Thursday, December 17, 2009

Labor/Capital Mix and Pest Control

One thing I've noticed in my chosen profession is that there is a tension between the interest in doing a thorough, professional job, and an interest in keeping costs down. I'm in the Pest Control industry.

I go to these educational meetings and learn all these things our technicians are supposed to be doing for their customers: taking time to talk with the customer, dusting voids, inspecting for harborages, moisture conditions, and other conducive conditions. We're supposed to use our chemical solutions (hereafter referred to as "products") sparingly, only in those places where it is deemed necessary. Doing this takes time.

But then you've got these bean counters who are less interested in getting the job done right and more interested in how many accounts they get to bill relative to how much labor they're having to pay for. These people either don't know much about how pest control is supposed to be done, or they just don't care. Finally, these bean counters wield considerable power in this, as every every industry. Yes, even the Pest Control Industry could serve as inspiration for Dilbert comics. So the technician who takes his time to get the job done right gets a talking to, and is actively compared to those technicians who are able to do fifteen to twenty jobs a day. That's no more than a half hour per job, including drive time. That's barely enough time to quickly spray the perimeter. So that's all that ever gets done, unless the customer actively demands more.

It got me thinking, as I woke up this morning, about decisions businesspeople make with regard to labor/capital mix. The accountants in the industry, given the choice between more labor less capital (taking the time while reducing product use), and more capital less labor (general broadcast treatments that use more product but take less time), the outcome of the wrangling over time and professionalism is a preference for more capital. This may be because it is more efficient. But I also note that the government taxes labor (income and payroll taxes) at a higher rate than they do capital (capital gains, sales, etc.). This will definitely have some effect on the decisions people make with regard to the use of man hours vs. the use of materials.

So the solution to me seems simple: tax labor and capital at the same rate... preferably zero. This removes the government's stimulus to prefer capital use over labor, making a great number of industries less consumptive (without penalizing the many, many cases where more capital actually means more productivity). And I'm not saying no taxes at all: this is just another strike in favor of the Single Tax, which I have discussed at great length in other entries. Tax labor and people tend to use less labor, resulting in unemployment. Tax capital and people tend to use less capital, resulting in lower labor productivity and reducing opportunities in capital goods producing industries. Tax land, and people tend to use less land... and since land is the one thing people can't just make more of, that's the only way to make more land available for more uses, thus actually improving productivity.

Tuesday, December 15, 2009

Conflict Within, Harmony Between

I've been reading Samuel P. Huntington's The Clash of Civilizations and the Remaking of the World Order. Huntington noted something he considered peculiar about American society in regard to "goodness" or "badness" in international relations: an assumption that friendly international relations are always desirable, and that hostile relations are always undesirable. He contrasted this with the American commitment to competition within American society, that Americans "endorse competition in American society between opinions, groups, parties, branches of government, businesses." (Huntington pg. 221) He wonders why Americans believe conflict within our society is good, but conflict between societies is bad, and speculates that nobody has seriously studied the question.

Off the top of my head it occurs to me that when conflict occurs within established forums or mediums for conflict, the conflict tends to shake out the best ideas and solutions to problems, while resulting in minimal collateral damage. Conflict between competing businesses encourages both businesses to do their best work, while the framework of law prevents destructive forms of conflict. Conflict between ideas occurs as debate and stimulates a vigorous exploration of the ideas under question, while laws and norms prevent the conflict from becoming physically destructive. Conflict between branches of government prevents any one of them from becoming overly powerful, restricting government action to only those things the involved parties can agree are necessary, desirable, or lawful. Even warfare within a cultural group has rules of engagement, ensuring that there is still something left when the victor wins the war.

Between cultural groups, however, laws and norms are not yet developed. As a result, conflict is much more likely to degenerate into total warfare. Tactics which are acceptable to one group are offensive to another group, provoking an equally offensive response. Neither side understands the other's rules of engagement. In debate one man's rebuttal is another man's personal insult. In business one man's clever strategem is another man's unfair practice. And in warfare one man's fair engagement is another man's unforgivable atrocity or abomination.

Conflict that occurs within a cultural paradigm is more likely to be a striving in good works. Conflict that occurs between cultural paradigms is more likely to be nothing but destruction and death. As such, what Huntington describe's as the American preference for conflict within nations, and harmony between nations, makes sense to me.

Thursday, December 03, 2009

Read The Bills Act

The following is just a little something I sent to my representative and senators via Downsize DC's Read The Bills Act Campaign. This is basically Downsize DC's "signature" campaign, the primary issue they'd like to get addressed.

Congress needs to start reading the laws it passes. Please introduce's "Read the Bills Act." I know you have the power to introduce this legislation on your own, without waiting for anyone else. I urge you to do so. This is a much-needed, common sense reform. I can see no justification for not introducing it. I'm telling my friends about it, and I look forward to hearing that you've introduced it. You can find the text of the legislation here:

An analogy: How limiting the flow can actually induce better results.

I have a friend who works in the intelligence community. We are all aware of the controversy over attempts by the previous administration to cast an unconstitutionally wide information gathering net. One might think this is done to make the intelligence community's job easier. But what I hear from the professionals, both those publishing articles on the subject as well as my friend, is that a bloat of untargeted information actually makes their job harder, absorbing resources to analyze all this extra, often irrelevant data that could be used analyzing more important data. Constitutional procedure that limits their ability to collect information, forcing them to prioritize and improving the quality of the information acquired.

In a similar fashion, the "Read The Bills Act" could end up forcing leadership and committees to prioritize in the introduction of legislation. It would definitely encourage brevity of language, making it more difficult to hide abuses of the process by special interest groups. By slowing the process by which bills come to the floor and get voted, it could actually make your job considerably easier. I can think of no reason why the RTBA could be a bad idea.

Sunday, November 22, 2009

If We Audit the Fed, What Next?

I just wrote a letter to my Congressional representatives (Representative Ruppersberger and Senators Mikulski and Cardin) I thought I'd share with you. I had just read an article by Scott Lanman over at ( linked it) about the progress of Ron Paul's "Audit the Fed" act. Reported were concerns of the bill's opponents about the impact such a bill would have on the political independence of the Federal Reserve, and that on the public's confidence in the Dollar. I thought this a good time to write a letter via Downsize DC's "End the Inflation Tax" campaign. The following is what I wrote:

In the last Congress Rep. Ron Paul introduced three bills that would conquer inflation. Please do all you can to wrap the "Honest Money Act," the "Free Competition in Currency Act," and the "Tax-Free Gold Act," into one bill, and get it introduced.

I just read an article on by Scott Lanman, "Fed Audit Shield Takes Blow After Ron Paul Proposal Advances", which reminded me of the need to indicate that should Ron Paul's "Audit the Fed" actually pass (yes, I would like to see that), neither that, nor reaction to the revelations about the Fed's role in promoting inflation on behalf of wealthy interests, should be construed as a desire for political control over the money supply. I do agree, that if there is a central bank, that central bank should be politically independent. However, I also believe that a central bank is both undesirable and unnecessary: central banking controls inflation not to eliminate it, but rather to limit it to a controlled fleecing of the public. It is a tax, but it is a highly regressive tax.

That's not to say that ending the Fed outright, as some in the community I associate myself with would have it, is the end goal here. A money issuing agency is a necessary component of a modern economy; having every store have their own assayer for gold and silver would probably be sufficiently inefficient as to drive down productivity. No, the Fed should stay... but they should also have competition. Competition could come in the form of foreign currencies held as a hedge against inflation and occasionally circulated in some places (such as border and seaboard areas), or privately issued company scrip, or privately produced circulable gold and silver coin, or anything else a group of people could find themselves using as a medium of exchange. Some of these things are already done to a limited degree, but most of these things, particularly circulation of gold and silver coin of ANY design (this is not a counterfeiting issue), are technically illegal, and therefore cannot currently serve a competitive role.

I doubt these things could knock down the Dollar's role even as international reserve currency, let alone domestic unit of account, any more than Federal Express and others were able to replace the United States Postal Service. But marginal, niche based competition provides a greater impetus for discipline than all the political oversight committees in the world. The Fed already competes with foreign currencies, gold and silver on an international stage. I think domestic competition could strengthen the dollar even more, making its role on the world stage, extremely important to the long term value of the dollar, virtually unassailable.

Laman's article stressed the role of perception in monetary strength. This is, of course, true in the short term. But all the lies in the world cannot overturn the underlying fundamentals in the long term; market discovery processes can be slowed, but not stopped. A well perceived currency with bad fundamentals will fall in the long run, betraying the trust of those who believed in the image presented. A poorly perceived currency with good fundamentals will perform well in the long run, rewarding those who were able to look past the hype and see the truth of the matter. Shall our monetary system be a duper of fools? Or shall it reward the prudent? If this is anything more than a rhetorical question for you... well, that's about what I'd expect from a politician. So surprise me.

