Economy, Society, and History

The subject of this lecture is “From Monarchy to Democracy.” This is obviously one of the main subjects that I cover in my book Democracy: The God That Failed. I have talked about monarchs already in the previous two lectures, about the role of monarchs in feudal societies, which we can refer to as prestate societies. And then, in the last lecture, about the position of monarchs as heads of state and the transition from the feudal stage to the monarchical state. Roughly speaking, historically, and only talking about Europe, in this case the period of feudal monarchs is roughly the period from 1100 to 1500 and then from 1500 until the end of World War I, that is, the period of monarchical states. The later stages are constitutional monarchical states and the earlier stages are what we refer to typically as absolute monarchies. As I said, the discussion during the last two lectures referred mostly to the development in Europe. I will come back to the European development, that is, to Christian monarchies as a transition from Christian monarchs to democracy in a moment, but I want to say a few things about the institution of kings and monarchs in general, even outside of the European scenery.

In a way, monarchs are a more typical form of rulership, whether pre-state or state rulers, than any other form. Democracies are a very rare event in human history, and it is easy to explain why that is, because patriarchy is one of the most natural institutions that you can imagine. You have, of course, fathers as the heads of households, and by and large the idea of kings was modeled after the structure that you find in households. Kings were typically regarded as the heads of extended families or the heads of clans or the heads of tribes, or later on of course, the heads of entire nations, but developing along the lines of the idea that this is a natural development, similar to what we see in each family.

All kings try to associate themselves with some sort of religious, or give themselves some sort of religious, dignity. In many places on the globe, kings were considered to be either gods or incarnations of gods or descendants of gods or as people who acquired godlike status after their deaths. And kings in all societies tried in a way to provide two functions. On the one hand, the function as judge and priest, that is, as the intellectual head of larger groups of people, and on the other hand, the function as warrior and protector of their clans or tribes or whatever the group was of which they were considered to be the head. And while it was sometimes the case that these two functions, the priest-judge function and the warrior-protector function were separated and occupied by different individuals, there was always an attempt made to combine the two, to make the protector and warrior also, at the same time, the high priest, and of course, in combining these two functions, you would achieve a far greater power than if these two functions were somehow exercised by different individuals controlling each other.

Outside of the West, more typically it was the case that the king was also considered to be the head of the religious organization or the head of the church. That was the case in places like Egypt and also in Japan, in the Islamic world, with the Hindus, and also in the case of China; the uniqueness of Western civilization, as I mentioned in the previous lectures, was precisely the relatively strict separation of these two functions by different individuals and different institutions. This is not to say that this existed all throughout the West, and it certainly was the case that religious leaders might hope and try to acquire earthly powers and that the earthly rulers try to control the churches. But certainly from about the year 1000 or so, this separation between the two roles worked for quite some time in Europe, basically until the Protestant Revolution when the combination between church, on the one hand, and state or earthly rulers, on the other hand, became increasingly closer again.

This separation between church leaders and the earthly worldly rulers did not, of course, prevent the various kings from claiming some sort of elevated status for themselves. I mentioned in the previous lecture that the kings of England, for instance, tried to trace their own claims to the land back to Adam and Eve, and thereby present themselves as people whose position had ultimately been founded by God, and that all of their subjects were indeed nothing else but the offspring following the tenants of Adam and Eve. Nonetheless, at least for the Christian world, even if kings claim that they have this special historical dignity of having been installed by God directly or indirectly into their positions, precisely because in Christianity kings are not considered to be godlike figures and we have a transcendent God, kings were always considered to be under the law like everyone else. And because of this, in the West, the institution of regicide, killing the king, was always considered to be quite legitimate, not entirely undisputed, but for centuries, of course, considered to be something that was entirely alright, if the king would not do what he was supposed to do, according to the universal law laid down by the transcendent God.

In addition, in Europe, or at least in some parts of Europe, the power of the king was always restricted by the fact that there existed other noblemen who claimed to be the sole and exclusive owners of their land, that is, not to have received their land as some sort of grant from the king, but being, maybe on a smaller scale, but nonetheless, an equally safe private property owner as a king was of whatever he claimed to be his. This is what we refer to as the allodial form of feudalism. And given, at least for the feudal king, that he was recognized as a voluntarily acknowledged judge and military leader, as I explained in the previous lecture, it took quite some time for him to secure and gain the position as a sovereign, stripping these allodial feudal owners of their full and complete property rights and establishing himself as a compulsory monopolist.

