Personal Freedom and Prosperity 103: Private Property
The first and chief design of every system of government is to maintain justice: to prevent the members of society from incroaching on one another’s property, or seizing what is not their own. The design here is to give each one the secure and peacable possession of his own property.
– Adam Smith
Utilizing property greatly advances a person’s opportunity to investment their time, intellect, labor and money. Coupled with limitless and competitive exchanges of ideas and products, these investments propel commerce, science, art and charity. Civilization advances.
The USA: How Government Confiscates Private Property
People seeking freedom throughout the world are horrified by the government of Cyprus stealing money from personal bank accounts. [Read: Cyprus! Government Spending, Debt and Government Confiscation of Private Property] Equally horrific is the European Union’s approval of the European Central Bank and the International Monetary Fund’s compliciy. Knowledgeable investors know that these government edicts – the coerced seizure of bank accounts – violates a cardinal element of freedom. Over 200 years ago, Adam Smith stated:
The first and chief design of every system of government is to maintain justice: to prevent the members of society from incroaching on one another’s property, or seizing what is not their own.
Raiding bank accounts in Cyprus has caused devastating financial and social degradation. Europe will suffer because investors in Europe and the rest of the world fear additional raids will continue on personal property. [Read: Stealing Private Property: Cyprus and the EU]
Now, take a look at how a sophisticated country devalues private property. Presently, the USA is raiding everyone’s bank account. Richard Rahn in the Washington Times explains that the Federal Reserve has expanded our money supply, which keeps our interest rate very low – approximately 1%. However, inflation is approximately 2 to 3%. Presto; if you had money in a savings account your purchasing power is 1 or 2% less.
Do you want evidence? Has your grocery bill gone up? Yep. Case closed. This is a deliberate manipulation by government, which reduces the wealth of its citizens. Again, a cardinal element fostering freedom is for government to protect people and their private property.
Additionally, tax on earned-interest seizes your wealth. Remember, your savings account is earning 1%. However, you must pay tax on the interest you receive. Think it through. You are paying tax on the piddly amount of interest you earned, and our 2 or 3% inflation has diminished your purchasing power – your wealth. Thus, you are paying tax on an savings account that’s losing real value.
Now, let’s examine a bigger theft by our government – Social Security. Our government taxes workers 12.4% (employee and employer each pay 6.2%). Every American should realize, government cannot honor its implicitly promised benefits. Politicians are already talking of mean-testing (thus, excluding people that saved for their retirement), changing our cost of living calculations and extending our retirement age. Again, our Federal government is taking property – 12.4% tax – and arbitrarily decreeing who and how much a worker will receive in benefits.
With the approval of the European Union, Cyprus overtly raided personal bank accounts. The United States, on the other hand, is stealthly depleting worker’s savings and promised retirement benefits, e.g., Social Security. Even worse, Americans saving their money, above and beyond Social Security, now know President Obama seeks to limit personal savings to $3million. This is not protecting private property. It’s just the opposite; this is regulating and confiscating private property.
In the late 1700’s, Adm Smith recognized that the secure and peacable possession of property enhanced a person’s opportunity to investment their time, intellect, labor and money. Fortunately for America, the importance of private property was known to the Founders of America. James Madison wrote:
Government is instituted to protect property of every sort; as well that which lies in the various rights of individuals, as that which the term particularly expresses. This being the end of government, that alone is a just government, which impartially secures to every man, whatever is his own.
John Adams wrote:
The moment the idea is admitted into society, that property is not as sacred as the laws of God, and that there is not a force of law and public justice to protect it, anarchy and tyranny commence. If “Thou shalt not covet,” and “Thou shalt not steal,” were not commandments of Heaven, they must be made inviolable precepts in every society, before it can be civilized or made free.
The governments of the United States and Europe have dangerously ignored and abused a crucial element of freedom – private property. Our governments must again respect and protect private property. It is absolutely essential for peace and prosperity.