In this article, Mark Crovelli makes the observation that, whatever the government chooses to say on the subject, prices ARE rising. I, too, have noticed this in my daily life. I used to rarely pay more than $.89 per pound for fuji or gala apples (generally, one or the other is cheap); now I never see them for less than a dollar, while granny smiths, which were previously an ultra-cheap alternative to these (not to mention those god-awful red "delicious") have risen to the level previously occupied by fujis and galas. I'm definately paying more for fast food; it wasn't long ago I could eat--and eat well--for less than three dollars. Now I drop four and change any time I go anywhere, including Taco Bell. New video games once averaged out at $45.00 or so for top-tier titles; now you probably won't pay less than $60.00, and $70.00 is becoming increasingly common.
It is becoming increasingly obvious that government reports of low general price increases are little more than propaganda. Inflation is always here, but it has sped up in the last few years.I take issue with blaming the Federal Reserve for this higher-than-usual rate of inflation, however. While the FED is inherently inflationary (and not the guardian against inflation they try to claim to be), the current trend is injurious not only to the public, but to the cartel of banking interests that makes up the FED. What's behind the current inflation is not monetary policy from the FED (outside its enabling role, that is), but fiscal policy from Congress.Simply put, all that spending they are doing--particularly the war, but that's hardly the only spending that has increased under the present administration--is being done not with taxes, not even with borrowed money, but with money printed from nothing and spent into the economy. Let me review again, how it works.
Congress overspends. The difference is made up through the selling of treasury bonds. This absorption of available capital by the government would result in a rising interest rate, left as it is. This rising interest rate would slow economic growth, in addition to making it increasingly difficult for the government to finance its own loans. This is the direct result of any kind of borrowing (a reduction in available money, and the resulting increase in the price of money, ie. interest rates), but the destructive uses the government puts it to means that money will never actually be returned; no profit is made, no supplies increased.The FED attempts to avert rising interest rates by buying up treasury bonds. The money they buy it with comes from nowhere; this is where US Dollars see their birth. More dollars are circulating, but this increase in the money supply has no relation to any increase in available goods. Thus, prices rise, while interest rates are held low.
It comes down to the fact that the crisis is caused by Congress. The FED does its best to hide the crisis, which enables Congress to continue, making the problem worse. I have little doubt that a day is coming--and possibly soon--when the probem becomes so large it can no longer be hidden. In the meantime, the rest of us will experience a steady drop in our standards of living. It's a bad situation, overall.
read more digg story
Wednesday, June 27, 2007
Sunday, June 03, 2007
Three Unproductive Drains of Value: More on Land
My study of the use of comoddities as a backing for money (or as money, itself) has given me a better understanding of what the problem is with land.
A thing has a use. The more people who want to use a thing, the greater the demand. The price of the thing is determined by the demand in relation to the supply. So, for example, if lots of people want toasters, and there aren't many toasters on the market, the price will be high. The result of this is that computer manufacturers will profit, encouraging others to enter the toaster industry, while buyers of toasters will take good care of their toasters so they don't have to replace them, resulting in more left for others. This will result in an increase of supply, which will result in a lower price. This is the typical rationale for capitalism: price works well for dealing of problems of scarcity.
Gold also has uses. You can make electrical contacts. You can make jewelry. Good does not tarnish. I'm sure there are many other uses for gold. And gold follows the same market dynamics as anything else: low supply and high price results ultimately in increased gold mining, which raises the supply, which lowers the price.
However, gold is also used as a store of value. Whenever investors are unsure of the future of the dollar and/or the stock market, they start buying gold. When prospects look good, they tend to sell their gold and buy other things with the proceeds. This use of gold as a store of value is yet another demand; the price of gold is influenced not only by industrial and commercial use, but by its financial use, as well. If we suddenly went from a gold market in which it is only used for its industrial uses to one that uses it as a store of value, the price would go up until production increased sufficiently to meet the new demand.
An example that could well end up happening is the Liberty Dollar. Silver is also used as a store of value, in addition to having uses as jewelry and in photography. However, the Liberty Dollar Organization is attempting to put silver into circulation as a barter medium. This adds an additional demand. The Liberty Dollar goes up with the value of silver. However, if the Liberty Dollar becomes popular, the demand of the LDO for silver will likely end up raising the price, in and of itself.
Land is the same. It is a vital component in wealth generation; no economic activity can take place without land. Because of this, land has a very stable value, one that increases steadily as the economy grows. Because of that, people use land as a store of value. Many buy land not for their own use, but simply so they can sell it at a profit at a later date. In the meantime they may or may not allow others to use it in exchange for rent. The existance of blighted regions is evidence that land investors are not always quick to lower their price to a level people are willing to pay.
When gold, silver, or toasters are used as a store of value, the price goes up. This stimulates production, and the price eventually reaches an equilibrium. This is not the case with land, because land is, by definition, not something that can be produced. If it can be, it is not land. The use of land as a store of value raises the price, making it more difficult for people to establish homes and businesses, thus raising unemployment and/or reducing people's economic independence. However, because land cannot be produced, there is no process that lowers the price of land.
A rise in the price of gold results in increased profits not only for those who are currently holding gold, but also increased activity in gold mining--more jobs, more profits, which ultimately spills over into other areas of the economy as investors in mining look for ways to spend their increased profits. A rise in the price of land has no such spillover benefits. Indeed, higher land prices results in a reduced rate of job creation, because the most vital component of any business plan--land--is harder to get. Fewer people can buy it, thus fewer people can start homes and businesses.
If the use of land as a store of value could somehow be reduced (and I will get to that), it would result in more opportunites for self employment, less urban blight, more efficient land usage, and thus more jobs. More jobs is another way of saying more demand for labor, which means the price of labor (wages) would be higher.
A thing has a use. The more people who want to use a thing, the greater the demand. The price of the thing is determined by the demand in relation to the supply. So, for example, if lots of people want toasters, and there aren't many toasters on the market, the price will be high. The result of this is that computer manufacturers will profit, encouraging others to enter the toaster industry, while buyers of toasters will take good care of their toasters so they don't have to replace them, resulting in more left for others. This will result in an increase of supply, which will result in a lower price. This is the typical rationale for capitalism: price works well for dealing of problems of scarcity.
Gold also has uses. You can make electrical contacts. You can make jewelry. Good does not tarnish. I'm sure there are many other uses for gold. And gold follows the same market dynamics as anything else: low supply and high price results ultimately in increased gold mining, which raises the supply, which lowers the price.
However, gold is also used as a store of value. Whenever investors are unsure of the future of the dollar and/or the stock market, they start buying gold. When prospects look good, they tend to sell their gold and buy other things with the proceeds. This use of gold as a store of value is yet another demand; the price of gold is influenced not only by industrial and commercial use, but by its financial use, as well. If we suddenly went from a gold market in which it is only used for its industrial uses to one that uses it as a store of value, the price would go up until production increased sufficiently to meet the new demand.
An example that could well end up happening is the Liberty Dollar. Silver is also used as a store of value, in addition to having uses as jewelry and in photography. However, the Liberty Dollar Organization is attempting to put silver into circulation as a barter medium. This adds an additional demand. The Liberty Dollar goes up with the value of silver. However, if the Liberty Dollar becomes popular, the demand of the LDO for silver will likely end up raising the price, in and of itself.
Land is the same. It is a vital component in wealth generation; no economic activity can take place without land. Because of this, land has a very stable value, one that increases steadily as the economy grows. Because of that, people use land as a store of value. Many buy land not for their own use, but simply so they can sell it at a profit at a later date. In the meantime they may or may not allow others to use it in exchange for rent. The existance of blighted regions is evidence that land investors are not always quick to lower their price to a level people are willing to pay.
When gold, silver, or toasters are used as a store of value, the price goes up. This stimulates production, and the price eventually reaches an equilibrium. This is not the case with land, because land is, by definition, not something that can be produced. If it can be, it is not land. The use of land as a store of value raises the price, making it more difficult for people to establish homes and businesses, thus raising unemployment and/or reducing people's economic independence. However, because land cannot be produced, there is no process that lowers the price of land.
A rise in the price of gold results in increased profits not only for those who are currently holding gold, but also increased activity in gold mining--more jobs, more profits, which ultimately spills over into other areas of the economy as investors in mining look for ways to spend their increased profits. A rise in the price of land has no such spillover benefits. Indeed, higher land prices results in a reduced rate of job creation, because the most vital component of any business plan--land--is harder to get. Fewer people can buy it, thus fewer people can start homes and businesses.
If the use of land as a store of value could somehow be reduced (and I will get to that), it would result in more opportunites for self employment, less urban blight, more efficient land usage, and thus more jobs. More jobs is another way of saying more demand for labor, which means the price of labor (wages) would be higher.
Thursday, May 24, 2007
US Warns Iran as Armada Enters Gulf
"The US today threatened new UN sanctions to punish Iran's nuclear drive as it ratcheted up tensions with the biggest display of naval power in the Gulf in years. A bristling US armada led by two aircraft carriers steamed into waters near Iran for exercises, hours before UN watchdogs said Iran was expanding its uranium enrichment program..."
This is something I haven't seen much of in the news I read recently. Most of what I've seen has to do with the Republican debates, and how everybody is excited by Ron Paul's cantidacy. Let us not forget that the election is still some time away, while our current President is steadily moving the government along toward war with Iran.
People will say "but they're making nukes." Indeed, the press is afire with reports of a steadily increasing program of enrichment. Remember, however, that this is the same bunch that was absolutely certain there were WMDs in Iraq.
Even if they are building nukes, honestly, it doesn't scare me in the least. They'd have to be incredibly stupid to actually use them. Of course, once they have them, we'd have to be incredibly stupid to invade, which is probably what they're going for--assuming they are building them at all. The US Government has a history of invading and abusing nations that cannot defend themselves--they leave people who do have nukes alone.
read more | digg story
This is something I haven't seen much of in the news I read recently. Most of what I've seen has to do with the Republican debates, and how everybody is excited by Ron Paul's cantidacy. Let us not forget that the election is still some time away, while our current President is steadily moving the government along toward war with Iran.
People will say "but they're making nukes." Indeed, the press is afire with reports of a steadily increasing program of enrichment. Remember, however, that this is the same bunch that was absolutely certain there were WMDs in Iraq.
Even if they are building nukes, honestly, it doesn't scare me in the least. They'd have to be incredibly stupid to actually use them. Of course, once they have them, we'd have to be incredibly stupid to invade, which is probably what they're going for--assuming they are building them at all. The US Government has a history of invading and abusing nations that cannot defend themselves--they leave people who do have nukes alone.
read more | digg story
Sunday, May 20, 2007
The Trouble With Government Grants
There are many ideas that many people put a great deal of faith in, with the justification being "A majority of scientific organizations say..." A majority of scientific organizations say the current global warming is caused by increased CO2 emissions. A majority of scientific organizations say that AIDS is caused by HIV. A majority of scientific organizations say even tiny amounts of certain substances can harm certain people. The thing people fail to realize is that a majority of scientific organizations can be wrong.
However, it isn't enough to say "truth is not established by a majority." These are, after all, scientists, and scientists are expected to know about these things. Lately, I've taken to responding to the "a majority of scientists say" comment with "A majority of scientists are selected and funded by politicians." The article linked goes into great detail as to how they are selected and funded, by whom, and how this entrenches a dogmatic orthodoxy within the "scientific community." It calls for new kinds of funding with less government control.
Of course, my solution is to end government funded scientific funding altogether, other than funding designed to produce results for specifically governmental use, such as military research. Never mind the tax dollars that would be saved; cutting off funding for an entrenched, hierarchical model of scientific research would do a great deal of good in and of itself.
read more | digg story
However, it isn't enough to say "truth is not established by a majority." These are, after all, scientists, and scientists are expected to know about these things. Lately, I've taken to responding to the "a majority of scientists say" comment with "A majority of scientists are selected and funded by politicians." The article linked goes into great detail as to how they are selected and funded, by whom, and how this entrenches a dogmatic orthodoxy within the "scientific community." It calls for new kinds of funding with less government control.
Of course, my solution is to end government funded scientific funding altogether, other than funding designed to produce results for specifically governmental use, such as military research. Never mind the tax dollars that would be saved; cutting off funding for an entrenched, hierarchical model of scientific research would do a great deal of good in and of itself.
read more | digg story
Wednesday, May 16, 2007
A Small War Guaranteed To Damage a Superpower
Patrick Cockburn and Tom Engelhardt describe what the Bush Administration Has Wrought in Iraq.
It starts out an "excellent essay on the misadventures of our Empire" (Billhaynes). At the end, the solutions he advocates include a committment to strengthen the U.N., international arms control, and protectionist trade policy (including a reference to "free trade" as "outdated doctrine").Perhaps tarrifs would be a good temporary source of funds to pay down the national debt, but if they are to be used, they should be maintained at a revenue-generating level, and not a level designed to implement an "industrial policy." The way to "reduce our dependence on our trade partners" is not to hinder international trade, but simply to stop creating artificial credit--end the Federal Reserve.
The only credit that should be available is that which is willingly offered and accepted by individuals at rates determined in the marketplace. The People can figure out best how to reduce our dependence, each in their own way, without the interferance of government.Bad loans should have consequences, and irresponsible creditors lending to iresponsible debtors should not be bailed out by the government. We are reaching the point where this will be enforced upon us by nature itself--the government itself is close to going bankrupt. By attempting to protect people from the disciplinary pain of minor bank failures, we have set ourselves up for one big, final, world-destroying bank failure: the bankruptcy of the U.S. Government and the collapse of the U.S. Dollar.
read more | digg story
It starts out an "excellent essay on the misadventures of our Empire" (Billhaynes). At the end, the solutions he advocates include a committment to strengthen the U.N., international arms control, and protectionist trade policy (including a reference to "free trade" as "outdated doctrine").Perhaps tarrifs would be a good temporary source of funds to pay down the national debt, but if they are to be used, they should be maintained at a revenue-generating level, and not a level designed to implement an "industrial policy." The way to "reduce our dependence on our trade partners" is not to hinder international trade, but simply to stop creating artificial credit--end the Federal Reserve.
