Democracy – The God That Failed; by Hans Herman Hoppe (book review)

Democracy – The God that Failed is the most bare knuckles libertarian / anarcho-capitalist book I have read. The premise is that democracy is bad for liberty – worse, in fact, than monarchy. This is a shocking claim of course (one that would probably cause the author, Hans Herman Hoppe, to be shouted off both the Rachel Maddow show and the Sean Hannity show) but the underlying critical assertion is compelling: monarchy is privately owned government while democracy is publicly owned. So says Hoppe, “…by freeing up entry into government, everyone is permitted to openly express his desire for other men’s property.” Hoppe is not suggesting we return to hereditary dictatorship (neither am I). He is simply reporting his observation that historically people have been more free, or government more restricted, under monarchical rule than under democratic rule. Example after example of empirical evidence is provided to support his claim.

The historical inflection point was World War I. A major result of the war was the extinguishment of the last of Europe’s great monarchies. Significantly, they were extinguished by the armies of democratically elected governments. From that point forward, “privately owned” monarchical government was de-legitimized, and displaced by the age of democracy. World War I also marked the first time that a war was fought over ideology, which henceforth legitimized the notion of fighting wars to spread democracy. (To be sure, Hoppe also places great importance on the French Revolution and the outcome of the War for Southern Independence in America.)

Public ownership of government encourages high time preference. (I want something now vs. I will wait for a better something later.) A politician who is elected to a 4-year term has high time preference. He has no incentive to preserve and protect assets for a future generation. Nor are the assets his own to begin with. So the bias is always toward plundering current assets to deliver perceived value right now.

Because the assets he plunders, by definition, belong to actual property owners, there is a strong incentive to expand the voting franchise to include non-property owners. Obviously non-property owners will be more inclined toward such plunder than the property owners themselves. Hoppe fills several  pages with historical examples of expansion of the voting franchise to include non-property owners and/or younger people.

As a result, the voting franchise, which was originally interested in the singular pursuit of protecting their own property rights (which are inextricably tied to individual rights), has gradually shifted its interest toward confiscation and reallocation of wealth. Thus empowering government to behave in exact opposition to its original professed intent (to protect property rights).

The confiscated wealth comes in the familiar form of social welfare (unemployment insurance, public health insurance, schools, regulations, and so on) along with national defense. As we know, the government generates demand for these “public goods“ by also generating perceived crises – everything from climate to race to foreign threats to pandemics.

That politicians intentionally generate crises, comes as no surprise. The surprise, again, is that the situation grows worse under a democracy than under a monarchy. A king, being a property owner himself (the wealthiest among them) has no interest (or at least much less interest) in extending authority over property rights (via the vote) to non-property owners. Hoppe repeatedly points out that monarchies also tend toward abuse in the form of higher taxes, etc., but on a far smaller scale than what has happened under democracy. Indeed, according to his research, social welfare did not exist under monarchical rule and wars were fought according to strict protocol, which limited the scale and destruction compared to the all out war of the democratic age.

Hoppe advocates for 100% free trade, but not for free immigration in the way that we think of it. Free trade works. Free immigration does not. Free trade works because there are always two parties, voluntarily engaged on each side of every transaction. The seller, who lives in Germany, agrees to receive money from the buyer, who lives in the US, in exchange for shipping a product. In the case of immigration, the immigrant is a willing volunteer, but the  people of the destination state are not. (They may agree or disagree with the presence of immigrants. The point is, when government controls immigration policy, citizens have no choice in the matter.) The solution would be some sort of sponsorship model, where a property owning citizen would willingly receive the immigrant and take responsibility for that immigrant’s actions. Presumably the sponsor would be incentivized to help the immigrant become a property owning citizen as quickly as possible. Which would consequently, motivate the citizen to sponsor only a certain caliber of immigrant.

Also, under a true free trade model, there would be much less incentive for immigration in the first place. Tariffs, and other trade barriers, which force citizens to economically favor domestically produced goods over imported goods reduce opportunity in other countries – and create the incentive to emigrate.

There are a few paragraphs on public health insurance. Hoppe invokes the familiar economic truth that if something is subsidized you will get more of it. In the case of public health, the services of doctors and nurses are subsidized, and therefore we will see more unhealthy behavior, leading to more sickness, and more laziness.

The simple-minded surely have attacked Hoppe as racist. He is not a racist (or, more precisely, we see no evidence that he is racist), but has no quarrel with those who racially discriminate when it comes to their own private dominion. If a man prefers no Germans to enter his home or business, then he is entitled to enforce his preference. (Hoppe, German by birth, repeatedly uses Germans in his hypothetical examples of property owner-based racial discrimination.)  He never condones aggression or violence. In this regard, his stance is against thought crime. In another regard, Hoppe ridicules the idea of forced racial integration, whether in the form of busing school children or unmitigated free immigration policy. His conclusion is that people co-exist most easily with those similar to themselves, and — here is the sacrilege — they should be allowed to do so, and — more sacrilege — multiculturalism is a ridiculous notion and a destructive force.

The solution to all this, according to Hoppe, is to delegitimize democracy – essentially by choosing to ignore the government – and ultimately embrace secession. (Quick aside… In my best case scenario we all stop voting and all stop paying taxes. Can they really come after everyone?)

