Why Do We Get Such Bad Leaders?

Why Bad Men Rule
By Hans-Hermann Hoppe


One of the most widely accepted propositions among political economists is the following: Every monopoly is bad from the viewpoint of consumers. Monopoly is understood in its classical sense to be an exclusive privilege granted to a single producer of a commodity or service, i.e., as the absence of free entry into a particular line of production. In other words, only one agency, A, may produce a given good, x. Any such monopolist is bad for consumers because, shielded from potential new entrants into his area of production, the price of the monopolist’s product x will be higher and the quality of x lower than otherwise.

This elementary truth has frequently been invoked as an argument in favor of democratic government as opposed to classical, monarchical or princely government. This is because under democracy entry into the governmental apparatus is free — anyone can become prime minister or president — whereas under monarchy it is restricted to the king and his heir.

However, this argument in favor of democracy is fatally flawed. Free entry is not always good. Free entry and competition in the production of goods is good, but free competition in the production of bads is not. Free entry into the business of torturing and killing innocents, or free competition in counterfeiting or swindling, for instance, is not good; it is worse than bad. So what sort of “business” is government? Answer: it is not a customary producer of goods sold to voluntary consumers. Rather, it is a “business” engaged in theft and expropriation — by means of taxes and counterfeiting — and the fencing of stolen goods. Hence, free entry into government does not improve something good. Indeed, it makes matters worse than bad, i.e., it improves evil.

Since man is as man is, in every society people who covet others’ property exist. Some people are more afflicted by this sentiment than others, but individuals usually learn not to act on such feelings or even feel ashamed for entertaining them. Generally only a few individuals are unable to successfully suppress their desire for others’ property, and they are treated as criminals by their fellow men and repressed by the threat of physical punishment. Under princely government, only one single person — the prince — can legally act on the desire for another man’s property, and it is this which makes him a potential danger and a “bad.”

However, a prince is restricted in his redistributive desires because all members of society have learned to regard the taking and redistributing of another man’s property as shameful and immoral. Accordingly, they watch a prince’s every action with utmost suspicion. In distinct contrast, by opening entry into government, anyone is permitted to freely express his desire for others’ property. What formerly was regarded as immoral and accordingly was suppressed is now considered a legitimate sentiment. Everyone may openly covet everyone else’s property in the name of democracy; and everyone may act on this desire for another’s property, provided that he finds entrance into government. Hence, under democracy everyone becomes a threat.

Consequently, under democratic conditions the popular though immoral and anti-social desire for another man’s property is systematically strengthened. Every demand is legitimate if it is proclaimed publicly under the special protection of “freedom of speech.” Everything can be said and claimed, and everything is up for grabs. Not even the seemingly most secure private property right is exempt from redistributive demands. Worse, subject to mass elections, those members of society with little or no inhibitions against taking another man’s property, that is, habitual a-moralists who are most talented in assembling majorities from a multitude of morally uninhibited and mutually incompatible popular demands (efficient demagogues) will tend to gain entrance in and rise to the top of government. Hence, a bad situation becomes even worse.

Historically, the selection of a prince was through the accident of his noble birth, and his only personal qualification was typically his upbringing as a future prince and preserver of the dynasty, its status, and its possessions. This did not assure that a prince would not be bad and dangerous, of course. However, it is worth remembering that any prince who failed in his primary duty of preserving the dynasty — who ruined the country, caused civil unrest, turmoil and strife, or otherwise endangered the position of the dynasty — faced the immediate risk either of being neutralized or assassinated by another member of his own family. In any case, however, even if the accident of birth and his upbringing did not preclude that a prince might be bad and dangerous, at the same time the accident of a noble birth and a princely education also did not preclude that he might be a harmless dilettante or even a good and moral person.

In contrast, the selection of government rulers by means of popular elections makes it nearly impossible that a good or harmless person could ever rise to the top. Prime ministers and presidents are selected for their proven efficiency as morally uninhibited demagogues. Thus, democracy virtually assures that only bad and dangerous men will ever rise to the top of government. Indeed, as a result of free political competition and selection, those who rise will become increasingly bad and dangerous individuals, yet as temporary and interchangeable caretakers they will only rarely be assassinated.

