www.thornwalker.com/ditch/neff_mops.htm
August 14, 2020
Editor's note. This article appeared in the February 1995 (Vol. II, No. 2) issue of The Last Ditch. It is a supplementary piece to Mr. Neff's series "Polite Totalitarianism." — Nicholas Strakon
The mops we push ourselves
By RONALD N. NEFF
Mr. Neff is senior editor of The Last
Ditch.
"A talon is caught; the bird is lost."
— Russian proverb
IN "POLITE TOTALITARIANISM" (TLD, Sept.–Dec. 1994), I contended that the Permanent Regime has found ways of governing that for the most part obviate the harsh and familiar tools of the police state. Fundamental to its program is that the noose around our necks not seem unjust; one step toward achieving that end is that Americans help the regime tighten it themselves.I am not here referring to the fact that most Americans vote to expand the power of the state or that they advocate oppressive measures aimed at both themselves and their neighbors or that they raise money for such measures in walkathons. I am not even referring to the fact that most Americans pay taxes year after year without threatening a major rebellion. Rather, I have in mind the fact that Americans routinely pay for oppression completely freely, with no threat hanging over them.
I begin by looking at the monetary system.
Banking in general
In part one of "Dark Suits and Red Guards," Nicholas Strakon outlined the fundamental procedures whereby the Federal Reserve controls the American money supply (TLD, Oct. 1994). Its procedures are sometimes misunderstood, however, and some other accounts would have it that the Fed and the state inject money into the economic system (or withhold money from it) all by themselves. The truth is subtler, for banks create money only in response to demand for it. Applications for welfare, for guaranteed loans, and for grants, and companies entering into contracts with the state all represent a demand for money that the Central Government meets by selling bonds and other Treasury instruments, primarily, but not exclusively, to the Federal Reserve.
Your own borrowing from a bank for an automobile or home purchase or a tuition payment also constitutes a justification and opportunity for the banking system to inject currency into the economy. Banks do not merely increase their reserves by multiplying deposits by a figure set by the Fed. Rather, they lend out "excess reserves" (defined by the Fed), which are deposited elsewhere, where they beget new excess reserves to be lent out for deposit elsewhere, and so on. Thus, borrowers' market activity becomes the agent of the transfer and distribution of inflated currency; borrowers become the apparent instigators of the increase.
Worse yet, the savings you keep in the banking system are counted in calculating those excess reserves, the mathematical base from which begins the debasement of the currency in which you receive the borrowed funds.
That is how it can be said, "The banking system and the public do, between them, create about $10 of bank deposits for each new dollar of reserves that is created for the banks." [1] By enlisting such market processes as facilitators of its tyranny, the Permanent Regime has made its totalitarianism in the United States much more successful than the command economies of its rivals. It has created a convoluted, virtually impenetrable method of making your inevitable participation in the economy the knots of the noose it has slipped over your head. Thus do the just put their hand to evil.
But if participation in the economy is inevitable, there is a putting of the hand to evil that is not.
The banking system in particular
Normally, the returns on investment instruments are paid out of the increased productivity, measured by a business's profits, that the issue of a bond or stock makes possible. But the state produces nothing; it realizes no profits and creates no new wealth from which to pay interest on the financial instruments it issues. If it becomes more productive, it is to the destruction of liberty, not the betterment of those to whom it supplies its dubious services. The only way the state can redeem any of its financial instruments is by stealing or extorting from its subjects. [2]
The national debt, of which we hear so much these days, is important to us as a mathematical Sword of Damocles. It is (so far) politically impossible to repudiate it; therefore, payments on it must be made. And those payments are extorted from us and our neighbors first in the form of taxes, hidden and seen, and second by stealing when the Central Government debases the money supply through its own further borrowing. That is, by diluting them, the Central Government steals both the value of the product of our labor and creativity, and the reward for them.