Just thought I'd share.

Friday, October 09, 2009

The "Read the Bills" Debate

For those of you who don't know, there is currently a debate going about whether or not Congressmen should be expected to have read and understood the bills they vote in favor of. One argument against is the notion that government would "come to a standstill" if such a requirement were made.

Why? It is my understanding that the day-to-day functioning of government, the execution of the government's duties, is carried out by the executive branch. That is to say, the President, not Congress. The job of Congress is to tell the President precisely what his job is. In the absence of input from Congress, the executive branch is perfectly capable of continuing to do its job according to the most recent input. The only possible shutdown of government could occur if the money runs out, and Congress does not authorize appropriations... but this is an extreme example, and while Congress likes to make budgets complex in order to micromanage the job of the executive branch (and is perfectly within their rights to do so), if they find that no agreement can be reached in Congress over a complex budget, a simple budget, or simply a repeat of the previous year until further instructions are sent, could easily suffice.

What about emergencies? Once again, that is the province of the executive branch. The President already has, in the Constitution itself, the authority to respond to emergencies of a military nature without the leave of Congress (though Congress must ratify his actions by providing the funding to continue once they are able to do so).

Legislation and execution are not the same thing, and the two functions are wisely separated. Can someone describe to me exactly how a slowing of the legislative process would bring government to a halt? Can someone give me an example of how an extremely lengthy bill might need to be passed before it can be read?

Sunday, October 04, 2009

Russell D. Longcore's Secession Paper: A reply

Over at, Russell D. Longcore posted a piece about the questions that would have to be answered at the state level should a state decided to secede from the United States of America, with Texas as his model, entitled Will Austin Become 'Liberty Central' or 'Little Washington?'. He listed twenty questions he believes should be answered before secession occurs. Here are the twenty questions and my attempts at answering them.

1. A formal Declaration of Independence and Secession would have to be written and ratified, likely by the legislature and signed by the Governor. A date for presenting that document to someone like the sitting US President would have to be chosen.

Not too difficult. I might even put my hand to drafting something like what such a document would look like.

2. The actual form of the new government must be chosen. Will it be a Constitutional Republic...a Parliament...what? Remember that this is a new constitution for a single nation, not a confederacy of nations. The new constitution doesn’t need to be articles of confederation, but should be more like the Virginia Constitution of 1776 or the Swiss canton system.

I tend to favor a parliamentary form myself. This site has a lot of ideas on potential forms of government, but my favorite idea at this time is for an internet based form of democracy that is both direct AND representational... and a scan of my past writings reveals I haven't actually written this up yet!

Basically, everybody with the right to vote has an account on a gigantic web forum/chatroom/general hub site. Anyone can put forth a proposal, and anyone can vote on it. But because not everybody has time to sit around on the Internet all day, people could also designate others as their representatives, at any time, for any reason. They just set their account to vote the way their chosen representative votes in any vote in which they abstain. They could have a list of votes, which would move to the next guy on the list in the event the first guy also abstains. Or they could set it to go through their abstaining representative to HIS representative. Or they could designate a list of voters, and have their abstentions go the way of the majority in the group. Or any other mechanism people wanted and could be coded in easily enough. And if they decided they didn't like the way their representatives were voting, with a few clicks and a few keystrokes they could change their representative... instantly!

The actual functions of government would be carried out by an officer or officers elected by the legislature... the legislature consisting of all voters, either directly or by way of their representative(s), as the individual prefers. They would receive money from the legislature, and could be given direction as to how it should be spent by the legislature, but actual responsibility for carrying out those directions would be enforced primarily by the threat of removal: once the money was in the hands of the executive, it would be his responsibility to spend it. Removal could be done at any time by a vote of no confidence, after which a new executive would have to be elected.

The precise procedures by which that first line of officers below the CEO/Prime Minister/Whatever are chosen would in theory be done entirely by the CEO. However, the legislature having the power to remove a CEO they don't like, someone running for the office could make whatever procedural promises they want, with the legislature making whatever demands they want, with the legislature's final call on confidence votes being the enforcement mechanism.

3. Will all the existing politicians in Texas have to stand for election in the new government? The present legislators in Austin may be infected with statism and opponents of sovereignty. I nominate Ron Paul as the first President of New Texas.

Eventually, certainly. Secession doesn't free people from having to wrangle with people they disagree with, only those who live too far away with to wrangle with in a rational fashion.

4. Monetary policy is the keystone of the new nation. All commerce, and the very existence of New Texas hangs on this one issue. But if Texas decides to adopt any monetary policy other than 100% gold dollar, it will have swallowed the poison pill of Keynesianism before its life even begins. No government in the history of mankind has devalued its money and survived. Not One.

Were it up to me, I'd have no monetary policy at all, at least no public monetary policy. Of course, the legislature would have to decide what they want to accept in payment of taxes. Probably immediately after secession, folks would continue to use Federal Reserve Notes, and would probably continue circulating them for some time, possibly as long as they hold any value at all. But there would be no legal tender law forcing people to accept them at any particular rate, meaning that gold and silver would circulate alongside them, in whatever denominations folks found convenient, to greater or lesser degrees depending on the condition of the US Dollar, their values allowed to float relative to each other (no bimetallism!). I suspect Mexican Pesos would also be in the mix, at least in the southern parts of the state.

4 (sic). Courts system – Will the new Texas begin with a clean slate, or will it adopt the corrupt American court precedents existing today? You can predict that entrenched interests in the legal system will attempt to tie up the secession in court forever. Where will Texas find judges that are pro-secession? Will Texans allow themselves to be drawn into Federal legal battles when the US should have no jurisdiction in secession?

The principle of the independent judiciary requires that inherited common law not be messed with too much. In the absence of federal law, judges would have the leeway to decide for themselves what they think is just. In the event the Legislature wants to clear up a matter, they could make a proclamation directing judges to observe a new principle. This is how the anglo law system has pretty much always worked, and I see no reason to do any radical restructuring. That said, I would prefer to alter the system to utilize mutually agreeable arbitrators more, and the state's judges less.

5. What method of tax collection will the new nation choose? Any income tax will likely foment yet another revolution.

May I humbly suggest the Single Tax be looked into seriously?

6. There are a lot of Federal lands and military bases in Texas. Will the new nation buy them from Washington or simply confiscate them? And why should the New Texas national government presume that it should own the former Federal lands and bases? Should they not be sold to private parties?

I think the start point for the negotiations that would inevitably have to be done between state officials and the feds should be the respecting of a hands off policy with regard to federal properties and institutions. The Republic of Texas would not immediately seize federal lands and facilities (this would surely provoke an armed response), but also not expend any resources protecting them; it would be the Feds' responsibility to do so. As to the IRS, while without the mandate of law their operations would be technically illegal (if it isn't already), their facilities should be respected in the interim, and their employees not unduly harassed (though duly prosecuted, should they attempt to seize any assets).

Indeed, I would simply regard the United States Government under State law as a property owner like any other. Under a Single Tax, they would be responsible for paying taxes for what they continue to hold (send them a bill, and keep a record of it for when the feds decide that if Texas should leave, they should take their share of the federal debt with them). In the end, the Federal Government would either have to surrender their claim, or sell off their claim (more likely the latter).

7. The new Texas will have to create an immigration policy. Not only is there the existing problem with the Texas/Mexican border, but hundreds of thousands of Americans will want to relocate to Texas to take part in the birth of the new nation.

Simple. Let everybody in, but only naturalize after a period of time. When the legislature can't figure out how to spend all the money they get from the Single Tax, they release the money as a dividend to their shareholders, which don't include the really recent immigrants. A rising population results in rising rental values, which would result in a rise in revenues from the Single Tax, which could be spread among the shareholders (citizens). Immigrants have the freedom to come and try to establish themselves, have no choice but to pay taxes (since a land tax is paid by everyone who uses the land, not just citizens), and the citizens get a bit of a windfall as a result. Everybody wins.

8. Millions of Texans presently receive Social Security benefits of some sort. What will happen to their benefits after secession? Will Washington cut them off in retaliation? Will Texas assume that obligation?

Probably they get cut off. Personally, I would try to make provision in Texas law for continued participation in the United States social security program, if they want to. They could still pay payroll taxes if they want to, and receive the benefits when they retire... or they could NOT pay the payroll tax. Under no circumstances would I saddle a newly independent state government with this obligation: it's questionable whether the US Government will even be able to handle it.

9. Privatization of state services – will Texas try to set up new bureaucracies to deliver mail, collect the taxes, etc? The free market always performs better than government, and no compelling reason can be made for government service.

