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Austro-Libertarian Blog Posts

The Hoppean Stamp of Approval

Hans Hoppe is out with a new miniature essay, titled “On Getting Libertarian Right.” Libertarianism as a movement, he says, has been corrupted by the same disease plaguing Western Civilization in general: cultural leftism. There are those, the popular branches, operating under the phrase libertarian but who misconstrue our beloved doctrine into an egalitarian mess.

Libertarianism, a political theory, is strictly related to the question of the proper use of coercion in society. However, there are those who want to blur the lines of its boundaries and extend its meaning into an acceptance and appreciation for all sorts of culturally leftist trends and habits. This is mistake number one.

After we correct mistake number one, by distinguishing between libertarianism as a political theory and libertarian strategy (how to achieve our goals), we must move on to a proper– and “realistic” path forward. Here, Hoppe challenges the idea that a libertarian order can be accomplished only if we embrace the present social movement against traditional western values. Moreover, in radical dissent from the social status quo, advocates secession, nullification, decentralization, and a grand opposition to global government in our time.

He writes:

In light of these observations, it should become rather obvious why the left-libertarian program does not and cannot achieve the supposedly libertarian end of a State-less social order, but, to the contrary, will lead to a further expansion of monopolistic State powers.

“Free” mass immigration from the non-Western world, “multiculturalism,” “affirmative action,” “non-discrimination,” the propagation of “openness” to “diversity” and “alternative life-styles,” to “feminism” and “gay- and gender-ism,” and of “anti-authoritarianism,” – they all are and must be seen as means to further diminish whatever little discretionary, discriminatory and exclusionary powers still remain in Western societies in the hands of non-monopolistic social authorities and hierarchies of social authority, and to correspondingly expand and increase the powers centralized, concentrated and monopolized in the hands of the State.

He finishes his essay with a handful of Hoppe-endorsed sites, promoting libertarianism as it ought to be (bold added):

For more than two decades, following in Rothbard’s footsteps, I have tried to get libertarianism right again – most prominently with my Democracy – The God That Failed (2001) – in complementing libertarian theory with social realism (history, psychology and sociology), and to rescue libertarianism from left-libertarian flakes and fakes and repair the public misperception that they are and represent what libertarianism is all about. The reaction to these endeavors – in particular Rothbard’s and mine – from the side of left-libertarians has been furious. This notwithstanding, however, they were instrumental in that today, among self-described libertarians, left-libertarianism is in retreat, while the influence of realistic-right libertarianism has steadily grown.

Throughout the entire period, the Ludwig von Mises Institute – mises.org – and Lew Rockwell – lewrockwell.com – have stood out as bulwarks against the infiltration of libertarianism by leftist thought. As well, Ilana Mercer has been an early critic of left-libertarianism with her paleo-libertarian blog – barelyablog.com. More recently, outlets for explicitly and decidedly anti-leftist libertarian thought have proliferated. There is “Bionic Mosquito” with his blog –bionicmosquito.blogspot.com. There is Sean Gabb’s and now Keir Martland’s British Ludwig von Mises Centre – mises.uk.org. There is [C.]Jay Engel’s blog – austrolibertarian.com. There is Matthew Reece’s site – zerothposition.com – and Chase Rachels’ radicalcapitalist.org. There is Robert Taylor’s excellent and highly important book Reactionary Liberty: The Libertarian Counter-Revolution (2016). And there is Stefan Molyneux with his show on freedomainradio.com and Tom Woods with his show on tomwoods.com.

I am honored and flattered that a hero of mine, the preeminent Rothbardian of our time and an Austro-Libertarian par excellence, has noticed and endorsed our site. What a motivation for increased output!

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Crime is in Terms of the Individual

Crimes are those actions which have as their victims actual individual human beings. There is no abstract “crime against society” as the Progressives want you to think; nor is there a “crime against the state” as fascists want you to think. Rather, a crime is something which actually aggresses the person or property of one’s neighbor.

