jazz, is nothing more than a demented half-wit.
But why the Teflon? Because of the incredible love affair that Ronald Reagan has enjoyed with the American people. In all my years of fascination with American politics (my early childhood memories are couched in terms of who was President or who was Mayor of New York City or who won what election), I have never seen anything remotely like it. Anyone else universally beloved? Franklin D. Roosevelt was worshipped, to be sure, by most of the American electorate, but there was always a large and magnificent minority who detested every inch of his guts. Truman? He was almost universally reviled in his time; he has only been made an icon in retrospect by the conservative movement. Jack Kennedy, too, is only a hero now that he has been safely interred; before his assassination he was cordially detested by all conservatives. Nobody ever loved Nixon. The closest to universal lovability was Ike, and even he did not inspire the intense devotion accorded to Ronnie Reagan; with Ike it was more of a tranquilized sense of peace and contentment.
But with Reagan, it has been pure love: every nod of the head; every wistful "We-e-ll," every dumb and flawed anecdote, every snappy salute, sends virtually every American into ecstasy. From all corners of the land came the cry, "I don’t like his policies very much, but I lo-o-ve the man." Only a few malcontents, popping up here and there, in a few obscure corners of the land, emerged as dedicated and bitter opponents. As one of this tiny minority I can testify that it was a lonely eight years, even within the ranks of the libertarian movement. Sometimes I felt like a lone and unheeded prophet, bringing the plain truth to those who refused to understand. Very often I would be at free-market gatherings, from living rooms to conferences, and I would go on and on about the deficiencies of Reagan’s policies and person, and would be met with responses like "Well of course, he’s not a PhD."
Me: "No, no, that’s not the point. The man is a blithering idiot. He makes Warren Harding tower like Aristotle."
Responder: "Ronald Reagan has made us feel good about America."
Perhaps that’s part of the explanation for the torrent of unconditional love that the American public has poured onto Ronald Reagan. Lost in Hollywood loony-land, Ronnie’s sincere optimism struck a responsive chord in the American masses. The ominous fact that he "made us" feel good about the American State and not just about the country is lost even on many libertarians.
But, in that case, why didn’t Hubert Humphrey’s egregious "politics of joy" evoke the same all-inclusive love? I don’t know the answer, but I’m convinced it’s not simply because Hubert was captive to the dreaded "L-word’ whereas Ronnie is a conservative. It’s lot deeper than that. One of the remarkably Teflon qualities of Reagan is that, even after many years as President, he is still able to act as if he were totally separate from the actions of the government. He can still denounce the government in the same ringing terms he used when he was out of power. And he gets away with it, probably because inside his head, he is still Ronnie Reagan, the mother of anti-government anecdotes as lecturer for General Electric.
In a deep sense, Reagan has not been a functioning part of the government for eight years. Off in Cloud-Cuckoo-Land he is the obedient actor who recites his lines and plays his appointed part. Some commentators have been critical of Reagan for napping in the afternoons, for falling asleep at crucial meetings, for taking long vacations at his beloved ranch. Well, why not? What else does he have to do? Reagan doesn’t actually have to do anything; like Peter Sellers in his last film, all he has to do is be there, the beloved icon, giving his vital sanction to the governmental process.
Reagan’s handlers perceived early on that one threat to Reagan’s Teflon rule would be allowing him to mix it up with members of the press. Away from his teleprompter, Ronnie was a real problem. So very soon, any sort of real press conference, including uninhibited questions and answers, was done away with. The only press "conferences" became shouted questions as Reagan walked quickly to and from the White House helicopter. One of his handlers has written that, despite all efforts, they couldn’t stop Reagan from exercising one peculiar personality trait: his compulsion to answer every question that he hears. But fortunately, not much was risked, since the noise of the helicopter engines would drown out most of the repartee.
The worst moment for the Reagan handlers came, of course during the first debate with Mondale in 1984. For one glorious moment, during the give and take of the debate, the real Reagan emerged: confused, befuddled, out of it. It was a shaky moment, but all the handlers needed to do was to reassure the shocked masses that their beloved President was still sentient, was still there to be a totem to his flock. The handlers blamed Reagan’s showing on "over coaching" they made sure that he slept a lot just before the second debate, and they fed him a snappy mock self-deprecating one-liner about his age. The old boy could still remember his jokes: he got off his lovable crack, and the American masses, with a sigh of relief, clasped him to their bosoms once again.
The Reagan Years: Libertarian Rhetoric, Statist Policies
How did Reagan manage to pursue egregiously statist policies in the name of liberty and of "getting government off our backs?" How was he able to follow this course of deception and mendacity?
Don’t try to get Ronnie off the hook by blaming Congress. Like the general public – and all too many libertarians – Congress was merely a passive receptacle for Ronnie’s wishes. Congress passed the Reagan budgets with a few marginal adjustments here and there – and gave him virtually all the legislation, and ratified all the personnel, he wanted. For one Bork there are thousands who made it. The last eight years have been a Reagan Administration for the Gipper to make or break.
