SUPPORTING BREIF #3: PLANNED ECONOMY, Page 1
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During the 1996 presidential campaigns, I couldn't help but catch something Robert Dole stated in one of his speeches. He stated that we "must move away form a planned economy". Few people realize what constitutes a "planned economy". I personally have never heard or read the term in the media or mainstream press. Also, I care not about the political affiliation of Robert Dole, but only his statement in reference to a "planned economy." After all, the man spent around 30 years in the Congress. Surely, he must know the state of the economy.
Also, those in the press during the 1930's realized that the implementation of the New Deal was creating a planned economy. In doing historical research, I was able to find articles in The Saturday Evening Post entitled: "Stretching the Constitution" (Oct. 28, 1933); "Planned Economy" (July 7, 1934); "Stumbling Into Socialism" (July 20, 1935); "Wealth And Taxation" (Sept. 21, 1935, note: not labor and taxation); "New Government" (Feb. 1, 1936); "The Spenders" (Aug. 8, 1936); "Government Run Everything" (Oct. 3, 1936); and "Bringing Over Europe" (Nov. 21, 1936).
The reason I did this research was because I knew that the combination of legal and historical research I had already done conclusively had proven that the income tax laws were not imposed upon labor in their beginning in 1913 or shortly thereafter. There had to be a period in history when the tax laws were expanded to tax human labor. I must admit that I was surprised to find what I was looking for during Franklin Roosevelt's presidency and the New Deal. After all, we are taught in school that the New Deal was a wonderful thing. After all, is the New Deal not held up in praise in the history books we studied in school? In reality, one who takes the time to study the period, as reported by the press at the time, will find out that the New Deal was a bunch of dirty, corrupt, mean, unconstitutional, and unprincipled politics; and this is putting it mildly. At any rate, I found what I was searching for; the time period in which the income tax was expanded to include the object of human labor.
One thing I found that was quite interesting,- and at the same time, quite disturbing,- was the fact that teams of observers were sent over to Europe to examine their planned economic systems to obtain ideas on how to plan the economic system in America! This was brought out in the "Bringing Over Europe" article aforementioned. In fact, there were quite a few Germans who were brought back to the United States, made citizens, and put to work in the federal bureaucracy to help implement the planned economy. Recall that, in 1936, Germany was ruled by Hitler and the National Socialists. Interesting historical facts, aren't they?
Just why was it that those exercising political power in America at the time so interested in the Germans? Did they want to bring National Socialism to America and then place such a horrible yoke upon the necks of the people? The answer is no. You see, Germany already had a planned economy. They implemented social programs back in the 1880's under Bismarck and had added others as the years went by. They had experience in economic planning for the purposes of providing for the people a wide range of social programs. What they were looking for were people with this kind of experience, since America's planned economy was in its infancy. However, even though they may not have brought back Socialism all at once, they may have brought back its seeds. One interesting thing Herbert Hoover brought out was that "The Socialists claim they would maintain democratic institutions and all other freedoms except economic freedom." The Challenge to Liberty (Charles Scribner's Sons: N.Y., 1934), pg. 59 (emphasis added). This statement was made by former President Hoover before the income tax laws were expanded to include the object of human labor. I wonder what Mr. Hoover would think about a 30% direct tax on labor today.
"As a result, many who think them selves infinitely superior to the aberrations of naziism, and sincerely hate all its manifestations, work at the same time for ideals whose realization would lead straight to the abhorred tyranny."
The above quote comes from a slender little volume on page 4 entitled The Road to Serfdom written by an Austrian economist named Friedrich A. Hayek. Mr. Hayek's book was published by The University of Chicago Press in 1944. What it does is describe the decay of German democracy into a totalitarian state under National Socialism.
Mr. Hayek pointed out that he had been in close contact with German intellectual life while living in Austria. He witnessed first hand the slow transformation of Germany from a Democracy to a Socialist State. What did Mr. Hayek see that caused Germany to transform itself into such a state of tyranny? It was a "planned economy". So then, what is it that creates a "planned economy"? The answer is social insurance and welfare.
