"POLITICAL POWER. All political power is inherent in the people, and governments derive their just powers from the consent of the governed, and are established to protect and maintain individual rights."
Well, that was the ideal once upon a time in America, even when the constitutional convention of Washington State adopted this language in 1889.
A "modern" (and ancient) version better matching contemporary practice might read:
"POLITICAL POWER. All political power is inherent in the government, and the people derive their permitted rights from the consent of the government, and exist to protect and maintain state prerogatives."
How many are left out there who like the old one better? If not enough, we're all going to be stuck with the new (and ancient) version.
They used to call it tyranny, but I guess that was back when people used to learn history.
Wednesday, November 26, 2008
Thursday, November 20, 2008
A formula to help with the "Inevitable Question"
A blog post I took note of the other day over at NoThirdSolution, and elements from a recent conversation with my German teacher congealed into one formula that may help avoid pitfalls for those of us who sometimes face what I will call the Inevitable Question: “(But) How would the purely free market society handle X?”
The post
The post cited argued that the New Orleans/Katrina fiasco was a result of government intervention. Thus, to the question, “how would the purely free market society handle X?”—X being the flooding of New Orleans—a simple answer would be that no city would likely have been built in a known recurring flood zone without extensive and systematic government subsidization and encouragement. The fact that the city was there and not somewhere else safer may well already have been a creature of government subsidies, regulations (badly distorting the operation of the insurance market), and make-work programs (Army Corp of Engineers building the dikes, etc.).
Thus, the answer to the question, “How would the free market have built those dikes?” may well be, “only a government would have been stupid enough to waste resources on building those dikes and encouraging the growth of a city in a known flood zone.”
One lesson from this hypothetical little interchange is that there is not always a need to struggle to come up with a creative free market scheme for building useless or dangerous structures of the kind that the state might build.
The conversation
The second input to my thought process was a conversation with my German teacher in which the concept of a statefree political philosophy came up in response to a question about my preference for US president (none). She struggled for a moment (since I usually seem like a reasonable sort of fellow) to mentally frame what I had said until her mind hit upon the conventional strawman terms in which we are all taught to consider and dismiss this possibility: “you mean you don’t think there should be any rules.”
I noticed later that even this summation can be easily translated into the form of the Inevitable Question: “How would the purely free market society handle X?” with X in this case being a strawman situation in which there are no rules or enforcement mechanisms in a society: in other words, Hobbesian anarchy, the war of all against all. This meme operates in conventional discourse to immediately and irrefutably discredit the statefree position.
But Hobbesian anarchy is, of course, the exact opposite of the position of advocates of statefree civilization. Advocates of a free civil society argue instead in favor of a small set of very crucial basic rules, for their consistent enforcement, and for their equal application to all human beings.
The state as we know it exempts itself from such consistent rules when it taxes, hands out favors and special privileges, wages war, and so forth, and the result of this is a great deal of unpredictability, chaos, and destruction of life and wealth. Indeed, from this perspective, Hobbesian anarchy may approach a fair description not of a statefree civilization, but of states themselves in action, their employees only modestly checked by a modicum of justice and the rule of law.
Spotting the trick in the Inevitable Question
The first thing to realize about the Inevitable Question is that it presents a stacked deck. This is because X is almost invariably a serious problem, but it is most often a problem that is created by the activities or existence of the state itself. Thus, the Inevitable Question can seem useful in one sense, but in another sense can be dangerously misleading and may even be inherently nonsensical.
At some point during an often long study of history, economics, law, and other disciplines, after wading through endless swamps of misleading history, fanciful economic theories, false conventional wisdom and plain-old propaganda, some of us have eventually reached the stage of advocating shrinking the state, building civil institutions, and moving toward a civilization that is free of the proven and inevitable corruption, interference, and disruptions of the state.
Why? Because, among other reasons, the state creates unending problems in society, such as X.
Thus, one productive approach to the Inevitable Question might well take a general form like this:
“The purely free market would handle X by being the purely free market, in which case X would not be a problem, because X is a problem that is caused by the poisonous influence of the state. This is, in fact, among the very reasons we advocate the purely free market. Thus, a statefree civilization would not have to handle X, by definition. That’s why we recommend it.”
After trying out this formula with a few sample values for X: war, business cycles, inflation, homelessness, unemployment, lack of education, and a surprisingly long list of other possibilities, it seems that it might come in handy in many cases. It might help keep advocates of consistent justice in society from spending valuable time inadvertently defending negative effects of the state that we do not really wish to defend.
Most importantly, it might help keep us from trying in vain to construct ingenious methods by which a purely free market society might successfully build massive and idiotic monuments to the state. Indeed, most of us would probably just say let's skip those.
