The West and China: A Rabbit That Has Been Hypnotized by a Snake

Twain famously observed how history doesn’t repeat, but that it tends to rhyme.  America and the West learned a hard lesson during the Cold War when the preeminent communist power of the day attempted to sedate the free world into a geopolitical slumber using an ingenious approach.

Today, we are making an uncannily similar mistake, this time with the modern-day communist power of China. If we don’t heed the historical rhyming and lessons that come with it, troubled times are certain.

The 1950s and the Geopolitical Sedative of ‘Peaceful Coexistence’

In early 1956 Soviet ruler Nikita Khrushchev delivered a secret speech to the Twentieth Party Congress.  In it he unveiled the new official state policy of ‘peaceful coexistence,’ which the Soviet Union would apply when dealing with its rival, the West.

Peaceful coexistence was packaged to be appealing to western Europe and the United States.  The concept advertised a future where communist nations in the Soviet sphere could live alongside western democracies, without fear of constant strife and with an eye toward reducing tensions.

Of course, the Soviet Union’s and Khrushchev’s true intentions with the application of peaceful coexistence were quite different than what was promoted to the West.  Behind the rhetoric of détente sat the long-term twin objectives of lulling the West into a false sense of security and of laying the groundwork to decisively vanquish democracy.  Peaceful coexistence was in many ways a marketing campaign to produce the opposite result of its name.

The Soviet propaganda machine got fully behind the promotion of peaceful coexistence.

Countless influential individuals in the West, including the powerful in European and American governments, took the bait hook, line, and sinker.   Peaceful coexistence was quickly embraced by the elite and expert classes.

The few who early on saw peaceful coexistence as a sham were initially labeled as narrow-minded and backward thinking.  Until the Soviets brutally invaded Hungary later in 1956.  Russian tanks in the streets of Budapest immediately clarified that peaceful coexistence was nothing but a ruse to buy time, gain advantage, and outmaneuver the West.

Peaceful Coexistence Redux: Modern China and the West

China has been promoting its own brand of peaceful coexistence for decades.  It is masterfully good at it; China today is much more persuasive, effective, and patient than the Soviets ever were in the 1950s.

China’s version of peaceful coexistence has successfully permeated just about every institutional pillar of modern western society.

Academia, having a seemingly incurable ideological soft spot for communism and its cousin socialism, needed little coaxing to jump on the peaceful coexistence bandwagon.  Colleges have been eagerly pocketing Chinese money to fund a broad spectrum of research and programs.  Universities compete to take on as many full-tuition-paying Chinese nationals as possible in undergraduate, graduate, and postdoctoral slots.  Individual professors, departments, and universities across higher education are hopelessly conflicted and financially indentured to China.

The capital markets have behaved badly under the influence of peaceful coexistence.  The largest investment houses, banks, and private equity firms assessed the growth prospects of China, and happily poured trillions of dollars into the communist economy.  Much of that economy is designed to pilfer technology from the West, further militarize the communist nation to better prepare for conflict with the West, and to build strategic industries that aim to destroy competition in the West. Ironically, the biggest capitalists in the free world have willingly funded a regime that exists to destroy capitalism.

Big business, specifically global corporations, saw over a billion potential new Chinese customers for products. They quickly became transfixed with peaceful coexistence, to where companies began acting illogically.

Major US airlines refuse to acknowledge the nation of Taiwan on their global maps resting in the seat pockets of their planes, for fear of upsetting China.

Tech firms grant Chinese state security access to user personal data that they would never dream of providing to US authorities.

Peaceful coexistence coupled with over a billion potential viewers have hypnotized western media and entertainment.  The Chinese Communist Party acts as director, editor, and producer of most major Hollywood films these days.  And marquee athletes and professional sports franchises are much more comfortable deriding their home nations and ticket-buying customers than they are speaking truth to the power that is China.

The western environmental movement fully embraced peaceful coexistence and commits the most egregious acts of aiding and abetting China.  Much of this knowing collusion falls under the flaw and folly of ‘tackling climate change.’

Environmentalism used anti-science ideology and nonsensical concepts of zero-carbon and renewable energy to drive policy mandates, subsidies, and protections for products with supply chains controlled by China.

Environmentalism is proving to be a geopolitical trump card for China:  eradicating American energy independence brought on by the shale revolution and replacing it with a certain energy dependence on China.

