Hornberger's Blog

Hornberger's Blog is a daily libertarian blog written by Jacob G. Hornberger, founder and president of FFF.
Here's the RSS feed or subscribe to our FFF Email Update to receive Hornberger’s Blog daily.

Socialism, Taxation, and Gold Seizures

by

Those Americans with socialist propensities, including, of course, Barack Obama, are surely having their hearts warmed by recent actions of fellow traveler Hugo Chavez, the democratically elected dictator of Venezuela. Faced with falling oil revenues, Chavez has just announced the government seizure of several privately operated gold concessions, which, he pointed out, are held by “rich people.”

Chavez declared, “Social investment will not be halted. This, for us, is sacred.” That, of course, is also a deeply held sentiment among American socialists, one that perhaps is best reflected by Obama’s plan to foist a massive public-works project on the American people as soon as he takes office.

To fund his “social investment,” Obama won’t be as crude as Chavez. Rather than directly seize rich people’s businesses, as Chavez has done, Obama will instead either (1) borrow the money from the Chinese communist government, thereby adding to the $1 trillion already owed to that regime, or (2) have the Federal Reserve print the money, thereby adding to the further debasement of the dollar, or (3) have the IRS seize a larger percentage of the money that rich people earn from their businesses.

Consider the oil industry. While the Venezuelan government owns and operates the oil industry in that country, after having seized it from private companies, the U.S. government leaves the oil industry in private hands but every so often levies an “excess-profits tax” on the oil companies. Thus, while the U.S. method of financing its socialistic welfare-state programs is obviously different from that of the Venezuelans, the principle is the same — using government force to take from the rich to give to the poor (with some of the money, of course, being transferred to the bank accounts of government officials).

Given that Obama and his team are looking to Franklin Roosevelt and the New Deal for inspiration to save America from its economic woes, we should remind ourselves of what the Roosevelt administration did with respect to gold. While Chavez is nationalizing the gold industry, Roosevelt nationalized the gold itself. Americans were required to turn in their gold to the federal government and anyone caught holding gold was subject to a felony prosecution.

If the U.S. government were to suffer a severe downtown in tax revenues, Obama, like Chavez, will do whatever is necessary to continue the federal government’s “social investment” programs and, for that matter, its overseas imperial and interventionist programs. If such a “crisis” were to strike the U.S. government, as it has the Venezuelan government, Obama could be expected to adopt Chavez-type measures, including higher taxes on “the rich,” “excess profits” taxes on oil companies, and even another FDR-like seizure of all gold held by the American people.

This post was written by:

Jacob G. Hornberger is founder and president of The Future of Freedom Foundation. He was born and raised in Laredo, Texas, and received his B.A. in economics from Virginia Military Institute and his law degree from the University of Texas. He was a trial attorney for twelve years in Texas. He also was an adjunct professor at the University of Dallas, where he taught law and economics. In 1987, Mr. Hornberger left the practice of law to become director of programs at the Foundation for Economic Education. He has advanced freedom and free markets on talk-radio stations all across the country as well as on Fox News’ Neil Cavuto and Greta van Susteren shows and he appeared as a regular commentator on Judge Andrew Napolitano’s show Freedom Watch. View these interviews at LewRockwell.com and from Full Context. Send him email.