Edwin Sumcad

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Edwin Sumcad

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Part II: Night Watchman State This Country Never Wants To Be


     When the state’s role of governance in this greatest nation on the planet is reduced to zero, and the Government has just become a night watchman in our darkest night, it’s time to pray!

      A Night Watchman State is merely a “components of courts, a military and a police force.”  It is a philosophy of governance, or the lack of it.

      Although it looks like a fly you can swat as a pestering ideology, it is hard to get rid of it because it has now mutated to different forms.

      It eventually became Minarchism, minimal statism,[1] small government, or limited-government libertarianism[2] and what have you. A minarchist state only exists “to protect the life, liberty and property of each individual.”  This miniscule attribute of a state does not fit a country so huge and so versatile that the United States of America happens to be … a nation that has long been committed to big-time free enterprise capitalism.

      Today many of us who are advocates of freedom are hardly aware that Minarchism has become a libertarian movement in a broader sense.  Minarchism subscribes to the philosophy of Samuel Edward Konkin III and J. Neil Schulman to create a society where the “relations between people are [just] voluntary exchanges”, a mutant restatement of the existing “free market"[1]   idea.

        But at the same time, Konkin III and Schulman are proponents of Agorisma type of free-market anarchism.[2] 

        It is even worse. The essential attribute of Agorism is the advocacy of “untaxed black market activity, which agorists say will lead to development of private defense force sufficient to protect private property and liberty from the state to the point where such protection is strong enough to overthrow the state …”  It is an ideology at war or a philosophy in a state of war.

       Obviously, this ideological expectation anticipates a state of affair where the United States can never become one or where it can never be. Who would think while wide awake, that we are a night watchman state? America may turn to socialism in practice just like what President Obama is attempting to do, but to be a “free-market anarchist” is a wistful thinking if not so foolishly defeating for a sleepwalker to profess or if awake is too delusional to entertain. It goes against the grain of free market capitalism, our core economic value Karl Marx had attempted to discredit but only succeeded in discrediting himself.

      Thus all things considered, it is sad for me to think that Agorists who are proud to be labeled “Libertarian R3volutionaries” are in for such a rude awakening.

      All of these rebellious philosophical mutations that are severely “punished” [criticized] by what seems to me are those many scholars who felt “offended” by the satirical aggression of modern anarchists in public debate, found solace in the present nationwide libertarian movement. The Austrian school of reformers is carrying on the battle the Agorists had begun.  Although they are engaged in this uphill struggle for what they believed in, I found their philosophical arguments formidable.

      For instance, Austrian theorists like Melton Friedman, a brilliant economist, present a big problem if given the opportunity to repackage the whole credit and federal banking system by getting their protégée appointed to the Chair of the Federal Reserve. The bottom line for their constant rejection to occupy positions of great responsibility in the government is the fact their philosophical economic theories are considered too “anarchist”, if not rarely proven right. 

        Friedman won the Nobel Prize by pointing the flaws of Keynesian economics, but his other analysis of economic problems and their solutions never work because they are mostly proven irrelevant and contradictory. Well-known British economist John Maynard Keynes’s free enterprise philosophy for economic development has been adopted by successful and powerful western economies as the best in the world that even communal economy or Communism can neither compete nor destroy.

       Friedman’s delusional attempt to replace Keynes had failed miserably.  In comparative economics, I once wrote a dissertation that Keynes theory can only be improved, but cannot be replaced.

      My position in defending Keynes’ classical economics from the likes of Friedman attacks can be read all over the Internet. “[A]ctive government intervention in the marketplace and monetary policy is the best method of ensuring economic growth and stability.” [3] The Federal Reserve of the United States is this necessary “government intervention” to ensure economic growth and stability.

       Friedman represents the Austrian philosophy contrary to this NECESSARY government regulatory intervention when the economy is rocked by greed … where competing greedy entrepreneurs chasing profit are at each other’s throat.  Blinded by greed, they are hardly aware or even care that they have turned themselves into parasites of our free enterprise system that would eventually eat up and destroy our badly abused free market economy.

     I expect that Austrian follower Ron Paul, libertarian congressman from Texas, is aware that Friedman’s version in this issue is sterile of this most important regulatory intervention. 

     In his perception of free enterprise without the government’s regulatory participation, Friedman contradicts his own solution to leave competing enterprises among themselves in peace and quite … contradictory because if not regulated, competing enterprises driven by greed create chaos that would lead to the destruction of the system. Adam Smith, founder of the world’s free enterprise [free market] system warned of this anathema, especially when entrepreneurs cabal to distort the market price to serve their own selfish ends.