Why make new ones? Just make sure the US Post Office knows they're welcome to continue doing what they do in your state, delivering mail and selling stamps and such. Of course, in the absence of US law, they'd have private competition and no government guarantee within the state of Texas, but if they can cope, just let them keep doing what they're doing. If they can't, the market will fill the void.

9 (sic). Law Enforcement is already entrenched in every niche and corner of Texas. Will the new Texas continue with the failed War on Drugs, or recognize that drugs are morally equal to alcohol and lift its prohibition?

You ask what will happen; I don't know, having never been a Texan. If California were the seceding state, most likely the war on drugs would be reduced, if not ended outright... and this is how I would have it. But I don't know what Texans would do.

10. What will the New Texas do about a military? Will it embrace a national militia like Switzerland, or establish Army, Navy, Air Force and Marines?

I would say the New Texas Republic would need some kind of navy to assist in the securing of persons and property in the Gulf, in conjunction with Mexico, the United States, and the various island nations (maybe even open relations with Cuba, ha!). I don't know how well a militia system would work in this day and age. I wonder if Texans would accept compulsory military training, as the Swiss do.

11. Foreign policy issues will involve border states and other sovereign nations. Will New Texas make the same foreign policy blunders that Washington loves to make?

Probably not. I imagine the perspectives of Texans alone would be different from a perspective that incorporates people from the East, the North, and anyone else not living on the Mexican border in the presence of many ethnically Mexican people. And as to other countries beyond the sea, I can't imagine Texas, for all its size, would have the same level of arrogance those who represent the United States' foreign policy establishment, lacking the military might of the United States. This, for me, is the top reason for seceding: to deny capacity to the rogue nation that has taken root in Washington D.C.

12. Will New Texas assume the liability of a Medicare/Medicaid system?

I should hope not.

13. Will New Texas protect religious liberty and eschew religious subsidy? After all, there is no practical reason that religious organizations and churches should enjoy tax-free status at the expense of the rest of the population. This issue will be decided as New Texas forms tax policy.

Tax exempt status is a far cry from the tax funded state churches of the past. This, to me, falls under the category of "low priority."

14. Insurance makes the world go around. New Texas will need the wisdom of Solomon in its Department of Insurance to properly regulate insurance companies.

The widsom of Solomon... or the Free Market. How about NOT regulating insurance companies, beyond requiring they honor their contractual agreements the same as everyone else, and establishing the limits of liability in the event of bankruptcy. Personally, I favor extending liability to the owners of the company to some degree.

15. Securities law must be enacted. But copying the corrupt FTC and SEC won’t work.

What securities law beyond a basic prohibition of fraud is needed? Let people use their money for what they want, don't shield people from the consequences of bad decisions, let willful misrepresentation of the facts be considered unlawful (and make no exceptions where other unlawful deeds are concerned for securities), and the market, in conjunction with the courts where necessary, will hash out the details.

16. How many of the existing US Cabinet offices will find a place in the New Texas government? New Texas would probably run fine without most of the unconstitutional bureaucracies operating in Washington today. Copying Washington won’t work.

Under the legislative system I described above, this would be hashed out via the legislative process. Really, this is a matter of bureaucratic convenience, rather than constitutional design.

17. Texas is a microcosm of all the environmental issues facing America today. The "greenies" will fight hard to continue some of the dumb environmental laws in New Texas. They have money and they are patient.

Oh noes, teh enviralmentalists is gonna get us! Firstly, not all environmentalism is dumb. But you can head the dumb stuff off at the pass by creating property classes that acknowledge the interest of all stakeholders in resources that are by their very nature shared. Decision making with regard to rivers should be shared by all who live along it, from the headwaters to the delta (and beyond, with regard to a reverse delta). Farmers upriver have no god-given right to divert off all the water and impoverish downriver farmers and fishermen. Air basins should be shared by the people that live there; power generators have no god-given right to spew their filth into the air others have no choice but to breath (any more than your neighbor has a god-given right to dispose of his garbage by dumping it in your yard).

Environmental issues are more complex than "dumb environmental laws", but only because we have new problems that require new insitutions, that we haven't quite figured out. This is a fact even if Texas never secedes.

18. New Texas will have to make an early decision on public education. Will New Texas continue the failed policies of the federal Department of Education and the deathgrip of the teacher’s unions?

I should hope not. I'd rather any money that would otherwise be spend on public schools be instead emitted as a citizens' dividend, allowing people to make their own decisions with regard to education. However, if the people, via the legislature, express a desire to set up some schools instead of receiving the money as a dividend, I have no problem with this.

19. Texas has great colleges and universities. What will happen to them when Federal money dries up? More importantly, will Texas football teams be thrown out of American football conferences and the BCS? God help us.

Hopefully, sports conferences will recognize that "America" is not the same thing as "The United States." If baseball leagues can court the participation of Latin Americans and Japanese, surely the NFL can accept Texan teams, even if Texans no longer accept the dominion of Washington D.C.

As for colleges, who knows? I'm willing to let this issue be decided by others at the statuatory level.

20. New Texas will need an intelligent Energy policy which embraces nuclear energy, oil and gas, and alternative sources. Texas must throw off the American regulations that prohibit new nuclear power plants. 100% of the electricity for New Texas should come from nuclear power.

This looks more like an answer than a question, but aren't there a whole lot of Texans setting up wind plants in the windy Texas countryside? Aren't the deserts of Texas (not to mention New Mexico, Arizona, and California) ideal for solar power, which is becoming a more commercially viable alternative almost by the week?

Personally, where operations with wide ranging catastrophic failure risks are concerned, I would permit the people living in the failure zone (ie. the "blast radius") the opportunity to prohibit the building of something like a nuclear plant. The risks may well be low, and if this is the case, the would-be nuclear power plant builder is bound to find some place where the people are not scared of the plant. No "permission" would be required to start building, though a builder would be wise to secure permission first, lest he incur building costs and find out only later it's not going to be allowed.

The people living in the risk zone could incorporate for the purpose of managing that risk, probably requiring some kind of payment in exchange for assuming the risks inherent in establishing a nuclear facility (or other facility which imposes physical risks or conditions on the people living near it) for a period not to exceed fifty years. This would include only the people already living there; those who move in later know what they're getting in to.

Alternately, the builders could be required to appease each property owner in the area individually, working out a deal by which the provision "is near a nuclear power plant" would be attached to the deed for a mutually agreeable period of time not to exceed fifty years (after which the next generation would have the opportunity to renegotiate the terms under which they assume the risks). Someone wanting to build a nuclear plant could potentially locate their plant in a manner similar to how free market road builders could locate their roads under the program suggested by Walter Block.

To not include the residents of the area in the process is to permit people to impose inordinate risks on other people against their will, and to take from them an aspect of their land property. It's the same as if someone went and built a chicken rendering plant right next to a residential neighborhood, flooding the neighborhood with the stench; at the very least, the people should be compensated for the drop in their quality of life, and the only way to ensure the compensation is proper is to require that it be negotiated between the new neighbor and the old neighbors. (Neighbors after that, of course, are buying in at the new levels of property values).

The beauty of this system is that it can be applied to any manner of potentially explosive establishments. This allows the government to respect complete and total freedom to possess and bear arms, while providing the neighbors with the opportunity to object should they find themselves in harms way as a result. If pointing a gun at a man for a reason other than self defense ought to be regarded as improper, the possession of explosives (not to mention nuclear devices) the yield of which could encompass a man's neighbors' property should it accidentally go off, ought also to be regarded as improper. But with such a system, we leave the decision not with legislature or bureaucracy, but with the neighbors themselves. If the people living in a city decide they are willing to allow someone to possess a nuclear device, then it could be permitted.

The Evils of Capitalism

I swear, I do some of my best work on forums having nothing to do with my best subject. Over on the Off Topic forum of the El Goonish Shive forums (EGS is a webcomic), somebody comes in posting about "Net Neutrality." Someone else posts something about capitalism and the free market being essentially the same thing, and his absolute trust in free markets, as opposed to the other guy's distrust of markets. And this is what falls out of my brain. I'm calling it:

The Evils of Capitalism

And this is where you get it wrong, and lead folks like blort down the wrong road. The Free Market is nothing more than the notion than the notion that society allocates resources best when it does so via an unregulated market. This is true, so far as it goes. But Capitalism is more specific to the current era, and carries with it baggage accumulated thanks to a property regime that, in my opinion, is wrong in places, and results in concentrations of wealth that must, ultimately, turn into concentrations of power via government. Capitalism is its own worst enemy (and Adam Smith himself predicted this very phenomenon): under Capitalism, a John D. Rockefeller can make a fortune providing a plethora of petroleum products for the consumer at prices lower than ever before seen, thus creating opportunities for more innovation and more fortunes, overall a good thing. But then the big money can then turn around and use that fortune to cement his own and his people's position, by acquiring rent collecting opportunities--ramming legislation through that limits potential competitors more than himself is but one of the tools.