Politicians, not always the sturdiest of moral fortitude and discipline, were often easy marks for China’s brand of peaceful coexistence.  Outwitted and outmaneuvered presidents, popes, and climate czars engage China with visions of world peace/détente, new members of the religious flock, and climate accords.  These western leaders bring back nothing of substantive value from the negotiating table, yet they readily cede value on the most vital of issues.

The biggest error politicians and state bureaucrats make when dealing with China is assuming discrete issues can be segregated from China’s grand strategy residing under its umbrella of peaceful coexistence.  Our self-anointed climate czar pretends we can put fundamental differences aside in a winner-take-all competition, so that we can agree on setting targets for future atmospheric concentrations of carbon dioxide.  China sees that miscalculation and happily utilizes it to secure more advantage and advance its strategic objectives.  That gives Code Red a new meaning.

A Wake Up Call from Sun Tzu

Communism remains the gravest threat to individual rights and human quality of life.  It desires to destroy the free world, bring what is left into its orbit, and grow its power.  The approach attempting to achieve these aims is insidious and steadfast.  It follows the ancient strategic teachings of Sun Tzu and the principles of Choho No Jutsu.

There is no art higher than that of destroying the enemy’s resistance without a fight on the battlefield.

Subvert anything of value in the enemy’s country.  Implicate the emissaries of the major powers in criminal undertakings; undermine their position and destroy their reputation in other ways as well, and expose them to the public ridicule of their fellow citizens. 

Do not shun the aid of even the lowest and most despicable people. Disrupt the work of their government with every means you can.

Spread disunity and dispute among the citizens of the enemy’s country.  Turn the young against the old.  Use every means to destroy their arms, their supplies, and the discipline of the enemy’s forces. 

Debase the old traditions and accepted gods.  Be generous with promises and rewards to purchase intelligence and accomplices.  Send out your secret agents in all directions. Do not skimp with money or with promises, for they yield a high return.

Act with Moral Superiority to draw the trust of the enemy’s people, in this way you gain the enemy’s own people as an ally against him.

Does reading that send a chill down your spine?

Global leaders of the communist ideology do not intend compromise, reform, or peaceful coexistence.  That was the reality during the Cold War with the Soviets, and it remains the reality today with China.

China understands that the elite in the free world desperately want to believe communism desires compromise and reform.  That desperate want is our biggest weakness.

The phrase ‘a rabbit that has been hypnotized by a snake’ is taken from the memoirs of German World War II and Cold War legendary spy chief Reinhard Gehlen, The Service.

America Needs a Third Party

I’m a big believer in America; where it came from, what it stands for, and its future potential. The United States is far from perfect, in both its history and its present. Yet it still represents the best social, political, and economic system to respect and nurture the individual.

But most sense something is very wrong with where the nation is heading. Look around at our national political leaders from both parties of late, is the best we can do? America needs a course correction.

Drastic change is not needed. The nation should not radically tear itself down and then rebuild itself into something perceived to be better abstractly but likely will be much worse. Keep the Electoral College, don’t stack the Supreme Court, defend the Bill of Rights, and preserve the free market.

But our political system is in dire need of new blood. Two parties have enjoyed a stranglehold on governance for too long. Where they were once different shades of similar ideals, today the two parties have split orbits to where they represent extremes that cater to the minority fringes and leave little for the large middle.

The Primary Problem

Primaries are mostly to blame for the current polarization of the two-party power cartel. A moderate Democrat has no chance when running against a proud leftist in a primary. A traditional Republican today may be dead-on-arrival when going up against a hard-right opponent.

Although moderates typically represent the strongest candidates to win the general election, today’s leadership in the Democrat and Republican parties, coupled with the primary election process, tends to kill off moderates before the general election.

The opposing party funds this dynamic, making it worse. How many times in the past decade have we seen one party funding commercials for the other party’s most extreme candidate in the primary election? The hope, of course, is that the extremist wins the primary, which will make it easier for the opposing party’s extremist to win the general. Experience has shown the logic works.

The dynamic also creates a talent drain in candidates. Many moderates with distinguished careers in politics have decided to step down rather than face a primary drubbing. Too many high-potential candidates never start political careers because of the radicalization of the primary party process.

People used to say to run for office you have to be nuts. Today, to successfully run for office you must be nuts, and extreme in ideology.

The General Conundrum

When candidates representing the extremes of each party prevail in the primaries, the choices in the general election leave much to be desired for moderate voters. If a moderate wants their vote to count and voice heard, they must choose the lesser of two perceived evils.

That gives an advantage to the leftist Democrat candidate in the general election. The leftist promises the world to voters and lavishes special interests with handouts, from universal income to college loan forgiveness. It’s hard to run against candidates who act as a political Santa Claus, where every day is Christmas, and the credit card bill never comes due.