There was no "Reagan Revolution." Any "revolution" in the direction of liberty (in Ronnie’s words "to get government off our backs") would reduce the total level of government spending. And that means reduce in absolute terms, not as proportion of the gross national product, or corrected for inflation, or anything else. There is no divine commandment that the federal government must always be at least as great a proportion of the national product as it was in 1980. If the government was a monstrous swollen Leviathan in 1980, as libertarians were surely convinced, as the inchoate American masses were apparently convinced and as Reagan and his cadre claimed to believe, then cutting government spending was in order. At the very least, federal government spending should have been frozen, in absolute terms, so that the rest of the economy would be allowed to grow in contrast. Instead, Ronald Reagan cut nothing, even in the heady first year, 1981.
At first, the only "cut" was in Carter’s last-minute loony-tunes estimates for the future. But in a few short years, Reagan’s spending surpassed even Carter’s irresponsible estimates. Instead, Reagan not only increased government spending by an enormous amount – so enormous that it would take a 40 percent cut to bring us back to Carter’s wild spending totals of 1980 – he even substantially increased the percentage of government spending to GNP. That’s a "revolution"?
The much-heralded 1981 tax cut was more than offset by two tax increases that year. One was "bracket creep," by which just inflation wafted people into higher tax brackets, so that with the same real income (in terms of purchasing power) people found themselves paying a higher proportion of their income in taxes, even though the official tax rate went down. The other was the usual whopping increase in Social Security taxes which, however, don’t count, in the perverse semantics of our time, as "taxes"; they are only "insurance premiums." In the ensuing years the Reagan Administration has constantly raised taxes – to punish us for the fake tax cut of 1981 – beginning in 1982 with the largest single tax increase in American history, costing taxpayers $100 billion.
Creative semantics is the way in which Ronnie was able to keep his pledge never to raise taxes while raising them all the time. Reagan’s handlers, as we have seen, annoyed by the stubborn old coot’s sticking to "no new taxes," finessed the old boy by simply calling the phenomenon by a different name. If the Gipper was addled enough to fall for this trick, so did the American masses – and a large chuck of libertarians and self-proclaimed free-market economists as well! "Let’s close another loophole, Mr. President." "We-e-ell, OK, then, so long as we’re not raising taxes." (Definition of loophole: Any and all money the other guy has earned and that hasn’t been taxed away yet. Your money, of course, has been fairly earned, and shouldn’t be taxed further.)
Income tax rates in the upper brackets have come down. But the odious bipartisan "loophole closing" of the Tax Reform Act of 1986 – an act engineered by our Jacobin egalitarian "free market" economists in the name of "fairness" – raised instead of lowered the income tax paid by most upper-income people. Again: what one hand of government giveth, the other taketh away, and then some. Thus, President-elect Bush has just abandoned his worthy plan to cut the capital gains tax in half, because it would violate the beloved tax fairness instituted by the bipartisan Reganite 1986 "reform."
The bottom line is that tax revenues have gone up an enormous amount under the eight years of Reagan; the only positive thing we can say for them is that revenues as percentage of the gross national product are up only slightly since 1980. The result: the monstrous deficit, now apparently permanently fixed somewhere around $200 billion, and the accompanying tripling of the total federal debt in the eight blessed years of the Reagan Era. Is that what the highly touted "Reagan Revolution" amounts to, then? A tripling of the national debt?
We should also say a word about another of Ronnie’s great "libertarian" accomplishments. In the late 1970’s, it became obvious even to the man in the street that the Social Security System was bankrupt, kaput. For the first time in fifty years there was an excellent chance to get rid of the biggest single racket that acts as a gigantic Ponzi scheme to fleece the American taxpayer. Instead, Reagan brought in the famed "Randian libertarian" Alan Greenspan, who served as head of a bipartisan commission, performing the miracle of "saving Social Security" and the masses have rested content with the system ever since. How did he "save" it? By raising taxes (oops "premiums"), of course; by that route, the government can "save" any program. (Bipartisan: both parties acting in concert to put both of their hands in your pocket.)
The way Reagan-Greenspan saved Social Security is a superb paradigm of Reagan’s historical function in all areas of his realm; he acted to bail out statism and to co-opt and defuse any libertarian or quasi-libertarian opposition. The method worked brilliantly, for Social Security and other programs.
How about deregulation? Didn’t Ronnie at least deregulate the regulation-ridden economy inherited from the evil Carter? Just the opposite. The outstanding measures of deregulation were all passed by the Carter Administration, and, as is typical of that luckless President, the deregulation was phased in to take effect during the early Reagan years, so that the Gipper could claim the credit. Such was the story with oil and gas deregulation (which the Gipper did advance from September to January of 1981); airline deregulation and the actual abolition of the Civil Aeronautics Board, and deregulation of trucking. That was it.