Markets are very efficient at property allocation. The question the market cannot answer (except, perhaps, under a condition of total anarchy, and even then the market only provides the evidence; we still must use our own brains to figure out the answers) is "What do we properly regard as property?" For when this is answered incorrectly, the market will show us, with brutal efficiency, why we are wrong... but we ourselves may be so enmeshed in the system we either fail to notice, or even deny the evidence. A perfect historical example is chattel slavery. American slavery was a very different thing from Mediterranean slavery (argument lifted directly from Stanley M. Elkins Slavery).

Mediterranean slavery was a heavily regulated institution, but both church and state watching over the institution with a close eye. It was as humane as slavery could be (which isn't very, but I'm just saying), and there were many opportunities for a slave to be freed. The pressure was toward gradual elimination of slavery, and, like so many other places, when it was finally abolished, the abolition occurred bloodlessly.

Slavery under Capitalism

Contrast the American experience. Under pure Capitalism, a thing is either property, or not property. Further, in the absence of a power system preventing a thing from becoming property (whether it be a substantial religious/philosophical influence, or access to friends and relatives), some people WILL reduce just about anything to property, and gaining by doing so, influence others to do so as well. Thus it was that, while white indentured servants had to be freed at the end of their term, lest word get back to England and Europe the fate waiting for future indentured servants in the Colonies, African servants had no similar defensive power structure, and as such could safely be, and therefore were, reduced to property. And once they were property, the law made few restrictions as to how this "property" might be "used".

But People are Not Property. Reduce them to such, and you reduce both them, and yourself, from personhood. For the slave must carefully avoid thinking, lest he notice his condition and despair, thus robbing the slave (and the public) of the creative potential of a human mind. The slave master, on the other hand, must devote his energies to suppressing rebellion, causing a similar impact on his potential as it does on that of the slave. Additionally, the master must singe, and ultimately burn out, his conscience, in the process of doing so; the more his conscience complains, the more likely he is to invent even more untrue ideologies (ie. racism), distorting his thinking further, and reducing his wealth producing capabilities even more.

Make no mistake: the market, left unrestricted, punishes both master and slave (and I'm not sure which gets it worse, since at least the slave has the benefit of a market value protecting him from excessive levels of cruelty!) for this violation of correct principle... by imprisoning them within this horrible system. For while the generation of slaveholders that first cemented the slave's condition in law doubtless saw benefits, the market quickly devours those benefits by pushing them into asset prices (the purchase price of a slave is higher than that of an indentured servant). Nobody after that point gets to be a free rider; he must pay a price for his slaves at least equal to the benefit the former owner could have gotten from the slave. But why would someone willingly buy into such a system, if it isn't even all that helpful in the long run?

Making Money or Taking Money?

My answer is that the vast majority of people understand accounting far better than they understand economics; or, to put it blort's way, people are greedy. For under capitalism, people follow the money, wherever it may lead. More profits is inherently better, and believed to be so, without reservation, by the layman economist because he imagines the only way to increase profits is to improve productive efficiency. And this is true... IF we're using the definition of "profit" used by economists, which is revenues minus ALL wages, rents, and interest... even the opportunity cost of this operation to the entrepreneur, himself. But most people don't; they instinctively use the accountant's definition. For the accountant, profit is what's left over from revenues once expenses have been paid. Profit equals revenues minus what you have to pay others for.

The difference is crucial, for under the accountant's definition, there are TWO ways to increase profits. Efficiency can be improved, leading to more revenues relative to the factors used; or, more factors can be brought under the ownership of the business owner, thus dropping the opportunity cost of these assets from the balance sheet. For example, if a man rents a storefront, he can increase his profits by making his store better (increasing revenues without increasing the resources used), or taking ownership of the storefront (thus dropping the opportunity cost of the storefront from the balance sheet). If he pays another for his labor (whether weekly, monthly, or for a five-year contract, in the case of indentured servitude), he can increase his profits by increasing the revenues of his operation through greater efficiency, or he can utilize the labor of someone he doesn't have to pay, thus dropping the opportunity cost of labor off the balance sheet.

It is very important to point out that from the economist's perspective, there IS NO PROFIT in either of those second options, the one that involves taking ownership of an asset he previously had to pay someone else for. There is, at best, a revenue neutral transferring of revenues from one person to another... but often, the effect is a net loss. The opportunity cost of a slave is the productive potential of a free man... but that does not matter to the slave master, since his revenues are up as a result of reducing a man to slavery. And if he DID buy his way into the system, while he has realized but small net gains to himself (having to pay the previous master the opportunity cost of giving up a slave), the abolition of slavery wipes his asset book clean. He goes from being a rich man to a poor man overnight... and therefore, though the slaveholders are every bit as held down by the system as the slave himself (witness the explosive economic growth in places were slavery was illegal, relative to that of the slave states), he dare not permit the institution to be abolished, because he is psychologically attached to the asset value of his slaves. It makes him "feel" rich, even though he isn't.

Political consequences of Rent Seeking

What does this have to do with Capitalism as a whole? The fact that while markets are the best way to allocate goods, it is also very efficient at entrenching evils (until such a society is overtaken from without by another society that has not entrenched that evil). People become wealthy by performing valuable services... but then can use that wealth to turn access to their profession into property. A big company may successfully petition the government to grant them a privileged position (generally protection from competitors) in exchange for a share of the loot. A particularly high paying profession may convince the government to erect barriers to entry (through state required licenses, etc.) in exchange for a share of the loot. A large developer might get preferential treatment with regard to the acquisition of land (to the point where municipal governments will deliberately create blighted areas for the purpose of seizing it to sell to a developer), in exchange for a share of the loot. Economist have a term for this sort of behavior: rent seeking. It's the effort to take control of something for purpose of requiring others to pay a toll to access it, whether customer or competitor... a thing they did not create.

And our economy is FULL of these kinds of things. Look at the health care debate, for example. A lot of people are convinced that the current costs are the result of the free market. Strictly speaking, this is true, but that is only because the market monetizes the rent seeking behavior of pretty much every participant in the health care system. Over the past century or so, enormous barriers have been erected against entry into pretty much every aspect of the health care system. There's doctor licensing (which requires far more in the way of expense than is actually necessary to acquire the necessary skill to perform basic services), centralized drug regulation (which big pharma can deal with much more easily than small pharma), tort law (which fails to recognize the inherent risk involved in medical care and medical procedures), preferential regulatory treatment of patented medicines over organic (and therefore unpatentable) alternatives, the insanely expensive nature of the legal system itself (which is, itself, caused by the cartelization of the legal profession), intense "fairness" regulation of health insurance and medical care which has the effect of shifting costs from those who incur them to others, employer health care requirements that have the effect of creating mini-monopolies over the employees of smaller firms, and mini-oligopolies over the employers of larger firms... the list goes far farther than I can even begin to go. At every point of contact, the money spent into the medical system is diverted from actual medical care, to the costs of maintaining, extending, and enjoying all the privileges granted by government... in exchange for a share of the loot.

Rent Seeking in the Communications Industry (Or, the Nexus of All Rent Seeking)

There is rent seeking in the communications industry, as well. Presently, rent seeking behaviors are likely low (in the Internet industry, at any rate), due to the fact that there are still plenty of real capital investments to be made. But when the field ultimately matures, the money that presently goes into laying new lines, sending up satellites, building towers, and such will go more and more into rent seeking behavior: efforts to control the communication system. And government will not merely support it in exchange for a share of the loot: large budget mass democracy creates a market for centralized control of media, the value of which is exactly proportional to the size of the government's budget. Centralized control over the media is the very engine of rent seeking, for everything the government does must pass muster with the electorate. The ability to saturate a market with a particular message, or to deny access to a particular message, has a value that can be measured in dollars, a value that is reaped by those larger companies that have the ability to edge out smaller competitors.

So with regard to Net Neutrality, we're between a rock and a hard place. On the one side, we've got the rent seekers, who will, if able, consolidate control over the medium of communication. On the other side, we've got government types saying they will protect us from the evil corporations (and rent seeking IS evil)... but it's every bit as likely that those very politicians are the tool of the rent seekers. In addition, the politicians AGAINST Net Neutrality might ALSO be the tools of the rent seekers. There are numerous examples throughout American history where BOTH sides of the debate were dominated largely by what we today call "Astroturf". It's entirely possible Net Neutrality is yet another example of that. That's why both sides of that debate scare me.

