The Naked Socialist

by Paul B Skousen

  The Wagner Act (1935) legalized the formation of unions, collective bargaining, and strikes. Later, it was amended to set minimum wages and eliminate child labor. Increased government costs to make these new laws happen had to be supported with increased taxes.

  Forcing unions on America made the Great Depression last longer because higher wages were extracted with strikes and union actions. This hurt business and slowed the recovery of the economy. At its core, the idea of a union is the government-sanctioned violation of the property rights of a company owner. Unions are empowered by the force of law to tell a property owner what to do and how to do it, winning temporary advantages to union workers, but ultimately, as with the walnut tree, preventing free market solutions from solving the work-place problems. It was, and is, Marxism in the work place.

  8.Increased Taxes: Painful tax increases severely damaged the ability of some companies to hire new people. In 1932, unemployment stood at a staggering 23.6 percent. The Revenue Act (1932) pushed the top tax bracket from 25 percent to 63 percent. Corporate taxes rose from 12 percent to 13.75 percent.

  Four years later, in 1936, taxes went up again. The top tax rate climbed to 79 percent, and business profits were taxed at 42 percent. Unemployment fluctuated between 16.9 percent in 1936 and 19 percent by 1938. The incentives to work, invest, create savings, and be more productive were all chilled, contributing to the length of the Great Depression. Not until World War II did unemployment drop back to single digits (4.7 percent in 1942).

  9.Laying the Foundation for the New Deal: Herbert Hoover (served 1929-1933) is the grandfather of the New Deal. He created an economic train wreck with his attempted scientific regulation of business, industry, farming, and the economy. He doubled federal spending, forced wages to stay artificially high, created a world-wide trade war with his Smoot-Hawley tariff, and increased taxes that depressed productivity. He even tried to subsidize farmers, but when that flopped he paid them not to produce so that prices would stay high. He imposed the Reconstruction Finance Corporation, and enacted or paved the way for every New Deal program that was yet to be deployed.

  The so-called “Hoover New Deal” gave birth to a massive failure in the form of more government control, manipulation and intervention—the epitome of power run amok. The monument to his utopian fantasies was a ruined economy and the Great Depression.

  10.The New Deal: Franklin D. Roosevelt (served 1933-1945), the father of the so-called New Deal, is best remembered for his intense regulation of the country with the largest expansion of government power in American history.

  James Madison knew how government leaders would destroy the Constitution using a crisis as the excuse. He warned, “You will understand the game behind the curtain too well not to perceive the old trick of turning every contingency into a resource for accumulating force in the government.”596 And accumulating force is exactly what most presidents did—especially FDR.

  It took a friendly Congress and a friendly Supreme Court (eventually) backing him up, but Roosevelt was able to exploit the emergencies of the Great Depression to fundamentally transform the United States into a democratic socialist republic. It was his New Deal.

  11.New Deal—Force Banks to Take a Holiday: After Roosevelt’s first day in office he forced all banks to take a holiday in an effort to stop those vault-emptying runs that were beginning. This act was unconstitutional (many banks were privately owned).

  12.New Deal—Force Taxpayers to Protect Deposits: Roosevelt promised everyone that their deposits were safe, and were backed up by the government’s FDIC. This was comforting and calming, but placed an unconstitutional obligation on taxpayers, without their consent, to insure complete strangers from loss.

  13.New Deal—Can’t Own Gold: Roosevelt declared that Americans could no longer own gold. Later, FDR made it a criminal act to own gold—unconstitutional confiscation of private property without due process.

  14.New Deal—Force Taxpayers to Pay Farmers to Sit: Roosevelt paid farmers to not grow crops. This kept prices higher at the market, forcing consumers to pay more. It profited the farmers so they wouldn’t lose their farms. There is no federal right to re-distribute wealth to help one sector of the economy over another, or to violate the freedom to fail, as took place with FDR and the farmers.