The only credit that should be available is that which is willingly offered and accepted by individuals at rates determined in the marketplace. The People can figure out best how to reduce our dependence, each in their own way, without the interferance of government.Bad loans should have consequences, and irresponsible creditors lending to iresponsible debtors should not be bailed out by the government. We are reaching the point where this will be enforced upon us by nature itself--the government itself is close to going bankrupt. By attempting to protect people from the disciplinary pain of minor bank failures, we have set ourselves up for one big, final, world-destroying bank failure: the bankruptcy of the U.S. Government and the collapse of the U.S. Dollar.
read more | digg story
Sunday, May 06, 2007
The Fall of Santiago
Musings on a game of Sid Meier's Pirates! Live the Lfe.
(note: I updated twice today. Don't miss Drains of Value 5, below)
Not long ago I acquired a copy of Pirates! for my XBox (actually, I have a 360; the game works fine except for the Live leaderboard... the game won't connect). In this game you take on the role of a pirate, plying the Carribean and the Spanish Main for treasure, prestige, and, when working for one of the great powers of the day (England, Spain, France, and the Netherlands), rank. You capture ships, raid towns, and, if your force is large enough, you can capture them, installing a governor from a rival power. In a recent game, I did just this, replacing the Spanish governor of Santiago with an English one.
Santiago is one of two major settlements on the island of Cuba, the other being Havana, on the north coast. At the time. I had a large and unruly crew... I needed plunder. Santiago was described as being a "wealthy Spanish capitol." What that meant is that there was a lot of booty to be had by taking Santiago, but also a lot of soldiers to beat to get to it. Even with my three-hundred and fifty men or so, I wasn't going to be able to take it.
So I partnered up with another band from a nearby pirate haven. I allowed them to fall on Santiago's defences, weakening it, and then I and my men invaded, claiming the prize. They had been weakened to the point where I was able to take total posession of the town, and installed an English governor. The city went from being a wealthy Spanish capitol to a poor English outpost overnight.
The town deteriorated further under English rule, until finally England declined to defend it at all (it was defended by no soldiers at one point), and the Spanish finally retook it. It began to recover a bit at that point, but for the remainder of the game. Santiago was never the same. It made me think about similar incidents in actual human history.
Let us consider the circumstances. First off, the justification is that somehow, all that individual prosperity that happened under the Spanish flag was somehow an affront to English security. My personal motivations, while partially motivated by a desire to advance military rank (at that point, I think I was working up through titles of nobility), was mostly motivated by a personal problem: too many men, not enough money. Attacking Santiago was a cynical attempt to reverse that calculation: eliminate some of my men while increasing our gold stores. Yes, my primary goal involved killing not Spaniards, but my own men! The people of Santiago suffered greatly because of my black hearted avarice.
It reminds me of Kiev. Kiev was a Russian city on the Black Sea (I think) and was, and one point, the cutural and commercial center of Russia. It was a prosperous and commercial city, a relatively free city. Under Kiev's leadership, Russian might have become something admirable, but it was not to be. Mongols destroyed the city, and took tribute from the rest. Kiev never fully recovered, and when Russia finally did develop some kind of central identity, it wasn't a commercial center that won that honor, but rather the most productive collector of tribute for the Mongols: Moscow.
The Mongols also ruined Islamic civilization. Prior to the Mongol invasion, Islamic areas were well known for philosophy, mathamatics, engineering, commerce, even some novel and forward thinking ideas. The success of the Mongol invasion left them grasping for the answer to a question: Why? The conclusion they came to, as it so often is for religiously centered civilizations that are conquered from without, is that God was punishing them for being insufficiently rigid and intolerant. The Islamic world was never the same.
A similar thing happend in Iran. A revolution overthew the Shah, and a democratic government elected. With American backing, the Shah returned. Why, do you suppose, did that decent government fall so quickly? Well, of course, it was because Americans are infidels, and Iranians were insufficiently rigid and intolerant to oppse them. :-\
War is a horrible thing, and not just because lots of people die. It's because it destroys the hopes and aspirations of humankind, often leading an entire people into a culture of despair. I found myself wondering: What form would it have taken in the future history of my game? What happened to the people of eastern Cuba?
Nevertheless, virtual war against digital enemies is still fun, so I will return to the Spanish Main. This time, I will not stop at one city. All America will live under the... how about the Dutch flag? ;)
(note: I updated twice today. Don't miss Drains of Value 5, below)
Not long ago I acquired a copy of Pirates! for my XBox (actually, I have a 360; the game works fine except for the Live leaderboard... the game won't connect). In this game you take on the role of a pirate, plying the Carribean and the Spanish Main for treasure, prestige, and, when working for one of the great powers of the day (England, Spain, France, and the Netherlands), rank. You capture ships, raid towns, and, if your force is large enough, you can capture them, installing a governor from a rival power. In a recent game, I did just this, replacing the Spanish governor of Santiago with an English one.
Santiago is one of two major settlements on the island of Cuba, the other being Havana, on the north coast. At the time. I had a large and unruly crew... I needed plunder. Santiago was described as being a "wealthy Spanish capitol." What that meant is that there was a lot of booty to be had by taking Santiago, but also a lot of soldiers to beat to get to it. Even with my three-hundred and fifty men or so, I wasn't going to be able to take it.
So I partnered up with another band from a nearby pirate haven. I allowed them to fall on Santiago's defences, weakening it, and then I and my men invaded, claiming the prize. They had been weakened to the point where I was able to take total posession of the town, and installed an English governor. The city went from being a wealthy Spanish capitol to a poor English outpost overnight.
The town deteriorated further under English rule, until finally England declined to defend it at all (it was defended by no soldiers at one point), and the Spanish finally retook it. It began to recover a bit at that point, but for the remainder of the game. Santiago was never the same. It made me think about similar incidents in actual human history.
Let us consider the circumstances. First off, the justification is that somehow, all that individual prosperity that happened under the Spanish flag was somehow an affront to English security. My personal motivations, while partially motivated by a desire to advance military rank (at that point, I think I was working up through titles of nobility), was mostly motivated by a personal problem: too many men, not enough money. Attacking Santiago was a cynical attempt to reverse that calculation: eliminate some of my men while increasing our gold stores. Yes, my primary goal involved killing not Spaniards, but my own men! The people of Santiago suffered greatly because of my black hearted avarice.
It reminds me of Kiev. Kiev was a Russian city on the Black Sea (I think) and was, and one point, the cutural and commercial center of Russia. It was a prosperous and commercial city, a relatively free city. Under Kiev's leadership, Russian might have become something admirable, but it was not to be. Mongols destroyed the city, and took tribute from the rest. Kiev never fully recovered, and when Russia finally did develop some kind of central identity, it wasn't a commercial center that won that honor, but rather the most productive collector of tribute for the Mongols: Moscow.
The Mongols also ruined Islamic civilization. Prior to the Mongol invasion, Islamic areas were well known for philosophy, mathamatics, engineering, commerce, even some novel and forward thinking ideas. The success of the Mongol invasion left them grasping for the answer to a question: Why? The conclusion they came to, as it so often is for religiously centered civilizations that are conquered from without, is that God was punishing them for being insufficiently rigid and intolerant. The Islamic world was never the same.
A similar thing happend in Iran. A revolution overthew the Shah, and a democratic government elected. With American backing, the Shah returned. Why, do you suppose, did that decent government fall so quickly? Well, of course, it was because Americans are infidels, and Iranians were insufficiently rigid and intolerant to oppse them. :-\
War is a horrible thing, and not just because lots of people die. It's because it destroys the hopes and aspirations of humankind, often leading an entire people into a culture of despair. I found myself wondering: What form would it have taken in the future history of my game? What happened to the people of eastern Cuba?
Nevertheless, virtual war against digital enemies is still fun, so I will return to the Spanish Main. This time, I will not stop at one city. All America will live under the... how about the Dutch flag? ;)
Three Unproductive Drains of Value: Part 5
What to do about currency debasement, inflation.
I've shown that counterfeiting and currency inflation are basically the same thing, undertaken by private parties and the government, respectively. This one is probably the easiest to fix out of all of them. All that is required is monetary freedom; the government doesn't really have to do anything, other than get out of the way.
It is entirely possible for private companies to issue money; this is already happening. However, the legality of such things is in question. It really shouldn't be. The simple fact is that the current monetary system is an upward wealth transfer system, and any alternative should be tolerated, if not welcomed. One thing that could not be done instantly is to abolish the Federal Reserve without there being something else in circulation to replace it. This, of course, is precisely why certain powerful interests will oppose any attempt to establish a privately issued medium of exchange superior to that issued by the government.
As I have written before, privately issued currency would not necessarily have to be based upon gold and/or silver. They could be based upon any other commodity, or even shares in business of one sort or another. Gold and silver have the advantage of rarity and durability, but I can see a place in our monetary system for many other sorts of things, as well. The key feature is that no kind of money should have a government monopoly.
The role of government in this would simply be to enforce contracts and claims of purity. If a company issues a silver piece that claims to contain a ounce of .999 pure silver, but it turns out that they do not, the courts would be there to settle the dispute. I would also like to see a law that says that any credit backed by a commodity would have to be 100% backed--a company would not be allowed to issue more credits backed by a commodity than they have the commodity in their possession or currently owed to them.
I say "currently owed to them" because one of the functions of banking is making loans on behalf of their depositors. I would require them to specify--in writing--what percentage of a given depositor's account is under loan at any given time, and require that the depositor agree that they are only allowed to withdraw the remainder over a given period of time. In other words, if I deposit twenty ounces of silver into my bank, specifying that they can loan out up to 50% of it, I could only go back and withdraw 10 ounces; I would have to give them a contractually specified amount of time to come up with the rest.
This would ensure two things. First, it would prevent a bank from inflating the supply of a given commodity. If there exists x amount of silver, people will trade it based upon that knowledge. If there exists 2x amount of silver backed credits (be they paper or digital), people will then begin to trade it at a lower rate. This is dishonest, and should not be allowed. Secondly, it would ensure that banks in compliance would never collapse, provided they engaged in sound lending practices. Nobody would wake up one day to find that the 100 ounces of silver they thought they had saved up was, in fact, only 20 ounces of silver, because the bank over-issued silver credits.
I could see a role for government in the establishment of a standard of weight and purity for a commodity. For example, early in our history, the US Government defined the "dollar" as being "equal to 412.5 grains (26.73 g) of 90% silver" (ref). While the Treasury was the only entity allowed to issue coins, banks issued their own bank notes, backed by silver dollars. The government could create a similar standard once again, though it'd have to come up with a new name, having so thoroughly corrupted the word "dollar". However, I don't even think this is necessary. Terms like "ounce" and "gram" are sufficient, and the while individuals would determine what degree of weight and purity they prefer to trade in, the network value of money would strongly encourage a consensus standard.
The key feature of all of this is that nobody would have the authority to issue unbacked credits at will and force anyone to accept it in payment (as the Federal Reserve has today). The wealthy and the powerful would no longer be able to steal the earnings of the poor and middle class by way of currency inflation.
I've shown that counterfeiting and currency inflation are basically the same thing, undertaken by private parties and the government, respectively. This one is probably the easiest to fix out of all of them. All that is required is monetary freedom; the government doesn't really have to do anything, other than get out of the way.
It is entirely possible for private companies to issue money; this is already happening. However, the legality of such things is in question. It really shouldn't be. The simple fact is that the current monetary system is an upward wealth transfer system, and any alternative should be tolerated, if not welcomed. One thing that could not be done instantly is to abolish the Federal Reserve without there being something else in circulation to replace it. This, of course, is precisely why certain powerful interests will oppose any attempt to establish a privately issued medium of exchange superior to that issued by the government.
As I have written before, privately issued currency would not necessarily have to be based upon gold and/or silver. They could be based upon any other commodity, or even shares in business of one sort or another. Gold and silver have the advantage of rarity and durability, but I can see a place in our monetary system for many other sorts of things, as well. The key feature is that no kind of money should have a government monopoly.
The role of government in this would simply be to enforce contracts and claims of purity. If a company issues a silver piece that claims to contain a ounce of .999 pure silver, but it turns out that they do not, the courts would be there to settle the dispute. I would also like to see a law that says that any credit backed by a commodity would have to be 100% backed--a company would not be allowed to issue more credits backed by a commodity than they have the commodity in their possession or currently owed to them.
I say "currently owed to them" because one of the functions of banking is making loans on behalf of their depositors. I would require them to specify--in writing--what percentage of a given depositor's account is under loan at any given time, and require that the depositor agree that they are only allowed to withdraw the remainder over a given period of time. In other words, if I deposit twenty ounces of silver into my bank, specifying that they can loan out up to 50% of it, I could only go back and withdraw 10 ounces; I would have to give them a contractually specified amount of time to come up with the rest.
This would ensure two things. First, it would prevent a bank from inflating the supply of a given commodity. If there exists x amount of silver, people will trade it based upon that knowledge. If there exists 2x amount of silver backed credits (be they paper or digital), people will then begin to trade it at a lower rate. This is dishonest, and should not be allowed. Secondly, it would ensure that banks in compliance would never collapse, provided they engaged in sound lending practices. Nobody would wake up one day to find that the 100 ounces of silver they thought they had saved up was, in fact, only 20 ounces of silver, because the bank over-issued silver credits.