Friday, September 18, 2009

Historical Inflation Wave: From Spain to the Middle East

So I was contemplating the decline of the Ottoman Empire. Not ordinarily a thing one contemplates, but I'm taking a class on contemporary Middle East history, and I discovered a rather interesting theory. The influx of gold and silver from American through Spain (as they thoroughly looted the civilizations discovered there) resulted in an immense price rise throughout Europe. However, this price rise was not immediate and uniform, but proceeded, as it does, as the money moved through the economy of Europe. The following is just a speculative model, but it makes sense to me.

The Spanish government would have first tapped local market, and the influx of new money would have risen prices there. Merchants, recognizing the price differences between Spain and other places, would have taken to importing goods into Spain in order to profit from these price differences. Buy low in France, England, Germany, Italy, or wherever, and sell high in Spain. As a result, the areas from which the imports came would have developed export industries to take advantage of this opportunity, while Spain, though temporarily benefiting, would have developed a dependency on these imports.

The result would have been that the second tier of nations would now have well developed export industries, enabling them to profit from trade not only with Spain, but also each other once Spain's money ran out, more throughly. However, they would have also had higher prices than the next set of neighbors, which would have included the Austro-Hungarian Empire, the Ottoman Empire, and, with improved navigation, India, China, the American colonies, and the rest of the world. While having good export industries of their own, they would now be able to import other things they needed from these third tier countries... while Spain, now lacking either a price advantage or export industries, would go into a decline from which it would never fully recover.

The third tier, being pretty much the rest of the world, would have ended up developing some level of exports to the second tier countries, but would not have the opportunity to export their own increased price level to a fourth tier, there being no fourth tier. So rather than an outflow stimulating the development of exports, followed by an inflow as they stimulate someone else's exports, they would mostly just experience the outflow, but find that their newly earned money doesn't buy as much as it did when merchants brought it in.

Spain founded an empire on this flow, but became dependent on it when the money ran out. England, France, Germany, and the United States founded industrial economies on it to absorb currency from Spain, and then spent it out to the third tier, developing a balance of both export industries and import dependencies. The final tier would mostly just experience asymmetrical exports, but not have the opportunity to benefit from similarly asymmetrical imports. The inflater, Spain, was destroyed by this wave. The final absorber was similarly damaged.

At present, the United States is increasingly dependent on imports, without developing similar levels of exports (and going further and further into debt), all based on a globally dominant inflationary currency. Will the US go the way of Spain? Will US importers, such as China, Japan, Korea, India, and such go the way of England and the United States? Is the Third World even more screwed than they already are?

Tuesday, August 25, 2009

National ID

A big topic in small government circles, of late, is the current efforts in Washington DC to establish a national ID card. Such groups (such as Downsize DC) are generally opposed to this effort, for a variety of reasons. I, too, am opposed, though perhaps not for the same reasons.

Simply put, I fear large databases, particularly when participants have no choice but to make their lives dependent on these databases. I've done a lot of information processing over the years, and I've seen bad databases. I've seen databases filled with bad information. I've seen databases damaged by system transitions. I've seen databases with fields filled with information that had nothing to do with those fields because previous data-entry technicians didn't understand the purpose of those fields... or maybe they didn't care. These databases were so bad they were routinely ignored by the people who had to deal with them in some cases, and made people's work harder in other cases.

But at least these databases could be scrapped if necessary, only had to be dealt with internally, and, if sufficiently bad, could cease to exist when the company unwisely attempting to rely on them went out of business. The pressures of business competition ensured that databases improve or die.

Not so with a government program. Governments are no more infallible than private enterprises, and more susceptible to the long-term accumulation of non mission-critical (and sometimes outright malicious) side interests. (I specify "long term" since there are plenty of bad actors in private enterprise, but that the competitive environment limits the damage they can do and the length of time they can remain in a position of power if that power is abused.) Private actors can be replaced by their competitors. Government programs generally only improve if there is a sufficient amount of the right kind of political interest in them, and even then there are times when an institution becomes impervious to reform (generally the longer it remains in existence). Even the best intentioned, best implemented programs can become institutionalized in the long run, and replacing government programs is generally more problematic than replacing a private supplier.

To put it in more emotional terms, YOU could end up with bad personal information in the national database, resulting in a more difficult time seeking employment, applying for credit, or even simply verifying your own identity if biometrics become part of the process, but your information gets corrupted... with your only recourse being the sending of a form that ensures that in thirty days or more your entry MIGHT be fixed. On the flipside, YOU could end up having to rely on a bad database that is, thanks to taxpayer funding, the only game in town (or at least the only affordable one), for your own identity verification needs.

With the current system, there is, at least, some variety between individual states in how this problem is handled. Though they don't compete with each other directly, they do provide examples of good and bad ways to handle this issue, which can be imitated or avoided, as the case may be. If it gets handled truly horribly, at least the damage is contained.

Now, none of this is to say I am against the idea of a national level identification verification service; governments are hardly only group who have use for such a service. Pretty much any potential employer will ask for an ID card, and some even go so far as to issue their own card to their employees. Merchants properly ask for identification when accepting a check or a credit card. Banks want to make sure that the person attempting to withdraw money or apply for a loan is who he says he is. With all the business that is conducted across state lines, I could easily see a national level ID, valid no matter where you go, being quite useful.

But if there is to be a national identification system, there should be competition. No one institution should be given a state supported monopoly over this. It wouldn't even be necessary to do so; the majority of the value of an ID card would be network value, thus in any given market the tendency would be toward a single, main supplier of this particular service.

I say "any given market" because markets are not discrete units. The entire world is tied together in a "global market", the particular needs of a given nation result in many "national markets". Transportation costs mean that, for some goods, the "regional market" is more important than the national or global one, and that "regional market" probably isn't bounded by national borders. Then there are services, which typically, though not always, cater to a "local market." For minority populations united by particular interest but not necessarily by geography, there are "niche markets." This preponderance of possible markets ensures that no matter how strongly a particular industry tends toward a natural monopoly, that monopoly will never been complete, since nobody can ever please everybody all the time.

In identification, there is, obviously, a general need for an efficient way of establishing, to a reasonable degree of certainty, certainty about an individual's identity, with various information about their qualifications and abilities (driver licensing, security clearances, criminal record, etc.). Precisely what is meant by "reasonable degree of certainty", "efficient", and "necessary information" is up to interpretation, and it is along precisely those lines that different "markets" would be established.

The national market probably isn't huge at this time. Regional markets may be larger. The result of that could be at least two companies operating in a given area: a national company and a regional company. Some regional demand could transcend national boundaries; for example, an effective identification institution serving the American Southwest and northern Mexico could possibly prove useful. Then there's the fact that, for some applications, a greater degree of security or scrutiny (in a word, certainty) is needed than is provided by the larger companies; another company could arise to serve this niche market. A particular segment of the population may be, for reasons of tradition, religion, or whatever reason, leery about the practices of most companies; a special company that can establish identity to a reasonable degree of certainty without offending their sensibilities could serve such a niche. Whatever the need, somebody would be capable of meeting it, once it could be identified.

If any of these companies fail their market, whether through poor database administration, lax identity policies, insecure (easily forged or altered) documentation, or whatever reason, there is always the possibility that a group presently operating outside that market could expand into an ill served market. If a niche market arises that isn't yet accounted for, a multitude of companies could expand their operations, or a new company could arise. All this mutability comes from the optional nature of any form of ID verification: people would be free to refuse to utilize a particular company to verify either their own ID or those of others. Going completely without probably isn't an option for most people in this age, but even that option could be permissible, if not terribly viable for the one that chooses it.

Contrast that to a single, overarching monopoly institution, a central standard and a central implementation. Politicians establish it in exchange for votes and the money necessary to get votes. If the initial implementation is bad, participants may be able to amass sufficient capital to get it revised or revoked, but once it is running smoothly, it will continue running. It is not performance dependent, except to that degree necessary to remain politically viable (which is much less difficult than retaining customers). It is tax funded, so that even if alternatives are permitted, they are financially inviable. It can afford to ignore any niche that lacks a sufficiently powerful political voice, and it cannot be displaced if it fails its mission unless the failure is so spectacular as to attract political attention. By the time that happens, the damage has been done, and in the meantime there are no alternative institutions that can cover for them (by successfully taking their business) either until they get their act back together, or permanently.

Here, I find it necessary to address the reason the political establishment at large is seriously attempting to implement a change: Terrorism. While the proposed (and passed but not yet adopted) changes have been being proposed for many years, now, it is the new public awareness of the terrorist problem that has made these changes politically convenient. The issue, so far as I understand it, is the fear that the current ID regime is insufficient to keep potential terrorists out of sensitive areas, like airplanes, manufacturing facilities, nuclear plants, and so on.