One can do no better than quote H.L. Mencken in this connection. “Politicians,” he notes with his characteristic wit, “seldom if ever get [into public office] by merit alone, at least in democratic states. Sometimes, to be sure, it happens, but only by a kind of miracle. They are chosen normally for quite different reasons, the chief of which is simply their power to impress and enchant the intellectually underprivileged….Will any of them venture to tell the plain truth, the whole truth and nothing but the truth about the situation of the country, foreign or domestic? Will any of them refrain from promises that he knows he can’t fulfill — that no human being could fulfill? Will any of them utter a word, however obvious, that will alarm or alienate any of the huge pack of morons who cluster at the public trough, wallowing in the pap that grows thinner and thinner, hoping against hope? Answer: may be for a few weeks at the start…. But not after the issue is fairly joined, and the struggle is on in earnest…. They will all promise every man, woman and child in the country whatever he, she or it wants. They’ll all be roving the land looking for chances to make the rich poor, to remedy the irremediable, to succor the unsuccorable, to unscramble the unscrambleable, to dephlogisticate the undephlogisticable. They will all be curing warts by saying words over them, and paying off the national debt with money no one will have to earn. When one of them demonstrates that twice two is five, another will prove that it is six, six and a half, ten, twenty, n. In brief, they will divest themselves from their character as sensible, candid and truthful men, and simply become candidates for office, bent only on collaring votes. They will all know by then, even supposing that some of them don’t know it now, that votes are collared under democracy, not by talking sense but by talking nonsense, and they will apply themselves to the job with a hearty yo-heave-ho. Most of them, before the uproar is over, will actually convince themselves. The winner will be whoever promises the most with the least probability of delivering anything.”

— Thanks to LRC — 


“Pets Shouldn’t Exist.”

So says says a university-employed tax-funded animal rights radical at Rutgers. “We ought to get rid of domestication altogether.”

According to this guy, pet owners are “oppressors.”

This is all pure confusion of course. Note first of all that, in the interview linked above, he is talking to to a human interviewer for an article to be read by humans. He is not talking to other animals about them ‘oppressing’ each other (like cats tormenting the birds in the yard).

Animals can’t be “not oppressed.” They can’t be “liberated” simply because they cannot be “free” the way humans can be.

That’s why it’s ok when we say, “I own this dog / this cat is my property,” but it’s not ok to own slaves and have humans as property. Humans have rights and animals don’t.

Obviously humans should take into account animal suffering for our actions. The burden of moral decisionmaking is entirely on humans in any case. But that is not the same as saying, “Animals have rights.”

There is certainly no justification for using the state’s guns and badges to restrict people from owning pets and eating animals. But this is what radicals like Gary Francione desire. The progressives have always hated the human use of animals (especially red meat).

Does Progressivism Have a Future?

Probably not. So-called “progressivism” has no guiding principle at all. It is driven by fickle emotions and a worldview that thinks you can have your cake and eat it too. There is no hard limiting factor with which progressives can judge if their frivolous proposals have gone too far. That’s why reasonable people think progressive demands and proposals are getting… progressively more laughable and absurd.

Does Capitalism Need the State?

Some guy named “William R Gillies” has been trying to troll CMR on Twitter for the past week or so.

He is failing, because he doesn’t know what’s he’s talking about. He is a “Cartographer, Psychogeographer, Historicist.” All historicists struggle with understanding economics.

Mr Gillies is no different. He does not understand economics and the nature of markets. What is his problem? He believes that capitalism and markets can only exist if there is a state to enforce private property rights. This basically sums up his position:

He is completely wrong. Since this is a widely held view, however, it is worth discussing.

Firstly, let’s define our terms. Generally, capitalism is taken to mean “private ownership of the means of production.” This is a reasonable definition. We can elaborate a little bit by saying capitalism is the social order characterized by respect and recognition of private property. The market is the outcome of capitalism — essentially, people producing stuff and trading with each other. And the state? It is a territorial monopoly on the use of force.

Capitalism exists despite the state, not because of it. There are four basic arguments that refute the notion that capitalism depends on the state to exist.


A simple thought experiment can helpfully highlight Mr Gillies’ basic error.

Robinson Crusoe, alone on an island, doesn’t have to worry about issues like “private property” or “markets.” It’s just him and maybe a few animals. He cannot trade with anyone. His use of resources affects no other economic agents on the island, because there are none. It is an autarkic economy. He spends his days catching fish and eating them. Property rights are literally a non-issue.