To vanquish such an opponent, one needs sound ideas and a sensible platform that appeal to run-of-the-mill Americans. That hasn’t exactly been the descriptor of many Republican candidates these days, who obsess on their own form of cultural control, just from a different direction than their leftist opponents.

Between primary and general elections, moderate voters are bombarded with shrill messages from each extreme side. Messages get amplified beyond the campaigns, because each end of the spectrum enjoys its own major media outlets who are more than happy to stoke the partisan flames.

The moderate voter sees two options as election day approaches: someone whose extreme leftist views disturb but who offers the voter free stuff, and someone else whose extreme hard-right views frighten and who offers no free stuff. The exhausted moderate often ends up voting for the former, or perhaps simply staying at home and not voting at all.

The Remedy

The fix to our current political conundrum is surprisingly simple. What we need today is a third national political party. One where the Constitution is respected, individual rights reign supreme, government is minimal but covers its necessary responsibilities, the free market is unshackled, and fiscal discipline is exercised.

That description fits neither the Democrat nor Republican platforms of today. And these two parties have enjoyed a stranglehold on the presidency since 1852. Perhaps it is time to shake things up and fill the great middle void space that many Americans associate with.

Choice is good. Three options at the ballot box are better than only two. Particularly when the current two have radically evolved to the extremes.
The best fit for a third choice is libertarian. There are two classic strains of libertarianism.

The first is the purer and more extreme, the Ayn Rand view. Where all government intervention is a form of coercion, coercion of the individual is immoral, and thus government tends to be immoral. Government is not to be minimalized as much as it is to be eradicated. Government should not prevent or subdue individual choice, even if such choice might infringe on the rights of others.

The second strain of libertarianism is more practical, the Milton Friedman view.[1] Where government should still be minimized to maximize freedom of the individual to choose, but where government protects the ability of others to do the same. Individual choice remains paramount, but it must not infringe on the rights of others to follow their own values.

This second strain of libertarianism, when properly framed, would be attractive to many moderate voters today. Government out of our bedrooms and classrooms, the state spending only what it takes in, the shrinking of the Orwellian administrative state, releasing the Darwinian free market, and protecting individual rights and the Constitution.

A smaller, more nimble government focuses on the bare necessities of national defense, protecting rule of law and property rights, and preventing the infringement of individual rights. Taxpayers realize an honest-to-goodness rate of return on their investment.

Reversing the Slide

A third political party embracing a practical libertarian ideology would be an instant success in America. It’s not a break from western republican democracy, it’s a restatement of it. Many Americans would listen to the platform and rightly think, “well, yeah, isn’t that the way it’s supposed to be?”

Perhaps the biggest benefit to this third, new political party would be the inevitable moderation of the Democratic and Republican parties. The middle, a voiceless space today, would become relevant once again and demand that the extremes evolve toward the moderate middle or face the consequence of losing power.

A third party occupying the middle and embracing practical libertarianism would reform the primary election process without tearing it down. The leftist would struggle to make it through a Democratic primary. The hard-right nationalist is placed on the eccentric fringe of the Republican party.

Reasonable and compelling candidates organically sprout up from Republican and Democratic primaries. Coupled with the libertarian choice, citizens and taxpayers are in a better place no matter who prevails in the general election.

Cartels and Their Vacuums

Imagine if consumers had only two cola drinks to choose from, call them P and C. Over time, each option evolved to an opposite extreme. Brand P became laced with cocaine and extremely unhealthy, and brand C removed all sugar and caffeine to where it became nothing but tasteless, colored water.

If those two choices held cartel power and were protected from competition, no other product options would manifest. Many consumers would stop drinking cola beverages. If a new option was introduced with the features of what coal drinks used to offer, it would become an immediate commercial success.

Nature abhors a vacuum. But American politics have created an impressive vacuum and preserved it for too long. That’s to be expected with concentrated cartels, in business and politics. Time to break the cartel and create more choice.

President Biden recently bragged, “Milton Friedman isn’t running the show anymore.” So true, no matter if Democrats or Republicans hold power. And so sad, because if Milton Friedman’s libertarian views were running the show today, America would be in much better shape.

Few of us desire to practice politics. But all of us want to choose from the very best of options when it comes to selecting our political leaders. That’s what the Founding Fathers envisioned and that’s what we deserve.

Let’s get what we deserve.