Now, with the establishment of kings as heads of states, we can almost from the very beginning discover the seeds of the destruction of dynastic monarchies in the following way. Remember what I explained about the justification that was given for the existence of a state, the justification that Hobbes developed. There will be war of all against all, and the only way that we can create peace is by having one monopolist on top of the social hierarchy being the ultimate judge equipped with the power to tax. Now, interestingly, in this justification, you realize that it doesn’t really matter for the Hobbesian argument who this monopolist is. It happened to be monarchs at the time because the institution of monarchy is a relatively natural institution, just people who have more wisdom and riches accumulated and who command more authority and are looked up to.

The first governments, the first states, happen to be monarchical states, but the argument for the state that monarchs used, in order to establish themselves as a state, makes no reference to a claim that it must be a king who is this monopolist. In principle, it can be anyone, it just must be a monopolist who does it. Because of this, for instance, the English kings were initially quite unsympathetic toward the Hobbesian argument, because they realized that it did not contain a specific justification or legitimation for the institution of dynastic monarchs, and Hobbes was even suspected of having some sort of republican sympathies, or even as being somebody who might have secret sympathies for Cromwell. Whether that is true or not is irrelevant, but what is of importance is the fact that this justification for the state, this rational justification for the state, embodies the seeds of the destruction of the institution of a monarchical state.

Now, this transition from monarchical state to a different form of state democracy took several hundred years, just as the establishment of states out of prestate orders took several hundred years, and the transition was driven not least by the very intellectuals that played an important role in securing the position of kings as states. Remember, states need legitimacy, need support, voluntary support among the public, and it was precisely intellectuals that were hired by the king who spread this idea about the necessity of a monopolist judge equipped with taxing power. But as intellectuals happen to be, they are always unsatisfied with their own position, even though the position of theirs somehow improved, being now somewhat employed or semi-employed by kings. As soon as they had reached this position, they began to spread various egalitarian views, and these egalitarian views simply raised the question whether it isn’t somehow unjust that there exist people who have privileges, that the king is guided by a different type of law than the rest of mankind, that there are princely laws and privileges different from the laws and rules that apply to the rest of mankind. So, the egalitarian propaganda took the form of an attack against privilege. How can privilege be squared with the Christian idea that we are all created equal by the same creator—and the alleged solution proposed to this seeming injustice was to say that there should be open entry into the position of government. Why should it be the king? After all, only a state was necessary in order to create law and order, and other people could do that just as well as some sort of hereditary king could do it. There were some people early on who recognized that the problem was rather that the state king represented a monopoly, and that what was necessary as a solution was, in a way, to get rid of this monopoly power—again, to have competing jurisdictions. But the overwhelming majority took the line that in order to abolish privileges, all we have to do is open up entry into the government to everyone, and they called this equality before the law.

Now, I point out from the outset that there is, of course, an error involved in this. By opening entry into the government agency to everyone instead of restricting it to just the members of some specific family, you do not abolish privileges. What you achieve instead is that you now substitute functional privileges for personal privileges. The king and his successors had a personal privilege, but if you open entry to the position of the government leader to everyone, you still have a functional privilege. Everyone can now acquire this privileged position, but there still exists privileged positions. In legal terms, you can say, instead of having a higher princely law and a lower law applying to the common man, we have now created, so to speak, public law, that is, the law that regulates the behavior of those who are in charge of the state, and private law that applies to the rest of mankind.

But, public law is, again, superior over private law in the same way as princely law was superior over the law applying to common folks. Public law beats private law, and that there are privileges you can simply see by the fact that as a public official, you could do things that you were not allowed to do as a private individual. This is, of course, true up to this day. As a public official, you can take the property of others. As a private citizen, this would be considered to be a crime. As a public official, you can enslave people; you can draft them into the army and military. If you were just a plain private individual, then that same act would be considered to be an outrage and would be a punishable offense. Privileges do not disappear when you open entry to government to everyone, and not everyone is equal before the law either, because there exist two types of law. If you are a public official, a different law applies to you and protects you than if you were a private individual; as a private individual you are only protected by a subordinate form of law, that is private law.