The Gipper deregulated nothing, abolished nothing. Instead of keeping his pledge to abolish the Departments of Energy and Education, he strengthened them, and even wound up his years in office adding a new Cabinet post, the Secretary of Veterans Affairs. Overall, the quantity and degree of government regulation of the economy was greatly increased and intensified during the Reagan years. The hated OSHA, the scourge of small business and at the time the second most-hated agency of federal government (surely you need not ask which is the first most-hated), was not only not abolished; it too was strengthened and reinforced. Environmentalist restrictions were greatly accelerated, especially after the heady early years when selling off some public lands was briefly mentioned, and the proponents of actually using and developing locked-up government resources (James Watt, Anne Burford, Rita Lavelle) were disgraced and sent packing as a warning to any future "anti-environmentalists."
The Reagan Administration, supposedly the champion of free trade, has been the most protectionist in American history, raising tariffs, imposing import quotas, and – as another neat bit of creative semantics – twisting the arms of the Japanese to impose "voluntary" export quotas on automobiles and microchips. It has made the farm program the most abysmal of this century: boosting price supports and production quotas, and paying many more billions of taxpayer money to farmers so that they can produce less and raise prices to consumers.
And we should never forget a disastrous and despotic program that has received unanimous support from the media and from the envious American public: the massive witch hunt and reign of terror against the victimless non-crime of "insider trading." In a country where real criminals – muggers, rapists, and "inside" thieves – are allowed to run rampant, massive resources and publicity are directed toward outlawing the use of one’s superior knowledge and insight in order to make profits on the market.
In the course of this reign of terror, it is not surprising that freedom of speech was the first thing to go by the boards. Government spies and informers busily report conversations over martinis ("Hey Joe, I heard that XYZ Corp. is going to merge with ABC.") All this is being done by the cartelizing and fascistic Securities and Exchange Commission, the Department of Justice and its much-hailed Savanarola in New York, Rudolf Giuliani. All this is the work of the beloved Gipper, the "free-market," "libertarian" Reagan Administration. And where are the "conservative libertarians"? Where are the "free market economists" to point this out and condemn it?
Foreign aid, a vast racket by which American taxpayers are mulcted in order to subsidize American export firms and foreign governments (mostly dictatorships), has been vastly expanded under Reagan. The Administration also encouraged the nation’s banks to inflate and pour money down Third World rat-holes; then bailed out the banks and tin-pot socialist dictatorships at the expense of U.S. taxpayers (via tax increases) and consumers (via inflation). Since the discrediting of Friedmanite monetarism by the end of the first Reagan term, the original monetarist policy of allowing the dollar to fluctuate freely has been superseded by Keynesian Secretary of Treasury James Baker, who has concerted with foreign central banks to try to freeze the dollar within various zones. The interference has been, as usual, futile and counterproductive, but that will not stop the soon-to-be even more powerful Baker from trying to fulfill, or at least move strongly toward, the old Keynesian dream of one world fiat paper currency (or at least fixed exchange rates of the various national currencies) issued by one world Central Bank – in short, economic world government.
But didn’t Ronnie "bring down inflation"? Sure, but he did it, not by some miracle, but the old-fashioned way: by the steepest recession (read: depression) since the 1930s. And now, as a result of his inflationary monetary policies, inflation is back with a roar – which the Teflon President will leave as one of his great legacies to the Bush Administration.
And then there is another charming legacy: the reckless inflationary course, encouraged by the Reagan Administration, of the nation’s savings-and-loan banks. Virtually the entire industry is now bankrupt, and FDIC – the federal agency supposedly "insuring" S&L depositors – is bankrupt. Instead of allowing the banks and their deluded depositors to pay the price of their profligacy, everyone of both parties, including our "free-market" Reaganauts, is prepared to use taxpayer money or the printing press to bail out the entire industry – to the tune of an estimated 50 to 100 billion dollars. (These estimates, by the way, come from government sources, which notoriously underestimate future costs of their programs.)
I have been cleaving to the strictly economic realm because even the staunchest pro-Reagan libertarian will not dare to claim that Ronnie has been a blessing for civil liberties. On the contrary. In addition to his reign of terror on Wall Street (who cares about the civil liberties of stock traders anyway?), Reagan worked to escalate toward infinity the insane "war against drugs." Far from the 1970s movement toward repealing marijuana laws, an ever greater flow of men and resources – countless billions of dollars – are being hysterically poured into combating a drug "problem" that clearly gets worse in direct proportion to the intensity of the "war."
The outbreak of drug fascism, moreover, is a superb illustration of the interconnectedness of civil liberty and economic freedom. Under cover of combating drugs, the government has cracked down on our economic and financial privacy, so that carrying cash has become prima fade evidence of "laundering" drug money. And so the government steps up its long-cherished campaign to get people to abstain from cash and into using government-controlled banks. The government is already insinuating foreign exchange controls – now the legal obligation to "report" large amounts of cash taken out of the country – into our personal and economic life.
