Liberty Defined: 50 Essential Issues That Affect Our Freedom

by Ron Paul

  Billions of dollars have been spent on the M-1 tank over the years and yet there has never been a need for it for the defense of our country—it was purely a military-industrial complex boondoggle to serve the interests of the demands of big business and big labor and to save Chrysler and at that time to stick it to General Motors. But in the end, General Motors got its bailout too.

  Not only was the tank not necessary to defend our country; it’s weapons like this that encourage our military intervention overseas, resulting in grief and blowback tragedies. This type of spending contributes significantly to our bankruptcy and the drain of capital resources away from productive enterprises.

  Though the economic planners claim the Chrysler bailout was a great success since Chrysler paid back the loan guarantees, no one tried or could measure the harm caused by the misdirection of resources inherent in the program. Worst of all, it conditioned Americans to accept the notion that, in tough economic times, the role of the U.S. Congress is to bail out corporations by protecting unearned profits and high union wages.

  Sadly, the Chrysler bailout of 1979 set up the unimaginable bailouts of today. It was erroneously concluded that spending on military weapons—even those we don’t need—can help a company or even an entire economy recover from a government-caused downturn. Unbelievably, I hear of talk in Washington that the only way to get out of a deep recession or depression is to get into a war, as FDR did.

  Instead of arguing that spending money on bailouts of bankrupt, inefficient companies is helpful, it should be seen as wasteful and something that cannot provide an incentive for the companies to clean up their act. It actually encourages the opposite. Besides, direct loans, guaranteed loans, or cash subsidies always harm some unidentified investor or company that was denied access to credit or may even have been taxed to pay for the bailout of their competitors.

  The Chrysler bailout was supported by big government, big business, and big banks and big labor; the little guy was stuck with the bills. No one should be surprised that today it’s not only Chrysler, it’s General Motors, Goldman Sachs, and many others who lined up at the Treasury and Fed and were also bailed out.

  After Ronald Reagan took office, in the first budget debate in 1981, a few cuts were made (only) in the previously proposed increases to some domestic welfare programs. Liberal Democrats screamed bloody murder and demanded a sharp cut in the Export-Import Bank, seen as a form of corporate welfare. The amendment to cut passed easily, with greater than 100 votes. It was a big political event and the report of the debate and vote made the front page of the Washington Post.

  Representatives of Boeing and other big American exporters who lived off export subsidies were quoted as saying that the vote, instead of being devastating to them, gave them an opportunity to “show their clout.” And indeed they did.

  The following day, since the final passage of the appropriations bill had not occurred, the same vote was repeated. This time it was defeated easily, with approximately 100 members changing their vote. The unions worked the Democrats, big business lobbied the Republicans, and the Export-Import Bank was protected from any cuts in its budget.

  The next morning, the Washington Post had a follow-up story regarding the impressive reversal in the vote. A House member from Louisiana was asked if his vote was up for sale, since he was one of the members who switched his vote. He was quoted as saying, “No, it wasn’t for sale but it was for rent.” This episode confirmed my cynicism regarding the way Congress worked nearly thirty years ago.

  But the pressure by government workers is still significant. In the midst of the severe economic crisis most of the new jobs are in the public sector—usually federal, since only the federal government can print the money it needs to pay wages, unlike state governments. There are jobs now commanding salaries vastly higher than similar ones in the private sector. Instead of these jobs being a positive for the economy, they are actually a negative—denying the private sector of needed resources and capital to generate economic growth.

  Minimum wage laws, mandating union contracts (closed shop), and Davis-Bacon rules are all designed to help a small segment of workers gain economic advantage while actually hurting unprotected workers. And long term, even the beneficiaries suffer from the unemployment that excessive wage demands bring about. It’s not a coincidence that Detroit workers suffer more severely than those who are employed in the states where arbitrary union power is held in check by right-to-work laws. High wages are great, but if there are no jobs they become meaningless.

  In a free society with free markets, workers should always negotiate for the highest wage, while businesses should always strive for maximum profits. And if left to the market, the consumer will decide which businesses thrive, the profit levels, and the wage rates. By deciding which product to buy, consumers vote constantly on quality, service, and price, which affect wages and profits. Efficiency and productivity determine success or failure.

  When labor is efficient and productive, wages must go up, not because of coercive legislation but because under the circumstances there would be competition by businesses to seek out the best workers and reward them with the best wages. Coerced union wages, dictated minimum wages, and prevailing wage laws like Davis-Bacon also grossly distort the market process and contribute to the malinvestment initiated by the Federal Reserve policy and guarantee that in the correction, wages must come down.

  When wages are not allowed to come down, the agony of the depression or recession is intensified and prolonged, as occurred in the 1930s. In March of 2010, the Obama administration proposed a unique way of avoiding the government’s prohibition of sending contracts directly to companies with union workers. By executive order the President planned to circumvent this restriction by sending $500 billion in annual contracts only to companies that pay high wages and very generous benefits—i.e., union workers.

