Star Wars and the Austrian School: Trade Routes (Part 2)

Continued from Part I: The Great Hyperspace War

Part II: The Invasion of Naboo

Star Wars and the Austrian SchoolFor those less-than-diehard Star Wars fans who insist that anything not in the six movies doesn’t count, they can witness this political-economic travesty of protectionism in Episode I: The Phantom Menace.  Because of a dispute over the taxation of trade routes to other star systems, the Trade Federation launches a blockade of the planet Naboo.  When the Jedi knights Qui-Gon Jinn and Obi-Wan Kenobi are sent to negotiate a settlement with the Trade Federation’s Viceroy, their diplomatic mission is simply to settle the issue but not to open the blockade, which, according to the Viceroy, is “perfectly legal.”  The notable Austrian school economist Mark Thornton makes an excellent political-economic analysis of the Trade Federation’s aggression against the Naboo:

Lucas sends a clear message that the Federation agreement with the corrupt Republic is based on the model of British Imperialism by filling the movie with historical imagery. The Federation is British Imperialism in the form of the East India Company, which controlled and taxed the British possession of the Indian sub-continent. Of course, entrepreneurs complained and evaded British taxes and regulations, but the British Empire gave out monopoly rights to control India and other colonial trading rights in return for tax revenue.

Yet the real clincher that the Federation was based on British Imperialism lies in the title of the local leader of the Federation blockade and the one who will rule the planet for the Federation-Republican alliance—Viceroy.

Viceroy is of course the British title for colonial leader. British imperialism was largely based on the “company model” where a company, like the British East India Company would be formed and given exclusive trading privileges. The government would get revenue and their proverbial foot in the door in exchange for the monopoly. Later, Britain would provide troops and other means of support and eventually take over the colony from the company once the profitability had been proven and English-rule had been established.

The main difference between the British  invasion and subjugation of India and the Trade Federation’s blockade and invasion of Naboo (with the end result of forcing Queen Amidala to sign an unbalanced treaty favoring the Federation) is that the former was a move of aggression by an empire against a sovereign people, whereas the latter is an act of aggression by one member entity of the Republic (the Federation has representation in the Galactic Republic Senate) against another Republic member world, Naboo.

Furthermore, the Battle of Naboo was a great victory for the Naboo/Gungan alliance against the Trade Federation invaders and their battle droid army, but the Indian Rebellion of 1857 against the British East India Company’s administration was suppressed, resulting in total domination by the British Crown. (Until the British government assumed full control over India, this once-proud empire and various autonomous states were ruled by a corporation which was merely sanctioned by the government; corporate welfare at its worst!)  The Indian people would not regain independence until a war veteran and Imperial patriot-turned pacifist nationalist by the name of Gandhi led a movement of civil disobedience that culminated in independence and catalyzed the British Empire’s dissolution.

Returning to Star Wars, crony capitalism and corporate welfare were rampant in the Republic, even to the disgusting culmination of the Trade Federation—a commercial venture—having its own representation in the Galactic Senate!  It’s one thing for the senators of certain worlds to represent their planets, which may or may not do business with the Federation, and vote according to the economic interests of their constituents, but it’s a completely different story when corporations have their own Senators.  Can anyone imagine Senators and Representatives from Halliburton and Goldmann Sachs strong-arming their counterparts from the states of Arizona or Iowa and wreaking unchecked havoc on Capitol Hill?  This was certainly the case in Star Wars, and the Trade Federation representatives did everything they could to silence Queen Amidala’s plea to the Senate, to end the blockade and invasion, by proposing “investigative” committees wrapped in miles of bureaucratic red tape.

Some might ask why they would do this.  Why would businesses commit such crimes?  Whether it’s the U.S. Congress heavily taxing imported goods to “protect the American economy,” or the British East India Company and its mercenaries invading and colonizing India, or the Trade Federation launching a blockade of Naboo to resolve the dispute over taxation of trade routes in their own favor, crony capitalism is a disease born from greed and laziness but whose epidemic expansion is catalyzed by government intervention, namely in the form of unbalanced protectionism (as if there’s any other kind!) and regulations (there’s always a loophole that favors the “regulated” industry as long as lobbyists in the capital).

