Now that the Democratic Party has “come out” as proudly Socialist, the American electorate has a clear choice: vote Trumpist Republican and be free and prosperous OR vote Big Brother Democrat and be collectivized and poor.

Nobody has ever explained why the free market is “just” AND creates wealth, better than the great economist Friedrich von Hayek. Here he is explaining why to William F. Buckley Jr. in 1977, supported in his argument by George Roche III, president of Hillsdale College.

Hayek explains that in order for a ruling power to make people economically equal, it would have to “treat people very unequally indeed”. (Some would have to work and be robbed of their wages,  while others would be able to sit back, do nothing, and receive the bounty of the stolen funds).

Buckley, who was actually strongly conservative, plays “devil’s advocate”, putting the (sentimental) case for Socialism to his two interlocutors.

We would have preferred Hayek to use the word “fair”, or “equitable”, rather than “just”, because justice can only apply to the individual. George Roche’s argument for freedom on moral grounds comes close to making this point, if not very clearly. We understand that Hayek had to say “just” because “Social Justice” is the subject and title of the discussion.

Friedrich von Hayek on why socialism must always fail:

In order to work, the dependency agenda needs not only to cultivate … a population of dependents. It also needs to foster a population of controlling bureaucrats, … warders of the system. And this brings us to … “the real entitlement mentality that threatens to bankrupt the nation: A political class that feels entitled to rule over the rest of us.”

So Roger Kimball writes at PJ Media:

Republicans … are often heard grumbling about the “entitlement mentality.” I sing in that chorus myself. Usually, the song dilates on the growing habit of dependency and appetite for … “goodies provided by the government and financed by taxpayers.”  …

It is a corollary of that “psychological change” in a people that Friedrich von Hayek diagnosed in The Road to Serfdom: a transformation from the practice of autonomy and self-reliance to the habit of dependency. It was, Hayek noted, both a regular result and precondition of “extensive government control.” Cause and effect fed upon and abetted each other. It was … a textbook case of what Tocqueville described in his famous paragraphs on “democratic despotism.”

How would despotism come to a modern democracy? Tocqueville asked. Not through the imposition of old-fashioned tyranny. No, that instrument is too blunt, too crude for modern democratic regimes. Much more effective is the disguised tyranny of infantilization. Turn government into the sole provider of all those “goodies” and you enslave the population far more effectively than an old-style tyranny ever managed. …

Entitlements are bait on the hook  of totalitarianism. Don’t take it.

What the state gives the state can withhold. Don’t depend on it.

The state should be neither a nanny nor a sugar-daddy. It should do only what it alone can do – protect our liberty.

The following extracts are from an essay on the failure of the welfare state in Europe by James Roberts and J.D. Foster:

Europe’s socialist (or “social democratic”) welfare state is collapsing under the load of unsustainable debt. There is no chance European politicians will ever make good on the many costly and unfunded entitlements they have promised their citizens.

The fundamental problem in the European Union is a monetary policy failure. In conjunction with the debilitating effects of the social welfare state, this has led to a broad economic collapse among the lesser states — notably the PIIGS (Portugal, Ireland, Italy [though not really a a “lesser state” – JB] , Greece, and Spain), but also some of the EU’s newer members — and it threatens to envelop the greater states.

For years, this collapse among the lesser states was disguised by debt accumulation — countries would borrow (at de facto concessionary interest rates) to overcome their inability to generate adequate income by producing and selling. The lack of actual and prospective growth combined with growing debt burdens has led to a long-term solvency crisis, which has been bubbling up of late into a series of liquidity crises.

The monetary and fiscal situation in the EU is increasingly unmanageable, as the debt burdens grow and growth prospects diminish further. …

The vision of a “euro zone” was ill-conceived from the start. It is now increasingly acknowledged that Brussels’ lack of control over social spending, especially in the PIIGS, doomed it from the beginning. Agreements (e.g., the Maastricht Treaty) to stay within EU member government spending targets were routinely flouted, even by the largest EU countries. …

The strong got stronger, while others, like Italy and Greece, stood still or even retreated on policies that would have sustained their international competitiveness. …

Southern Europeans kept borrowing in low-interest-rate euros (which simultaneously inflated housing bubbles in their countries) until, in Margaret Thatcher’s words, their socialist governments “ran out of other peoples’ money!” As a result, some of Europe’s large private banks now hold toxic quantities of sovereign debt issued by the PIIGS and are threatened with extinction through serial defaults …

For decades now, one of the most tragic costs of the European welfare state has been Europe’s structural unemployment, especially among the young, combined with welfare payments that turned unemployment into an acceptable — even desirable — status, while stripping those affected of their dignity and sense of responsibility. The recent riots in the U.K. are an ominous reflection of this failure.