1. Watch the video TAKE IT TO THE LIMITS: Milton Friedman on Libertarianism on YouTube to hear an explanation of ‘consequentialist’ libertarianism from Milton Friedman.

Nick Deiuliis’ CNX Q3 2022 Earnings Call Remarks

The following is a summary of Nick Deiuliis’ introductory comments from CNX Resources’ Third Quarter 2022 Earnings Conference Call, held Thursday, Oct. 27, 2022.

I want to provide a few thoughts regarding the macro backdrop and how CNX is continuing to uniquely position itself not just amongst energy companies, but also amongst the broader equity markets.

During the second quarter call, we discussed in depth the world’s growing demand for responsible energy development and how natural gas sourced from the Appalachian basin is an essential catalyst fuel in delivering that future. We laid out our vision of Appalachia as the heart of a sustainable energy revolution, and we discussed the numerous opportunities CNX is developing to leverage our existing asset base and core competencies to create significant free cash flow opportunities for our shareholders beyond our core gas development activities.

Today, however, I want to pivot back to the core of our investment thesis and the actions we are taking to position CNX for long-term per share value creation in the face of increasing uncertainty on three main fronts.

First, during the third quarter, the macro-economic backdrop in the US has continued to become more uncertain as inflation continues to erode purchasing power, interest rates have risen sharply, and equities valuations have declined. Despite this challenging backdrop, CNX was able to execute an attractive long-term debt refinancing that further extended our maturities profile and thereby unlocked additional degrees of freedom with respect to our capital market activities. Our combination of consistent quarterly free cash flow generation, extensive available liquidity, and our long debt maturity runway uniquely positions CNX to take further advantage of any deepening valuation disconnects that might occur in either the equity or debt markets.

Make no mistake about it, CNX is well positioned to continue to play offense in this type of environment.

The second area of uncertainty that featured prominently during the third quarter is the continued inability of our elected representatives to achieve consensus on interstate pipeline permitting reform. Without a meaningful acknowledgment of energy realities from Congress, the natural gas industry continues to be unable to unlock the full potential of US shale to serve the obvious energy demand centers here in the US.

Despite Washington continuing to ignore rational energy policy for the time being, CNX is one-of-one who has positioned itself to work in this potentially capacity constrained world. So, while Appalachia awaits future pipelines to be built, CNX will continue to focus on executing our maintenance of production plan to generate an annuity-like stream of significant free cash flow regardless of where we are in the commodity cycle. In addition to our organic base development plan, we will leverage our extensive legacy asset base to create new free cash flow growth opportunities through our New Technologies efforts and deep dry Utica development. We will clinically allocate this incremental free cash flow to create long-term per share value growth.

The third and last area of uncertainty that I want to highlight is the pricing volatility in the natural gas markets, and what we experienced during the third quarter is a reminder of just how volatile the commodity markets are, as well as how difficult they are to predict. However, CNX is uniquely positioned to respond to this uncertainty through its consistent programmatic hedging strategy and its basin-leading cost structure derived from its midstream ownership.

These two strategic differentiators significantly lower risk and provide long-term free cash flow visibility throughout all phases of the commodity cycle. This de-risked approach creates opportunity for significant long-term per share free cash flow growth even if lower natural gas price scenarios were to materialize.

So, the CNX story is simple, yet unique. It is a story about keeping our head down and executing our sustainable business model plan over an extended time-period time to generate sustainable per share value. Most companies do well when gas prices are high. What makes CNX unique is our ability to still thrive when prices are low, and things get tough. Our sustainable business model does not rely on gas prices staying high or on accurately predicting the future, which we all know is impossible; but instead, it is based on building a business that works in whatever the future holds. We are over two and a half years into executing this plan across many different macro backdrops, and Q3 adds another successful quarter to our track record.

I’ll wrap up my commentary with some final thoughts on our social impact. As we’ve discussed before, CNX’s sustainable business model is not only focused on creating value for our shareholders, but also on creating tangible and impactful value in the local communities in which we’ve operated for the last 150+ years.

I wanted to take the opportunity to highlight the kick-off of the second class of young men and women who are entering the CNX Mentorship Academy this fall.

As a reminder, this initiative is focused on exposing students in our underserved urban and rural communities to the myriad of career opportunities that exist within not just the energy industry but also throughout the region. These young adults are the foundation of tomorrow’s economy, and we are excited to build upon the success of last year’s class and to continue to provide a unique corporate engagement model for others in the region to follow. This fits right into CNX’s vision for the region as we wait for pipes to get built out of the basin.

