Democracy: The God that Failed

0:00I want to say a few things about how that book came to be written. Then I want to say a rough idea of the main thesis in the book. I should make you aware of the fact that I wrote for www.lewrockwell.com .com, a description of the book a few months ago, so that I'm sure the music institute will be able to make that available if you have not seen this, and lastly I want to just make a few remarks about what I hope are the prospects of the book.

0:51Let me start by giving you a little bit of background on how the book was written. In the late 1980s, Murray Rothbard and Lew Rockwell broke away from the libertarian party, and for reasons, foreign policy, the cultural leftism of the libertarian party and so forth, and formed a coalition with old style conservatives, those that are nowadays referred to as the paleo-conservatives, People who were associated with Chronicles Magazine and the Rockford Institute.

1:44And we had for, from about 1991 until I would say 1996 or so, a number of conferences sponsored by these paleoconservatives or by the Paleo-libertarians, Murray Rothbard and Lew's group. And a number of books originated out of these conferences that took place at various places all over the United States. I was a regular speaker at these conferences and to a certain extent, so to speak, My contribution to this newly created movement is contained in this book.

2:38There were a number of other products coming out of these few years of cooperating with conservatives, such as, for instance, The Cost of War book, Reassessing the Presidency book, this is the book on recession, liberty and the state, then Murray Rothbard's The Irrepressible Rothbard, which are collecting columns that he wrote for the Triple R, which was for many years the main outlet for paleo-conservative, paleo-libertarian writers and became, of course, the forerunners of the people of urockwell.com So some of my articles in earlier versions appeared, for instance, in the Triple R.

3:40This coalition somehow broke apart after a number of years, but not the spirit of it. Some people remain friends and still cooperate closely with another book I should mention that came out of these 10 years of cooperation, Paul Gottfried's After Liberalism. And if I want to describe, so to speak, the objective of my book, then I would say the objective of the book is to describe and to create an alliance between libertarians and conservatives.

4:33There are following seasons contained in my book. First of all, I try to show that we as economists have a great advantage, so to speak, over other people, especially over historians, insofar as we know some theory, and you cannot interpret history without knowing some theory. Let me just give you one example. As an economist, you know that printing money cannot possibly create prosperity. Nonetheless, there are numerous historians, for instance, who give you accounts that money was printed and then prosperity broke out.

5:21So as an economist, even if it should be true that there was prosperity occurring after money was printed, then you know that prosperity occurred despite the fact that money had been printed. but the printing of money could not possibly be the cause of it or take some other statements that you find frequently mentioned in the press nonetheless are theoretically nonsense, ridiculous, such as we should, when we are in a recession, then we should consume more instead of saving more. Every normal person knows of course if you are in a recession the way to get out is to save more, not to consume more And again, in historical reports, you frequently read, yeah, there was a stimulus program that made people to consume more and prosperity ensued.

6:10Again, an economist would note, this is a wrong report, even if, so to speak, the facts that they report, the secrets of the event is correct. These things happen because of it, or they happen despite of it, and these sorts of questions historians cannot decide, economists are far better equipped to handle these questions. And then the main series are, I try to apply simple economic reasoning to a reinterpretation of history. The first thing I try to show there is that the idea to believe in states creating peace is obviously a fundamental error.

6:58Imagine, just consider what a state is. A state is defined, and there is no debate over the definition of this, a state is defined as being an organization that is the ultimate judge in cases of conflict within a territory. And allegedly we need a state, because otherwise if there would not be an ultimate judge, there are conflicts breaking out all the time. Now what I try to show is that if you have a monopolist of ultimate decision making or ultimate alteration in a territory, this implies of course that this ultimate judge also is the judge in all conflicts that the state itself creates.

7:47That is, if I hit him on the head as a state and create the conflict, then I'm the judge who determines who is right and who is wrong. So how can you possibly think that an organization that has a right to be the ultimate decision-maker will not take advantage of this position and cause the liberty conflict and then rule afterwards in its own favor? The second thesis is that the transition in history from monarchical governments, which existed from most of human history, to the modern form of majority-ruled democracies, is a transition that began with the French Revolution and was finished roughly after World War I when practically the entire world turned to the democratic version.

