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Dear reader, |
Here ar Freedom Financial News, we have had government on our mind this week — democratic government in particular. |
Thus it is fitting to conclude the week with a final reflection on democracy. Here is the question we tackle today: |
Which form of government is superior — democracy — or monarchy? |
In 2001, academic Hans-Hermann Hoppe scribbled a book bearing the soaring title Democracy: The God That Failed. |
Hoppe's work was a dart leveled against that holiest of secular divinities. Hoppe's primary tort against democracy? |
It wastes. It exhausts its capital. It forever takes the short view. |
Hoppe uses the economic concept of time preference to nail his point home. |
Democracy Wants It Now |
A Jill with low time preference delays her gratification until the future. She is disciplined. She is willing to have her cake later — only after she has tended to her chores. |
Yet a Jack with high time preference orients toward present consumption. He wants his cake now — and the future can go scratching. |
Democracy, in Hoppe's regard, "wants it now." It is a spendthrift, a profligate, a child at large in a candy store. |
As the drunkard cannot see beyond the next drink… democracy cannot see past the next election. |
The central problem, says Hoppe, is that democratic leaders do not own the machinery of government. It is theirs on temporary loan. Thus the democratic politician is a mere placeholder. |
But is that not our system's cardinal virtue — that power is not permanently lodged in a single vessel? |
A rotating roster of rogues is far superior to one alone, you argue. |
Else, the American Revolution was a vast swindle, and the Fourth of July is a blackguard's holiday. |
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Let the Future Be Someone Else's Problem |
Yet because a leader under democracy does not own the government apparatus, argues Hoppe, he has no incentive to maximize its value. Instead, he tends to deplete it. His limited time horizon forces him toward immediate gratification. |
That is, he must get while the getting is there to be gotten. |
Consider the aspiring democratic official who seeks the franchise of a demanding public. |
Should he fail to gratify the crowd's clamorings, he knows the other fellow will. He will lose his election. |
And so he offers up the requisite sweets. |
If Social Security benefits must increase to sweep him into office, they will increase. Will it take more Medicare benefits, more unemployment insurance, more welfare? |
Then these you will see. |
If the national purse is thin, if the burden cannot be met from existing stocks, then let it go upon the credit card. |
Is the business sordid? Might it eventually throw the Republic into bankruptcy? |
Well, eventually is a long way off, he says. Let it fall into the next fellow's lap. I have an election to win. |
This is the office-seeker under modern democracy. |
Compare, for a moment, democratic government with a rented automobile… |
Who Ever Washed a Rental Car? |
The renter does not own the auto. He, therefore, has no regard for its long-term health. So he over-accelerates the engine. He pummels the brakes. Down its gullet, he pours the lowest-test gasoline. Would he ever check the oil? |
And who, may we inquire, has ever run a rental through a wash? |
Here Hoppe applies the theory to democratic government: |
It must be regarded as unavoidable that public-government ownership results in continual capital consumption. Instead of maintaining or even enhancing the value of the government estate, as a king would do, a president (the government's temporary caretaker or trustee) will use up as much of the government resources as quickly as possible, for what he does not consume now, he may never be able to consume… For a president, unlike for a king, moderation offers only disadvantages. |
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Hoppe speaks of a king. |
Unlike democracy, Hoppe contends, monarchy takes the long view. The monarch owns the apparatus of government. As will his heirs. Thus he naturally inclines to policies that increase the value of his property across time. |
If Social Security, Medicare and the rest begin to deplete the government's stocks, the monarch will announce a halt to them. |
"It's welfare you want, subject? I understand the church runs a charity. |
"Social Security, you seek? I suggest you begin planning early for your retirement. And remember to save against the rainy day. |
"You say you want health care? I hope you don't smoke or drink too much. And let me mention it now — sugar is a far-from-healthful substance. Besides, there are private insurers. I can refer you to several if you wish." |
Is such a system undemocratic? Certainly. |
Callous, perhaps? Well, perhaps it is. |
But is it fiscally stable? Yes. |
In brief, monarchy may be better with money than democracy. It is a superior steward of wealth — at least by this theory. |
Debt Constrains Kings |
Once again, Hoppe: |
While a king is by no means opposed to debt, he is constrained in this "natural" inclination by the fact that as the government's private owner, he and his heirs are considered personally liable for the payment of all government debts (he can literally go bankrupt, or be forced by creditors to liquidate government assets). |
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In distinct contrast, Hoppe argues, we find the democratic president: |
A presidential government caretaker is not held liable for debts incurred during his tenure of office. Rather, his debts are considered "public," to be repaid by future (equally nonliable) governments. |
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Perhaps this explains why the national debt of the United States runs to some $38.7 trillion? |
It is a capital fact beyond all dispute: |
Most democratic nations groan beneath bloated government… extortionate taxation… and Himalayan levels of debt. |
Taxes |
I cited the extortionate taxes associated with modern democracy. Here Mr. Hoppe contrasts democracy's tax rates with monarchy's tax rates: |
During the entire monarchical age until the second half of the 19th century… the tax burden rarely exceeded 5% of national product. Since then it has increased constantly. In Western Europe it stood at 15–20% of national product after World War I, and in the meantime it has risen to around 50%. |
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Perhaps our Colonial forefathers should have left old King George alone in 1775. His tax bite was so light… it failed to break the skin. |
My researches reveal that American Colonial taxation ran to about 1% of total income — 1%. |
As traitorous as it may appear, I am tempted to disinter King George's bones and throw them a much overdue parade. |
But let us entertain no more thoughts of heresy. |
The Worst System of Government… Except for the Rest |
Hoppe's book is actually no call for monarchy. As the author himself states at the onset — "I am not a monarchist and the following is not a defense of monarchy." |
His primary purpose is to diagnose an illness — not to prescribe a cure. |
Hoppe's sins against democracy are nonetheless of the mortal variety. And mainstream academics put him under excommunication for his blasphemies. |
Yet to repeat: Hoppe does not call for monarchy. Nor do I. |
Beneath my seditious motley beats the heart of an American patriot… whose blood runs true under red, white and blue. |
Besides, a king could be every inch the scoundrel as an American president. And since he faces no election, how could we possibly count upon him to say amusing and idiotic things? |
Let us, therefore, not discount the comedic value of democratic government. |
In addition, monarchy is certainly no guarantee against bankruptcy, as history records well. More than a few ne'er-do-well kings have driven their realms to rack and ruin. |
Yet I hazard it is due more to incompetent kingmanship than kingmanship itself. Regardless, it matters little. |
Hoppe's monarchic realm will never exist — not in today's age of mass democracy. |
Yet does it soften his case? |
Winston Churchill famously quipped that democracy was the worst form of government except for the rest. |
Yet upon further reflection, perhaps monarchy is the worst form of government… except for the rest. |
Brian Maher |
for Freedom Financial News |
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