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Why We Are NOT on the Road to Serfdom

Written by Gary North on May 24, 2012

F. A. Hayek wrote The Road to Serfdom in 1943. It was published in 1944. Americans who read the 1945 Readers Digest version liked it. University professors didn’t. This is one more bit of evidence that American voters have more sense than university professors. Are you surprised?

When Hayek wrote The Road to Serfdom, he had a marketing problem. The book’s title was absurd. He knew that. He knew the difference between Western serfdom, which had limited but defined property rights and the rule of law, and socialism, which in theory had neither. Serfdom was a system of liberty compared to Communism, Fascism, and National Socialism. But he was trying to sell the book to educated Leftists, who were favorable to socialism. He could not very well have sold copies in 1944 based on a title like The Road to Fascism, which was in fact the road the West was on in 1944.

We have been on the road out of “serfdom” ever since 1947, the year after Truman removed wartime price and wage controls. Anyone who doubts this development has no awareness of the lack of influence that free market ideas had in 1945. It was worse on campus, but it was bad in general. Henry Hazlitt’s Economics in One Lesson was a breath of fresh intellectual air in 1946. He was alone among financial journalists in 1946.

He would not be alone today.

FEDERAL TAX REVENUES AND LIBERTY

I ran a chart on federal tax revenues as a percentage of GDP. Go back and refresh your memory. http://www.garynorth.com/public/9539.cfm

There was a reason why I ran it. I wanted to drive home a point: the federal government is no deeper into our pockets than it was in 1947.

Think about this.

I got into the conservative movement in 1956. That was the year that Dwight Eisenhower was reelected President. I think most people like to think of those days as the good old days. Certainly, the popular television show Happy Days was premised on nostalgia for that era. But the reality is this: in terms of taxes collected by the federal government, the good old days were no better than today. With the top tax income rate at 91%, it was a lot worse. It was confiscatory.

What we forget is the enormous increase of productivity that the world has lived through since 1947. The output of American workers has risen steadily because of innovation, capital formation, and the greater wealth of our trading partners. As the rest of the world has gotten rich in the postwar era, everyone has prospered. When our neighbors get richer, we get richer. This includes our neighbors who live 10,000 miles away. This tremendous increase of productivity has enabled us to pay our taxes to the federal government and still enjoy an enormously increased standard of living.

When we think of the automobiles that Americans drove in 1946, or when I think of the 1952 automobile that I drove in 1958, there is no comparison. The cars today are safer, get far better mileage, are more stylish, handle better, and last longer. While a man my age looks back nostalgically at a 1955 Chevy hardtop convertible, he would not want to have to drive one on a regular basis.

The dream cars of 1955 had more to do with fantasies about the dream girls of 1955 than they did with transportation.

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32 thoughts on “Why We Are NOT on the Road to Serfdom

  1. HadEnuf says:

    Hey North, I wish I had a pair of those rose colored glasses that your looking through and some of those drugs that you evidently are doing! We have lost most of our wealth and freedom, and will continue to do so unless these communist bastards are outted for whom they really are. The dollar will crash, as planned by this Muslim-Marxist and his minions, before this year is up and we are also being dragged into World War III by this regime which will bring the US into the NWO; but other than that, according to you, things aren/t as bad as they seem. America, man up or be taken down!

  2. lilbear68 says:

    id love to have a hardtop convertible, seing as how ford made them not chevy

  3. donloyd says:

    Hey Garry – thanks. I read the full article and passed it on for others to read, too. You surely offered a well thought out, much needed balance to the conversation. Are you right? Hope so. I know you are right about those who lead the country and those talking heads in positions of "leadership" (similar to herding cats?).

  4. Gary, Gary, Gary, what have you been smoking? This article is full of, "That isn't going to happen." and "I don't think so."

    You base these opinions on "it has never happened before" and other false logic. You use Fed taxes vs GDP as your metric. You ignore State Taxes, Local Taxes, and even Community Assessments which have grown many times over. However the biggest tax you ignore is the tax of inflation when the Treasury and Fed monazite the debt by "creating" more money. This money is not worth the paper it is not printed on and serves to simply reduce the value of the dollar. You ignore the lack of a gold standard which only happened 40 years ago. You ignore the collapse of the EU happening as we write, (another thing that never happened before).

