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The US Two-Party System Made Donald Trump’s Fascist Campaign Possible – Article by G. Stolyarov II

The US Two-Party System Made Donald Trump’s Fascist Campaign Possible – Article by G. Stolyarov II

The New Renaissance Hat
G. Stolyarov II
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                It is disconcerting to watch as the front-runner for the 2016 Republican Presidential nomination in the United States espouses a genuinely fascistic agenda – not just in terms of protectionism, economic nationalism, militarism, and the desire to centrally plan economic greatness – but also in terms of the overtly uglier sides of historical fascism: the xenophobia, racism, advocacy of torture and blood guilt, desire to silence political opponents, and incitements to violence against protesters and dissenters. Yet this is precisely what Donald Trump has done, unleashing the long-dormant worst tendencies of American politics. He has emboldened the crudest, least enlightened, most hide-bound enemies of tolerance, cosmopolitanism, and liberty to emerge from well-deserved disgrace to fuel the campaign of a cynical, unprincipled opportunist who thrives by pandering to their lowest impulses. Trump is vulgar, volatile, and unhinged. He has already turned his rallies into miniature versions of the police state he would create if elected – evicting even protesters who simply stand there with signs or clothing that express disagreement with Trump, or even individuals who attract the ire of the frenzied Trumpists for having the “wrong” color of skin or the “wrong” incidental expressions. Because of a bizarre law (H. R. 347, enacted in 2012), it is illegal to protest inside Trump rallies (or rallies of any candidate that receives Secret Service protection), so Trump is already utilizing coercive police powers to suppress dissent.

                Though it may be alleged that economic fascism has characterized America’s “mixed economy” since at least the New Deal of the 1930s, the resurgence of cultural fascism would have been unthinkable even during the 2012 Presidential Election. Mitt Romney, who seemed to me at the time to represent a paradigm of crony capitalism that inched toward overarching totalitarianism, now appears to be a gentleman and an intellectual – a voice of reason, class, and prudence in his eloquent denunciation of Donald Trump. Romney, as President, would have been unlikely to avert an incremental descent into fascism (although, in retrospect, he seems to be a decent human being), and his own candidacy was marred by manipulations at various State Republican Conventions, but, compared to Trump, Romney is a model of civility and good sense. Romney, if elected, would primarily have been the next status-quo President, overseeing a deeply flawed and deteriorating but endurable economic, political, and civil-liberties situation. Trump, however, would plunge the United States into an abyss where the remnants of personal liberty will suffocate.

                And yet the manipulations that occurred in 2012 to aid Romney paved the way for a Trump candidacy and its widely perceived “unstoppable” momentum. (Let us hope that this perception is premature!) I was a delegate to the Nevada State Republican Convention in 2012, where I helped elect a pro-Ron Paul delegation to the Republican National Convention. However, upon learning of the events at the National Convention, I became forever disillusioned with the ability of the Republican Party to become receptive to the advocacy of individual freedom. I wrote after Romney’s electoral defeat that

the rule change enacted by the party establishment at the National Convention, over the vociferous objections of the majority of delegates there, has permanently turned the Republican Party into an oligarchy where the delegates and decision-makers will henceforth be picked by the ‘front-runner’ in any future Presidential contest. Gone are the days when people like me could, through grass-roots activism and participation at successive levels of the party conventions, become delegates to a state convention and exert some modicum of influence over how the party is governed and intellectually inclined.

                The Republican Party establishment intended its rule change to prevent the ability of motivated grass-roots activists to elect delegates at State Conventions who would vote against the “presumptive nominee” and in favor of an upstart – presumably more libertarian – contender such as Ron Paul. Little did the establishment expect that this rule change would prevent its own favored candidates from effectively contesting Donald Trump’s nomination if Trump continues to win popular votes, especially in “winner-take-all” primaries, and approaches a majority of the total delegates. The most that the Republican Party elites can hope for now is that a candidate such as Ted Cruz eventually overtakes Trump, or that the remaining candidates – Cruz, Marco Rubio, and John Kasich – split enough of the delegates to deny Trump the majority and lead to a brokered convention. But as the narrative of inevitability continues to be spun in Trump’s favor and he amasses prominent endorsements and even promises from the other candidates that they would support him if he were the nominee, these damage-control plans seem quite vulnerable. Blind party loyalty, combined with a bandwagon mentality, appears to be driving the Republican establishment to a reluctant capitulation to Trump – which would be political suicide, but they are apt to do it anyway.

                If Trump trumps the old Republican Party establishment, however, this would be nothing to cheer. It would be a replacement of a defunct, cronyist, and backroom-dealing oligarchy – but one considerably tempered by satiation from its own decades of comfortable dominance and the remaining checks and balances of the political system – with a vicious, crass, completely unrestrained new oligarchy headed by Trump himself, and fueled by populistic pandering to masses about whom Trump personally could not care less. Trump asserts that he is incorruptible because he is funding his own campaign. However, the truth is that he does not need to pay anyone off for special political privileges, because he is the special interest that would be garnering the favors during “normal times”. If elected, he will simply do so without the intermediaries of the traditional political class. As Jeffrey Tucker eloquently explains,

many have fallen for Donald Trump’s claim that he deserves support solely because he owes nothing to anyone. Therefore, he is not part of the establishment. Why is that good for liberty? He has said nothing about dismantling power. […] He wants surveillance, controls on the internet, religious tests for migration, war-like tariffs, industrial planning, and autocratic foreign-policy power. He’s praised police power and toyed with ideas such as internment and killings of political enemies. His entire governing philosophy boils down to arbitrary, free-wheeling authoritarianism.

                Yet the biggest underlying facilitator of Trump’s frightening rise is the very two-party political system in the United States. Had the ballot-access laws not been rigged against “third” political parties and independent candidates, and had representation been determined on a proportional rather than a “winner-take-all” basis, there would have been genuine alternatives for voters to choose from. At present, however, every recent election season has degenerated into a spectacle of demonizing “the other side” – even if that side is just a different wing of the same political establishment. Far too many people vote for “the lesser evil” in their view, rather than the candidate with whom they agree most (who will most likely be a minor-party or independent candidate, since both the Republican and Democratic Parties are widely perceived as ineffectual and misguided once actually in power). Instead of evaluating specific candidates based on their stances on the issues as well as their personal record of integrity (or lack thereof), too many voters have learned to viscerally hate “the other” party’s brand and exhibit unconditional loyalty to their own. During the primary process, even voters who prefer the candidates who did not become the nominee will often capitulate and embrace a deeply flawed frontrunner. If too many Republican voters come to believe that Hillary Clinton or Bernie Sanders would be intolerable choices for President, then they may come to rally behind Trump even if they personally would have preferred Rubio, Cruz, or Kasich – and that is how a fascistic campaign could elicit the support of even the many non-fascists who simply cannot distance themselves from the “R” next to a candidate’s name.