Social Security, Medicare, Medicaid, Workman's Compensation, Welfare for the unemployed, etc. are all forms of social insurance and welfare. Why does this create a "planned economy"? The answer is not that difficult. One must be reminded that government does not collect gains and profits from business activity, it collects taxes and borrows. Borrowing only delays further taxation for the future,- the government's gift to our children.
All of the social programs require a tremendous amount of money to fulfil the promise of social insurance and welfare to the classes of people to which the promise is made. So where does the money come from? Almost all of it comes from the laboring class of the people. The continual striving for all of these various social programs invariably reduces the laboring class into slaves of the state, for the bulk of the national income is represented by the money people are paid for their labor. This is what happened to Germany over a period of decades.
The social programs we have in America today are nothing new. In fact, they are quite old. As already noted, Germany had a variety of social programs including old age pensions, workers insurance, widows and orphan's insurance, and many other social programs long before they were introduced in America. In fact, many of the social programs we have today are in actuality, importations of Germany's social programs. One prime example is Social Security which was implemented by virtue of the Social Security Act of 1935.
It cannot be denied that many people want to cling to many of these social programs. They want to feel safe and secure by believing in all of these social programs. However, Hayek, quoting Benjamin Franklin stated: "Those who would give up essential liberty to purchase a little temporary safety deserve neither liberty nor safety." The Road to Serfdom (Univ. of Chicago Press, 1944), pg. 133.
Remember, Hayek personally witnessed what happened to the German people. Consider the following profound statement.
"Is there a greater tragedy imaginable than that, in our endeavor consciously to shape our future in accordance with high ideals, we should in fact unwittingly produce the very opposite of what we have been striving for?" ibid., pg. 5.
Hayek showed that social programs inevitably create a planned economy. All national income flows through the economic system, and to accomplish a redistribution of the national income, the government must invade the economy and use all the resources of the economy to accomplish the objectives of the social programs. Tell me, who of you would have even thought that, for example, Social Security for the old folks meant slavery for the working class? It's not a pretty picture. No one wants to hurt the retired class. As Hayek pointed out: "Yet, though the road be long, it is one on which it becomes more difficult to turn back as one advances. If in the long run we are the makers of our own fate, in the short run we are the captives of the ideas we have created. Only if we recognize the danger in time can we hope to avert it." ibid., pg. 2.
Quoting DeTocqueville, Hayek stated:
"'Democracy extends the sphere of individual freedom,' he said in 1848; 'socialism restricts it. Democracy attaches all possible value to each man; socialism makes each man a mere agent, a mere number. Democracy and socialism have nothing in common but one word: equality. But notice the difference: while democracy seeks equality in liberty, socialism seeks equality in restraint and servitude.'" ibid., pg. 25. (emphasis added)
Are we today individuals with individual rights secured by the Constitution, or are we mere numbers? Is not the labor of the working class exploited and despoiled by government today? Does not the federal government equally burden the labor of individuals throughout the entire country? As DeTocqueville so aptly put it, "socialism seeks equality in restraint and servitude."
Both DeTocqueville and Lord Acton warned the people long ago the "socialism means slavery." Were the German people, under the National Socialists, slaves?
"And now that we have seen a new form of slavery arise before our very eyes, we have so completely forgotten the warning that it scarcely occurs to us that the two things may be connected." ibid., pg. 13. (emphasis added)
The German people, under the National Socialists, were under nationalized dictator controlled labor. No individual in Germany could claim any individual right to labor. In fact, "the Labour Front even swallowed up all the employer associations, on the general principle that all persons, employers and employees alike, belonged to a single community, which was to be guided by the slogan: 'The common good before the individual good.'" Encyclopedia Britannica, 1944 ed., Vol. 10, pg. 252. In short, an individual in Germany under the National Socialists had no individual rights, for the "good of the whole" was paramount law.
