Guest Post: What Democracy?

Submitted by James Miller of the Ludwig von Mises Institute of Canada

What Democracy?

A sacred cow is usually defined as that which is regarded as far too valuable or prestigious to even think about altering.  Any proposition that comes close to complete abolition is met with astounding ridicule.  In the realm of legalized harlotry (politics), careers are made out of defending sacred cows no matter how expensive, socially corroding, or intentionally dishonest they are.  Compulsory public education is one of the first to come to mind.  The various vote buying schemes that masquerade as a welfare safety net are another.  Whenever the political class or its apologists in the media find themselves in a bind trying to validate the government’s latest plot to fill its coffers or grind already-undermined liberties further into the curb, they often resort to evoking the greatest sacred cow of all: democracy.

Starting from the earliest years of basic comprehension, children in the Western world are propagandized into believing that without democracy, society would descend into unlivable chaos.  Schools, both public and private, perpetuate the fantasy to millions of forced attendees every year.  They are told that the government which has a hand in practically anything they encounter was formed with only the best intentions.  In America especially, the representative democracy constructed out of the collective genius of the country’s founding fathers is lauded as a gift to humanity.  And though its influence is waning in recent years, the Constitution served as a model for developing nation-states around the globe.  Back in 1987, Time magazine estimated that of the 170 countries that existed at the time, “more than 160 have written charters modeled directly or indirectly on the U.S. version.”

The Constitution is presented as the miraculous creation of divine individuals when, in fact, it was nothing of the sort.  Like any attempt to centralize state power, the Constitution was formed out of the economic desires of its framers.  Thomas Jefferson, John Adams, Thomas Paine, and Henry Adams weren’t even present at the Philadelphia Convention as it was drafted.  Many Americans at the time were suspicious at what ended up being a coup to toss out the decentralized Articles of Confederation in return for an institution powerful enough to be co-opted for the purposes of rent seeking.  As Albert Jay Nock noted:

The Constitution had been laid down under unacceptable auspices; its history had been that of a coup d’état.

It had been drafted, in the first place, by men representing special economic interests. Four-fifths of them were public creditors, one-third were land speculators, and one-fifth represented interests in shipping, manufacturing, and merchandising. Most of them were lawyers. Not one of them represented the interest of production

when the Constitution was promulgated, similar economic interests in the several states had laid hold of it and pushed it through to ratification in the state conventions as a minority measure, often — indeed, in the majority of cases — by methods that had obvious intent to defeat the popular will. Moreover, and most disturbing fact of all, the administration of government under the Constitution remained wholly in the hands of the men who had devised the document, or who had been leaders in the movement for ratification in the several states.

Unvarnished history like this is never taught in public schools and is hardly known by the public at large.  There is a reason for this of course.  When the rose tinted glasses are removed, the state appears as the organized criminal racket it really is.  Those entrusted as “representatives of the people” are really looking out for themselves and their financial well-being.  As government grows and regulatory bureaucracies flourish in size and scope, law formation becomes not just a job for the elected legislature but also of the executive enforcers.  In other words, the same people tasked with enforcing the law are also given discretion over what rules they wish to impose.  These unelected bureaucrats, in a constant effort to validate their positions of authority, will never seek to cut the tax money that is their lifeblood.  Instead, they will spend the whole of their budget every year as they live out their desire to have meaningful employment through crushing freedom.  The people’s will is sold off to ensure a new bloc of state-privileged voters.

Leviathan’s growth by bureaucracy has been occurring all over the Western world but it is accelerating at a worrisome rate in the United States and Europe.  In the 2012 edition of the Competitive Enterprise Institute’s 10,000 Commandments which provides a type of snapshot of the American regulatory state, it is documented that federal agencies were responsible for the implementation of 3,807 rules.  These economically destructive regulations were set in stone despite only 81 bills passing Congress and being signed by the President.  Representative democracy has been replaced by the rule of the unaccountable.  In an environment where the power players are shielded from public backlash, the opportunity for cronyism, corruption, and back room deals increases tenfold.  Revolving door politics becomes the norm as the regulators who write the laws end up being employed at the same firms that avoid their punitive nature.