                The only way in the long term to defeat Trump and those like him (because, in the wake of Trump’s bewildering popularity, others will emerge to imitate his tactics) is to renounce the two-party political system and judge each candidate solely on his or her policies, record, and personal merits or demerits. As I pointed out in 2012 in “On Moral Responsibility in General and in the Context of Voting”,

The most reliable way to avoid adverse moral responsibility in voting is to vote for a candidate whom one considers to be an improvement over the status quo in absolute, not relative, terms – and without regard for how others might vote. Morality is not based on consensus, but on objective truth. One’s own understanding of objective truth, and the continual pursuit of improving that understanding, is the best path to moral action and the habits of thought that facilitate it.

More recently, in 2015, I explained that

voters who are caught in the expectations trap will tend to vote for the “lesser evil” (in their view) from one party, because they tend to think that the consequences of the election of the candidate from the other party will be dire indeed, and they do not want to “take their vote away” from the slightly less objectionable candidate. This thinking rests on the false assumption that a single individual’s vote, especially in a national election, can actually sway the outcome. Given that the probabilities of this occurring are negligible, the better choice – the choice consistent with individual autonomy and the pursuit of principle – is to vote solely based on one’s preference, without any regard for how others will vote or how the election will turn out.

             Had Trump been one candidate among tens of independent contenders, he would have been rightly recognized as a demagogue whose base of support is a xenophobic, poorly educated fringe. Had numerous political parties been able to compete without major barriers to entry, today’s “moderate” establishment Republicans and movement conservatives would have had no need to fight with Trump over a particular party’s nomination, since they – having little in common – would have likely fielded multiple candidates of their own from multiple parties. As it stands now, however, the two-party system has destroyed the checks that would exist in a truly politically competitive system to prevent a fascistic demagogue’s meteoric rise. Only the consciences of voters stand between Trump and the Republican nomination, as well as the Presidency. Now, more than ever, it is imperative to vote solely on principle and escape the “lesser evil” trap, lest the greater evil of untrammeled illiberalism trap us forever.

This essay may be freely reproduced using the Creative Commons Attribution Share-Alike International 4.0 License, which requires that credit be given to the author, G. Stolyarov II. Find out about Mr. Stolyarov here.

Bernie Sanders’ Anti-Foreign Crankery – Article by Daniel Bier

Bernie Sanders’ Anti-Foreign Crankery – Article by Daniel Bier

The New Renaissance HatDaniel Bier
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A Vesuvius of Tribalism and Economic Illiteracy

At Sunday’s Democratic presidential debate, Bernie Sanders attacked American trade with Mexicans, Chinese, Vietnamese, and presumably all other foreigners who might try to steal our jobs. Sanders harangued Hillary Clinton,

NAFTA, supported by the Secretary, cost us 800,000 jobs nationwide, tens of thousands of jobs in the Midwest. Permanent normal trade relations with China cost us millions of jobs.

Look, I was on a picket line in early 1990’s against NAFTA because you didn’t need a PhD in economics to understand that American workers should not be forced to compete against people in Mexico making 25 cents an hour.

… And the reason that I was one of the first, not one of the last to be in opposition to the TPP is that American workers … should not be forced to compete against people in Vietnam today making a minimum wage of $0.65 an hour.

Look, what we have got to do is tell corporate America that they cannot continue to shut down. We’ve lost 60,000 factories since 2001. They’re going to start having to, if I’m president, invest in this country — not in China, not in Mexico.

First, let’s note his dodgy job numbers. As Dan Griswold noted in 2011, in response to a similar claim about jobs “lost” from the “trade deficit” with Mexico,

In the first five years after NAFTA’s passage, 1994-98, when we could have expected it to have the most impact, the U.S. economy ADDED a net 15 million new jobs, including 700,000 manufacturing jobs.

Behold, the horror unleashed on US manufacturing jobs by trade with Mexico:nafta-manufacturing

In fact, since NAFTA went into effect in 1994, total US employment has increased by 28 million jobs. Even if we buy the dubious claim that NAFTA “cost us 800,000 jobs” over the last 22 years, this amounts just 36,000 jobs a year.

As Griswold noted, even in good times, 300,000 Americans file for unemployment each week. The US economy creates and destroys more than 15 million jobs every year. This alleged displacement amounts to less than one day’s worth of job losses.

It’s true that, in the long-run, manufacturing jobs have been in decline in the United States. But this is not because manufacturing is in decline. The myth (promoted by the other nationalist blowhard in the race) that United States “doesn’t make stuff anymore” is not just wrong — it couldn’t be further from the truth.

Real US manufacturing output is the highest it has ever been. Simply put, the US makes more stuff than ever.

manufacturing-indexHow can this be? Because manufacturing productivity — the amount of value added per hour worked — has gone up dramatically in recent decades. Manufacturing employment is declining because of automation; a US factory worker today can add a lot more value per hour than one in 1970.

manufacturing-employees-output-per-hour

It’s simply not true that trade devastated the US economy and wiped out millions of jobs. Employment has shifted within the US economy, out of industry into service jobs, and manufacturing has shifted around the globe, aligning production with the comparative advantages of each country’s labor and capital markets.

The resentment stoked by nationalists like Trump and Sanders is based on a nonsensical proposition, a mirage of high-paying blue collar jobs stolen by conniving foreigners, which we could reclaim if only we had the will to wage a trade war.

But the machines and global production chains are here to stay, and the jobs being done in Vietnam and China for fifty cents an hour are on the extreme low end of the value-added chain — which should be obvious, when you think about it, since they pay so little. (On the back of every iPhone is a short economics lesson on this point: “Designed by Apple in California. Assembled in China.”)

Do we really want to “bring those jobs back”? Do we envision a future where the American middle class is sewing textiles in sweatshops for a dollar an hour? Of course not. Americans today likely wouldn’t do those jobs at any wage, but especially not at the wages paid to low-skilled workers in developing Asian and Latin American countries. Those jobs only exist at those wages; at higher wages, they are scarcer, higher-skilled, and more capital intensive.

True, we could make t-shirts and Happy Meal toys in the United States, but we’d be doing it with far, far fewer workers and a lot more capital. Instead of 30 workers at fifty cents an hour, it’d be one person with a machine for $20 an hour.

The real difference would be that everyone would be poorer as a result: consumers paying higher prices, foreigners working in worse conditions and for less money, and American resources being diverted away from where they are most productive.

This is where economic ignorance stops being morally neutral and becomes a real threat to the life and well-being of the poor, especially in the developing world.

Not content to merely keep Mexicans from working in the United States (where, thanks to US capital and infrastructure, they could earn three or four times more than they make in Mexico), Bernie Sanders now objects to the right of Mexicans to work in Mexico, if they dare to sell goods and services to Americans — or, God forbid, try to compete with American firms.

For a champion of the poor like Sanders, there’s a double irony here, in that poor Americans are already much wealthier than poor Mexicans, and that tariffs also make goods more expensive for native consumers, disproportionately hurting the poorest Americans. Not only are poor Mexicans made worse off, by losing access to the US market and thus losing jobs, but poor Americans are also made worse off by having less disposable income, which is thus not spent elsewhere in the economy to sustain other American jobs.

