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Book of the Century (So Far, At Least)

On Hans-Hermann Hoppe's Democracy - The God That Failed

by James Leroy Wilson
May 8, 2003

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Book of the Century (So Far, At Least)_James Leroy Wilson-On Hans-Hermann Hoppe's <i>Democracy - The God That Failed</i> Adam Smith, the first modern economist, was considered in his day (the late 1700's) a "moral philosopher." His colleague David Hume was also a philosopher who studied economics. Perhaps the most famous economist is John Stuart Mill, who's known more for his liberal political philosophy than for his contributions to classical economics.

The relationship between economics and politics seem inextricably linked. The discipline was originally called "political economy;" Smith's groundbreaking work is called The Wealth of Nations. Every economist to this day can't help but be a political advocate of some sort. Perhaps the two most famous economists of the 20th century are John Maynard Keynes and Milton Friedman. Keynes seduced three generations of politicians into believing that government spending cures recessions. Friedman began his adovcacy of school vouchers, earned income tax credits, and privatizing social security half a century ago.

But one school of thought divorced the study of economics from politics - with extraordinary ramifications for the political process. The Austrian School studies economics by studying individual action based on individual value judgments. As if each person had their own interests, beliefs, values, and wills, none of which can be controlled by others. As if each person treated their own bodies and the fruits of their own labor as their own property. That is, as if each person acted as if they were self-owning and self-governing.

From this premise, prosperity derived from social cooperation and the division of labor is explained, as well as the costs of violent intervention, whether through the actions of individual violent criminals or through an organized violence monopoly, called government. Austrian economists are still marginalized because, instead of basing the study of economics on what can make governments richer, it studies instead what can make individuals wealthier. And concludes that government is the chief obstacle to individual and social prosperity. Since most of acadamia is dependent on government payrolls, grants, other largesse of one sort or another, holding an Austrian view is definitely "politically incorrect."

Landmark books from the 20th Century by Austrian School economists include Friedrich Hayek's Road to Serfdom, Ludwig von Mises's Human Action and Murray Rothbard's Man, Economy, and State. Hayek's book was a bestseller and he eventually won the Nobel prize; the latter two books are mammoth treatises which were instrumental in developing modern libertarian thought, but perhaps intimidating to the lay reader.

But our new millennium has brought forth a book that may have as many or more far-reaching effects. Building on the ideas of Mises and Rothbard, the UNLV economics professor Hans-Hermann Hoppe produced Democracy, the God that Failed: The Economics and Politics of Monarchy, Democracy, and Natural Order (New Brunswick, NJ: Transaction Publishers, 2001). And, at 292 pages, it is very accessible to the intelligent lay reader.

Hoppe does not defend or promote monarchy in this book. But he does compare the incentives for Kings with the incentives for democratically elected rulers. Kings rule for life, and their property (that is, their exclusive monopoly of force and taxation powers) goes to an heir. They may be ambitious, but are unlikely to try to destroy capital in their wars of conquest. Extermination and destruction do not increase their wealth. And because the very monopoly of violence and taxation is itself unjust, Kings had an incentive to keep taxes low.

In a demcracy, however, the elected leaders have control of the state temporarily, but unlike Kings, they do not have ownership of the "capital stock." Democratically-elected politicians get into office, do whatever they can to make themselves beloved and rich, reward their friends, punish their enemies, and then do whatever they can to get re-elected. Hoppe points out that farsightedness is virtually impossible for politicans in a democracy. Politicians are more likely to not care so much about the size of the national debt the next generation is burdened with - those will be other people's problems.

Likewise, bribing the citizenry with promises of greater economic security and physical safety, have the effect of taking away from wealth-producers in the form of higher taxes, in order to pay for government pensions, other welfare programs, and a larger public payroll, while also forcing them to spend money to comply with greater governmental regulations - everything from wheelchair-accessible doors to larger legal fees.

This has a corrupting effect on wealth-producers, who now have less time and money to create new wealth because they're too busy complying with and paying taxes to the government. Businesses have the incentive to make as much money as quickly as possible, because you never know when government might raise taxes or impose even more expensive regulations. The incentives for fraud, tax evasion, and some perhaps legal but less than ethical practices are greater, the more governments intervene. Corporate greed is a product of government policy, because governments deny businesses and entrpreneurs the advantage of far-sighted business planning. Make as much as you can now, because the government might take it from you in the future. That ethic is a product of democracy. The politics of envy encourage the practices of greed.

And it also has a corrupting effect on the less able, the less talented, the less intelligent, and any of those who can not generate as much wealth. They are bribed by politicians into thinking that the government is their advocate. That government should supply an old-age pension. That their children will be well-educated in the public schools. That a legally-imposed minimum wage should support a family of four, five, or more with just one income based on a forty-hour work week, (which is completely at odds with anything remotely resembling real life on earth). That the unemployed are entitled to government assistance.

The more government promises, the less people have to do for themselves and their loved ones. The "Nanny State" doesn't do it justice, this is the "Parent State." Democracy inspires the masses to act as if they're in suspended adolescence, enjoying the benefits of wealth and consumption that are far greater than their own actual labors. People think they can afford to abandon relationships they feel are unsatisfactory, or put off looking for a new job. They are encouraged by the government to spend and spend, whereas sound economic policy is based on capital growth through savings.

Hoppe sees in this the inevitible seeds of cultural decline. For example: if you don't "need" children, because the government will take care of you in your old age anyway, why have children? Why be married, or why stay married? But then we will find that the burden of old-age programs supported by fewer and fewer workers, because of lower and lower birthrates, will send modern, supposedly free, supposedly market-oriented democracies on the same path as the Soviet Union.

I'm only scratching the surface into Hoppe's insights. I mention this book as a major influence, so that if, in some previous column or a future one, you detect me making a remark that is in contempt of democracy, perhaps now you'll have a better understanding why. That some sort of democratic government is the "best" form of government is the answer to the wrong question. Regardless of its form, Thomas Jefferson had it right: "That government is best which governs least."

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