If we look at the change from monarchy to democracy, described as a system where entry into the government is available to everyone, from a purely economic point of view, what happens in this case is that we substitute a person who considers the entire territory over which he exercises monopolistic control as his private property which he can pass on to his offspring, for a person who is only a temporary caretaker who is in charge, for a certain limited period of time, of the same territory. But this, being the owner of a territory versus being a temporary caretaker of a territory, makes a fundamental difference from an economic point of view. Let me just illustrate that by using a very elementary example. I can give you a house and say, “You are the owner of the house. You can sell this house if you want, you can pass it on to future generations if you want. You can sell part of it. You have the right to collect rent from it.” And on the other hand, I give you a house and say, “You are not the owner of the house. You cannot sell it, you cannot determine who will be your successor. You can also not sell part of it, but you can use it to your own advantage for a certain period of time. That is, the rent that you can get out of this house, you are free to do with this rental income whatever you want.”

Now, ask yourself whether or not these two people will treat the house in the same way or differently, and the answer is obvious. There will be a fundamental difference in the way that the house will be treated by these two individuals. The incentive for the owner is, yes, of course, I try to get as high a rental income as possible out of the house, but at the same time, I always take into consideration what happens to the value of the capital stock of which I am the owner. After all, I can sell the house. Or, I can pass the house on to future generations. And it is possible, for instance, to increase your rental income from your house in such a way that the value of the capital stock drops or falls more than my increase in rental income that I get. An owner would try to prevent something like this from happening. And if he doesn’t do this, then he will be punished insofar as he will see that the value of his property will fall in the property market. A caretaker’s incentives are entirely different. A caretaker only owns the rental income. He does not own the capital stock. What is his incentive? His incentive is to maximize his rental income regardless of what the repercussions are with respect to the value of the capital stock.

Let’s say that instead of putting one or two families in my house and collecting rent from two families, I can instead put a thousand guest workers in my house and have one bed over the other and thereby I will definitely increase my rental income. But it is also easy to see what the price of this type of usage will be, that is, there will be a deterioration of the property taking place very quickly. The toilets will be clogged immediately, the carpets will be dirtied. There will be graffiti on the walls and all the rest of it, people come home drunk and smash the walls and who knows what. Again, if I know that I will be in charge of this house for four years and that the losses in terms of the capital value are not my losses because I don’t own the thing in the first place, my incentive will be to maximize my current income that can be achieved by using this capital, even if it is the case that at the end of these four years, the capital stock has been run into the ground and has been completely depleted.

Now, on a large scale, this is the difference between democratic caretakers of countries and kings as owners of countries. A democratic caretaker’s incentive is that I have to loot the country as fast as possible, because if I don’t loot it as fast as possible, then I will no longer be in power. I can buy myself many, many friends if I just impose a tremendous amount of taxes right now, and as to what happens after I am out of power, who cares? Whereas kings, at least by and large, had an interest in preserving the value of their dynastic property and passing on a valuable piece of property to future generations. No, I’m not saying that every king will automatically be equally good in terms of preserving his capital values, nor do I say that every single democratic caretaker will precisely follow the scenario that I developed, but what I’m saying is, the incentive structure is so different that we can expect that by and large, on the average, kings will have a longer planning horizon and a greater interest in the preservation of the capital stock and democratic rulers, by and large, have a far smaller interest in the preservation of the capital stock and a far greater interest in the current consumption of resources that you can press out of the existing capital stock. The exploitation of a king is a long-run exploitation, farsighted exploitation, calculated exploitation. The exploitation of a democratic caretaker is short-run exploitation, noncalculating exploitation, and so on.

I will illustrate this by looking just at three dimensions here. The subject of taxation—for a king, of course, he wants to tax, there’s no question. Everybody is tempted to do this; if you have the right to tax, of course you like to tax. But, what he will bring into perspective is, if I tax too much right now, the productivity of the population might go down in the long run and I expect to be in power also in the long run. So, he will more likely engage in a moderate amount of taxation, always keeping in mind the disincentive to productive people that taxation implies. Compare this with a caretaker who is just in charge for a certain period of time. Again, for him, the fact that in the long run, productivity will decline if he currently engages in massive amounts of taxation is of far lesser concern than it would be for a king because after all, in the more distant future, he will likely not be in power. He is far more present oriented in this regard, and discounts the fact that high taxation means a reduction in productivity on the part of the subject population to a greater extent than a king would do.