8:54Even those countries that are by name monarchies nowadays like Great Britain or Sweden or so are of course in all practical effect not classical monarchies anymore, the monarch says nothing to say, they are democracies too. And I try to show that while the standard interpretation is of course, especially in the United States, that this transition was by and large progress in human history. That is, it was a great event that we got rid of kings and then had elected officials taking their position. That this, again, stands in contradiction to some elementary economic reasoning.

9:40Those institutions are of course dangerous, kings are dangerous and democratic government, those are states, but comparatively speaking monarchies have certain advantages, the advantage that the monarchy has is that the monarch takes a long run view of things, he owns the country and wants to pass it on to a son or daughter and he will not He wants to rule the country, he wants to preserve the value of the country in order to hand it over to the next generation intact. He takes, so to speak, the view of somebody who owns the house and wants to preserve the value of it in order to give it to the next generation.

10:33If you look at democracies where you have rotating rulers, they will take the short run. What you don't loot today, or in one year, or in five years, you will not be able to loot again in the future. So you have to loot as fast as possible, short run, short run orientation. The way I always explain it to my students, imagine, for instance, on the one hand I give you a house, and you become the owner of the house, and in the other case I simply appoint you to be the temporary caretaker of the house. But I allow you to get income out of the house, to do something with the income that you get out of the house.

11:18Will people act differently if they are the owner of the house, or if they are the temporary caretaker of the house? The second point in this connection I point out is that what is normally pointed out as an advantage of democracy, that is that you have free entry into the position of the ruler, everybody can become president, everybody can become senator, that this is actually worse, of course, only the son of the king can become the next king or the daughter of the king can become the next king that this what is normally pointed out to be an advantage of democracy turns out to be actually a disadvantage after all, keep in mind, states are organizations that tax and legislate and take things away, they produce no goods, they produce actually bads and do you want to have competition in the production of bads?

12:19And the answer is of course, no, we don't want to have competition in the production of plans. I remember Murray always telling me, look, we should be happy that we don't get all the government that we pay for. Imagine, for instance, that we would really have efficient tax collectors. We found it out to the GM or something like this. No, we want them to be inefficient. In any case, what we see when it comes to open entry into government is that a king can be continuously a decent person. There is at least no a priori reason why after all he's just born into this position, why he might not be at all like that.

13:07On the other hand, when it comes to can a democratically effective politician ever be a decent person? And there the answer is quite obvious. No, of course there is competition in this area, there is competition among bad people, and of course the worst people will rise to the top inevitably. So what is normally depicted as an advantage of democracy turns out to be a disadvantage. You can bet your life that no decent person can ever be elected to a very high ranking position. You must constantly lie in and out of your way in order to attain these types of positions. And the last thesis of the book is that we can easily imagine that the task of enforcing property rights, defending all ourselves and so forth, can be undertaken by private defense by insurance companies, by a panoply of different institutions, all of which have to attract clients, none of them can engage in legislation, for instance, that is changing the rules of the game as states do that constantly, none of them could insist that you have to hand

14:32Imagine over all of your arms, and then we will protect you. This is what states do. They say, we protect you, you give us all the arms, and then we protect you. Imagine that a private insurance company, for instance, would say, look, we will protect you, but first you give us all of your knives and forks and so forth, so we can protect you more efficiently. This doesn't work. They must have a contract and they cannot change the rules of the game as they move along. Now a few words about what I hope of. Hope of the book. So far the book has been extremely successful.

15:19I'm quite surprised, this is a party of course, there's a title, I guess, which was sent to me by Lua Ludwig von Mises, thank you for coming up, this is a great title, probably misled many people to buy the book, who didn't even know what to get. The first edition was already sold out in January, and now it came back into print last week. I can imagine that this book might become some sort of revolutionary treat. If it is combined with some more popular writings, and there I have in particular in mind a book by Patrick Buchanan, The Death of the West which is a very easy book to read, my book is a little bit more difficult to read and Buchanan's book is of course a bestseller in Buchanan's book he presents a similar thesis to the thesis that you find in my book What he refers to as a guess of the West is, we have decline in birth rates in all Western countries, below replacement level, and at the same time we have coming into these Western countries a massive invasion of foreigners from third world countries.

