2957 old rocky ridge road birmingham, alabama 35243 …dec... · 2017-11-30 · banknotes - nelson...

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Banknotes

2957 Old Rocky Ridge Road Birmingham, Alabama 35243

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Nelson Nash, Founder [email protected]

David Stearns, Editor [email protected]

Monthly Newsletter - December 2017

An IBC Tax Strategy Part IIIByL.CarlosLara

[ReprintedfromtheAugust,2017editionoftheLara-Murphy-Report, LMR]

[An IBC Tax Strategy Part I is in theAugust, 2017editionofBankNotes,An IBC Tax Strategy Part IIisintheSeptember,2017editionofBankNotes, visittheonline BankNotes Archives tofindthem]

InthisthirdandconcludingarticleaboutanIBCTaxStrategy,astrategythatIpersonallyuse,Iwouldliketoshiftgearsandsteerourthoughtsinthedirectionofsomeveryimportantrulesthatgovernlifeinsurancepolicy loans.As individuals thatpractice IBC thesediscretionaryguidelineswithregardstopolicyloansshouldbefullyunderstood,whetherwearemembersofthegeneralpublic,orfinancialprofessionals.ThisisthemainreasonthatIreiteratedseveraltimesintheprecedingtwoarticlesthatthisparticulartaxstrategywasnotfornovices,orthosenewtoIBC.

Toclarify,letmeputittoyouthisway.Wemustneverforget that beyond all of the outstanding attributesof a properlydesigneddividend-payingWholeLifeinsurance contract and how it works, policy loansare a completely separate undertaking and are acentral feature of the Infinite Banking Concept. Inotherwords,IBCisneverreallybeingfullypracticedwithoutpolicy loansbeingutilizedatsomepoint inthe process. Consequently, knowing all the ins andouts of how policy loanswork is crucial to gettingthemostoutofpracticingIBC.Thegoodnewsisthatthereareonlyafewcriticallyimportantbestpracticeguidelinesthatwemustknowandunderstand.Thesefew principles are the subject matter of this finalarticleofthisthree-partseries.

Ifyouarenew to IBC I encourageyou to continueto broaden your education about IBC using ourpodcast and our website, especially with regardsto policy loans. Robert and I have written quite anumberofarticlesspecificallyaboutthissubjecteversince2010whenwefirstlaunchedtheLara-Murphy Report (LMR)andtheyareallavailableintheLMRarchivesforsubscribers.ButwhetheryouareanLMRsubscriberornot,Iwouldatleastliketorecommendthatyouread“ThePolicyLoanDebateExplained,”which I wrote in the September 2014 issue of theLMRasastarterarticle.Youcanfindafreecopyofit here: https://lara-murphy.com/lmr-greatest-hits/Many other free articles on policy loans are alsolocatedonthissamepageandIrecommendthatyoureadasmanyofthemasyoucanbeforeyoubegintouseIBCinyourowneconomicaffairs.

The Ideal Strategy for Business Owners

Beforelaunchingintothemostcriticalrulesonpolicyloans,let’sbrieflyreviewthemainreasonthatIwrotethisseriesinthefirstplaceandwhyIbelievethisistheidealtaxstrategyforabusinessownerprimarily.

It all started with an attempt to answer a typicalobjection that I would often hear being expressedby business people once it dawned on them thatpracticingIBCwouldinfactallowthemtoeventuallywean themselves from their dependency oncommercialbanksandinparticularfromtheclutchesofacommercialbank’sovertcollateralrequirements.Asaprerequisitethecollateralthatcommercialbanksdemand include the assets of the business and thepersonal guarantee of the business owner. This iswhyoncetheworkingsofIBCandpolicyloansarefullyunderstood,thebusinessownerhasnodifficultychoosingthesuperiorstress-freeoption.

http://www.infinitebanking.org/banknotes/

BankNotes -NelsonNash’sMonthlyNewsletter-December2017

2www.infinitebanking.org [email protected]

Still,thelimitingfactorformanybusinessownerstobeabletoobtainanIBC-typepolicywasthatalloftheir excess cashflowwas tiedup elsewhere.Theyhad enough business savvy to know that in orderto obtain an IBC banking policy large enough toaccommodate therequiredneedsof theirbusinessasignificantamountofreadycapitalwouldberequiredto fund such a policy. So I simply suggested thatthebusinessowner could takecashflows thatwerealreadyearmarkedforpayingtaxestotheIRSandre-route themthroughacorrectlydesignedIBCpolicythatwouldhavethecapacitytoadjusttothebusinessowner’sparticularsituation.

Byusing thisparticularstrategy thebusinessownerwould in effect bemaking use of the samemoneythatwasalreadysetasidetopaythegovernmentandwind up accomplishing two things with it insteadofjustone.AllhehadtodowastofirstdirectthesemoniestosetuphisIBCpolicythenturnaroundandpay them to the IRSusingapolicy loan.Hewoulddo this again the following year and continue thissame procedure for several years until he had builtup a sizable IBC infrastructure with a huge deathbenefit. My illustrations (in Part 2 of this article)showed ten consecutiveyears of policy loans as anexample, althoughoneof themwas a real life casestudy.Buildingthelargedeathbenefitwastheinitialgoalofthisstrategyandthenlater,atsometimeinthefuture, the business ownerwould repay these loanswith“windfalls”orthesaleofbusinessassets.

I want to stress again that there is nothing magicgoing on here;we are not conjuring upwealth outofthinair.ThisiswhyIincludedactualillustrationsprovidedbyalifeinsurancecompanytoshowexactlywhatImeant.Furthermore,whenItalkabouttheIBC“taxstrategy” I am not talking about reducing your tax liability.YouarestillpayingyournormaltaxbilltotheIRS.Iamsimplyshowingthebusinessownerhow to use the same cashflow to build up an IBCinfrastructureinadditiontosatisfyingthetaxman.

I focuson thebusinesspersonbecausehehas largecashflows.This isnot tosay thatanemployeeonafixed income does not ever have awindfall or thatsuchanindividualneversellsanassetandthenneeds

aplacetostoretheproceedsfromthatsale.Isimplymean that this idea resonates most strongly withbusinessownersbecausetheycancreatewindfallsbygeneratingadditionalbusinessprofitsand,asarule,theystrivetobuildupbusinessassetsinordertosellthemlaterforaprofit.

What really makes this IBC tax strategy work asefficiently as it doesboils down to theway the lifeinsurance contract is initially designed, combinedwith the following three important attributes of adividend-paying Whole Life insurance policy. Wehavealreadydiscussedall threeoftheseindetailinthepreviousarticles,butitiswellworthlistingthemoncemoreforemphasis.