It would, indeed, be wonderful to socialists if all the members of society would readily assent to their political rule, for socialists, just as the slaveholders of the South, believe themselves to be the few with the wisdom and capacity to rule the masses. However, there will always be those who disagree with their laws and try and claim their individual rights. This does not create greater security, but confusion as far as the law is concerned. And when the good of the greatest number become the touchstones of the law, individual rights are overridden.
"It may well be that Hitler has obtained his unlimited powers in a strictly constitutional manner and that whatever he does is therefore legal in the juridical sense. But who would suggest for that reason that the Rule of Law still prevails in Germany?" The Road to Serfdom, (Univ. of Chicago Press, 1944.), pg.82.
The Rule of Law suffered terribly in Germany, both during its decay as a democracy and under the totalitarian regime of the National Socialists. Have we seen a similar trend in America since the New Deal was implemented? Indeed we have. We all know that we are led to believe that we have a Constitution, and it's being torn to shreds! The Executive exercises legislative powers in violation of Article I, § 1; exercises taxing powers in violation of Article I, § 8; governs in the several States at its own pleasure in violation of Article IV, § 3; uses coercive power over labor in violation of the 13th Amendment; and diminishes the salaries of judges in violation of Article III, § 1; and this is but the tip of the iceberg. As Thomas Jefferson pointed out long ago, if the federal government expanded its powers by mere construction, then we have no Constitution.
Why has the federal government done such grave injury to the fundamental law of this nation? In a "planned economy" power must become arbitrary, in that, the "planners" must not be obstructed by fundamental rules of law. They must be a law unto themselves. Hayek stated: "It cannot tie itself down in advance to general and formal rules which prevent arbitrariness.... In the end somebody's views will have to decide whose interests are more important; and those views must become part of the law of the land, a new distinction of rank which the coercive apparatus of government imposes upon the people." ibid., pp. 73-74.
As arbitrary governmental power increases, the more individuals are compelled to obey the state in order to work. Quoting Leon Trotsky, Hayek stated:
"In a country where the sole employer is the State, opposition means death by slow starvation. The old principle: who does not work shall not eat, has been replaced by a new one: who does not obey shall not eat." ibid., pg. 119. (1937)
Hayek stated, as far as Germany was concerned: "One could write a history of the decline of the Rule of Law, the disappearance of the Rechtsstaat, in terms of the progressive introduction of these vague formulas into legislation and jurisdiction, and of the increasing arbitrariness and uncertainty of, and the consequent disrespect for, the law and the judicature, which in these circumstances could not but become an instrument of policy. It is important to point out once more in this connection that this process of the decline of the Rule of Law had been going on steadily in Germany for some time before Hitler came into power and that a policy well advanced toward totalitarianism planning had already done a great deal of the work which Hitler completed." ibid., pg. 78.
As planning extends, the legislative body vests more and more power in the executive. The legislative body of the federal government, consisting of only a very small fraction of the people, cannot direct a system of a planned economy. Today, the legislative body that constitutes the federal government numbers less that 600 members. How could so few individuals plan the economic lives of millions of people? Inevitably, the powers to direct a planned economy must be delegated to others. Hence, the continual delegation and/or abdication of powers to the executive arm. The executive becomes a disguised dictatorship while the legislative body is reduced to a "talking shop".
"The inability of democratic assemblies to carry out what seems to be a clear mandate of the people will inevitably cause dissatisfaction with democratic institutions. Parliaments come to be regarded as ineffective 'talking shops,' unable or incompetent to carry out the tasks for which they have been chosen. The conviction grows that if efficient planning is to be done, the direction must be taken 'out of politics' and placed in the hands of experts- permanent officials or independent autonomous bodies." ibid., pg. 62.
In short, the legislative body, unable to accomplish the task before them, must abdicate and/or delegate power to others. Hence the expansion of executive powers. Before Hitler came to power, so much power had already been relinquished by the German legislature to the executive arm, that Hitler's foundation was already laid. All he had to do was saddle up the horse and ride. In fact, all of the massive bureaucracy we have in America today represents executive power. The FDA, FAA, FCC, EPA, USDA and IRS are but a few examples of this. When you fight these agencies in court, you are not fighting Congress but the Executive.