16:52And he predicts, quite convincingly, that within one or two generations, Western civilization will simply die out, will be taken over by people who do not know what made Western civilization as great as it is. I describe this process as the process of decivilization and also associated with the growth of the state, with the rise of democracy, and so forth. The weakness, I think, Buchanan's book is quite excellent in terms of diagnosing the problem. The problem of Buchanan's book is that he does not understand what the cause is and does not know how to get out of it, out of this predicament.

17:44Pat Buchanan's view is basically, you can revive the West without changing any of the fundamental institutions that are currently in existence. The welfare state remains in existence as it is. All we need to do is elect Pat Buchanan to become the President and then he would introduce some family policy that paid people for bringing more children and things like that. What I point out in my book is, of course, this decline of birth rates is a result of having social security, of having all sorts of welfare programs and so forth. The entire social security problems of all, Medicaid, Medicare and so forth, all of this stuff destroys individual responsibility, It destroys all the institutions that normally handle these types of problems, family, churches, communities, and so forth.

18:45So if you want to bring about what Ruth Cannon wants to bring about, a revival of families, churches, and communities, and so forth, then the welfare state must be eliminated, and he also does not understand at all that the state itself is supposed to be and does not see that if you want to restore families to their traditional role and communities to their traditional role then this implies by and large that the state has to be dismantled. Look, what you can see is the state has, if you have a monopoly to be the ultimate judge, then you must destroy all intermediate institutions.

19:34The head of a household is in a way competing, of course, against the claim of the state, I am the ultimate judge. The head of a church is in a way competing against the state. The head of a community is competing against the claim of the state, I will be the ultimate judge. So states in the course of centuries have destroyed all of these institutions, knowing full well that they are supposedly dangerous to their own claim in all cases of conflict. I will be the one that decides. So states have to be eliminated in order to restore communities, churches and so forth to their former role, and this will revive the West.

20:21My hope is in a way that many of these Buchananites who are excited about this book will come across the last two chapters in Buchanan's book where they find the guy as convincing as he is in this other part, he has no solution, he has no answer to what caused this problem and that they might stumble across my book. and this and then through this Buchanan's book might be a catalyst of creating some sort of revolutionary movement or counter-revolutionary movement to restore the West. Are there signs for this? Yes, I think there are signs for this. If you look at, for instance, Amazon.com, who buys what other books?

21:09You find that there must have been plenty of people who have already found out what I'm just recommending here, that you cannot speak and you should read mine, and if you have read them both, then you are a potential revolutionary. I'll take a few questions. You didn't address this topic much in your book, but I was just wondering, what's your opinion on the idea of a republic? Is it more a democracy with higher barriers of entry, or is it fundamentally more a modern country?

21:57I think it is democracy with higher barriers of entry. I think, by and large, when you introduce the idea of a republic, the tendency toward becoming a mass democracy is already implied. Because if you accept the idea of a republic, you accept the idea that there can be open entry into governmental positions. And if you accept this, then it is very difficult to say, even though in principle there is open entry, this group or that group does not qualify for it. So I think practically all republics go down the drain and become mass democracies.

22:48I cannot really see what argument people put the Donald, so to speak, to accept the republic and then prevent that it goes in the direction of mass democracy. Q. Didn't the American Republic fail really because the American people weren't Republican enough? Isn't that the argument? There was a skeleton idea, but really it was hard for a lot of people who were wishing to watch it. And that's why it failed. Is there really more Republicanism? A. No, I think there is also fundamental error to believe that the monopoly that has the right to legislate and pass can possibly be a protector of yours. Murray Rothbard at one point said, and I wholeheartedly agree with this, the American Constitution was a noble experiment, but it was obviously a wrong experiment.

23:44We know why it went wrong. You could predict, so to speak, at the beginning, from the very beginning, in what sort of tendency, in what direction the development would go without being able to say how long it would take, of course, before all of these things would actually develop. But to believe otherwise is sort of like leaving some theory of that history is a sequence of accidents. If you give a privilege to a person, then this person will use the privilege. If you give the privilege to an institution that you can tax, they will make use of this and will tax more in the course of time.