1. Access and Control Over Your Money: If youhavecashvalueinyourpolicyyouhaveacontractualrighttopolicy loans.

2. Flexibility of Repayment Terms: Although anoutstandingpolicyloanrollsoveratinterest,youcanpayitbackonyourownschedule,orevennotatall,ifyouwish.

3. Uninterrupted Compounding Of Your Money:Whatever amount you borrow—that same amountcontinues to earn money in the form of interest,dividends,andequity inyourpolicyas longasyouliveandaslongasyourpolicyremainsinforce.

The Important Discretionary Guidelines of Policy Loans

Notice that I refer to the policy loan rules as“discretionary guidelines.”Thisisbecauseinthefinalanalysistheserulesareuptoyou,thepolicyowner,toexerciseornot.Forexample,withregardstopointnumber 2 above—in reference to the flexibility ofthe repayment terms of policy loans, I clearly statethatyoucanpaybackthepolicyloan“on your own schedule, or even not at all, if you wish.”

Thatstatementisnotamisprint.Itisabsolutelytrueofpolicyloans.ButinthecontextofmydiscussionofanIBCtaxstrategy,itwouldbecontrarytothetruepracticeofIBCifyoudidnotpaybackyourloansatall.ThisimportantpointhasbeenrepeatedlystressedthroughoutthisseriesandIamrestatinghereagain.


BankNotes -NelsonNash’sMonthlyNewsletter-December2017Inotherwords,itisabsolutelyinthebestinterestofthepolicyownerwhoispracticingIBCtorepayhispolicyloans.

The reason for this insistence is that we must notforgetourprimarypurposeforpracticingIBCinthefirstplace.IBCisfirstandforemostacashflowandfinancingsystemthatallowsyoutoborrowfromtheinsurance company using your cash values in yourpolicy as the collateral. Repayment of policy loansis what releases the collateral and replenishes yourlineofcreditwiththeinsurancecompanysothatyoucanre-usethecashvaluesagainforeitheremergencyexpenditures,investmentsand/orforpurchasingbig-ticketbusinessassets.

ThetrueIBCpractitionerrealizesandacceptsthatthisprocessofusingtheWholeLifepolicyasitsplatformisthe“alternate”cashflowandfinancingmechanismhe has been looking for to replace the commercialbankingsystem,whichhewaspreviouslyusingwithalltheduressthatcamewithit.Thisalternatesystemnow becomes his main (so called) privatized bankandtheprimaryplacewherethebulkofhis“dollars”shouldultimatelyreside.Sonaturallythereisaverystrong economic incentive to pay off policy loanswithwindfallsandproceedsfromthesaleofbusinessassets.

Ineffect,theentireIBCprocessinvolves“overfunding”the policy without “MEC-ing” it in the initialcapitalization phase and then “re-funding” it againwhenpolicyloansarepaidoff,therebyreplenishingthe business owner’s capital base. Practicing bothphases of this process is representative of soundmoneymanagement and the best use of time as anally.

Years later, once the business owner is ready toretirewith his substantial cash values and the hugedeathbenefit inhispolicy,hecannowre-direct thedividends,whichbynowwillalsobehuge,intoatax-free income stream to sustainhim inold age.Thenat his death it all culminates with the beneficiary,or beneficiaries, or his estate receiving that largedeathbenefitincometaxfree.Allthistosaythatbypracticing IBC correctly and responsibly there will

neverbetheworryofa1099surpriseortheworryoftheIBCpolicyeverbeingunderwater.

Avoid Surrendering The Policy…Until Death

Thereisonecomplication.Thiserrorcanpotentiallytriggerataxableeventespeciallyifyouhavehadthepolicyforanumberofyears,havesurpassedthecostbasisof thepolicy(thepremiumspaidin)andhavebeen taking out tax free dividends andwithdrawalsand still have sizable unpaid loans too close to thecash values on the books. I do, however, want tounderscore the word potential because the way tokeepthatpotentialtaxableeventfromeveroccurringistoneversurrenderthepolicy.Quitefrankly,thereis absolutely no need to do such a thing unless theentire U.S. economic system derails. Short of thistype of catastrophe there is no need to surrender itwhenpracticing thisstrategy.Thesurrender iswhatmakesthepotentialityofthetaxeventmorecertain.

Specifically,whatcanhappenisthis:Ifyousurrenderalifeinsurancepolicy,thenatthatpointtheIRSwilllook at its history. If, during the life of the policy,you have “taken more out of it” (in the sense ofdividends, withdrawals and policy loans) than you“put intoit”(intheformofpremiumpaymentsandloan repayments), then the IRS isgoing to treat thenetwealthyouextracted from thepolicyas taxableincome.

Because of this possibility, you want tomake sureyouhandleyourIBCpolicysuchthatyouneverfindyourselfinapositionwhereyouwanttosurrenderit.Thepolicymustbeallowedtocontinuetochugalongutilizing its uninterrupted compoundingmechanismonitscreditedinterestrateanditsdividendpaymentstobuildupequityinthepolicyasdescribedinpointnumber 3 above. In spite of sizable policy loansoutstanding,thepolicy’searningswillstayaheadofthem.Recallthatduetothedesignandstructureofthepolicy,you,thepolicyownercanneverbeobligatedforaloanthat’sgreaterthantheavailablecashvalue.Thepolicywillstayaheadofyour loansas longas you live and as long as your policy stays in force.

To further reinforce the value of practicing IBC ingeneral and this strategy in particular is the IRS’s



rulingunderTitle26Section7702 (a) thru (g)1andagaininTitle26Section101(a)2,whichtogetherstatethatanyandallcashvaluegrowthinthepolicyisnottaxableinanyyearandanydistributionstakenoutofthepolicy including itsgainsarenot taxable inanyyear,plusifthepolicyishelduntildeaththetaxationof anygainsareavoidedaltogether.On topof that,thebeneficiaryofthedeathbenefitreceivesitincometaxfree.

To repeat, the type of error I’m warning about ismade when a policy owner mistakenly surrendersapolicy topayforanoutstandingpolicy loan.Thattransactioncanpotentiallycreateataxableevent,notbecausetheloanistaxable,butbecausethesurrenderofthepolicyitselfmaybetaxable.Thisisbecausethepolicysurrenderwhileyouarestillalivecauses theentireprincipalandallthegainstobecomerevealedasthoughtheywerewithdrawnallatonceatthetimeofthesurrender,thustriggeringthetax.