In this way, actual justice has to do with crimes and there is no such thing as “social justice,” much to the disdain of the socialist or liberal Christian. Any crime which aggresses hundreds of people is a “crime against many individuals,” not a “social crime.” Society has no rights, for society is not a thing in itself. We must speak in terms of the individual, lest collectivism creep in unannounced.

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Watching Iran

The US and Israeli governments have long wanted an excuse to militarily confront Iran, but it’s been a difficult situation. Now that there seems to be a popular uprising, a sudden collection of intense protests which even include some deaths, the Iranian government is under pressure to make zero mistakes. Any misstep could initiate foreign intervention. Of course, these protests should be held with suspicion.

The US and Israel love to initiate and support activities like this, stirring up trouble as an excuse for explicit intervention.

For instance, the hugely important Ukraine coup was the work of the West.

Already, Netanyahu has jumped to the support of the protesters. Even Hillary is throwing her support into the ring– a scary sign if there ever was one:

Whether this is authentic or not remains to be seen. Whatever the case, Iranian intervention seems to loom. Daniel Larison of TAC offers some advice:

The key thing that U.S. politicians and policymakers need to keep in mind is that internal protests in Iran are not about us, and they are not an “opportunity” for us to exploit. The U.S. should publicly say as little as possible about the protests except to condemn the use of force against peaceful protesters, and it should not otherwise attempt to insert itself into the situation or interfere. There is not much that the U.S. could practically do in any case, and none of it would be helpful or constructive. The Trump administration in particular has no credibility with Iranians, and any expressions of support it offers are likely both unwanted by and harmful to the intended recipients.

The administration cannot ban Iranians from the U.S. at the start of the year, and then suddenly pretend that it respects them and supports their aspirations at the end. It will be a serious error if the Trump administration concludes that the U.S. needs to “make up” for Obama’s handling of the Green movement protests, but after eight years of hawkish myth-making they might do exactly that. It would be far wiser and better for the U.S. and the Iranian people if our government allowed events in Iran to unfold without comment from Washington.

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Anti-German Propaganda and the Roots of Western Messianism

The title of this post certainly promises more than the post delivers. But after my previous excerpt on the matter of Churchill, I was motivated to follow it up with a few miscellaneous thoughts I’ve had as of recent.

First, Hoppe mentioned in his celebration of Murray Rothbard earlier this year, that the two of them were Germanophiles– lovers of the culture, music, mannerisms, and contributions of the German people. While many likely dismissed this as just an irrelevant memory of Hoppe’s, it quite intrigued me. In the post-Hitler west, we live in the context of the fruits of anti-German sentiments. The entire push for WWII, both in the US and British world, was partly built on an anti-German narrative. Hence Albert Jay Nock’s opposition to America’s involvement being titled Myth of a Guilty Nation.

Germany was seen as the cause of strife and conflict. Germany was blamed for WWI, the German people were considered backward and unenlightened, unappreciative of the glories of a Progressive view of the world. This was Progressive propaganda in its infancy. Today, we are told all sorts of terrible things about the south, conservatives, individualists, and social traditionalists. Anyone who dissents from Anglo-American variety therapeutic statism is labelled a bigot, and et cetera.

So it was the same during the early twentieth century, with the Germans as the great enemy of Progress. Hitler, of course, was the result of humiliating an entire people group. People like to compare the so-called and over-hyped “alt-right” as a return to Hitlerism. If this is true, which I think is quite apocalyptic, perhaps we might consider what happens when you throw stones at beehives. Hitlerism was not a random situation; he was an effect (a terrible effect), from a cause.

In any case, socialism in the Anglo-sphere came about due to Fabianism. Fabianism was socialism for the west— it appealed to the wealthy elite, the progressive and leftist culture of media, of the University. It pompously looked down on unEnlightened, non-diverse, and homogenous cultures of places like Germany. The allied victory was an achievement for Fabian Progressivism, both economically and culturally (it shouldn’t need to be said that I’m therefore somehow a supporter of the Central Powers). Our own socialization trend, today, is of the Fabian style.

