Disregarding the Constitution

In Article One, Section Eight of the U.S. Constitution are listed the things that Congress is allowed to do. In Article One, Section Nine are listed the things Congress is not allowed to do (more prohibitions were added in the Bill of Rights several years later). At the time of ratification, it was generally understood that the congress could not do anything except what was found in section eight, and in so doing could not do anything in section nine. Nowadays, for the most part, it's understood to mean that congress can do anything it wants, except what is in section nine.

"For the most part" because the House of Representatives just passed a law that is clearly in violation of "No Bill of Attainder or ex post facto Law shall be passed"—the new law on bonuses. They passed a law (the bailout) and later found out that they didn't like a provision of that law (maybe because none of them read the thing), so they're ex post facto fining people who made entirely legal decisions based on the law at the time. There's no conceptual difference between this and the government passing a law raising the 2007 tax rates and tossing you in jail if you don't pay.

This country was meant to be based on rule of law and the government was meant to be restrained, but in practice that's not the case any more. If you're in a minority that gets vilified by the press/government, you're going down, regardless of whether or not you did anything wrong. In this case, it's the people who agreed to risk their careers by sticking with shaky financial institutions in return for large retention bonuses. In the past it was crazy wackos or families who just wanted to be left alone.

This is what happens when you no longer have a working Constitution and instead have plain old democracy—two wolves and a sheep voting on what's for dinner.

It's not my fault!

This isn't a financial blog, but bear with me for a bit. From the Wall Street Journal comes the following tale of woe:

After watching her account drop 44% last year, Kristine Gardner, a 35-year-old information-technology project manager in Longview, Wash., feels no sense of security. "There's just no guarantee that when you're ready to retire you're going to have the money," she says. "You either put it in a money market which pays 1%, which isn't enough to retire, or you expose yourself to huge market risk and you can lose half your retirement in one year."

A lot of people are feeling the same way Kristine is feeling. They've heard the financial media tell them how to get rich by investing in real estate or the stock market or whatever. They've had financial advisers tell them where to put their money to get the best return. They've thought, "I want to retire in 2015, so I'll put my entire savings into this Target Retirement 2015 mutual fund."

And sizable portions of their money have vanished into thin air, just like that.

Now, they're searching for the culprit, the evil thief who stole nearly half of their retirement savings and who is forcing them to work an extra five years. They're blaming the evil bank CEOs for not lending money. They're blaming the evil president for "deregulating" the financial industry. They're blaming their evil financial advisers, who should have foreseen all this. They're blaming the evil government for not adequately protecting them.

But in the midst of all this blaming, whose fault is it, really? The bankers? The president? The financial advisers? The government?

Nope. They, individually, are the ones who deserve the blame. They made the decision to invest or not to invest. They made the decision where to invest. They made the decision of who to trust. They made free choices, under no coercion, and are now suffering as a direct result of those choices.

Harsh? Yes. Unfair? No. Look, Kristine, I'm sorry you lost money in the stock market. I'm sorry that you didn't realize that the stock market doesn't automatically bounce back up every time it goes down by 10%. I'm sorry you thought "it'll never happen to me." I'm sorry you weren't aware of the risks. But who made the decision to not spend 10-20 hours doing research and reading a good investing book, like The Bogleheads' Guide to Investing or The Four Pillars of Investing? You did. Who made the decision to not evaluate your risk tolerance? You did. Who made the decision to not read and understand your mutual fund prospectus? You did.

Everything you needed to know was out there; all you needed to do was invest a little money and time to learn about it. You would have found out that market crashes are rather common events. You would have found out that, historically, bonds have been less risky than stocks. You would have discovered that there are a lot of scary scenarios that could happen in the future, and you would have learned that there are different ways to prepare for them.

You would have learned that life is risk. You can't avoid it. All you can do is mitigate it and handle it. You must decide, consciously or unconsciously, which bad scenarios you are going to prepare for and how you will prepare for them. If you fail to prepare for the bad scenario that actually befalls you, that's not the government's fault, it's not your parents' fault, it's not your kindergarten teacher's fault. It's your fault. You are responsible for yourself. If you make a bad decision, you are not entitled to demand help from those who made good decisions. Learn from your mistake, make better decisions next time, and teach others not to make your mistake.