The arrival of Friday considerably changes the situation. Suppose Robinson Crusoe decides to trade some of his fish for some of Friday’s berries. This would literally create a market economy. It’s just a small and simple one.

The only way trade is possible is if both recognize the property rights of the other. Transferring ownership is what trade means. Otherwise there can be no trade. Either no exchanges will take place, or a hegemonic relationship will arise if one actor uses violence against the other.

If trade is possible in this situation, and there is no state, then a market economy does not depend on the state. Since trade clearly is possible in this situation, then it follows the market economy depends not on the state, but something else A modern economy is more complex and its division of labor much wider than the “two people on an island” economy, but in principle nothing changes between them.


The idea that the market economy depends on the state gets things entirely backwards. The state depends on the market, not the other way around. To say otherwise is to say the host depends on the parasite, rather than the parasite depends on the host. It just makes no sense.

The state literally cannot exist unless there is something to tax (because it produces nothing). The market, on the other hand, can arise spontaneously and exists anywhere people are trading goods and ideas with one another. The state depends on the market. The market does not rest on “state violence” as Mr Gillies claims. The state rests on state violence, the way the robber depends on robber violence. Just because there might be property rights violations where there is no state does not mean property rights depend on the state, because the state has property rights violations too. If the market must exist before the state, and the market depends on private property, it’s hard to understand how only the state can establish property rights.

It is simply incoherent to claim that the state, the very nature of which necessitates interference with property rights, is the source of property rights. All states without exception tax their subjects and outlaw competing institutions of compulsion. To say that the greatest, most systematic violator of private property rights is the only way to protect private property rights is simply absurd, and reveals a level of cognitive dissonance so severe it must cause migraines. The state fails the number one requirement of a valid lawgiver: that it follow its own laws.

The very idea of the state as a protector of property rights is contradictory. Hoppe writes:

Yet how can there be better protection for A and B, if S must tax them in order to provide it? Is there not a contradiction within the very construction of S as an expropriating property protector? In fact, is this not exactly what is also—and more appropriately—referred to as a protection racket? To be sure, S will make peace between A and B but only so that he himself in turn can rob both of them more profitably. Surely S is better protected, but the more he is protected, the less A and B are protected from attacks by S.

We should at this point offer some other remarks on the Hobbesian thesis, that there cannot be peaceful relations without a Sovereign to enforce agreements. Hobbes’ argument asserts that in the “state of nature”, A and B cannot cooperate, so they must agree to have S tax them and resolve their disputes. If this is true, then ostensibly property rights depend on the state.

But who enforces the agreement between S, A and B? After all, S is still a human and unable to form agreements without a Sovereign according to the Hobbesian thesis. So there would need to be another enforcer, S*. But then who enforces this agreement? You would need another enforcer, S**. And then you would in turn need to enforce this with S***, and S****, and so on into an infinite regress. To escape this conclusion, it must be conceded that agreements and property relations are possible without the state, otherwise no agreement or trade could ever arise (this argument comes from Anthony de Jasay).


The essence of Mr Gillies’ position is private property rights are “not natural” and “must be enforced.” Sure, rights need to be enforced. So what? It is a non sequitur to take that claim then say it follows that only the state can enforce rights. There is nothing inherent in private property rights that require enforcement to come from the state.

There are historical cases in which the enforcement of property rights occurs with the state. Yet there are also examples without the state. This is extremely important. Basically, all legal systems deal with property rights, and if there have been non-state legal systems, Mr Gillies must be wrong. A legal system of enforcing rights does not inherently require the state at all.

Remember, the state is specifically a territorial monopoly on the use of coercion. Yet throughout history there has been enforcement of rights without such monopolists. Most of the Anglo-Saxon law grew out of voluntarily adopted norms, rather than authoritarian decree. Off the top of my head, here are some other random examples of customary, non-monopolistic legal systems: ancient Ireland, the Law Merchant, many other forms of commercial law, the Yurok Indians, the Ifugao, the Kapauku Papuans, medieval Iceland, and eBay.


Most critically, the proposition “Private property rights depend on the state” is proven wrong by the act of saying it. For it is not possible to argue anything without presupposing that one has private property in one’s body. This is logically antecedent to the formation of any system of rights enforcement. It’s what makes it possible to have a rational standard by which to judge a system of rights enforcement in the first place.