So, okay, maybe airports and airlines need to reconsider their policies regarding who they allow onto their facilities. Perhaps an ID verification system, national in scope, is needed to verify the background of potential passengers. Such a system need only cover those who choose to fly, which is definitely not 100% of the population, and possibly not even 50%. This does not justify a single, central program that aims to cover 100% of the population, and a program designed to cover this specific need likely does not even require taxpayer funds to operate, and probably not even to establish.

Wednesday, August 05, 2009

Fred Foldvary Says It Better

Fred Foldvary ties together the Geolibertarian position far better than I. I found his August 3 contribution to especially good.

Thursday, July 23, 2009

High Fructose Corn Syrup

I just came across this article about some recent work revealing potential problems with high fructose corn syrup. It seems consumption of HFCS, ubiquitous as a sweetener in packaged foods, has been linked with things like obesity, diabetes, and such. But in addition to this, apparently the process used to produce the stuff results in mercury contamination, as well. All in all, not a good thing.

How long, I wonder, until someone starts a campaign saying the Government should do something about HFCS? Maybe a ban, or a tax, or some other measure designed to reduce the amount of the stuff that gets used. Before such a thing is even considered, hopefully people will remember that the relative prices of high fructose corn syrup, and plain old sugar, is not a natural relationship. Sugar is rendered artifically expensive by import quotas (limiting how much sugar can be imported and therefore providing higher prices for domestic producers), while corn syrup is rendered less expensive through corn subsidies. Actually... I've noticed a recent trend toward greater use of regular sugar as a sweetener (always well advertised, such as Pepsi Throwback), which I suspect may have something to do with rising corn prices associated with corn ethanol fuel requirements.

Thus, solving America's "obesity epidemic" may well be as simple as eliminating a few subsidies and import quotas. Certainly reduction of government should be the first solution tried, if only to reduce the chance of multiple conflicting programs wasting resources and accomplishing nothing.

Thursday, July 16, 2009

Governor Schwarzenegger: Baby Geoist?

Over at, I discovered a reference to a letter California Governor Schwarzenegger sent to the California Assembly Bill 32, which would, among other things, create a greenhouse gas cap-and-trade system for the State of California. Among the options mentioned are both the free distribution and the auctioning of emissions rights. And it looks like the main purpose of the letter is to promote the idea of auctioning those rights and then distributing the money back to the people.

This is a tiny step toward a more fully geo-libertarian policy. For the right to the limited capacity of the atmosphere to absorb pollution qualifies as a form of Rent, in the classical sense; and distributing that rent, rather than spending it centrally, is specifically geo-libertarian in nature. Does Governor Schwarzenegger know this? Could this be the beginning of a more general trend in favor of geo-libertarian ideas?

All in all, I am very much in favor of this policy.

Thursday, July 09, 2009

Restraining Presidential Warmaking

Here's an idea I had the other day. The problem is that, despite the fact that the constitution lodges the power to declare war in Congress, the President's status as commander-in-chief of the armed forces, combined with the existence of a standing army, enables the President to prosecute wars, particularly small ones, without orders to do so from Congress. At present, the only way to deal with this is impeachment: Congress would have to impeach the president to stop him from commanding the armed forces to commit acts of war.

An additional protection could be added. Congress could pass a bill, perhaps an addendum to the War Powers Act, perhaps something else, doing three things. First, it would explicitly reaffirm the Constitutional arrangement: Congress declares War, and any acts of war outside such a declaration is illegal. Secondly, it would approve and encourage the refusal of deployment and combat orders not sanctioned by Congress by military personnel, and declare that persons being court marshaled for refusing orders on these grounds have a right to have their case heard in a civilian court.

Thursday, July 02, 2009

California IOUs

So the budget problem in California has gotten bad enough that instead of paying their suppliers and contractors with Federal Reserve Notes (aka US Dollars), they're paying some with IOUs. This is the result of a system that makes it very difficult for the legislature to raise taxes, alongside a initiative system that makes it very easy for "citizens" (actually groups with enough money to circulate and advertise the petitions necessary to get initiatives on the ballot) to force spending. Like that isn't going to result in a problem?

But what I'm wondering about is this: are IOUs technically the same thing as "Bills of Credit", which are forbidden to the States under Article 1, Section 10 of the US Constition? Would anyone care if they were?

The Constitution is not a living document. It is quite dead, in my opinion.

Thursday, June 25, 2009

Market Dynamics of Police Protection

I wrote this a few years ago. I'm not really sure why I never posted it.

The Flaw in Anarcho-capitalism

Go here for a really long definition of anarcho-capitalism. Go here for articles from the point of view of anarcho-capitalists.

It has often been said, and I believe, that there can be no monopoly in any industry where government does not create it. Even in products with a network component to their value (those products that become more valuable to the individual consumer when more people use it, like telephone systems and computer operating systems), the constant flux in technology and habits will inevitably wear away at any particular company's market share. AT&T had a monopoly, but only because telecom regulation made it prohibitively difficult for competitors to enter their market. Microsoft seemed to have a monopoly at one time, but challengers to that monopoly crop up every day--we're not far from a Linux distro that can be used by the average person, for example.

It is also recognized that every product and service in a free market is going to have the highest quality and lowest cost any human system can give it. Anything that turns a significant profit is going to attract more labor and investment, the effort of outsiders to that industry to claim a part of those profits. Rising supply meets the demand, prices fall, profits fall, untill some other industry becomes "too" profitable, and everybody who can rushes to meet the need there. Provided there are no artificial barriers to entry into the market for a particular product or service (like requiring government-issued licences to practice everything from law and medicine to hair-styling and pest-control), prices and services must ultimately be reasonable. (You want to know why health-care is so costly? Look no further than the government's entry-fee of fifty-thousand dollars or so for the practice of medicine, and their exclusion of any form of medicine that does not meet current political needs.)

The anarcho-capitalist suggests that police protection would benefit from the same dynamics every other service does in a free market. Current policing is wasteful, inefficient, and corrupt. The belief is that if there was NO entity with an exclusive monopoly on police protection, things would be significantly better. If a particular security organization became corrupt, they would simply loose customers; taxation would not continue to fuel an ineffective and corrupt institution, since there would be no taxation. Thus, police protection would be subject to the same mechanism of economic choice every other service is subject to, which would be good, right? Unfortunately, I belive, so long as men are sinners, such a situation will never exist, not for any length of time. The market dynamics of the use of force and the threat of such use are fundamentally different from every other product and service.

When one produces, when one labors to change one form of matter to one that is useful, one has a number of choices as to what to do with this piece of property: it can be used for immediate personal gain, or it can be exchanged for the fruit of another's labor. For example, a farmer might spend the year ploughing, planting, watering, and finally, harvesting. A subsistance farmer consumes the whole of his produce, and does his own house-building, tool-making, and such besides. A more prosperous farmer specializes in farming, acquiring better tools, using better methods for a particular subset of crops, and then exchanges the produce (which is greater than a farmer who had to spend time and energy on other tasks) for the produce of others: the wheat farmer exchanges wheat for apples with the orchard owner; wheat for beef from the cattle herdsman; wheat for plough maintenance from the blacksmith; wheat for bread from the baker, who bought his flour from the miller, who bought the wheat from the wheat farmer. As wealth increases, that wheat farmer starts to produce so much wheat that he can exchange it for music and arts, research in the art of wheat-growing, or anything else he might desire.

The use of force is no different in that it can be used for immediate satisfaction of desires or in trade with another; however, it is here that the similarities end, because, unlike the subsistance farmer, we perceive a significant moral difference between the use of force for immediate satisfaction of desires, and the use of force in trade.

The use of force for immediate satisfaction of needs and wants is what we call crime. The burgler breaks windows, enters a house, and takes what he wants. The raider sweeps down on the countryside in the company of his fellows and steals the produce of the farmer. The mugger knocks a man down and takes his wallet. The angry man kills the one who "made him angry." The zealot murders in the name of his god (though this might be described as an exchange, between the murderer and the "god"). Standing against them are the "subsistance-fighters" who raise their own weapons in defense of their own property.

Such people are the reason police protection is required. The idea of the anarcho-capitalist is that the second group, those who professionally use violence for money, but only when violence is warrented by the initial violence of the other party. I would argue, however, that in addition to that particularly professional form of violence-on-the-market, there would be a proliferation of many corms.

First, you'd have your basic thief. Whether there would be more or less of those than there currently are, I don't really know. It is possible that, more lucrative occupations existing due to the absence of taxes and regulations, there would be fewer. More effective police services migh reduce their numbers in areas inhabited by people who can afford more effective police services. I don't know, but I suspect that, given the considerably more dangerous nature of petty crime, and more lucrative nature of other kinds of violence, petty crime would, at worse, be no more common than it presently is.