  15.New Deal—Force Banks to Affiliate with the Fed: Roosevelt made sure that only banks affiliated with the Federal Reserve were protected from failure by the government. This was unconstitutional favoritism against private, non-Federal Reserve banks.

  16.New Deal—Take Regulatory Power Away From Congress: Roosevelt usurped law-making power of the legislative branch by giving his agencies power to pass laws under the misnomer of “regulations.” This was the unconstitutional transfer of legislative power to the executive branch.

  17.New Deal—Force States to Submit to Federal Finance Rules: Roosevelt forced brokerage firms, even those operating within state boundaries, to obey federal rules on stock trades as an interstate activity—here he crept in, unconstitutionally, to violate states’ rights.

  18.New Deal—Selective Government Lending: FDR started lending tax dollars to farmers and struggling homeowners at below-market interest rates, but wouldn’t make similar concessions to other industries that were in harm’s way. This was an unconstitutional use of public funds to intrude into the free market.

  19.New Deal—Force Banks to Treat Farmers Special: FDR pushed for a law that protected farmers who were late on mortgage payments. If they were late, their property could not be repossessed for three years. This was the unconstitutional violation of private contracts, and control of private property (preventing private investors’ money loaned to farmers from being collected).

  20.New Deal—Nationalize the Railroads: Roosevelt declared the railroads to be public property and assigned the first rail czar to find ways to save money. He ended up destroying duplicated facilities. It was an unconstitutional nationalization of private property.

  21.New Deal—Nationalize the Coal Industry: Roosevelt tried to control wages, prices, production, unions, and rules for all coal mines across America. The Supreme Court knocked him down on this one, calling the action unconstitutional.

  22.New Deal—Force Taxpayers to Finance Local Projects: In 1933, Roosevelt used the Tennessee Valley Authority Act (TVA) to take over the means of production and distribution of electricity in that area. Massive projects were funded by taxpayers to build dams, reservoirs, power lines, etc., and to use the facility to create fertilizer and sell surplus power. The tally in the end showed that 98 percent of the country paid for the electrical power in the Tennessee Valley and surrounding region that made up only 2 percent of the nation. Recent studies reveal TVA retarded economic development of Tennessee compared to its neighboring states.597

  23.New Deal—Force Taxpayers to Finance Home Loans: Roosevelt gave government authority to lend tax dollars to people in danger of losing their homes, or to help others to buy a home. This violated Article 1.8 of the Constitution, giving Congress the power to pick winners and losers by spending public tax dollars on some home mortgage loans, excluding others.

  24.New Deal—Control Communications: The 1934 Communications Act regulated the airwaves, first controlling interstate radio, and later, television. It was expanded in 1982 to include the airwaves inside specific states in violation of the interstate commerce clause.

  25.New Deal—Let Unions Violate Property Rights: Roosevelt pushed through legislation that gave unions unprecedented control to coerce business owners to capitulate to their demands—rule by the workers, just as Karl Marx had envisioned it.

  Hidden Wedges Destroying the Tree

  Subsequent generations of Americans born since the New Deal have expanded those federal powers to lethal proportions. Unrestrained powers at the highest levels now jeopardize the economy and culture of the United States. Unrecoverable debt, reckless spending, dec
aying virtue, and a widespread suspicion of fellow Americans are the poisonous fruits of the New Deal tsunami—they are the hidden wedges of socialism.

  Learning to Recognize Socialism

  What is fractional banking? Do you think banks could function as lending institutions without that process in place?

  Can banks be stronger than a king? A president? Explain.

  Is the existence of a private central bank against the Constitution? Explain.

  How many promises has the Federal Reserve broken?

  What was the New Deal? List some New Deal programs that continue to this day. Could the private market do better?

  Of the 25 wedges of socialism in the U.S., which six have done the most damage? Which pillars of socialism were unleashed?