And every day more evil drugs are being found that must be denounced and outlawed: the latest is the dread menace of anabolic steroids. As part of this futile war, we are being urged by the Reaganites to endure compulsory urine testing (supervised, of course, since otherwise the testee might be able to purchase and substitute black market drug-free urine). In this grotesque proposal, government is not only not off our backs, it is now also insisting on joining us in the bathroom.
And in the bedroom, too, if Ronnie has his way. Although abortion is not yet illegal, it is not for lack of effort by the Reagan Administration. The relentless Reaganite drive to conservatize the judiciary will likely recriminalize abortion soon, making criminals out of millions of American women each year. George Bush, for less than twenty-four glorious hours, was moved to take a consistent position: if abortion is murder, then all women who engage in abortion are murderers. But it took only a day for his handlers to pull George back from the abyss of logic, and to advocate only criminalizing the doctors, the hired hands of the women who get abortions.
Perhaps the Gipper cannot be directly blamed – but certainly he has set the moral climate – for the increasingly savage Puritanism of the 1980s: the virtual outlawry of smoking, the escalating prohibition of pornography, even the partial bringing back of Prohibition (outlawing drunken driving, raising the legal drinking age to 21, making bartenders – or friendly hosts – legally responsible for someone else’s drunken driving, etc.).
Under Reagan, the civil liberties balance has been retipped in favor of the government and against the people: restricting our freedom to obtain government documents under the Freedom of Information Act and stepping up the penalties on privately printed and disseminated news about activities of the government, on the one hand; more "freedom" for our runaway secret police, the CIA, to restrict the printing of news, and to wiretap private individuals, on the other. And to cap its hypocrisy, as it escalated its war on drugs, the Reagan Administration looked the other way on drug running by its own CIA.
On foreign policy, the best we can say about Ronnie is that he did not launch World War III. Apart from that, his foreign policy was a series of murdering blunders:
His idiotic know-nothing intervention into the cauldron of Lebanon, resulting in the murder of several hundred US Marines.
His failed attempt – lauded by Reaganites ever since – to murder Colonel Khadafy by an air strike – and succeeding instead in slaying his baby daughter, after which our media sneered at Khadafy for looking haggard, and commented that the baby was "only adopted."
His stumblebum intervention into the Persian Gulf, safeguarding oil tankers of countries allied to Iraq in the Iraq–Iran war. (Ironically, the US. imports practically no oil from the Gulf, unlike Western Europe and Japan, where there was no hysteria and who certainly sent no warships to the Gulf.) In one of the most bizarre events in the history of warfare, the Iraqi sinking of the U.S.S. Stark was dismissed instantly – and without investigation, and in the teeth of considerable evidence to the contrary – as an "accident," followed immediately by blaming Iran (and using the sinking as an excuse to step up our pro-Iraq intervention in the war). This was followed by a US warship’s sinking of a civilian Iranian airliner, murdering hundreds of civilians, and blaming – you guessed it! – the Iranian government for this catastrophe. More alarming than these actions of the Reagan Administration was the supine and pusillanimous behavior of the media, in allowing the Gipper to get away with all this.
As we all know only too well, the height of Reagan’s Teflon qualities came with Iran-Contra. At the time, I naïvely thought that the scandal would finish the bastard off. But no one saw anything wrong with the Administration’s jailing private arms salesmen to Iran, while at the very same time engaging in arms sales to Iran itself. In Reagan’s America, apparently anything, any crookery, any aggression or mass murder, is OK if allegedly performed for noble, patriotic motives. Only personal greed is considered a no-no.
I have not yet mentioned the great foreign-policy triumph of the Reagan Administration: the invasion and conquest of tiny Grenada, a pitiful little island-country with no army, air force, or navy. A "rescue" operation was launched to save US medical students who never sought our deliverance. Even though the enemy consisted of a handful of Cuban construction workers, it still took us a week to finish the Grenadans off, during the course of which the three wings of our armed forces tripped over each other and our military distinguished itself by bombing a Grenadan hospital. The operation was as much a botch as the Carter attempt to rescue the American hostages. The only difference was that this time the enemy was helpless.
But we won didn’t we? Didn’t we redeem the US loss in Vietnam and allow America to "stand tall"? Yes, we did win. We beat up on a teeny country; and even botched that! If that is supposed to make Americans stand tall, then far better we sit short. Anyway, it’s about time we learned that Short is Beautiful.
The US war against the Sandinistas on the other hand, which has been conducted at enormous expense and waged hand-in-hand with Guatemalan, Honduran, and Salvadoran dictators, is going down the drain, despite illegal CIA mining of harbors and injury to neutral shipping. Even the nearly comatose American public is giving up on the idea of supporting bandit guerrillas, so long as they are anti-Communist, despite the best efforts of Ollie and Secord and Singlaub and Abrams and all the rest of the war crowd.