The anti-German sentiment, of course, never went away upon the victory of the Anglo-Americans. As I described (quoting Philip Bagus) recently, Germanophobia was shamelessly leveraged at the dawn of the Euro as a new currency:

German politicians tried to convince their constituency with an absurd argument: They claimed that the Euro was necessary for maintaining peace in Europe. Former president Richard von Weizsäcker wrote that a political union implied an established monetary union, and that it would be necessary to maintain peace, seeing as Germany’s central position in Europe had led to two World Wars. Social democrat Günther Verheugen, in an outburst of arrogance and paternalism typical of the political class, claimed in a speech before the German parliament: “A strong, united Germany can easily—as history teaches—become a danger for itself and others.” Both men had forgotten that after the unification, Germany was not as big as it had been before World War II. Moreover, they did not acknowledge that the situation was quite different in other ways. Militarily, Germany was vastly inferior to France and Great Britain, and was still occupied by foreign troops. And after the war the allies had reeducated the Germans in the direction of socialism, progressivism and pacifism—to ward off any military opposition.

The implicit blaming of Germany for World War II and making gains as a result was a tactic that the political class had often used. Now the implicit argument was that because of World War II and because of Auschwitz in particular, Germany had to give up the Deutschmark as a step toward political union. Here were paternalism and a culture of guilt at their best.

Thus, if you prefer localism over globalism, aren’t head over heels on Progressive cultural ideals, and desire a military that defends the homeland over one that travels the world looking to “help,” you are guilty of various forms of bigotry— just as such guilt was thrown under the feet of Germans for so long.

Now don’t get me wrong, I’m by no means an Anglo-phobe. I happen to appreciate, in several ways, British history and influence (minus any examples of statism). Of course, a good Hoppean, I prefer the monarchy and the tradition of private government over the necessarily statist and socialized Parliament which, being a democratic form of government, is always bound to make the State more influential in the world. One might even argue that without the rise of democratic government, the monarchical ties between Britain and Germany would not have been severely damaged and the two nations might have remained at peace during the worst era of statism the world has ever known.

It’s interesting how decivilization follows democratization. Just as Hoppe said it would.

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Churchill as Man of the State

There’s been a lot of Churchill lately. I’ve been watching The Crown on Netflix and of course post-WWII Churchill is a key character. There’s also the new film Darkest Hour, which is about the heroism of early Churchill, during the Hitler years. In preparation for going to see the latter movie, I’ve opened the great Pat Buchanan book to refresh my mind of the context. And I just read the late Ralph Raico’s dissident take on the man, who he described as follows:

When, in a very few years, the pundits start to pontificate on the great question: “Who was the Man of the Century?” there is little doubt that they will reach virtually instant consensus. Inevitably, the answer will be: Winston Churchill. Indeed, Professor Harry Jaffa has already informed us that Churchill was not only the Man of the Twentieth Century, but the Man of Many Centuries.

In a way, Churchill as Man of the Century will be appropriate. This has been the century of the State — of the rise and hypertrophic growth of the welfare-warfare state — and Churchill was from first to last a Man of the State, of the welfare state and of the warfare state. War, of course, was his lifelong passion; and, as an admiring historian has written: “Among his other claims to fame, Winston Churchill ranks as one of the founders of the welfare state.” Thus, while Churchill never had a principle he did not in the end betray, this does not mean that there was no slant to his actions, no systematic bias. There was, and that bias was towards lowering the barriers to state power.

[…]

Yet, in truth, Churchill never cared a great deal about domestic affairs, even welfarism, except as a means of attaining and keeping office. What he loved was power, and the opportunities power provided to live a life of drama and struggle and endless war.

There is a way of looking at Winston Churchill that is very tempting: that he was a deeply flawed creature, who was summoned at a critical moment to do battle with a uniquely appalling evil, and whose very flaws contributed to a glorious victory — in a way, like Merlin, in C.S. Lewis’s great Christian novel, That Hideous Strength.169 Such a judgment would, I believe, be superficial. A candid examination of his career, I suggest, yields a different conclusion: that, when all is said and done, Winston Churchill was a Man of Blood and a politico without principle, whose apotheosis serves to corrupt every standard of honesty and morality in politics and history.

