"Something's Got To Break": Murray Sabrin On $40 Trillion In Debt And Abolishing The Welfare-Warfare State

Authored by Ryan McMaken and Murray Sabrin via The Mises Institute,Ryan McMaken and Murray Sabrin discuss the ways that the United States has become a land of regulation, taxation, and welfare. The American republic disappeared long ago, and the welfare-warfare state replaced it.Ryan McMaken: Welcome back to Radio Rothbard. I'm Ryan McMaken, editor in chief at the Mises Institute. Thank you for joining us today. And today, our guest is Murray Sabrin... And I want to talk about Murray's new book, which is now out. It's called... The Abolition Manifesto... If you've been following Murray for a year, you know that he taught for years finance at Ramapo College in New Jersey, and has also just been involved with really pushing the cause of freedom and free markets, not just through education, but through a variety of ways.Murray Sabrin: ...Rothbard was a member of my dissertation committee when I was at Rutgers, and I met him at Brooklyn Polytech when he was teaching there in 1974... And I started immersing myself in this because I had to develop a dissertation topic, and my topic was based upon what Rothbard wrote about in Man, Economy, and State, how money enters the system and diffuses through the economy, the Cantillon effect, and impacts prices... So I used the CPI as an example of the differentiation in prices across the country, and the evidence showed at that time that the big city money banks where the money initially comes into, that's where inflation is the highest, and that's exactly what the data showed....One of the points I keep on making is that hyperinflation has led to totalitarianism in Russia after World War I with the Soviet Revolution, obviously in Germany 10 years later with Hitler becoming chancellor. And people don't realize, after World War II, the Chinese nationalists were inflating like crazy in China. Hyperinflation took place, and Mao took over China in 1949... So we have three examples, in the 20th century, of hyperinflation where the central bank just goes crazy in printing money. And what did it lead to? It led to totalitarianism.McMaken: Sometimes people ask, "Well, why do you publish so many articles about inflation?" And if you just look at economic history and political history, especially over the last 300 years, inflation is absolutely at the center of it, not just some sort of theoretical economic issue, but at the very center of the survival of regimes, of revolution, of political violence. Inflation seems to always be there."No One Mentions The Fed"Sabrin: The amazing thing, Ryan, about this, listening to these politicians on both sides of the aisle when they go on CNBC and other stations, no one mentions the Fed as the cause of the unaffordability. It is astonishing. That means that they're incredibly illiterate or they're just mouthpieces for not talking about the Fed. Because how could you not talk about the Fed causing inflation when they pumped up the money supply during COVID and afterward to the tune of trillions of dollars?That money has been flowing through the system, as Rothbard and Mises and others have written about over their lifetime. And I just find it incredible that no one mentions the Federal Reserve as the cause of inflation... And you look at housing prices around the country, it's amazing how housing prices have basically doubled in the last six years.And with interest rates at 7% now on a 30-year mortgage, it's tough for young people to get what some people think is the American dream. If I had to do it over again, Ryan, I tell you, I would not have bought any real estate over the last 50-plus years. I would have invested that money in the stock market, and we would have done extremely well given how some stocks have just gone crazy the last 30, 40 years.McMaken: ...Asset price inflation by the central bank is a major component of it all... Anyone who is talking about the cost of living situation and the burden placed on people and doesn't mention the Fed, this is not a serious person.Sabrin: ...They don't believe in markets. They don't believe in pricing. They don't believe in voluntary exchange. They believe in a managed economy... They believe it's their mission in life to, quote, "manage the economy" by manipulating short-term interest rates and spending and regulation. That's their view of the world. I think Rothbard said it best, is that the typical view of economists and the politicians is that the economy is always teetering between inflation and recession, and the Federal Reserve is going to manage this to avoid either one.But they cause both of them by inflating and causing the artificial boom, and then, of course, raising rates to get rid of the inflation, which triggers the recession."Why Do They Have To Be Coerced To Pay For It?"McMaken: ...You hit a bunch of points that I love in this, talking about the transformation from the old decentralized Articles of Confederation to the new Constitution, the abandonment of core issues within even the new Constitution that were supposed to limit federal power, like the 10th Amendment. And that instead, it's all been transformed into this welfare warfare state... Why do you call it The Abolition Manifesto then? What are we abolishing, and why is this so necessary, and what went wrong?Sabrin: ...What I'm doing is serializing the book on my Substack and making it available to everybody. I figure this is the best way to get it out to as many people as possible. And I really try to model the book in a way, in a lengthier version of Thomas Paine's Common Sense, which was published in January 1776, which sold, according to estimates, 120,000 to 500,000 copies in a nation of 2.5 million people. So if I could reach 10% of the American people, that's 34 million people with this book....We have the three big programs that I've been criticizing and presenting alternatives. That's the key. I don't think you can just criticize these big government programs, but you have to present alternatives, which are Social Security, Medicare, and