The Reagan Administration’s continued aid and support to Pol Pot in Cambodia, the most genocidal butcher of our time, is more reprehensible but less visible to most Americans. As a result, Pol Pot’s thugs are mobilizing at this very moment on the Thai border to return and take over Cambodia as soon as the Vietnamese pull out, presumably to renew their bizarre mass murders. But you see, that’s okay with the Reaganites because the Cambodian Commies are guerrilla fighters against the Vietnamese (pro-Soviet) Commies, who by definition are evil. Pol Pot’s butchers as "freedom fighters" show us that, in the arsenal of the Reaganite Right, "freedom," like "taxes" and many other crucial words, means, as in the case of Humpty Dumpty, whatever they choose it to.
Grenada was the perfect war as far as many conservatives (and apparently much of the American public) were concerned: it was quick and easy to win, with virtually no risk of loss, and allowed ample opportunities to promote the military (and their Commander-in-Chief) as heroes while bragging up the victory on television – in short, allowing the U.S. to glory in its status as a bully. (It helped eradicate the awful memory of Vietnam, which was the perfect war for American centrist liberals: virtually impossible to win, horribly expensive in terms of men and property – and best of all, it could go on forever without resolution, like the War on Poverty, fueling their sense of guilt while providing safe but exciting jobs for members of their techno-bureaucratic class.)
While the American masses do not want war with Russia or even aid to the bandit Contras, they do want an ever-expanding military and other aggravated symbols of a "strong," "tough" America, an America that will, John Wayne-like, stomp on teeny pests like Commie Grenada, or, perhaps, any very small island that might possess the tone and the ideology of the Ayatollah.
Setting the Stage: The Anti-Government Rebellion of the 1970s
I am convinced that the historic function of Ronald Reagan was to co-opt, eviscerate and ultimately destroy the substantial wave of anti-governmental, and quasi-libertarian, sentiment that erupted in the U.S. during the 1970s. Did he perform this task consciously? Surely too difficult a feat for a man barely compos. No, Reagan was wheeled into performing this task by his Establishment handlers.
The task of co-optation needed to be done because the 1970s, particularly 1973–75, were marked by an unusual and striking conjunction of crisis – crises that fed on each other to lead to a sudden and cumulative disillusionment with the federal government. It was this symbiosis of anti-government reaction that led me to develop my "case for libertarian optimism" during the mid-1970’s, in the expectation of a rapid escalation of libertarian influence in America.
1973–74 saw the abject failure of the Nixon wage-price control program, and the development of something Keynesians assumed could never happen: the combination of double-digit inflation and a severe recession. High unemployment and high inflation happened again, even more intensely, during the greater recession of 1979–82. Since Keynesianism rests on the idea that government should pump in spending during recessions and take out spending during inflationary booms, what happens when both occur at the same time? As Rand would say: Blankout! There is no answer. And so, there was disillusionment in the government’s handling of the macro-economy, deepening during the accelerating inflation of the 1970s and the beginnings of recession in 1979.
At the same time, people began to be fed up, increasingly and vocally, with high taxes: income taxes, property taxes, sales taxes, you name it. Especially in the West, an organized tax rebel movement developed, with its own periodicals and organizations However misguided strategically, the spread of the tax rebellion signaled a growing disillusion with big government. I was privileged to be living in California during the election year of 1978, when Proposition 13 was passed. It was a genuinely inspiring sight. In the face of hysterical opposition and smears from the entire California Establishment Democratic and Republican, Big Business and labor, academia, economists, and all of the press the groundswell for Prop 13 burgeoned. Everyone was against it but the people. If the eventual triumph of Ronald Reagan is the best case against "libertarian populism," Prop. 13 was the best case in its favor.
Also exhilarating was the smashing defeat of US imperialism in Vietnam in 1975 – exhilarating because this first loss of a war by the United States, many of us believed, was bound to get Americans to rethink the disastrous warmongering bipartisan foreign policy that had plagued us since the unlamented days of Woodrow Wilson.
On the civil liberties front, the de facto legalization of marijuana was a sign that the nonsense of drug prohibition would soon be swept away. (Ye gods! Was that only a decade ago?) Inflationary recession; high taxes; prohibition laws; defeat in foreign war; across the board, the conditions seemed admirable for a growing and triumphant libertarianism.
And to top it off, the Watergate crisis (my particular favorite) destroyed the trust of the American masses in the Presidency. For the first time in over a hundred years, the concept of impeachment of the President became, first thinkable, and then a living and glorious process. For a while, I feared that Jimmy Carter, with his lovable cardigan sweater, would restore Americans’ faith in their president, but soon that fear proved groundless.
