What Keeps the Free Market Free?

If you want to understand the basis for freedom and the free market then you should listen to Supreme Court Justice Antonin Scalia’s Oct. 5, 2011 testimony before the Senate Judiciary Committee. According to Scalia, our freedom is secured by way of the U.S. Constitution. Unfortunately, he says, we aren’t adequately passing along the secret of the Constitution to the next generation. Scalia frequently meets with students from the best law schools and asks them, “How many of you have read the Federalist Papers?” Never more than about 5 percent raise their hands. About this, Scalia says, “That is very sad…. Here is a document that says what the Framers thought they were doing. It is such a profound exposition of political science … yet we have raised a generation of Americans who are not familiar with it.”

Scalia goes on to ask why America is a free country and what sets it apart. According to Scalia, most people will say that the Bill of Rights is the basis of our freedom. Scalia shook his head, “If you think that a Bill of Rights is what sets us apart you’re crazy. Every banana republic in the world has a Bill of Rights. Every president-for-life has a Bill of Rights. The Bill of Rights … of the Union of the Soviet Socialist Republics was much better than ours.” Scalia reminded his listeners that a Bill of Rights is merely “words on paper, what our Framers would have called a ‘parchment guarantee.’ And the reason is that the real Constitution [is a structure] … and a sound constitution has a sound structure…. The constitution of the Soviet Union did not prevent the concentration of power in one person or in one party. And when that happens the game is over….”

“The real key,” said Scalia, “is separation of powers.” The system was built for gridlock, and that’s a good thing. According to Scalia, America is not about democracy. In fact, the Framers didn’t like democracy. Checks and balances was what really mattered to them. Unchecked power could not be permitted. Such power tends toward corruption. This ancient principle was best stated by Lord Acton in 1887, who famously wrote, “Power tends to corrupt, and absolute power corrupts absolutely.” He pointed to the murderous actions of English monarchs, and one might point to a larger history in which powerful men and women have killed and plundered without being held accountable.

…

Critics of the U.S. Constitution say it is an instrument of class oppression – made by the rich to the disadvantage of the poor. They deny the reality of separate powers under the Constitution. For them, the inequalities of the market economy must be corrected by government intervention. A century ago Le Bon wrote of the difficulties involved in “reconciling Democratic equalization with natural inequalities.” As Le Bon pointed out, “Nature does not know such a thing as equality. She distributes unevenly genius, beauty, health, vigor, intelligence, and all the qualities which confer on their possessors a superiority over their fellows.” When a politician pretends to oppose the inequalities of nature, he proves to be a special kind of usurper – personifying arrogance in search of boundless power.

Logically, the establishment of universal equality would first require the establishment of a universal tyranny (a.k.a., the dictatorship of the proletariat). A formula for doing all this was worked out in the nineteenth century, and was the program of Karl Marx. Le Bon warned that socialism might indeed “establish equality for a time by rigorously eliminating all superior individuals.” He also foresaw the decline of any nation that followed this path (i.e., see the Soviet Union). Such a society would aim at eliminating all risk, speculation and initiative. These stimulants of human activity being suppressed, no progress would be possible. According to Le Bon, “Men would merely have established that equality in poverty desired by the jealousy and envy of a host of mediocre minds.”

…

It is doubtful that many people today understand the basis for our economic freedom. Many students are not properly educated today, as Justice Scalia testified. Political forces are at work aiming at a fundamental re-interpretation of the Constitution, and these forces dominate education and the media. The time may not be far off when we entirely forget the secret of our prosperity along with the secret of liberty.

Full article: What Keeps the Free Market Free? (JR Nyquist)

The Unraveling in Europe

Geopolitical expert, JR Nyquist, on the situation in Europe:

How bad is the financial situation in Europe? Greece may be about to exit the eurozone, though not according to everyone. The Economic Times of India has published an interview with Jean Lemierre, the chief negotiator for private creditors in the Greece bailout. According to Lemierre, Greece has too much to lose and “a majority of political parties are in favor of the Euro.” Yet the Boston Globe is reporting that Bundesbank President Jens Weidmann has warned Europe’s central banks not to increase their exposure to Greece on account of political uncertainty.

Is there really danger? For those who live in hope, and for those who cling to economic optimism, there is nothing to fear but fear itself. For those who understand the Leftward drift of Europe’s political economy, and the inevitable bankruptcy that implies, there is no uncertainty whatsoever. Bankruptcy is coming for everyone and Greece is merely first in line.

The optimists, of course, are putting a brave face on it. They have Lemierre’s soothing words – and these words are repeated on every side. Bloomberg News is reporting that the “euro has weathered the worst financial crisis since the Great Depression….” Of course, weathering is nothing to worry over. It makes men and currencies stronger. It is no big deal if the euro has lost value of late. It is still above the dollar, and will probably stay above the dollar. Or is there someone with authority who says that Greece will lead the way for a series of euro-defections?