Every government financial instrument you may hold, therefore, represents your free and uncoerced participation in your own enslavement and that of your neighbors. [3]
To be sure, you participate in that enslavement only to a tiny degree. Most of your assets do not depend on a pledge by the government to jail or expropriate any of your neighbors who refuse to help pay you your dividends. A much larger chunk of such assets is held by companies controlled by Dark Suits, who regard them as the epitome of safety, for their redemption depends not on the success of risk-taking entrepreneurs, but on the efficacy of the state's threats against you and your property. Odd that the Dark Suits regard it as safe to threaten to jail or kill you; odder still that your tax monies must go to them, and not to any of the purposes you were taught in Poli
Guaranteed loans function more indirectly yet. If you "qualify" for a guaranteed home, small-business, or college tuition loan, you participate in the distortion of market decisions even if you repay the loan on schedule and in full. First, the monies that you borrow are not available to productive enterprises for their use; second, the monies that guarantee the loans are not available to others who could qualify for a free-market loan of those monies. By virtue of their assets or anticipated productivity and the fact that you could not qualify for an unguaranteed loan, those others were — in free-market terms — better financial risks than you.
Again, individual borrowers are not the primary culprits in distorting the economy, or, by contributing their mite to inflation, in siphoning wealth from one group to another. But the principle is the same for both individuals and corporations: government intervention makes possible alternatives that are then freely chosen in a remolded market, and all of society is restructured with the participation of those who are to be ruled.
More insidious still
Let us say that you are a neighborhood pharmacist, dedicated to your work. You want to provide ever better service and products to the customers who trust you. You join the American Pharmaceutical Association (APhA), which like most professional associations publishes a professional monthly and a scholarly quarterly: American Pharmacy (hereafter AP) keeps its readers abreast of developments in the industry — including FDA recalls — and the Journal of Pharmaceutical Sciences functions as a kind of printed continuing scientific education for them. Membership helps you enhance your practice and makes financial and insurance benefits available to you. APhA also takes your membership dues and finances its own lobbying efforts, promising to "advocate for the interests of pharmacists" and to "influence the profession, government, and others in addressing vital pharmaceutical care issues." [4]
APhA considered it in its members' interests not to oppose the proposed nationalization of medical care; it also considered it in its members' interests to propose legislation that would ensure payments for what they call "value-added services" or "pharmaceutical care services" — payments they have not been successful in obtaining contractually from third-party payers. [5]
A pharmacist may hold a B.S. in pharmacy or a doctor of pharmacy (PharmD) degree. In 1993, only about
Perhaps a majority of pharmacists believe it is in their interest to be directly responsible to the state in a socialized medical environment or to restrain competition by training fewer practitioners. APhA does not, after all, hide its agenda, and, like many other associations, it surveys its membership for ideas and direction. But that is not the point. The point is that those members who disagree (and even those who are indifferent to APhA's political activities or undecided about them), but who want to be better pharmacists, will be unable to enjoy the scientific, academic, or professional advantages of APhA membership without also paying for the success of values they do not hold and for their own enslavement.
I have cited activities and publications of APhA not to single it out, but merely to use it as a concrete example. Any number of professional organizations likewise lobby for more expansive government activity in their fields. [8] Moreover, most are not content merely to undermine the preferences and beliefs of a portion of their membership; they also use the members' dues to publish materials propagandizing the membership.
The American Bankers Association is the publisher of Michael R. Buchanan's Introduction to Mortgage Lending. [9] After explaining the Community Reinvestment Act (CRA), which established a rating system for local banks, Buchanan adds that the point of the rating system was to provide "affirmative lending practices."
But banks should not think that this regulation will adversely affect their balance sheets. Buchanan soothingly assures the member readers of his book that these ideas, if followed, "would benefit banks as well as the communities they serve."
And therefore ...
If the reader will but look around, he will find any number of other small ways in which he is given the opportunity to further the Permanent Regime's goals, either directly or by contributing to its propagandizing efforts (e.g., by "membership" in a local Public Radio station). We are enmeshed in 
the state's network of coercion. If the proverb at the head of this article is true, we are all in very big trouble.
