Saturday, July 20, 2013

Deregulation, the French Revolution and "legal plunder" in the USA

A little weekend reading for you, especially if you want to learn more about the real source of the Tea Party movement.

Frederic Bastiat, a political economist (1801-1850), defined "legal plunder" as when “…the law takes from some persons what belongs to them and gives it to other persons to whom it does not belong.” He advised such a law be abolished without delay, for if allowed to remain, it would “spread, multiply, and develop into a system".

Bastiat is really the original inspiration for Ayn Rand who in turn is the inspiration of those on the right like Ron and Rand Paul, Paul Ryan and all other Tea Party members. They see the problem as being taking taxes from working members of society and redistributing it to the poor. However, if you read Bastiat's work, "The Law", you find that his greatest concern dealing with "legal plunder" was the exact opposite of this.

Bastiat was writing in the context of the aftermath of the French Revolution and the famous "let them eat cake" quote from Marie Antoinette who was tried and convicted of treason to the principles of the revolution and then was beheaded in 1793 just a few years before Bastiat was born. Bastiat therefore was very aware of the dangers of the rich taking advantage of the poor and the consequences of those actions. This is why Bastiat's emphasis in explaining "legal plunder" was focused on ways those in power and those with wealth could game the system to their advantage. He in fact states that this is the worst form of legal plunder and if allowed to persist would always lead to revolution.

I believe Bastiat was correct in this analysis. However, his solution to it was flawed. He believe in deregulation to the point of having only one law, which was the protection of one's right to personal property. Sound familiar? This, and the fact that he was steadfastly against socialism, is the reason he is a god in the eyes of the Tea Party movement. However, if you read his work he in fact proves himself wrong on this matter of having just one law. One obvious problem with this one law is that it has to be enforced. With enforcement the possibility of corruption of enforcement develops and automatically a need for more laws and regulation. It's easy to see the absurdness of it with any kind of reflection at all. The right's obsession with Bastiat's principles, or at least the picking and choosing what part of his principles are of importance is perhaps one of their earliest known examples of them twisting and rewriting history to match up with their chosen ideology.

Bastiat lived his life during the newly formed and budding government set up by the United States. The US Constitution itself inspired him and he believed that it was the closest thing to the optimal system of government that the world had ever seen. At this point, it turns out that governmental system has fostered the greatest wealth inequality of any major country in the world; a country in which the 400 wealthiest individuals have more assets and income than the bottom 157 million Americans. Half of this country do not make enough income to pay for what most of us think of as basic needs. 46 million of us live in what the government officially calls poverty and this number includes 22 million children. Though these facts have been made extremely clear our US government still gives subsidies in the ratio of almost 3 to 1 to the rich compared to the poor. To many of those at the top this is still not enough and they use their power and wealth to push for more tax breaks for themselves and even less benefits for the poor. Given these facts, it is likely Bastiat, if writing today, may have a change of heart about some of his ideas. However, it is also likely he would say, "Ah Ha, what I pointed out as being the biggest problem about "legal plunder" after the French Revolution is still the biggest problem in America today- the rich rigging the system for their own benefit to the detriment of everyone else."

You can read "The Law" online for free here, it's a quick read, only 74 pages long:

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