  What section of the Constitution keeps spending under the direct control of the Congress? (see Article 1 sections 8 and 9)

  Part XIV--SOCIALISM TODAY IN AMERICA

  “It is impossible to introduce into society a greater change and a greater evil than this: the conversion of the law into an instrument of plunder.”

  * * *

  594 All quotes from Samuel T. Whitman, “Forgotten Wedges,” as related by Thomas S. Monson, Hidden Wedges, Conference Report, April 2002.

  595 Jakob B. Madsen, Trade Barriers and the Collapse of World Trade during the Great Depression, Southern Economic Journal 67 (4), pp. 848-868, 2001.

  596 Ralph Louis Ketchem, James Madison: A Biography, 1990, p. 351.

  597 William U. Chandler, The Myth of TVA: Conservation and Development in the Tennessee Valley, 1933-1980, 1984, pp. 50-53.

  Chapter 80: Thinking Like a Socialist

  Reducing the definition of socialism to “government force to control and change society” helps measure how far leaders are moving their national fortunes and populations away from protected rights. Each day, the headlines shout new messages about all the consequences and problems from government force being used to address problems that are solved more cleanly on the local level with freedom and liberty. Socialists never see it that way—that is not how they think. “There ought to be a law” is their motto, and they go about making sure that happens in every way possible.

  Begin With America

  U.S. presidents who impose socialistic ideas are defended by their supporters who place blame (i.e., capitalism doesn’t work), guilt (i.e., look at all the suffering), and well, that’s his job (i.e., he must do what is necessary regardless of Congress or the Constitution), as reasons for a leader’s failings. They believe that government only has the solutions to national problems.

  Once a nation embarks down the pathway of socialism, common sense becomes replaced with panic and self-absorption to “get my share from the government.” This mind-set is perpetuated by two things: a Santa Claus politician who bestows gifts not earned, and an economy so ruined by gratuitous government giveaways that dependency on the government has become a way of life, like it or not. People begin thinking in terms of “what can the government do for me?” instead of “what can I do for myself?”

  The socialism that most Americans fear isn’t necessarily some party or platform. Americans fear an ever-expanding federal government that consumes an ever-growing quantity of their money, that creates trillion-dollar liabilities, and puts new restrictions on people’s behavior and activity. That expansion has swelled under the name of almost every political party and declaration since the Civil War.

  In America, socialism is a uniquely crafted product. It must be slipped into the mainstream in a fashion that does not arouse suspicion or objection. Here are some examples of how that happened through the offices of the executive branch—

  Chapter 81: U.S. Presidents and Socialism

  —Lincoln, Cleveland, Teddy Roosevelt—

  In both peace and war, the ruling executives of the United States are bound by oath to uphold, defend and protect the U.S. Constitution. Did they?

  PRESIDENT: Abraham Lincoln (served 1861-1865)

  EVENT: Unconstitutional actions during the Civil War?

  STORY: As Commander in Chief during the Civil War, Lincoln declared war and established war policies (Congress’s job), suspended habeas corpus (Congress’s job), imposed martial law on Kentucky (Violated Article 4, Sections 2 and 4), tried civilians in military tribunals where they were convicted and punished by the military (Judiciary’s job), and exercised strong prerogatives thought by many to exceed his authority.

  After the Union armies started gaining the upper hand in 1862-63, the constitutionality of Lincoln’s actions was finally brought to the Supreme Court as the Prize Cases.

  The Court sided with Lincoln. It acknowledged that the president does not have power to start a war, but an insurrection within the country’s midst that “sprung forth suddenly” bound him to “meet it in the shape in which it presented itself.” The Court said Lincoln “was bound to accept the challenge without waiting for any special legislative authority ... He must determine what degree of force the crisis demands.”598

  Dissenters in the case said the president didn’t have the power to change the nation from “a state of peace to a state of war ... this power belongs exclusively to the Congress ...”