    Take a look at the same chart that you use to show the sky is not falling… Look at 1944-1945… See that spike, (well over 20%)? In 1944, that was the end of the chart. What do you suppose would have happened if there was not wide spread concern?

    You point out that the Federal Government rules our everyday lives like we've never seen before. As you know it is escalating faster each month. So, do you think the government is going to "solve" these problems by allowing us our freedoms back or by taking the reigns from our hands and directing us what to do?

    Just thought I'd ask you to go back to your drawing board and redraw something more like what we have and less like what you think because you never saw it before. Have you looked into Germany in the early 30s?

  5. In some circles the "Hard Top Convertible" is actually in reference to what later become known simply as a "Hard top" The term "Hard top" refers to cars that did not have have door Pillars, A Sedan had the Window pillars and a frame around the windows. How the name comes about was the Convertible had a particular window line, and the "Hard top Convertible" used the same window line. Many people in the 50's called those Hard top cars with the window line of a convertible a "Hard Top Convertible" however Technically inaccurate. When Ford came out with their real "Hard Top Convertible" where the top stowed in the boot, the term for the pillar-less cars was widely changed to simply "Hard top"

  6. You are wrong about the cars. My dad drove our 1941 Dodge until 1953 when we bought a new Pontiac. He drove that car until 1964. Yes both cars had some rust on them when they were sold, but show me a car built today that will last that long in snow country.

  7. American Patriot says:

    the Ford "hardtop convertible" as you refer to it was called a "retractable hardtop" back then. Back in 1968 one of my close high school buds and his dad each had one, a '57 & a '59 …both were cool cars

  8. Arnold Mathers says:

    We all probably wish you are right, but how do you factor in the draconion moves of authority? Ben Rich, former head of the Skunkworks of Lockeed Martin, said “We already have the means to travel among the stars, but these technologies are locked up in black projects, and it would take an act of God to ever get them out to benefit humanity. Anything you can imagine, we already know how to do.”

    Do you really think that those who control such technology to the detriment of mankind will change their mode of operating or even just go away?

    You are a religious man. Can you not see the approaching one world government described in the Bible?

    The Elite have all of the military power of the US government at their disposal. Why would a paper money system failure do anything but speed their control of the world? The have the hubris of Satan whom they worship and I just pray that I my
    children and grandchildren will have the protection of God to overcome it all.

  9. sean murry says:

    We lost our freedoms under obummer.

  10. while i respect gary norths opinions i seldom agree with him,,every one older than me i talk to say the 50s was such a great time to be alive..you did not have to lock up your house at night,,the most trouble kids got into was sneaking booze and cigs from there parents,you did not have 12 yr old girls getting pregnant,children listened to there parents,,and in my opinion the cars were so much nicer looking better built[qaulity wise]..if i could go back into time i would wanna be about 30 yrs old and live in the 50s..and ARNOLD i can see very clearly the nwo coming,but i do not care because my heart is with JESUS,i do care about the unsaved tho..

  11. Mr. North schizophrenically points out a supposed difference without distinction. He claims government spending has not increased as a percentage of GDP since WW II, but government spending is increasing too fast and will implode. Which is it? To deny that our Constitutional Republic is under fierce attack is bewildering at best. We are practically drowning in the Globalist penchant for a Neo-Feudalist world economy and Mr. North kindly offers a glass of water. I cannot imagine why this ridiculous article was published othr than to embarrass its writer.

  12. Paul Trombley says:

    sean, that's hyperbolic nonsense. You are not yet a slave in the fullest sense of the word, as North points out. Furthermore, it's misleading to single out "obummer". He's not a solitary knave among angels, and, in fact, many of the knaves are Republicans.