Mr Gillies simply doesn’t understand the relationships between capitalism and the state. He relies on a tissue of fallacies believed by those whose understanding of reality is completely distorted by historicist nonsense. His confusion is so profound that he doesn’t even come close to understanding property rights, capitalism, or markets. He doesn’t understand the foundations of the market economy at all.

For further reading:

Hans-Hermann Hoppe — A Theory of Socialism and Capitalism

Jörg Guido Hülsmann – The A Priori Foundations of Property Economics

Follow Canadian Market Review on Twitter here.

UPDATE: For the record, Mr Gillies has seen this article. After reading it, he swiftly retreated from the debate. He was clearly in over his head.

I didn’t want him to think I was being unfair, so naturally I offered him a chance to reply. Instead, he went crying to his friends on Twitter for support. To them he made made a bunch of inane comments, like “Austrian School econ also underpins a fair bit of the neoliberal consensus” (lol wut), and “Must be a Randian.” Right. Because anyone who defends free market anarchism from an rationalist, objective idealist position — pretty much the opposite of statist, egoist, empiricist Rand  — must be Randian. Which… makes no sense at all.

He also said that “plenty” of “economists” have “refuted” everything I wrote. Of course, he provided no names or links or anything. I am pretty confident I have seen those arguments and anticipated them. Otherwise, I would gladly respond to any specific arguments. His behavior is to be expected from someone who understands nothing about economics and history.

BOOK REVIEW: Ludwig von Mises – Human Action (Scholar’s Edition)

Human Action: The Scholar’s Edition

There is no way I can say all that I want to say in this review. Murray Rothbard has aptly said: “Every once in a while the human race pauses in the job of botching its affairs and redeems itself by producing a noble work of the intellect. . . . To state that Human Action is a `must’ book is a greater understatement. This is the economic Bible of the civilized man.”

I would take Rothbard’s praise further. This is not only the single most important economic tome ever, but also the pathbreaking, definitive exposition of praxeology, the correct basis for social sciences and also necessarily the foundation for epistemology. Only a few living economists of the “Austrian” school of economics seem to have truly absorbed the Misesian “praxeologic” method.

Mises’ contribution to economics cannot be understated. In basing economics on the axiomatic status of action, Mises established the ultimate foundation for economic science. The fact that humans act — that is, human beings act purposefully to reach subjectively chosen ends — is, of course, irrefutable (to argue against the axiom of action is itself an action). This, however, may seem like a trivial observation. Humans act, big deal? Why is it so important? Its importance is in praxeology’s methodology, which uses deductive chains of reasoning to realize the implications. In understanding what is implied by action — values, ends, means, choice, cost, preference, profit, and loss — economic science can be deduced logically, so it is a purely an a priori science where economic laws tell describe apodictically real relationships in the world. In this way, key economic principles follow from the action axiom (as well as a few general, explicit assumptions about the empirical reality in which the action occurs), such as the law of diminishing marginal utility, how taxation changes time-preference schedules, the counterproductive nature of interventionism, involuntary unemployment, and so on. So long as the logic deriving the principles is correct, then economic laws are a priori-valid, and empirical testing has no bearing on them.

This book initially appeared in a difficult time, when positivist methodology and the Keynesian paradigm were dominant. Thus, upon Human Action‘s release it was mostly derided and ignored by the mainstream, rather than studied and criticized. It did, however, gain notoriety among academic circles for rebuilding economic science from the ground up, all the while plowing through the epistemological shortcomings of previous standards. It also sold surprisingly well for a nearly 1000 page book about economics.

Mises provided considerable ammunition for institutional critique in Human Action. He uncovered the socialist calculation problem — a central planning authority has no rational way to allocate resources for production without market prices — and this is an insurmountable hurdle for any state-run economy. In fact, when analyzed fully, it shows that any government intervention in the economy results in market distortion and inefficiency. In essence, nothing can ever be provided more efficiently by the government nor can the government do anything to make the market more efficient. Murray Rothbard, who was of course Mises’ student, explored this thoroughly in his critique of interventionism, Power and Market.