There is no reason to wait to bring demand and manufacturing into our regions, which will help lift communities out of poverty by creating long-term manufacturing jobs, all while lowering global carbon emissions and improving the economy.

Additionally, in furtherance of CNX’s overarching aim to creating tangible and impactful value for our local community, another effort we’ve engaged in is “The HQ at CNX.” The HQ as we call it was created to provide office space in our headquarters building for non-profit, charitable, underserved, and underrepresented organizations to elevate and thrive their business while enabling collaboration with like-minded business individuals. We view it as the living embodiment of our Foundation – to find the diamond in the rough that might not receive attention from the establishment but is doing the important, hard work on the ground in our communities.

That’s what CNX is after – investments we can make that produce returns not only for our company but for the wider region. For generations, this region has fed CNX with unmatched talent and CNX has in turn fed the region with jobs, investments in our communities, and quality of life derived from the product we bring to market. That virtuous circle that is part of the fabric of our legacy lives on today through initiatives like our Foundation, Mentorship Academy, and HQ concept.

The HQ initiative is well underway, and we’ve gotten in half a dozen co-workspace tenants, which include a local non-profit career development association, a regional non-profit mentorship organization, a small local university, and two female-owned for-profit businesses (one a social media/marketing firm and the other a deli). We are excited for the opportunities ahead for the HQ to help reinforce our overall tangible, impactful and local value add philosophy.

Click here for more information on CNX Resources’ third quarter 2022 results.

When a Blinded 1930s Writer Saw the 2022 Future

Aldous Huxley, the English author, was blinded for nearly two years by infection when he was a teenager. Despite his ailment and lingering poor eyesight, Huxley managed to produce a dystopian classic with a precise vision that gazed ninety years into the future. His masterpiece, Brave New World, predicted with frightening accuracy modern society in the 21st century.

Huxley penned Brave New World in 1931 and published it in 1932, years before Orwell’s 1984. The dystopian worlds offered by each classic share similarities but also present sharp contrasts. Despite 1984’s rightful acclaim, one might argue Brave New World scores more direct hits when it comes to comparing its society to that of modern-day America.

Brave New World envisions a society run by a global bureaucracy that practices a kinder, gentler totalitarianism. There is a strict caste system of elite alphas at the top down through lowly epsilons at the bottom.  Humans are no longer born, but instead are manufactured, in labs with predetermined outcomes and castes.  Complex yet aimless entertainment and the drug soma are applied as tools to numb and train those in society to be passive and submissive.  God no longer exists, and everyone worships Henry Ford and makes the sign of the T.  Monogamy has been replaced with promiscuity.

A World of Parallels to Today

Seven eerily prescient parallels exist between Huxley’s Brave New World and today.

First, Huxley brilliantly illustrated how constant but hollow leisure in society does not lead to increased culture.  A popular saying in Brave New World is “never put off till tomorrow the fun you can have today.”  Games like obstacle golf are encouraged to the point of participation being a civic duty, and the games are designed to be complicated and constantly updated.   The complexity helps promote continuous and hollow consumption, so that people are kept busy by both playing the games and making the equipment to play the games with.  Self-cheating is encouraged.

The connections to today are striking.  Instant gratification prevails over long-term achievement.  Americans now have an obsession on consumerism with the constant acquiring of more stuff.  Consider the exponential growth in mindless entertainment such as VR and gaming.   And our everybody-gets-a-trophy/don’t-keep-score/cheat-until-caught culture.

Second, Brave New World informs us as to how science is the enemy of the totalitarian state when left unhindered and must be tightly controlled and distorted by the state so that it can become a useful instrument.

Science is a crucial piece of the strategy in keeping society in line, but scientific progress was purposely frozen with the advent of the world state.  Science and the muzzling control of it are the prices of stability.  Science propaganda is practiced at colleges, and one believes things because they were conditioned to believe them.  The culmination is science becomes a cook-book orthodoxy that is never challenged. The effort is managed by the state in a 60-story building that houses the Bureau of Propaganda and the College of Emotional Engineering.

The mirroring to today’s world is obvious.

Science has morphed into political science.  The scientific method has been replaced by scientific consensus.  We are told when the science is settled and are instructed to obey.  Questioners and dissenters of popular views or of accepted science in the university culture get labeled as heretics and deniers.  Although most literary critics interpret Brave New World to warn of the danger of science, I interpret something subtly but crucially different:  the danger of the state suppressing and commandeering science.