It's impossible to be justified in having a sense of security, because if you're alive, there's no such thing as security, and if you're dead, there's no such thing as a sense. Complete security is impossible. All you can do, all anyone can do, is evaluate which risks are most dangerous, make what you believe are appropriate preparations, and then live your life. If you evaluated poorly or just got unlucky, that's unfortunate, but you made the choice, and you must live with the consequences.

Sorry Kristine, but the bottom line is that you're an adult—put on your big-girl pants and take responsibility for your own decisions.

Religion.gov

It's a sad fact that civil libertarians and social conservatives (in particular the Religious Right) have a love-hate relationship. Love, because both tend to support free markets and gun rights. Hate, because they tend to disagree on gay rights, free speech, and the relationship between church and state. And it's sad, because when they fight, they end up with someone they both loathe (i.e. John McCain) as their presidential nominee.

Both claim to represent what the Founding Fathers had in mind when they founded the country. The libertarians focus on how we shook off the chains of tyranny, set down a strong Bill of Rights, and enjoyed a weak federal government. The social conservatives grudgingly accept this, but are quick to point out that the phrase "separation of church and state" doesn't appear in the constitution, and that even the Founding Fathers sometimes passed laws that were blatantly pro-Christianity.

Both have their facts right, but what did America look like, really, during those early years? Was it really a staunchly "Christian nation" as the social conservatives like to think? Or was it a society of nominal Christians and deists who were really only concerned with liberty?

There's a lot more out there that I need to read before I can take a strong position on this issue, but Tocqueville's widely respected work, Democracy in America, seems to point to a middle ground. He says that America was a nation of Christian morality, and in some sense, Christianity itself:

There are countless sects in the United States. Each reveres the Creator in a different fashion, but all agree about man's duties to his fellow man. Each worships God in its own way, but all preach the same morality in God's name. [....] All sects in the United States are encompassed within the overarching unity of Christianity, and Christian morality is the same everywhere.

But can it be possible that each person in a liberal society devotes himself to the same religion? Few are the examples of free societies consisting of an entire citizenry passionate about serving God in a unified way. Without political or cultural coercion, disinterest and disagreement is inevitable, but with coercion of some type, unity, or the appearance of unity, can be maintained:

Some Anglo-Americans profess Christian dogmas because they believe them, others because they are afraid lest they seem not to believe them. Christianity therefore reigns without impediment, by universal consent.

Since that time, obviously, things have changed. Charles Darwin made it respectable for smart people to question the existence of God, and other religions have expanded sufficiently to make pluralism the new status quo. Christian morality is no longer widely accepted on many issues, including divorce, abortion, and homosexuality. Only some of the general parts of Christian morality remain, such as prohibitions of theft and contract-breaking, and positive virtues such as personal responsibility and caring for the poor. Even these, however, exist not because people are concerned about obeying God but primarily to grease social interaction.

Mores, as Tocqueville calls "the moral and intellectual state of a people," have changed, and that's not insignificant, because:

Laws are always shaky unless they are supported by mores. Mores are the only robust and durable power in any nation.

Indeed, Tocqueville fears that a weakening of religion makes political liberty impossible:

When a people's religion is destroyed, doubt takes hold the highest regions of the intellect and half paralyzes all the others. [...] When no authority exists in matters of religion, any more than in political matters, men soon become frightened in the face of unlimited independence. With everything in a perpetual state of agitation, they become anxious and fatigued. With the world of the intellect in universal flux, they want everything in the material realm, at least, to be firm and stable, and, unable to resume their former beliefs, they subject themselves to a master.

Hold on to your seats:

I doubt that man can ever tolerate both complete religious independence and total political liberty, and I am inclined to think that if he has no faith, he must serve, and if he is free, he must believe.

"Man" here refers to "mankind," so while Tocqueville is defending the utilitarian value of religion in a people, he isn't saying that atheists can't handle political liberty. His point is relevant—today, people are bombarded by pluralistic messages, making doubt toward religion almost inevitable. And indeed, as Christianity has lost acceptance, the people's demands for government-provided security have grown louder. That may be mere correlation and not causation, but I'm putting my money with Tocqueville on this one.

But even if the decline of Christianity is at least partially responsible for growing government, the Church hasn't effectively responded. Seeing its decline both in numbers and cultural significance, it has ignored Tocqueville's wise advice:

Religions should remain discreetly within their proper limits and not seek to venture beyond them, for if they try to extend their power beyond religious matters, they run the risk of not being believed about anything.

