- October 2, 2024
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Editor’s note: In case you missed the Election 2024 installment last week — “The republic that’s failing” — here is a summary:
We recounted how American culture from 1776 to the mid-1960s, was rooted in the early Roman culture. Both shared the virtuous traits of a nuclear family that was self-sufficient, hardworking, honest, courageous, friendly, patriotic and pious.
And when our Founding Fathers began forming the Constitution, the Roman traits and the failure of the Greeks’ democracy led the Founders to reject a democracy. They knew it would lead to tyranny.
Instead, they chose a democratic republic and a government whose powers were limited and whose foremost purpose was to protect individual rights.
But over 248 years, in spite of warnings, democratic, majority rule has replaced the Founders’ vision of a limited government. Here are the consequences:
Tyranny is upon us. Just as the Founders feared.
That is not an exaggeration.
The long, creeping shift to majority-rule democracy and the unabated expansion of our federal government has rendered devastating consequences to your individual liberty and to the United States.
Take this one example: how the value and purchasing power of your dollar has declined. Take a look at the graphic below. You should be outraged.
Unfortunately, while most Americans feel the shrunken value of their dollars, they do not realize this decline is taxation at its worst and that they do it to themselves. They elect people to Congress who have no moral qualms about taking and spending other people’s money.
In this week’s installment, we will show how American democracy predictably and inevitably has led to, in the words of the late F.A. Hayek, “how the worst get on top” in public office; how government-sanctioned redistribution of wealth increases and speeds up economic and social destruction; how democratic rule has brought on economic fascism; and how the choices voters make in this year’s presidential and congressional candidates can take us further and faster down Hayek’s “Road to Serfdom.”
Oy. What a downer. Who wants to read about all that negativity?
But as the first step of Alcoholics Anonymous states, if you want to fix the problem, you must first see and admit it. Americans must see how and admit that the evils of democracy have taken over.
You are not in control of your life the way our Founders envisioned. Americans are slaves — slaves to their government.
In Hayek’s 1944 classic, “The Road to Serfdom,” he devoted Chapter 11 to “Why the Worst Get on Top.” While his focus was on totalitarian states in the 1940s, Hayek’s analysis is just as applicable today in the United States — particularly in relation to our presidential elections.
Hayek provided three main reasons why the best elements of society are not elected. And he wrote that the principles on which the worst and “least worst” are often selected “will be almost entirely negative.”
It starts with “the lowest common denominator which unites the largest number of people.”
“In general,” Hayek said, “the higher the education and intelligence of individuals become, the more their views and tastes are differentiated and the less likely they are to agree on a particular hierarchy. It is a corollary of this that to find a high degree of uniformity and similarity of outlook, we have to descend to the regions of lower moral and intellectual standards. This does not mean that the majority of people have low moral standards; it merely means that the largest group of people whose values are very similar are the people with low standards.”
Hayek’s second negative principle is the candidate’s skill of demagoguery. “He will be able to obtain the support of all the docile and gullible, who have no strong convictions … those whose vague and imperfectly formed ideas are easily swayed and whose passions and emotions are readily aroused.”
Rush Limbaugh called these groups “low-information voters” — sheep led to the cliff.
Hayek called his third reason for why the lesser elements of society are often elected the most important. “It is almost a law of human nature that it is easier for people to agree on a negative program — on the hatred of an enemy, on the envy of those better off — than on any positive task.
“The contrast between the ‘we’ and the ‘they,’ the common fight against those outside the group, seems to be an essential ingredient in any creed which will solidly knit together a group for common action. It is consequently always employed by those who seek, not merely support of a policy, but the unreserved allegiance of huge masses,” Hayek wrote.
Surely this sounds familiar. It’s the playbook of all Republican and Democrat candidates for the presidency, governorships and Congress — the hatred of an enemy.
The late H.L. Mencken was much more succinct on why we get what we get. As he put it: “Votes are collared under democracy, not by talking sense, but by talking nonsense … The winner will be whoever promises the most…” Or, also, the one who promises not to take away people’s free stuff (welfare, subsidies and redistribution).
Austrian economist Hans-Hermann Hoppe has a much more harsh, cynical view of why we get who we get: “Popular elections make it practically impossible that any good or harmless person could ever rise to the top. Prime ministers and presidents are selected for their proven efficiency as morally uninhibited demagogues.”
You have to admit, Hayek, Mencken and Hoppe have it right.
Of course, there are exceptions. There are some good, moral politicians. But they are a small minority. Otherwise, the national debt — a moral tragedy and just one example — would not be what it is.
There is one more factor Hayek cited that leads to the wrong people being on top. No one ever confesses to it, but it’s the one that often becomes an addiction: Power.