Third, Brave New World exposes the dangers of how the system can institutionalize class and solidify socio-economic barriers.   Mothers no longer give birth.  Instead, embryos are constructed in the lab and customized through chemistry to manufacture people at the desired caste level.  Effectively, children are decanted, from the privileged alphas down to the low-ranking epsilons.  Each person is molded by the hereditary and by the environment of the state-chosen caste.  Babies are not raised by parents but by State Conditioning Centers and are trained by crude Pavlovian methods to hate flowers and books.  The ideal society is described as having the proportion of an iceberg, where 1/9th sits at the top as elite alphas and the remaining 8/9ths are toiling below the water line.

Think about how much of this is present today.

Our public education system in major cities virtually guarantees students never realize their full potential.  Self-determination as to what one does in life is becoming an increasing rarity because of socio-economic obstacles. Science, math, and reading competency are not the focus of education these days. Instead, the exclusive focus is to deaden the minds of students and create a subservient collective that thinks what it is told to think and believes what it is told to believe.  The 1/9th of elites are the alphas above the water line, while the rest of society is kept struggling below the water line.

Fourth, Brave New World reminds us of the perils of loveless sex and promiscuity.  In Huxley’s society, “everyone belongs to everyone else.”  Sex is pursued exclusively for physical pleasure and the idea of a dedicated and committed relationship is viewed as savage.  The character Lenina (Huxley assigned character names in Brave New World to be plays on despots, scientists, politicians, and business leaders) gets lectured by her friend for not being promiscuous enough.  Children are taught “erotic play.”  Family, love, and monogamy are pornographic.  The word “mother” has become a crude obscenity, so profane that to speak it sparks revulsion.

The similarities to today are obvious.  Marriage and the family structure have never been under more duress.  Internet porn and lust have replaced personal intimacy and love.  Topics that not long ago were discussed in high school sex ed class are now covered in explicit detail in elementary schools.  We are learning that free love often ends up in less love.

Fifth, in Brave New World we see what awaits society in a drug culture. The miracle opiate is soma, and it is administered from cradle to grave, with euthanized death set by the state promptly at age 60.  Workers are paid in soma to feed their addiction.  Soma giveth by arresting the aging process, providing an emotional high, and softening depression during tough times or from harsh realities. But soma also taketh by acting as a poison that kills the person over years of use and eradicating individual thought and free will.

Huxley would be shocked at how the various modern versions of soma afflict Europe and America today.  Social media brings mass emotional addiction to children and adults.  Fentanyl, heroin, crack, alcohol, and marijuana are consumed legally and illegally to create physical additions that cross all socio-economic levels, as people seek escape from whatever haunts them.  Imagery of the physical ideal sets expectations at a young age, leading to more and more medical procedures and treatments to halt the natural aging process.

Sixth, Brave New World paints a society where the individual is erased into the collective and where free will and independent thought are vanquished by totalitarian domination.  Imagination and sense of self are dangers. Individual free thinkers who read the banned great works, from the Bible to Shakespeare, are savages of old civilization and are exiled to the wilds.  A popular slogan is “when the individual feels, the community reels.” Another one is “everyone works for everyone else.”  War is waged against the past, when individual rights were supreme.  To be happy, you don’t pick your path; instead you learn to enjoy the path that has been selected for you.

What an accurate portrayal Huxley foresaw of today’s political correctness.

Views of the state are constantly streamed to kids from all directions and across all mediums so that it conforms their minds.  There are parallels to today’s cancel culture, where you must tear down anything traditional that would make one think and challenge.  College syllabuses delete classic works and public square statues of prominent leaders are removed.  Dissenters are not simply ostracized but attacked by the Twitter mob.  And meritocracy, attacked as unfair, is replaced with the unethical injustice of equal outcomes.

Seventh and last, Brave New World demonstrates how such a dystopian society is a result of omnipotent and global totalitarian government.  The World State motto is “Community, Identity, Stability.”  A World Controller determines what information is allowed for public access and consumption, what science is acceptable, and what works are to be locked up and forbidden.  The state figured out that social conditioning was much more effective and lasting than brute force when looking to control a population.

These days, global organizations and accords make one wonder if we still live in a republican democracy.   The United Nations, World Health Organization, World Bank, and G-20 hold more sway over Americans’ pocketbooks, quality of life, freedoms, and decision-making than the U.S. Congress.  The faceless unelected bureaucrat buried within the administrative state holds more power than our elected president.  Domestic regulations and international accords take away more of our liberty in 2022 than any legislation or statute.

