Tuesday, October 17, 2017

The Budget Cut That Would Restore Our Liberty - by Gary North

Every ideologically driven citizen has one law that he would like to see enacted. The trouble is, there is no agreement about which law it should be.
We all have our favorite hobby horse, our recommended silver bullet.
I suggested two laws on Lew Rockwell's site back in May 2000. It was the first article by me that he posted. Since then, he has posted about 1,700 more. The site no longer numbers them, so I am not sure how many. The article was titled, "Two Teensy-Weensy Legal Reforms."
Every American visitor to this website probably has a cabinet-level agency that he thinks should be abolished first. I dream such dreams, too. But as I grow older, I become less utopian. So, I’m going to recommend two minor technical revisions of the tax code.
Repeal withholding on all federal income taxes.
Move the date that federal taxes are due to the first Monday of November.
Federal elections are held on the first Tuesday after the first Monday of November.
You can read my arguments here:
As I wrote then, I regarded these as non-utopian. What reform would I pursue if I wanted to go full utopian?
In deciding what reform it should be, I have in mind a practice of the U.S. government that is inherently messianic. It is a widely accepted practice that identifies the U.S. government as semi-divine. If it were prohibited, it would shrink the federal government to its authority of 1860.
The key phrase is "widely accepted." This identifies the surrender of liberty on a widespread basis. It marks a practice that is not controversial, but is in fact the crucial lever of power of the federal government over the voters. It has to be a practice that, in colloquial American English, no one thinks twice about.
Finally, it has this unique two-fold characteristic. Murray Rothbard identified it as the Achilles' heel of the state, and the Bible identifies it as Satanic.
Most people know what an Achilles' heel is. It comes from Greek mythology. Here is a summary from Wikipedia.
In Greek mythology, when Achilles was a baby, it was foretold that he would die young. To prevent his death, his mother Thetis took Achilles to the River Styx, which was supposed to offer powers of invulnerability, and dipped his body into the water; however, as Thetis held Achilles by the heel, his heel was not washed over by the water of the magical river. Achilles grew up to be a man of war who survived many great battles. One day, a poisonous arrow shot at him was lodged in his heel, killing him shortly afterwards.
Have you figured out what the practice is?
The Government's collection of statistics.
In 1961, Rothbard wrote an article for the Foundation for Economic Education. Its title: "Statistics: Achilles' Heel of Government." He made a cogent argument about the nature of government planning. In order to justify government planning of any kind, the bureaucrats have to have access to statistics. If it were not for statistics, nobody would believe that bureaucrats in a government agency have the ability to plan much of anything.
He argued that there is no justification for government-collected statistics. Citizens have to pay for this: taxation. Also, they are coerced into providing the data. Here are some of the article's highlights.
While private agencies and trade associations do gather and issue some statistics, they are limited to specific wants of specific industries. The vast bulk of statistics is gathered and disseminated by government. The overall statistics of the economy, the popular "gross national product" data that permits every economist to be a soothsayer of business conditions, come from government.
Furthermore, many statistics are by-products of other governmental activities: from the Internal Revenue bureau come tax data, from unemployment insurance departments come estimates of the unemployed, from customs offices come data on foreign trade, from the Federal Reserve flow statistics on banking, and so on. And as new statistical techniques are developed, new divisions of government departments are created to refine and use them.
The burgeoning of government statistics offers several obvious evils to the libertarian. In the first place, it is clear that too many resources are being channeled into statistics-gathering and statistics-production. . . .
Hidden Costs of Reporting
Secondly, the great bulk of statistics is gathered by government coercion. This not only means that they are products of unwelcome activities; it also means that the true cost of these statistics to the American public is much greater than the mere amount of tax money spent by the government agencies. Private industry, and the private consumer, must bear the burdensome costs of record keeping, filing, and the like, that these statistics demand. Not only that; these fixed costs impose a relatively great burden on small business firms, which are ill equipped to handle the mountains of red tape. Hence, these seemingly innocent statistics cripple small business enterprise and help to rigidify the American business system.
But aren't these statistics useful to the public? Don't they provide information that we can use to make our own decision-making more efficient? No.
The individual consumer, in his daily rounds, has little need of statistics; through advertising, through the information of friends, and through his own experience, he finds out what is going on in the markets around him. The same is true of the business firm. The businessman must also size up his particular market, determine the prices he has to pay for what he buys and charge for what he sells, engage in cost accounting to estimate his costs, and so on. But none of this activity is really dependent upon the omnium gatherum of statistical facts about the economy ingested by the federal government. The businessman, like the consumer, knows and learns about his particular market through his daily experience.