24:41If you give the privilege to an institution that they can pass, that they can create laws, they will create laws. And when they create laws, the laws will be by and large written in favor of them and the expense of others. So I think, yes, the American Constitution is supposed to be a clear error. And there were people who knew that when the American Constitution was adopted. I mean, after all, there were anti-Federals at this time. were plenty of people who at that time realized that the Constitution was a clear error. Let's say 50% of the people agree with you, some strongly, some just enough to create your system, and then they start to kind of flip through it in a way that doesn't really exist in your system, it depends not on the commitment of the population, even your system.

25:32You have to understand the reasons why it happened, what happened, and that you have to be done entirely digitally. What I'm suggesting here is of course that what should occur is that the regions received from the central state And in smaller regions, then the likelihood that you have a population that is aware of the problems and remains vigilant is comparatively high. Whereas we would be probably even naïve to assume that for a country of the size of the United States, for instance, that the entire population would be vigilant enough to maintain an order such as this for the entire country.

26:33One of the expected ideals in it that you're referencing is all this feudal order of very with democratic demands and so forth. Yeah. Alex, I've read about two-thirds of your book. All right. There's only a dozen of them in my book. First of all, one of the aesthetic ideals in it that you're referring to is all this feudal order of very small societies. I've been here a couple of years, and we have the sessions going on in the city, with Scotland and Wales, and Northumbria, and the old centipedes, and the Anglo-Saxon Kingdom, and the Isle of Wight, and I can see the vision unfold, and I'm worried that peace was actually created in the UK, or specifically England, I would say, through the imposition of a national government, rather than prior Q2. At this point in time, Europe was composed of large numbers of small units, But they did not understand, as we understand it now, what the advantages are of this type of system.

28:11The advantages are, of course, that small places must engage in free trade. They cannot engage in protection, of course. In small places, you cannot blame other people for your errors that you commit. The stand-up excuse for all this is because the Russians are the elite. That's why things don't work in Kazakhstan, Uzbekistan, whatever it is. In Yugoslavia the evil Serbs are running the central government and they exploit the croats and the slow beans and so forth. And there is some truth in this. If you are a very small unit, the soil excuse does not work anymore.

29:03The slow beans now have their own place there and they can no longer blame the serfs. If things don't work out well, then they must say there must be something wrong with us. We have to learn. So the larger the units are, I think the smaller is the reason to ever identify your own errors. What about testing of the small liberal society next to the larger illiterate society that seeks a grand life? Surely the small society will go back to the very beginning. Well, consideration in the sense that they might have defense alliances or something like that. Yes, of course. If you live in the neighborhood of very big states and you are small, you are almost forced to have alliances of this kind.

29:57But this does not imply that you have to have states. I just wanted to understand if that would take it back to the similar cycle of recreating national problems that you have. Again, in all of this you have to keep in mind that have we learned something from history and what we can learn from history, so be aware that forming a state is a state, so don't form it. Know that small units are advantageous. Don't feel ashamed that you are a small unit, so to speak, as the path of history goes in the direction of more concentration.

30:43As long as you believe that there are these sorts of laws of history that all run towards the world state, you will not put up any resistance if they try to eliminate your small state. Be proud of the fact that there are, The more people know about this, have learned about this, the less likely is that these sorts of same mistakes will be repeated. All mistakes can be repeated again if people don't learn. I think we're scholars, I have nothing, but it stands to give, you're saying that what you've done in the United States is wrong, and to me it's like, well, if you've taken the country, then it's made the most of what was done in the past, and then there's a whole other world out there with many more problems than we have. Am I correct?

31:43Party. Yes, it is true that the United States is wealthier than other states. But what is the reason for this? Because in the 19th century they had an extremely weak state. They had almost an anarchical system in the 19th century. So we can take the United States history in a way as an example to show, yes, if there is less state, if we have more anarchy, if we have the wild west and things like this, crime rates were lower in the wild west than they currently are.