The post
The post cited argued that the New Orleans/Katrina fiasco was a result of government intervention. Thus, to the question, “how would the purely free market society handle X?”—X being the flooding of New Orleans—a simple answer would be that no city would likely have been built in a known recurring flood zone without extensive and systematic government subsidization and encouragement. The fact that the city was there and not somewhere else safer may well already have been a creature of government subsidies, regulations (badly distorting the operation of the insurance market), and make-work programs (Army Corp of Engineers building the dikes, etc.).
Thus, the answer to the question, “How would the free market have built those dikes?” may well be, “only a government would have been stupid enough to waste resources on building those dikes and encouraging the growth of a city in a known flood zone.”
One lesson from this hypothetical little interchange is that there is not always a need to struggle to come up with a creative free market scheme for building useless or dangerous structures of the kind that the state might build.
The conversation
The second input to my thought process was a conversation with my German teacher in which the concept of a statefree political philosophy came up in response to a question about my preference for US president (none). She struggled for a moment (since I usually seem like a reasonable sort of fellow) to mentally frame what I had said until her mind hit upon the conventional strawman terms in which we are all taught to consider and dismiss this possibility: “you mean you don’t think there should be any rules.”
I noticed later that even this summation can be easily translated into the form of the Inevitable Question: “How would the purely free market society handle X?” with X in this case being a strawman situation in which there are no rules or enforcement mechanisms in a society: in other words, Hobbesian anarchy, the war of all against all. This meme operates in conventional discourse to immediately and irrefutably discredit the statefree position.
But Hobbesian anarchy is, of course, the exact opposite of the position of advocates of statefree civilization. Advocates of a free civil society argue instead in favor of a small set of very crucial basic rules, for their consistent enforcement, and for their equal application to all human beings.
The state as we know it exempts itself from such consistent rules when it taxes, hands out favors and special privileges, wages war, and so forth, and the result of this is a great deal of unpredictability, chaos, and destruction of life and wealth. Indeed, from this perspective, Hobbesian anarchy may approach a fair description not of a statefree civilization, but of states themselves in action, their employees only modestly checked by a modicum of justice and the rule of law.
Spotting the trick in the Inevitable Question
The first thing to realize about the Inevitable Question is that it presents a stacked deck. This is because X is almost invariably a serious problem, but it is most often a problem that is created by the activities or existence of the state itself. Thus, the Inevitable Question can seem useful in one sense, but in another sense can be dangerously misleading and may even be inherently nonsensical.
At some point during an often long study of history, economics, law, and other disciplines, after wading through endless swamps of misleading history, fanciful economic theories, false conventional wisdom and plain-old propaganda, some of us have eventually reached the stage of advocating shrinking the state, building civil institutions, and moving toward a civilization that is free of the proven and inevitable corruption, interference, and disruptions of the state.
Why? Because, among other reasons, the state creates unending problems in society, such as X.
Thus, one productive approach to the Inevitable Question might well take a general form like this:
“The purely free market would handle X by being the purely free market, in which case X would not be a problem, because X is a problem that is caused by the poisonous influence of the state. This is, in fact, among the very reasons we advocate the purely free market. Thus, a statefree civilization would not have to handle X, by definition. That’s why we recommend it.”
After trying out this formula with a few sample values for X: war, business cycles, inflation, homelessness, unemployment, lack of education, and a surprisingly long list of other possibilities, it seems that it might come in handy in many cases. It might help keep advocates of consistent justice in society from spending valuable time inadvertently defending negative effects of the state that we do not really wish to defend.
Most importantly, it might help keep us from trying in vain to construct ingenious methods by which a purely free market society might successfully build massive and idiotic monuments to the state. Indeed, most of us would probably just say let's skip those.
The perfect crime is the one not detected
Orson Scott Card, in his open letter Would the Last Honest Reporter Please Turn On the Lights? argues that the Community Reinvestment Act and Fannie and Freddie's antics were responsible for the financial crisis due to Democratic party policies.
Card is correct that the deleterious effects of forced and subsidized lending practices helped set up the sub-prime bubble. Unfortunately, the fundamental problem is much broader, much worse, and lies elsewhere. Indeed, it lies well beyond any issues about which Republicans and Democrats differ. The Big Government parties (available in an exciting selection of Blue and Red colors) are united on being unwilling or unable to say a single word about this larger issue.
To place the effect of the CRA in this larger perspective, it may be helpful to imagine the process of overinflating a balloon. The CRA created a weakness at a particular spot on the latex surface of the balloon. When the balloon popped, it naturally popped starting at the weakest point, after which the air proceeded to rush out altogether, deforming the entire balloon.