And this is just the first order effects of closing off trade with Mexico. When the Mexican government inevitably retaliates, US exports to Mexico (which totaled $236 billion in 2015) will also be devastated and more jobs will be lost. And of course, simply multiply this orders of magnitude for China, Vietnam, and every other country on the nationalistic hit list.

Who gains from this? In the long run, nobody, which is why (after decades of gradual reform) we finally got relatively free trade with our closest neighbors, signed into law by a liberal Democrat. But in the short run, a few US corporations and labor unions would benefit from trade tariffs — at the expense of both poor foreigners and poor Americans as a whole.

(For those keeping score, this makes it an ironic hat trick for Sanders, whose tirades against free trade and open borders are laced with fear-mongering about “corporations.”)

Finally, let us ponder Sanders’ Alice-in-Wonderland solution to the imagined ills of free trade:

Look, what we have got to do is tell corporate America that they cannot continue to shut down. We’ve lost 60,000 factories since 2001. They’re going to start having to, if I’m president, invest in this country — not in China, not in Mexico.

Did I say Alice in Wonderland? I meant Atlas Shrugged. Ayn Rand was justly accused of having unbelievable, one-dimensional stereotypes, but sadly, American politics seems to have the same problem.

It’s anyone’s guess how Sanders imagines he could force factories not to close and order companies to stay in the United States, but the “you can’t shut down” solution is almost directly lifted from “Directive 10-289,” the order that Rand’s antagonists use to try to “stabilize” the economy:

All workers, wage earners and employees of any kind whatsoever shall henceforth be attached to their jobs and shall not leave nor be dismissed nor change employment… All industrial, commercial, manufacturing and business establishments of any nature whatsoever shall henceforth remain in operation…

Faced with economic decline, the government believed that the only option was to stop the decline, rather allowing people to go where they choose, buy what they choose, and make what they choose. “What it comes down to is that we can manage to exist as and where we are, but we can’t afford to move!” archvillain Wesley Mouch exclaims. “So we’ve got to stand still… We’ve got to make those bastards stand still!”

When Rand first published this in 1957, this was hyperbole about the fear of change, the reductio ad absurdum of the argument for keeping things as they are. Now, it’s an applause line for mainstream presidential candidates.

Daniel Bier is the site editor of FEE.org He writes on issues relating to science, civil liberties, and economic freedom.

This article was published by The Foundation for Economic Education and may be freely distributed, subject to a Creative Commons Attribution 4.0 International License, which requires that credit be given to the author.

Free Trade Is the Path to Prosperity – Article by Georgi Vuldzhev

Free Trade Is the Path to Prosperity – Article by Georgi Vuldzhev

The New Renaissance HatGeorgi Vuldzhev
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The political circus of the 2016 presidential election has revived and reinvigorated popular belief in age-old protectionist fallacies. Currently Donald Trump and Bernie Sanders are both in favor of expanding protectionist trade policy, with both of them arguing that free trade “destroys” jobs and hurts domestic workers and producers by exposing them to foreign competition. Both candidates espouse an utterly misguided zero-sum view of economics, in which one side to an exchange wins only when the other side loses. Both men are, of course, completely wrong.

Free Trade Does Not Destroy Jobs

It is true that greater competition between domestic and foreign workers can lead to a decline in wage rates and possibly unemployment in some sectors of the economy. But this is only a short-term effect. Free competition between foreign and domestic producers also naturally leads to lower prices for the goods and services which can now be freely imported from abroad. So, while nominal wage rates are pushed down in some sectors, real wage rates rise overall for everyone in the economy because of the decline in prices.

Thanks to free trade consumers spend less money on certain goods and services and this allows them to spend more money on others, which leads to rising demand and thus profits in the sectors providing the latter, and consequently leads also to more investment by entrepreneurs. This higher rate of investment naturally leads to the creation of more jobs in these sectors and thus offsets any original rise in unemployment that might have occurred.

Alternatively, the consumers may choose to save the extra disposable income that was freed up by the decline in prices. This rise in the savings rate will lead to a decline in interest rates, which makes profitable certain long-term capital-intensive projects which were not profitable beforehand. Seizing the opportunity presented by this increase in savings, entrepreneurs will start borrowing and investing in those long-term capital intensive projects, which on its own already creates more jobs, but it also leads to a rise in demand for capital goods, which raises profits in the capital goods industries and consequently leads to more investment and job openings in those sectors.

Free Trade Is Win-Win

Free trade not only doesn’t “destroy” jobs, but it also promotes specialization between nations, which improves the efficiency and productivity of workers, and leads to a rise in living standards for all. Trade is not some kind of a zero-sum game in which if one side wins, the other has to lose.

When two countries such as the United States and China, for example, trade freely with one another, their citizens are incentivized to specialize in those lines of production in which they have a comparative advantage. Due to the difference in factors of production endowments it is best for different countries to specialize in producing those types of goods and services which they can produce most efficiently in comparative terms. A higher level of specialization, through the effect of economies of scale, makes production more cost-efficient.

By specializing in a certain line of production and then exchanging the goods and services produced for those that others are specialized in producing, the people of a given country can substantially raise their living standards because the gains in productivity are naturally followed by an increasing supply of goods and services and thus rising real incomes. This way free trade allows for the flourishing of what can be called an “international” division of labor. Just like a greater degree of division of labor can lead to big gains in productivity and thus real incomes on an intra-national (i.e., internal for a given country) level it can also do so on an international level.

Protectionism Makes You Poor

When international trade is restricted, for example, by protectionist legislation which places tariffs on certain imports, this process of specialization is hindered and thus the gains in productive efficiency are diminished. By artificially raising the price of imports, tariffs allow otherwise uncompetitive and inefficient domestic businesses to remain in operation. Consumers are forced to pay higher prices for the goods the importation of which is penalized by tariffs, and this effectively constitutes a redistribution of resources from the consumers to the domestic producers.

More importantly, protectionism hinders the process of specialization described in the previous section and thus prevents living standards from rising in the long-term, or worse — it can even lead to their decline. By propping up the profits of comparatively inefficient domestic producers and keeping in business, tariffs prevent the labor shift from those inefficient sectors, to more comparatively efficient ones. Consequently, because this prevents a higher degree of specialization from taking place, or even reverses it, the benefits that specialization leads to cannot be obtained. Productivity does not increase (or at least not to the same degree as it could) and thus real incomes do not rise.

Contrary to the popular political rhetoric nowadays, free trade does not “destroy jobs.” It can only lead to a shift of resources (labor, capital, and other factors) from one comparatively inefficient sector or group of sectors in the domestic economy to another more comparatively efficient one. This process of specialization in the comparatively advantageous lines of production not only does not destroy jobs, but it also enables big gains in efficiency and productivity to take place, which leads to a rise in real incomes. This is how, far from somehow hurting the domestic workers, free trade actually does the opposite — it makes them richer. It is, in fact, protectionism which makes us all poorer, workers included, by artificially propping up inefficient businesses, leading to a misallocation of resources and a decline in standards of living for us all.

