March 2012 — Laissez FaireLaissez Faire

From “How Not To Fight Against Socialized Medicine,” in Ayn Rand’s The Voice of Reason:

Doctors are not the servants of their patients. No free man is a “servant” of those he deals with. Doctors are traders, like everyone else in a free society—and they should bear that title proudly, considering the crucial importance of the services they offer. . . .

Most people in this country are not moochers who seek the unearned, not even today. But if all their intellectual leaders and the doctors themselves tell them that doctors are only their “selfless servants,” they will feel justified in expecting and demanding unearned services.

On January 3, 2012, our dear friend John David Lewis passed away after an extended battle with cancer. In this impassioned talk, delivered last May, John showed that government medicine treats doctors as cogs in a giant machine. Obamacare, he argued, is not only unconstitutional: it is a moral assault on a free people, and an attack on human life itself.

Here is the Q&A:

Today the government decides what we use as money, and it can print new money whenever it wants. Under laissez-faire capitalism, there is a separation of state and economics—and this includes a separation of the state and the money supply.

If this issue sounds remote or unimportant, it shouldn’t. Ending government control of money is indispensable to protecting freedom.

Money is, of course, crucial to our lives. In a division of labor society, individuals don’t produce the things they themselves consume (the way a farmer might). They produce things that other people want, sell those things for money, and use the money to buy the things they themselves want. Money is a tool of exchange.

Under laissez-faire capitalism, individuals are free to use whatever they want for money, assuming they can get other people to accept it. Historically, when people have been free to choose their medium of exchange, they have gravitated toward gold.

There are a lot of reasons why gold makes for good money: it’s fungible, it’s portable, it lasts forever—and it’s relatively scarce.

Today, money consists of green pieces of paper (and computer entries) that the government can print at will. It’s the complete opposite of scarce, and that’s a very dangerous thing because it enables the government to spend virtually without restraint.

Under a gold standard, government spending is constrained by what the government can collect in taxes. But when it controls money it can inflate the currency.

Inflation is one of the most destructive things that can happen to an economy. As the government prints more money it doesn’t magically bring new goods into existence—it merely dilutes the purchasing power of each dollar: your money is worth less. It’s for this reason that inflation is often referred to as a “hidden tax.”

Some of results?

• The government can eat away at your savings.
• The government can take on incredible amounts of debt, as we’re seeing today.
• Inflation can distort the entire economy. The new cash can become concentrated in certain sectors of the economy, creating bubbles that ultimately burst—as we saw during the recent housing boom and bust.

Under a gold standard, the government has no power over the money supply: it cannot inflate. Its power to spend is restrained, and its ability to create bubbles is eliminated. Whatever the economic advantages of gold, the political advantage is undeniable: gold is the guardian of a free economy.

Monetary economics is a vast, complex topic, but here are a few resources that I recommend for anyone thinking about this issue.

• Ayn Rand – Egalitarianism and Inflation
• Lawrence H. White – Competing Money Supplies
• Judy Shelton – A Guide to Sound Money
• Henry Hazlitt – The Inflation Crisis and How to Resolve It

I recently got to talk to Howard Gluss about how the government is messing up American health care, and why getting the government completely out of the health care system is the only moral solution. I always love talking to Dr. Gluss. He asks good, challenging questions. . .and then he gives you time to answer them.

It’s a rare thing.

In May 2011 I gave a talk at a Doctors Town Hall in which I argued that to save American health care, advocates of freedom and capitalism have to capture the moral high ground from the proponents of government control.