    Speaking of whom, take a look at the GOP's website. When I last checked, the elephants were claiming that the USA has a free market economy. Does their claim have merit? Of course not. The existence of a banking cartel is alone sufficient to demonstrate that commerce is rigged. And where would businesses like Boeing and TASER International be without the Republicans' eagerness to subsidize them with extorted wealth? In fact, the GOP has been rigging commerce for about 150 years.

    Still, you have not lost all of your freedoms, as you suggested with your sweeping generalization. Had you done so, you'd have no means to write what you did.

  13. TIME FOR MR NORTH TO RETIRE

  14. Bill in NC says:

    In the 1950s my grandfather could still walk home for lunch every day, and he lived in a city, not a village.

    Grandparents only needed the one car, and yes, it needed more maintenance, but you could do it yourself on the weekend.

    When I was a kid in the 1970s state sales tax was barely half the rate it is today.

    Increasing state income taxes have more than compensated for any federal rate cuts.

    Local taxes?

    Well, I grew up in a very nice house, but post-divorce mom sold it 25 years ago.

    It recently sold for twice the price she received, but property taxes had _quadrupled_ over the same period.

    If it quadruples again the future owner will be paying nearly $5,000/month in property tax, even here in flyover country.

  15. 2WarAbnVet says:

    I've come to believe that it is innate to human nature to desire freedom when it is denied, and to be willing to fight to achieve it. Men are even willing to die to bequeath it to their children. On the other hand those who inherit freedom, with no effort on their part, take it for granted. They are willing, almost eager, to toss it aside in favor of some nebulous promise of something better like "hope and change".

  16. Eisenhower was a drip…not a good President but a shade better than obammy. As for the 50s, it was a good time when compared to today; if you want to make comparisons, any time in the past can be considered better than todays world. Maybe in some communities they didn't lock the doors at night, but where I lived, you did (and that was in good old Washington DC); there were predators in the parks, playgrounds, and on the streets and children were not really all that safe in the city. I have to disagree with North's unrealistic view of the modern era–we ARE on the road to serfdom, or to put it more precise, communism a'la obammy style. If he thinks we are in the land of milk and honey at this particular time in history, he isn't seeing the world as it really is. As for products and pride in workmanship–that went out the window in the early '60s when corporation giants introduced planned obsolescence into the American Dream. Refrigerators were no longer made that would last a lifetime–instead, we got refrigerators that couldn't get beyond the 10th year; ditto for all other products. Mr North needs to get a better perspective on this world of today…and quit printing slop.

  17. Gary, The charts are interesting as is your commentary about Government Revenue versus Spending leading to inflation and ultimately default. I would like to point out that unfortunately, you not only overlook taxes, fees, and whatever names given by lower levels of government (states, municipalities, etc.) but you also overlook the significant cost of the Regulatory Burden imposed by Government at all levels, which I suspect is as much or more than the direct tax burden. The combination of taxes and regulation is crushing the private sector, and the middle class.

  18. ladybug says:

    http://www.petition2congress.com/6251/we-people-d

    This petition has been signed by over 38 thousand people and that is only the tip of the Obama iceberg. He is destroying our country. He is trying to make it a nanny state, and burying us in debt, He isn't fit to be president because he doesn't believe in the Constitution and I don't believe he is eligible. People are waking up to the devious ways of the man. Too bad congress is too lily-livered to stand up to him and impeach him.

    independent voter

  19. One word answer to your question, Why is everyone worried? -JOBS!

  20. Arnold Mathers says:

    More evidence of even worse than serfdom. Jeffery Tucker of an Agora publication,

    "It's stunning when you think about it. The "land of the free" is home to the world's largest prison population. Americans constitute 5% of the world's population, yet one-quarter of the entire world's inmates are in the U.S. The ratio of the prison population to the general population is higher in than any other nation in the world. Russia is second. China is third.

    But it turns out to be very easy these days to trip over that wire that causes you to land in jail. The trouble is that you don't know that until it happens. It could be a mistake that you or a family member made in handling too much cash. It could be a joint that someone smoked at your house party. It could be an unpaid ticket. It could be a tweet you sent that insulted a bureaucrat.