Georgi Vuldzhev is a student and an intern at the Institute for Market Economics in Sofia, Bulgaria. He has written articles on economics and politics for the European Students for Liberty blog, where he is a regular contributor, and various Bulgarian publications. His main interests are Austrian economics and libertarian political theory.

This article was published on Mises.org and may be freely distributed, subject to a Creative Commons Attribution United States License, which requires that credit be given to the author.

Trump and Sanders Are Both Conservatives – Article by Steven Horwitz

Trump and Sanders Are Both Conservatives – Article by Steven Horwitz

The New Renaissance HatSteven Horwitz
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Shared Visions of Fear, Force, and Collectivism

Those of us who reject the conventional left-right political spectrum often see things that those working within it cannot. For example, in “Why the Candidates Keep Giving Us Reasons to Use the ‘F’ Word” (Freeman, Winter 2015), I argue that Donald Trump and Bernie Sanders, seen by many as occupying opposite ends of the ideological spectrum, both embrace the thinking of economic nationalism, if not fascism.

They also share a different political tradition. It may seem to contradict their shared fascist pedigree, but Trump and Sanders are both, in a meaningful sense, conservatives.

Trump, of course, has been lambasted by many self-described conservatives precisely because they believe he is not a conservative. And Sanders, the self-described “democratic socialist,” hardly fits our usual conception of a conservative. What exactly am I arguing, then?

They are both conservatives from the perspective of classical liberalism. More specifically, they are conservatives in the sense that F.A. Hayek used the term in 1960 when he wrote the postscript to The Constitution of Liberty titled “Why I Am Not a Conservative.” There he said of conservatives,

They typically lack the courage to welcome the same undesigned change from which new tools of human endeavors will emerge.… This fear of trusting uncontrolled social forces is closely related to two other characteristics of conservatism: its fondness for authority and its lack of understanding of economic forces.… The conservative does not object to coercion or arbitrary power so long as it is used for what he regards as the right purposes. He believes that if government is in the hands of decent men, it ought not to be too much restricted by rigid rules.

That description would seem to apply to both Trump and Sanders. They share a fear of uncontrolled and undesigned change, especially in the economy. This is most obvious in Trump’s bluster about how America never “wins” and his desire to raise tariffs on Chinese imports and close the flow of immigrants, especially from Mexico. Economic globalization is a terrific example of uncontrolled change, and using foreign workers and producers as scapegoats for that change — especially when those changes have largely benefited most Americans — is a good example of this fear of the uncontrolled.

Those policies also show the much-discussed economic ignorance of Trump and his supporters, as shutting off trade and migration would impoverish the very people Trump claims to care about — those who are, in fact, supporting him. International trade and the free migration of labor drive down costs and leave US consumers with more money in their pockets with which to buy new and different goods. They also improve living standards for our trade partners, but Trump and his followers wrongly perceive their gains as necessitating American losses.

The same concerns are echoed in Sanders’s criticisms of free trade and in his claim that immigration is undermining good jobs for the native-born. Trump’s rhetoric might be more about how the US needs to “beat” the Chinese, and Sanders might focus more on the effects on working class Americans, especially union workers, but both fear the uncontrolled change of globalized markets, seeing commerce as a zero-sum game. (See “Why Trump and Sanders See Losers Everywhere,” FEE.org, January 20, 2016.)

For Sanders, fear of change also bubbles up in his criticisms of Uber — even though he uses the service all the time. Part of Hayek’s description was the fear of change producing “new tools of human endeavor.” The new economy emerging from the reduction of transaction costs will continue to threaten labor unions and the old economic understanding of employment and the firm. Sanders’s view of the economy is very much a conservative one as he tries to save the institutions of an economy that no longer exists because it no longer best serves human wants.

In addition, both Trump and Sanders are more than willing to use coercion and arbitrary power to attempt to resist that change. These similarities manifest in different ways, as Trump sees himself as the CEO of America, bossing people and moving resources around as if it were one of his own (frequently bankrupt) companies. CEOs are not bound by constitutional constraints and are used to issuing orders to all who they oversee. This is clearly Trump’s perspective, and many of his followers apparently see him as Hayek’s “decent man” who should not be too constrained by rules.

The same is true of Sanders, though he and his supporters would deny it. One need only consider his more extreme taxation proposals as well as the trillions in new spending he would authorize to see that he will also not be bound by constraints and will happily use coercion to achieve his ends. This is also clear in his policies on trade and immigration, which, like Trump’s, would require a large and intrusive bureaucracy to enforce. As we already know from current immigration restrictions, such bureaucracies are nothing if not arbitrary and coercive. Both Trump and Sanders believe that with the right people in charge, there’s no need for rule-based constraints on political power.

Hayek also said of conservatives that they are characterized by a

hostility to internationalism and [a] proneness to a strident nationalism.… [It is] this nationalistic bias which frequently provides the bridge from conservatism to collectivism: to think in terms of “our” industry or resource is only a short step away from demanding that these national assets be directed in the national interest.

As noted, Sanders and Trump share exactly this hostility and proneness. And despite being seen as political opposites, their distinct views converge in the idea that resources are “ours” as a nation and that it is the president’s job (and the state’s more generally) to direct them in the national interest. For Trump, that interest is “making America great again” and making sure we “beat” the Chinese. For Sanders, that interest is the attempt to protect “the working class” against the predation of two different enemies: the 1 percent and foreign firms and workers, all of whom are destroying our industries and human resources.

All of this fear of uncontrolled change and economic nationalism is in sharp contrast with the position of what Hayek calls “liberalism” or what we might call “classical liberalism” or “libertarianism.” In that same essay, Hayek said of classical liberalism, “The liberal position is based on courage and confidence, on a preparedness to let change run its course even if we cannot predict where it will lead.”

This is why classical liberalism rejects the idea that the path toward progress entails electing the right people (the “decent men”) and the cult of personality that frequently accompanies that idea, as we’ve seen with Trump and Sanders. Classical liberalism understands how, under the right rules and institutions, progress for all is the unintended outcome of allowing each to pursue their own values and ends with an equal respect for others to do the same, regardless of which side of an artificial political boundary they reside on.

If we want to live in peace, prosperity, and cooperation, we need to recognize that progress is a product of unpredictable, uncontrolled, and uncontrollable change.

Trump and Sanders can stand on their porches telling us to get off their lawn, but we’re going to do it in an Uber imported from Asia and driven by a nonunionized immigrant, because we classical liberals welcome the change they fear.

Steven Horwitz is the Charles A. Dana Professor of Economics at St. Lawrence University and the author of Hayek’s Modern Family: Classical Liberalism and the Evolution of Social Institutions. He is a member of the FEE Faculty Network.

This article was published by The Foundation for Economic Education and may be freely distributed, subject to a Creative Commons Attribution 4.0 International License, which requires that credit be given to the author.