Look at the subject of debt, of state debt. A king is, of course, also inclined to incur debt and they all did, especially for war finance, but kings typically, in order to get credit, had to pledge certain things as security and in addition, though that was somewhat disputed, there was always the possibility that the future generations were held responsible for the debt incurred by their own father or mother. That was not in all cases carried through, but it was hanging as a Damoclean sword above the head of a king that maybe the next generation is expected to pay off my debt. And again, he knows, of course, that if his debt load is too high, this has long-run negative repercussions on savings rates, and he tries to avoid these long-run consequences, to a certain extent at least. Now consider a public caretaker and his attitude toward government debt. First of all, none of these people ever expects that any of them will be held personally responsible for the debt to be repaid. Ronald Reagan, who indebted the United States more than anybody before him and now, our beloved Bush warrior, who again, indebts this country for a tremendous amount—Reagan is not in debtor’s prison, nor will Bush have to fear that he will be jailed if he doesn’t repay the debt. They just take up as much debt as they can, and say that some future suckers will have to pay for this. In addition, of course, they will not give any security for it. That is, whereas major lenders to kings insisted that if you don’t repay, I get this castle or that castle or this little piece of land or that piece of land from you. Here there are no pledges of any security whatsoever. If a democratic government defaults on their debt, none of you are entitled to take over the Grand Canyon or some place like this, so no security whatsoever. And again, you can, of course, imagine that the tendency of democratic governments to run up debts is far more pronounced than it would be under monarchical rule.

The same applies to inflation. Yes, of course, kings loved inflation, coin clipping and so forth; it enriches you. But again, there are two concerns that you have. On the one hand, by inflating, you increase your own current income; on the other hand, you will get, in the future, taxes back in inflated money. For people who have a very short-term perspective, what counts far more is the current advantage that you have in terms of inflating, that you can print the money and then buy yourself a Mercedes or a BMW or whatever you want. And then you realize, of course, how many friends you have that you were not even aware of, who also just realized that man, these guys have the magic wand, they can just create wealth merely by printing up paper money. Yes, of course, you get inflated paper money in the form of future taxes back too, but again, in the future, you will not be there; you will not be the recipient of that inflated money that comes back in the form of taxes. Then, your attitude toward inflation is more generous, so to speak. You like inflation more.

Again, for all of these predictions that I make, there exists, of course, ample empirical evidence that this is indeed the case. Let me just emphasize that while kings tried several times to substitute paper monies for commodity monies such as gold or silver, all of these attempts were relatively short-lived attempts. And they had to go back to a gold or silver standard. For the democratic world, which begins after World War I—during this period, for the first time in all of human history, it happens that commodity monies disappear entirely on a worldwide scale and wherever you go, all you have is paper money, and of course, paper money inflation on a scale that was unheard of in previous centuries.

There’s also a different attitude among kings, as compared to democratic caretakers, when it comes to the redistribution of income. Both can take other people’s property, but the king, if he takes property from private individuals, runs an ideological danger. That is, he himself vis-à-vis other kings, considers himself also to be a private property owner. He does not want to undermine the legitimacy of private property, because if he does, then, of course, his competitors, King George or King Henry or whatever, King Fritz, they might then be interested in also taking his property. So, he’s very much interested in maintaining the legitimacy of the institution of private property as such. So, his forms of redistribution are rarely redistributions from the rich to groups of poor. The redistribution activities through which he tries to achieve popularity are typically benefits that he gives to particular individuals in the form of privileges, and mostly to individuals who have achieved something. Just take the Hapsburgs as an example. They sometimes ennobled people who were enemies of monarchy, but in most cases they ennobled people who had achieved something. That’s why the family of Ludwig von Mises was ennobled, despite the fact that they were Jewish. They also had relatively little racial hatreds, because all the noble houses were somehow interconnected and there was sort of far more international orientation among the kings than among democratic caretakers, who tend to be more nationalistic.