“It is a goal in itself,” Hayek wrote. “The desire to organize social life according to a unitary plan springs largely from a desire for power. … In order to achieve their ends, collectivists must create power — power over men wielded by other men — of a magnitude never before known …”
As noted before, Hayek was speaking of totalitarians. But as all Americans have seen, the lust to hold onto power has consumed the Democratic Party elites ever since Donald Trump came down the Trump Tower escalator in 2015.
Once the wrong people get into power — and you can say this goes for the right people, too — rather than performing their chief constitutional duty of protecting individual rights, they immediately succumb to the mobs.
In Milton Friedman’s “Free to Choose,” he noted that when it comes seeking favors from the government, business is always first in line. We constantly see industries seeking a subsidy or protection at someone else’s expense. And this leads to Friedman’s Law of Laws.
An aggrieved group goes to the Capitol and pleads for relief. Lawmakers write a law with the good intention of correcting the aggravation, only to come back the next year to address the unintended consequences. That goes on and on.
This is how our democracy has come to be a machinery for the redistribution of wealth — and ultimately the deterioration of society. As economist Hoppe notes, it’s a fundamental principle of economics that you will get more of whatever you subsidize.
Subsidizing and redistribution are the taking, or confiscation, from the producers and the “haves” and giving an unearned benefit to the “have-nots.” This lowers the incentive to be a producer, and raises the incentive to be a non-producer.
“Accordingly,” Hoppe writes, “as a result of subsidizing individuals because they are poor, there will be more poverty. By subsidizing people because they are unemployed, more unemployment will result.”
With Social Security, “in subsidizing retirees out of taxes imposed on current income earners, the institution of the family — the intergenerational bond between parents, grandparents and children — is systematically weakened.”
Hoppe concludes: As a result of “subsidizing the malingerers, the careless, the alcoholics, the drug addicts, there will be more illness, malingering, alcoholism, drug addiction.” And this: “By forcing non-criminals, including the victims of crime, to pay for the imprisonment of criminals (rather than making criminals compensate their victims and pay the full cost of their apprehension and incarceration) crime will increase.”
All of that has occurred and continues. Consider this data point:
From 2020 to 2025, the mandatory spending for the U.S. Department of Health and Human Services rose 41% to $1.7 trillion, while HHS’ discretionary spending rose 50%, to $130.7 billion. Meanwhile, the combined rates of inflation and population growth in that same period was 22.7% — half the growth of welfare spending.
As redistribution and subsidizing are destructive socially, so they are economically. These policies and practices have turned our so-called capitalist economy into economic fascism. That is, lawmakers leave ownership in the hands of private individuals, but the leviathan laws and regulations coerce private individuals to cede control of their property to the government.
The United States has never been a pure laissez-faire capitalist economy. It was much closer in the beginning, but now it is a mixed mongrel of part free-market capitalism and a much larger part controlled by government fiat.
The employer is forced to collect and pay his employees’ income tax and a portion of their Social Security and Medicare. An employer is forced to pay a prescribed wage. Farmers are ordered how to grow their crops. Importers pay tariffs and must acquiesce to quotas. Landlords’ rental rates are capped. And now, one presidential candidate wants to mandate the end of gas-powered cars. And on and on.
No one describes the consequences of our mongrel mixed economy better than Ayn Rand did in 1965: “A mixed economy has no principles … to limit the power of government. The only principle of a mixed economy is that no one’s interests are safe, everyone’s interests are on a public auction block, and anything goes for anyone who can get away with it.
“Such a system — or, more precisely, anti-system — breaks up a country into an ever-growing number of enemy camps, into economic groups fighting one another for self-preservation in an indeterminate mixture of defense and offense, as the nature of such a jungle demands.
“A mixed economy is rule by pressure groups. It is an amoral, institutionalized civil war of special interests and lobbies, all fighting to seize a momentary control of the legislative machinery, to extort some special privilege at one another’s expense by an act of government — i.e. by force.”
This is economic fascism.
So let’s put all this together: The U.S. — with its cultural roots in early Roman virtues, and once the envy of the world as a limited-government, democratic republic — has transmogrified over the past 248 years into a mob-ruled democracy that no longer places individual rights before the collective.
As shown, the destructive effects of this are pervasive, spreading and relegating Americans to being slaves of their government.
This is the Road to Serfdom, or the Fall of the American Empire.
But it can be stopped and reversed. And that is clearly the choice for Americans with the November elections.
To be sure, Kamala Harris and Donald Trump are flawed in so many ways — proof of Hayek, Mencken and Hoppe’s explanations of why we get who we get. We’ll add one more: “When the worst get on top, it is because there are enough of the worst among us to put them there” — from the late Leonard Read, founder of the Foundation for Economic Education.
Yes, we put them there.
And once again, as it so often is said, voters in the 2024 presidential election are faced with making a choice of the lesser of two evils.
However, if American voters actually assessed these two choices, they might go through this checklist of questions:
Two ways to reach a conclusion on these questions would be to assess their platforms — what they say they will do — and assess their performance in office.