Thisactionbythepolicyownersignalstheinsurancecompany to pay itself out from the remaining cashvalues(notthedeathbenefit)leavingthepolicyownerto pay the tax on all the gains with the remainingmoney,whichmayornotbethereifyoustrippedallofyourcapitalbasebyneverpayingoffanypolicyloans.Ofcourse,ifyousurrenderthepolicyatatimewhenyouknowyouhavenotsurpassedthecostbasistherewillbenotaxdue.Additionally,ifyousurrenderthepolicywithaheftycapitalbaseenoughtopayoffthepolicyloansandstillhaveenoughcashvalueleftovertopaythetaxthenit’sprettymuchawash.

The other commonmistake ismadewhen a policyownerbelieveshecannolongermakethepremiumpaymentsonthepolicytokeepitinforce,thereforeallowing the policy to lapse. If you are havingproblemsmakingthepremiumpaymentsallyouhaveto do is restructure the policy so that some of thepolicy’sworkingparts,suchasPUAs,deathbenefit,ordividendsarepartiallysurrenderedordirected insuchawaytomakesurethepremiumpaymentsarecontinuouslymade and thiswill keep the policy inforceuntilyourdeath,whichisthemaingoalofthisstrategy.

Everyone who practices IBCmust know about thepotential tax problems caused by policy surrendersand the available premium payment restructuresavailableinalldividendpayingWholeLifeinsurancepolicesobtainedfromamutualoramutualholdingcompany. This knowledge is a must. But as I’vestressed, so longasyouareplaying“honestbankerwith yourself ” and paying down your outstandingpolicy loans according to a schedule, then youwillnevergetintodangerouswaters.

Annual Policy Reviews and In-Force Illustrations

There is one final piece of advice. Practicing IBCand especially the IBC Tax Strategy that we havebeen discussing here requires monitoring of yourpolicyorpolicies.Remember,thisisacashflowandfinancing system you are managing. Consequently,youshoulddoareviewofyourpolicywiththehelpof your Authorized IBC Practitioner each year.Yourinsurancecompanywillprovideyouanannualsnapshotofyourpolicyeachyearattheendofyourpolicy’s anniversary date. This is an excellent timetodoyourpolicyreview.Askquestionsandbecomefamiliar with all of the terminology in the policy’sannual statement and especially how to read thepolicy’sprogress.

Sinceyou,thepolicyowner,areultimatelyinchargeoftakingoutandpayingoffpolicyloanswithwindfallsandproceeds fromthesaleofbusinessassets, learnhow to request an “in-force illustration” from theinsurance company.These in-force illustrations canprojectforyouseveralyearsintothefuturetoseehowthepolicyisexpectedtoperformfromthedayofyourrequest.

Theseprojectionstakeintoaccountcurrentcreditinginterest rates, current loan rates, and premiumpaymentstohelpguidethecostandconsequencesoffutureloansandpayoffs.Iknowthatwearecurrentlyinaprolongedlowinterestrateenvironment,buttherealityisthatweliveinavolatileinterestrateworldwhere the values of assets can change overnight.Theseprojectionswillhelpyouseedownthecorridorofthefuturetohelpguideyouinmakingimportantbusinessdecisionstosteerawayfrompotentialfuture


BankNotes -NelsonNash’sMonthlyNewsletter-December2017problems.

For example, these in-force projections may showyouthatsayfiveyearsdowntheroadyoumayneedtomakeadjustments,likepaytheinteresteachyearforafewyearstoslowupthecompoundinginterestonloansifyoudon’thaveenoughtoreducetheprincipalat thepresenttime.Or,youmayneedtorestructurethe policymuch earlier than you first thought.Thepoint is that the entire IBC process is flexible andyouhaveoptionswhenyouaremonitoringyourIBCpolicysensibly.

OnceyouknowandunderstandthesefewimportantdiscretionaryguidelinestothesuccessfulpracticeofIBC,includingpolicyloans,youcandotheIBCtypetaxstrategywithany recurringexpenseyoumayhave,not justyour taxes. IfyouwillalwayspracticeIBCcorrectlyandresponsibly,asthesethreearticleshavemade clear, you can do this strategywith completeconfidence.References

1.LifeInsuranceContractDefined,IRSRulingTitle26U.S.Code7702(a)thru(g),LegalInformationInstitute,CornellLawSchool,September4,2017,https://www.law.cornell.edu/uscode/text/26/7702

2.LifeInsuranceDeathBenefit,IRSRulingTitle26SubtitleA,Chapter1,SubchapterB,PartIII,101,LegalInformation

Hamilton LiarByBrionMcClanahan

RepublicansunveiledtheirtaxplaninSeptembertomixed reviews. That was to be expected. It hasn’tgottenanybetterinrecentweeks.

Americans generally want lower taxes. They alsowant the Republican Party to do something theypromisedwhilebeggingforvotes.

Let’snotaskfortoomuch.

One called on the Rush Limbaugh Show in lateSeptember suggested that people read FederalistNo.21 tounderstandwhy taxesshouldbe lowered.Hamilton,thiscallersaid,showedusthelight.

Limbaughjokedthatherappedit.Eitherway,hereis

Hamilton entering anothermodern debate.There isnowanappforthat,unfortunately.

Hamilton proposed in Federalist No. 21 that“indirect”taxes,meaningtariffs,shouldbeusedmoreextensively than direct because direct taxes createdsubstantial problems for an economy. The modernincometaxisadirecttax.

Except we shouldn’t listen to Hamilton. He didn’tmeanit.LessthanthreeyearsafterwritingFederalistNo. 21, Hamilton turned around and argued for…drumroll…a lengthy list of direct taxes, ostensiblybecause the country “needed it,” but Hamiltonsuggested that such taxes would only be used in atimeofwar.TheUnitedStateswasn’tatwarin1790.

ThatwasHamilton’s “m.o.”His duplicity knew nobounds.

John Taylor of Caroline called him a tyrant as dida number of forward thinking Americans at thetime. They could see Hamilton’s constitutionalmachinations wrecking the fragile fabric of Union.His top down approach to every problem and hispenchant for advancing a stronger central authorityat theexpenseof the stateswere theexactoppositepositions he favoredwhile scribbling the Federalistessays, and many could see that Hamilton’sdesire to recreate the corruption of the Britishconstitution would eventually destroy the Union.Itwasn’t“state’srights”thatrippedaparttheUnion.It was Hamiltonian nationalism, the belief that thegeneral government can do anything it wants aslongasitis“necessaryandproper”forthe“generalwelfare”oftheAmericanpeople,theConstitutionbedamned.ThatistherealstoryofAmerica,buteveryschool child is fed the opposite narrative from thetimetheyenterkindergartenasalittlemindofmush.UncleSamknowshowto indoctrinatekids,andwewant more Uncle Sam in education. Doesn’t makesense.