  Lincoln lamented that Congress and existing laws were sorely inadequate to deal with rampant preparations by the South to break away, including spying, stealing of war materials, and splitting legislatures to favor the rebellion. Lincoln felt compelled to take drastic action to save the Union.599

  “I have never understood that the presidency conferred upon me an unrestricted right to act,” Lincoln wrote in 1864. “I did understand, however, that my oath to preserve the Constitution to the best of my ability imposed upon me the duty of preserving, by every indispensable means, that government—that nation, of which the Constitution was the organic law.”600

  The Constitution is largely a peace-time document with little detail on war powers. By war’s end, however, many questions and lapses about federal power—for better or worse—were resolved.

  PRESIDENT: Grover Cleveland (served 1893-1897)

  LEGACY: Pro-Constitution, pro-free market

  STORY: President Cleveland demonstrated how a man of integrity will refuse pressure by Congress to approve unconstitutional projects simply to gain votes. His administration was an example of how a president can function as a check and balance to counter an over-zealous Congress.

  No Gifts: When Cleveland vetoed a Senate pension plan for Elizabeth S. DeKraft, he complained that the Senate had buried him with 400 such “special interest bills,” and said he would continue to disapprove “gifts of public money” to people with no legal constitutional claim.

  No Handouts: He vetoed House Bill #10203 that provided seeds to drought-stricken Texas. “I can find no warrant for such an appropriation in the Constitution, and I do not believe that the power and duty of the General Government ought to be extended to the relief of individual suffering which is in no manner properly related to the public service or benefit.”601

  Stop the Splurge: Cleveland rejected needless spending, over-taxation, accumulation of surplus money in the Treasury, bequeathing federal grants to states as means to buy control, and other finance schemes that plundered the people’s national treasury.

  Control the Power: Cleveland withdrew the treaty granting the U.S. takeover of the Hawaiian monarchy. He said the U.S. used methods that were morally wrong, and there shouldn’t be “one law for a strong nation and another for a weak one....”602Cleveland’s story is an example of how a president should avoid the many tempting traps to expand the government, and focus on good leadership. Unfortunately, after Cleveland had to leave the White House with his correct perspective on freedom, things were never the same in Washington. It was the beginning of a slow decline into abusive political power, corruption, and struggle.

>   PRESIDENT: Teddy Roosevelt (served 1901-1909)

  LEGACY: A progressive who dismantled restraints

  STORY: A great wave of reform was sweeping the nation when Roosevelt took office. His energetic personality fit the times nicely. He emulated Hamilton’s vision of a strong monarch in the executive position—a head of state beholden to no one including, in the strictest sense, the Constitution.

  America’s Steward: Roosevelt appointed himself “steward” over America’s welfare, and used executive orders to take independent action outside his constitutional boundaries. He believed he could do anything that wasn’t specifically forbidden by the Constitution. “I declined to adopt the view that what was imperatively necessary for the nation could not be done by the President unless he could find some specific authorization for it. My belief was that it was not only his right but his duty to do anything that the needs of the nation demanded unless such action was forbidden by the Constitution or by the laws ...”603

  What Constitution? When Roosevelt was challenged by Congress about usurping Congress’s authority to seize private property (in this case, the coal mines), Roosevelt shrugged them off with, “The Constitution was made for the people and not the people for the Constitution!”604

  Graduated Taxes: Roosevelt supported Karl Marx’s idea of graduated taxes, especially on large fortunes, inherited fortunes, and corporations.

  Federal Controls: Roosevelt enlarged the power of the federal government to interfere in the marketplace. He pushed the Department of Commerce and Labor to oversee large corporations, and his Bureau of Corporations had police power to go after businesses that Roosevelt deemed too big and too powerful. He ordered his attorney general to file 44 lawsuits against such corporations.

  Land Grabs: Roosevelt fenced off more than 170 million acres as national parks and monuments, leaving them immune to private development or control by the states that held the lands in their boundaries. He thrust the federal government into the role of activist to take over water management and reclamation.