For a New Liberty review, Part 2 (Ch. 4-9)

Ch. 4 The Problems

Rothbard’s list of the problems of society is a predictable list of almost every major area government is involved.  Highlights of his list include the nationalization of television and radio, and a critique of the military industrial complex and its cost-plus guarantees to defense contractors.  Rothbard identifies government as the “red thread” between society’s problems.

Ch. 5 Involuntary Servitude

Rothbard defines forced labor as “an act which denies the most elemental right of self-ownership.” (pg 97)   He applies this definition to the following:

1)      The military draft (including the drafting of doctors)
2)      Lower than market-wage salaries for enlisted men/women, as well as the “term of service” obligation, violating the familiar right-to-work sentiment
3)      Anti-strike laws
4)      All forms of taxation
5)      Forced testimony in courts
6)      Forced rehabilitation of mental patients

All of these acts, argues Rothbard, violate the non-aggression axiom which is at the center of libertarian thought, and they all represent forms of forced labor which he deems immoral and inefficient.

Ch. 6 Personal Liberty

Rothbard shines in his opening diagnosis of the right of free speech as it pertains to the ever important question of property rights.  He defends the incitement of riots by arguing that those incited were not forced, and defends libel and slander by saying that the reputation of individuals is arbitrary and thus cannot be considered private property that can be violated.  He also makes a case that these laws violate against the poor.  Lastly, pertaining to free speech, he sees a major problem with assembly laws.   When a group assembles in government owned streets, and clogs traffic, who’s rights are to be upheld, the right of the group to assemble or the right of the travelers to an uninterrupted trip?  He says the crux of the matter lies in that the streets are publicly owned, where a private owner would independently decide what use his street would allow for a given time.

Finally, Rothbard makes detailed, albeit very predictable, arguments against the FCC, pornography and other sex laws, wiretapping, gambling, and gun laws, clinging all the while to the non-aggression axiom and its application to property rights.

Ch. 7 Education and Ch. 8 The Welfare State

I’ve chosen to lump these chapters together because the principle his argument involves for both remains the same.  The contradiction made by statists is in, at once, defending the need of both an educated public and charity to help the poor, and advocating the use of government programs to accomplish these noble goals.  Specifically for education, he argues against the forming of a consistent curriculum for children growing up in different areas with different educational needs, as well as truancy laws which provide a captive audience for the curriculum inevitable chosen by the liberal intellectuals.  His argument goes that if private education were allowed, children who wanted to be, for example, electricians could maximize their earning potential by developing these skills at a young age.  At any rate, competition in the schooling system would allow for a more personalized and higher quality experience for those who chose to buy an education, as is the tendency of the free market.

As for the welfare state, he again distinguishes between the intentions of providing a safety net for those in rough times, and the inefficient and coercive use of taxation to provide it.  Another main argument against the welfare state is that when the State uses a numerical value to define poverty, it has strange consequences on the opportunity cost of working.  For example, a person making 20,000 dollars a year who would be due to receive 18,000 in total benefits by being unemployed, may very well choose that option.  Thus Rothbard shows using statistics that the welfare state inevitable grows over time because of this phenomenon.

Ch. 9 Inflation and the Business Cycle

This is where For a New Liberty shines the brightest.  Rothbard’s defense of the Austrian business cycle theory is cold, logical, and pointed.  He begins by pointing out that Keynesian economics have no explanation for stagflation.  Decreasing demand during a recession inevitably forces prices downward, but during the early 70s prices rose along with unemployment.

One of the main points Rothbard makes is that the modern contention that “a bit of inflation is good for the economy” is false.  In fact, during the period since around 1800 to 1913, prices steadily declined due to increases in productivity and technology.

He places the blame of rising prices solely on the State for allowing the creation of a central bank (The Federal Reserve) with a monopoly power to control the money supply.  Especially after the dollar was released entirely from the gold standard during the Nixon administration, the Fed’s expansionary monetary policy has continually harmed the value of the dollar, causing a rise in prices.   It also causes false signals to investors because of an artificially low interest rate.  This is an especially harmful process when combined with government subsidies to certain industries, further discombobulating the true market signals sent by the price system.   Finally he argues against the ills of the Fractional reserve banking system (a sneaky way for the Fed to indirectly raise the money supply) and then offers the common Austrian argument of returning to the gold standard as a means for money to hold its value over time, as it has done in the past.

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