The redistribution under democratic conditions is different. You have to be reelected all the time and you have to be reelected by the masses, and the masses always consist of have-nots. There are always more have-nots than haves, in every dimension of having that is worth having. That is, in terms of money, in terms of beauty, in terms of smarts, whatever it is, there always exist more dummies than smarts; there always exists more poor than rich, etc. The strategy under democratic systems is, of course, the redistribution of income. First of all, you don’t have to legitimize this anymore because after all, you are now operating no longer as somebody who defends the principle of private property; you are in favor of public property and consider public property to be superior to or more important than private property. Taking private property is no ideological problem for you, and then, of course, you distribute it not to individuals, but to the masses, and by and large, to the masses of have-nots, that is, the less capable people in all dimensions of capability.

Then I come to the argument that is frequently brought up in favor of democracy, that is, “Shouldn’t we, as free marketeers, be in favor of free entry? After all, this is what we learned in economics: monopoly is bad, from the point of view of consumers, because there is no longer free entry into every line of production. And if there is no longer free entry into every line of production, then the incentive of a producer to produce at the lowest possible cost is no longer in existence.” Imagine this: if there exists free entry in the free market, everybody can become a car manufacturer, for instance. Then, if I produce a car at a cost that is higher than the minimum possible cost of producing this car, I basically extend an invitation to somebody else to go into competition against me, to produce the same product at a lower cost than my cost and then be able, of course, to charge a lower price for the product and thereby drive me out of the market. On the other hand, if we have restrictions on free entry, then this pressure to produce at the lowest possible cost is no longer operative. This is the case that we make, normally, for why we are in favor of competition, meaning free entry into every line of production, and why we are against monopoly, meaning entrance into certain lines of production is either prohibited or obstacles are placed in the way of free entry, etc. The argument of some advocates of democracy goes, “Yeah, isn’t the same thing true here? If we have a king, meaning restricted entry, and with democracy, all of a sudden entry is open, and isn’t this a big advantage of democracy over monarchy?”

Now, the problem with this argument is this. The argument against monopoly in favor of competition that I presented before only holds insofar as we are considering the production of goods. The argument, however, does not hold if we consider the production of bads, and this is precisely what governments do. After all, people who are taxed do not willingly pay for the privilege of being taxed. That is to say, they are not considering being taxed to be a good. Those people who are, through legislative action, stripped of their property or robbed of part of their income, do not consider that to be a good thing that happens to them; they consider that to be a bad. People who see that the purchasing power of their money goes down as a result of paper money printing, do not consider this the production of goods; they consider that as the production of something bad. Now, do we want to have competition in the areas of the production of bads? The answer should be obvious: no. In the production of bads, we want to have as little competition as there can possibly be. We do not want to have competition as to who would be the most efficient commandant of a gas chamber. We would not want to have competition as to who would be the best whipper of slaves. There, we would be perfectly happy if that slave-whipping or gas chamber-commandant occupation would be very restricted and we would be quite happy if very incompetent people exercise this power, rather than looking for people who are particularly good at this.

Continuing this argument, you might say, “Kings, because they get into their position by accident of birth, can, of course, be evil guys, no question about it.” But, if they are evil guys and pose a danger that, through their activity, the possession of their dynasty—after all, they are head of a family—is threatened, then what typically happens is that one of their close relatives will be designated to make short shrift of this guy and chop off his head. That is, we have a way of getting rid of these people, and we don’t even have to worry too much about the general public taking care of this problem. It is within the family of those weird kings themselves where they have the greatest incentive either to surround these weirdos with advisors who curtail their evil desires, or if this doesn’t work, then have somebody hired out of their own family to kill this guy off.

On the other hand, if you come into the position by accident, it is also possible that these people can be nice and decent people, like nice uncles. They do not have to worry about being reelected. They have been by and large trained for a long time to be the future king or queen and to take care of the country. And believe me, I have met some members of royal houses; the upbringing of those people on the average tends to be an upbringing that most people would not like to suffer. That is to say, there is far more demanded of them in terms of decent good behavior than of the normal run-of-the-mill-type people. I’m glad that I’m not one of the offspring of a royal house. There is, in most of these places, relatively little fun in your life. In those monarchical families that have been deposed, they have frequently become playboys, because they have had no preparation for anything else. They just have affairs and gamble and do this and that, but in those places where there is still the expectation that they will get into the position, I tell you, there is discipline that you have never seen in your own house before.