Then you'd have the armed citizen type. These would own and be practiced in the use of a weapon, but have as their primary occupation something else, using said weapons only in self-defense. Among these would be people who, when angry or drunk, would also use their weapons, but I suspect such people would be weeded out in all but the ares of lowest population density. People who do this might shoot someone, but they tend to get shot themselves, far more often than the average person--particularly when the average person is not prevented from carrying their own weapon by a police force. The lower population-density areas I refer to are such places as the high seas, rural areas, etc.

Then you'd have private police organzations. In exchange for money, they would do the job of defending people's lives and property, generally only of those who could afford to pay. Of course, mercenaries would come in many other forms, as well.

A local olive oil distributor could hire men to intimidate competitors out of the market. A rancher could hire men to protect "his" property--which just happened to be on the OTHER guys ranch a few days ago. An investor could include violent men as part of his attempt to buy someone else out of their business. And finally, a police protection organization could attempt to use their capacity to do violence to force competitors out of an area they claim. The question is, which form would be the most profitable to both provider and customer, and thus predominate?

Let us examine the situation where money is the only concern. The doers of violence can be grouped into three basic types:

a = those who use force solely for direct acquisition of property (thugs)
b = those who provide police protection for a price, and who will take "no" for an answer.
c = those who provide police protection for a price, the payment of which is enforced coercively, competitors being excluded coericively.

We must consider the amount of police protection required by a client, and that amount differs by which type they choose. If they choose the police group "b", they are going to need an amount of protection equal to "a + c", since the group that won't take no for an answer will also be attacking. If they take the protection of group "c", the amount of protection they'll be paying will be equal only to "a", since group "b", as a matter of principle, will not attack. Thus, model c wil predominate, since it will be the most profitable model for both the customer and the provider.

The wildcard in this analysis, of course, is the vast body of armed citizenry. If a community is inhabited by people who are violently opposed to allowing anyone to FORCE them to accept police services, anyone who tried, or even seemed to be trying, might end up strung up by a lynch mob. This assumes, however, that either the capacity to use force is relatively evenly distributed (and it generally isnt in a specialized economy, any more than the ability to produce food or build houses is), or that enough of the people at large are willing to die for a matter of principle, since it would be bloody work for a lynch mob to take down a bunch of well-armed gangsters.

Many anarcho-capitalists wisely focus on education, rather than political action. The State is group c, writ large, the result of natural economic forces. The only thing that will shut down model c is if people generally stop trying to use force for personal economic gain--if group "a" goes away on their own. So long as men are sinners, there will always be government in some form. The only question is the scale.

Thursday, June 18, 2009

The Right to Land, The Right to Exist

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.
Land, Labor and Capital. Freedom. The relationship between the three main factors of production and the ideal of property determine what kind of society we live in. One institution produces a condition of slavery; another allows freedom. Each of these factors are different from the others; none is a "subcategory" of the other. As such, the rules of property are, and rightly ought to be, different with regard to these things.

I think any civilized person can agree that there is a proper limitation to the degree to which "labor" may be considered property. To say that a free man "owns" his labor is just another way of saying that a free man may choose what to do with his time and his abilities. "Labor" just happens to be a subset of those choices that is relevant from an exclusively economic standpoint. To say that a man has no right to purchase another man's claim to his own labor is only to say that a man may not sell himself into slavery. Two people can come to an agreement that one will labor on another's behalf in exchange for something the other can provide, but this condition is by necessity limited, whether that limitation be the six year limitation to the period during which an Israelite under the Law of Moses may hold another Israelite in a condition of slavery, or our own society's notion of "at-will" employment, wherein either party to the transaction may cease unilaterally at any time, for any reason.

Labor is a choice, not a "commodity." A free man is free to keep the fruits of his choices or dispose of them as he sees fit. A free man is also required to suffer the consequences of bad choices. For the most part, this is how our society treats labor, at least outside the tax code. People are not "owned" as objects are.

Capital is nothing more that the fruits of earlier labor which are applied to the efforts of future labor. As such, it (initially) belongs to the laborer that created it as surely as anything else. Any transfer of ownership in capital goods should be regarded as final as any transfer in ownership of any inanimate objects. Capital is a subset of material goods in general, distinct from consumer goods only in the use to which they are put. The very same object can be considered capital in one use, and a consumer good in another use.

For example, a drill press in a machine shop is a capital good. A drill press in some dude's garage for his personal use is a consumer good. Bread on the shelf at the store, waiting to be sold, is a capital good. Bread in the pantry, awaiting consumption, is a consumer good. A truck that is used to haul equipment from site to site is a capital good. A truck of the very same model used to haul camping gear into the mountains for a family camping trip, or for mud bogging, or for a trip to Disneyland, or the grocery store, is a consumer good.

It should be apparent that making the distinction between a capital good and a consumer good is an arbitrary process, a matter of subjective perception and not objective fact. Thus, capital goods are (outside the tax code) and ought to be be considered "property" in the same sense as consumer goods. And I think we can all agree that freedom requires ownership in consumer goods; thus, it also requires ownership in capital goods. Unlike a human being, inanimate objects are not "free" in a free society... though the individual is free to produce, purchase, sell, and/or own any kind of object.

Then there is land, the economic category being more properly expressed as "a legal claim to a monopoly over the use of a particular area of physical space." The relationship between the individual, physical space, and the law is of tantamount importance to the issue of individual freedom. Consider the ways in which one may be considered "unfree". One such condition is slavery, in which one person is legally owned by another, and thus required to obey his commands. But another unfree person is the prisoner, whose chief duty is to remain in a particular place, and not to go anywhere else unless he gets permission from someone else.

I will give a ridiculous example. Suppose you are a small landowner, the only such person in a region owned mostly by a large landowner. There are no roads leading from your plot of land to a place outside it. Assuming land ownership is considered absolute (and it is so to an increasing degree in our society), to legally travel from your island to another place you must acquire permission from the big landowner to travel across his land. He may legally demand whatever he wishes in exchange for this permission, or refuse outright.

I doubt there are any but "free market fundamentalists" (by which I mean people who have an unthinking devotion to the status-quo minus government) who would believe a society in such a state to be a free society. Increasing the number of owners can reduce the price of access to land by putting owners in a position where they can be underbid by other owners; however a society in which all land is owned by individuals is still a society in which many, if not all, human activities... even existence itself... occurs only with the permission of one's "betters."

For what is the fate of the landless in such a society? Suppose all the land is owned by someone, and nobody agrees to allow a particular individual access to their land. What is their option, to float through the air, or leap into the sea? We all occupy physical space, and a right to exist necessarily implies a right to occupy physical space.

And this isn't some nebulous threat that doesn't exist in reality. There have been many, many societies in which a few have owned most of the land, while a significant plurality, if not a majority, of the population lived under conditions that closely match that of slavery, even if they were technically not "owned" individually by the great landowners.

The question I want to ask is, where does the right to individual ownership of land come from? Because I can tell you where the fact of individual ownership comes from: conquest. Every land deed in existence today was purchased from someone who purchased it from someone who purchased it from someone, along a chain of buying and selling, until you reach the first person who received title from the government of the State... whether that person was a feudal lord who received his grant from his king in exchange for service, or a speculator who received it from a congress in exchange for money. That person or entity got the "right" to dispense of the land as they saw fit through conquest: the violent subjugation, or even expulsion, of the previous inhabitants.

If the police found your property in the hands of a person who purchased it from a fence, you would want it returned to you, correct? And if people are not pursuing claims to goods stolen generations ago, it is only because, ultimately, capital and consumer goods can be replaced; the reward is not worth the effort.

But land cannot be replaced. Land cannot be produced; land cannot be destroyed. It's utility for certain purposes can be improved through effort, and its utility for certain purposes can be reduced through negligence or destructive action, but physical space does not increase. A population alienated from the land can only migrate to progressively less valuable lands until all the lands are taken... and then they must secure permission from others even to exist.

The right to live requires access to land. Freedom of movement and travel require access to land.

This is not to say that individual monopolies over the use of land are unjust. There are many modes of production which require this to a certain degree. Farming conflicts with herding (lest the animals eat the crops before they can be harvested). Foundries and grocery stores really don't mix.

Friday, June 12, 2009

"Cost Push Inflation"

Something people like to talk about is things like rising oil prices "causing" "inflation". The idea is that there are certain commodities which are used in nearly every productive process, and as a result movements in the price of this commodity can influence the prices of just about every other commodity. Petroleum provides both the energy for many, many productive processes, the vast majority of the energy for transportation of products, and the raw materials for everything from the fertilizer used in growing the food to the plastics they are stored in. Because a rise in the price of oil causes a rise in the price of everything else (debatable, but I don't need to go there this time), it follows that The State is justified in engaging in collective action to keep these prices down. Or, another side goes, the prices being left as they are, a certain amount of the higher prices, inconveniencing people as they do, should be collected for the benefit of the state. Right?