Good News, Bernie Sanders: Average Workweeks Are Getting Shorter – Article by Chelsea Follett

Good News, Bernie Sanders: Average Workweeks Are Getting Shorter – Article by Chelsea Follett

The New Renaissance HatChelsea Follett
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Capitalism is letting people choose more leisure

Senator Bernie Sanders recently tweeted the following:

sanders.tweetFortunately, the gruelingly long workweek described by Sanders is not the norm. In fact, leisure time has been on the rise. In 1950, an average U.S. worker worked 1,984 hours a year, or about 38 hours a week. In 2015, an average American worker worked 1,767 hours, or about 34 hours a week.

workhours

That means that the average U.S. worker had 217 more hours for leisure or other pursuits in 2015 than in 1950. That is about 9 days of extra time.

The 50-hour workweek described by Sanders is more common in China, where the average worker worked 2,432 hours in 2015, or around 47 hours a week.

This post first appeared at HumanProgress.org.
Compare other countries over time with their interactive dataset.

Chelsea Follett (Chelsea German) works at the Cato Institute as a Researcher and Managing Editor of HumanProgress.org.

This article was published by The Foundation for Economic Education and may be freely distributed, subject to a Creative Commons Attribution 4.0 International License, which requires that credit be given to the author.

The Conservative Meltdown, Courtesy of Trump – Article by Jeffrey A. Tucker

The Conservative Meltdown, Courtesy of Trump – Article by Jeffrey A. Tucker

The New Renaissance HatJeffrey A. Tucker
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Trumpflag2For 60 years, the conservative establishment has worked to overcome the biggest leftist lie of them all: that non-leftists are really Nazis in disguise. To wreck that view, conservatism reinvented itself after World War II.

William Buckley, editor of National Review, led the way. He purged the hard racists, dedicated segregationists, the Falangists, the anti-semites, the crypto-Nazis, the theocrats and ecclesiocrats, and the wildly paranoid conspiracy mongers.

Buckley was the one to do it too, because he was erudite and educated, with a subtle sense of things. It was a massive effort in social and political control, and it mostly worked. The culminating victory came with the election of Ronald Reagan.

So sensitive was Buckley to the charge of Nazi sympathies that he lost his composure completely, on live television, when in 1968 Gore Vidal charged him with being a crypto-Nazi. It was enough to cause Buckley, again on live television, to threaten Vidal with a punch in the face.

And Buckley never stopped the purges even through the 2000s. To be in the Buckley circle, you had to be housebroken. You had to avoid the fever swamps.

Many of these purges were wholly justified, but there was also collateral damage. He also purged the libertarians and the Randians too, for different reasons. Libertarians weren’t on board with the Cold War, so that was enough for him. As for Rand, perhaps it was the atheism above all else, since by this time, a firm defense of religious faith had become essential to the package of this new thing called conservatism.

If Buckley was so worried about the impression that the only alternative to leftism was Nazism, he might have cooled it a bit on suggesting nuclear war against the North Vietnamese and the Russians. If a distinguishing mark of Nazism is the use of mass violence to serve political ends, an ideological change would have been more effective than purges in countering the smears against the right. He might also have shown less affection for police-state tactics against antiwar protestors. After all, these smears from the left have the whiff of credibility for a reason.

And now in 2015 enters Donald Trump. He is not a marginal candidate. His rise and persistent dominance of the Republican field has establishment conservatives panicked, simply because it’s proof that their ideology is not dominant among GOP voters. Every demographic analysis of his supporters shows that they do not get their news from magazines or the internet. These people (middle age, middle income, white) are TV watchers and mostly haven’t been to college. What the intelligentsia says doesn’t impact their lives at all.

And yet their voices have a plurality in the Republican party. We haven’t heard from them that much in recent years because they’ve not had a standard bearer and the establishment has exercised such tight control. Now with Trump, we have the perfect storm: a person who is the caricature of the ugly American. He pushes patriotism to the point of nativism, energy in the executive to the point of fascism, police power as a solution without limits, and military strength to the point of outright worship of war as the only suitable means.

The latent statism of the right reaches its apotheosis in Trump, and it is driving the conservative establishment crazy. He is the painting in the attic, and they want it to remain hidden.

As for populism generally, both conservatives and libertarians have variously toyed with it in the past. Surely the people want liberty. Surely the only real problem is the ruling class and its power. If the people get their way, through an assertive wresting of control from the elites, the result would be a freer America. The real problem traces to the people controlling the party, not the voters as such.

But look at what’s happening. The establishment is losing control, but the result is not a movement that favors freedom but something more like the right-wing version of the Red Guard. The Trump movement is unleashing unguided hate: it was Mexicans, then Syrians, then all Muslims, and now he can stand in front of audiences ridiculing free speech and elicit cheers from the frothing masses.

H.L. Mencken is making much more sense to me today. This is a change for me. I’ve always appreciated Mencken’s love of freedom, his suspicion of the state, his appreciation for high culture, his disdain for the age-old superstitions. All that I could grasp and share. What I could not entirely share was his dread of the common man, and his absolute loathing of the political system that puts the hoi polloi in charge of choosing political leadership. He found the system preposterous.

I’ve always understood the intellectual arguments against democracy and agreed more or less. But I could never muster Mencken’s passion concerning the topic. I’ve never fully understood his intense conviction that democracy is the single biggest threat to liberty.

Trump has changed all that. Now I see it fully. The common man is gold as a consumer, worker, family member, church goer. As a voter and political influencer, the common man is a disaster waiting to happen.

What effect does this have on conservative ideology? It makes the job of seeming intelligent and responsible ever more difficult. If I were a leftist, I would be laughing out loud at all these upheavals. Trump as the only alternative to Sanders/Hillary is not a world I want to inhabit.

My prediction is this. Whether or not Trump snags the nomination, his dominance of the polls in 2015 has given the biggest boost the left has received in half a century. It also calls on conservatives to clean up their act: get more libertarian or prepare for the full Trumpization of your movement.

Read more:
Trumpism: The Ideology
Why We Should Talk About Fascism
The Eff Word Goes Mainstream
Has Donald Trump Unleashed the Neo-Nazis?
How Carly Fiorina and a Boring Debate Took Out Trump
The Rand Paul Campaign: A Retrospective

The featured image was taken by Michael Vadon (CC BY-SA 2.0 — photoshopped).

Jeffrey Tucker is Chief Liberty Officer of Liberty.me (http://liberty.me/join), a subscription-based, action-focused social and publishing platform for the liberty-minded. He is also distinguished fellow of the Foundation for Economic Education (http://fee.org), executive editor of Laissez-Faire Books, research fellow of the Acton Institute, founder of the CryptoCurrency Conference, and author of six books. He is available for speaking and interviews via tucker@liberty.me.

