If you want to get a good idea of the damage that is done to students who take economics courses in most colleges and universities, just take a look at a The Atlantic’s October 3 attack on Libertarian Party presidential candidate Gary Johnson, entitled, “No, Not Gary Johnson: The Libertarian Candidate Puts a Likable Face on a Deeply Troubling Economic Policy” by Derek Thomas, a young man who graduated from Northwestern University with majors in journalism, political science, and legal studies. Lamenting the fact that so many of his fellow millennials are supporting Johnson, Thomas provides a perfect summation of the Keynesian economic nonsense that students, including those who don’t major in economics, are taught in college.
Thomas is shocked — shocked! — that Johnson and libertarians advocate the abolition of the income tax. He considers such a position to be radical and irresponsible.
Really? Was it radical and irresponsible for the American people from 1787 through 1913 to live without a federal income tax for most of that time? For more than a century, Americans were free to keep everything they earned and decide for themselves what to do with it. No Social Security, no Medicare, no Medicaid, no welfare whatsoever. And no IRS or income-tax returns.
That’s what our American ancestors called freedom — economic freedom, a concept with which Thomas obviously isn’t too enamored, especially since he’s convinced that economic freedom is detrimental to people. Never mind that when Americans lived without income taxation, and the welfare-warfare state it funds, they brought into existence the most prosperous — and the most charitable — nation in history.
Just consider the economic nonsense that Thomas is spouting. He’s saying that that economic liberty is bad because it would bring economic crises, healthcare crises, and monetary crises to America. Is he really unaware of the big economic lesson that people learned in the 20th century — that it is socialism and interventionism that impoverish people and that it is a free-market economy that is the key to economic growth and prosperity? Derek, read Mises. Read Hayek. Read Bastiat. Read Rothbard. Or, heck, just watch FFF’s new video series “An Introduction to Austrian Economics” by the noted Austrian economist Richard Ebeling. And read his new ebook that accompanies the video series, “Austrian Economics and Public Policy: Restoring Freedom and Prosperity. And while you’re at it, read Ebeling’s ebook, Monetary Central Planning and the State, which will disabuse you of your devotion to the Federal Reserve. Maybe also read my 3-part article this week entitled, “Left-Wing Panic Over Gary Johnson.”
Guess who the radicals were in the late 1800s and early 1900s. The socialists and interventionists! That is, those Americans who were proposing programs like income taxation, national health care, minimum-wage laws, maximum-hours legislation, and public (i.e., government) schooling, all which they were importing from socialists in Germany. It was those statists who were considered by our American ancestors to be radicals who were trying to shift America from a free-market economy way of life to socialism and interventionism.
Let’s not forget what those radical statists were saying when they were battling for the enactment of the Sixteenth Amendment in 1913. They were saying, “We promise that if we are permitted to bring income taxation to America, it will only be levied on the rich — and even then, it will only be a very small percentage of taxation on the rich.” It was an unvarnished appeal to the great sins of envy and covetousness.
As Thomas and others of his socialist and interventionist ilk know full well, income tax didn’t end up being limited to the rich and the percentage didn’t stay small for long. Instead, like a metastasizing cancer it spread throughout the middle class and even to the poor, to the point where many people today, especially the young, can’t make ends meet.
Why did income taxation become such an enormous burden on people? Because it became the means to raise the money to pay the ever-burgeoning costs of both the welfare state and the warfare state that American socialists and interventionists (i.e., progressives) were bringing into existence — programs like Social Security, Medicare, Medicaid, public schooling, foreign aid, the Pentagon, the military-industrial complex, the CIA, the NSA, and an empire of domestic and foreign military bases.
The expenditures got so high that they soon exceeded income-tax revenues. No problem. U.S. officials just borrowed the money, beginning the process of adding mountains of debt onto the ever-growing “entitlement” programs.
What happened when the debt got too high? No problem. That’s where the Federal Reserve, which, just coincidentally came into existence in the same year that the Sixteenth Amendment was enacted, came into play. Its job was to monetize the ever-growing debt by enabling the government to pay it off in ever cheapening, ever-devaluing paper dollars.
That’s why the American people were no longer permitted to use the official money that had been established under the U.S. Constitution — the official money that Americans had used for more than a century — gold coins. If gold coins had remained America’s official money, the welfare-warfare statists would never have had the unlimited ability to spend money for their welfare-warfare adventures.
And then along came John Maynard Keynes, the English economist who put his imprimatur on all this statist nonsense. His argument was that government spending, deficit spending, ever-growing debt, and monetary debasement were all good things. He called it “priming the pump.” It gets the economy humming, he said. The government should just keep spending, borrowing, and inflating, and everyone should keep going out and spending their money. It’s the secret to a wealthy, booming, prosperous economy, he said.
Except that it isn’t. Instead, it leads to impoverishment and bankruptcy. Just ask the Greeks. Or the Puerto Ricans. Or Cubans. Or North Koreans. All of them have taken the socialism and Keynesianism to their logical conclusion, and look where they are today.
Keynes was the snake oil salesman of the economics profession. But the statists loved him — they still love him — because he made their destructive economic nonsense respectable and credible. They could spend, borrow, and inflate to their hearts’ content. And it would all, according to Keynes, bring happiness, wealth, and prosperity.
The problem for people like Thomas is that their minds operate within the confines of a statist box, one whose four walls are socialism, interventionism, Keynesianism, and regulation. Their minds are so fixated on fixing the problems inside the box that they’re not able to see that it is the box itself that is inherently defective and that is the cause of the problems they want to fix.
Thus, when they encounter libertarians, they’re shocked — shocked! — that libertarians are not operating within the confines of the statist box. They want libertarians to think like them. They want libertarians to fight over what interest rate the Fed should set. Or what deductions people should be permitted to take on their income tax returns. Or whether students should be required to say the pledge of allegiance in public schools. Or how many bombs should be dropped on people in the Middle East or what the rules of assassination should be. Or whether the FISA court approved too many warrants for secret surveillance. Or what nations the CIA and Pentagon should target for regime change. Or how many immigrants the government should let into the country.
But that’s not what libertarians are all about. We don’t care about fixing and reforming the statist box. We know that it’s the box itself that is the problem. We want a free-market economy, not a socialist and interventionist economy. We want a limited-government constitutional republic, not a national-security state empire. We want the statist box dismantled.
And why do we libertarians favor these things? Because we want freedom, and, unlike people like Thomas who undoubtedly is grateful for the “freedom” that socialism and interventionism have brought him, we libertarians know that no one who lives in a welfare-warfare state can be considered free.
Moreover, we libertarians also know that the key to an economically prosperous nation lies not in coercive confiscation and redistribution of wealth, out-of-control government spending and debt, inflationary debasement of the currency, and welfare and warfare but rather in sound money, unlimited accumulations of wealth, free markets, private property, and economic liberty.
The economic snake-oil salesmen who promote socialism, Keynesianism, and interventionism have done enough damage to liberty and prosperity, not only in America but all over the world. While unfortunately all too many old people keep imbibing this snake oil, the good news is that an ever-growing number of young people in America are rejecting it.
Well, except for Derek Thomas. He should consider suing Northwestern University for educational malpractice.