32:33The American system has been exported to all other places in the meantime. All European countries have a system that is by and large the same sort of system that we have in the United States. And all of them drift, so to speak, in the same direction. How can anybody think that the United States, or the Constitution of the United States was a success if you see the outcome of it? The outcome contradicts entirely what the Constitution was set up to do, or what people claimed the Constitution was to do.

33:19If you have an institution like the Supreme Court, what can you predict the Supreme Court will do? You can predict, for instance, that the Supreme Court will have an interest in eliminating as much as possible the power of individual states. Why? Because if you eliminate the power of individual states, that gives more power to those people who serve on the Supreme Court. They just serve their own self-interest. How do you explain, for instance, that whatever tense amendment there, that that is at that level, that follows simply from having institutions such as the Supreme Court as you will take advantage of it and you will increase the power of the central government, you will increase your own power and so forth.

34:17Another example, if you set up an institution such as a central bank, what can you predict will happen if you set up an institution such as a central bank? Will people then print money? Of course they will print money. The Constitution is the same thing. You set up an apparatus that says there are certain people that can tax others and there are certain people that can make laws, change laws. Wouldn't you then say, yes of course these people that are equipped with these powers will of course tax, and will of course tax more, as much as they can get away with, and they will of course make laws, and they will make as many laws as they can get away with, and all of the laws will be written in such a way that it benefits them at the expense of others. Can you not predict this?

35:13The Constitution says, you can tax and you can legislate. A machinery that allows people to do this is, so to speak, a criminal machinery. We have not recognized that from the outset. That's true, there were few people who, whatever, at that time, had the insight that we nowadays do have. But now we have the insights. We see the experiment has failed. But part of the transmission was success, in that it took away the power to declare war, took away the power to print money, took away the power to impose internal tariffs and quotas between the states of the world.

36:00No, but this is not true. Look, there are no internal tariffs, that's true, but there are all sorts of business regulators who harmonize, so to speak, the entire country now. And you can, in this way, cause more havoc than if you would have internal tariffs. By the way, the tariff is not the only problem that you have. Good that you have to know the term, but in the same, look, there you see the same sort of thing that goes on in the European community, there are no eternal tariffs anymore, or at least that's what they say, but on the other hand of course what we see is an upward harmonization of everything, so in one country you have tax A, in another country you have tax B, and if they integrate Then both countries have tax A and tax B.

37:04One country regulates the baking industry, and the other one regulates the beer brewing industry. And once you create the European community, they both regulate the baking of bread plus the brewing of beer. So this sort of thing you have in the United States. But if the definition of the state is an institution for the assertion of the will to strongly believe, The question is, how do you prevent this? Look, the first insight is of course, you must understand what the state is. As soon as people know this, they will be very sceptical about these sorts of people that tell you what is good for you and... How else can you...

37:52I'm lost to say. Understanding the nature of it is the first step in comparing it. Look, states have to rely on other people supporting them, executing their will, at least not resisting them when they are commanded to do this or that. Now, if it becomes so to speak a general attitude among people to say, these are not people who do good things. These are not people that have to be admired. These are people who are in the business of doing bad things.

38:38Almost all politicians have engaged in criminal activity, so to speak, if we just use normal standards of conduct. If we look at them in this way, then I think they will no longer be able to get away with many of the things that they currently do get away. They do get away with many of the things because we admire them. Before we make mistakes sometimes, of course, every person makes mistakes, but we do not see that making mistakes is sort of inherent in the machinery for which they work. As soon as we recognize this, they will lose most, if not all, of their power instantly, and can no longer just tell us, do this and do that, because people will laugh in their face. What are you telling me?

39:28I think we should stop for a moment, and I would invite Roger and Tom to come back too, so we can just have questions also relating to the other presentations, et cetera, et cetera. I think we don't have to take it away. Let's just do it. So the questions do not have to be just related to what I have said. The macroeconomic questions would be welcome too.

40:13and linked in questions as well, so please continue, I did not want to say that you shouldn't ask me questions anymore, I wanted to give you the opportunity to do that, you can also ask questions. It was on the hot seat there.