Most people are naturally greedy, but the free market forces them to channel their greed towards production of the best and/or lowest priced consumer goods and services, lest they be forced out of the market.  Even these greedy people are forced to work hard nonstop, always planning, strategizing, and innovating in order to come up with new and better ways to serve consumers and ultimately make life better for society, or else they are rejected by the consumer base and go out of business.

Unfortunately, it’s a lot easier to be lazy and use mafia tactics to drive foreign producers out of the domestic market and slam the door in the face of new entrepreneurs (all of these enabling bad businesses to charge high prices for cheap goods) than it is for producers to gird up their loins for the ceaseless competition of innovation and service that the free market demands.

Despite the “best intentions” of legislators, regulations will always favor some corrupt corporate entity because of all the lobbyists in government, whereas the free market naturally imposes survival of the fittest on the businessman and will eventually punish crooked business practices (case in point: had Wall Street not been bailed out by government, those crooked businesses would have been wiped out and new and honest blood would have stepped in to serve clients).  Therefore, crooked businesses are a mafia, the Federal Reserve being the public loan shark which debases the currency and finances predatory loans, and the government—despite the best of intentions—ultimately acts as the enforcer for the mob and its loan shark.  Pray, if we only had Jedi knights with lightsabers willing to cut their way into the Fed to force an audit!

Neither the United States nor the Galactic Republic enjoy the benefits of a fully free market, and in the face of economically-driven state terrorism, it’s up to citizens clinging to God and their guns to solve problems and fight against the desecration of their Constitution.  The Naboo/Gungan alliance did just that.  Had they failed to liberate their world, the Federation would have ruled their planet and the Viceroy’s one-sided treaty would have been signed by Queen Amidala at gunpoint, making the invasion and subjugation of Naboo legal.  Corporate welfare within the Republic would have evolved to new heights, with the conquest of sovereign worlds by corporations and their private armies becoming the norm.

Let no one forget that corporate welfare is antithetical to the free market and its natural ability to raise the standard of living for all people.  Crony capitalism is phony capitalism.

[Originally published by Young Americans for Liberty]

Images by the author; compiled from various explicitly public domain photos from the Wikimedia Commons.

Buy American Only? A Letter From a Concerned Citizen

By Zach Foster. A response to an email letter.  This article originally appeared on The Political Spectrum blog.

"Buy Government Bonds" posterDear [friend], thank you so much for writing to me with your concerns.  I happen to share your deep concern for the fate of working class America, especially since the recession (which I justifiably call the Second Great Depression) has fallen the hardest on the backs of the working poor and the middle classes.

I’m also concerned with the fact that so many of our products come from China and other overseas producers.  Unfortunately, this is not necessarily the fault of American producers but rather that of government intervention in the economy.

What I’m about to say to you might seem a little crazy, but I urge you to bear with me.

The Myth of Protecting American Industry

Buying American products alone will do nothing to restore our economy, nor will it bring production and jobs back to the country.  Instead, what this does is actually raise prices and diminish the quality of domestic products, since producers now know that they have American buyers captive and no longer need to make the best products; they know that the law is on their side.

When I say that I’m all for free market capitalism, it means that the market needs to be truly free and unrestrained in order for consumer sovereignty to take place.  By consumer sovereignty, I refer to the old notion that “the consumer is king” or “the customer is always right”, and according to this ideology, producers who want to get rich know that the only HONEST way to do this is to produce the BEST QUALITY goods at the LOWEST COST and sell them at the lowest possible price.  This is how hard-working Americans have been getting rich for centuries.

Unfortunately, there are those who have found easy ways to get rich through the evils of government intervention.  I’ll explain this momentarily.