With Constitution Day a little over a month ago,Americans should reconsider their Hamilton love.Theyshouldfirstavoiddownloadingtheapp.Afterall,Hamilton’sConstitution,theConstitutionhefavored



So This Is What Happens With Government Disaster Relief? byJeffreyTucker

Theideaofhavinggovernmentassistafteranaturaldisastersoundsgreat.Itmakesusfeelgood.Houstonfloods? Send millions. New Orleans floods? Sendhundreds of millions. Puerto Rico? The place is amessandneedsbillionsandbillions.Itallseemsright.

Untilyoulookatthedetails.Someonegetsthemoney.Whethertheyarethesameinstitutionswhoactuallydo the reconstruction is another matter. And whatkind of relief they provide is still another question.Otherpeople’smoneyusuallyworksthisway.Lookcloselyenoughandyoufindcorruptionateverylevel.

Irecalllivinginatownhitbyahurricanemanyyearsago.The townmayor instructedpeoplenot tocleanupyet becauseFEMAwas coming to town.Togetthemaximumcashinfusion,theinspectorsneededtosee terrible things.When themoneyfinallyarrived,it went to the largest real estate developers, whopromptly used it to clear cut land for new housingdevelopments.That’ssomenicecapitalifyoucangetit.

AndnowwehavetheremarkablecaseofWhitefishEnergy. It’s a good example of how a website canmake anything seem awesome. You would neverknowbylookingattheimpressivedigitalspacethatthis is a father/son business. That’s right: just twoemployees.

ItdoesseemhighlystrangethatthisdesktopoperationinMontanawouldbeawardeda$300millioncontractto rebuild the electrical grid in Puerto Rico. Thatsoundsoutrageous.Butguesswhat?Thisisadayandahalfofdisasterreliefspending.

Meanwhile, fully six weeks following HurricaneMaria,mostoftheislandisinthedark.Already,$20millionofthecontracthasbeenspent.Thecontroversysurrounding the award has led the governor of theislandtocancelthecontract.NowtheFBIislookingintopreciselywhathappenedhere.

Here is an interesting clue buried in theNewYork

in1787whenhecalledforunlimitedcentralpowerortheConstitutionheadvancedasSecretaryofTreasurywith expansive “implied powers” was the oppositeof theConstitution he sold to the states as primaryauthoroftheFederalistessaysandinspeechestotheNewYorkratifyingconvention.Andheclearlyknewit.

Hamilton, for example, knew his “assumptionscheme”wherethegeneralgovernmentwouldassumethedebtsoftheseveralstateswasexpresslyrejectedbythePhiladelphiaConvention,buthepushedforitanyway.Samewithhisfavoriteproject,theBankoftheUnitedStates.ThatideawasshotdownsothoroughlythatnooneinPhiladelphiain1787thoughtitwouldbe resurrected once the Constitution was ratified.Theywerewrong.

Hamilton argued in Federalist No. 69 that theAmerican presidency would not resemble a kingonlytopushforexecutivepowerswhileSecretaryofTreasurythatGeorgeIIIwouldhaverecognized.

Hamiltonwasabrilliant,narcissistic,psychopath, amanwithareal“Americanstory”of“ragstoriches,”but amanwho didmore to undermine the originalunderstandingoftheConstitution—anunderstandinghehelpedcraft—thananyoneinAmericanhistory.

ConservativeAmericans should stop rapping aboutHamiltonandstart railingagainsthim. If they trulybelieveinageneralgovernmentoflimitedpowers,ofreal“grassroots”politics,thenHamiltonisnottheirguy.

There is a reason a leftist political activist likeLinManuel-MirandawroteaplayaboutHamilton.Thatshouldgiveanyconservativepause.Mirandadidn’thijackHamilton’slegacy.Hemerelyliftedtheveil.

But by lettingMiranda tell the story, “Who Lives,WhoDies,WhoTellsYour Story,” Hamilton gainsa reputationhedoesn’tdeserve.Hamilton’smusicalshouldratherbe“Hamilton:TheLiar.”

Brion McClanahan [send him mail] holds a Ph.DinAmerican History from the University of SouthCarolina.HisnewestbookisHow Alexander Hamilton Screwed Up America.


BankNotes -NelsonNash’sMonthlyNewsletter-December2017and this egregious and this absurdly ridiculous toattracttheinterestofthepressandeventheFBI.Whatelsegoesonwithdisasterrelief?Whydoesithavetobethisbadfinallytoraisesomeeyebrows?

FEMAhaslongbeenusedasapipelinetocroniesgainaccess to funds for rebuilding. It's not really abouthelping people who are hurt by storms. It is aboutgettingdisasteraidintherighthandsasarewardforpoliticalloyaltiesanddonations.

The great truth about government is that everypenny it spends must come from somewhere andmust land somewhere else.Depending on howyoudefine “scandal,” it is absolutely ubiquitous fromthebeginning to theendof thebudget.There isnopossibilityofeliminatingcorruption ingovernment.That’s a pipe dream. The entire apparatus itself isrootedincorruption,definedasself-interestedpeopleusing the system to enrich themselves at others’expense.

Maybe someone will get to the bottom of thisparticularcaper.Ifso,thataccountsfor$300million,outof$3.27trillion.We’vegotalongwaytogotosortoutpreciselywhereourmoneytakenbyforceisgoing.

Jeffrey Tucker is Director of Content for theFoundation forEconomicEducation.He is founderof Liberty.me, Distinguished Honorary Member ofMises Brazil, economics adviser to FreeSociety.com, research fellow at theActon Institute, policyadviser of the Heartland Institute, founder of theCryptoCurrencyConference,memberoftheeditorialboard of the Molinari Review, an advisor to theblockchainapplicationbuilderFactom,andauthoroffive books,most recentlyRight-WingCollectivism:The Other Threat to Liberty, with a preface byDeirdreMcCloskey(FEE2017).Hehaswritten150introductionstobooksandmanythousandsofarticlesappearinginthescholarlyandpopularpress.

ThisarticlewasoriginallypublishedonFEE.org.

Times’sreporting:

The company’s chief executive,Andy Techmanski,came from the same small town in Montana asInteriorSecretaryRyanZinke.Inaninterviewshortlyafter securing the contract, Mr. Techmanski told alocalnewsstationthathehadbeenintouchwithMr.Zinkefor“moreresources.”Mr.Zinke’ssonworkedforWhitefishlastsummer.