Congress Fiddles While the Economy Burns – Article by Ron Paul

Congress Fiddles While the Economy Burns – Article by Ron Paul

The New Renaissance HatRon Paul
September 14, 2015
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Reports that the official unemployment rate has fallen to 5.1 percent may appear to vindicate the policies of easy money, corporate bailouts, and increased federal spending. However, even the mainstream media has acknowledged that the official numbers understate the true unemployment rate. This is because the federal government’s unemployment figures do not include the 94 million Americans who have given up looking for work or who have settled for part-time employment. John Williams of Shadow Government Statistics estimates the real unemployment rate is between 23 and 24 percent.

Disappointingly, but not surprisingly, few in Washington, DC acknowledge that America’s economic future is endangered by excessive spending, borrowing, taxing, and inflating. Instead, Congress continues to waste taxpayer money on futile attempts to run the economy, run our lives, and run the world.

For example, Congress spent the majority of last week trying to void the Iranian nuclear agreement. This effort was spearheaded by those who think the US should waste trillions of dollars on another no-win Middle East war. Congressional war hawks ignore how America’s hyper-interventionist foreign policy feeds the growing rebellion against the dollar’s world reserve currency status. Of course, the main reason many are seeking an alternative to the dollar is their concern that, unless Congress stops creating — and the Federal Reserve stops monetizing — massive deficits, the US will experience a Greek-like economic crisis.

Despite the clear need to reduce federal spending, many Republicans are trying to cut a deal with the Democrats to increase spending. These alleged conservatives are willing to lift the “sequestration” limits on welfare spending if President Obama and congressional democrats support lifting the “sequestration” limits on warfare spending. Even sequestration’s minuscule, and largely phony, cuts are unbearable for the military-industrial complex and the rest of the special interests that control our federal government.

The only positive step toward addressing our economic crisis that the Senate may take this year is finally holding a roll call vote on the Audit the Fed legislation. Even if the audit legislation lacks sufficient support to overcome an expected presidential veto, just having a Senate vote will be a major step forward.

Passage of the Audit the Fed bill would finally allow the American people to know the full truth about the Fed’s operations, including its deals with foreign central banks and Wall Street firms. Revealing the full truth about the Fed will likely increase the number of Americans demanding that Congress end the Fed’s monetary monopoly. This suspicion is confirmed by the hysterical attacks on and outright lies about the audit legislation spread by the Fed and its apologists.

Every day, the American people see evidence that, despite the phony statistics and propaganda emanating from Washington, high unemployment and rising inflation plague the economy. Economic anxiety has led many Americans to support an avowed socialist’s presidential campaign. Perhaps more disturbingly, many other Americans are supporting the campaign of an authoritarian crony capitalist. If there is a major economic collapse, many more Americans — perhaps even a majority — will embrace authoritarianism. An economic crisis could also lead to mob violence and widespread civil unrest, which will be used to justify new police state measures and crackdowns on civil liberties.

Unless the people demand an end to the warfare state, the welfare state, and fiat money, our economy will continue to deteriorate until we are faced with a major crisis. This crisis can only be avoided by rejecting the warfare state, the welfare state, and fiat money. Those of us who know the truth must redouble our efforts to spread the ideas of liberty.

Ron Paul, MD, is a former three-time Republican candidate for U. S. President and Congressman from Texas.

This article is reprinted with permission from the Ron Paul Institute for Peace and Prosperity.

Has Donald Trump Unleashed the Neo-Nazis? – Article by Jeffrey A. Tucker

Has Donald Trump Unleashed the Neo-Nazis? – Article by Jeffrey A. Tucker

The New Renaissance HatJeffrey A. Tucker
September 8, 2015
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Donald Trump went from clown to contender in a mere 30 days. He is now polling in at 30% among Republicans, a 12-point spread from Ben Carson who is #2. Trump still loses next to Hillary by 2 points, but her nomination is not secure.

A race of Sanders vs. Trump would be quite the sight, straight out of the 1930s. It’s the Reds vs. the Browns all over again. My own sense is that the Browns could win this. Then we have a serious problem. As much as we loathe the establishment, it could be worse.

It’s time libertarians get serious about realizing that there exists such a thing as Brown-shirted socialism. It masquerades as patriotism. It seeks national greatness. It celebrates the majority race and dehumanizes the other. It is violently protectionist. On cultural matters, it is anti-leftist (“politically incorrect”). It is unapologetically authoritarian.

Even given all this, we are mostly mystified by it. It doesn’t strike us as a coherent ideology. It seems like a string of bad policy ideas (and some not terrible ones too) rather than a real political tradition. This is because we, as libertarians, are well-schooled to fear the socialist left but have little preparation to understand the threat from the other side.

Events of the last weeks should heighten our consciousness. There really is a brown-shirt movement in the U.S. It’s been building for many years. They have their organizations, books, websites, and splits within splits. The neo-Nazis are the most extreme variant. But fascism has many other types of expression, each reflecting a special interest, but each of them leading to a special kind of authoritarianism.

That the neo-Nazis support Trump is an established fact. Notorious racist, anti-semite, and unapologetic former KKK grand dragon David Duke has endorsed Donald Trump for president. So has the mega-popular website Stormfront.org, with its overtly neo-Nazi editorial outlook.

The American Nazi Party (yes, there is such a thing, as founded by George Lincoln Rockwell) is also all-in with support: “He tells it as the majority of the population FEELS, and he’s far ahead in the polls because of it.”

When Trump was asked about all of this, his response was that he didn’t know about it, but that this is not surprising since “everyone likes me.” He said he would be happy to repudiate their support “if that would make you feel better.”

Is this just the leftwing media looking for any excuse to smear a great American? Many of his supporters think so. And this is because the American left has been traditionally reckless about flinging the labels racist and anti-semite (and so on) against anyone with whom they disagree. However, let’s remember that just because the boy cries wolf constantly doesn’t mean that wolves do not exist.

Some people say that this supposed neo-Nazi/racist/nativist group is tiny and irrelevant? That’s what I used to think.

Until recently. I was a critic of Trump early on, for his trade and immigration views. I wrote an article that ended up in Newsweek.

Then I became a target. My social feed blew up with scum of the earth suddenly taking me on as their enemy. I was the target of the most vicious hate campaign I’ve ever experienced. I wish this on no one.

In the course of two weeks, blocking accounts of neo-Nazis and their affiliated friends became a part-time job. I now know more than I ever wanted to know about a movement that is actually large and growing right in the United States. You can call it extreme right if you want to, but its views on politics are not that different in substance from the extreme left. They have different styles but they are both authoritarian to the core, lustful for power to achieve their own aims.

As regards the right-wing authoritarians, Trump is their savior.

Here is a typical example. A Twitter account (“Seth Rubenstienberg”) features a Nazi-era caricature of a Jew. It posts incendiary posts such as this one: “if whites ever manage to get another ethno-state in the future, women’s bodies should be regulated. None of this my choice bullshit.”

The account has only 216 followers. That does not sound like much. But I’ve banned at least 50 such accounts. Multiply that account by 1,000 times and you have something serious going on. And when all these people are tweeting at you at once, it can be overwhelming.