I could see a role for government in the establishment of a standard of weight and purity for a commodity. For example, early in our history, the US Government defined the "dollar" as being "equal to 412.5 grains (26.73 g) of 90% silver" (ref). While the Treasury was the only entity allowed to issue coins, banks issued their own bank notes, backed by silver dollars. The government could create a similar standard once again, though it'd have to come up with a new name, having so thoroughly corrupted the word "dollar". However, I don't even think this is necessary. Terms like "ounce" and "gram" are sufficient, and the while individuals would determine what degree of weight and purity they prefer to trade in, the network value of money would strongly encourage a consensus standard.
The key feature of all of this is that nobody would have the authority to issue unbacked credits at will and force anyone to accept it in payment (as the Federal Reserve has today). The wealthy and the powerful would no longer be able to steal the earnings of the poor and middle class by way of currency inflation.
Wednesday, May 02, 2007
Loyalty Day!
Oh dear God...
The very name of this new "holiday" hass Orwellian overtones. Here we have the head of the administration that presided over the biggest centralization of government since FDR, the most overt establisher of a foreign-backed government outside his jurisdiction, bleating about our beloved tradition of "freedom and self-government." Who, exactly, do these people think they are kidding? And it wasn't just Bush. " The Congress, by Public Law 85-529, as amended, has designated May 1 of each year as "Loyalty Day."
Huh. I was searching for this at house.gov, and I discovered that congress is busily creating "days" for all kinds of stuff:
I found the text in the US Code, but I can't seem to find the actual record of it being passed. This doesn't make me suspicious of the President's proclaimation, so much as it does my searching skills, but I am very curious as to how Nunes, Boxer, and Feinstein voted on this. I expect they all voted in favor, since they're all such good patriots.
The very name of this new "holiday" hass Orwellian overtones. Here we have the head of the administration that presided over the biggest centralization of government since FDR, the most overt establisher of a foreign-backed government outside his jurisdiction, bleating about our beloved tradition of "freedom and self-government." Who, exactly, do these people think they are kidding? And it wasn't just Bush. " The Congress, by Public Law 85-529, as amended, has designated May 1 of each year as "Loyalty Day."
Huh. I was searching for this at house.gov, and I discovered that congress is busily creating "days" for all kinds of stuff:
Can't you just feel the love?
9 . Designating March 2, 2007, as `Read Across America Day'. (Agreed to by Senate)[S.RES.91.ATS]
10 . Designating April 20, 2007, as `National and Global Youth Service Day'. (Agreed to by Senate)[S.RES.158.ATS]
11 . Designating March 25, 2007, as `Greek Independence Day: A National Day of Celebration of Greek and American Democracy'. (Reported in Senate)[S.RES.95.RS]
6 . Designating March 25, 2007, as `Greek Independence Day: A National Day of Celebration of Greek and American Democracy'. (Introduced in Senate)[S.RES.95.IS]
17 . Designating May 18, 2007, as `Endangered Species Day', and encouraging the people of the United States to become educated about, and aware of, threats to species, success stories in... (Reported in Senate)[S.RES.125.RS]
18 . Designating April 6, 2007, as `National Missing Persons Day'. (Introduced in Senate)[S.RES.112.IS]
19 . Designating March 25, 2007, as `Greek Independence Day: A National Day of Celebration of Greek and American Democracy'. (Agreed to by Senate)[S.RES.95.ATS]
20 . Designating April 6, 2007, as `National Missing Persons Day'. (Agreed to by Senate)[S.RES.112.ATS]
I found the text in the US Code, but I can't seem to find the actual record of it being passed. This doesn't make me suspicious of the President's proclaimation, so much as it does my searching skills, but I am very curious as to how Nunes, Boxer, and Feinstein voted on this. I expect they all voted in favor, since they're all such good patriots.
Sunday, April 15, 2007
Three Unproductive Drains of Value: Part 4
What to do about theft.
I have shown that theft is something that is done both by people we traditionally recognize as criminals, as well as by government. The question at hand is: what can be done about theft, both by your regular pickpockets, burglers, muggers, and such, as well as by the grand extortion ring we call "government?"
The simplest one to solve logically is also the most difficult politically. Let us make the assumption, for the moment (an assumption I will attempt to flesh out in part 6) that there is a source of sufficient revenue other than arbitrary taxation which can be used to support government. Assuming that is true, ending institutionalized theft is simply a matter of ending that arbitrary taxation, and switching over to that untapped source of public revenue. (Again, I will discuss that in detail in part 6.) We'll take the "magic wand" approach to government theft for now, and move on to noninstitutional theft.
I think the best way to reduce regular theft, vandalism, and other crimes of property is to reverse it wherever it is found. In other words, restitution should be our primary model in dealing with crimes of property. Did a kid spraypaint your wall? I say give him a chance to fix it himself, whether that be by acquring the paint and painting it personally, or paying someone else to do it, or paying the equivalent money directly to the owner of the wall. Wallet get stolen? Make the thief give back an equal amount. Something taken from the house? The thief should have to give it, or its monetary equivalent, back. Murray Rothbard wrote an excellent article on how, and why, restitution would work, but here is my stab at explaining my take on it.
However, just that amount is not enough. Money in the thief's hands is money you can't spend just yet. It's a kind of "forced interest-free loan" if he only has to pay back what he took. I am inclined to use the Book of Exodus as a model as to what must be paid back in addition to the base amount. For things that are replaceable on a one-to-one basis, such as "silver or goods for safekeeping," televisions, jewelry, and anything still in the thief's posession and intact, the thief should have to pay back double what he took. However, for things which have irreplacable qualities which were either sold or damaged beyond recovery before the thief was found, the thief should have to pay back four or five times as much. Biblial examples include oxen and sheep. I might include such things as personal computers, since at times, the value of such a thing includes data. Folks should be paid back not only for the machine itself, but also for their digital photo albums, personal writings, and other things which can be lost if such a machine is lost. I'm not certain about that, but any living thing which is stolen and/or killed should be replaced double.
In the event that the thief is unable to pay, the thief should be required to work to pay it back. The system I prefer is a system of indentured servitude. The victim would be permitted to work the thief, keeping all the proceeds but providing room and board to the thief, for a period of time not to exceed six years. After the term is served, the servent would be given a statuatorily determined amount of money and supplies and sent on his way. (Once again, I model it after the system given in the Bible--Deuteronomy 12 in this case.) Because not everybody is likely to desire--or even be comfortable with--the responsibility of overseeing the indentured servitude of one who previously victimized them, the servant's term would be transferralbe; he could sell the term to someone else. This system would have numerous advantages.
First off, I think the requirement for the thief to pay back twice as much is much more just than the way we currently do things. These days, if a thief is caught, he is incarcerated. The victim, who has already lost money to the thief, is now among the many who will lose yet more providing the thief room and board in exchange for nothing. Double restitution, I think, would be a sufficient deterrant, and it would restore the victim's fortunes, rather than hurting it further.
For those who are unable to pay the required restitution, indentured servitude would ensure that the victim still got something back. As for the thief, he would spend the next few years not only paying the victim back, but also accumulating job skills, a work history, and finally capital to get him started once he regains his freedom. I can imagine companies arising whose business is purchasing indentured terms, and then maximizing the return on their investment by attempting to get maximum value out of their servents, which means discovering their talents, developing them, utilizing them. In the end, not only is the former victim better off than he started, so is the former thief! The best part: no tax dollars need go toward incarceration.
Then there is battery (which is separate from assault, here in California). I think that the accused should be given a choice between two options: suffering injury equivalent to what was suffered by the victim, or paying for medical care sufficient to restore the victim to full health, and paying it twice over (to compensate the victim for lost time). In other words, an eye for an eye, a tooth for a tooth... unless they can pay the doctor for a new eye or a new tooth. Servitude would not be an option for someone who was unable to pay doctors fees. (Note that the flat doubling of medical expenses, rather than evaluating for "lost time" ensures that all victims are compensated equally--a CEO is owed nothing more than a minimum-wage burger flipper.)
This would extend to murder: I am a firm believer that if a life is taken, a life is owed. The victim himself should have first claim on what is to be done with his murder--if his will specifies that anyone who kills him shall also be killed, then the murderer should be killed. If nothing specific is in the will, then the life of the murderer falls into the hands of the next of kin.
Now, all that said, I do believe that the victim should be in control of what punishment is exacted--not the state (other than ensuring punishment does not exceed a maximum limit). While restitution would be the right of the victim, so would forgiveness. If the victim does not wish to punish the perpetrator, then the perpetrator should not be punished. Someone who did not want to throw some twelve year old shoplifter into six years of servitude could waive that penalty. Someone who does not believe in the death penalty could waive the death penalty. If two men fight, each causing the other injury, they would have the right to call it quits, rather than having both of them suffer yet more injuries under the "eye for an eye" clause.
Thus, the demand for double resitution would reduce theft both by refersing previous thefts (we can count them as "not commited" for the purposes of analyzing how much thefts go on), and would act as a deterrant. For those who could not pay it back, the period of indentured servitude would provide not only a reversal and a deterrant, but also a certain amount of rehabilitation. The complete lack of prisons for crimes of property (other than jails where the accused can be held for trial), reduces the necessary amount of government revenue greatly, which has the potential to significantly reduce governmental theft levels, even without the ideas I will introduce later.
I have shown that theft is something that is done both by people we traditionally recognize as criminals, as well as by government. The question at hand is: what can be done about theft, both by your regular pickpockets, burglers, muggers, and such, as well as by the grand extortion ring we call "government?"
The simplest one to solve logically is also the most difficult politically. Let us make the assumption, for the moment (an assumption I will attempt to flesh out in part 6) that there is a source of sufficient revenue other than arbitrary taxation which can be used to support government. Assuming that is true, ending institutionalized theft is simply a matter of ending that arbitrary taxation, and switching over to that untapped source of public revenue. (Again, I will discuss that in detail in part 6.) We'll take the "magic wand" approach to government theft for now, and move on to noninstitutional theft.
I think the best way to reduce regular theft, vandalism, and other crimes of property is to reverse it wherever it is found. In other words, restitution should be our primary model in dealing with crimes of property. Did a kid spraypaint your wall? I say give him a chance to fix it himself, whether that be by acquring the paint and painting it personally, or paying someone else to do it, or paying the equivalent money directly to the owner of the wall. Wallet get stolen? Make the thief give back an equal amount. Something taken from the house? The thief should have to give it, or its monetary equivalent, back. Murray Rothbard wrote an excellent article on how, and why, restitution would work, but here is my stab at explaining my take on it.
However, just that amount is not enough. Money in the thief's hands is money you can't spend just yet. It's a kind of "forced interest-free loan" if he only has to pay back what he took. I am inclined to use the Book of Exodus as a model as to what must be paid back in addition to the base amount. For things that are replaceable on a one-to-one basis, such as "silver or goods for safekeeping," televisions, jewelry, and anything still in the thief's posession and intact, the thief should have to pay back double what he took. However, for things which have irreplacable qualities which were either sold or damaged beyond recovery before the thief was found, the thief should have to pay back four or five times as much. Biblial examples include oxen and sheep. I might include such things as personal computers, since at times, the value of such a thing includes data. Folks should be paid back not only for the machine itself, but also for their digital photo albums, personal writings, and other things which can be lost if such a machine is lost. I'm not certain about that, but any living thing which is stolen and/or killed should be replaced double.
In the event that the thief is unable to pay, the thief should be required to work to pay it back. The system I prefer is a system of indentured servitude. The victim would be permitted to work the thief, keeping all the proceeds but providing room and board to the thief, for a period of time not to exceed six years. After the term is served, the servent would be given a statuatorily determined amount of money and supplies and sent on his way. (Once again, I model it after the system given in the Bible--Deuteronomy 12 in this case.) Because not everybody is likely to desire--or even be comfortable with--the responsibility of overseeing the indentured servitude of one who previously victimized them, the servant's term would be transferralbe; he could sell the term to someone else. This system would have numerous advantages.
First off, I think the requirement for the thief to pay back twice as much is much more just than the way we currently do things. These days, if a thief is caught, he is incarcerated. The victim, who has already lost money to the thief, is now among the many who will lose yet more providing the thief room and board in exchange for nothing. Double restitution, I think, would be a sufficient deterrant, and it would restore the victim's fortunes, rather than hurting it further.
For those who are unable to pay the required restitution, indentured servitude would ensure that the victim still got something back. As for the thief, he would spend the next few years not only paying the victim back, but also accumulating job skills, a work history, and finally capital to get him started once he regains his freedom. I can imagine companies arising whose business is purchasing indentured terms, and then maximizing the return on their investment by attempting to get maximum value out of their servents, which means discovering their talents, developing them, utilizing them. In the end, not only is the former victim better off than he started, so is the former thief! The best part: no tax dollars need go toward incarceration.
Then there is battery (which is separate from assault, here in California). I think that the accused should be given a choice between two options: suffering injury equivalent to what was suffered by the victim, or paying for medical care sufficient to restore the victim to full health, and paying it twice over (to compensate the victim for lost time). In other words, an eye for an eye, a tooth for a tooth... unless they can pay the doctor for a new eye or a new tooth. Servitude would not be an option for someone who was unable to pay doctors fees. (Note that the flat doubling of medical expenses, rather than evaluating for "lost time" ensures that all victims are compensated equally--a CEO is owed nothing more than a minimum-wage burger flipper.)
This would extend to murder: I am a firm believer that if a life is taken, a life is owed. The victim himself should have first claim on what is to be done with his murder--if his will specifies that anyone who kills him shall also be killed, then the murderer should be killed. If nothing specific is in the will, then the life of the murderer falls into the hands of the next of kin.
Now, all that said, I do believe that the victim should be in control of what punishment is exacted--not the state (other than ensuring punishment does not exceed a maximum limit). While restitution would be the right of the victim, so would forgiveness. If the victim does not wish to punish the perpetrator, then the perpetrator should not be punished. Someone who did not want to throw some twelve year old shoplifter into six years of servitude could waive that penalty. Someone who does not believe in the death penalty could waive the death penalty. If two men fight, each causing the other injury, they would have the right to call it quits, rather than having both of them suffer yet more injuries under the "eye for an eye" clause.