However, we would not expect the balloon, in the process of being overinflated, to have not popped if only the weakest point on its latex surface had happened to be somewhere else. We would expect it to pop perhaps half a second later, starting in a different place. This is not to advocate or excuse the unending list of nonsensical policies, such as the CRA, that weaken the surface of the balloon, it is rather to argue that the overinflation of the balloon is arguably worse than each and all of these lesser destructive policies.
What few but the Austrian school economists and the Ron Paul movement are currently addressing is the fact that the balloon is quite unlikely to pop at all unless it is being overinflated.
The air pump in this case consists of the fractional reserve banking system pyramiding on top of ever-expanding fiat currency and electronic "deposits" (of nothing) created on central bank computers. The underlying process has, in one form or another, been going on for centuries, becoming ever more refined, effortless, massive, and destructive up to the present day. It exists and persists for a very simple reason. It is the usual reason: the use of state power to channel money. But how does it work and in what direction does the money flow?
The government provides special exemptions to the ordinary rule of law for banks. This allows banks to simultaneously lend out the exact same money that they are supposed to be "safekeeping" on deposit, a form of fraud. Indeed, most of that "money in the bank" that people are lulled into feeling that they have, is not actually in the bank. In return for this special legal treatment of banks, the government, its best friends, and the banks themselves are the first beneficiaries of the new money and loans thus generated fraudulently out of thin air.
The classic question to ask about a policy system such as this is who benefits? Most of the early forms of such fraudulent loans of other people's money went straight from banks to the king for his wars, or to the city for its expanding budget. Of course, the system has come a long way since then.
Today, this process operates as a massive hidden tax that extracts wealth from all the people to whom this money and its effects "trickle down" only late in the process, after the general price level has already been lifted.
In understanding this racket, it is important to realize that creating money out of thin air lifts the price level artificially, but this is a process that takes time, extending out over several months or years. During this period, those who get the money first can spend it before the general price level has been lifted—in other words, when the money still buys more goods and services. Those who get the money later, can only spend it after the general price level has already been lifted—by which time it doesn't buy as much. This is a massive scheme to transfer wealth:
Indeed, a more perfect criminal scheme has never been devised. It is insanely profitable, its victims are unaware of the source of their losses, and the state not only calls it all legal, but is itself at the top of the pyramid, the biggest player in the game.
It makes for fascinating reading, and once you know about it, perhaps also a certain degree of responsibility to learn more and spread the word. The first step is to find out more.
Books:
1. (Shorter, introductory): The Mystery of Banking (pdf), 2nd ed. by Murray N. Rothbard
Or order a physical copy.
2. (Longer, more detailed): Money, Bank Credit, and Economic Cycles (pdf) by Jesus Huerta de Soto
Or order a physical copy.
Card is correct that the deleterious effects of forced and subsidized lending practices helped set up the sub-prime bubble. Unfortunately, the fundamental problem is much broader, much worse, and lies elsewhere. Indeed, it lies well beyond any issues about which Republicans and Democrats differ. The Big Government parties (available in an exciting selection of Blue and Red colors) are united on being unwilling or unable to say a single word about this larger issue.
To place the effect of the CRA in this larger perspective, it may be helpful to imagine the process of overinflating a balloon. The CRA created a weakness at a particular spot on the latex surface of the balloon. When the balloon popped, it naturally popped starting at the weakest point, after which the air proceeded to rush out altogether, deforming the entire balloon.
However, we would not expect the balloon, in the process of being overinflated, to have not popped if only the weakest point on its latex surface had happened to be somewhere else. We would expect it to pop perhaps half a second later, starting in a different place. This is not to advocate or excuse the unending list of nonsensical policies, such as the CRA, that weaken the surface of the balloon, it is rather to argue that the overinflation of the balloon is arguably worse than each and all of these lesser destructive policies.
What few but the Austrian school economists and the Ron Paul movement are currently addressing is the fact that the balloon is quite unlikely to pop at all unless it is being overinflated.
The air pump in this case consists of the fractional reserve banking system pyramiding on top of ever-expanding fiat currency and electronic "deposits" (of nothing) created on central bank computers. The underlying process has, in one form or another, been going on for centuries, becoming ever more refined, effortless, massive, and destructive up to the present day. It exists and persists for a very simple reason. It is the usual reason: the use of state power to channel money. But how does it work and in what direction does the money flow?
The government provides special exemptions to the ordinary rule of law for banks. This allows banks to simultaneously lend out the exact same money that they are supposed to be "safekeeping" on deposit, a form of fraud. Indeed, most of that "money in the bank" that people are lulled into feeling that they have, is not actually in the bank. In return for this special legal treatment of banks, the government, its best friends, and the banks themselves are the first beneficiaries of the new money and loans thus generated fraudulently out of thin air.