      On the other hand, politically motivated government intrusion into our free market system is as bad as when there is no regulatory intervention to stabilize the market that is getting wild and out of control. 

      If you have an example of a government that President Obama runs nowadays, interference in our market system becomes objectionable.  But we fault the wayward government that intervenes in the market to achieve its political ends … not the free enterprise system itself where the government’s rightful intervention is absolutely necessary to stabilize the market and ensure economic growth.

     I will give more -- a couple or so -- examples of Friedman’s contradictions.  Going back to the Gold Standard that he advocates does not guarantee the value of monetary circulation. What can guarantee the value of circulation “… which can be increased so much as to sustain further production … is the remaining value of the production itself.” This is one of the fundamental principles in monetary economics that students and their professors with Ph.D. in economics interestingly discussed and learned inside the classroom.

     What is shown in the study of advance economics is that Gold Standard does not and cannot protect us, when in an economic downturn there is this inflationary increase of the value of circulation necessary to sustain increased production … the Central Bank [that’s why there is a Central Bank] or the Government or the Fed has to intervene after determining that the effect of its excesses that destroy the gold reserve is deleterious. 

      Not just in theory but in practice, all of these critical Keynesian economic responses to crisis nullify Friedman’s position. That’s why the theoretical economic postulates he represents are not only objectionable and insufferable but also considered by many Keynesian economists as surreptitiously destructive!

       Friedman’s take on how inflation is created which oftentimes the Congressman from Texas mimics when he criticizes and puts Bernanke’s fiscal and monetary expertise in doubt, and Friedman’s accompanying economic rants against it are like used toilet papers hanging on the branches of the tree of knowledge.  Although it emits an objectionable odor, I am still amused when listening to the Congressman’s videotaped argument. 

       Friedman and his rah-rah boys think the Government wants to create inflation by printing and spending money without taxing it. That’s too simplistic and too far from the truth of what an honest economist should think.

       First of all, the “evil” of printing money, is not a future malady that Friedman wants to prevent. The United States Government was originally created as a deficit government … repeat, the United State Government cannot be other than a deficit government.  It has been printing money by a truckload, depending on how much use the Government needs, to achieve its purpose, in war or in peace.  Friedman talks of the future when it is already happening since time immemorial! In this context, his vision becomes unreal, if not delusional.

        The real cause of the problem that “inflation” creates does not come from this direction. We suffer the consequences of our lack of control and discipline.  We allowed public and private debts to multiply to such a degree that we could no longer afford to service its run-away growth.

        In this connection, Friedman is wrong on two counts:

        First, this particular run off “inflation” we suffer is not caused by the Government printing paper money.  Printing paper money is the effect … a response to a cause, good or bad.  The bad cause is the undisciplined multiplication of debts for chasing our rainbows, on top of what the Government wants to accomplish in war and in peace [needs money to fund a war and to spend for socio-economic-technological development that brought us beyond the edge of space – the good cause].

        Second, Friedman is quite short in faulting rising prices as the linchpin of inflation.

        The Government does not tax itself -- only the people are taxed on what they earned or owned. Contrary to the Austrian concept of taxation is when the Government tax spending, to curb inflation.  This leads the likes of Friedman to conclude that in fact inflation is a form of taxation [no one should wonder why they want to abolish the IRS].  It is contrary to what deficit Governments need to do … relieve taxpayers of the financial burden that inflation creates during stagflation and at the same pump prime the depressed economy.  This is the reason why “Government deficits allow the population to live beyond their means [inflationary] by in fact avoiding taxation.”[4] It is not entirely correct to say that inflation is a form of taxation, but in fact it is one way of avoiding taxation.

     What is wrong with restricting the money supply to the point where we exhibit our ignorance of credit expansion and the printing of paper money is that the level of the resultant contraction usually cannot sustain the level of commerce, development and progress we aspire and capable of doing.

     Many are not all strangers to what I am saying here, but I am sure that all of these are also in the mind of Bernanke who needs to stay as Chairman of the United States Federal Reserve when his term expires. In economic stewardship, it is not easy to steer the ship in a rough sea. And recent developments are even making it worse. Bernanke’s chairmanship of the Fed is floundering on top of the balance beam, and so is this nation’s economic life impaled in the girder of uncertainty.

      But no matter what happens, this nation can never become a Night Watchman State of free-market-anarchism that advocates governance where actually there is none!

      When the state’s role of governance in this greatest nation on the planet is reduced to zero, and the Government has just become a night watchman in our darkest night, it’s time to pray! #

© Copyright Edwin A. Sumcad. Access FP.com August 24, 2009.

The writer is an award-winning journalist.  Know more about the author by reading his published editorials and feature articles or you may e-mail your comment to ed.superx722@yahoo.com.

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