Thus, the demand for double resitution would reduce theft both by refersing previous thefts (we can count them as "not commited" for the purposes of analyzing how much thefts go on), and would act as a deterrant. For those who could not pay it back, the period of indentured servitude would provide not only a reversal and a deterrant, but also a certain amount of rehabilitation. The complete lack of prisons for crimes of property (other than jails where the accused can be held for trial), reduces the necessary amount of government revenue greatly, which has the potential to significantly reduce governmental theft levels, even without the ideas I will introduce later.
Sunday, April 08, 2007
Three Unproductive Drains of Value: Part 3
Rent
Le us imagine a few businesses, in which one party supplies the labor, another the capital, and a third access to land.
Imagine a farmer on someone else's land (a historically common enough phenomenon). He supplies the labor, both his own, and those of his laborers. The owner of the land supplies access to his land. The bank loans to the farmer every spring for capital expenses throughout the year (seed, tools, parts, wages for his laborers, etc). At the end of the year, the harvest occurs, is sold at market (or, in more primative economies, divided directly), and the proceeds are divided between the farmer, the banker, and the landowner.
Or imagine a shop run on someone else's lot (also a common enough phenomenon). The shopkeeper provides the labor. The bank supplies money for stocking, building repairs, advance wages, etc. The landowner supplies access to his land. The shopkeeper hopefully manages to make enough of a profit on his goods that he can afford to pay back the bank, pay the rent on the land, and hopefully still has enough left over to make it worth his while.
In both of these examples, I have clearly delineated the three components of an economy defined by classical economics: land, labor, and capital. The interaction of the three is how wealth is created. The posession of the three determines how wealth is distributed. To the landowner goes the rent. To the banker goes interest on any capital loans. Whatever is leftover is what goes into wages. If it isn't enough. the business fails.
Of course, each of those businesses could be configured differently, by combining roles. The farmer, for example, could have in past years saved enough that he now acts as his own banker, getting to keep that which would have otherwise gone into interest on loans (and possibly making interest on the money while it waits in the bank). Or, he could be the owner of the land, getting to keep that which would otherwise be paid in rent to another landowner. Or, the farmer could theoretically "own" the land, on the condition that he pays his mortgage--principal and interest; thus the bank can be thought of as the landowner (becoming such literally should the business fail). Or, we could be talking about a subsistance-farming agrarian society, in which all roles are contained in a single individual or family. If you (the reader) can think of any other combinations that introduce a fourth economic component (other than land, labor, and capital), please tell me about it.
The thing to examine is that the wealth resulting from economic activity can be thought of as being divided into three discrete streams: rent (for landowners), wages (for laborers), and interest (for bankers). The question I examine here is: do all three of these compensate individuals for productive activity, thus providing an incentive for productive activity? For the worker, the answer is obvious: yes, it does. The worker earns his wages, whether he be a blue-collar grunt on the factory floor, or the boss making all the hard decisions (and dying of a heart-attack by fifty-years of age?). What about the other two?
The thing to recognize about the banker (at least, the honest banker--today's government "banking system" is not honest) is that he, too, is a sort of laborer. People save money at his institution rather than under their floorboard (for example), and he can make that money available for others while the owner doesn't need it. He has to keep accurate accounts. He has to gather the information necessary to make decisions as to whom should be lent money, what rate to charge (to compensate him for his efforts, as well as to compensate his account holders for making their stored wages--and rent--available to others). He has to correctly discern the level of risk a borrower presents. All of this requires time and effort. Of course, his account holders profit from the labor of others (to a degree directly proportional to the size of their account), but by making funds available, production that would otherwise not occur does occur.
Thus, I conclude that interest does provide an incentive to behavior that increases productivity. In addition, as savings rise relative to productivity, the price of access to savings--the interest rate--drops. It's a simple matter of supply and demand: the greater the supply of money for borrowing, the lower the price of access is going to be. A high interest rate stimulates a greater rate of savings, which ultimately lowers the interest rate, which decreases the savings rate, increasing the rate of consumption, which creates new opporunities for investment (demand for products), which raises the interest rate...
Land is another matter. Leaving aside the matter of how the land was obtained (assuming, for example, it was inherited), the landowner contributes absolutely nothing to economic activities. If the farmer did not exist, obviously farming would not get done. The farmer could certainly survive without the banker (the one that provides capital only, and not land by mortgage), but access to capital enables him not only to survive, but to thrive. (Note that the plight of the farmer who spends his life in the pocket of the banker is the result either of bad decision-making on the part of the farmer (got greedy, took out an unwise loan, and thus deserves to fall), or the result of the banker also acting the part of landowner.) But not only would the farmer do just fine without the landowner (either he or the community owns the land), the farmer would do far better in that he could reinvest more of his proceeds, or just enjoy a higher standard of living.
The same goes for the shopkeeper--though capital is certainly more vital for him than for the farmer (his stock IS capital). If the shopkeeper did not have to pay rent, either he could keep more of his profits, or he could lower his prices--thus the customer is also better off without the landowner.
In fact, the only reason rent expenses even exist is because access to land, like everything else, is scarce, but necessary: everybody needs it, since no economic activity can occur without it. And unlike the market for capital, in which the price goes down as productivity rises, the price of land rises with productivity. For while capital increases with quantity as people save, land is a fixed quantity. As the number of people and dollars chasing land goes up (demand for land), the supply remains constant, and can never be increased. Technological developments can open up new frontiers, but this only opens land resources previously unexploited, or underexploited relative to the new technology. It does not create new land for new people to own; instead, barring conquest, the old owners own both the old potential and the new potential.
So what is land? Take a look at any wealth generating system. Separate first out the day-to-day efforts of the people involved: that is labor. Separate out anything created with human hands (or machines): that is capital. What is left is land: the uncreated, natural potential of the earth (and beyond). It includes the right of the farmer to plant and harvest where another cannot; it does not include the crops, fences, tractor, barn, etc. It includes the city lot a store or a house exists where another cannot; it does not include the building itself, the landscaping, the electrical system, the plumbing, or anything else of that nature. It includes the right-of-way where a road, a cable, or a track exists and another cannot; it does not include the asphault or the necessary maintenance, the cable, the tracks, the ties, or anything like that. It includes bandwidth in the electromagnetic spectrum in a given area where one can broadcast, but another cannot; it does not include the broadcast equipment or the content of the broadcast. It includes the potential of an aquatic system where one can fish but another cannot (the waters having already been fished); it does not include the boats or the actual fish. It includes the limited orbital space where one sattelite can exist and another cannot (to try would result in a collision); it does not include the satellite or the costs of launching it.
Another thing about land, unlike labor and capital, is that unlike the other two, exclusive personal ownership of land, always and everywhere, originates in conquest. Men are always and everywhere recognized as free agents where their own labor is concerned--slavery is required to make man into a commodity. A laborer who saves his wages (creating a store of capital) is naturally the owner of such, whether he be a hunter-gatherer who took the time to pick a rock off the ground and chip it into an arrowhead, a merchant who purchased something one place and took the time to transport it somewhere it was needed more, or an industrial laborer saving a nest egg he hopes to invest into a business of his own. However, land, always and everywhere, is owned either by nobody, or by the community, until such time as it is seized by force. Individual land ownership in Europe began with Roman conquests--land was seized from communities, and distributed individually among the victors. Individual land rights in Amerca was a Roman tradition brought across the sea, and established by conquest, as well.
Consider your dinner. Someone took the time to transform raw food into dinner. They bought that food from a grocery store, who had it shipped there and stored it until you needed it. The bought it from someone else, ultimately leading back to the farmer, who sowed, watered, weeded, and reaped.
However, your lot is different. You bought it from someone, who bought it from someone else, who bought it from someone else. Trace it back far enough, and if you be an American, the original owner probably bought it from the government. The government acquired it by declaration: "This land belongs to us, and anyone who disagrees will die." Things are a little more complicated in Europe, I'd imagine, though it all probably goes back either to some Roman senator who stole it from the original inhabitants, or some Germanic raider who settled down and worked out territorial arrangements with some other Germanic raiders (though it was many, many years--generations--before even that arrangement went from being a public defense committment under a king, to being a personal domain devoid of public responsibility).
Thus, rent is a nonproductive drain of wealth (where wages and interest are productive drains), that results from a dishonest practice. It is a drain that takes a larger slice of production the more economically developed a place is. And unlike theft and fraud, it is not something that could theoretically be done away with if everybody suddenly became honest: rent is the natural result of the simple fact that, to maximize productivity, you need some way to distribute land intelligently among people, and rent is the result. However, where the land is owned (and the rent collected) by the community, it is spent on public works in times of peace, on public defense in times of war. Where it is owned (and the rent collected) by individuals, it subsidizes a parasitic aristocracy, who typically spend it distorting the economy to their advantage, weakening society, until it either breaks from within (as the enslaved masses revolt) or from without (as enemies prey upon the weakened nation).
All of this might seem rather remote to the average person. After all, we no longer have highly visible landowners in our society (at least in America). The modern innovation that hides the phenomenon of Rent is the joint stock corporation. With the exception of homeowners who have finally paid off their mortgages, and the few sole proprietors who are lucky enough to own the land their business stand on, nobody owns land directly any more. People own stocks, or own mutual funds through which they own stocks, in corporations. It is the corporations that own the majority of the land. So instead of a clearly delineated set of classes defined by their ownership of land or the lack therof, we have a spectrum, with people who own enormous amounts of stock at the top, moving somewhat gradually down the line through people who own only that which is in their 401k, down to those who own no stock, whatsoever.
However, it is no less the case today than in the past that the rich get richer while the poor get poorer, and through the exact same phenomenon: rent. The businesses are bigger and more complex, but their revenue streams can still be conceptually categorized in terms of wages, interest, and rent. The corporation (particularly the bigger, older ones) typically owns its land. If it does not, it still has to pay rent to someone that does (typically, another corporation). If it does not have to pay rent, that money is pure profit, to be reinvested (increasing the value of the stock) or paid out as profits. It certainly is not paid out as wages, since the market value of labor takes into account the rent costs all businesses must take into account. A company that diverted rent costs to their workers rather than their investors would be vulnerable to a competitor that did pay to their investors.
And that is Part 3. The next part will discuss the way I think these drains could be dealt with, and even a method by which we could get to there from here!
Le us imagine a few businesses, in which one party supplies the labor, another the capital, and a third access to land.
Imagine a farmer on someone else's land (a historically common enough phenomenon). He supplies the labor, both his own, and those of his laborers. The owner of the land supplies access to his land. The bank loans to the farmer every spring for capital expenses throughout the year (seed, tools, parts, wages for his laborers, etc). At the end of the year, the harvest occurs, is sold at market (or, in more primative economies, divided directly), and the proceeds are divided between the farmer, the banker, and the landowner.
Or imagine a shop run on someone else's lot (also a common enough phenomenon). The shopkeeper provides the labor. The bank supplies money for stocking, building repairs, advance wages, etc. The landowner supplies access to his land. The shopkeeper hopefully manages to make enough of a profit on his goods that he can afford to pay back the bank, pay the rent on the land, and hopefully still has enough left over to make it worth his while.
In both of these examples, I have clearly delineated the three components of an economy defined by classical economics: land, labor, and capital. The interaction of the three is how wealth is created. The posession of the three determines how wealth is distributed. To the landowner goes the rent. To the banker goes interest on any capital loans. Whatever is leftover is what goes into wages. If it isn't enough. the business fails.
Of course, each of those businesses could be configured differently, by combining roles. The farmer, for example, could have in past years saved enough that he now acts as his own banker, getting to keep that which would have otherwise gone into interest on loans (and possibly making interest on the money while it waits in the bank). Or, he could be the owner of the land, getting to keep that which would otherwise be paid in rent to another landowner. Or, the farmer could theoretically "own" the land, on the condition that he pays his mortgage--principal and interest; thus the bank can be thought of as the landowner (becoming such literally should the business fail). Or, we could be talking about a subsistance-farming agrarian society, in which all roles are contained in a single individual or family. If you (the reader) can think of any other combinations that introduce a fourth economic component (other than land, labor, and capital), please tell me about it.
The thing to examine is that the wealth resulting from economic activity can be thought of as being divided into three discrete streams: rent (for landowners), wages (for laborers), and interest (for bankers). The question I examine here is: do all three of these compensate individuals for productive activity, thus providing an incentive for productive activity? For the worker, the answer is obvious: yes, it does. The worker earns his wages, whether he be a blue-collar grunt on the factory floor, or the boss making all the hard decisions (and dying of a heart-attack by fifty-years of age?). What about the other two?
The thing to recognize about the banker (at least, the honest banker--today's government "banking system" is not honest) is that he, too, is a sort of laborer. People save money at his institution rather than under their floorboard (for example), and he can make that money available for others while the owner doesn't need it. He has to keep accurate accounts. He has to gather the information necessary to make decisions as to whom should be lent money, what rate to charge (to compensate him for his efforts, as well as to compensate his account holders for making their stored wages--and rent--available to others). He has to correctly discern the level of risk a borrower presents. All of this requires time and effort. Of course, his account holders profit from the labor of others (to a degree directly proportional to the size of their account), but by making funds available, production that would otherwise not occur does occur.
Thus, I conclude that interest does provide an incentive to behavior that increases productivity. In addition, as savings rise relative to productivity, the price of access to savings--the interest rate--drops. It's a simple matter of supply and demand: the greater the supply of money for borrowing, the lower the price of access is going to be. A high interest rate stimulates a greater rate of savings, which ultimately lowers the interest rate, which decreases the savings rate, increasing the rate of consumption, which creates new opporunities for investment (demand for products), which raises the interest rate...