Now look at democratic rulers and how they get to power. They have to be elected. And, it should be perfectly clear, that under this condition, that is, with free entry, everyone can become president, senator, etc.—and these people are in the business of doing bad things, being capable of doing bad things; we have a competition, “Who is the smartest bad guy? Who has the most demagogic talent? Who is a magnificent briber, liar, cheater and all the rest of it?” Under democratic conditions, especially on the central level, it is almost impossible that a decent person will ever be elected to a higher rank. This might not be the case in a small village. In a small village, there are still some sort of social constraints, as the biggest, smoothest liar and so forth might not win an election in a village of one hundred people where everybody knows what kind of jerk he is. But, go to higher levels, state level, federal level, etc., it is almost assured that a person who out of conviction, doesn’t lie, who says we should, of course, not rip off the rich in order to give to the poor, but we should protect private property rights under all circumstances, a person like this is as likely to be elected as that it will snow in the summer in Las Vegas.

I will just make a few more remarks. There is also far more resistance against raising taxes if you have monarchs in place because everybody sees, this is a monarch, I cannot be the monarch. I’m just a regular guy and why should he tax me? There will be resistance against being taxed because you realize you will never benefit from this sort of stuff. On the other hand, as soon as everybody has a chance to become president, senator, or whatever it is, you do not like being taxed as long as you are outside of government, but there is a consolation prize. The consolation prize may be that at one point I will be at the other end of all of this, and that makes me put up with the taxation more easily than I otherwise would. That’s another important argument. Again recall, kings that overdo it, they quickly lose their heads. Democrats, even if they are far more evil than kings ever would be, because you think, “Maybe in four years we can get rid of this guy, he will rarely be killed, and imagine how nice it would be if this institution of regicide would also be expanded to democraticide or something of that nature.”

I will end on some offside remarks. The first one explains how I developed these ideas about monarchy. The person who made me interested in this subject in the first place was Eric von Kuehnelt-Leddihn, with whom I was somewhat friends. He was, of course, far older than I am. Before that, like most people, I always thought, “Monarchy, what an idiotic thing to say. How can you even talk about this subject?” So, he convinced me that that was something worthwhile thinking about. I think he did not have nearly as convincing arguments as those I later developed. [Laughter] I’m not boasting, because he himself admitted that. He wrote a few articles before he died and in each one, he quotes me and says that I have, of course, developed this far further than he ever thought possible. So, it is not that I just boast about this.

The idea that I stumbled across first, from which I then developed this was, having observed that in the former Soviet Union, in contrast to most places on Earth, in the last two decades, life expectancies fell. Having traveled extensively in the Eastern Bloc because my parents came from East Germany and were exploited by the government there, and I have relatives there and visited these places, I always noticed the bad health conditions of these people, despite the fact that they had, of course, free healthcare. There, everything was free, except nothing was ever available of these allegedly free things. And I asked myself, “What could explain this? If life expectancy falls here but everywhere else it seems to be going up.” And another striking observation was the massive number of people that the Soviet Union killed and worked to death, even during peacetime.

And then it came upon me, there’s actually a very simple explanation for this and the explanation is simply this. There exist two types of slavery. There exists the old run-of-the-mill-type slavery that we are familiar with in the United States. You Americans are familiar with it and guilty; I, of course, am not. Germans have done other things, but not that. So, here you had private ownership of slaves. In the Soviet Union and in the Eastern Bloc countries, you also had a form of slavery, because slavery is characterized by two marks. On the one hand, you cannot run away. If you try to run away, and they catch you, they punish you or even kill you. And the second characteristic is that they can assign you to work. This they could do in the Soviet Union. You could not run away, they would shoot you dead if you tried to do this and of course you could not just hang around. If you were just hanging around, they would take you and put you to work someplace. But, the slaves in the Soviet Union were not privately owned slaves. That is, Lenin, Stalin, and Gorbachev and whomever, they could not sell these people in the slave market and pocket the money, or rent them out for a few hours and then finance their beers from the rental money that they got. No, they were just public owners or public caretakers of these slaves. They could exploit them to the hilt, but they did not own the capital in them. That is, they did not own the person. And once you realize this, then it is perfectly clear that a private slave owner who can sell the slave in the slave market, who can rent him out, who can pass him on to his son, will by and large treat his slave far more humanely than somebody who is a public slave owner, because the private slave owner realizes that if he mistreats a slave, the value of that slave will fall.