  This effort would have also included government discretion in directing contracts that follow government-mandated labor standards. This change would further expand government control over business-labor relationships and guarantee higher unemployment and slower recovery. These changes would make the Davis-Bacon principle of mandating prevailing wages much worse. Davis-Bacon was passed in 1931 and made the unemployment problem of the 1930s much worse. The outrage is that Obama plans to make these changes simply with an executive order.

  Keynes actually understood the need for real wages to go down but opted for the reduction of real wages by decreasing the purchasing power of the dollar through inflation of the money supply. This obviously only made the economic problems worse.

  A free market grants no authority or privileges to labor unions or business. All contracts between workers and businesses must be mutually agreeable and without government mandates. No one is forced to work, no one is prevented from quitting, and the wages are to be set by mutual agreement. All workers are free to organize and collectively negotiate with employees. Employees have a right to participate or not. Government workers have no power to force obscene wages on the taxpayers and should not be given a contractual right to strike and hold the taxpayers hostage.

  It seems strange that the idea of voluntary associations and personal choices are so readily accepted by individuals of both progressive and conservative persuasions, yet when it comes to setting wages it’s assumed that only an all-knowing, all-coercive government has the wisdom to know what the proper wages should be.

  If the system of government interference in worker and business relationships produced a prosperous society with all workers making huge salaries and businesses thriving with huge profits, one could understand the endless blind acceptance of coerced wage controls. But the opposite is true, because the artificially high wages significantly contribute to unsustainable debt in government and business, making the Federal Reserve’s generated business cycle that much worse.

  Ignorance in economics contributes to this blind acceptance of government regulations over the free market.
It also reflects an unwillingness to recognize and defend the principle of individual liberty. In a society that honors individual liberty, the use of force to make people better off or an economy fairer is rejected. The great irony is that, when the goal is liberty, prosperity flourishes and is well distributed. When economic equality is the goal, poverty results.

  Petro, Sylvester. [1957] 2008. The Labor Policy of a Free Society. New York: The Ronald Press; Auburn, AL: Mises Institute.

  ZIONISM

  More than two thousand years after the Jewish Diaspora began, in the eighth century BC, and especially following widespread Jewish assimilation into national groups in the eighteenth and nineteenth centuries, a worldwide movement began to recapture a universal Jewish identity, culture, and faith. Part of this mission was for Jews to return to the Middle East (Palestine) and establish a single homeland. But this was not the only issue. The leaders of the Zionist movement, as it came to be called, wanted to preserve the Jewish identity, language, and religion, in the face of acculturation.

  Nathan Birnbaum, an Austrian political activist, is credited with coining the word “Zionism” in 1891, from the name of a hill in Jerusalem. It is not in its cultural, religious, or language aspirations that Zionism has inspired the most controversy but rather in its political goals of securing a geographic homeland. The timing of the movement’s most notable victory, the establishment of the State of Israel, coincided with a widespread reaction against the violence of anti-Semitism in Europe.

  There is no doubt that Jews have a historic claim on the land itself. The Bar Kochba revolt in AD 135 against the Roman Empire prompted a large number of Jews to be exiled from the area now known as Israel. Some historians report that the Jewish population of 300,000 was further reduced to a thousand families during the Christian Crusades in the Holy Lands.

  From the 1890s until 1948, when Israel became a sovereign nation carved out of Palestine, immigration was mostly voluntary, gradual, and accomplished with due respect for existing land titles. Zionism, during the first forty years of this movement, was not about taking land by force nor was it about militarism. A continual peaceful transformation would probably have occurred except for the political actions after World War II in which the United Nations turned a local and demographic issue into an international and highly politicized one.

  One of the first decisions made by the UN was when the UN General Assembly accepted the Security Council’s recommendation in 1947 to partition Palestine. The same year, the United Nations also got involved in the partitioning of Korea. By June 1950, under a UN resolution, America was back at war siding with South Korea against the Soviet Union and China, which supported North Korea.

  The partitioning problems of Palestine and Israel and North and South Korea persist to this day. Considering the lives lost and the money spent, it doesn’t say much for the UN’s peacekeeping efforts or our own foreign policy of the past sixty years.

  Though I was not active in politics in high school or college, I recall attending a Rotary Club meeting in the early 1950s with my father. The speaker was a college student from Palestine studying in the United States. Her story was about how her family had been forced from their property, which had been in the family for centuries, but was then used for Israeli settlements. I can recall thinking at the time that this did not seem fair to me, and it doesn’t seem fair to me today.

  This taking of land from one group for the benefit of another has been criticized by most Muslims, many Christians, and Jews as well. The entitlement argument that this new arrangement was ordered by God and reflects ancient ownership by the Jews is not an easy case to make. This belief inspires those who support the use of force to achieve an expanding geographic presence for a greater Israel, including most of the Middle East.

  Zionism as a movement has accomplished wonderful things for the Jewish people and Jewish faith. It inspired Jews the world over to recapture their language, and to do so in a period of time that was nearly miraculous. It helped restore the Jewish faith as a living presence and heighten consciousness of Jewish identity and purpose. It is tragic that the political agenda has been so divisive for the Middle East and the world, especially given that the entire mission of creating a homeland might have been accomplished without the use of force.