Land is another matter. Leaving aside the matter of how the land was obtained (assuming, for example, it was inherited), the landowner contributes absolutely nothing to economic activities. If the farmer did not exist, obviously farming would not get done. The farmer could certainly survive without the banker (the one that provides capital only, and not land by mortgage), but access to capital enables him not only to survive, but to thrive. (Note that the plight of the farmer who spends his life in the pocket of the banker is the result either of bad decision-making on the part of the farmer (got greedy, took out an unwise loan, and thus deserves to fall), or the result of the banker also acting the part of landowner.) But not only would the farmer do just fine without the landowner (either he or the community owns the land), the farmer would do far better in that he could reinvest more of his proceeds, or just enjoy a higher standard of living.
The same goes for the shopkeeper--though capital is certainly more vital for him than for the farmer (his stock IS capital). If the shopkeeper did not have to pay rent, either he could keep more of his profits, or he could lower his prices--thus the customer is also better off without the landowner.
In fact, the only reason rent expenses even exist is because access to land, like everything else, is scarce, but necessary: everybody needs it, since no economic activity can occur without it. And unlike the market for capital, in which the price goes down as productivity rises, the price of land rises with productivity. For while capital increases with quantity as people save, land is a fixed quantity. As the number of people and dollars chasing land goes up (demand for land), the supply remains constant, and can never be increased. Technological developments can open up new frontiers, but this only opens land resources previously unexploited, or underexploited relative to the new technology. It does not create new land for new people to own; instead, barring conquest, the old owners own both the old potential and the new potential.
So what is land? Take a look at any wealth generating system. Separate first out the day-to-day efforts of the people involved: that is labor. Separate out anything created with human hands (or machines): that is capital. What is left is land: the uncreated, natural potential of the earth (and beyond). It includes the right of the farmer to plant and harvest where another cannot; it does not include the crops, fences, tractor, barn, etc. It includes the city lot a store or a house exists where another cannot; it does not include the building itself, the landscaping, the electrical system, the plumbing, or anything else of that nature. It includes the right-of-way where a road, a cable, or a track exists and another cannot; it does not include the asphault or the necessary maintenance, the cable, the tracks, the ties, or anything like that. It includes bandwidth in the electromagnetic spectrum in a given area where one can broadcast, but another cannot; it does not include the broadcast equipment or the content of the broadcast. It includes the potential of an aquatic system where one can fish but another cannot (the waters having already been fished); it does not include the boats or the actual fish. It includes the limited orbital space where one sattelite can exist and another cannot (to try would result in a collision); it does not include the satellite or the costs of launching it.
Another thing about land, unlike labor and capital, is that unlike the other two, exclusive personal ownership of land, always and everywhere, originates in conquest. Men are always and everywhere recognized as free agents where their own labor is concerned--slavery is required to make man into a commodity. A laborer who saves his wages (creating a store of capital) is naturally the owner of such, whether he be a hunter-gatherer who took the time to pick a rock off the ground and chip it into an arrowhead, a merchant who purchased something one place and took the time to transport it somewhere it was needed more, or an industrial laborer saving a nest egg he hopes to invest into a business of his own. However, land, always and everywhere, is owned either by nobody, or by the community, until such time as it is seized by force. Individual land ownership in Europe began with Roman conquests--land was seized from communities, and distributed individually among the victors. Individual land rights in Amerca was a Roman tradition brought across the sea, and established by conquest, as well.
Consider your dinner. Someone took the time to transform raw food into dinner. They bought that food from a grocery store, who had it shipped there and stored it until you needed it. The bought it from someone else, ultimately leading back to the farmer, who sowed, watered, weeded, and reaped.
However, your lot is different. You bought it from someone, who bought it from someone else, who bought it from someone else. Trace it back far enough, and if you be an American, the original owner probably bought it from the government. The government acquired it by declaration: "This land belongs to us, and anyone who disagrees will die." Things are a little more complicated in Europe, I'd imagine, though it all probably goes back either to some Roman senator who stole it from the original inhabitants, or some Germanic raider who settled down and worked out territorial arrangements with some other Germanic raiders (though it was many, many years--generations--before even that arrangement went from being a public defense committment under a king, to being a personal domain devoid of public responsibility).
Thus, rent is a nonproductive drain of wealth (where wages and interest are productive drains), that results from a dishonest practice. It is a drain that takes a larger slice of production the more economically developed a place is. And unlike theft and fraud, it is not something that could theoretically be done away with if everybody suddenly became honest: rent is the natural result of the simple fact that, to maximize productivity, you need some way to distribute land intelligently among people, and rent is the result. However, where the land is owned (and the rent collected) by the community, it is spent on public works in times of peace, on public defense in times of war. Where it is owned (and the rent collected) by individuals, it subsidizes a parasitic aristocracy, who typically spend it distorting the economy to their advantage, weakening society, until it either breaks from within (as the enslaved masses revolt) or from without (as enemies prey upon the weakened nation).
All of this might seem rather remote to the average person. After all, we no longer have highly visible landowners in our society (at least in America). The modern innovation that hides the phenomenon of Rent is the joint stock corporation. With the exception of homeowners who have finally paid off their mortgages, and the few sole proprietors who are lucky enough to own the land their business stand on, nobody owns land directly any more. People own stocks, or own mutual funds through which they own stocks, in corporations. It is the corporations that own the majority of the land. So instead of a clearly delineated set of classes defined by their ownership of land or the lack therof, we have a spectrum, with people who own enormous amounts of stock at the top, moving somewhat gradually down the line through people who own only that which is in their 401k, down to those who own no stock, whatsoever.
However, it is no less the case today than in the past that the rich get richer while the poor get poorer, and through the exact same phenomenon: rent. The businesses are bigger and more complex, but their revenue streams can still be conceptually categorized in terms of wages, interest, and rent. The corporation (particularly the bigger, older ones) typically owns its land. If it does not, it still has to pay rent to someone that does (typically, another corporation). If it does not have to pay rent, that money is pure profit, to be reinvested (increasing the value of the stock) or paid out as profits. It certainly is not paid out as wages, since the market value of labor takes into account the rent costs all businesses must take into account. A company that diverted rent costs to their workers rather than their investors would be vulnerable to a competitor that did pay to their investors.
And that is Part 3. The next part will discuss the way I think these drains could be dealt with, and even a method by which we could get to there from here!
Monday, April 02, 2007
Broken Window Fallacy Fallacy
In an indirect fashion, I'll be discussing the third unproductive drain in today's entry. I will discuss the Parable of the Broken Window, which economists of the Austrian School refer to as the "Broken Window Fallacy." In considering the school of thought named for Henry George, I have come to the conclusion that labeling the Parable of the Broken Window a "fallacy" may well be a fallacy, as well.
A brief description of the parable: When something is broken (such as a window), the automatic assumption is that this is a bad thing. Upon further reflection, however, one can observe that the broken window provides employment for others: the one that make the glass, the one that forms it into a pane, and the one that fits it in place. They can, in turn, spend the money they made on the broken window elsewhere, including, of course, the place where the window was broken in the first place. This, goes the parable, everybody benefits. Destruction is an economic benefactor, extending all the way from acts of petty vandalism to war itself. War is good for the economy!
Austrian economists rightly point out that, had the owner of the window not spent that money on the window, he would have spent it on something else. He might have eaten out a few more times than otherwise, providing employment to cooks and waiters. He might buy a new piece of furniture, providing employment in the furniture trade. Nobody loses anything because of intact windows; money that is not spent there will be spent elsewhere. Certainly, money not spent on bombs and bullets by one side, and on a total rebuilding by the other, could be better spent!
However, there is something the Austrians overlook. While the man of unbroken windows can spend it on nice dinners, new cars, furniture, improvements to his house, better food than he could otherwise afford, or what have you, there are a few other things he could spend it on. He could buy stock in a bank, buying his way up the monetary pyrimid as described in Unproductive Drains Part 2. He can also buy land, whether in the form of a rental property, a vacation home, or indirectly by purchasing stock. The stock is probably the least offensive of purchases, since at least some of that money goes toward capital improvements, and therefore jobs, whether in the creation or the utilization (though some of it also goes to bid up the price of land, as well...). The other two, however, do little more than bid up the price of land--the price of access to both living space and work. If you've been reading this blog for a while, you know what I'm trying to say here. If not, look forward to Unproductive Drains Part 3.
With the broken window (or the exploded bomb), there is no question: the money spent is going to be spent in a manner that profits a tradesmen of some sort in some way. With the unbroken window (and the peace economy), that money could be spent in a manner that profits someone else. However, it also could be spent in a manner that raises the individual's position on the pyramid of "legitimate" dishonest gain.
Thus, the Fallacy of the Broken Window is only half fallacy. It shouldn't be economically beneficial, but because of all the institutional distortions our half-free economy has, it is. It not only diverts money that would otherwise be spent on something that would benefit the community around them (as well as the individual spending it); it also diverts money that would otherwise be "invested" into the unjust distortions to bend them to the individual's favor.
A brief description of the parable: When something is broken (such as a window), the automatic assumption is that this is a bad thing. Upon further reflection, however, one can observe that the broken window provides employment for others: the one that make the glass, the one that forms it into a pane, and the one that fits it in place. They can, in turn, spend the money they made on the broken window elsewhere, including, of course, the place where the window was broken in the first place. This, goes the parable, everybody benefits. Destruction is an economic benefactor, extending all the way from acts of petty vandalism to war itself. War is good for the economy!
Austrian economists rightly point out that, had the owner of the window not spent that money on the window, he would have spent it on something else. He might have eaten out a few more times than otherwise, providing employment to cooks and waiters. He might buy a new piece of furniture, providing employment in the furniture trade. Nobody loses anything because of intact windows; money that is not spent there will be spent elsewhere. Certainly, money not spent on bombs and bullets by one side, and on a total rebuilding by the other, could be better spent!
However, there is something the Austrians overlook. While the man of unbroken windows can spend it on nice dinners, new cars, furniture, improvements to his house, better food than he could otherwise afford, or what have you, there are a few other things he could spend it on. He could buy stock in a bank, buying his way up the monetary pyrimid as described in Unproductive Drains Part 2. He can also buy land, whether in the form of a rental property, a vacation home, or indirectly by purchasing stock. The stock is probably the least offensive of purchases, since at least some of that money goes toward capital improvements, and therefore jobs, whether in the creation or the utilization (though some of it also goes to bid up the price of land, as well...). The other two, however, do little more than bid up the price of land--the price of access to both living space and work. If you've been reading this blog for a while, you know what I'm trying to say here. If not, look forward to Unproductive Drains Part 3.
With the broken window (or the exploded bomb), there is no question: the money spent is going to be spent in a manner that profits a tradesmen of some sort in some way. With the unbroken window (and the peace economy), that money could be spent in a manner that profits someone else. However, it also could be spent in a manner that raises the individual's position on the pyramid of "legitimate" dishonest gain.
Thus, the Fallacy of the Broken Window is only half fallacy. It shouldn't be economically beneficial, but because of all the institutional distortions our half-free economy has, it is. It not only diverts money that would otherwise be spent on something that would benefit the community around them (as well as the individual spending it); it also diverts money that would otherwise be "invested" into the unjust distortions to bend them to the individual's favor.
Saturday, March 17, 2007
Three Unproductive Drains of Value: Part 2
It looks like it's been considerably more than a week since my last post. Sorry about that. This is a long one, so here's a summary. I start by talking about coins, their original purpose, and the mutually dishonest practices of coin-clipping on the one hand, and debasement by the issuer on the other. I then move from metal to paper, talking about the dishonest practices of counterfeiting and fractional reserve banking, and the pyramidal wealth transfer system fractional reserve baking establishes. I then talk about how the effects of fractional reserve banking have been intensified and unified under the Federal Reserve system. Finally, I talk about how the system might be reduced, if not eliminated.
Currency Debasement
This is a more recent phenomenon. People have been stealing from each other for time immemorial, but monetary inflation--or rather, deliberate monetary inflation, while still an old practice, is comparatively new, mainly because standardized currency is a historical phenomenon. Our current monetary system is so removed from historical monetary systems that this is a phenomenon people are unlikely to recognize, or understand if pointed out to them, however it is no less dishonest and economically damaging than plain theft. The last remaining link between our currency systems and previous ones is coinage, so that is where I shall begin.
The original purpose of coinage was to make trading in gold and silver more convenient than it had previously been. Gold already had the advantage of being a metal that does not tarnish, was rare enough that a great deal of value could be represented by a small, portable amount of gold, and it was easy enough to verify the purity. Coinage was an attempt to make it easier. The people that made the coins basically made an easily recognizable package with a standardized content of the metal. The difference between accepting raw metal and accepting a coin was like the difference between buying a scoop of sugar from the bulk bin at the grocery store, and buying a standard five pound bag of sugar that has been certified both to be exactly five pounds, and be pure sugar, by the FDA.
Like anything that improves convenience at the expense of vigilance, coins introduce a number of methods for dishonest gain, and, like theft, the illegitimate methods used by individual criminals, and the "legitimate" methods used by governments are treated differently.
First, there's coin clipping. That's where a person shaves a small amount of metal off the coin. To use the earlier analogy, that's the equivalent of the grocery store buying those certified five pound bags of sugar, opening each one and removing a quarter pound of sugar and resealing them, and proceeding to sell them as five pound bags, while selling the rest as bulk sugar... a clearly fraudulent practice.
However, individuals are not the only ones that debase currency. The very governments that issue the coins can also debase them at the source. For example, they can simply lower the gold content in the coin, but issuing them as if they had the same purity as the previous, more pure coins. Merchants still think in terms of trading in gold, but actually they are trading something else. It's the equivalent of the factory that bags the sugar using the same five-pound label as before, but actually increasing the weight of the bag (or mixing in something else that is cheaper than sugar), and reducing the weight of the sugar. Cocaine offers another analogy: a dealer acquires five ounces of pure cocaine, mixes it with some other white powder, and then sells ten ounces of "pure" cocaine.