…

We are approaching a situation in which economic distress engenders political unrest and revolution. If this happens in Europe it will probably happen in the United States as well. Many people will think such a prediction is farfetched, but revolutions have followed on the heels of economic distress in ancient and modern times. It is safe to say that the present economic unraveling isn’t going to stop. The reason for this may be found in the decadence of our civilization. We ourselves have degenerated from our ancestors. All the signs are present, including signs of impending calamity.

Full Article: The Unraveling in Europe (JR Nyquist)

New Threats for Old

Once upon a time the Cold War and the threat of nuclear annihilation helped to maintain a certain focus. America and its European allies were supposedly upholding capitalism and freedom against Soviet Communism. Then the Soviet Union broke apart and we got our hands on the “peace dividend.” Money could be diverted from weapons to social programs. The West was free to pursue its own socialism – leading to bankruptcy.

In 1990 a Soviet dissident named Sergei Grigoryants, who was twice imprisoned by the KGB, gave a speech in which he warned of the deceptive reality behind of the collapse of Communism. According to Grigoryants, “Perestroika was a giant project undertaken by the KGB and the Soviet leadership for over 15 years.” Such a project, undertaken by a totalitarian power, could not result in something good. Real democracy was not a Communist goal. Instead, Grigoryants suggested, Russia would be treated to a new type of totalitarianism.

“They figured that the totalitarian system could perfectly coexist with private enterprise,” Grigoryants noted. “These people are not limited by anything, and they can perfectly coexist with private property.” What we call capitalism is a necessary but insufficient condition for democracy. Capitalism, properly controlled, is not a threat to authoritarian rulers who know how to consolidate their power.  “All that is needed for authoritarian rule is the bureaucratic apparatus, army and KGB,” Grigoryants explained. The Communist rulers of Russia, he added, have figured out that a large number of competing political parties are easier to handle than a united opposition. In fact, a system with many political parties “also serves as a decorative ornament” of false democracy. It will help the regime’s daily functioning, “and will be better for absorbing Western technology and wealth.”

…

The great deception was working in 1990, and it has continued to work. “The new authoritarian regime is supported not only by tanks and KGB, but by all of us to a large extent,” Grigoryants lamented. It might be added, as well, that the capitalist world was and is willing to bend over backward to do business with Russia. They will look the other way when the regime shows its real face. And make no mistake; this new regime is more dangerous than the old. “When they give up the bloody methods of the fanatic, they develop new and more dangerous methods,” Grigoryants noted.

When everyone was cheering for the new Russia, when everyone thought democracy would triumph, Grigoryants offered a warning. “The foreign policy of the USSR after Stalin became more dynamic and dangerous and brought humanity to the verge of catastrophe – like the placement of Soviet rockets in Cuba, and worldwide explosions of terrorism and local wars,” he explained. “It is hard to grasp all the elements of the new regime, but its promise of catastrophe is clearly visible.” According to Grigoryants, the “infiltration” of Russians and other Soviet persons into Western Europe would take place on a massive scale. People brought up under the Soviet Union can be dynamic and highly effective. Yet they were raised to have a slave-type psychology. Few had the inner strength or resources to resist the regime. “We had a situation,” he explained, “when every year at least half a million people were released from the prison system. Many were stripped of ethical, moral and cultural norms and standards that are the foundation of European civilization. Now these people are coming to Western Europe. And this is a threat to European culture and civilization because it can destroy the spiritual climate in Europe.”

But the real danger comes with the West’s willingness to go along with Moscow’s lies. “The fantastic success in recent years of the disinformation campaign against the West confirms this,” Grigoryants noted.  “One may say that through the whole Soviet period Western public opinion was never, until now, such a prisoner of so many massive and unreal misperceptions.” By 1990 Moscow’s disinformation schemes had managed to unite hawks and doves, Marxists and Christian Democrats. All are prisoners, all are taken in. According to Grigoryants, “The KGB is creating multiple information firms, groups, publishing houses, radio and TV stations and countless enterprises of this nature in the Soviet Union and abroad.” Much of this is paid for with Western money. Grigoryants added, “The KGB is a unique organization in human history, with more projects outside the country than inside. The KGB is the organization that simultaneously completed the perestroika program inside the country, and the disinformation program outside. How the KGB will use [these programs] and what it is planning for the future is a burning question that should trouble all humanity. As a colleague said, we have had brown and red totalitarianism but now we will learn of a new color.”

With the death of the Soviet Union in 1991 Grogoryants’ warning was not heeded. The West ceased to fear Communism. After all, there were no more Communists. Perhaps this “fact” could be explained to the people of Venezuela, Nicaragua, South Africa and the Congo. Communism has continued to swallow countries because resistance to Communism fell away after 1991. It has to be understood that the adoption of a private property system in Russia did not signify the triumph of capitalism. It signified a new kind of danger which involves the subversion of capitalism through capitalism itself. It was the substitution of a new threat for the old.

Full article: New Threats for Old (JR Nyquist)