I am, of course, referring to subsidies to the oil industry (up to and including war on the industry's behalf) on the one hand, and special taxation of the industry on the other. In addition, I am playing devils advocate here, for the sake of another argument. Certainly, subsidization of the oil industry (or any other) to bring prices down doesn't make sense because the money still has to come from somewhere; ie. taxes. In addition, seeking to reduce the profitability of a commodity will discourage the development of new sources of that commodity, keeping prices up in the long run. However, there is one other thing, an entire category, one of the factors of production, the price of which drives all other prices even more surely than the price of petroleum, but which is not subject to the same market dynamics of petroleum.

I am referring to land. Access to physical space is necessary for existence itself, let alone to the productive processes that support existence. Thus, the costs involved in occupying this physical space must be accounted for in the costs of production. This is true whether you're dealing with a business that is paying rent to an owner, a mortgage to a financial institution, the costs of physical security in a land where the State does not assume this burden, or even if the business owner is also the landowner and is simply paying out market norms for all the other factors, while keeping the surplus (including the rent) for himself. And even if one has found a way to make a living in a place neither tethered to ownable land nor threatened by criminal violence, one is only making use of marginal land... and if it is profitable, this land will not be marginal for long, as others move to imitate.

As an economy grows, the price of a given unit of land relative to the price of a unit of just about anything else grows. For while increasing economic efficiency enables people to get more out of smaller and smaller quantities of any given input, including land , the result is larger available quantities of every other input... but not land. One can squeeze more and more productivity out of a given area of land, which is good for those who own the land, since they can claim an ever larger quantity of goods and services in exchange for the use of their land.

And this increasing cost of access to land must ultimately come out in the prices of goods and services for production to be profitable. These price increases, furthermore, enter the cost of production at a multitude of points.

The minimum price of labor must account for land prices increases, since they affect the price of living space. This minimum price is also affected by food prices, which are affected by rising land prices. The price of everything the laborer must use is affected by land prices. This doesn't necessarily mean all these prices are rising in an absolute sense, but compare what prices are when efficiency increases are opposed by rises in land prices to what they could be if the cost of physical space were somehow magically removed, and you get an idea what I'm talking about here.

Then there's the price of capital goods: machines, facilities, goods on the shelf. All of those who produced these had to pay for access to land; therefore rising land prices affect the prices of these thigns, as well. And the inputs that went into producing the capital goods ALSO were impacted by rising land prices in the previous cycle.

All of this is in addition to the compensation for the landholder for permitting the land to be used by one individual rather than another. Clearly, land prices (or actually, the rental value of land, which impacts, but does not exclusively determine, the purchase prices of land titles) affect prices economy-wide to a degree equal to or greater than the price of oil. IF you happen to believe that goods with this degre of influence over other prices (like oil) fall under the purview of government regulation, taxation, and subsidy (and I admit, I do not share that belief, but work with me here), certainly land falls into this category.

When does this fact become most obvious? When domsetic producers are displaced by producers located in developing regions, the land in which has lower rental values due to things like a lower or less educated population, more frequent violence, less capital development, and overall factors that produced a lower historical degree of interest in developing in those lands. This will not last forever, since this disequlibrium of rental values will eventually stabilize... which is to say, eventually, developing country will become developed country, and what was once marginal land will be pulled into production.

Attempting to legislate rental values down would be foolish, since it is those prices that ensure that land, when it changes hands, goes into the hands of those most capable of making use of it. All you would end up doing is pushing rents into a black market. Because land, by definition, cannot be created, an attempt to stimulate production of land (increase supply) through subsidies is clearly not going to succeed. However, this same fact makes taxation of landholdings unable to reduce the availability of land; thus, unlike special oil taxes, land taxes cannot discourage future production.

For those of you who do not think this is enough to justify regulation and taxation, I will attempt, once again, to present the moral argument next week.

Thursday, June 04, 2009

A Better Pledge for America

Huh, I left this in my drafts folder so long I don't even remember how I came up with it. I was having some kind of a dream, and I think the scenario arose from it that someone in authority was trying to force someone in their charge to recite the Pledge of Allegiance. I awoke with a fragmentary version of what was said instead, which after spending a few days working over it in my head, this is what I came up with:

I pledge myself to no idol,
of cloth or wood or stone.
I pledge myself in war no more,
than I must to defend my own.

I pledge myself to no empire,
of land or air or sea.
I pledge myself to God alone, and
His handmaiden, Liberty.

Thursday, May 28, 2009

On God: Why I Believe

Something I always struggle to put into words is why I believe in the existence of but one God. I wasn't raised to believe in Him. At a superficial level, I actually tend to prefer to think as an atheist. I'm definitely a great big sinner by the standards of many religious creeds. But believe I do, and I think, at this moments, I may actually have the words. Hopefully I can get them down before they fly from my mind yet again.

Suppose you were an engineer, and you came across a functioning device of unknown origin. You spent many years studying this device, seeing how all the parts go together, determining the principles by which it operates. However, the one thing you could not get a look at no matter how hard you tried was the power source. The device was clearly self propelling, but the power by which it operates was, for whatever reason, hidden from view. You'd diagrammed the entire thing, but at the heart of the diagram was an empty spot simply labeled "phlebotinum device". No other configuration seemed workable, and any other model you could come up with required a lot of arbitrary adjustments to even function, a bit like the Ptolomeic model of the solar system. In a situation like this, it would be foolish to debate the semantics of what the device should be called, or the existence of the device.

For me, the field is moral philosophy. No, I am not formally trained, but the majority of my life has been spent musing on the subject, whether I believed in God's existence at the time or not. To me, one of the primary functions of scientific thinking is to discover the order in a seemingly chaotic mixture of facts. And so far as I could tell, notions of right and wrong were only questions of seeming, and could not be justified according to any ultimate principle or structure of thought. Ultimately, right and wrong were purely matters of either futile and circular reasonings, or assertion.

And nobody asserts that more than the more traditional, less thoughtful believers... but ironically, the time I spent trying my best to be as religious as possible, attending church and reordering my thoughts to account for His existence, brought a spark of order to all these chaotic musings. For though in the short term, submission to a written code and a social order (so far as I was able... I've never been good at submitting to social order) brought me a brief reprieve from my own crisis of morality, in the long term, the "God" principle became the "phlebotinum device" at the core of my own moral structure.

(Note that I recognize that this "God principle" is not God himself, but rather a memetic structure that fits into the only consistent memetic structure I have ever run across. I do not worship this principle; that would be idolatrous. Indeed, I do not ordinarily worship, unless my wonder at the brief flashes of insight this principle enables me to have counts. I say this not to brag, but more as a confession.)

What is this structure? Hopefully I can elaborate on this further in future entries, but there are a few platitudes that I regard as being more true than false, that point to the existence of some benevolant guiding force.

For example, "leave the rest up to God," or "Matters beyond that will attend themselves." It is, I believe, a fact that there are limits to individual responsibility. One simply does not have the power to order the entire world around him... but there are so many who drive themselves to the grave attempting to do so. Worry worry worry... but it isn't even necessary. For the world is not a dark place with potential enemies around every corner... unless you have made those enemies yourself. One CAN focus his attention on that which is within one's own power without worring about sudden unexpected disaster... and be more effective at life as a result. For though sudden unexpected disaster does strike from time to time, worrying about it accomplishes nothing. And afer a natural disaster, or "act of god", the key to moving on is acceptance of the situation, "trusting God", not howling at the arbitrary and senseless nature of the universe.

What is the engine that enables "matters" to "attend themselves"? One can suppose an inherent benevolance of humankind... this is not, in my opinion, a reasonable supposition. One can throw up his hands and simply say "I don't know." I don't know either, but the first phrase I quoted suggests something that is true...

What is the mind that guides the "invidible hand" that guides the distribution of resources? How are the species that survive amid extinctions on the one hand, and the social and moral systems that continue to the present day, selected? Is the chain of cause and effect infinite, with no original cause? Or is there a "base" cause from which all effects arise... and what is that "first cause"? What is the equation behind the fractal pattern that seems to emerge in such disparate places in nature? And why does it always seem to function, at the macro level, better than any human planner?

What is it that made Jews and Jewishness indestructable? What is it about the cult of YHWH that was so compelling it spawned two world religions, and numerous other ofshoots? What was it that drove Jesus to knowingly and willingly approach the cross? Which is less reasonable: to entertain the notion that the old prophets may have known something (or someone) we do not, or to valiantly squeeze one's eyes from even the possibility (whatever you think of the old religions) that the ordering of the universe has a conscious intent behind it?

To me, human morality simply does not make sense without a "God principle" at the center.