There have been periods in American history where there were high tariffs on imported goods (and some of these taxes still exist) which were meant to improve conditions for American businesses and consumers, but instead made things worse.  The free market is all about competition, and tariffs are essentially meant to kill competition.  Not only do tariffs on imports cause many American producers to lose their incentive to produce high quality goods at low prices (because without the competition they know they have their consumers by the throat), but often times foreign countries retaliate.  Because our high taxes make it harder for them to sell their countries’ products in America, they in turn set super high tariffs to punish American producers.  Therefore, the quality of goods produced at home goes down, the prices of those low-quality goods goes up, and the quality of foreign goods which are often good quality is now super high.

Interventionism

This happened during the Great Depression, and both the Hoover and Roosevelt administrations have blood on their hands.  Both administrations, among many other anti-free market crimes, dramatically raised tariffs on foreign goods under the myth that it would boost American industry.  They also set minimum wage laws that were meant to protect incomes.  Well, guess what the tariffs DIDN’T do for our economy and job creation, and guess how foreign countries reacted to them.  Regarding the minimum wage laws, they made production more expensive and unmaintainable for producers, so instead of only having some pay cuts, they ended up having to lay off workers or just went under completely, resulting in the laying off of all workers.  Furthermore, small and medium-sized employers were no longer able to afford to hire people because they couldn’t pay X dollars per hour as required by law.  Removing the regulations and interventionist measures that strangle industry will ultimately make it less expensive to create jobs in America, and jobs will migrate back from the third world.

Because of the government stepping in to be the hero, business growth is stunted, and that stunted growth also stunts job creation, and things are more expensive for everyone.  Many big businesses will send lobbyists to the federal government because most of this is EXACTLY what they want.  They want to be able to charge higher prices for cheaply produced goods, and they want no foreign competition, especially not from foreigners who are probably making things better and selling them cheaper.  The one thing these greedy businesses DON’T see is that, while they’ll make a profit from their captive consumers in the short run, everyone gets poor in the long run and these businesses fail and end up having to be bailed out by the federal government. This is not what the free market ever intended.

For more on the evils of regulation, you can check out Frederic Bastiat’s book The Law, which talks about how government intervention and regulation empowers the two main forms of plunder: stupid greed and false philanthropy.  The producers getting lazy on the quality of their products because people can only afford to buy American falls under stupid greed.  The regulations and minimum wage laws and “job creation” bills, “consumer protection” bills, etc., fall under false philanthropy.  You can also see chapter 18 of Jeffery Tucker’s book Bourbon For Breakfast (chapter titled “How Free is the Free Market?”).  I also HIGHLY recommend chapters 1 and 2 of Kel Kelly’s book The Case For Legalizing Capitalism, which fully explain the consequences of government intervention on stateside producers as well as international trade (and this book is a lot of fun to read and easy to understand).  All three books can be downloaded in full and for free at Mises.org/books.

Bailouts

Photo of a long bread line during the Great DepressionThis gets me to the subject of bailouts.  The big bailouts that took place in 2008 and 2009 completely outraged the majority of the American people.  These bailouts were also a crime against the free market and against capitalism.  The whole concept of pure, untainted free market capitalism is that a business has to work hard to compete with other businesses and provide its goods and services at the best quality and lowest price.  This is one reason why McDonalds and Taco Bell, who have very low-priced value menus with a wide variety of choices, have done a lot better than other higher-priced fast food chains who have had to close down many locations.  This is also why Borders, who didn’t cater to the consumer demand for e-reader books (Kindle, Nook, iPad, etc.), is going out of business, whereas Barnes and Noble, who did cater to that demand, is still in business, and why Honda and Toyota’s low-priced, superior quality cars are outselling Ford while General Motors had to be bailed out.

Businesses that fail need to be allowed to fail once and for all, which weeds out the bad elements of industry and allows room for new contenders (small and medium-sized businesses or new entrepreneurs) to try their luck at meeting the un-met consumer demands.  When big businesses fail and lay off their workers, these new contenders will be the ones to hire the laid off working people, and if the new blood meets consumer demand, then they will succeed.

Thomas Woods, the author of The Politically Incorrect Guide to American History, wrote a fantastic book called Meltdown, which analyzes the Great Depression, the current recession, and vindicates free market capitalism from the lies of the statists and interventionists.  The truth is that when the federal government bailed out all those failed banks in 08-09, as well as parts of the auto and housing industry, they gave these failed businesses a “second chance” which will only postpone another inevitable collapse.  This is like an angry and heartbroken wife, whose husband was cheating on her, giving that husband a “second chance” in which he doesn’t have to shape up but instead can keep cheating on her until he gets caught again.