The Brave New World Outside Our Doors

In conclusion, Huxley provided a valuable service to the human condition.  He presented in stark contrast two very different views for the individual and society.  Consider two passages from Brave New World as illustrative of the contrast.

First, from the Director, who as representative of the state betrays a hatred for the individual: “The greater a man’s talents, the greater his power to lead astray.  Better for one to suffer than many be corrupted. Murder kills only the individual and what is the individual?  We can make more of them.  Unorthodoxy threatens more than the life of the individual, it strikes at society itself.”

Second, from John the outcast, who didn’t want comfort if it prohibited truth: “I don’t want comfort.  I want God, I want poetry, I want real danger, I want freedom, I want goodness. I want sin.”

Huxley, who passed away on the same day JFK was assassinated, warned us that before we start pining for such a brave new world, we should wait till we see it first.  My fear is the wait is over and it now sits outside our doors.

Heed the Historical Rhyming of Ludwig von Mises’ Omnipotent Government

Ludwig von Mises was a shining light in the Austrian school of economics and for libertarianism. Despite the obsession Keynesians and socialists have with tarnishing his legacy, Mises sounded the alarm about statism louder and clearer than anyone.

One of his great works was Omnipotent Government, which Mises published toward the end of World War II. Although much of the book focuses on analyzing fascism and socialism, many of the book’s insights from the mid-1940s are quite pertinent today.

Capitalism versus Totalitarianism

There are two big, opposite ideological trends for mankind to choose from.

The first is capitalism, which embraces freedom, rights of man, self-determination, and technology. Under capitalism the arts and science thrive. Excellence and meritocracy are celebrated.

The second is totalitarianism, where the state is omnipotent. Power is vested in government because government promises to make paradise.  Individual happiness becomes the duty of government, creating a nanny-state. The final goal is not a national government but a universal government.

Mises understood human nature comes with a certain level of intolerance of criticism of an individual’s social and economic beliefs. Often the intolerance is accompanied with labeling the critics as enemies of the nation, race, or group.

Capitalism has a clearly superior record compared to socialism and communism.  Thus, the supporters of the latter take pains to slander the former. Mises set the facts straight when it comes to capitalism’s superiority over socialism and communism.

Yes, capitalists and inventors get rich, but they do so while everyone else becomes better off with their inventions and products.  Capitalism is far from perfect, but in the long run raises quality of life for all, including the poor. Despite government continually attempting to stifle it. True liberals oppose state impediments to a free economy and freedom of economic activity.

Such benefits are not found with the bureaucrat or state control of the economy. Communism did not bring technological innovation to society and only copied the innovations of the capitalists. Only a bureaucrat can think that adding more bureaucrats, regulations, or impediments can be positive and beneficial. And the justifications will be in the name of progress and freedom, with both being the first casualties.

The concept of pervasive, omnipotent government did not start with the commoners and bubble up to the elite. Quite the contrary. Statism was conceptualized by the elite. All socialist thought was hatched by the 1%.

Totalitarians, whether socialist, religious, fascist, or communist, believe they are smarter than the citizens. Extreme right meets extreme left, with no tolerance of dissent. Hitler got his orders from above; the religious leader is infallible; President Xi enjoys demi-god status; and Putin is now leader for life instead of elected president for term. The German socialist Ferdinand Lassalle claimed, “the state is God,” which was eventually adopted as a slogan by the Nazis.

The Big Middle

But between capitalism and totalitarianism sits a wide spectrum of free market and government intervention mix. Etatism¹ is an economic system where the state owns and runs many things although some limited capitalism still exists.  Economic interventionism is the hallmark of etatism.

There is interference by restriction, where the state diverts production from channels demanded by the market, consumers, and technology into what the state desires.  Doing so makes people poorer, prevents individuals from achieving, erodes wealth, and wastefully expends funds.  Government ends up taxing losers and subsidizing winners, with inefficient bureaucracy in the middle of it all.

Interference by price controls is the second method of government interventionism, which sets values and prices differently than what the market sets them at.  Where market pricing sets equilibrium of supply and demand, government price controls create scarcity and rationing.

Mises found it ironic that the free market nations fighting Germany in World War II, the UK and US, were adopting a more etatist approach with a command economy.  In these once capitalistic economies, taxation was transformed into confiscation, free thinkers were taught to be thought followers, and individual freedom to act was supplanted with government now having the initiative.

In many ways, the creeping etatism of the Allied nations set the stage for World War II by creating international economic strains.  The UK wanted to protect its industry from France.  Belgians fought Dutch imports.  Subsidies for exports grew everywhere.  Protectionist tariffs spread virally.  Each nation was waging an economic war against other nations.  Everyone wanted free trade for everyone else and protectionist policies for their own nation.  Pain and tensions ratcheted up to the breaking point—and it feels like the same is happening today.

