Money and Honor

James Madison observed that liberty is lost more often through gradual encroachments than through sudden revolutions. This is also known as the boiling-frog principle: if the water heats slowly, they say, the frog doesn’t notice the fatal increase and fails to jump out in time.

I don’t know about frogs, but I keep an eye on people, and I’ve concluded that they’ll put up with anything if they can get used to it by slow degrees until they’re convinced it’s the way things have always been. We’ve long since passed the point our ancestors would have recognized as the dividing line between liberty and tyranny.

The first income tax imposed in this country, during the Civil War, caused outrage and was eventually declared unconstitutional by the U.S. Supreme Court. The rate was 3 per cent on all income between $600 and $10,000; those tycoons making more than $10,000 paid 5 per cent. The federal government justified this crushing tax on grounds of a pressing national emergency, but it was hated anyway. Americans saw it as an act of tyranny, a dangerous first step toward the loss of all their freedom.

Today, if a president could get tax rates down to the 3-to-5 per cent range, he would be a hero to taxpayers. They would probably honor him as the Great Emancipator.

Not that any modern president would harbor any such utopian goal as restoring the tax rates of yore. Liberals attack President Bush as irresponsible for seeking to limit the top tax rate to 33 per cent.

One reason Americans have such poor historical memories is that they are systematically cut off from their past by their own money. The government has debased its own currency so badly that comparisons with the past are difficult.

Today a $10,000 income makes you a poor man. A century ago it would have meant that you were rich. Even when I was a young man, $10,000 was still a very good annual income. By the time I was making that kind of money, it was just enough to live on, but I still paid tax on it at rates that had been designed to soak the rich.

A state without justice, St. Augustine said, is nothing but a band of robbers. In this country there is no longer a pretense of justice about it. The government’s chief function is extorting money from us and giving it to others. It has the power to do with impunity what private persons would go to prison for doing. It is, literally, organized crime.

But the frog still doesn’t notice the rising temperature. Our ancestors thought diluting the currency was one of the foulest things a government could do. That was what counterfeiters did: robbery of the general population through bogus increases in the money supply. The U.S. Constitution not only charged the federal government with preserving the value of money, but specifically authorized it to punish counterfeiting.

Today that selfsame government effectively counterfeits its own money. And it does so on a scale no private counterfeiter could ever match. But do we protest? No. We take inflation for granted, as a normal and inevitable fact of economic life, with no moral or criminal dimension.

Once upon a time, a dollar was a dollar: not a piece of paper, but a fixed amount of precious metal. It was hard to fake. The federal government was authorized to “coin” it, not “print” it. Paper money, or “bills of credit,” was suspect; it had to be strictly tied to metal, for the general safety of society. The government’s honor was staked to the stable value of its money.

A government that, over time, reduced the value of its own money to a small fraction of its original value, as ours has done, would be regarded as criminal, tyrannical, and also incompetent. But we’re not complaining. We don’t even remember that things were ever any different. We can’t even imagine a government behaving honorably. The very concept of honor is equally unfamiliar to politicians and to government experts.

But I’d like to close on a positive note. So let me record my grateful acknowledgment that this government has never quartered a single soldier in my home. Whatever can be said about the rest of the Constitution, the Third Amendment is alive and well.

Joseph Sobran