Instead, religious leaders have thoroughly involved themselves in politics, some of them spending more time denouncing political positions than teaching the Christian morality with which they allegedly conflict. Now, loud-mouths like Jesse Jackson, Jerry Falwell, Jeremy Wright, and Pat Robertson are the faces of the church—not a pretty sight. And while they do have small spheres of influence, they are intensely polarizing, and largely disrespected by the population at large. Indeed, whenever they open their mouths, they "run the risk of not being believed about anything."

The church no longer understands "that its empire is more secure when it reigns through its own intrinsic strength and dominates the hearts of men without assistance"; instead, it attempts to reign by stepping into the public sphere. It ought to return to its role of being the "safeguard of mores" (a task at which it has failed miserably of late), and stop attempting to join forces with the State (as seen in Bush's faith-based social programs initiative). Joining forces with the government is a road that ends in disaster:

Whenever a religion joins forces with political powers of any kind, the alliance is bound to be onerous for religion. It has no need of their help to live, and in serving them it may die.

The Church hasn't learned this yet, but civil libertarians have known for a long time that government shouldn't be your first pick for a teammate. Social conservatives, and especially the Religious Right, need to reconsider their tactics, and here's a hint—positively impacting individuals is more effective than trying to get the government to treat you "fairly."

It will take a long time before Americans again confound Christianity and liberty, but ultimately, that's what the Religious Right ought to have as their goal.

Liberalism, defined

A commenter brought up the issue of vocabulary--after all, the meaning of the word "liberal" in this blog's title does not match today's typical definition of the word. Instead, I've taken a page from Milton Friedman and identified myself with the great classical liberals of past centuries. The distinction between the two types of liberalism is described by Friedman in Capitalism and Freedom:

The nineteenth-century liberal regarded an extension of freedom as the most effective way to promote welfare and equality; the twentieth century liberal regards welfare and equality as either prerequisites of or alternatives to freedom. In the name of welfare and equality, the twentieth-century liberal has come to favor a revival of the very policies of state intervention and paternalism against which classical liberalism fought.

And again:

Jealous of liberty, and hence fearful of centralized power, whether in governmental or private hands, the nineteenth-century liberal favored political decentralization. Committed to action and confident of the beneficence of power so long as it is in the hands of a government ostensibly controlled by the electorate, the twentieth-century liberal favors centralized government.

Both classical liberals and modern-day liberals claim to be on the side of "liberty," but as their goals are diametrically opposed to each other, this isn't possible without playing with the meaning of the word. In The Road to Serfdom, F. A. Hayek explains that the difference between liberals comes from their different definitions of "liberty" and "freedom":

To the great apostles of political freedom [the classical liberals] the word had meant freedom from coercion, freedom from the arbitrary power of other men, release from the ties which left the individual no choice but obedience to the orders of a superior to whom he was attached. The new freedom promised [that of modern-day liberals], however, was to be freedom from necessity, release from the compulsion of the circumstances which inevitably limit the range of choice of all of us, although for some very much more than for others. Before man could be truly free, the "despotism of physical want" had to be broken, the "restraints of the economic system" relaxed.

Freedom in this sense is, of course, merely another name for power or wealth.

Indeed, it is the modern-day liberals who have perverted the English language, first redefining "liberty" to mean "wealth," and then claiming to be "liberal" when in fact they support making people equally wealthy (through methods completely impossible in systems where individual liberty exists).

Classical liberals value equality, but not in the same way, as Friedman explains:

The [classical] liberal will therefore distinguish sharply between equality of rights and equality of opportunity, on the one hand, and material equality or equality of outcome on the other. He may welcome the fact that a free society in fact tends toward greater material equality than any other yet tried. But he will regard this as a desirable by-product of a free society, not its major justification.

Tocqueville, in Democracy in America, argues that the struggle between individual liberty and equality plagues all democratic peoples, and that our natural tendency is unfortunately to prefer equality:

Democratic peoples have a natural taste for liberty. Left to themselves, they seek it out, love it, and suffer if deprived of it. For equality, however, they feel an ardent, insatiable, eternal, invincible passion. They want equality in liberty, and if they cannot have it, they want it still in slavery. They will suffer poverty, servitude, and barbarity, but they will not suffer aristocracy.