One of the key questions now is: How much longer will workers and taxpayers in Germany and other relatively more fiscally prudent countries in northern Europe be willing to work into their late 60s to subsidize (via eurozone bailouts and managed defaults) their neighbors in southern Europe so that the latter can retire early in their 50s on generous state-funded pensions and go to the beach? 

How many times does it have to be proved that socialism does not work?

Free-market economists – the giants among them, von Mises, Hayek, Milton Friedman – demonstrate in theory that socialist economics cannot work. Their reasoning is not hard to follow, and entirely convincing. We human beings can use our faculty of reason – unique to our species –  to save ourselves from having to try out risky ideas in reality. But millions among us want to keep trying out the failed redistributive policies of socialist economics, experimenting with real lives, courting disaster over and over again.

Roberts and Foster grimly point out:

For the U.S., Europe is the ultimate object lesson — a warning of what happens when government is allowed to run wild, with the resulting loss of liberty, and fiscal debt.

An object lesson. A warning. But Obama, his circle of advisers and appointees, and the millions who persist in voting for socialism – aka “stimulus”, “entitlements”, “taxing the rich”  – remain obstinately deaf and blind to it.

Obama’s chief economic adviser, Christina Romer, admits that the Keynesian economic policy she (among others) advised Obama and the Democrats to adopt and implement, which they did eagerly as it was the redistributionist policy they wanted, was wrong and has failed.

The Washington Post reports:

Christina Romer, chairman of President Obama’s Council of Economic Advisers, was giving what was billed as her “valedictory” before she returns to teach at Berkeley, and she used the swan song to establish four points, each more unnerving than the last:

She had no idea how bad the economic collapse would be.

She still doesn’t understand exactly why it was so bad.

The response to the collapse was inadequate.

And she doesn’t have much of an idea about how to fix things.

What she did have was a binder full of scary descriptions and warnings, offered with a perma-smile and singsong delivery: “Terrible recession. . . . Incredibly searing. . . . Dramatically below trend. . . . Suffering terribly. . . . Risk of making high unemployment permanent. . . . Economic nightmare.” …

At week’s end, Romer will leave the council chairmanship after what surely has been the most dismal tenure anybody in that post has had: a loss of nearly 4 million jobs in a year and a half. … She was the president’s top economist during a time when the administration consistently underestimated the depth of the economy’s troubles – miscalculations that have caused Americans to lose faith in the president and the Democrats.

Romer had predicted that Obama’s stimulus package would keep the unemployment rate at 8 percent or less; it is now 9.5 percent. … The economy lost 350,000 jobs in June and July. …

When she and her colleagues began work, she acknowledged, they did not realize “how quickly and strongly the financial crisis would affect the economy.” They “failed to anticipate just how violent the recession would be.”

Even now, Romer said, mystery persists. “To this day, economists don’t fully understand why firms cut production as much as they did or why they cut labor so much more than they normally would.” Her defense was that “almost all analysts were surprised by the violent reaction.”

That miscalculation, in turn, led to her miscalculation that the stimulus package would be enough to keep the unemployment rate from exceeding 8 percent. Without the policy, she had predicted, unemployment would soar to 9.5 percent. The plan passed, and unemployment went to 10 percent. …

The truth is that the Obama administration is pretty much out of options. … “What we would all love to find – the inexpensive magic bullet to our economic troubles – the truth is it almost surely doesn’t exist,” Romer admitted.

Okay, there is no magic bullet – but there is the invisible hand.

It’s also called the free market.

Free marketeers would lower taxes, remove the minimum wage and the multifarious bureaucratic burdens on employers, and above all forbid government interference in the market. That is to say, they would reverse the policy of high spending by the state which Romer advised, Obama and the Democrats wanted, and even President Bush was seduced into attempting.

Economically wise conservatives have been telling liberals for decades, Keynes was wrong, Hayek was right.

Will the Republicans remember that when they regain Congressional power in November?

In a must-read article, Mark Steyn writes in the National Review about the possibility of American decline, pointing out that it is a matter of choice, and that the Democrats now in power are offering that choice. Here are some paragraphs:

Permanence is an illusion – and you would be surprised at how fast mighty nations can be entirely transformed. But, more importantly, national decline is psychological – and therefore what matters is accepting the psychology of decline. Within two generations, for example, the German people became just as obnoxiously pacifist as they once were obnoxiously militarist, and as avowedly “European” as they once were menacingly nationalist. Well, who can blame ‘em? You’d hardly be receptive to pitches for national greatness after half-a-century of Kaiser Bill, Weimar, the Third Reich, and the Holocaust.