A comparison of the Harris and Trump platforms are posted below. The differences are vivid.
Harris’ platform is all about the usual Democrat Party approach — government force and spending. She would punish success with higher taxes on individuals (the standard “fair share” drivel); establish a police state that punishes businesses; and create laws forcing all taxpayers to foot the cost of higher minimum wages and giving more unearned benefits to millions of Americans by forgiving loans and downpayments on homes. In other words, expand the Welfare State.
She says nothing about immigration, foreign policy, the wars, military or energy.
Trump’s platform isn’t exactly a conservative manifesto. He proposes to use the government to address the issues that have occupied the public square the past three years: to bring down inflation; stop the immigration; ensure freedom of speech and religion; stop the wars in Ukraine and Israel; stop the destructiveness of gender ideology; and address two issues he harps on: pump more energy and retool the military.
Of course, neither platform says one word about reducing the national debt; nor does either provide the “how” to their litany of promises. But we know how: More government intervention.
Nevertheless, the question for voters is, if adopted, which approach would cost you less and improve your life more?
To that: Past is prelude.
On the basis of performance and competence in office, this goes to the litmus test we apply in all elections. It’s simple: If the candidate did a good job as incumbent, re-elect him or her. If he or she did a lousy job, no.
Which of the two did better?
This is the heart of the election. The answer on this and the other questions in the checklist is unequivocal: Donald Trump.
Like platforms of every national political candidate, the platforms of Donald Trump and Kamala Harris are vomiting promises.
Harris’ platform is all about the usual Democrat Party approach — government force and spending. She would punish success with higher taxes on inidividuals (the standard “fair share” drivel); establish a police state that punishes businesses; and create laws forcing all taxpayers to foot the cost of higher minimum wages and giving unearned benefits to millions of Americans by forgiving loans and downpayments on homes. In other words, expand the Welfare State.
She says nothing about foreign policy, the wars, military or energy.
Trump’s platform, on other hand, addresses the issues that have occupied the public square the past three years: inflation; the immigration crisis; freedom of speech and religion; war in Ukraine and Israel; gender ideology and men in women’s sports. And two issues he harps on: energy and the military.
Of course, neither platform says anything about the “how.” But that is always the same: more government intervention. Nor does either address the national deficit or debt.
The Washington, D.C.-based Tax Foundation analyzed the tax plans of Kamala Harris and Donald Trump.
The not-for-profit, nonpartisan tax policy organization says its research is always guided by the principles of sound tax policy — simplicity, transparency, neutrality, and stability. Here is a summary of its analysis:
On a gross basis, we estimate that Vice President Harris’s proposals would increase taxes by about $4.1 trillion from 2025 to 2034. After taking various credits and tax cuts into account, Harris would raise about $1.7 trillion over 10 years on a conventional basis, and after factoring in reduced revenue from slower economic growth, the net revenue increase comes to $642 billion.
We estimate the proposed tax changes would reduce long-run GDP by 2.0 percent, the capital stock by 3.0 percent, wages by 1.2 percent, and employment by about 786,000 full-time equivalent jobs.
We find the tax policies would raise top tax rates on corporate and individual income to among the highest in the developed world, slowing economic growth and reducing competitiveness. The tax credits and other carveouts would complicate the tax code, run more spending through the IRS, and, together with various price controls, fail to improve affordability challenges in housing and other sectors.
Former President Trump has floated several tax policy ideas. Among various (sometimes competing) ideas, he seeks to extend the expiring 2017 Tax Cuts and Jobs Act (TCJA) changes, further reduce the corporate income tax rate in some form, exempt tips and Social Security benefits from tax, impose a 10 percent or higher universal baseline tariff on all imports, and raise current tariffs on China to at least 60 percent. He has also discussed replacing the individual income tax with tariffs.
Using the Tax Foundation’s General Equilibrium Model, we estimate the major tax changes proposed by Trump would increase long-run GDP by about 1.5 percent. Permanence for the individual, estate, and business tax components of the TCJA are the largest drivers, together increasing long-run GDP by 1.1 percent; lowering the corporate tax rate to 20 percent (+0.1 percent GDP), further lowering it to 15 percent (another +0.3 percent GDP), and exempting Social Security and tips from income tax (+0.1 percent of GDP), make up the remainder. We estimate that repealing the green energy tax credits has no long-run effect on GDP because the policies are scheduled to expire.
The gross tax cuts would decrease federal tax revenue over the 10-year budget window by $6.1 trillion on a conventional basis and by $5.3 trillion on a dynamic basis. Repealing the IRA green energy tax credits would increase revenue by $921 billion, resulting in a net revenue impact from tax policies that would decrease federal tax revenue by $5.2 trillion on a conventional basis and by $4.4 trillion on a dynamic basis.