Across the pond in Europe, unelected technocrats continue to try and save the floundering currency union.  Austerity measures, which amount to more tax increases than cuts in government spending, have been imposed by bureaucrats who have little to no identification with the people they are levied against.  It is centralized planning on continent-wide scale.  The person with the most sway in the crisis has been European Central Bank President Mario Draghi.  Though Draghi only has one vote in the body that controls the printing press, he is seen as its mouthpiece.  Last week as the Olympic Games kicked off, he infamously made the off-the-cuff remark on doing “whatever it takes to preserve the euro”.  The remark, whether Draghi admits it or not, carried with it the bought-and-sold notion that the printing presses would soon be put on overdrive in an effort to quell the crisis by buying sovereign debt.  Stocks in both the U.S. and Europe rallied on the news but sunk soon after the plan was revealed as a farce.  There was no trick up his sleeve; Draghi’s remark was pure posturing.

However the event was highly revealing of the reliance the global economy has on a constant injection of cheap, fiduciary currency.  Under central banking, consumer preferences which normally guide the free market’s structure of production take a backseat to the whims of the operators of the printing press.  Financial markets begin centering their operations around fresh batches of newly created digital currency.  Fractional reserve banking becomes even more emboldened.  Because money isn’t neutral and always enters the economy at specific points, the first receivers are able to spend and invest before overall prices are affected.  The last receivers must deal with prices rising prices as their wages stagnate; thus lowering their real income.

The free market economy is analogous to democracy because consumers vote with their wallets on who produces the best product.  Under central banking, few individuals are granted the monopolistic license to produce that which facilitates all transactions.   There is nothing democratic about central banking in practice; it is a system of top-down governance based on the fantastical idea that there exists an ideal amount of money that only a few intellectually gifted economists can determine.  With one hundred years of operation under its belt, all the central banker profession has learned through the various recessions which plagued the 20th century is that money printing appears to solve everything.

From the beginning of the Eurozone crisis, anyone not quenching their thirst with the Kool-Aid of good, honest government recognized that the large banks were the true beneficiaries of the various bailout schemes.  Because commercial banks in Northern Europe are exposed to sovereign debt, it is in their best interest for default to be avoided even if it means receiving interest payments in a devaluing currency.  The people of the PIIGS (Portugal, Italy, Ireland, Greece, and Spain) are told their governments are being bailed out as a benefit to them.  What’s really happening is the bankers are pulling the reigns of an unscrupulous political class looking to ultimately cash out by helping their friends in high places.  The rhetoric of preserving democracy by EU officials amounts to nothing but a childish ploy when contrasted with the brazen, systematic exploitation the state embodies.

To the ruling establishment, the approval of “we the people” matters insomuch that they don’t recognize their oppressors.  Democracy is a charade to convince the masses that they are in charge of their future when they are servants to authoritarianism.  Economist and philosopher Hans-Herman Hoppe was spot on when he recognized that

Democracy has nothing to do with freedom. Democracy is a soft variant of communism, and rarely in the history of ideas has it been taken for anything else.

Rather than give the people a voice, democracy allows for the choking of life by men and women of state authority.  When Occupy protestors were chanting “this is what democracy looks like” last fall, they wrongly saw the power of government as the best means to alleviate poverty.  What modern day democracy really looks like is endless bailouts, special privileges, and imperial warfare all paid for on the back of the common man.

None of this is to suggest that a transition to real democracy is the answer.  The popular adage of democracy being “two wolves and lamb voting on what’s for lunch” is undeniably accurate.  A system where one group of people can vote its hands into another’s pockets is not economically sustainable.  Democracy’s pitting of individuals against each other leads to moral degeneration and impairs capital accumulation.  It is no panacea for the rottenness that follows from centers of power.  True human liberty with respect to property rights is the only foundation from which civilization can grow and thrive.