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Skousen on the Tom Woods Show– The Bull Market in Stocks

A quick thought on Tom‘s Skousen podcast today. Skousen expressed dissent from the general tendency amongst Austrians to always be fearing the next financial bust, instead arguing that people ought to invest in the markets. He argues that the reason the US stock markets constantly do well year over year is because we are still a relatively capitalistic economy with enough freedom to encourage capital accumulation and profits, reflected in rising asset prices.
 
This is the type of thinking that I wanted to disagree with in my recent piece at Mises.org. I dont think this is why the markets seem to be forever on an upward trajectory. I think that the result of the nature of the Fed’s monetary expansion post 1980s is why the stock market seems to go up in perpetuity (with a handful of hiccups along the way of course). It has nothing to do with “free enterprise.”
 
I agree with Skousen that Austrians shouldn’t be so bear-market-oriented, but the reason for this is because of the power of the Fed and its Open Market Operations, not capitalism. I’ve been talking about this in depth with Robert Blumen, and it’s remarkable that not very many Austrians see the market as a result of the shift in the way government deficits have been funded since the Volcker years.
 
If anyone is interested in exploring this phenomenon in further detail, see the links in my article, but more importantly, David Stockman describes this transition in The Great Deformation in the section on the T-Bill Standard.
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Hoppe on Milton Friedman and the Drift Toward Statism

From Natural Elites, Intellectuals, and the State:

This seemingly unstoppable drift toward statism is illustrated by the fate of the so-called Chicago School: Milton Friedman, his predecessors, and his followers. In the 1930s and 1940s, the Chicago School was still considered left-fringe, and justly so, considering that Friedman, for instance, advocated a central bank and paper money instead of a gold standard. He wholeheartedly endorsed the principle of the welfare state with his proposal of a guaranteed minimum income (negative income tax) on which he could not set a limit. He advocated a progressive income tax to achieve his explicitly egalitarian goals (and he personally helped implement the withholding tax). Friedman endorsed the idea that the State could impose taxes to fund the production of all goods that had a positive neighborhood effect or which he thought would have such an effect. This implies, of course, that there is almost nothing that the state can not tax-fund!

In addition, Friedman and his followers were proponents of the shallowest of all shallow philosophies: ethical and epistemological relativism. There is no such thing as ultimate moral truths and all of our factual, empirical knowledge is at best only hypothetically true. Yet they never doubted that there must be a state, and that the state must be democratic.

Today, half a century later, the Chicago-Friedman school, without having essentially changed any of its positions, is regarded as right-wing and free-market. Indeed, the school defines the borderline of respectable opinion on the political Right, which only extremists cross. Such is the magnitude of the change in public opinion that public employees have brought about.

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The Very Best H.L Mencken Quotes

Mencken was one of the most important social critics and columnists in American history. His prose and ability to craft remarkable sentences are now of legend.  He was well known for covering the Scopes trial (it is popularly known as the “monkey trial” –this was Mencken’s doing). Here is Murray Rothbard’s essay on Mencken: “H.L. Mencken: The Joyous Libertarian.”

Here are my favorite quotes of Mencken’s:

  • “A professional politician is a professionally dishonorable man. In order to get anywhere near high office he has to make so many compromises and submit to so many humiliations that he becomes indistinguishable from a streetwalker.”urgetosavemencken1
  • “Democracy is an art of governing the circus from the monkey’s cage.”
  • “The men the American people admire most extravagantly are the most daring liars; the men they detest most violently are those who try to tell them the truth.”
  • “The most dangerous man, to any government, is the man who is able to think things out for himself… Almost inevitably, he comes to the conclusion that the government he lives under is dishonest, insane, and intolerable.”
  • “The urge to save humanity is almost always a false front for the urge to rule.”
  • “I believe that it is better to be free than to be not free, even when the former is dangerous and the latter safe. I believe that the finest qualities of man can flourish only in free air– that progress made under the shadow of the policeman’s club is also progress, and of no permanent value. I believe that any man who takes the liberty of another into his keeping is bound to become a tyrant, and that any man who yields up his liberty, in however slight measure, is bound to become a slave.”
  • “The truth, indeed, is something that mankind, for some mysterious reason, instinctively dislikes. Every man who tries to tell it is unpopular, and even when, by the sheer strength of his case, he prevails, he is put down as a scoundrel.”
  • “When a candidate for public office faces the voters he does not face men of sense; he faces a mob of men whose chief distinguishing mark is the fact that they are quite incapable of weighing ideas, or even of comprehending any save the most elemental — men whose whole thinking is done in terms of emotion, and whose dominant emotion is dread of what they cannot understand. So confronted, the candidate must either bark with the pack or be lost… All the odds are on the man who is, intrinsically, the most devious and mediocre….”
  • “As democracy is perfected, the office represents, more and more closely, the inner soul of the people. We move toward a lofty ideal. On some great and glorious day the plain folks of the land will reach their heart’s desire at last, and the White House will be adorned by a downright moron.”
  • “The aim of public education is not to spread enlightenment at all; it is simply to reduce as many individuals as possible to the same safe level, to breed a standard citizenry, to put down dissent and originality.”mencken-dressed-up1024x675
  • “The typical lawmaker of today is a man wholly devoid of principle — a mere counter in a grotesque and knavish game. If the right pressure could be applied to him, he would be cheerfully in favor of polygamy, astrology or cannibalism.”
  • “It is [a politician’s] business to get and hold his job at all costs. If he can hold it by lying, he will hold it by lying; if lying peters out, he will try to hold it by embracing new truths. His ear is ever close to the ground.”
  • “Public opinion, in its raw state, gushes out in the immemorial form of the mob’s fear. It is piped into central factories, and there it is flavoured and coloured and put into cans.”
  • “I believe that all government is evil, and that trying to improve it is largely a waste of time.”
  • “The state… consists of a gang of men exactly like you and me. They have, taking one with another, no special talent for the business of government; they have only a talent for getting and holding office. Their principal device to that end is to search out groups who pant and pine for something they can’t get, and to promise to give it to them. Nine times out of ten that promise is worth nothing. The tenth time it is made good by looting ‘A’ to satisfy ‘B’. In other words, [the state] is a broker in pillage, and every election is a sort of advanced auction on stolen goods.”
  • “Democracy is a pathetic belief in the collective wisdom of individual ignorance.”
  • “The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by an endless series of hobgoblins.”
  • “The notion that a radical is one who hates his country is naive and usually idiotic. He is, more likely, one who likes his country more than the rest of us, and is thus more disturbed than the rest of us when he sees it debauched. He is not a bad citizen turning to crime; he is a good citizen driven to despair.”
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FINALLY! The History of Economic Thought, part 2

So much of my understanding of economics has come directly from digging into the details of its development over time. It’s amazing what a better grasp of something one can receive by learning the roots of the theory, the context from which is sprung, and the debates our intellectual forefathers had with their opponents. Studying the history of political and economic thought is just as rewarding as studying more modern and systematic works on the subjects themselves.

Gerard Casey is the master of the history of political thought, and his recent book on the matter was based on his series of lectures from Tom Woods’ Liberty Classroom.

I was ecstatic to discover yesterday that Bob Murphy’s overview of the history of economic thought was just released this week. The first part of this series has been out for a while and I have profited tremendously from it. The second part I have yet to go through, but from the list of topics, it looks amazing. If you decide that you need this– and in all honesty, you do– it would be awesome if you entered the site to purchase at my link: austrolibertarian.com/woods 

And what better time to do it?? Besides Murphy’s new course, they are also having a sale right now so you can get access at a discounted price. Excellent!

Check out the lecture list for parts 1 and 2.

 

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Property theory proves its usefulness in another field: Computer programming

Property exists, according to Hans-Hermann Hoppe, to avoid conflicts over scarce resources. Property allows human beings to avoid constantly fighting each other over the same plot of land, the same cow, or the same hammer. Someone is the owner, and there’s a protocol for the legitimate transfer of title from one person to the next. A simple rule almost everyone can comprehend orders our behavior to prevent most conflicts before they start. I don’t take Sue’s hammer because it’s hers.