Surely, it is no accident that it was precisely in this glorious and sudden anti-government surge that libertarian ideas and libertarian scholarship began to spread rapidly in the United States. And it was in 1971 that the tiny Libertarian Party emerged, in 1972 that its first, embryonic presidential candidacy was launched, and 1973 when its first important race was run, for mayor of New York City. The Libertarian Party continued to grow rapidly, almost exponentially, during the 1970s, reaching a climax with the Clark campaign for governor of California during the Prop 13 year of 1978, and with the Clark campaign for the Presidency in 1980. The morning my first article on libertarianism appeared in the New York Times in 1971, a very bright editor at Macmillan, Tom Mandel, called me and asked me to write a book on the subject (it was to become For a New Liberty). Not a libertarian himself, Mandel told me that he believed that libertarianism would become a very important ideology in a few years – and he turned out to be right.
So libertarianism was on a roll in the 1970s. And then Something Happened.
Enter the Neocons
What happened was Ronald Wilson Blithering Reagan. Obviously Reagan did not suddenly descend out of the clouds in 1980. He had been the cherished candidate of the conservative movement, its chosen route to power, ever since Goldwater’s defeat. Goldwater was too blunt and candid, too much an unhandleable Real Person. What was needed was a lovable, manipulable icon. Moreover, Goldwater’s principles were too hard-edged: he was way too much a domestic libertarian, and he was too much an eager warmonger. Both his libertarianism and his passion for nuclear confrontation with the Soviet Union scared the bejesus out of the American masses, as well as the more astute leadership of the conservative movement.
A reconstituted conservative movement would have to drop any libertarian ideology or concrete policies, except to provide a woolly and comfortable mood for suitably gaseous anti-government rhetoric and an improved foreign policy that would make sure that many more billions would go into the military-industrial complex, to step up global pressure against Communism, but avoiding an actual nuclear war. This last point was important: As much as they enjoy the role of the bully, neither the Establishment nor the American people want to risk nuclear war, which might, after all, blow them up as well. Once again, Ronnie Reagan looked like the Answer.
Two important new ingredients entered into, and helped reshape, the conservative movement during the mid 1970’s. One was the emergence of a small but vocal and politically powerful group of neo-conservatives (neocons), who were able, in a remarkably short time, to seize control of the think tanks, the opinion-molding institutions, and finally the politics, of the conservative movement. As ex-liberals, the neocons were greeted as important new converts from the enemy. More importantly, as ex-Trotskyites, the neocons were veteran politicos and organizers, schooled in Marxian cadre organizing and in manipulating the levers of power. They were shrewdly eager to place their own people in crucial opinion molding and money-raising positions, and in ousting those not willing to submit to the neocon program. Understanding the importance of financial support, the neocons knew how to sucker Old Right businessmen into giving them the monetary levers at their numerous foundations and think tanks. In contrast to free-market economists, for example, the neocons were eager to manipulate patriotic symbols and ethical doctrines, doing the microequivalent of Reagan and Bush’s wrapping themselves in the American Flag. Wrapping themselves, also, in such patriotic symbols as The Framers and the Constitution, as well as Family Values, the neocons were easily able to outflank free-market types and keep them narrowly confined to technical economic issues. In short the neocons were easily able to seize the moral and patriotic "high ground."
The only group willing and able to challenge the neocons on their own moralizing on philosophic turf was, of course, the tiny handful of libertarians; and outright moral libertarianism, with its opposition to statism, theocracy, and foreign war, could never hope to get to first base with conservative businessmen, who, even at the best of times during the Old Right era, had never been happy about individual personal liberty, (e.g. allowing prostitution, pornography, homosexuality, or drugs) or with the libertarians’ individualism and conspicuous lack of piety toward the Pentagon, or toward the precious symbol of the Nation-State, the US flag.
The neocons were (and remain today) New Dealers, as they frankly describe themselves, remarkably without raising any conservative eyebrows. They are what used to be called, in more precise ideological days, "extreme right-wing Social Democrats." In other words, they are still Roosevelt-Truman-Kennedy-Humphrey Democrats. Their objective, as they moved (partially) into the Republican Party and the conservative movement, was to reshape it to become, with minor changes, a Roosevelt-Truman-etc. movement; that is, a liberal movement shorn of the dread "L" word and of post-McGovern liberalism. To verify this point all we have to do is note how many times Roosevelt, Truman, Kennedy, et al., properly reviled by conservatives while they were alive, are now lauded, even canonized, by the current neocon-run movement, from Ronnie Reagan on down. And no one calls them on this Orwellian revision of conservative movement history.
As statists-to-the-core the neocons had no problem taking the lead in crusades to restrict individual liberties, whether it be in the name of rooting out "subversives," or of inculcating broadly religious ("Judeo-Christian") or moral values. They were happy to form a cozy alliance with the Moral Majority, the mass of fundamentalists who entered the arena of conservative politics in the mid-1970s. The fundamentalists were goaded out of their quietist millenarian dreams (e.g., the imminent approach of Armageddon) and into conservative political action by the accumulation of moral permissivism in American life. The legalization of abortion in Roe v. Wade was undoubtedly the trigger, but this decision came on top of a cumulative effect of the sexual revolution, the militant homosexual movement "out of the closet" and into the streets, the spread of pornography, and the visible decay of the public school system. The entry of the Moral Majority transformed American politics, not the least by furnishing the elite cadre of neocons with a mass base to guide and manipulate.