Tobesure,thiscouldbeacoincidence.Surely.Andyet,tobelievethatdoesrequirethatyoususpendallnormalstandardsofincredulity.TheNYTagain:

“Absolutely outrageous,” said Eduardo Bhatia,a Puerto Rican opposition senator who wrote anenergylawin2014.“Atwo-employeecompanyfromWhitefish,Mont.,getsa$300millioncontractoutofnowhere?Basedonwhat?”

Still,thecompanyprotestedtheendofthecontract.

“The decision will only delay what the people ofPuertoRicowantanddeserve—tohavethepowerrestored quickly in the same manner their fellowcitizens on the mainland experience after a naturaldisaster.WewillcertainlyfinishanyworkthatPrepawantsustocomplete,andstandbyourcommitments,knowing thatwemadean importantcontribution totherestorationofthepowergridsinceourarrivalontheislandonOct.2.”

That’ssomespinrightthere.Meanwhile,Zinkeclaimsthathehad"absolutelynothingtodo"withselectingthe company that got the contract, even though thecompanyisinhishometownandhisownsonworkedthere.

Andyetthereismore.TheDailyBeastdiscoveredthatthecompanythatisfinancingWhitefish'sexpansions,HBCInvestments,wasfoundedbyitscurrentgeneralpartnerJoeColonnetta.HeandhiswifewerelargerdonorstoTrumpcampaign,ineveryformpermissibleby law and at maximum amounts. In addition,ColonnettaservesontheboardanddirectsinvestmentforthisTeacherRetirementSystemofTexas.

Smellaratormaybeawholepack?

Hereiswhatstrikesme.Acontracthastobethisbig



The Bolshevik Great Experiment: 100 Years Later byT.HuntTooley

Since thebeginningof thecentennialofWorldWarI, I have been writing a series of essays about thewarasthememoryofeventspassesusby--ahundredyearslater.ButasweapproachthecentennialoftheBolshevikRevolution, Ifind itnearly impossible todelimit my thoughts on this profound event in thehistoryofthehumanraceasifitwereonlyapassageofthewar,liketheSomme,orAmericanintervention,ortheinternmentofenemyaliens.

There are so many narrations of the "event" itself.There are somany answers to the question "why."There are so many clashing depictions of tectonicshiftsinRussiaandtheworldatthattime,ofLenin,Trotsky,Dzerzhinskyand the rest as actors, heroes,villains,and(tosomemoderndaysycophants)secularsaints.

Theinhumancruelty,thekillingcapacityofthisMarxist-Leninistmovementwhich styled itself occasionallyasthechampionofthe"people"(thoughmuchmoreoften andmuchmore truthfully as the vanguard ofthe proletariat on themarch toward a revolutionaryconflagrationthatwouldproducethenewman)trulytests the bounds of human comprehension. Even ifwetakeintoaccountagroupofrecenthistorianswhominimize standard historical estimates of total non-combat,democidaltotalsofdeaths(basedinpartonrecentlyfoundarchivalmaterials,butinpartonsoftheartsstillloyaltotheGreatExperiment),themediancalculation of Communist mortality by historiansanddemographerscreditstheSovietUnionofLeninand Stalin with somewhere between eighteen andsixty-twomilliondeathsbeyondtechnicallymilitarylosses. Ifweaddup thedemocidalkillingsofspin-offCommunist regimes across the globe, the totalsare astronomical, with the estimates by historians,sociologists,demographers,andotherseriousanalystshoveringaroundahundredmillionhumanbeings.

Thesedeathswere,intheviewofCommunistelitesfromLenintoStalintoMaotoPolPot,necessary.The

gristofHistory'smill,sotospeak.

Still,many persist inwearingCheGuevara t-shirtsand longing for the Great Experiment. In 2011,Rasmussen pollsters found that eleven percent ofAmericans thought thataCommunistregimewouldbe better than the current "system" of politics andeconomicsintheUnitedStates.

Such attitudes come in part from the lack ofmuchseriousstudyofhistoryatanylevelintheschoolsintheUnitedStatesandinotherpartsoftheworld.MyownhistorystudentsreadSolzhenitsyn,orYevgeniaGinzburg, or The Black Book of Communism andexpresssurpriseattheenormityofCommunistmassmurdersandpersecutiontheyhavehardlybeenawareofpreviously.But thisphenomenon isbynomeansrecent.Inmyowneducation,whichtookplace,fromfirst grade toPh.D., during theColdWar, only oneor two teachers dealt with Soviet and Communistmassmurderinanyway,andthatwasnotuntilIwaswellintouniversityhistoricalstudies.AndofcourseHollywood, that great shaper of popular historicalawareness,hasassiduouslyavoidedallofthismurderandmisery.Nodoubtbecauseitofferssolittleinthewayofhumandrama.

In any case, the answer is not the schools, whosebureaucracy and whose ideological and evenpedagogical limitations will never add to thecurriculum a special chapter studying the bloodyhistoryoftheGreatExperiment.Rather,thesolutionwill come through individual reading and learningamongagrowingsubsetofeducated,andespeciallyself-educated, persons committed to the explorationofthetotalstateanditsorigins--outsideandtypicallyafter the completion of formal schooling. Thematerialsofthiskindofguerrillaeducationtakestheform these days of books, online seminars, specialcoursesoneconomicsandsociety,andmyriadotherforms of information that somehow escape fromand flow around the historical narratives that avoidmentioningtheseprofoundcrimeswhichtookplaceinthenameoftheMarxisthistoricaldialectic.

Soaswecometothisparticulargrimcentennial,wedowelltopayevenmoreattentiontotheinfluenceof


BankNotes -NelsonNash’sMonthlyNewsletter-December2017theBolshevikRevolutionthroughtheentiretyofthelastcentury.Byanymeasure,WorldWarIshapedthecenturyafteritbyinstitutionalizingandtosomeextentnormalizingmassviolence,byunleashingthestateinits aggressiveness, acquisitiveness, and power. Butthe"contributions"oftheBolshevikRevolutionholdpride of place.As yet, the legacy of the BolsheviktakeoveroftheRussianEmpirebeginninginOctober/November1917 represents the singlehistorical factfrom theGreatWar—ofdreadfullymanypossiblechoices—thatmustbeviewedashavingvisitedthemostmiseryanddeathonthehumanraceinitstimeandoverthecenturytocome.

HuntTooleyischairmanofthedepartmentofhistoryatAustinCollege.

ReprintedfromMises.org

Parents Can Trust Kids to Teach Themselves byDanSanchez

Goodnews:Greatparentingismucheasierandmorefunthanmostpeoplethink,evenifyouhomeschool:infact,especiallyifyouhomeschool.