It’s been true with Facebook too. The neo-Nazis came crawling out of their holes in the ground to denounce me as an enemy of the race, a self-hating white, a “cuckservative” (their favorite term for their enemies), and so on.

They having been posting on my wall incessantly. Many of their accounts celebrate other movements with only one degree of separation from the real deal. Instead of announcing themselves as neo-Nazis, they choose other causes: white nationalism, protectionism, anti-immigration, men’s rights, the hope for theocracy, and so on.

But for me, it’s become so inevitable as to become boring. I’ve learned to smell these people a mile away. You dig a bit and you land right where we started: straight-out hate rooted in Nazi ideology.

I’ve banned one FB account every few hours for weeks now — truly offensive material.

On the one hand, it is a credit to American democracy that we have such free speech, and I would oppose any government shutdowns of such accounts and sites. The worst mistake anyone could ever make in opposition to brown-shirted politics is to shut them down by force. That only reinforces their deluded perceptions that they have hit on a fundamental truth, and are being persecuted for it.

But free speech reigns on social media, and it’s given me an education about the existence — and the danger — of this movement that I once supposed was an invention of the “liberal media.”

Here is the question I keep asking myself. I’ve been on social media for a long time. Why is this just now happening? The answer is Trump. His free-wheeling style and open attacks on immigrants and foreigners, and hard-core promotion of trade isolationism, has emboldened them as never before.

As for how important they are, consider that the most popular neo-Nazi website, The Daily Stormer, has a higher traffic ranking than the Cato Institute or Heritage Foundation. These people are not irrelevant. They are real and growing.

Why should I care? I’m a devoted follower of the economist Ludwig von Mises (1881-1973), a genius and a Jew. He was driven out of his home in Austria because of the rise of Hitler. And why did Hitler rise? Because a population was fed up with the corrupt political system and a failing economic structure — a situation not unlike our own.

Mises was a dedicated opponent of the socialist left. His first major book on political theory (1922) took them on. But, little more than a decade later, it was not the red shirts that ruined his life. It was the brownshirts who are socialists of a type but use race hatred, misogyny, nativism, and the hope for religious and political domination as a means of control. They drove him from his home and stole his money and books. He barely escaped death.

Are we seeing the rise of a fascist movement in the U.S., and has Trump unleashed them? Is this our Road to Serfdom? Judging from Trump’s rise, and what I’ve experienced in the last week, there is no basis for pretending otherwise.

Jeffrey Tucker is Chief Liberty Officer of Liberty.me (http://liberty.me/join), a subscription-based, action-focused social and publishing platform for the liberty minded. He is also distinguished fellow Foundation for Economic Education (http://fee.org), executive editor of Laissez-Faire Books, research fellow Acton Institute, founder CryptoCurrency Conference, and author six books. He is available for speaking and interviews via tucker@liberty.me.

Bernie Is Wrong: Trade Is Awesome for the Poor and for America – Article by Corey Iacono

Bernie Is Wrong: Trade Is Awesome for the Poor and for America – Article by Corey Iacono

The New Renaissance HatCorey Iacono
August 28, 2015

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The socialist senator is totally wrong about free trade

Sen. Bernie Sanders, the Democratic presidential hopeful, is no fan of free trade. In an interview with Vox, Sanders’ made his anti-trade position clear: “Unfettered free trade has been a disaster for the American people.”

He also noted that he voted against all the free trade agreements that were proposed during his time in Congress and that if elected President he would “radically transform trade policies” in favor of protectionism.

Sanders and his ilk accuse their intellectual opponents of promoting “trickle-down economics,” but that is precisely what he is advocating when it comes to trade. The argument for protectionism ultimately relies on the belief that protecting domestic corporations from foreign competition and keeping consumer prices high will somehow benefit society as whole.

However, the real effect of protectionism is to increase monopoly and consequently reduce overall economic welfare. In fact, according to a paper by economists at the Federal Reserve Bank of Minneapolis, “Government policies…such as tariffs and other forms of protection are an important source of monopoly” that lead to “significant welfare losses.”

In contrast to Sanders’ assertion that the expansion of free trade has been a disaster for the American people, there is a near unanimous consensus among economists that the opposite is true.

An IGM Poll of dozens of the most renowned academic economists found that, weighted for each respondent’s confidence in their answer, 96 percent of economists agreed, “Freer trade improves productive efficiency and offers consumers better choices, and in the long run these gains are much larger than any effects on employment.”

When the vast majority of economists of all sorts of ideological stripes agree that free trade is a good thing, maybe, just maybe, they’re onto something.

In fact, they surely are. Using four different methods, economists at the Petersen Institute for International Economics estimated the economic benefits from the expansion of technology that facilitates international trade (such as container ships), as well as the removal of government-imposed barriers to international trade (such as tariffs). Since the end of World War II, they generated “an increase in US income of roughly $1 trillion a year,” which translates into an increase in “annual income of about $10,000 per household.”

This result is mostly driven by the fact that foreign businesses produce many goods which are used in the production process at a lower cost than their domestic competitors. Access to these low-cost foreign inputs allows American businesses to decrease their production costs and consequently increase their total output, making the nation as a whole much wealthier than it otherwise would have been.

Moreover, contrary to common conjecture, the benefits of international trade haven’t simply accrued to the wealthy alone. Low and middle income individuals tend to spend a greater share of their income on cheap imported consumer goods than those with higher incomes. As a result, international trade tends to benefit these income groups more so than the wealthy.

Corey Iacono Sanders ArticleIndeed, according to the President’s Council of Economic Advisers, middle income consumers have about 29 percent greater purchasing power as a result of international trade.

In other words, middle income consumers can buy 29 percent more goods and services as a result of the access to low-cost imports from foreign countries.

Low income consumers see even greater gains with 62 percent higher purchasing power as a result of trade. In contrast, the top 10 percent of income earners only saw an increase in purchasing power of 3 percent as a result of trade.

On top of that, international trade has provided benefits by bringing new and innovative products to American consumers.

According seminal research by Christian Broda of the University of Chicago and David E. Weinstein of Colombia University, the variety of imported goods increased three-fold from 1972 to 2001. The value to American consumers of this import induced expanded product variety is estimated to be equivalent to 2.6 percent of national income, about $450 billion as of 2014. That’s not exactly small change.

The spread of free trade has also made considerable contributions to environmental protection, gender equality, and global poverty reduction. As a result of the spread of clean technology facilitated by freer trade, “every 1 percent increase in income as a result of trade liberalization (the removal of government-imposed barriers to trade), pollution concentrations fall by 1 percent,” according to the Council of Economic Advisers.

The CEA also has found that “industries with larger tariff declines saw greater reductions in the [gender] wage gap,” suggesting that facilitating foreign competition through trade liberalization reduces the ability of employers to discriminate against women.

In regards to global poverty reduction, research has shown that in response to US import tariff cuts, developing countries, such as Vietnam, export more to the US, leading to higher incomes and less poverty.