In economic matter, the neocons showed no more love of liberty, though this is obscured by the fact that the neocons wish to trim the welfare state of its post-Sixties excrescences, particularly since these were largely designed to aid black people. What the neocons want is a smaller, more "efficient" welfare state, within which bounds they would graciously allow the market to operate. The market is acceptable as a narrow instrumental device; their view of private property and the free market is essentially identical to Gorbachev’s in the Soviet Union.
Why did the Right permit itself to be bamboozled by the neocons? Largely because the conservatives had been inexorably drifting Stateward in the same manner. In response to the crushing defeat of Goldwater, the Right had become ever less libertarian and less principled, and ever more attuned to the "responsibilities" and moderations of Power. It is a far cry from three decades ago when Bill Buckley used to say that he too is an "anarchist" but that we have to put off all thoughts of liberty until the "international Communist conspiracy" is crushed. Those old Chodorovian libertarian days are long gone, and so is National Review as any haven for libertarian ideas. War mongering, militarism, theocracy, and limited "free" markets – this is really what Buckleyism amounted to by the late 1970s.
The burgeoning neocons were able to confuse and addle the Democratic Party by breaking with the Carter Administration, at the same time militantly and successfully pressuring it from within. The neocons formed two noisy front groups, the Coalition for a Democratic Majority and the Committee on the Present Danger. By means of these two interlocking groups and their unusual access to influential media, the neocons were able to pressure the Carter Administration into breaking the détente with Russia over the Afghanistan imbroglio and influencing Carter to get rid of the dove Cyrus Vance as Secretary of State and to put foreign policy power into the hands of the Polish émigré hawk and Rockefeller Trilateralist, Zbigniew Brzezinski. In the meantime, the neocons pushed the hysterically hawkish CIA "B" Team report, wailing about alleged Soviet nuclear superiority, which in turn paved the way for the vast gift of spending handed to the military-industrial complex by the incoming Regan Administration. The Afghanistan and "B" Team hysterias, added to the humiliation by the Ayatollah, managed not only to kill off the bedeviled Carter Administration, but also to put the boots to non-intervention and to prepare the nation for a scrapping of the "post-Vietnam syndrome" and a return to the warmongering of the pre-Vietnam Era.
The Reagan candidacy of 1980 was brilliantly designed to weld a coalition providing the public’s instinctive anti-government mood with sweeping, but wholly nonspecific, libertarian rhetoric, as a convenient cover for the diametrically opposite policies designed to satisfy the savvy and politically effective members of that coalition: the neocons, the Buckleyite cons, the Moral Majority, the Rockefellers, the military-industrial complex, and the various Establishment special interests always clustering at the political trough.
Intellectual Corruption
In the face of the stark record, how were the Reaganites able to get away with it? Where did Ronnie get his thick coat of Teflon? Why was he able to follow statist policies and yet convince everyone, including many alleged libertarians, that he was successfully pursuing a "revolution" to get government off our backs?
The essential answer was provided a century ago by Lysander Spooner. Why does the public obey the State, and go further to endorse statist policies that benefit the Power Elite at the public’s own expense? The answer, wrote Spooner, is that the State is supported by three powerful groups: knaves, who know what is going on and benefit from State rule; dupes, who are fooled into thinking that State rule is in their and everyone else’s interest; and cowards, who know the truth but are afraid to proclaim that the emperor has no clothes. I think we can refine Spooner’s analysis and merge the Knave and Coward categories; after all, the renegade sellout confronts the carrot and the stick: the carrot of wealth, cushy jobs, and prestige if he goes along with the Emperor; and the stick of scorn, exclusion from wealth, prestige, and jobs – and perhaps worse – if he fails to go along. The reason that Reagan got away with it – in addition to his aw-shucks "lovability" – is that various powerful groups were either duped or knave-cowardly corrupted into hailing his alleged triumphs and deep-sixing his evident failures.
First, the powerful opinion-molding media. It is conventional wisdom that media people are biased in favor of liberalism, No doubt. But that is not important, because the media, especially elite media who have the most to lose, are also particularly subject to the knave/coward syndrome. If they pander to Reaganism, they get the approval of the deluded masses, their customers, and they get the much-sought-after access to the President and to other big-wigs in government. And access means scoops, carefully planted exclusive leaks, etc. Any sort of effective opposition to the President means, on the other hand, loss of access; the angering of Reagan-deluded masses; and also the angering of their bosses, the owners of the press and television, who are far more conservative than their journalist employees.
One of Reagan’s most notable achievements was his emasculation of the liberal media because of his personal popularity with the masses. Note, for example, the wimpy media treatment of Iran-Contra as compared to their glorious attack on Watergate. If this is liberal media bias, then the liberals need to be saved from their friends.