So ... am I urging foes of the Permanent Regime to liquidate their Treasury holdings, to cancel memberships in professional associations, or to stop depositing their Federal Reserve Notes in member banks? Not at all. The Last Ditch is not a financial advisory newsletter; it is not a guide to moral theology. Least of all is it the Headquarters of the Revolution (there being no revolution and none being possible). The Last Ditch, for readers who missed Strakon's declaration of purpose in the first issue, is "not a combat redoubt but just an observation post, from which we can study the mopping-up operations of our great and abominable enemies...." My particular interest is noticing the mops we push ourselves. And hoping I can help you notice them, August 14, 2020
© 1995, 2020 Ronald N. Neff
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1. Paul Samuelson and William D. Nordhaus, Economics, 12th ed. (New York: McGraw-Hill, Inc., 1995), p. 276. The authors are using
The conceptual tool for the fraud of fractional-reserve banking is the
2. Of course, the best scam is the Social Security system, which holds its
3. I am not counting government instruments that may be held in your pension fund or as assets in companies in which you hold stock. No one is directly responsible for actions others take, and I am here concerned only with direct participation in the expansion of state powers.
4. "1994–95 APhA Owner's Manual" (Washington, D.C.: American Pharmaceutical Association, no date, p. ii).
It should be understood, by the way, that lobbying consists not only of cajoling, cautioning, or bribing legislators but also in testifying before congressional and legislative committees. Professional organizations also lobby the judiciary, for example by filing friend-of-the-court briefs. Because professional associations are driven by a handful of volunteer members — and sometimes, in less obvious ways, by headquarters staff — they convey valuable information to the state, in effect advertising what kinds of tyranny will be welcome and which not. The Permanent Regime can then determine which voices to listen to and which to ignore.
It should be further understood that members of professional associations are not alone in paying for legislation they may not want. Shortly after his inauguration, Bill Clinton attended a reception where he was introduced to big shots in the medical business. When the executive vice president of one of the many pharmacy associations was about to introduce himself, Clinton said, "I know who you are. You're the guy who's going to help me take on the big drug companies." The story made the rounds at association headquarters, and the editorial staff were gleefully excited at the prospect of writing it up in their monthly magazine to demonstrate to members how influential their organization could be. But when someone pointed out that most of those "big drug companies" advertised in the magazine, the idea was dropped. No one needed to explain that advertising revenues were in large measure responsible for making the magazine possible.
5. See "APhA Scores Victories in House Bill," AP, August 1994,
See also "Coalition Promotes Pharmaceutical Care to Lawmakers," AP, June 1994,
Robert J. Osterhaus, president of APhA, said that expanding pharmacy's role in the Clinton health care system depended on pharmacists' acting "decisively," and that if they did not, "the future of pharmacy will be in doubt." ("You Can Help Reform Health Care," AP, March 1993,
6. Sara Martin, "Pharmacists Number More Than 190,000 in the United States," AP, July 1993,
7. "The University of Maryland School of Pharmacy is the 15th in the nation to replace its five-year BS program with a six-year PharmD program.
"Helping to sway the board of regent's [sic] approval of the doctor of pharmacy degree as the single entry-level degree was testimony by ... APhA Executive Vice President John A. Gans, ... who presented the unified position of ... APhA and six other national pharmacy groups...." Students and faculty, together with local and national chain pharmacy groups, had lobbied strongly against the move. "They argued that it will deter students from entering pharmacy school and eventually result in fewer pharmacists and high salaries." ("Maryland Wins Battle for All-PharmD Curriculum," AP, January 1993,
8. And not just professional associations. If you want to get a senior's discount on airline fares, you can join AARP, the most ferocious defender of Social Security in the business. If you want to help preserve historical buildings or battlefields, you can join any number of innocuous-sounding organizations that will use your dues to campaign for zoning restrictions and against commercial development. When the state's decrees affect the minutiæ of daily life, political action becomes ubiquitous; nonpolitical pastimes virtually vanish.
The importance of being a player in policy making is discussed in "Polite totalitarianism," in TLD, Nov. 1994,
9. Washington, D.C.: 1993.
10. While making irresponsible and financially dangerous loans to avoid a suspicion of racism could have no such effect in a free market, it might very well appear to benefit local banks in a FIRREA-fascized economy, where the funds for such loans are made possible by local and state agencies — "community-based subsidies," as they are called. (Buchanan, p. 168)
In its literature to prospective members, ABA boasts that it testified before two House Banking subcommittees to extend FIRREA and to extend the application of the CRA to bank competitors, in this case to credit unions — a virtual admission that FIRREA and CRA are disadvantageous to banking.
Published in 1995, 2020 by WTM
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