    It could be the wrong download, upload or file-sharing act. Or maybe you lost your temper at the airport and said something you shouldn't in the presence of a TSA agent. Maybe you acted on a stock tip that was slightly too revealing. Even the wrong glance at a cop could cause your life to unravel.

    Any of these actions and thousands of others can cause you to become embroiled in a system you cannot control and cannot resist. You spend the night in jail. You are bailed, but there are endless legal battles ahead to get out of the thicket."

    The private prison companies require that the contracting government garauntees 90% occupancy rate. Consequently, there
    is much incentive for the police agency to fill them whether you are a law breaker or not. Every day there are new laws made to further entrap you.

    Serfdom? or Slavery? They can contract your services out very cheaply to a multinational corporation very cheaply.

  21. The system which will permit the greatest opportunity for each citizen's maximum productive activity will be secured by decentralization,economic and political . Now that is a fact and at an advanced level of thinking .

  22. I'm a subscriber to Specific Answers and read the TPE every day. I must say most of your articles posted to TPR are much darker and pessimistic in outlook (other than this shaft of light) than the ones you usually post. I do feel this corrupt, bloated empire cannot be sustained much longer. We have isolated ourselves from the rest of the world through the export of weapons, death and the means to destabilize sovereign nations and install puppet regimes in their stead. Nations with much wiser leadership than ours are already realigning themselves to trade with all the industrial powers that we have managed to alienate. When they found an alternative to the $dollar it will all be over for US. I just hope the collapse is bloodless as it was for the Soviet Union.

  23. You're absolutely right! And why is Gary accepting this as the new normal? Why can't we go back to the PRE-WWII levels? After all, the "crisis" was over in 1947. Yet, things never returned to pre-war levels.

  24. Bill McCroskey says:

    Dr. North is the most brilliant and logical writer of life, economics and the law of for every action there is a reaction I have discovered in my 60+ years on this earth. I read and reread the rest of the article in its entirety via the link, absorbing slowly and rationally what Dr. North was saying. My opinion of him has not changed after 3 hours of reflection and thought about this essay.

  25. Intelligence (IQ) is overrated – Wisdom is grossly underrated.

  26. The thing is about the taxes back there were so many loopholes that no one paid those high rates. Today the rates are lower but there are fewer loopholes to escape the confiscation. As a percentage of GDP the federal government is confiscating way more revenue than it used to.

  27. john marshall says:

    gary north is either inept or a charlotton fact the displaced american workers are a direct result of globalisation and so called free trade agreements everything ross perot warned us about has come to frution this enviremont the rich get richer the poor get poorer hence the road to surfdom failure of our government to do its job and regulate trade in favor of corporate kickbacks has directly ruined our economy tax china repeal nafta enforce our borders stop runaway spending in congress and america will prosper beyond imagination so be it

  28. john marshall says:

    if what you say is true then he is a liar and a fat mouth because i a lowley construction worker see the fallacy in his words furthermore i forsaw the results of globalisation far enough ahead of the action to position myself out of harms way besides not working as much my life is pretty stable even though they ruined our economy the only way someone with a brain could beleive that bs is to be one of the sheisters who profited off it or be inept

  29. A Patriot says:

    Mr. North, in what University are they now teaching Obama math? It seems you are more than qualified to teach others. We take a bit of this and a bit of that and adjust our time frame and look, we're doing great. Problem is you are talking about federal government income, no spending. Does $16 trillion dollars of debt register at all in your logic of how 1950ish we are?

  30. MontieR says:

    He is right ! We are not on the road to serfdom, we are already SLAVES.

  31. […] in Greece and Rome,” Part 1 and Part 2. [↩]See Gary North’s recent article, “Why We Are NOT on the Road to Serfdom.” […]

  32. damn lies and statistics… how can you ignore a deliberate trend by the Feds to keep more of the revenue they used to send to the states? To see just how irrelevant mentioning only federal revenues is see http://www.usgovernmentrevenue.com/revenue_histor… . Then you mention the increasing debt like it's only a problem for the future. Govt debt steals money from savers, devalues the dollar, and distorts the economy , diverting capital from productive enterprise.