Then he got to the heart of the matter.
Statistics are the eyes and ears of the bureaucrat, the politician, the socialistic reformer. Only by statistics can they know, or at least have any idea about, what is going on in the economy. . . .
The Master Plan
Certainly, only by statistics, can the federal government make even a fitful attempt to plan, regulate, control, or reform various industries — or impose central planning and socialization on the entire economic system. If the government received no railroad statistics, for example, how in the world could it even start to regulate railroad rates, finances, and other affairs? How could the government impose price controls if it didn't even know what goods have been sold on the market, and what prices were prevailing? Statistics, to repeat, are the eyes and ears of the interventionists: of the intellectual reformer, the politician, and the government bureaucrat. Cut off those eyes and ears, destroy those crucial guidelines to knowledge, and the whole threat of government intervention is almost completely eliminated. . . .
Surely, the absence of statistics would absolutely and immediately wreck any attempt at socialistic planning. It is difficult to see what, for example, the central planners at the Kremlin could do to plan the lives of Soviet citizens if the planners were deprived of all information, of all statistical data, about these citizens. The government would not even know to whom to give orders, much less how to try to plan an intricate economy.
Thus, in all the host of measures that have been proposed over the years to check and limit government or to repeal its interventions, the simple and unspectacular abolition of government statistics would probably be the most thorough and most effective. Statistics, so vital to statism, its namesake, is also the State's Achilles' heel.
This is good stuff. But he missed a crucial point about Achilles' heels. They are inescapable concepts. It is never a question of Achilles' heel vs. no Achilles' heel. It is always a question of whose Achilles' heel.
Voters around the world have surrendered their liberty to statist central planning. Their willingness to allow civil governments at all levels to collect statistics has led to their silent, unthinking surrender to the messianic state. If they had organized to stop the collection of statistics, the modern Keynesian state could not exist.
The defenders of the messianic state shot a poisoned arrow into the liberty of the citizenry. Citizens should return the favor.
In the Bible, there is a story about census collecting. You probably have never heard a sermon on it. It deserves one. It surely deserves a Sunday school lesson.
King David decided to number the Israelites. He ordered his senior military commander, Joab, to collect the statistics. Joab knew this was morally wrong, and he argued against it, but David forced him to do it. This story is found in Second Samuel and First Chronicles. It is a remarkable story. Here is the version in Chronicles.
Satan rose up against Israel and caused David to take a census of the people of Israel. So David said to Joab and the commanders of the army, “Take a census of all the people of Israel—from Beersheba in the south to Dan in the north—and bring me a report so I may know how many there are.”
But Joab replied, “May the Lord increase the number of his people a hundred times over! But why, my lord the king, do you want to do this? Are they not all your servants? Why must you cause Israel to sin?”
But the king insisted that they take the census, so Joab traveled throughout all Israel to count the people. Then he returned to Jerusalem and reported the number of people to David. There were 1,100,000 warriors in all Israel who could handle a sword, and 470,000 in Judah. But Joab did not include the tribes of Levi and Benjamin in the census because he was so distressed at what the king had made him do. (I Chronicles 21:1-6)
In II Samuel 24, the author blames this on Israel. "And again the anger of the Lord was kindled against Israel, and he moved David against them to say, Go, number Israel and Judah" (v. 1).
Why was David wrong? Didn't Moses take a census twice? He did. He conducted a census immediately after the exodus. This was in preparation to invade Canaan. It was an act of military aggression. This invasion was delayed by 40 years (Numbers 14). In his old age, Moses numbered the people again in preparation for the invasion of Canaan.
In Israel, the census was a military act. It was not legitimate under any other circumstances. War centralizes power. Taking a census also centralizes power. Joab, a general, understood that it was illegitimate for David to conduct a census. There was no war on the horizon.
There was a price to pay.
And God was displeased with this thing; therefore he smote Israel. And David said unto God, I have sinned greatly, because I have done this thing: but now, I beseech thee, do away the iniquity of thy servant; for I have done very foolishly. And the Lord spake unto Gad, David's seer, saying, Go and tell David, saying, Thus saith the Lord, I offer thee three things: choose thee one of them, that I may do it unto thee.