Back to Hoppe. He does not advocate a return to monarchy. Ultimately, he advocates for what he calls, “the natural order.” In a natural order society, there would be no such thing as public ownership. Everything of value would be somebody’s property. Hoppe describes, in detail, what this would look like, including a full chapter slaying the sacred cow of state-monopolized security. Security, he asserts, would be the natural province of insurance companies. Under today’s model, apprehended criminals are made to pay their debt to the government rather than to the victim. Under a model of competing private insurance carriers, the victim would be compensated – either by way of extracting payment from the apprehended criminal, or through payout on a claim. Because they would obviously prefer not to pay on a claim, insurance companies would be incentivized to catch the criminals who damaged their clients’ property, and would therefore employ a security force. Furthermore, they would prefer their clients need not file a claim in the first place; and would, therefore encourage their clients to bear arms and take other measures to self-protect.

Could Hoppe be accused of presenting an An-Cap paradise that has no chance of ever becoming reality? Perhaps. But so what? At minimum, I believe he is theoretically sound. And keep in mind, unlike other visions of paradise, he is not attempting to architect a new societal structure. He is simply saying that if left alone, people would naturally organize into the structure he sees. He is a predictor, not a prescriber.

Democracy – The God that Failed is very thoroughly foot-noted and includes ample references to the work of other well-known libertarian thinkers, most notably and most frequently Mises and Rothbard. Unsurprisingly, this is not a breezy weekly magazine-type read. It is rigorous and admittedly, sometimes a little dry and repetitive. (Though the book builds toward a single, contiguous narrative, each chapter is meant to serve as a standalone essay.) But don’t let that stop you. This is a highly rewarding read. Hoppe is uncompromising and unrelenting in defending the principles he lays out in the beginning. He makes no exceptions.

Not even for the US Constitution. Thus, I leave you with this. Hoppe:  “The American Constitution must be recognized for what it is – an error. As the declaration of independence noted, government is supposed to protect life, property, and the pursuit of happiness. Yet in granting government the power to tax and legislate without consent, the constitution cannot possibly assure this goal but is instead the very instrument for invading and destroying the rights to life, liberty, and the pursuit of happiness. It is absurd to believe that an agency which may tax without consent can be a property protector. Likewise, it is absurd to believe that an agency with legislative powers can preserve law and order. Rather it must be recognized that the Constitution is itself unconstitutional, i.e., incompatible with the very doctrine of natural human rights that inspired the American revolution.”

If you like tax cuts for the rich, you are not the crazy one

Another Republican is in the White House and another tax cut has been passed. Predictably, all the usual opposition to the tax cuts is being heard from all the usual suspects. This is a tax cut for the rich. This will only serve to widen the income gap. The federal debt will grow. The rich will get richer on the backs of the working poor. Arguing against this stuff is exhausting. No amount of factual evidence shuts down the true believers, nor does a fact-based argument even compel them to argue back in kind – that is with their own set of facts. Their arguments are not arguments at all, but emotional pandering. It’s fear mongering and anger stoking. They should forget their contempt for Trump for just a moment, and consider just how ridiculous their premise is: today, I take 20% of your money and that is good (although 25% would be better). Tomorrow, I will take only 15%, and this will be dangerous and destructive for you.

But somehow they are winning in the popular opinion polls. I believe this is because they make simple, uncomplicated statements, which (if not the complete story) are actually true. Meantime we who favor tax cuts respond with complicated lessons in economics, going hoarse trying to explain how corporate tax breaks actually benefit Joe Sixpack because on a macro level, a majority of that tax savings will be invested in ways that will lower prices, raise salaries, and increase choices. Eventually. On average. Over time. I’m exhausted already. And simultaneously I’m fighting the urge to dive into the economic arguments – like a Jedi Knight resisting the urge to give into his anger. Explaining all that complicated economic stuff is falling right into their trap. We are attempting to combat five word headlines with 5000 word essays.

High taxers, when shouting down a proposed tax cut, focus solely on one fact, which is that the immediate effect of a tax cut is for higher earners to benefit more (in dollars) than lower earners. They are not lying. Tax cuts indeed go disproportionately to the rich. The income gap indeed does widen for an instant after a tax cut. Notice, most of these politicians, like Chuck Schumer, who make these statements, make the statement and then shut up. They don’t explain why tax cuts for the rich are bad, they just let those words float across the airwaves and then peoples’ imaginations do the rest. They are like old-school horror film directors who can scare us without ever actually showing us the monster. Except for that in the case of income tax reductions, there really is no monster, on screen or off.

So what do we do? Well… this might be hard, but we need to remember that we are not the crazy ones. We are not saying that letting me keep my money, or you keep yours, is dangerous to our own well being. They are! Don’t ever forget that. Keep this simple. Remember that all taxation is confiscation. But for heaven’s sake don’t say that out loud. People need to figure out for themselves that taxes are ultimately taken at the point of a gun. They need to go through their own transformation. We cannot transform people but we can attempt to make them face the choice to transform. We can do this by giving them a small taste of their own medicine – meaning put them on the defensive with a simple question and never stop asking it. When we hear a tax cut is bad, ask them to prove it. Why should we always have to be the ones wrapping ourselves around the axle? Let them do it. What high theatre that would be! Tax cut for the poor is bad because it is a smaller cut than that for the rich. Prove it. Tax cut for the rich is bad. Prove it. Tax cut for corporations is bad. Prove it. Tax cut for high earners is bad. Prove it. Prove it. Prove it. Show the evidence. Play out your theory without leaps of logic. Let’s see if you really got game!

We won’t persuade all of them. Some will refuse to be persuaded. But as we persist, as we stay on message, as we let them take a shot at explaining something that cannot be explained, we will start to persuade more than we do today. Eventually. On average. Over time.