  Historian Juan Cole has pointed out that Jerusalem (Palestine), through the many centuries, was under Jewish rule for only about 170 years. In other words, there are many competing claims for the same land, and it is impossible to decide between them. Dozens of other regimes occupied the land for much longer periods of time. For instance, Muslims ruled Jerusalem for 1,191 years.

  Factual history is not much help in sorting out the emotionally charged religious and secular arguments over who should live in and rule over this region. It seems that there should be a statute of limitation on ancient claims of ownership. Those still in possession of titles to land and homes should not be cavalierly dismissed out of a sense of justice.

  Even with recognizing the ruthless way some American settlements uprooted both Mexican and Indian occupants, I’m certain I wouldn’t be too happy to give up without compensation any property I now own to those with claims just hundreds of years old, let alone thousands. Religious interpretations of God’s desires are subjective and can never be settled through reason, no matter how logical some would like to make the debate.

  Though the fighting has gone on for literally thousands of years, and control of the Holy Lands has shifted back and forth among Muslims, Romans, Christians, Jews, and others, there have been examples when the people were left alone, for relatively long periods of time. With less government involvement, different religious groups were quite capable of getting along together peacefully. Intermarriage regardless of religious beliefs was not unusual. My advice: Leave the young people alone and they’ll find out that they prefer lovemaking to warmongering and are more anxious to get along with one another than the older generations who stir the pots of war.

  Give government any kind of foothold and it will figure out a way to force or incite young people into war making. The old saying is true: Old people and governments start the wars and young people must fight and die in them for all kinds of cockamamie reasons.

  Today, the Israeli political lobby is a powerful political force. Two to three hundred nuclear weapons, under Israel’s control, make Israel more powerful than all the Arab and Muslim countries put together. But that’s not where the real power lies. The UN can labor tirelessly in “controlling” one nuclear weapon (in Iran) that doesn’t exist while the international community does not put pressure on Israel to sign the Nuclear Non-Proliferation Treaty. In contrast, the world community rarely even admits that Israel’s nukes exist—and at the same time Iran has never been ruled in noncompliance with the NPT. The fact that Muslim nations become annoyed with this policy is written off by most in the West by charging anti-Semitism.

  Meanwhile, within Israeli politics, there is a great deal of debate and diversity of opinion. The Liberal party in Israel often raises questions about the apartheid conditions that Palestinians are subjected to. Even newspapers in Israel are willing to discuss this issue openly, but it is essentially never permitted in the United States. Former President Jimmy Carter is now persona non grata for raising the question in his most recent book, Palestine: Peace Not Apartheid. J. Street, a new pro-Israel Washington PAC, is challenging AIPAC’s monopoly control of the discussion of U.S.-Israeli relations in the United States. The group Peace Now also strives to change the tone and essence of the debate.

  Other American Jews have spoken out against Israel’s treatment of the Palestinians as well. The American Council for Judaism is growing in influence in the American Jewish community, especially with the younger generation. Though it’s argued that Jews are motivated to immigrate to Israel because they were exiled from Palestine, only a small fraction of American Jews ever moved to Israel.

  Even given all of this, my position on Israel is the same as
my position with regard to any other country. I favor a noninterventionist position, consistent with what the American Founders favored and what the Constitution enshrines. I would like a policy of peace, friendship, and trade—and no intervention in any country’s internal affairs.

  I’m convinced that this would serve Israel’s best interest. Since we generously subsidize Israel, the potential of stopping our aid means that Israel must get tacit approval from the United States for its policies toward its neighbors. We have been known to hinder friendly outreaches by Israel in the Middle East, as well as Israel’s use of force to protect her borders. Israel is not a truly sovereign nation as long as it depends on getting U.S. permission to do what it sees is in her best interest.

  But this is a two-way problem. If Israel would be so bold (something that I do not believe it will be) as to attack Iran without explicit approval of the United States, we’ll be blamed anyway, and if war spreads to include Iran, we’ll be in the middle of it as long as today’s conditions persist.

  A principled stand against all foreign aid is a net benefit to help Israel. Foreign aid breeds dependency and sacrifice of sovereignty and removes an incentive to promote a free market economy. We subsidize and protect Arab nations with money and weapons, and many of those are not even close to Israel in supporting democratic elections. No aid means Arab Muslim nations suffer more, giving Israel a military plus. But unfortunately, that will never happen because we must protect “our” oil and we will remain in the region for the foreseeable future.

  Our strong support for Israel practically eliminates any desire for it to work out differences in the region by direct negotiations with organizations like the Arab League. Alliances among moderate states to maintain peace and in opposition to the radical mullahs would be more likely than when we control the whole process. And when we do achieve a peace agreement like the Camp David Accords between Egypt and Israel, it costs the American taxpayers plenty—in perpetuity. This bought peace has cost us well over $150 billion since 1979, and yet friction remains. Artificial peace treaties hinder the need for all involved to rely on commerce and trade to improve the standard of living for both sides and to work out their differences locally.