In computer programming, scarce resources are also a potential source of conflict. A program is constantly appropriating portions of memory (called allocation), doing work with the data it stores there, and then telling the system it’s done using that portion (called deallocation). If those steps aren’t taken carefully, different programs, or even parts of the same program, will try to use the same location in memory, creating a lot of problems.

Normally, either the programmer is responsible for anticipating these conflicts and addressing them explicitly, or there is an extra process running alongside the program, called a garbage collector, that performs the “deallocation” job so the programmer doesn’t have to remember to do it. The latter is convenient, but it comes at the price of a slower program.

In the human world these approaches would be akin to either memorizing a script that tells me what to do in all situations, or having a third person monitor me while I act on impulse, constantly updating Sue about the status of her hammer. Property works great for humans because a simple, universal rule takes a lot less energy than trying to monitor or anticipate every possible problem.

The relatively new Rust programming language manages to capitalize on this ancient human innovation. In a sense, it thinks of memory as property. It enforces a policy the creators call ownership. Details are available here. To make a long story short, only one part of your program at a time is allowed to read and write to a particular piece of memory. Title to that data is passed around to the other parts of your program as needed, but your code will not be allowed to run in the first place if one part is instructed to use data without owning it first. To the astonishment of some in the computing world, this prevents a lot of common mistakes without imposing a cost on speed. To an Austrian, it is no surprise that this approach solves a number of hard problems.

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The Rulers in a Propertarian Society

If a ruler is one who has the legal claim to setting the “rules” of a given jurisdiction, then logically the property owner is a ruler over all that he owns.  And further, if the ideal libertarian society can be described as a “Propertarian” society, that is, a society made up only of privately-owned property as opposed to “public” property, then it is essentially ruled by proper owners creating their rules and voluntary interacting with each other.  The number of rulers in this society is not zero, in fact, it is hundreds or thousands or however big the society is! Ironically then, it is democracy and every other State structure which limits the number of rulers.

The point here is that there most certainly are rules in a capitalistic and strict property-rights order.  The anarcho-capitalists should always remember this. It’s just that there is no state-originated rules. Thats the difference.

Recently, I read a similar statement by Mises Canada’s Editor in Chief James E. Miller, who wrote:

The issue is not necessarily the functionality of a hypothetical anarcho-capitalist society, but of definition. The etymology of anarchy is simple: the ancient Greek meaning is simply “without rulers.” Are so-called “rulers” necessary for capitalism? Yes and no, depending on one’s general understanding.

Private property itself needs rulers – that is the owners of the property themselves. The same goes for hierarchy. If a rentier owns land that people agree to live on, there is a clear distinction between who’s in charge.

Glad to see this agreement.

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H.L. Mencken on Envy and Democracy

Mencken:

No doubt my distaste for democracy as a political theory is, like every other human prejudice, due to an inner lack-to a defect that is a good deal less in the theory than in myself. In this case it is very probably my incapacity for envy.

That emotion, or weakness, or whatever you choose to call it, is quite absent from my make-up; where it ought to be there is a vacuum. In the face of another man’s good fortune I am as inert as a curb broker before Johann Sebastian Bach. It gives me neither pleasure or distress. The fact, for example, that John D. Rockefeller had more money than I have is as uninteresting to me as the fact that he believed in total immersion and wore detachable cuffs. And the fact that some half-anonymous ass or other has been elected President of the United States, or appointed a professor at Harvard, or married to a rich wife, or even to a beautiful and amiable one: this fact is as meaningless to me as the latest piece of bogus news from eastern Europe.

The reason for this does not lie in any native nobility or acquired virtue. Far from it, indeed. It lies in the accidental circumstance that the business I pursue in the world seldom brings me into very active competition with other men. I have, of course, rivals but they do not rival me directly and exactly, as one delicatessen dealer or or clergyman or lawyer or politician rivals another.