Lee Carlson’s shamefully inane review can be wholly disregarded. He believes economics can benefit from aping the methods of physics, when actual physicists and engineers recognize that is foolish. Carlson fallaciously appeals to authorities, and it does not change the fact that the search for mathematical constants that describe human choice is futile. If it is possible to learn and have different ideas in the future, which cannot be denied without contradiction, then you cannot know in advance how one will act based on new ideas. That’s why economics must deal with the formal implications of choice, and not the formation of specific choices. Mises understood this. Few other economists do.

In regards to the reviews criticizing Mises extreme rationalism, they would do well to better understand Mises’ methodology and the epistemological problems of economic science. He spends nearly 200 pages early in the book discussing this, but people are lazy and think the rationalist foundations of economics is “boring” or somehow not relevant.

To Mises, ultimately, all economic laws were derived from the incontestable axiom that, trivially enough, humans act, choosing between alternatives in a finite universe. In understanding the effects of different forms of economic activity, the economist must determine correct theory by relying on human choice as the guiding factor. To consider the effects of a change brought about by action, we need recognize that by taking certain choices, the opportunities for other choices are destroyed. And because the relationship between these universes resulting from different choices are a priori related to the others, there is no need to rely on empirical confirmation for correct theory. The corpus of economic science is essentially a system of counterfactual laws where empirical testing is completely useless.

It would be foolish to argue that consumption need not be preceded by production, or that that which is consumed now cannot be consumed later, just as it would be foolish to argue that money inflation does not raise prices higher than otherwise, just as it would be nonsensical to argue that 1+1=3, just because of an “observation.” Like a mathematical proof, all economic laws must be refuted by identifying errors in the axiomatic-deductive chain, not finding “conflicting” data. This is also the only truly valuable way to understand complex economic phenomena. For example, were rising real incomes in Canada 1950-1990 a result of increased taxes, or despite of more taxes? Would they have been higher still with higher or lower taxes? The traditional economist is utterly helpless, because they have actually rejected economic theory in favor of a misguided empiricist prejudice. Praxeology is more valuable than any mathematical model because of of its method. They require no qualifying considerations (“all things being equal” or “ceteris paribus”) and are always true.

Finally, the original issue of the Scholar’s Edition was a BEAUTIFUL book. It really shows how a physical book can be damn sexy in a way that ebooks and such can never be. From the Mises Institute:

“The Scholar’s Edition is printed on stunning, pure white, acid-free Finch Fine 50 lb. paper; carefully set in the readable and beautiful Janson typeface, including the 1954 index, the most comprehensive ever done; covered in spectacular dark azure Odyssey cloth from Prague, the finest natural-finish, moisture-resistance book fabric in the world; secured by the finest caliper Binders board; protected by an impressive slipcase from the famous Old Dominion company; graced with antique-soapstone endpapers from Ecologic Fibers; casebound with the strongest Smyth-sewn signatures; fitted at head and foot with silken endbands, thick wrapped for durability; complemented with a double-faced, satin-finish ribbon marker; stamped with brilliant, non-tarnishing gold foil from Japan’s Nakai International; and produced at R.R. Donnelly’s famed Crawfordsville Bindery, where’s America’s finest books are assembled.”

Pretty delicious, actually!

The Scholar’s Edition also features an exhaustively compiled index and — most importantly — restores all the ambiguities and deleted material from the third and fourth editions. In particular, Yale University Press’ complete butchery of the 1963 edition is now nothing more than a bad memory.


(This review was originally published in 2004.)

Purchase Human Action from Amazon.com for a ridiculously low price

Ron Paul in Calgary

Last Friday, I attended the Ron Paul speech at the “Making Alberta Safe for Capitalism” summit.  This was at the Westin Ballroom in downtown Calgary. I was among approximately 300 attendees, which included financial professionals, publishers, IT nerds, engineers, students, neocons, and more.

I would like to note how this attracted virtually NO media attention. I do not think there is any “conspiracy” here — rather, it is simply due to Ralph Klein’s memorial service being held at the same time. We all know how the media loves to fill its time with the glorification dead politicians whenever the opportunity presents itself. This week, they’ve got Thatcher.

Besides, Ron Paul’s ideas make Canadians uncomfortable. Most people don’t want to talk about such things.