The classic question to ask about a policy system such as this is who benefits? Most of the early forms of such fraudulent loans of other people's money went straight from banks to the king for his wars, or to the city for its expanding budget. Of course, the system has come a long way since then.
Today, this process operates as a massive hidden tax that extracts wealth from all the people to whom this money and its effects "trickle down" only late in the process, after the general price level has already been lifted.
In understanding this racket, it is important to realize that creating money out of thin air lifts the price level artificially, but this is a process that takes time, extending out over several months or years. During this period, those who get the money first can spend it before the general price level has been lifted—in other words, when the money still buys more goods and services. Those who get the money later, can only spend it after the general price level has already been lifted—by which time it doesn't buy as much. This is a massive scheme to transfer wealth:
- From the poor, the retired and others on fixed incomes, savers, and those who work in industries farthest removed from government expenditures.
- To bankers, government employees, debtors, government contractors of all kinds, and any other industries and operations (don't forget universities) that are relatively close to the sources of government expenditures and new money creation.
Indeed, a more perfect criminal scheme has never been devised. It is insanely profitable, its victims are unaware of the source of their losses, and the state not only calls it all legal, but is itself at the top of the pyramid, the biggest player in the game.
It makes for fascinating reading, and once you know about it, perhaps also a certain degree of responsibility to learn more and spread the word. The first step is to find out more.
Books:
1. (Shorter, introductory): The Mystery of Banking (pdf), 2nd ed. by Murray N. Rothbard
Or order a physical copy.
2. (Longer, more detailed): Money, Bank Credit, and Economic Cycles (pdf) by Jesus Huerta de Soto
Or order a physical copy.
Wednesday, November 5, 2008
1% for Obama; 100% for Brother
Mr. Obama received 63mn votes, which would have been roughly similar for whatever candidate might have won. Is this a mandate?
US President is "the most important job in the world," said a Bloomberg article announcing the election result. The office surely does impact the entire world.
One problem with that is that it defies the job description utterly. I mean the original job description in the Constitution, the document that legally created the office of President. As the Founders roll over in their graves, the decisions of US Presidents impact the entire world, particularly those portions of it that, at any given time in recent history, no matter which party is in power, find US-launched or sponsored violent destruction raining down.
But how about the significance of those voting numbers? As I have been suggesting above, it all depends on your perspective. For example, the voting-age citizen population of the US is about 200mn. Therefore, about 68.5% of this group did not vote for the next US President; just 31.5% did. Indeed, only 20.6% of the entire population of the United States (305.5mn) voted for Mr. Obama. Thus, 79.4% of the US population did not, either by choice or by exclusion. Is the next President according to such a process their President? What power should he have over them, to make decisions on their behalf, to spend their resources and even lives?
And looking further afield, the global population is 6,734.9mn. This means that a scant 0.94% of people voted for the next occupant of this office.
Though I find political voting highly problematic ethically, I did vote yesterday too, in a way. The campaigning by many, many great candidates had been intense. But in the end, on economic voting day, the day of decision, the result was unanimous, as usual. What I voted for, incidentally, was a Brother HL-5280DW monochrome printer for my office.
One vote in favor; none against. 100%. As it should be.
US President is "the most important job in the world," said a Bloomberg article announcing the election result. The office surely does impact the entire world.
One problem with that is that it defies the job description utterly. I mean the original job description in the Constitution, the document that legally created the office of President. As the Founders roll over in their graves, the decisions of US Presidents impact the entire world, particularly those portions of it that, at any given time in recent history, no matter which party is in power, find US-launched or sponsored violent destruction raining down.
But how about the significance of those voting numbers? As I have been suggesting above, it all depends on your perspective. For example, the voting-age citizen population of the US is about 200mn. Therefore, about 68.5% of this group did not vote for the next US President; just 31.5% did. Indeed, only 20.6% of the entire population of the United States (305.5mn) voted for Mr. Obama. Thus, 79.4% of the US population did not, either by choice or by exclusion. Is the next President according to such a process their President? What power should he have over them, to make decisions on their behalf, to spend their resources and even lives?
And looking further afield, the global population is 6,734.9mn. This means that a scant 0.94% of people voted for the next occupant of this office.
Though I find political voting highly problematic ethically, I did vote yesterday too, in a way. The campaigning by many, many great candidates had been intense. But in the end, on economic voting day, the day of decision, the result was unanimous, as usual. What I voted for, incidentally, was a Brother HL-5280DW monochrome printer for my office.
One vote in favor; none against. 100%. As it should be.
Subscribe to:
Posts (Atom)