What private slave owner would, just for the joy of it, kill the slave? That is a very rare event. Just like a farmer doesn’t kill his horses and cows just for the fun of it. After all, they represent his capital goods! But in the Soviet Union, in those places where you had public slavery, this is precisely what happened. People did not take care of their slaves. Life expectancy fell. If these slaves dropped like flies, no problem, you had a fresh supply waiting just around the corner. If you were told that you must be a slave, that you can’t be a free man, what would you choose? Would you want to be a privately owned slave or would you want to be a gulag slave? And I think the answer is perfectly clear. I’d rather be a privately owned slave than a gulag slave. And when it comes to democracy and monarchy, the thing is basically the same. If you cannot be a free man, if you cannot have a natural order that respects private property, but you have to be ripped off by somebody, would you rather want to be ripped off by some dynasty of kings or by some randomly elected caretakers? And I think the answer to this question is also relatively clear.

And the last thing I want to do is, again, give you an example that I always give to my students and, based on their reaction, always find very instructive, explaining the effects of democracy. You know that during the twentieth century, the right to vote was extremely restricted. In many countries, it didn’t exist at all early in the nineteenth century, but then it was gradually expanded over time. First, of course, people only thought about male franchise. Females were considered to be just appendices of men, voting just like their husbands do. Unfortunately, they don’t do that anymore either.

And the interesting thing is, the country, for instance, that introduced the male franchise first, almost full male franchise, happened to be the country that gave the right to vote to women last, and that was Switzerland. And since that time, Switzerland is also in a very iffy condition. They were already in great danger before, but the danger has dramatically increased since that time. But, as you realize, of course, I have nothing against women at all. I’m a lover of women and I’m just in favor of nobody should have the right to vote. But in any case, in the nineteenth century, gradually the franchise was expanded and parallel to the expansion of the franchise, the classical liberal movement died out and social democratic and socialist parties came to power. Even those parties who called themselves liberal are no longer liberal in the previous classical sense. They have become social liberal parties.

And in order to illustrate this tendency, to make people understand this, as almost a necessary consequence of expanding the franchise, I always use two examples. The first example is, imagine we have a world democracy, one man, one woman, one vote, on a worldwide scale. What will the result of that be? There will be an Indian-Chinese coalition government, simply by virtue of numbers. What will this Indian-Chinese coalition government do, in order to be reelected in the next round? They will, of course, initiate a massive redistribution, an income and wealth redistribution program from the United States and Western Europe to those regions. Does anybody have the slightest doubt that that would be the result? I have not found any student in my classes who ever had the slightest doubt that that is what would happen. And then, you point out, “Look, what do you think happened when they expanded the franchise in your own country?” And then they begin to realize, oh, that’s probably exactly the same thing happened there too, maybe not as drastically because the population was more homogeneous, the difference between income levels were not as pronounced as they are now between India and the United States or places like this, but of course, the same thing has happened there.

And the second example is, in the nineteenth century, the age when people could vote was relatively high and by and large, they also had property restrictions. But, look just at the age. There were many places like Italy, where the age was twenty-nine years, in a country with a life expectancy of forty-five. So, only old men could vote in that place. That would be nowadays like only people above seventy-five years would be allowed to vote. And then the voting age was gradually reduced to its current level of eighteen. Now, we have to admit that eighteen is, of course, a completely arbitrary age. Why not twelve? In many places of the world, people can write at age twelve. In the United States, that is not always clear, but many places, it is known of people that they are able to write. So, why not twelve? Now, what would then happen? I would not predict that a twelve-year-old would then be elected president or something like this, but what you can predict is, of course, that every political party would have something on their platform about the legitimate concerns and rights of the children. Just as we are nowadays greatly concerned about the elderly, that we treat them right because we know they have the most time on their hands and tend to go and schlep out to these elections, whereas other people sometimes have to work and can’t go. We would then be greatly concerned about their well-being and what would these platforms then likely contain? At least one visit to Toys “R” Us per month, free videos from Blockbuster, as many as you want, at least one square meal at McDonald’s, or Burger King per day and a Big Gulp for every kid at all times.