Ron Paul’s speech was basically what you would expect if you’ve been following him for the last few years. I’ve been watching Ron Paul’s political career since 1998, so I was very familiar with all the themes: personal responsibility, free markets, small government, anti-war, and anti-central banking. Still, it was great to pay respects to someone who is more than just an honorable statesman (a contradiction in terms when applied to anyone else), but a man whose efforts have done more for the liberty movement than anyone else in the modern era.

Having retired from politics, this was Ron Paul without any filter that might have previously been imposed by the realities of being in political office. Yet since his message has always been fundamentally radical, there was no difference with post-politics Ron Paul. The message is just as unfavorable to economic, social, and imperial intervention as ever.

At various points throughout the speech, I would look around to gauge the response to certain statements. How delightful to see various attending neocons squirm uneasily when Paul declared there should be no income tax. Some folks scowled at the suggestion to replace government welfare entirely with private charity. Otherwise, the ideas of less spending, less tax, less regulation, and more civil liberties were received favorably. Paul age and manner makes is a kind, wise grandfatherly figure — part of his great success is due to his ability to convey radical arguments in favor of liberty while making them seem completely non-controversial.

The biggest opportunity that was missed in Dr Paul’s speech was HEALTHCARE. If there is a sacred cow in Canadian politics, it’s definitely government healthcare. Without a doubt, government healthcare is a disaster, and Canadians need to learn why it will always be awful regardless of the huge piles of money thrown at it. Unfortunately, healthcare was not covered at all in Dr Paul’s remarks. Too bad. Huge missed opportunity, I think.

He is a medical doctor and an economist who can speak with authority on the failings of public healthcare. He is also old enough to speak about American healthcare system before the government became heavily involved. Before Medicaid, Medicare, the HMO Act of ’73, and so on, there was relatively little government intervention with the provision of healthcare. Basic medical services were cheap and plentiful, and a greater portion of the population had health insurance compared with now. The audience would have greatly benefited from hearing his insights on this subject. He has effectively explained the necessity of free markets in medical care — it is a message Canadians desperately need to hear from somewhere. Virtually no one will touch the issue of public healthcare in this country. We will all be worse off as long as this condition persists.

I would have also liked to hear more war-related remarks. Essentially, anything that applies to the US wasting lives and money on Afghanistan applies to Canada as well. Paul spoke about Iraq more than Afghanistan — which is fine in and of itself, but Canada was not seriously involved in Iraq. Our participation in Afghanistan is another story. Sadly, Afghanistan is an issue that people barely seem to care much about. If they do, it’s because they are dumb enough to think we have Canadian forces there “fighting for our freedom.” Yuck. The lack of interest is even more critical now, because Obama has declared he is “bringing the troops home” in 2014. This is typical government strategy: declare “victory!” and suddenly no one cares anymore. Just like Iraq, where there was never any “victory”, and as I write this the country continues tearing itself apart.

Ron Paul’s speech included a few “fanservice” parts for the Calgarian audience:

He said, “Ralph Klein sounds like a guy I might have liked.” Fair enough, given the memorial was that day, and Klein actually did cut spending at one point.  So that’s cool, whether or not Klein was a principled friend of liberty.

He also gave his support to the Keystone XL — with the important qualification that one can get the permission of property owners, the government should not stand in the way of pipeline construction. This is an rather critical proviso, because in reality pipeline construction does involve government takings/expropriations. Remember: in Canada, the Crown owns all the land as a matter of law.

Anyone who attended this event specifically for Ron Paul could be described as “cutting-edge.” Canadians are not generally ready for the radical Paulian message. For many Americans, there is the emotional connection to ideas of independence, revolution and decentralization, even these are not embraced in practice. The Paulian message can get its hooks in that. For Canadians, the state is endlessly glorified in subtle and not-so-subtle ways. There is no element within our culture that reinforces skepticism about state power. The closest thing to this is Albertans’ memories of the NEP, but that is a regional sentiment and it is being gradually overwhelmed with the pleas for more government.

I hope that the mere fact that Ron Paul has visited Canada to give pro-capitalism speeches indicates that there is a growing audience for the message of liberty in this country. Just as the 20th century demonstrated communism was a lie, the 21st century will show us that democracy is a lie. Democracy’s death throes will be earth-shattering. Liberty’s natural elite must spread and shine the light through dark times, so that a better age may yet emerge.

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