It is only rarely that their success costs me anything, and even then the fact is usually concealed. I have always had enough money to meet my modest needs and have always found it easy to get more than I actually want. A skeptic as to all ideas, including especially my own, I have never suffered a pang when the ideas of some other imbecile prevailed. […]

And there is only one sound argument for democracy, and that is the argument that it is a crime for any man to hold himself out as better than other men, and, above all, a most heinous offense for him to prove it.

What I admire most in any man is a serene spirit, a steady freedom from moral indignation, an all-embracing tolerance-in short, what is commonly called good sportsmanship. Such a man is not to be mistaken for one who shirks the hard knocks of life. On the contrary, he is frequently an eager gladiator, vastly enjoying opposition. But when he fights, he fights in the manner of a gentleman fighting a duel, not in that of a longshoreman cleaning out a waterfront saloon. That is to say, he carefully guards his amour propre by assuming that his opponent is as decent a man he is, and just as honest-and perhaps, after all, right. Such an attitude is palpably impossible to a democrat. His distinguishing mark is the fact that he always attacks his opponents, not only with all arms, but also with snorts and objurgations-that he is always filled with moral indignation-that he is incapable of imaging honor in an antagonist, and hence incapable of honor himself.

Such fellows I do not like. I do not share their emotion. I cannot understand their indignation, their choler. In particular, I can’t fathom their envy.

And so I am against them.

Taken from A Blind Spot from the Smart Set, 1920, pp.43-44

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Hans-Hermann Hoppe on the Long-Term Capital Effects of Taxation

From The Economics and Ethics of Private Property

Taxation is a coercive, non-contractual transfer of definite physical assets (nowadays mostly, but not exclusively money), and the value embodied in them, from a person or group of persons who first held these assets and who could have derived an income from further holding them, to another, who now possesses them and now derives an income from so doing. How did these assets come into the hands of their original owners? Ruling out that this was the outcome of another previous act of taxation, and noting that only those assets can be taxed that have not yet been consumed or whose value has not yet been exhausted through acts of consumption (a tax-gatherer does not take away another man’s garbage but rather his still valuable assets!), three and only three possibilities exist: They come into one’s possession either by one’s having perceived certain nature-given goods as scarce and having actively brought them into one’s possession before anyone else had seen and done so; by having produced them by means of one’s labor out of such previously appropriated goods; or through voluntary, contractual acquisition from a previous appropriator or producer. Only through these types of activities is one capable of acquiring and increasing valuable—and hence taxable—assets. Acts of original appropriation turn something which no one had previously perceived as a possible source of income into an income-providing asset; acts of production are by their very nature aimed at the transformation of a less valuable asset into a more valuable one; and every contractual exchange concerns the change and redirection of specific assets from the hands of those who value their possession less to those who value them more.

From this it follows that any form of taxation implies a reduction of income a person can expect to receive from original appropriation, from production, or from contracting. Since these activities require the employment of scarce means—at least time and the use of one’s body—which could be used for consumption and/or leisure, the opportunity cost of performing them is raised. The marginal utility of appropriating, producing, and contracting is decreased, and the marginal utility of consumption and leisure increased. Accordingly, there will be a tendency to shift out of the former roles and into the latter ones.

Thus, by coercively transferring valuable, not yet consumed assets from their producers (in the wider sense of the term including appropriators and contractors) to people who have not produced them, taxation reduces producers’ present income and their presently possible level of consumption. Moreover, it reduces the present incentive for future production of valuable assets and thereby also lowers future income and the future level of available consumption. Taxation is not just a punishment of consumption without any effect on productive efforts; it is also an assault on production as the only means of providing for and possibly increasing future income and consumption expenditure. By lowering the present value associated with future-directed, value-productive efforts, taxation raises the effective rate of time preference, i.e., the rate of originary interest and, accordingly, leads to a shortening of the period of production and provision and so exerts an inexorable influence of pushing mankind into the direction of an existence of living from hand to mouth. Just increase taxation enough, and you will have mankind reduced to the level of barbaric animal beasts.

Hans-Hermann Hoppe. The Economics and Ethics of Private Property (Kindle Locations 438-463). Ludwig von Mises Institute. Kindle Edition.

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