Now, the contamination of the coins may not initially seem to be as great a crime as the contamination of sugar. After all, there is no "consumer" where money is concerned, and thus there is nobody eating cake which has sand in it along with sugar, or running out before they should. The gold is just a trade medium, something you accept because someone else will in turn accept it from you. The act of passing an ounce of 90% pure gold as 95% pure gold (100% being too soft to retain coin form), while clearly fraudulent, just doesn't seem to harm the fooled in the same manner theft does.
The problem, however, is that markets respond to increases in supply by reducing the value of the coin. When less is presented as more, people eventually figure out that there is "more" gold out there than there was previously. Every body's money loses value. It's as if the debaser, rather than stealing from an individual, stole a little bit from every person in the community. The biggest losers are the people who are living off savings (like those among the elderly who saved for their retirement). Their money simply ends up running out faster than expected.
Today, of course, we don't really use coins any more. Heck, we don't even use paper for most transactions any more, but I'll move on to the history of paper.
The legend goes that paper money began as little more than receipts given by bankers indicating that the holder of the paper had gold stored at the bank. People started trading in the receipts rather than the gold itself, which lent itself to all new ways of debasing currency.
The criminal method, of course, is what we call counterfeiting. Basically, an individual who is not the bank (or the government, in the case of government-issued notes) prints his own notes and passes them as if they were genuine. This is considerably more economical for the private debaser than coin-clipping was, since paper is much cheaper than the coins. The result, once again, is that people start trading the metal as if there is more than there actually is. Assuming the counterfeits pass into circulation unchecked, no individual is stolen from, but rather the whole community is. This lasts until people realize there are more notes than there is gold on deposit, and everybody scrambles to get to the bank first. The slow ones lose, as their paper becomes worthless--all their money disappears.
Of course, banks did their own "counterfeiting," although it isn't called that, rather it is called "fracional reserve banking." The bank accepts gold and issues notes in its place. They then turn around and issue more notes, lending them out at interest. So long as there isn't a run on the bank, the bank turns a profit, very likely passing some of that onto their depositors. However, the impact on the general market for the metal is the same as it is when counterfeiters are passing their notes: people behave as if there is more gold in the system than there actually is, and thus prices rise.
However, the effect goes beyond that. Fractional reserve banking creates a pyramid of dishonest wealth transfer. At the top of the heap are the bankers themselves, who not only profit off the interest paid on loans, but likely maintain their own reserves, on which they earn interest like any other depositors. The next tier is the depositors, depending on how much they have on deposit. Whoever has more money in the bank is earning more interest; the rich get richer while the middle class does not. And in an unstable banking system, it is probably the richer depositors who get the news of an impending collapse earliest. At the bottom of this system is the debtors. They are the ones paying the interest that profits the people above them. The rich get richer; the poor get poorer.
The lower on the pyramid a person is, the worse position they are in. If they're not socially tied to the top, they are likely to be the ones that end up with nothing when a collapse happens. However, any money they do not store in the bank does not earn interest, and thus they are fully exposed to inflation.
The greatest coup for the banking industry, however, is the present state of affairs. Understand that the Federal Reserve System is not a government-owned central bank, but rather a government-sanctioned cartel of private bankers. The road to today's unbacked fiat currency was a long and gradual one. First came the setting of a government standard conversion rate between paper and gold. The next was to periodically stop conversions into gold during wartime, enabling the government to pay for war expenses in unbacked certificates. Third was to stop conversions altogether for private citizens, while a gold standard was maintained in international currency trading. The final step, realized during the Nixon administration, was to sever that last link. Today, the dollar has no guaranteed value whatsoever, and its value continually drops against the goods and services we are expected to exchange them for.
So, if dollars are not created through the deposit of actual objects of value, how are they created? Does it even occur to anyone to ask?
Very simply put, they are created by loan. The Federal Reserve Banks have the authority to create dollars out of thin air, which they loan out to other banks at the rate specified by the Federal Open Market Committee. The FOMC is a group of twelve men, consisting of of the seven members of the Board of Governors for the Federal Reserve System, and five of the twelve presidents of the Federal Reserve Banks, one of which is always the president of the New York branch. And that's it. All the money in the economy represents somebody else's debt, plus the interest. Where does the interest go?
The bank that loaned it to the individual or corporation takes a part of it. Part of that is used to cover the expenses of the banks. Buildings need to be maintained, staff needs to be paid. The rest is profit, given to the owners of the bank. This profit does not serve as reward for the wise management of financial capital, resulting in the creation of jobs, goods, or services, but rather is a reward for buying oneself a place in the pyramid.
The other part goes to the Federal Reserve Bank that loaned the money to the bank that loaned the money to you. Their profits go into the U.S. Treasury.
So what has occurred is that the prior system of multiple competing unstable pyramid's has been stabilized. The Federal Reserve System ensures that banks no longer fail. The elimination of convertibility into gold removes any remaining limitation on the creation of new dollars. The pyramid has been unified, with the federal government benefiting and protecting it, and the owners of banks also benefiting, far more than they did before the Federal Reserve was established. The rich get richer via interest payments. The poor get poorer via inflation (at the very least). Value is thus extracted from the economy in an unjust fashion, being continually siphoned upward.
What is the solution to this? One thing we can be sure of is that the government is not going to come to our rescue on this. Congress benefits directly from the interest paid to the Federal Reserve System, and those with money to offer for elections benefit from the system as well, to a degree directly proportional to how much they have to offer. The monetary pyramid results in a political pyramid. Politics cannot be the answer.
What can work is if people are educated as to the nature of our monetary system, and begin to seek an alternative system... begin to use money other than Federal Reserve Notes (aka U.S. Dollars). There are a few competing potential models out there already. My preference is the Liberty Dollar, which have been around since 1998. It's the only alternative currency I am aware of, based upon a standardized weight and purity of a precious metal (silver, in this case), that attempts to emulate the dollar quite so completely, having both paper certificates (100% silver backed--no fractional reserve here!) and a digital currency (also 100% backed; for every non-silver Liberty Dollar in circulation, there is silver stored in their warehouse), they will also ship the base coin at any time (not too long ago, I was carrying around a half-ounce silver coin stamped with a suggested value of $10.00. I spent it as part payment on Aikido lessons).
The primary base coin is one ounce of .999 pure silver. When the price of silver rises (and it must over time, given inflation), the price of the base coin also rises. They issue a recall of the dollars, reminting the coins with the new suggested price, replacing the bills and digital currency with more new bills and electronic currency. For example, suppose in 2004, I acquired a $10/1 oz certificate. Due to the rising price of silver, the base was switched from $10 to $20 on Nov 24, 2005. I could have sent the $10 certificate in, and received a $20 certificate in return. The attempt to follow the U.S. dollar means the company has to do this (if they didn't folks would be selling their $10 1 ounce coins for approximately $12 on the open market today, rather than circulating them at their stamped value), and the holders of Liberty Dollars are protected from inflation.
There are a few other models. Several local currencies circulate in various towns and cities (such as the Ithica Hour, one of the more successful ones since there is actually a bank that accepts them). There is also e-gold, a company that enables their customers to trade with each other in gold, either by weight or in its current estimated value in any currency worldwide. However, it is for online transactions only, and gold is of such high value that it isn't suited for everyday transactions... at least not in quantities you can hold in your hand. Indeed, competing currency systems is probably the only real way to blunt the pyramidal wealth transfer scheme that is the U.S. Dollar.
If people got used to trying these alternative currencies out, the competition alone could even improve the U.S. Dollar, since its benefactors would not want to see the dollar lose against these new currencies. Less value would be extracted unjustly; the worker would get his wages in full, assuming something can be done about the other two unjust drains of value.
Note: I now realize that the mechanism of money creation I described above isn't the actual method used to create money. It has something to do with the Fed buying Treasury bonds. The money they use to do so is still created out of nothing, but the system is different from what I thought.
Currency Debasement
This is a more recent phenomenon. People have been stealing from each other for time immemorial, but monetary inflation--or rather, deliberate monetary inflation, while still an old practice, is comparatively new, mainly because standardized currency is a historical phenomenon. Our current monetary system is so removed from historical monetary systems that this is a phenomenon people are unlikely to recognize, or understand if pointed out to them, however it is no less dishonest and economically damaging than plain theft. The last remaining link between our currency systems and previous ones is coinage, so that is where I shall begin.
The original purpose of coinage was to make trading in gold and silver more convenient than it had previously been. Gold already had the advantage of being a metal that does not tarnish, was rare enough that a great deal of value could be represented by a small, portable amount of gold, and it was easy enough to verify the purity. Coinage was an attempt to make it easier. The people that made the coins basically made an easily recognizable package with a standardized content of the metal. The difference between accepting raw metal and accepting a coin was like the difference between buying a scoop of sugar from the bulk bin at the grocery store, and buying a standard five pound bag of sugar that has been certified both to be exactly five pounds, and be pure sugar, by the FDA.
Like anything that improves convenience at the expense of vigilance, coins introduce a number of methods for dishonest gain, and, like theft, the illegitimate methods used by individual criminals, and the "legitimate" methods used by governments are treated differently.
First, there's coin clipping. That's where a person shaves a small amount of metal off the coin. To use the earlier analogy, that's the equivalent of the grocery store buying those certified five pound bags of sugar, opening each one and removing a quarter pound of sugar and resealing them, and proceeding to sell them as five pound bags, while selling the rest as bulk sugar... a clearly fraudulent practice.
However, individuals are not the only ones that debase currency. The very governments that issue the coins can also debase them at the source. For example, they can simply lower the gold content in the coin, but issuing them as if they had the same purity as the previous, more pure coins. Merchants still think in terms of trading in gold, but actually they are trading something else. It's the equivalent of the factory that bags the sugar using the same five-pound label as before, but actually increasing the weight of the bag (or mixing in something else that is cheaper than sugar), and reducing the weight of the sugar. Cocaine offers another analogy: a dealer acquires five ounces of pure cocaine, mixes it with some other white powder, and then sells ten ounces of "pure" cocaine.
Now, the contamination of the coins may not initially seem to be as great a crime as the contamination of sugar. After all, there is no "consumer" where money is concerned, and thus there is nobody eating cake which has sand in it along with sugar, or running out before they should. The gold is just a trade medium, something you accept because someone else will in turn accept it from you. The act of passing an ounce of 90% pure gold as 95% pure gold (100% being too soft to retain coin form), while clearly fraudulent, just doesn't seem to harm the fooled in the same manner theft does.
The problem, however, is that markets respond to increases in supply by reducing the value of the coin. When less is presented as more, people eventually figure out that there is "more" gold out there than there was previously. Every body's money loses value. It's as if the debaser, rather than stealing from an individual, stole a little bit from every person in the community. The biggest losers are the people who are living off savings (like those among the elderly who saved for their retirement). Their money simply ends up running out faster than expected.
Today, of course, we don't really use coins any more. Heck, we don't even use paper for most transactions any more, but I'll move on to the history of paper.
The legend goes that paper money began as little more than receipts given by bankers indicating that the holder of the paper had gold stored at the bank. People started trading in the receipts rather than the gold itself, which lent itself to all new ways of debasing currency.
The criminal method, of course, is what we call counterfeiting. Basically, an individual who is not the bank (or the government, in the case of government-issued notes) prints his own notes and passes them as if they were genuine. This is considerably more economical for the private debaser than coin-clipping was, since paper is much cheaper than the coins. The result, once again, is that people start trading the metal as if there is more than there actually is. Assuming the counterfeits pass into circulation unchecked, no individual is stolen from, but rather the whole community is. This lasts until people realize there are more notes than there is gold on deposit, and everybody scrambles to get to the bank first. The slow ones lose, as their paper becomes worthless--all their money disappears.
Of course, banks did their own "counterfeiting," although it isn't called that, rather it is called "fracional reserve banking." The bank accepts gold and issues notes in its place. They then turn around and issue more notes, lending them out at interest. So long as there isn't a run on the bank, the bank turns a profit, very likely passing some of that onto their depositors. However, the impact on the general market for the metal is the same as it is when counterfeiters are passing their notes: people behave as if there is more gold in the system than there actually is, and thus prices rise.
However, the effect goes beyond that. Fractional reserve banking creates a pyramid of dishonest wealth transfer. At the top of the heap are the bankers themselves, who not only profit off the interest paid on loans, but likely maintain their own reserves, on which they earn interest like any other depositors. The next tier is the depositors, depending on how much they have on deposit. Whoever has more money in the bank is earning more interest; the rich get richer while the middle class does not. And in an unstable banking system, it is probably the richer depositors who get the news of an impending collapse earliest. At the bottom of this system is the debtors. They are the ones paying the interest that profits the people above them. The rich get richer; the poor get poorer.
The lower on the pyramid a person is, the worse position they are in. If they're not socially tied to the top, they are likely to be the ones that end up with nothing when a collapse happens. However, any money they do not store in the bank does not earn interest, and thus they are fully exposed to inflation.
The greatest coup for the banking industry, however, is the present state of affairs. Understand that the Federal Reserve System is not a government-owned central bank, but rather a government-sanctioned cartel of private bankers. The road to today's unbacked fiat currency was a long and gradual one. First came the setting of a government standard conversion rate between paper and gold. The next was to periodically stop conversions into gold during wartime, enabling the government to pay for war expenses in unbacked certificates. Third was to stop conversions altogether for private citizens, while a gold standard was maintained in international currency trading. The final step, realized during the Nixon administration, was to sever that last link. Today, the dollar has no guaranteed value whatsoever, and its value continually drops against the goods and services we are expected to exchange them for.
So, if dollars are not created through the deposit of actual objects of value, how are they created? Does it even occur to anyone to ask?
