12. Rothbard on Current Economic Issues

ROTHBARD ON CURRENT ECONOMIC ISSUES

He offered comments on current economic issues in The Free Market, published by the Ludwig von Mises Institute; and a collection of his columns from 1982 to 1995 is available in Making Economic Sense.²⁹⁰

Many economists have noted that in a free market, consumers have much greater freedom of choice than in an economy run by government coercion. But here a misstep threatens. Because consumers have greater choice in a free market, it is easy to jump to the conclusion that whatever promotes choice is a free market measure. Thus, Milton Friedman, in some circles “the very essence of a modern major general” of free market forces, has supported vouchers so that parents can send their children to the schools they choose for them.

Rothbard at once penetrates to the heart of the matter in his analysis.

[B]y fatuously focusing on potential “choice,” the voucher revolutionaries forget that expanding the “choices” of poor parents by giving them more taxpayer money also restricts the “choices” of the suburban parents and private-school parents from having the sort of education that they want for their kids.²⁹¹

The focus, he argues, should not be on the abstract notion of “choice” but on money and income. The person who earns more money necessarily has more “choices” on how to spend that money. A simple point: a free market society rests on a system of property rights, not on a futile effort to maximize choices, of whatever sort. Yet who before Rothbard saw the point so clearly and so well?

Rothbard was ever alert to mistaken arguments for capitalism that, in an effort to be value free, lack a sound foundation in ethical theory. We have earlier seen his criticism of the Pareto criterion as a welfare ideal: in an article included here, he brilliantly illustrates how the criterion operates in practice.

A grotesque example of a “free-market” “expert” on efficiency slightly moderating totalitarianism was the proposal of the anti-population fanatic and distinguished economist ... Kenneth E. Boulding. Boulding proposed the typical “reform” of an economist. Instead of forcing every woman to be sterilized after having two babies, the government would issue each woman ... two baby-rights.²⁹²

The mother could have two babies; if she wanted more, she could purchase baby rights from a woman who wanted to trade hers in. “[I]f we start from the original ZPG [Zero Population Growth] plan,” Rothbard comments, “and we introduce the Boulding plan, wouldn’t everyone be better off, and the requirements of ‘Pareto superiority’ therefore obtain?”²⁹³

If the key to a free society is not to be found in standard welfare economics, neither is resort to that contemporary shibboleth, democracy, sufficient. The mere fact that a majority of a society supports some measure tells us very little about that measure’s desirability:

What, in fact, is so great about democracy? Democracy is scarcely a virtue in itself, much less an overriding one, and not nearly as important as liberty, property rights, a free market, or strictly limited government. Democracy is simply a process, a means of selecting government rulers and policies. It has but one virtue, but this can indeed be an important one: it provides a peaceful means for the triumph of the popular will.²⁹⁴

With Rothbard, one can rarely predict what is coming next. No matter how carefully one thinks one has grasped his thought, he was always several steps ahead. Thus, what follows from the passage just quoted? One might think that, given his view of democracy, he would call for us sharply to de-emphasize democratic reforms. Quite the contrary, he demands more democracy.

It does not at all follow from the fact that democracy is theoretically inessential that moves in a democratic direction cannot be the order of the day. Rothbard was especially concerned to strip from the judiciary its power to overturn popularly supported initiatives. In a highhanded way, our judicial lords and masters find in the Constitution the leftist values they have imposed on that document. Rothbard would have none of this: he proposed measures that would “effectively crush the power of the Supreme Court.”²⁹⁵

Rothbard, it is sufficiently clear, was no conventional economist. His economic analysis was always embedded within a careful account of politics and ethics. Thus, many economists, when considering Nafta [North American Free Trade Agreement], saw only that some tariffs would by its terms be lowered. Was this not a move toward free trade that deserved the support of libertarians?

Rothbard’s analysis penetrates much deeper.

The worst aspects of Nafta are the Clintonian side agreements, which have converted an unfortunate Bush [I] treaty into a horror of international statism. We have the side agreements to thank for the supra-national Commissions and their coming “upward harmonization.” The side agreements also push the foreign aid aspect of the establishment’s “free trade hoax.”²⁹⁶

He also noted another problem with Nafta, which escaped the attention of most commentators: “Nafta is called a trade agreement so it can avoid the constitutional requirement of approval by two-thirds of the Senate.”²⁹⁷

Rothbard’s treatment of the politics of economic issues covers a vast field, but one theme stands uppermost. Whatever advances the power of the state is for him a deadly danger. And even worse than an increase in the power of a single state was the rise of an imperial power that sought world domination.

Here he saw a prime danger of Nafta, a vital step to a New World Order. Politically it suggests that the United States is “totally committed” to a form of global government. Economically it means not free trade but a “managed, cartelized trade and production, the economy to be governed by an oligarchic ruling coalition of Big Government, Big Business, and Big Intellectuals/Big Media.”²⁹⁸

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²⁹⁰Making Economic Sense, 2nd ed. (Auburn, Ala.: Ludwig von Mises Institute, 2006).

²⁹¹Ibid., p. 159; emphasis in the original.

²⁹²Ibid., p. 152.

²⁹³Ibid.

²⁹⁴Ibid., p. 487; the essay, “The November Revolution ... And What To Do About It,” from which this quotation comes was a Confidential Memo that was made available to the public for the first time in Making Economic Sense.

²⁹⁵Ibid., p. 490.

²⁹⁶Ibid., p. 374.

²⁹⁷Ibid., p. 371.

²⁹⁸Ibid., p. 377.