Defending the Judeo-Christian Ethic, Limited Government, & the American Constitution
Wednesday July 30th 2014

Self-Educated Man

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Federalist 58 by James Madison. 1. Under the proposed Constitution whose interests were represented by the U.S. Senate? Is it so today? If not, how might it be remedied & by what means? 2. How did the Constitution provide for updating representation in Congress? 3. Madison credits the U.S Constitution with assigning the greatest power, that of the “purse strings” to the U.S. House. In your opinion, how might the House assert that power to reduce the size & cost of government today? 4. Explain in your own words Madison’s warning against too many men serving in the House. How might his warning be applied today as calls abound for a more direct democracy & for scrapping the electoral college system? 5. Is democracy the form of government our Founders gave us or was it a republican form? Explain the difference.


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Is Serfdom an Executive Order Away?

Sheldon Richman, The Freeman

Sometimes a step back helps to provide perspective on a matter. President Obama provided such a step with his March 16 Executive Order—National Defense Resources Preparedness. In it we see in detail how completely the government may control our lives—euphemistically called the “industrial and technological base”—if the president were to declare a national emergency. It is instructive, if tedious, reading.

President Obama claims this authority under the Constitution and, vaguely, “the laws of the United States,” but it specifically names the Defense Production Act of 1950. As Robert Higgs of the Independent Institute and a Freeman columnist observed, the government’s authority to commandeer the economy, which was “abandoned” after World War II then substantially reinstated with the Korean War,

was retained afterward in the form of statutory authority for its reinstatement whenever the president might so order under the authority of the Defense Production Act of 1950, as amended. . . . Under this statute, the president has lawful authority to control virtually the whole of the U.S. economy whenever he chooses to do so and states that the national defense requires such a government takeover.

No Academic Exercise

The Executive Order, which requires no additional congressional approval, details who within the executive branch has what precise authority in the event the President invokes his emergency powers. We shouldn’t assume this is merely an academic exercise or that a third world war would need to break out. In the last decade, under circumstances representing no “existential threat” to our society, the executive branch has exercised extraordinary powers.

Reading the Executive Order, I was reminded of a quotation of Leonard Read’s (HT: Gary Chartier): “[A]nyone who even presumes an interest in economic affairs cannot let the subject of war, or the moral breakdown which underlies it, go untouched. To do so would be as absurd—indeed, as dishonest—as a cleric to avoid the Commandment, ‘Thou shalt not steal’ simply because his parishioners had legalized and were practicing theft.”

In other words, if one holds that a free economy is essential to human flourishing, one must look with alarm on the comprehensive power government’s chief executive claims in the event he (or she) declares an emergency.

Assessing Capabilities

Let’s go to the Executive Order. It begins by authorizing executive-branch officers to “assess on an ongoing basis the capability of the domestic industrial and technological base to satisfy requirements in peacetime [!] and times of national emergency, specifically evaluating the availability of the most critical resource and production sources, including subcontractors and suppliers, materials, skilled labor, and professional and technical personnel.”

But these officials are to do more than assess. They are to be prepared to “ensure the availability of adequate resources and production capability,” to “improve the efficiency and responsiveness of the domestic industrial base to support national defense requirements,” and to “foster cooperation between the defense and commercial sectors….”

That’s broad authority.

Further, the President’s order notes his authority to “require acceptance and priority performance of contracts or orders (other than contracts of employment) to promote the national defense over performance of any other contracts or orders, and to allocate materials, services, and facilities as deemed necessary or appropriate to promote the national defense” (emphasis added).

That is, the government’s executive branch is first in line for whatever it wants (except civilian labor–perhaps).

Government Loans

Under the section titled “EXPANSION OF PRODUCTIVE CAPACITY AND SUPPLY,” the heads of agencies engaged in procurement are authorized to “guarantee loans by private institutions,” “make loans,” and “make provision for purchases of, or commitments to purchase, an industrial resource or a critical technology item for Government use or resale, and to make provision for the development of production capabilities, and for the increased use of emerging technologies in security program applications, and to enable rapid transition of emerging technologies.”

Think of the potential for corporatist rent-seeking.

There’s more. The power to pay direct subsidies (after consultation) is delegated to agency heads to “ensure the supply of raw or nonprocessed materials from high cost sources, or to ensure maximum production or supply in any area at stable prices of any materials in light of a temporary increase in transportation cost.”

The agencies are also authorized to “procure and install additional equipment, facilities, processes, or improvements to plants, factories, and other industrial facilities owned by the Federal Government and to procure and install Government owned equipment in plants, factories, or other industrial facilities owned by private persons” (emphasis added). Further, they are empowered to “provide for the modification or expansion of privately owned facilities” (emphasis added).

Selective Service

In the section on personnel we learn that the secretary of labor shall “collect and maintain data necessary to make a continuing appraisal of the Nation’s workforce needs for purposes of national defense” and upon request by the Director of Selective Service, and in coordination with the Secretary of Defense, assist the Director of Selective Service in development of policies regulating the induction and deferment of persons for duty in the armed services.”

Maybe the government is making a first claim on all labor after all. Selective Service of course is the government agency that would oversee a military draft. We haven’t had a draft since the 1970s, but 18-year-olds are still required to register for it. So along with the commandeering of private resources in the event a president declares an emergency, there will be the commandeering of military (and other?) labor–slavery by another name. (Here you’ll find the old FEE pamphlet “The Conscription Idea” by Dean Russell.)

Advocates of the freedom philosophy have a dual concern: that the executive has virtually unchecked authority to declare an emergency and that in an emergency the private economy would be commandeered by government officers. The Executive Order is a breathtaking reminder that, as Higgs put it, “private control of economic life in the United States, to the extent that it survives, exists solely at the president’s pleasure and sufferance.”


Sheldon Richman is the editor of The Freeman and TheFreemanOnline.org, and a contributor to The Concise Encyclopedia of Economics. He is the author of Separating School and State: How to Liberate America’s Families.


Copyright © 2012 Foundation for Economic Education. Used with permission.