But what are we to make of the British? They were on the right side of all the great conflicts of the last century; and they have been, in the scales of history, a force for good in the world. Even as their colonies advanced to independence, they retained the English language, and English legal system, not to mention cricket and all kinds of other cultural ties. Even in imperial retreat, there is no rational basis for late 20th century Britain’s conclusion that it had no future other than as an outlying province of a centralized Euro nanny state dominated by nations whose political, legal and cultural traditions are entirely alien to its own. The embrace of such an alien fate is a psychological condition, not an economic one.

Is America set for decline? It’s been a grand run. The country’s been the leading economic power since it overtook Britain in the 1880s. That’s impressive. Nevertheless, over the course of that century and a quarter, Detroit went from the world’s industrial powerhouse to an urban wasteland, and the once golden state of California atrophied into a land of government run by the government for the government. What happens when the policies that brought ruin to Detroit and sclerosis to California became the basis for the nation at large? Strictly on the numbers, the United States is in the express lane to Declinistan: Unsustainable entitlements, the remorseless governmentalization of the American economy and individual liberty, and a centralization of power that will cripple a nation of this size. Decline is the way to bet. But what will ensure it is if the American people accept decline as a price worth paying for European social democracy.

Is that so hard to imagine? Every time I retail the latest indignity imposed upon the “citizen” by some or other Continental apparatchik, I receive e-mails from the heartland pointing out, with much reference to the Second Amendment, that it couldn’t happen here because Americans aren’t Euro-weenies. But nor were Euro-weenies once upon a time. Hayek’s greatest insight in The Road To Serfdom is psychological: “There is one aspect of the change in moral values brought about by the advance of collectivism which at the present time provides special food for thought,” he wrote with an immigrant’s eye on the Britain of 1944. “It is that the virtues which are held less and less in esteem and which consequently become rarer are precisely those on which the British people justly prided themselves and in which they were generally agreed to excel.

The virtues possessed by Anglo-Saxons in a higher degree than most other people, excepting only a few of the smaller nations, like the Swiss and the Dutch, were independence and self-reliance, individual initiative and local responsibility, the successful reliance on voluntary activity, non-interference with one’s neighbor and tolerance of the different and queer, respect for custom and tradition, and a healthy suspicion of power and authority.” Two-thirds of a century on, almost every item on the list has been abandoned, from “independence and self-reliance” (40 per cent of people receive state handouts) to “a healthy suspicion of power and authority” – the reflex response now to almost any passing inconvenience is to demand the government “do something”, the cost to individual liberty be damned. American exceptionalism would have to be awfully exceptional to suffer a similar expansion of government and not witness, in enough of the populace, the same descent into dependency and fatalism. As Europe demonstrates, a determined state can change the character of a people in the space of a generation or two. Look at what the Great Society did to the black family and imagine it applied to the general population: That’s what happened in Britain…

One sympathizes with Americans weary of global responsibilities that they, unlike the European empires, never sought. The United States now spends more on its military than the next 40 or so nations combined. In research and development, it spends more than the rest of the planet put together. Yet in two rinky-dink no-account semi-colonial policing campaigns, it doesn’t feel like that, does it? A lot of bucks, but not much of a bang. You can understand why the entire left and an increasing chunk of the right would rather vote for a quiet life. But that’s not an option. The first victims of American retreat will be the many corners of the world that have benefitted from an unusually benign hegemon. But the consequences of retreat will come home, too. In a more dangerous world, American decline will be steeper, faster and more devastating than Britain’s – and something far closer to Rome’s.

In the modern era, the two halves of “the west” form a mirror image. “The Old World” has thousand-year old churches and medieval street plans and ancient hedgerows, but has been distressingly susceptible to every insane political fad from Communism to Fascism to European Union. “The New World” has a superficial novelty – you can have your macchiato tweeted directly to your iPod – but underneath the surface noise it has remained truer to older political ideas than “the Old World” ever has. Economic dynamism and political continuity seem far more central to America’s sense of itself than they are to most nations. Which is why it’s easier to contemplate Spain or Germany as a backwater than America. In a fundamental sense, an America in eclipse would no longer be America.

But, as Charles Krauthammer said recently, “decline is a choice.” The Democrats are offering it to the American people, and a certain proportion of them seem minded to accept. Enough to make decline inevitable? … In the words of [the seldom so insightful historian] Arnold Toynbee: “Civilizations die from suicide, not from murder.”