Medicaid. Medicaid is an easy one for me because Peter Drucker, who was from Austria, who I talked about at the Mises Institute a few years ago, he wrote this magnificent article which sounds very Misesian, very Rothbardian in the Wall Street Journal entitled, "It Profits Us to Strengthen Nonprofits," where he shows that the welfare state should be phased out and replaced by the nonprofit sector to deal with all the social services.I helped create a nonprofit health center in Bergen County, New Jersey, where I live... Their goal was to create this nonprofit medical center without a penny of taxpayer dollars, all through voluntary contributions and voluntary work by the doctors and the nurses and whomever else wanted to work there. So we can take up Medicaid and get rid of 900 billion dollars of taxpayer monies that support that. Social Security and Medicare are a little bit more dicier, but we can have young people save for their own retirement....Even anyone in their 40s or 50s, they could opt out of Social Security and Medicare, take their payroll taxes and Social Security taxes and save for themselves in a super IRA. The money wouldn't be taxed. And here's the other kicker. They would not be taxed on dividends, interest, and capital gains... The problem with medical care is we're over-insured, over-medicated, under-exercised, and we have this huge obesity problem....The key question that needs to be asked and answered by members of Congress and the talking heads, the opinion molders in society is, if what the federal government is doing with 7 trillion dollars of expenditures... if those things are so wonderful for the American people, why do they have to be coerced to pay for it? We're not coerced to pay for anything that we get in life, food, clothing, shelter, transportation, cable bills, utility bills, streaming services. We all voluntarily pay for that, and if we don't like the service, we go on and get another service, or find alternatives....I think we have to disabuse the American people of that notion that the government is there to help you, because it's like taking money from your left-hand pocket, the government taking a cut of it, and putting something back in your right-hand pocket at a 10, 20% discount."The Old Republic Has Long Been Gone"McMaken: ...What would the federal government actually do if anybody actually cared about the 10th Amendment?... It basically states, right, anything that is not explicitly listed as a power of the federal government here in the Constitution is reserved to the states and the people. And so all of this, what, the war on drugs, the EPA, the Patriot Act, warrantless searches, all of that stuff, none of that would be considered constitutional as far as I can see, if anybody cared about the 10th Amendment.Sabrin: ...There's nothing in the Constitution that says the government has to manage the economy to boost employment and keep prices stable. I mean, that's what the Federal Reserve is trying to do, and yet there's nothing in there that says that's what the charge is for the federal government. You can make the case that the Federal Reserve is unconstitutional as well....We should get rid of all federal aid to colleges, universities, states, governments, local governments, county governments, all foreign aid... corporate welfare as well. And the trade-off for that would be get rid of the corporate income tax. No more grants, no more subsidies, and corporations will have to do as Mises pointed out, they'll either be profit-oriented, or they'll suffer losses, and they'll either have to go out of business or merge.And I have a quote that I came across from George Bernard Shaw, "Liberty means responsibility. That's why most men dread it." I think that's a beautiful summation of why we have the welfare state, is that people want security. And as Benjamin Franklin responded to when he was asked, "What did you create this?" "A republic, if you can keep it." Well, the old republic has long been gone, since the New Deal, or even with the income tax and the Federal Reserve in 1913.And we have to begin the process of phasing out this welfare warfare state, which is just going to lead to a major financial crisis, because when you've got a 40 trillion dollar debt, 2 trillion dollar deficits, a trillion plus in interest costs every year, something's got to break. And it's a matter of time. It's not a matter of if it'll happen. The question is when, and no one knows the answer exactly.But when I was reading the material about monetary crisis and financial crisis in the 1970s, it became clear to me the key point is, will there be enough lenders to buy up the government debt? Because if not, then the central bank steps in and they monetize the debt, then you're off to the races with inflation."Look In The Mirror"...According to what polls show, young people, I think are very receptive because they're more entrepreneurial than previous generations. They don't want to work 9:00 to 5:00. They don't want to work for big corporations. They want to take control of their own life.McMaken: ...I just looked at the history of small business in America. And you can see a very clear decline in the total number of small business people as a percentage of the overall economy... An economy that is dominated by owners of their own capital and of a business enterprise would be a fundamentally different economy and a fundamentally different political situation than we have now.Sabrin: ...Very few people think that politicians are going to make their lives better. I think that's a great myth that we have to shatter once and for all. And I think that the Abolition Manifesto points that out. Don't depend on politicians to improve your life... The way you improve your life is look in the mirror. It's up to you....I think Warren Buffett is right. You have to be optimistic long term, but in the meantime, we have to get rid of the termites that are eroding the foundation of the American economy. And that's the government. It's not the private sector that's eroding the economy. It's the government sector that's eroding the economy.