Very simply put, they are created by loan. The Federal Reserve Banks have the authority to create dollars out of thin air, which they loan out to other banks at the rate specified by the Federal Open Market Committee. The FOMC is a group of twelve men, consisting of of the seven members of the Board of Governors for the Federal Reserve System, and five of the twelve presidents of the Federal Reserve Banks, one of which is always the president of the New York branch. And that's it. All the money in the economy represents somebody else's debt, plus the interest. Where does the interest go?
The bank that loaned it to the individual or corporation takes a part of it. Part of that is used to cover the expenses of the banks. Buildings need to be maintained, staff needs to be paid. The rest is profit, given to the owners of the bank. This profit does not serve as reward for the wise management of financial capital, resulting in the creation of jobs, goods, or services, but rather is a reward for buying oneself a place in the pyramid.
The other part goes to the Federal Reserve Bank that loaned the money to the bank that loaned the money to you. Their profits go into the U.S. Treasury.
So what has occurred is that the prior system of multiple competing unstable pyramid's has been stabilized. The Federal Reserve System ensures that banks no longer fail. The elimination of convertibility into gold removes any remaining limitation on the creation of new dollars. The pyramid has been unified, with the federal government benefiting and protecting it, and the owners of banks also benefiting, far more than they did before the Federal Reserve was established. The rich get richer via interest payments. The poor get poorer via inflation (at the very least). Value is thus extracted from the economy in an unjust fashion, being continually siphoned upward.
What is the solution to this? One thing we can be sure of is that the government is not going to come to our rescue on this. Congress benefits directly from the interest paid to the Federal Reserve System, and those with money to offer for elections benefit from the system as well, to a degree directly proportional to how much they have to offer. The monetary pyramid results in a political pyramid. Politics cannot be the answer.
What can work is if people are educated as to the nature of our monetary system, and begin to seek an alternative system... begin to use money other than Federal Reserve Notes (aka U.S. Dollars). There are a few competing potential models out there already. My preference is the Liberty Dollar, which have been around since 1998. It's the only alternative currency I am aware of, based upon a standardized weight and purity of a precious metal (silver, in this case), that attempts to emulate the dollar quite so completely, having both paper certificates (100% silver backed--no fractional reserve here!) and a digital currency (also 100% backed; for every non-silver Liberty Dollar in circulation, there is silver stored in their warehouse), they will also ship the base coin at any time (not too long ago, I was carrying around a half-ounce silver coin stamped with a suggested value of $10.00. I spent it as part payment on Aikido lessons).
The primary base coin is one ounce of .999 pure silver. When the price of silver rises (and it must over time, given inflation), the price of the base coin also rises. They issue a recall of the dollars, reminting the coins with the new suggested price, replacing the bills and digital currency with more new bills and electronic currency. For example, suppose in 2004, I acquired a $10/1 oz certificate. Due to the rising price of silver, the base was switched from $10 to $20 on Nov 24, 2005. I could have sent the $10 certificate in, and received a $20 certificate in return. The attempt to follow the U.S. dollar means the company has to do this (if they didn't folks would be selling their $10 1 ounce coins for approximately $12 on the open market today, rather than circulating them at their stamped value), and the holders of Liberty Dollars are protected from inflation.
There are a few other models. Several local currencies circulate in various towns and cities (such as the Ithica Hour, one of the more successful ones since there is actually a bank that accepts them). There is also e-gold, a company that enables their customers to trade with each other in gold, either by weight or in its current estimated value in any currency worldwide. However, it is for online transactions only, and gold is of such high value that it isn't suited for everyday transactions... at least not in quantities you can hold in your hand. Indeed, competing currency systems is probably the only real way to blunt the pyramidal wealth transfer scheme that is the U.S. Dollar.
If people got used to trying these alternative currencies out, the competition alone could even improve the U.S. Dollar, since its benefactors would not want to see the dollar lose against these new currencies. Less value would be extracted unjustly; the worker would get his wages in full, assuming something can be done about the other two unjust drains of value.
Note: I now realize that the mechanism of money creation I described above isn't the actual method used to create money. It has something to do with the Fed buying Treasury bonds. The money they use to do so is still created out of nothing, but the system is different from what I thought.
Monday, February 19, 2007
Three Unproductive Drains of Value: Part 1
There are, in our economy, three ways in which value is drained, in which wealth is stolen, from the people who have rightfully earned it, or would rightfully earn it if the futility institutional theft introduces into people's attitudes and activities was not there. I believe these three could be reduced to one, to the benefit of all. Over the next few weeks, I'll introduce the three different value drains, starting from the most obvious and moving to the most insidious. After that, I'll talk about how two out of the three can be eliminated.
Theft
The most obvious form of theft is, well, regular old theft. Theft, in this context, is the direct siezing of wealth by guile, fraud, force, or the threat therof. It's when a pickpocket removes someone's wallet without their awareness, when a burgler does the same when someone isn't home, when a mugger knocks someone down and takes their stuff, when a gang of thugs demands money and threatens violence if it is not given, or when a confidence man offers service in exchange for payment, receives payment, and then gives nothing in return. It is when the wealth of the productive is transfered to the unproductive against the will of the productive.
The impact this has on economic activity doesn't take much thought to imagine. A person living in a neighborhood in which theft is common and largely unpunished is unlikely to engage in any more than he must in order to survive. Why work harder for additional comforts, when it is likely to get stolen anyway? Want a new TV? Get a better job, save up enough (or buy it on credit and pay it off)... and then have it stolen. Want to make your house look nice? Get some paint, spend a weekend cleaning and painting and repairing... and then have it vandalized. The only real way out of this situation, assuming there is not a revival of law in this area, is to move to another area.
Of course, lawbreakers are not the only ones stealing. Those that make the laws steal, as well. (Most) Individuals do not pay the government voluntarily for the services they claim to offer. Like an archtypical protection racket, they offer protection from theives and murderers, and it's truly an offer you cannot refuse. The government has ways of making people pay: they threaten to jail those who decline their services, and we all know what happens to someone who is determined neither to do as they're told nor to go to jail. In short, the justification for taxation is thus: the government needs money. You will give it to them. Or else. The government is a thief.
Of course, we have representatives who consent to this, so theoretically, the majority are paying willingly, under the idea that in return, the government provides protection from other sorts of criminals. However, in realty, most of the money collected goes to pay off the supporters of elected officials, so the government is, in this scenario, also a confidence man. It offers services in exchange for payment, but delivers far less than would justify the degree of payment. Even a mob boss couldn't get away with this for long. A mobster must compete with other mobsters, and any resources that do not go toward the protection of his domain potentially leave him vulnerable to his competitors. The government, however, is, almost by definition, the only game in town.
Of course systematic government theft does have the advantage that it is, for the most part, predictable... so long as you keep your tax liabilities limited to the particular part of the tax code you are familiar with. For most people, despite the amount of money taken out of their check, state and federal withholding are not a burden that keeps them from coming to work every day, and trying to increase the value of their labor. It's not like the person in a crime-ridden ghetto who could have his whole stash taken in a single day. You can plan around institutionalized theft.
However, it does keep them locked into the role of a wage earner. To step even slightly out of that role into that of an entrepreneur requires that one learn a whole new section of the tax code, and the more one deviates from forms of economic activity that can be anticipated by the writers of the tax code, the more likely it is that the tax man will descend upon one's business, quoting obscure regulations that have been broken, and ruin said business. It doesn't even matter whether the laws actually apply or not; litigation alone is prohibitively expensive. It becomes more like the crime filled ghetto. And I am sure that there are lots of folks who are intimidated out of utilizing their creativity on behalf of society by the state of things, and even more who are conditioned by the system to be unable to even imagine being an economic innovater. Jobs that would otherwise be are not, wages are lower than they could be, while others are completely jobless.
However, even if one could devise a perfectly flexible and predictable tax system that did not have that dampening effect upon innovation, there is still the issue that wealth that could be used improving people's lives is instead squandered at best, used horrifically at worst. I firmly believe that the vast majority of the government's resources are spent either on unproductive projects that enrich a few at the expense of the many, or on maintaining and extending its global hegemony in a manner that enriches a few at an extraordinary expense that can be measured not only in wealth, but in lives.
And it can be no other way, for wealth that is gained in an unproductive fashion is most likely to be utilized in an unproductive, even destructive, fashion. There is no accountability link between how the money is acquired and how it is spent. It is as if we live in the city of the heir to the mob boss that completely obliterated his rivals. Having no competition, he spends his protection money on himself and his cronies, offers little protection to the people whose lives he lays claim to. Only the mob boss is an elected legislature and executive, and in their voting patterns reveal the truth in Frederic Bastiat's statement, "The state is that great fiction by which everyone tries to live at the expense of everyone else."
Now, I do not deny that some sort of institution is required to punish those that would steal on their own accord. Remove the big thief, and all you end up with is a whole lot of little theives. But let us, for a moment, imagine that there are ways to finance such an operation, other than by doing the very thing the institution is meant to prevent. I said earlier that there is a way to reduce the number of unproductive wealth drains from three to one--not to zero. So I hope you'll keep an open mind as the weeks go by.
Theft
The most obvious form of theft is, well, regular old theft. Theft, in this context, is the direct siezing of wealth by guile, fraud, force, or the threat therof. It's when a pickpocket removes someone's wallet without their awareness, when a burgler does the same when someone isn't home, when a mugger knocks someone down and takes their stuff, when a gang of thugs demands money and threatens violence if it is not given, or when a confidence man offers service in exchange for payment, receives payment, and then gives nothing in return. It is when the wealth of the productive is transfered to the unproductive against the will of the productive.
The impact this has on economic activity doesn't take much thought to imagine. A person living in a neighborhood in which theft is common and largely unpunished is unlikely to engage in any more than he must in order to survive. Why work harder for additional comforts, when it is likely to get stolen anyway? Want a new TV? Get a better job, save up enough (or buy it on credit and pay it off)... and then have it stolen. Want to make your house look nice? Get some paint, spend a weekend cleaning and painting and repairing... and then have it vandalized. The only real way out of this situation, assuming there is not a revival of law in this area, is to move to another area.
Of course, lawbreakers are not the only ones stealing. Those that make the laws steal, as well. (Most) Individuals do not pay the government voluntarily for the services they claim to offer. Like an archtypical protection racket, they offer protection from theives and murderers, and it's truly an offer you cannot refuse. The government has ways of making people pay: they threaten to jail those who decline their services, and we all know what happens to someone who is determined neither to do as they're told nor to go to jail. In short, the justification for taxation is thus: the government needs money. You will give it to them. Or else. The government is a thief.
Of course, we have representatives who consent to this, so theoretically, the majority are paying willingly, under the idea that in return, the government provides protection from other sorts of criminals. However, in realty, most of the money collected goes to pay off the supporters of elected officials, so the government is, in this scenario, also a confidence man. It offers services in exchange for payment, but delivers far less than would justify the degree of payment. Even a mob boss couldn't get away with this for long. A mobster must compete with other mobsters, and any resources that do not go toward the protection of his domain potentially leave him vulnerable to his competitors. The government, however, is, almost by definition, the only game in town.
Of course systematic government theft does have the advantage that it is, for the most part, predictable... so long as you keep your tax liabilities limited to the particular part of the tax code you are familiar with. For most people, despite the amount of money taken out of their check, state and federal withholding are not a burden that keeps them from coming to work every day, and trying to increase the value of their labor. It's not like the person in a crime-ridden ghetto who could have his whole stash taken in a single day. You can plan around institutionalized theft.
However, it does keep them locked into the role of a wage earner. To step even slightly out of that role into that of an entrepreneur requires that one learn a whole new section of the tax code, and the more one deviates from forms of economic activity that can be anticipated by the writers of the tax code, the more likely it is that the tax man will descend upon one's business, quoting obscure regulations that have been broken, and ruin said business. It doesn't even matter whether the laws actually apply or not; litigation alone is prohibitively expensive. It becomes more like the crime filled ghetto. And I am sure that there are lots of folks who are intimidated out of utilizing their creativity on behalf of society by the state of things, and even more who are conditioned by the system to be unable to even imagine being an economic innovater. Jobs that would otherwise be are not, wages are lower than they could be, while others are completely jobless.
However, even if one could devise a perfectly flexible and predictable tax system that did not have that dampening effect upon innovation, there is still the issue that wealth that could be used improving people's lives is instead squandered at best, used horrifically at worst. I firmly believe that the vast majority of the government's resources are spent either on unproductive projects that enrich a few at the expense of the many, or on maintaining and extending its global hegemony in a manner that enriches a few at an extraordinary expense that can be measured not only in wealth, but in lives.
And it can be no other way, for wealth that is gained in an unproductive fashion is most likely to be utilized in an unproductive, even destructive, fashion. There is no accountability link between how the money is acquired and how it is spent. It is as if we live in the city of the heir to the mob boss that completely obliterated his rivals. Having no competition, he spends his protection money on himself and his cronies, offers little protection to the people whose lives he lays claim to. Only the mob boss is an elected legislature and executive, and in their voting patterns reveal the truth in Frederic Bastiat's statement, "The state is that great fiction by which everyone tries to live at the expense of everyone else."
Now, I do not deny that some sort of institution is required to punish those that would steal on their own accord. Remove the big thief, and all you end up with is a whole lot of little theives. But let us, for a moment, imagine that there are ways to finance such an operation, other than by doing the very thing the institution is meant to prevent. I said earlier that there is a way to reduce the number of unproductive wealth drains from three to one--not to zero. So I hope you'll keep an open mind as the weeks go by.
Thursday, February 15, 2007
Liberalism
I just read an article which dealt with German politics, where the word "liberals" was used. The author, for the benefit of his American readers, appended "(classical)" to the description, though a German would not need that clarification.
I am the son of a self-identified "conservative," and as such, there was a time in my life when I was hostile to "liberals" and "liberalism." I regarded them as the enemies of traditional American freedom. I considered them just one step sort of Communists. I grew up thinking I would be a Republican. I was aware of a time when "Liberal" referred to American heroes, like Thomas Jefferson, Thomas Paine, and so on. So far as I (and most Americans) knew, that word ceased to mean anything worthwhile, being more synonymous with "socialist" in the present age. And so it has been, in America.