If the media were willing to go along with Reaganite duplicity and hokum, then so were our quasi-libertarian intellectual leaders. It is true of the libertarian-inclined masses as it has been always true of the conservative masses: they tend to be not too swift in the upper story. During the late 1970s, libertarian intellectuals and free-market economists were growing in number, but they were very few, and they had not yet established institutions with firm ties to journalistic and mass opinion. Hence, the libertarian mood, but not the informed thought, of the masses, was ready for co-optation, especially if led by a charismatic, beloved President.
But we must not under weigh the importance of the traitorous role performed by quasi-libertarian intellectuals and free-market economists during the Reagan years. While their institutions were small and relatively weak, the power and consistency of libertarian thought had managed to bring them considerable prestige and political influence by 1980 – especially since they offered an attractive and consistent alternative to a statist system that was breaking down on all fronts.
But talk about your Knaves! In the history of ideological movements, there have always been people willing to sell their souls and their principles. But never in history have so many sold out for so pitifully little. Hordes of libertarian and free-market intellectuals and activists rushed to Washington to whore after lousy little jobs, crummy little grants, and sporadic little conferences. It is bad enough to sell out; it is far worse to be a two-bit whore. And worst of all in this sickening spectacle were those who went into the tank without so much as a clear offer: betraying the values and principles of a lifetime in order to position themselves in hopes of being propositioned. And so they wriggled around the seats of power in Washington. The intellectual corruption spread rapidly, in proportion to the height and length of jobs in the Reagan Administration. Lifelong opponents of budget deficits remarkably began to weave sophisticated and absurd apologias, now that the great Reagan was piling them up, claiming, very much like the hated left-wing Keynesians of yore, that "deficits don’t matter."
Shorn of intellectual support, the half-formed libertarian instincts of the American masses remained content with Reaganite rhetoric, and the actual diametrically opposite policies got lost in the shuffle.
Reagan’s Legacy
Has the Reagan Administration done nothing good in its eight ghastly years on earth, you might ask? Yes, it has done one good thing; it has repealed the despotic 55-mile-per-hour highway speed limit. And that is it.
As the Gipper, at bloody long last, goes riding off into the sunset, he leaves us with a hideous legacy. He has succeeded in destroying the libertarian public mood of the late 1970’s, and replaced it with fatuous and menacing patriotic symbols of the Nation-State, especially The Flag, which he first whooped up in his vacuous reelection campaign in 1984, aided by the unfortunate coincidence of the Olympics being held at Los Angeles. (Who will soon forget the raucous baying of the chauvinist mobs: "USA! USA!" every time some American came in third in some petty event?) He has succeeded in corrupting libertarian and free-market intellectuals and institutions, although in Ronnie’s defense it must be noted that the fault lies with the corrupted and not with the corrupter.
It is generally agreed by political analysts that the ideological mood of the public, after eight years of Reaganism, is in support of economic liberalism (that is, an expanded welfare state), and social conservatism (that is, the suppression of civil liberties and the theocratic outlawing of immoral behavior). And, on foreign policy, of course, they stand for militaristic chauvinism. After eight years of Ronnie, the mood of the American masses is to expand the goodies of the welfare-warfare state (though not to increase taxes to pay for these goodies), to swagger abroad and be very tough with nations that can’t fight back, and to crack down on the liberties of groups they don’t like or whose values or culture they disagree with.
It is a decidedly unlovely and unlibertarian wasteland, this picture of America 1989, and who do we have to thank for it? Several groups: the neocons who organized it; the vested interests and the Power Elite who run it; the libertarians and free marketeers who sold out for it; and above all, the universally beloved Ronald Wilson Reagan, Who Made It Possible.
As he rides off into retirement, glowing with the love of the American public, leaving his odious legacy behind, one wonders what this hallowed dimwit might possibly do in retirement that could be at all worthy of the rest of his political career. What very last triumph are we supposed to "win for the Gipper"?
He has tipped his hand: I have just read that as soon as he retires, the Gipper will go on a banquet tour on behalf of the repeal of the 22nd ("Anti-Third Term") Amendment – the one decent thing the Republicans have accomplished. In the last four decades. The 22nd Amendment was a well-deserved retrospective slap at FDR. It is typical of the depths to which the GOP has fallen in the last few years that Republicans have been actually muttering about joining the effort to repeal this amendment. If they are successful, then Ronald Reagan might be elected again, and reelected well into the 21st century.
In our age of High Tech, I’m sure that his mere physical death could easily have been overcome by his handlers and media mavens. Ronald Reagan will be suitably mummified, trotted out in front of a giant American flag, and some puppet master would have gotten him to give his winsome headshake and some ventriloquist would have imitated the golden tones: "We-e-ell..." (Why not? After all, the living reality of the last four years has not been a helluva lot different.)
Perhaps, after all, Ronald Reagan and almost all the rest of us will finally get our fondest wish: the election forever and ever of the mummified con King Ronnie.
Now there is a legacy for our descendants!
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