This "ardent, insatiable, eternal, invincible passion" must be conquered. History has demonstrated the superiority of true liberalism in bringing wealth, political freedom, and happiness to mankind, and has likewise shown that collectivism, by any name (including today's "liberalism"), results in poverty and tyranny.

Some say that Confucius said that "when words lose their meaning, people lose their liberty." Whether he did or not, surely this is doubly true when the word "liberal" itself loses its meaning. Modern-day collectivists have bastardized the term and assigned it to themselves, hoping to give credibility to their debunked system of political thought. On this blog, however, I refuse to allow such destruction of language to go unchecked, and defend liberty--both the word and the ideal.

Morality requires liberty

A movement whose main promise is the relief from responsibility cannot but be antimoral in its effect, however lofty the ideals to which it owes its birth.

Experience has made [liberal Germans] wiser and sadder men: they have learned that neither good intentions nor efficiency of organization can preserve decency in a system in which personal freedom and individual responsibility are destroyed.

These little passages, combined with the rest of the excellent 14th chapter of The Road to Serfdom by F. A. Hayek, have changed my way of thinking of the relation between liberty and morality. I've never been able to resolve the conflict in my head between liberal thought and social conservatism, and there are still areas of conflict, but it's now clear to me that liberalism is the foundation for morality—without it, morality cannot exist.

I've recognized for a long time that collectivism (in all its incarnations--big government, welfare state, socialism, communism, fascism, etc.) is A Bad Thing, since it must use coercion to achieve arbitrary ends. Forcing individuals to pay for the healthcare, retirement, vocational training, and recreation of others is folly. Worse, as Hayek points out elsewhere, collectivism breeds arbitrary rule, making tyranny even more unbearable. In the U.S., we see unchecked government bodies creating rules and regulations that impact the lives of millions of Americans, without direct oversight from elected officials, and it's worse in most other countries.

I've also known, especially since reading Democracy in America, that collectivism kills personal responsibility, because it leads people to rely on government to solve problems and take care of them:

What good does it do me, after all, if an ever-watchful authority keeps an eye out to ensure that my pleasures will be tranquil and races ahead of me to ward off all danger, sparing me the need even to think about such things, if that authority, even as it removes the smallest thorns from my path, is also absolute master of my liberty and my life; if it monopolizes vitality and existence to such a degree that when it languishes, everything around it must also languish; when it sleeps, everything must also sleep; and when it dies, everything must also perish?

Indeed, Hayek agrees:

The virtues which are less esteemed and practiced now--independence, self-reliance, and the willingness to bear risks, the readiness to back one's conviction against a majority, and the willingness to voluntary cooperation with one's neighbors--are essentially those on which the working of an individualist society rests.

But while I've known this, I never made the connection that Hayek makes in the quotes at the top of this post: that as collectivism kills individual freedom and responsibility, it simultaneously kills morality. How? Because morality requires a choice. It's not "moral" for me to pay the medical bills of a stranger if I'm forced to by an IRS agent with the power to put me in jail. It's only a good deed if I make a donation voluntarily. All government coercion is like that--it eliminates the morality of every decision that it touches. As Hayek says, "only when we ourselves are responsible for our own interests and are free to sacrifice them has our decision moral value."

Eliminating the morality in a decision isn't always a bad thing, however, because some people have no qualms about being immoral to the extent that they endanger civilization. Thus, it's essential to have a government capable of enforcing laws against theft and murder, for example. But when moral choices are increasingly replaced by coercion, the result is a society of robots, the polar opposite of the type of men God created us to be. "Man’s chief end is to glorify God, and to enjoy him forever," but without the power of moral choice, glorifying and enjoying God becomes impossible except in punishment and death at the hands of the state. I can't glorify God with my money if the government takes it all away from me. I can't glorify God with my talents if the government forces me into an occupation outside my skill set, through excessive regulation, price floors, or price ceilings. The overall effect of this government intervention may not be ultimately bad (though it almost certainly will be), but it is still antimoral, because it forbade me the chance to be moral with the gifts God gave me.

Thus, the fight for liberty is more than a rebellious teenager's fight for the freedom to do what he wants without authority telling him what to do. Without individual liberty, it is impossible to glorify God. That's why liberty must be defended.