Youdon’tneedtobeanexpert,whetherineducationoranygivensubjectmatter, foryourchild to learn.You don’t need to be a taskmaster for yourchild to become self-disciplined and successful.Andyoudon’tneedtoregularlyrebukeyourchildrenover theirbehavior for them to learngoodmannersand grow up to become decent, moral people.You can relieve yourself (and your child) of theseonerousburdens,becausekids teach themselves.

Free to Learn

This is the fundamental insight underlying Self-Directed Education, a burgeoning movement andphilosophythathasgrownoutofideasassociatedwithhomeschooling, unschooling, peaceful parenting,Montessori education, and other child-centeredapproaches.

AsbiopsychologistPeterGraywroteinhisbookFree to Learn:

Children come into the world burning to learnand genetically programmed with extraordinarycapacities for learning. They are little learningmachines.

Weareallbornautodidacts—self-educators—blessedwithaninstinctivedrivetoacquire,exercise,test,andimprovenewabilitiesthatwillhelpusthriveinlife.

As children growmore aware of the world aroundthem,theyyearntoengagewithit,andtodosowithevergreaterindependence.Theyseehowadultsandolderkidsusetheirmindsandbodiestodowondrousthings—moving, communicating, performing,creating,etc—andthisinspiresthemintoemulation.

Thisisnottosaythereisnofundamentaldifferencebetweenchildrenandadults.Childrenarenotyetfullyindependent.Theycannotprovideforthemselves,andtheymustn’tbeallowedtotoddleintodeadlydanger.Assuch,theyneedadultstogivethemaconsiderabledegree of protection and provision.They also needaffection, which serves as emotional assurance ofsuchlife-securingsupport.

The Role of Parents

But,whatchildrendonotneed (andwhat isalmostalways imposed on them) is continuous externaldirectionandcorrectionintheirdailydoings.Childrencanbetrustedtoself-direct,andtoself-directtowardevergreaterself-actualization.

As JohnHolt, who coined the term “unschooling,”wroteinhisbookHow Children Learn:

AllIamsayinginthisbookcanbesummedupintwowords—TrustChildren.Nothingcouldbemoresimple—ormoredifficult.Difficult,becausetotrustchildrenwemusttrustourselves—andmostofusweretaughtaschildrenthatwecouldnotbetrusted.Andsowegoontreatingchildrenasweourselvesweretreated,callingthis‘reality,’orsayingbitterly,‘If Icouldputupwith it, theycan too.’Whatwehave to do is break this long downward cycle offearanddistrust,andtrustchildrenasweourselveswerenottrusted.Todothiswilltakealongleapoffaith—butgreatrewardsawaitanyofuswhowilltakethatleap.



performancelevelsoftheirelders.

Thisishowchildrenlearntowalkandtotalk.Andifour teacherlyministrationsdon’t interfere, it is alsohowtheycansmoothlyteachthemselvestoread,write,draw,sing,dance,sport,build,orundertakeanythingelse that interests them.And they can be trusted tobecome interested inall thecoreskillsnecessary tothriveintheculturethey'resurroundedby.

Voluntarily following self-directed pursuits is howchildrenlearnsuchvirtuesasself-discipline,industry,andgrit.Andsocialplay ishowchildren learnhowbest to treatotherpeople: inotherwords,how theylearnmoralsandmanners.

How Adults Get in the Way

Theflipsideoftheinsightthatkidsteachthemselvesis the unsettling realization that adults, in trying tobegoodteachers,toooftenobstructandsidetracktheefforts of children to self-educate: especially oncechildrenareenrolledinschool.

This message should be especially easy for loversof liberty tounderstand.Humanbeings,bothadultsandchildren,thriveunderfreedom.Andauthoritarianinterventions, no matter how well-intentioned,generallymuck thingsup:whether the intervener isanoverbearingteacherorabusybodybureaucrat.

AsGraywrote:

Naturedoesnot turnoffthisenormousdesireandcapacitytolearnwhenchildrenturnfiveorsix.Weturnitoffwithourcoercivesystemofschooling.

Freeplay is thenaturalworkandstudyofchildren.And,evenforadults,thehighest,mostproductiveandcreativeformsofworkandstudyareindistinguishablefromplay.Displacingthefreeplayofchildrenwithadult-imposed, coercedwork and study only servestocripplethechild’sself-educatingspiritandtostuntthechild’sdevelopment.

The main lessons imparted by coercive educationare (1) that work and study are fundamentallyboringandstressfulendeavors topursuegrudginglyfor someoneelse’s sake,andnotyourown,and (2)that submissiveness and blind compliance will be

This is not to say that parents have no role in theeducationoftheirchildrenbeyondbasiclife-support.Great parenting means facilitating self-directededucation by providing children with access toresource-rich environments, and then stepping backandallowingthemmaximumfreedomtoengagewiththoseresourceshowevertheyplease:inotherwords,freedomtoplay.

Someof theseresourcesarematerial: toys,stuffforbuilding,naturalmaterials,etc.Childrenarenaturallydrawn tomanipulate, explore, and experimentwithstuff:especiallynewthings.

AndchildrenespeciallyneedaccesstowhatDr.Grayreferstoas“thetoolsoftheirculture.”Forchildreninhunter-gatherersocieties,thismeant,“knives,diggingsticks,bowsandarrows,snares,musicalinstruments,dugout canoes, and the like.” For children in themodernworld,thismeanscookingutensils,cleaninginstruments, handiwork tools, creative materials,books, computers, and other hi-tech devices: yes,even the much-maligned smartphone and tablet of“screentime”infamy.

Justashunter-gathererchildrenlearnedtoplaywithprimitive tools by observing their elders, modernchildrenneed toseeadultsandolderchildrenusingthe tools of their work and pastimes. So access to“human resources” is just as important as materialresources. Parents must first and foremost provideaccesstothemselves.Andfromthere,childrenshouldbe allowed to branch out to other familymembersandnon-relatedfriendsofallages.Anymemberofachild’scommunitycanservethechildasamodeltoemulateandasaplaymatetointeractwith.

Play Is Education

Suchplayishowchildrenself-educate.Theyobserveothers doing things they themselves cannot yet do.Theytrytheirhandbyroughlymimickingthebehavior.Theyrequesthelpwhentheyneedandarereadyforit.And they obsessively repeat new behaviors overandoveragain.Duringthesereps,theycomparetheirownactionswiththeactionsoftheirmodels,noticediscrepancies, and refine accordingly. And theycontinually challenge themselves to approach the


BankNotes -NelsonNash’sMonthlyNewsletter-December2017rewarded in life, and so are prime virtues, whileinitiativeandself-drivenenterprisewillbepunished,andsoaredangerousvices.