Despite the large gains from trade America has already reaped, there is still room for improvement (contrary to Sen. Sanders’ accusations of “unfettered” free trade). The PIIE economists estimate that further trade liberalization would increase “US household income between $4,000 and $5,300 annually,” leading the them to conclude that, “in the future as in the past, free trade can significantly raise income — and quality of life — in the United States.”

Ultimately, the conclusion that most economists seem to reach is that, from being a disaster, the expansion of free trade has been a tremendous success, and that further trade liberalization would most likely make Americans, and the rest of the world, considerably better off.

Don’t let fear-mongering about foreigners and China scare you: free trade benefits everyone, especially the poor, while protectionism benefits only the politically powerful.

Corey Iacono is a student at the University of Rhode Island majoring in pharmaceutical science and minoring in economics. 

This article was published by The Foundation for Economic Education and may be freely distributed, subject to a Creative Commons Attribution 4.0 International License, which requires that credit be given to the author.

Why the Candidates Keep Giving Us Reasons to Use the “F” Word – The Electoral Clown Car Is Full of Nationalistic Socialists – Article by Steven Horwitz

Why the Candidates Keep Giving Us Reasons to Use the “F” Word – The Electoral Clown Car Is Full of Nationalistic Socialists – Article by Steven Horwitz

The New Renaissance HatSteven Horwitz
August 6, 2015
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“There are far too many candidates,” writes Dana Milbank at the Washington Post. “And to gain attention they are juggling, tooting horns and blowing slide whistles like so many painted performers emerging from a clown car.” The two clowns making the most noise in recent weeks are Bernie Sanders and Donald Trump.

At first glance, it would seem they couldn’t be more different: a Democrat and a Republican, a friend of the unions and a CEO, a man of relatively modest means by congressional standards and one of the wealthiest men in the United States. But a closer look reveals some interesting similarities and teaches us an important lesson about the history of ideas. What Sanders and Trump have in common is no laughing matter.

Recent articles by libertarians on both candidates have suggested that they are both strongly nationalist. Dan Bier tore apart Sanders for his views on immigration, and both Jeff Tucker and Jason Kuznicki have associated Trump with nationalism and perhaps even a variant of fascism. I think they are all on to something: Sanders and Trump have a lot more in common than many think. But before I get there, we need to take a detour into the history of socialism and fascism.

In its original conception, Marxian socialism was strongly internationalist. Marx’s theory was based on the idea of class struggle and the disparity in power between those who owned the means of production (the capitalists) and those who did not (the proletariat).

Marxism has nothing to do with nationality. It’s all about class, defined as whether or not one owns capital. For true Marxists, a German worker has much more in common with a Russian worker or an Italian worker than he or she does with a German capitalist. Marxism did not give any importance to national borders.

For many in the early 20th century, this was a problem with Marxism, especially in the aftermath of World War I. Much like today, people were looking for a “third way” between capitalism and socialism. For many of those people, that third way was fascism.

Today we use the word fascism as an epithet, especially for bossy people. We associate it with dictatorships, and especially with Nazism. It turns out that fascism was a fairly well-worked-out theory of how to organize a society, and in its original form was not about racism or anti-Semitism directly. Fascism was an attempt to combine what people saw as the best parts of capitalism and socialism, and then to do so in the context of putting nationality before class.

The most extensive writing about how fascism would work came from the Italians in the 1920s and 1930s, and interested readers should find a copy of Luigi Villari’s The Economics of Fascism to see the details. (You can find a nice summary of those ideas in Sheldon Richman’s entry on fascism in the online Concise Encyclopedia of Economics.)

The fascists argued that the whole notion of class conflict was the problem. Instead of pitting class against class and tearing nations apart, why not bring all the parties together and give them the chance to cooperate with each other rather than struggle their way to socialism? The fascist economy was built around a series of cartels where the state, the nominal owners of the means of production, and the workers (represented by labor unions) would get together and figure out what to produce, how to produce it, what to charge, and how much profit would be “allowed.”

The fascists agreed with socialism’s desire not to leave markets to spontaneous ordering forces, but they thought the nation-state should direct the economy, not the workers. Both capitalism and socialism involved conflict, not cooperation. The same third-way thinking, and some of the same structures, were present in the first two years of the New Deal in the United States. The cartels of the National Recovery Administration were modeled after Italian fascism, and FDR and Mussolini were mutual admirers.

You can see how fascism took elements of both capitalism and socialism, then added nationalism. The idea was to look out for the welfare of the nation-state first. The Italian capitalist and the Italian worker were both Italians first and foremost, and that should be the first call on their allegiance. Lashing socialism to the glorification of the nation-state gives us fascism, and you can see why anyone who represented a threat to national identity would quickly become a problem.

This is one reason why the German version of fascism so easily linked up with a long history of German anti-Semitism. The Nazis were undoubtedly socialist (recall that Nazi is short for National Socialist German Workers Party), as even a quick glance at their 1920 platform will tell you. They were also, even at that date, fiercely nationalist. In Hitler’s hands, that national pride quickly became a desire to glorify the Aryan race.

Plus, recall that Jews were disproportionately both capitalists and supporters of the Marxist revolution in Russia — not to mention the symbol of the cosmopolitan, rootless nomad for centuries. Many of those who wanted to reject both capitalism and Marxian socialism saw the Jews as the symbol of both.

So what does this have to do with Bernie Sanders and Donald Trump?

I would argue that they are both “nationalist socialists.” That is, they both embody key elements of fascism. They both think the nation comes first, and they both think the United States is an organization (not a spontaneous order) that should be under someone’s control.

The difference is that Sanders sees both the problems and the solutions from the workers’ perspective, so he’s focusing on both the exploitation by capitalists and keeping immigrants out to protect the wages of US workers. The losses to US workers matter more than the large gains to foreign-born workers coming here.

Trump sees all of this from the CEO/owner/capitalist perspective. He thinks the United States is, or should be, like a big firm where we all work together for a common goal. He envisions himself as the CEO, negotiating deals with other countries as if they, too, were just big corporate firms. But nations are not firms — they are spontaneous orders.

As I argued in an earlier column, “Socialism Is War and War Is Socialism,” this desire to turn spontaneous orders into hierarchies is characteristic of both war and socialism. It is also deeply embedded in fascism, and Sanders and Trump exemplify that tendency among the presidential candidates, though they do so with different emphases and rhetoric.

Their commonalities are also why our conventional binary left-right political spectrum makes no sense. That one candidate is perceived as far to the left and the other as (to some degree) a right-wing capitalist shows the depth of our failure to understand history. They have both rejected the spontaneous order of the market as well as the cosmopolitanism of liberalism and socialism. They are fascist brothers under the skin.

That both are getting the attention and support of so many Americans should be a matter of grave concern. After all, some clowns are far more scary than funny.

Steven Horwitz is the Charles A. Dana Professor of Economics at St. Lawrence University and the author of Microfoundations and Macroeconomics: An Austrian Perspective, now in paperback.

This article was published by The Foundation for Economic Education and may be freely distributed, subject to a Creative Commons Attribution 4.0 International License, which requires that credit be given to the author.