Mises knew that to address economic woes or preserve world peace, you don’t need another government office, bureaucrat, or global organization like the UN.

What is needed is stopping and rescinding domestic economic policies that substitute government for the private actor.

Unfortunately, we continue to drift to more etatism, with the growth of the administrative state to address inequality and the adoption of international accords like Paris to ‘combat’ climate change.

The evil genius of the transformation of western nations from free market to etatist is that when troubling symptoms of state control hit, such as inflation, unemployment, and economic inequality, people become convinced it is the fault of capitalism and not the fault of illiberal policies of government intervention. Academia and the bureaucratic state ridicule economic liberalism, the social sciences vilify the free market, university students are taught to admire socialists, and the entertainment industry has been promoting etatism in plays, writings, songs, and movies since the days of George Bernard Shaw.

The closer a nation orbits toward etatism and away from capitalism, the graver the danger. Mises said it best: “A state whose chiefs recognize but one rule, to do whatever at the moment seems expedient in their eyes, is a state without law. It does not make any difference whether or not these tyrants are benevolent.”

Although the state may end up doing and running lots of things, the essence of state action is always coercion and compulsion.  When done surgically and tactically, it works for the individual. But it should never be the ultimate. It is simply an instrument for the true ultimate: the individual.

The Weimer Republic and Today

Unfortunately, state economic intervention is popular as ever, including in the US.  FDR would be shocked to see how since the Great Depression, America blew past his New Deal incremental interventionist shifts and now sits closer than ever to socialism.  How did we get here?  Consider parallels to Germany just after World War I.

During the failed German Weimer Republic, businesses were accused of profiteering, inflation ruined the middle class, incompetent government looked to price controls, and a socialist approach was taken to monetary policy.  The media, economists, and politicians of the time ignored the danger of excessive monetary policy leading to commodity inflation. Capitalism was vilified as exploitive, unfair, warmongering, and benefitting only the 1%.

The answer was to increasingly manage business by government and the bureaucrat.  Easy money, price controls, wage floors, export subsidy, and import tariffs blossomed. All for the public good and to help the little guy.

Sound familiar?

Rise of the Nazis and Today

American popular support for socialism, communism, and state intervention have never been higher. We did not arrive at this point by accident, but under a methodical campaign waged by the elite over decades.

Much of the campaign’s playbook copied that of the Nazis in their rise to power before World War II. Nazism and German nationalism were first resisted by big business and the middle class. But these groups had no consistent ideology and were overcome by the academic focus of Nazism and nationalism. Youth came out of university indoctrinated to the cause.

The nationalists assumed key government posts. The economy became more etatist, which made businesses subserviate to the government and the bureaucrat’s nationalist ideology. The government ended up forcing business to bow to its views and fund those views.  Business had no way to influence public opinion once the tipping point was reached. The intellectuals beat the businessmen.

Substitute leftist/socialist for Nazi/nationalist, 2010-2020s for 1920-1930s, and America for Germany. Concerned?

Conclusion

The state has been an endless source of mischief and disaster through history.

Mises observed that “there is no more dangerous menace to civilization than a government of incompetent, corrupt, or vile men.” The minority in a society stands to lose and suffer the most as a state moves from capitalist end toward the etatist/totalitarian side of the spectrum.

That’s why I’ve always found libertarianism attractive.

Classic liberals and libertarians are not anarchists and do not desire to abolish the state. We want government to recognize the supremacy of the individual and to protect private property. If you have private property, then you have individual rights, and vice versa.

To avoid war, eliminate its causes, which are all too often nationalism and lack of free markets.  Make government small and focused on preserving life, health, and property. And safeguarding the free market.

Yet Mises’ writings convinced me that etatism is the natural tendency of bureaucrats and governments.  Only liberalism and capitalism prevail when pressed and forced by citizens. Market interventionism is a slippery slope that can quickly slide us toward totalitarianism.

Mark Twain noted that history does not repeat itself, but it often rhymes. Let’s hope the American experience in the coming years does not rhyme with Germany’s in the first half of the 20th century.

[1] Alberto Mingardi explains, “Mises uses ‘etatism’ instead of statism because that word, ‘derived from the French état… clearly expresses the fact that etatism did not originate in the Anglo Saxon countries, and has only lately got hold of the Anglo-Saxon mind.’”