AsHoltwrote:

Inshort,childrenhaveastyleof learningthatfitstheir condition, andwhich they use naturally andwell untilwe train themout of it.We like to saythat we send children to school to teach them tothink.Whatwedo,alltoooften,istoteachthemtothinkbadly,togiveupanaturalandpowerfulwayofthinkinginfavorofamethodthatdoesnotworkwellforthemandthatwerarelyuseourselves.

If you would like to explore these ideas further, Ihighlyrecommendthefollowingbooksandresources.Lettheself-educationbegin!

Books

FEE's Essential Guide to Self-Directed Education

Free to Learn byPeterGray

How Children LearnbyJohnHolt

How Children FailbyJohnHolt

Dumbing Us Down byJohnTaylorGatto

Weapons of Mass InstructionbyJohnTaylorGatto

Organizations and Websites

TheAllianceforSelf-DirectedEducation(self-directed.org)

FreedomtoLearn(PeterGray’sblogatPsychologyToday)

WholeFamilyLearning

Praxis:aself-directededucationandapprenticeshipprogramforyoungprofessionals

TheLibertarianHomeschooleronFacebook

DanSanchezisManagingEditorofFEE.org.HiswritingsarecollectedatDanSanchez.me.

ThisarticlewasoriginallypublishedonFEE.org.Readtheoriginalarticle.

State Coercion Is Intoxicating, Seductive, and Wrong byOmerGrigg

A while ago I met a young religious woman whofoundedaverysuccessfulnonprofitorganizationallbyherself.Theorganizationraisesprivatefundsfor,and organizes trips to, various important and holyJewish sites for high school classes. She believedthat it is important foryoungpeople toknowmoreabout their religious ancestral heritage, and she didsomethingaboutit.Butshewasnotsatisfied.Shetoldmethatherdreamistogetintopoliticsandeventuallygetappointedaseducationminister.

"Yousee,Omer,thefundraisingandlogisticsarenotso hard.What drivesme crazy are the high schoolprincipals.Itissodifficulttogetthemtocooperate!Idoallthehardworkforthem;theydon’tevenhavetopayforthetrips!Alltheyneedtodoismaketimein the school schedule and organize the kids, andstill, theygivemeahard time.WhenI'meducationminister,I'llmakethetripsmandatoryforallIsraelischools,andthestatewillpayforthem."

"Buteventuallysomeonewillreplaceyouasministerand might overturn your policy. Worse, he or shemightreplaceitwithanotherpolicyyouareopposedto!And what about the parents? If you don't wantsomeministertoforceyourkidstovisitMuslimsites,for example, why force other parents to send theirkidstoJewishsites?"

"I'msorry,butthisissueisjusttooimportanttoleaveinthehandsoftheparents."

Ijustcouldnotgettoher.Shewassoconvincedofthe importance of these trips that she found usingcoercionasashortcut,insteadofthedailydrudgeryoftheeffortofpersuasion,tobejustifiable.

The Allure of Coercion

Whyistheuseofgovernmentcoercionsoappealingtowell-intentionedpeople?

I think one reason is thatwe lost our trust in civilsocietyandinsteadplacedourhopesinpolitics.



Ayearago,Israel'sMinisterofJustice,AyeletShaked,spokeinfrontoftheIsraelBarAssociation.Inwhatwaslatercalled"Shaked'slibertyspeech,"shemadeseveralpoignantstatements:

EverytimeParliamentpassesanewlawaimedatservingaworthwhilepurpose…weactuallyholdavoteofnoconfidence…inourabilityasindividualsand communities to manage ourselves…in thepeople'swisdomtocreateandmaintainmechanismsmore successful than those artificially shaped byexperts.

ShakedalsolamentedthestaggeringnumberofbillssubmittedtoParliament:

In the last fifteenmonths…time after time, 1,550times,wewereasked,asthegovernment,todeprivethecitizensofjustalittlemoreoftheirliberties…toengineersocietyinsuchawaythatwillonlydogoodandneverbad,sotheypromised…

Israeli parliament holds the dubious record as theparliamentthatproposesthehighestnumberofbillsin theworld.Between 1999 and 2016, 23,819 billsweresubmitted.Italyholdssecondplacewith17,800bills, Austria is third with 6,000; most Europeanparliaments average at several hundred bills. Evenworse, Israeli law does not require parliamentmembers to accompany their bills with detailedanalysesontheirbudgetaryorlegalimplications.

Big Government Squeezes Out Private Decision-Making

Shaked's"everynewlawisavoteofnoconfidenceinthepublic"argument issimilar toanargumentI trytoadvanceasoftenasIcan–thepoliticalsphereandtheciviliansphereopposeeachother,andeachoneexpandsattheexpenseoftheother.

Thisisthereal"biggovernment"–theever-increasingpoliticalmeddlingincivillife.Thepoliticalsphereisaparasite,feedingonanddepletingcivilsociety.

But what is so wrong with conferring politicsjurisdictionoveraspectsofcivilianlife?

Onemajorreasonisthedifferencebetweenpoliticalandciviliandecision-making.

Education Is the State’s Greatest Tool for PropagandabyBrittanyHunter

Inchapter10ofThe Road to Serfdom,Hayekdescribeshowsomeoftheworstpeoplealwaysenduprisingtothetopofthepoliticalheap.Continuingtotouchonthis themeintheeleventhchapter,Hayekdigsevendeeperanddiscusses thecontrolof informationandtheverybasisoftruthinaplannedsociety.

Inasocietywheretotalitarianismreigns,truthisfoundnot in objective principles, but in a government’sdesiredends.Oncetheseendshavebeenestablished,allotherformsofinformationaretailoredtoreinforcethat “truth.” Reason is henceforth thrown out thewindow and the state’s version of truth is beyond

For example, choosing ice cream flavor falls,presently, within the civilian sphere. The result?Chocolate lovers can get chocolate ice cream, andvanillaloverscangetvanilla.Themarketmechanismfound away to satisfyboth camps.Butwhat ifwedelegated this littlepieceofour life to thepoliticalsphere?Wewouldhaveelections,andallofuswouldeateitherchocolateorvanillaicecreamforthenextfour years, depending on the majority outcome.And that is assuming the democratic process is"pure,"which it is not. Political decision-making isinherently adversarial, and political solutions areusually one-size-fits-all. Therefore, politics tend tocreate unnecessary friction and strifewhile civiliandecision-makingminimizesthem.

