Murray Rothbard loved the intersection where politics and economics collide. The legendary libertarian intellectual, who taught economics at UNLV from 1986 until his death in 1995, was a devoted anarchist. But like many an anarchist, he was fascinated with government, and if he were here today he would be blogging endlessly about the current presidential race and America’s economic funk. I studied under Rothbard in the early 1990s, and his life and work have been an inspiration in my own career. Here are my thoughts on what he would have made of the current American morass:
• If any issue stops President Obama’s re-election it will be unemployment. The latest unemployment rate nationally is 8 percent. In Nevada it is much worse at 12 percent. The real rates are much higher. The answer is easy: To increase the number of employed, the cost of labor must be reduced versus the cost of capital.
Benefits drive up costs along with increases in the minimum wage. Not coincidentally, Nevada’s minimum wage increased to $8.25 in 2010. Rothbard would always reply to those who claimed an increase in the minimum wage had no effect on unemployment with the question, “Well then, why not $10 an hour? $100? $1,000?”
“It is obvious that the minimum-wage advocates do not pursue their own logic,” Rothbard wrote, “because if they push it to such heights, virtually the entire labor force will be disemployed.”
• The Romney/Ryan ticket talks a lot about the federal government’s deficit and debt. Ryan, nominally a devotee of Ayn Rand and the great Austrian-school economist Friedrich Hayek, has supposedly put forth a draconian plan. But even it doesn’t balance the budget for decades, let alone reduce the debt. It makes for good sound bites for politicians to talk about not saddling America’s children and grandchildren with government debt. But individuals cannot be held responsible for debt that was incurred against their will or without their approval. Rothbard contended the federal debt should just be repudiated. It’s illegitimate.
“But, who would lend us more money if we do that?” you ask. No one, hopefully, and that would be a good thing.
• Government’s ham-handed intervention is the very reason for the lack of economic recovery in the United States. The Fed’s easy-money policy after 9/11 created a historic housing boom. Las Vegas still hasn’t recovered from the inevitable bust. The federal government has reacted to the crisis by throwing trillions in fiscal and monetary stimulus at the economy to little effect. It is, as was the case in the 1930s, this very stimulus that keeps the downturn in place. The Federal Reserve’s zero-interest rate policy will not stimulate new growth; it only redistributes capital from productive uses to non-productive uses.
Government intervention in the housing market with record-low interest rates, first-time buyer tax credits and a tangled foreclosure mess only keeps housing and other real estate prices artificially elevated. Wall Street speculators may benefit from Ben Bernanke’s continued money creation, but for the average person, the result will be the same as the Japanese central bank’s zero-interest-rate policies since 1980: Twenty years of little to no growth and, tragically, a lost generation of young people who can’t find jobs.
• Meanwhile, with the ongoing economic mess at home, it’s shocking that any president would advocate fighting multiple wars around the globe. Democrats are wrestling with Republicans over which party is stronger on “national security.” This competitive warmongering only makes us less secure. Besides the cost in lives and health, both physical and mental, the financial cost since 2001 is $1.3 trillion and mounting.
• The U.S. is a prison nation. What used to be the “land of the free and home of the brave “is now the “land of laws and home of the imprisoned.” America has 750 inmates per 100,000 residents, far outdistancing any other country. The government controls the criminal justice system, and it determines who is a criminal and who is not. The cost is enormous, more than $100 billion a year, and the results are catastrophic. People whose only crime was to make a transaction with another consenting adult rot in jail. Hard-nosed judges continue to be elected around the country, and they enforce draconian three-strikes laws enacted by legislators who are in turn pandering to a busy-body citizenry that believes that laws can make them safe and absolve them of responsibility for their own wellbeing.
Unfortunately, none of this will change on Nov. 6. No matter who wins, the government gets elected. Rothbard would never get behind Obama or Romney. But Murray was ever the optimist, and the Ron Paul and Tea Party revolutions would have made him gleeful that smaller government and individual freedom are not too far off.