So Gad came to David, and said unto him, Thus saith the Lord, Choose thee Either three years' famine; or three months to be destroyed before thy foes, while that the sword of thine enemies overtaketh thee; or else three days the sword of the Lord, even the pestilence, in the land, and the angel of the Lord destroying throughout all the coasts of Israel. Now therefore advise thyself what word I shall bring again to him that sent me.
Notice that these were three familiar curses: famine, war, and pestilence.
And David said unto Gad, I am in a great strait: let me fall now into the hand of the Lord; for very great are his mercies: but let me not fall into the hand of man.
So the Lord sent pestilence upon Israel: and there fell of Israel seventy thousand men (I Chron. 21:7-14).
David did not pay the price. The people of Israel paid the price. God held them accountable. We read in Second Samuel 24: "And again the anger of the Lord was kindled against Israel, and he moved David against them to say, Go, number Israel and Judah" (v.1).
This was a joint effort: king and people. The people decades earlier had been warned by Samuel about placing a king over them. This is recorded in the famous passage in First Samuel, chapter 8. God warned them what was going to happen. They were going to pay tyrannically high taxes: 10%. (Note: Israel under the kings would be regarded today as a tax haven.) The king was going to intrude into their lives. He was going to send their sons off to war. They paid no attention. So, they got exactly what they deserved. They wanted a king like the nations around them, and the nations around them were tyrannical. The nation had not resisted this expansion of central power, so they paid a heavy price. They paid it over and over and over. The history of the nation of Israel after the installation of the king was a series of disasters.
Bureaucrats in government agencies that attempt to plan the economy or anything else in society do this only on the assumption that they possess the power of God.
You may think I'm exaggerating. I am not. Theologians say that there are incommunicable attributes of God. Three of them are these: omniscience, omnipotence, and omnipresence.
Government planners operate on the assumption that their ability to collect statistics and evaluate them places them in the position of an omniscient deity. They believe that coercively collected statistical data are the equivalent of God's omniscience. Second, they use the threat of coercion to direct the economy's production and distribution. Here, they imitate God's omnipotence. Third, they send out agents to report on people's activities. This completes the triad of God's incommunicable attributes: omnipresence.
The modern central planning state is messianic. It is therefore a threat to our liberties. It is also a threat to our future economic productivity. The state needs power and resources to direct the economy. The resources are collected from the public. Wealth that would have been used for personal productivity and personal consumption is transferred to the planning state. The bureaucrats use this wealth to direct productivity along lines that they approve of. They think they are immune from public reprisal, and generally this is the case.
Rothbard got to the point in his essay. Without statistics, central planners are flying blind. Of course, Mises made that point back in 1920. He said that, even with statistics, socialist economic planning is inherently irrational. It has no prices to guide the planners. There are no capital markets that produce reliable prices. He said this in an essay, "Economic Calculation in the Socialist Commonwealth." But the general public has never read that essay, and for 70 years the vast majority of economists who had ever heard of it, let alone read it, dismissed it as irrelevant. Then, in 1991, the Soviet Union went bankrupt. It turned out that Mises was right.
The central planners are flying blind. The problem is this: the public does not perceive just how blind the central planners really are. The public does not know about the theoretical problem of socialist economic calculation. But the public does know about bureaucrats. The public knows that these people are not noted for either efficiency or common sense. Most voters think that the central government has some ability to plan the economy, but if the fig leaf of statistics were ever removed, nobody would believe this anymore. This is why the fig leaf should be removed.
Without statistics, the central planners are the three monkeys of the statue: deaf, dumb, and blind.
Statistics are the Achilles' heel. Today, they are the Achilles' heel of the voters. The government uses this weakness against them. The restoration of liberty requires that the voters come to their collective senses, and that they shoot the poisoned arrow into the heels of government agencies that collect statistics directly or purchase these statistics from the free market.
To restore liberty, the budgets of government agencies must be cut. The best possible place to cut any agency's budget is to cut 100% of the budget devoted to the collection of statistics or their purchase. The statistical department of the agencies should be eliminated. The payoff from such budget cuts would be greater in terms of the restoration of liberty than any other single alteration of modern civil government.
Therefore, if I had one agency to abolish, I would not choose the Internal Revenue Service. It would be the Bureau of the Census.
It would be replaced by a new department. It would have only one function: to collect data on how many people reside in each state. This information could be used for only one purpose: to determine each state's representation in the House of Representatives. I would call this agency the Department of Pre-Gerrymandering.