Libertyandresponsibilityaretwosidesofthesamecoin–theyareinseparable.Somepeoplemightfindthis fact discouraging, but it is a fact nonetheless.Usinggovernmentcoercionasashortcuttoachievinggoals is a dangerous temptation, frequently comingback to bite those who seek to use it for worthypurposes.

OmerGriggisaDeputyDirectorattheIsraelCenterforSocialandEconomicProgress.



BankNotes -NelsonNash’sMonthlyNewsletter-December2017contestation.AsGeorgeOrwellwrote:

“Nazitheoryindeedspecificallydeniesthatsuchathingas“thetruth”exists....TheimpliedobjectiveofthislineofthoughtisanightmareworldinwhichtheLeader,orsomerulingclique,controlsnotonlythefuturebut thepast. If theLeadersaysofsuchand suchanevent, “Itneverhappened”–well, itneverhappened.Ifhesaysthattwoandtwoarefive–well,twoandtwoarefive.Thisprospectfrightensmemuchmorethanbombs.

Butthisonitsownisnotenoughtoswayentirenations.Insteadofthepeoplemerelyacceptingthese“truths”itisimportantthatthestateconvincethemthatthesetruths are their own.When individuals begin to tietheirintereststothestate’sinterestsaterrifyingunityoccurs,thelikesofwhichcanbeseeninalmosteverydeceptivedictatorshipthroughouthistory.

AsHayeksays:

“Themosteffectivewayofmakingeverybodyservethesinglesystemofendstowardwhichthesocialplan is directed is to make everybody believe inthoseends.Tomakeatotalitariansystemfunctionefficiently, it isnotenough thateverybodyshouldbeforcedtoworkforthesameends.Itisessentialthatthepeopleshouldcometoregardthemastheirownends.”

Inordertodothis,allpropagandaisorchestratedtoreinforcetheseendsinordertopushindividualsinthedesired direction. Common themes and slogans arerepeatedoverandoveragaininorderbeatthesegoalsinto theminds of the people.Anything contrary totheendgoalmustbesquashedimmediately.Anyonespeakingoutagainst themmust toobedestroyed inthe nameof national security.AsHayek says, “Buttheminoritywhowillretainaninclinationtocriticizemustalsobesilenced.”

And while most people associate propaganda withpoliticalpostersandmultimedia, there isnogreatertoolforpropagandathananation’seducationsystem.

State-Controlled Education

No matter how intelligent an individual may be,almost every person is susceptible to propaganda.

Thisisbecause,inmanyinstances,mostareunawarethattheyarefallingpreytoit.Itseepsintoourlivesthroughallformsofentertainmentbutmostespeciallythroughstate-sponsorededucation.

InNaziGermany,indoctrinatingtheyouthwasoneoftheeasiestwaystoensuretheferventsupportoffuturegenerations. Adolf Hitler himself said, “He alone,whoownstheyouth,gainsthefuture.”ChildrenwereforcedintoyouthgroupswheretheirroleintheThirdReich was reinforced continually. Germany eventailored toys,games,andbooks towards thedesiredends of the Reich, ensuring that children wouldbelievewhatevertheywantedthemtobelieve.

Hayekwrites:

“If all the sources of current information areeffectivelyunderonesinglecontrol,itisnolongeraquestionofmerelypersuadingthepeopleofthisorthat.Theskillfulpropagandistthenhaspowertomoldtheirmindsinanydirectionhechooses,andeven themost intelligent and independent peoplecannotentirelyescapethatinfluenceiftheyarelongisolatedfromallothersourcesofinformation.”

AndthiswastheaimoftheThirdReich.IftheGermanpeopleweretonotonlyacceptbutcondonetheactsoftheirgovernment,therewasnobetterwaytodoitthen to teach themyoung,and lead themtobelievethatthishasalwaysbeenthecase.

Touchingonthis,Hayeksays:

“Themosteffectivewayofmakingpeopleacceptthevalidityofthevaluestheyaretoserveistopersuadethemthat theyarereally thesameas thosewhichthey,oratleastthebestamongthem,havealwaysheld, but which were not properly understood orrecognizedbefore."

Or,topullfromOrwellianspeak,thegoalistomakethesechildrenbelievethat,“wehavealwaysbeenatwarwithEastasia.”

But this deliberatemoldingofmindsdoesnot onlyoccurinyoungstudents.Infact,oncethesechildren’smindshavebeen sufficiently indoctrinated, theyarepassedofftoinstitutionsofhighereducationwhereabeliefinintellectualelitismistheninstilled.



The Educated Elite

Trained to learn by rote methods rather thancritical thinking, young adults, eager to asserttheir independence, were thrown into colleges anduniversities and told that they are now part of theintellectualelite.Butfromthiscomesthedangeroustendency tostopquestioning the information that ispresentedtoyou.Afterall,yourprofessorsarehighlyregardedfortheirintellect.Whywouldtheysteeryouinthewrongdirection?

But when these professors begin to present stateopinionasunquestionedtruth, thisiswheretherealproblemsarise.

Thefieldofeugenics,forexample,wasoncetaughtasifitweredoctrinaltruth.Ifracialsuperioritycouldbe“scientifically”proven,or,rather,ifthestatecouldassertthatthiswasfact,thenquestioningthisdoctrinebecameheresy.

AsHayeksays:

“The need for such official doctrines as aninstrument of directing and rallying the efforts ofthepeoplehasbeenclearlyforeseenbythevarioustheoreticians of the totalitarian system. Plato’s“noble lies” and Sorel’s “myths” serve the samepurpose as the racial doctrine of theNazis or thetheoryof thecorporativestateofMussolini.Theyareallnecessarilybasedonparticularviewsaboutfacts which are then elaborated into scientifictheoriesinordertojustifyapreconceivedopinion.”

And, as has been seen throughout history, once atheory becomes part of the scientific narrative, itcontributestothedirectionofallsocietalends.Hayekcomments on this saying, “Thus a pseudoscientifictheorybecomespartof theofficialcreedwhichtoagreateror lesserdegreedirectseverybody’saction.”While the eugenics example may seem ratherextreme,itwasveryapplicabletothetimethatHayekwaswriting.

Andwhile it is not easy in hindsight to understandhowanentirepopulationcouldfall for theories thiscallous, Hayek reminds us, “It is not difficult todeprivethegreatmajorityofindependentthought.”

Itmaybe easy to cast blameon themedia and theentertainment industryforbeingnaturalpropagandamachines, but history tells a different story.As wehavenow seen, state-controlled education is one oftheworstandmosteffectivepropagandatoolsthathaseverexisted.

BrittanyHunterisanassociateeditoratFEE.Brittanystudied political science at Utah Valley UniversitywithaminorinConstitutionalstudies.


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