The Fed

These bailouts, which only punished the American people and the big and small businesses who were doing the right thing, and rewarded the failure of the businesses who were doing the wrong thing.  These bailouts were financed by the Federal Reserve System, which is a quasi-government organization that is basically in charge of big banks (Wells Fargo, Chase, Citibank, etc.) and financial organizations (AIG, Fannie Mae and Freddie Mac, etc.).  Banks are businesses, not storage lockers for money, and rather than letting these businesses try to figure out how to meet the demands of their clients, the Federal Reserve tells them how much to hold in the vaults, how much to lend, and how much to invest.  The Federal Reserve also has the power to print as much money as it wants, which is obviously bad because the more money that is being printed means inflation goes up.

Before the Federal Reserve, there was a U.S. Central bank which was on a gold standard.  The gold standard means that every paper dollar printed needs to have an actual gold dollar that exists somewhere in a bank.  Gold is real money and paper is just an I.O.U.  This was alright though, because with real gold backing up the I.O.U., people had faith in the paper, and they used it for everyday buying and selling.  Even if the central bank used a fractional gold reserve (for every gold dollar there is, they print two or three or four), there was at least SOMETHING partially backing up the paper money.  Nowadays more and more paper money is printed with nothing to back it up other than the “good credit of the United States.”

When the Federal Reserve was created in 1913 by J.P. Morgan, John Rockefeller, and a few government employees and politicians that were in their pockets, it was created with the intent to expand the money supply (inflation) and bail out particular businesses and industries which Morgan and Rockefeller were conveniently invested in.  The Fed essentially became the new central bank and began to coerce banks into doing whatever it ordered.  It also began printing more and more money to pay for expensive and Unconstitutional government grants, loans, bailouts, and other programs.  It is because of the evils of the Fed that inflation is so high (prices are so high) and the dollar is almost worthless.  The gold standard has been abandoned and the Fed will continue to manipulate banks and financial institutions and kill our dollar.  The only way to reverse this is to reinstate the Gold Standard and abolish the Federal Reserve.

To sum up the above points I made: 1) Government interventions, including those in the form of tariffs, are very bad for business, workers, and the whole economy.  2)  The free market is about competition and consumer sovereignty.  Don’t necessarily buy American—buy what’s best.  3)  Bailouts are anti-capitalistic and the only way to stop this is to bring back the Gold Standard and end the fed.

The Contender

Finally, in your email to me you mentioned that in all your readings, you found no one with real solutions or sufficient character and a backbone.  I can honestly say to you that there is a hardworking group of people who are engaged in a grass roots effort to support an honest and hardworking man who is painfully aware not only of the REAL problems that are hurting the working class, but of real solutions to those problems.  This man of course is Ron Paul, who is an outspoken Austrian school economist who has been able to pinpoint problems and their remedies.  He is the only Republican contender who has tackled these issues, regardless of how unpopular the truth was, and remained unwavering in his position.  If you’ve heard of him but have found cause to distrust him, I beg you to reconsider and see what he has to say.

He has three very popular books out (among many others he’s written) which have changed the minds of many Americans.  There is The Revolution: A Manifesto, in which he outlines his political platform and uses the Constitution, American and world history, and the guidance of the Founding Fathers to back up his platform.  In the book End the Fed he makes the case and the plan for abolishing the Federal Reserve System and reviving the value of our hard-earned money.  In his latest book, Liberty Defined, he provides ideas for Constitutional solutions to various political, fiscal, and social ills that are plaguing our society.  I certainly hope my short explanation provided you with some meaningful answers, or at least provoked your thinking and ore beliefs.  I truly hope you also take into consideration the reading I recommended to you, which surely changed my thinking and strengthened my beliefs.  God be with you, my friend.

Both images use in this article are in the public domain and were obtained from Wikimedia Commons.