As a citizen of the Internet, I am now aware that Other Countries Exist. Not only that, but they have people in them! And those people have political dynamics that differ from the dynamics I am accustomed to. One thing I long ago discovered is that people in other countries still use the word "Liberal" in the "classical" sense. What I have only recently fully appreciated is that The United States is the ONLY place in the world where the word "Liberal" has been so fully corrupted.
Take Gun Control, as an example. In the US, a liberal favors gun control. The British people I have met regard gun control as something a liberal would oppose. American liberals seem to have contempt for the idea of free enterprise. The Liberal Party in Australia regards free enterprise as an unmitigated good. An "ultra-liberal" in France is a proponent of lassiz-faire capitalism. In the US, the party regarded as the original party of Classical Liberalism, the Democratic Party, mutated into America's exponent of left-wing socialism. In Austria, the Freedom Party, the closest thing to a Liberal political party I could find on Wikipedia, is said to have mutated into an exponent of right-wing populism. In short, Liberalism is synonymous with Socialism in America, only.
I think I know why. America is unique in the broad base of support Liberal ideas had at the time Socialism was becming popular in Europe, and unique in the degree of popular opposition Socialism had in the U.S. In Europe and elsewhere, "Socialist" is not a dirty word, and "Liberal" is not a worship word. It is only in the United States that proponents of socialism--that is, economic totalitarianism--found the greatest advantage corrupting the word "liberal." Everywhere else, they can simply call themselves "socalists" and win elections under that name. And I suspect "conservatives" willingly gave up that word because the freedom they valued, enshrined in the U.S. Constitution, the Declaration of Independence, and other documents of traditional Americana, could be covered under the word "conservatism," and by abandoning the word "liberal" they could also continue to practice another tradition of theirs Liberalism has always been opposed to (even as it gave birth to it): racism.
I am heartened by the fact that many American so-called liberals are now calling themselves by another name: Progressives. Progressivism, in it's heyday in the early twentieth century, was always a nexus of authoritarianism, elitism, racism, eugenics--basically an American version of the disease that swept Europe at around the same time, admired by such people as Adolf Hitler (though most Americans aren't aware of this). Should they relinquish the term Liberal, it may be much easier for people like myself, who believe in both equality and economic liberty, to reclaim the word that is rightfully ours. Given that the rest of the world already accepts this conception of Liberalism, it might be easier than most Americans might think.
I am the son of a self-identified "conservative," and as such, there was a time in my life when I was hostile to "liberals" and "liberalism." I regarded them as the enemies of traditional American freedom. I considered them just one step sort of Communists. I grew up thinking I would be a Republican. I was aware of a time when "Liberal" referred to American heroes, like Thomas Jefferson, Thomas Paine, and so on. So far as I (and most Americans) knew, that word ceased to mean anything worthwhile, being more synonymous with "socialist" in the present age. And so it has been, in America.
As a citizen of the Internet, I am now aware that Other Countries Exist. Not only that, but they have people in them! And those people have political dynamics that differ from the dynamics I am accustomed to. One thing I long ago discovered is that people in other countries still use the word "Liberal" in the "classical" sense. What I have only recently fully appreciated is that The United States is the ONLY place in the world where the word "Liberal" has been so fully corrupted.
Take Gun Control, as an example. In the US, a liberal favors gun control. The British people I have met regard gun control as something a liberal would oppose. American liberals seem to have contempt for the idea of free enterprise. The Liberal Party in Australia regards free enterprise as an unmitigated good. An "ultra-liberal" in France is a proponent of lassiz-faire capitalism. In the US, the party regarded as the original party of Classical Liberalism, the Democratic Party, mutated into America's exponent of left-wing socialism. In Austria, the Freedom Party, the closest thing to a Liberal political party I could find on Wikipedia, is said to have mutated into an exponent of right-wing populism. In short, Liberalism is synonymous with Socialism in America, only.
I think I know why. America is unique in the broad base of support Liberal ideas had at the time Socialism was becming popular in Europe, and unique in the degree of popular opposition Socialism had in the U.S. In Europe and elsewhere, "Socialist" is not a dirty word, and "Liberal" is not a worship word. It is only in the United States that proponents of socialism--that is, economic totalitarianism--found the greatest advantage corrupting the word "liberal." Everywhere else, they can simply call themselves "socalists" and win elections under that name. And I suspect "conservatives" willingly gave up that word because the freedom they valued, enshrined in the U.S. Constitution, the Declaration of Independence, and other documents of traditional Americana, could be covered under the word "conservatism," and by abandoning the word "liberal" they could also continue to practice another tradition of theirs Liberalism has always been opposed to (even as it gave birth to it): racism.
I am heartened by the fact that many American so-called liberals are now calling themselves by another name: Progressives. Progressivism, in it's heyday in the early twentieth century, was always a nexus of authoritarianism, elitism, racism, eugenics--basically an American version of the disease that swept Europe at around the same time, admired by such people as Adolf Hitler (though most Americans aren't aware of this). Should they relinquish the term Liberal, it may be much easier for people like myself, who believe in both equality and economic liberty, to reclaim the word that is rightfully ours. Given that the rest of the world already accepts this conception of Liberalism, it might be easier than most Americans might think.
Friday, February 09, 2007
Crimes Against the Peace
Do you know what I would love to see? I would love to see the American people unite behind a dark-horse cantidate who is genuinely dedicated to peace and liberty. I would then love to see said president, upon being sworn-in, turn around and place the entire Bush administration under arrest, to be tried for Crimes Against The Peace and Crimes Against Humanity at The Hague. >:)
Monday, January 22, 2007
Saturday, January 20, 2007
What would you do?
Imagine the following scenario.
A month remains before the elections in 2008. An explosion goes off in the halls of Congress, killing fifteen senators and wounding many others. Another explosion goes off simultaneously in the oval office, and President Bush is killed. A third goes off in a crowded area of a major U.S. city, killing seventy and wounding hundreds more. A government investigation reveals that islamic suicide bombers were behind the attacks. All evidence is classified; none is released to the public. There are largely discredited rumors coming out by way of non-mainstream "news" outlets that the evidence was hardly conclusive.
With George W Bush dead, Dick Cheney assumes the Presidency, and declares a state of national emergency. He declares that the elections are to be suspended until after the emergency has passed. A congressional resolution passes endorsing this. Here is the question:
What do you think would happen? What would you do?
A month remains before the elections in 2008. An explosion goes off in the halls of Congress, killing fifteen senators and wounding many others. Another explosion goes off simultaneously in the oval office, and President Bush is killed. A third goes off in a crowded area of a major U.S. city, killing seventy and wounding hundreds more. A government investigation reveals that islamic suicide bombers were behind the attacks. All evidence is classified; none is released to the public. There are largely discredited rumors coming out by way of non-mainstream "news" outlets that the evidence was hardly conclusive.
With George W Bush dead, Dick Cheney assumes the Presidency, and declares a state of national emergency. He declares that the elections are to be suspended until after the emergency has passed. A congressional resolution passes endorsing this. Here is the question:
What do you think would happen? What would you do?
Saturday, January 06, 2007
Money: What does it represent?
Recently, an idea of money that explains inflation as a natural phenomenon inherent to money in general, and not the result of fiendish collaboration between government and bankers, came to mind.
Lots of people on the side of the debate I generally find myself on look to the history of American money as the history of All Money, degenerating from the era of Gold, The Perfect Money, to the nefarious "fiat" money that is obviously so amazingly horrible because it loses value as time goes by. Now, I'm hardly an expert on the history of money, but I am aware that there are many things throughout history that have been used as money. The common features I see in historical forms of money are that they are durable, easily recognizable, sufficiently rare, and require a predictable amount of labor to introduce into the economy.
Gold generally (though not always) satisfies these requirements best. Being a metal that does not oxidize, it never rusts away. It is not difficult to know gold from other materials (though there are a few that can fool the uninitiated). It is sufficiently rare that an extrordinary amount of value can be represented by a very small amount (a single ounce goes for at least $600 right now, and that's in an economy where people aren't using it as money). Generally, gold enters the economy at a predictable rate, and a more productive economy can afford more gold miners. One historical example of a major devaluation of gold is when the gold supply in Europe increased drastically due to a sudden influx of booty by Spanish conquistadors. Silver has similar qualities, though I the supply of silver is a little more variable than gold.
I have read that Native Americans of the Rocky Mountains onced use shells from the Pacific coast as a sort of currency, and upon reflection, I can see why. While shells certainly aren't as durable as gold, they are still quite durable. It probably isn't that difficult to distinguish an ocean shell from a river shell. These shells could enter the economy no faster than the trade links between the Rockies and the Pacific coast could move them, and simply could not be gathered in the local area. For all these reasons, ocean shells could well have served as an excellent trade medium for the time in which it was used. Of course, the introduction of the horse alone undermines this entire system.
Wampum was the "currency" of the natives of the eastern seaboard. It has been suggested "clovis points" were used as a form of currency. I once read in an issue of The Lighthouse about an island culture that used massive, specially carved rocks as a form of currency. All of these shared certain features. I don't know how durable wampum is, but certainly an oversized stylistic arrowhead is like a coin, and those massive rocks last for generations. They all require--in a technologically stagnant setting--a predictable expenditure of labor to create. They are all highly stylistic in form, making them easily recognizable. Given the amount of labor necessary simply to collect enough food to survive, let along make additional luxaries, the labor involved in making them ensured their rarity. The demise of "clovis points" is prehistoric, though both wampum and those big rocks were undermined with western machinery.
Imagine for a moment we live in a "Star Trek" universe. Gold would have long ago ceased to be "money," given replicator technology would have long ago undermined the value of gold. For non-trekkies, a "replicator" is a device that can transform raw energy into any form of matter, including food (though it never tastes as good as the "real thing") and including gold.
History is no more the determiner of great monetary devices than it is of great technological devices, and it was while considering what money is actually used for that I realized monetary inflation is not necessarily a horrible thing that must be avoided like a plague.
The "base case" for an economy is your basic agrarian barter economy, the only level where barter can be used exclusively, I think. Producers travel to a central location to trade their produce. You might have a wheat grower, a vegetable farmer, a grower of tree fruits, a blacksmith, a potter, someone from the nearby mine, etc. They hope to give what they produce in exchange for things they need that others produce. The miner brings raw iron, the blacksmith brings finished iron work, the potter brings, pots, the vegetable grower brings vegetables, etc. The miner might need a pot, but the potmaker has no need for raw iron. Either the potmaker needs to accept iron, and then find trade iron for something he needs from the blacksmith, or the the miner has to trade iron for something the potter needs, and then trade that for the pot. It's not that difficult at this scale.
However, as the divisions of labor get more complex, this process becomes increasingly cmbersome. The introduction of some sort of medium of trade, something that all will accept in trade, is an innovation of extraordinary value, and the thing that makes our modern economy possible. However, one thing to note is that money has not replaced the things that they were previously trading; rather, it simply facilitates the trade, itself. And this money HAS to lose value as time goes by. Why? Because the things the money represents lose value as time goes by!
Think about the produce of the vegetable grower. Today, even in my modern refrigerator, I know well that I HAVE to eat my bag of organic salad leaves within a week. Many of the leaves don't even last that long. You think a 40% loss in the value of your trade goods over fifteen years is bad? Imagine a total loss over the course of fifteen days!
Each producer's goods depreciate at varying rates. The blacksmith's goods will last for many, many ears, possibly even generations, properly cared for. Of course, part of that care is repairs. And rust happens. Pots break. Even jewelry wears, requiring occasional tooling. And the food has to be consumed soon, or it will spoil, wasted. Now, I can't communicate a good, solid logical connection right now, but I can't help but think that money must reflect in some fashion the average of the economic properties of the goods it is meant to substitue for in trade. Sure, the depreciation of money isn't as simple as taking an average of the depreciation rates of all goods, but surely some depreciation is a natural feature.
The only thing that keeps a currency increasing in value is economic growth that is faster than monetary growth. The lettuce made last year is certainly compost by now if it wasn't purchased and eaten, but provided enough people were wanting to buy lettuce, there may well be two lettuce farms where previously there was one; and thus, the money is worth more now than it was before. However, if a culture has reached the point where it has reached an economic equalibrium with its local ecology and technological progress has hit a wall, I can't help but think it would be natural for a currency to depreciate at a rate comparable to the actual goods that can be purchased with it.
Lots of people on the side of the debate I generally find myself on look to the history of American money as the history of All Money, degenerating from the era of Gold, The Perfect Money, to the nefarious "fiat" money that is obviously so amazingly horrible because it loses value as time goes by. Now, I'm hardly an expert on the history of money, but I am aware that there are many things throughout history that have been used as money. The common features I see in historical forms of money are that they are durable, easily recognizable, sufficiently rare, and require a predictable amount of labor to introduce into the economy.
Gold generally (though not always) satisfies these requirements best. Being a metal that does not oxidize, it never rusts away. It is not difficult to know gold from other materials (though there are a few that can fool the uninitiated). It is sufficiently rare that an extrordinary amount of value can be represented by a very small amount (a single ounce goes for at least $600 right now, and that's in an economy where people aren't using it as money). Generally, gold enters the economy at a predictable rate, and a more productive economy can afford more gold miners. One historical example of a major devaluation of gold is when the gold supply in Europe increased drastically due to a sudden influx of booty by Spanish conquistadors. Silver has similar qualities, though I the supply of silver is a little more variable than gold.
I have read that Native Americans of the Rocky Mountains onced use shells from the Pacific coast as a sort of currency, and upon reflection, I can see why. While shells certainly aren't as durable as gold, they are still quite durable. It probably isn't that difficult to distinguish an ocean shell from a river shell. These shells could enter the economy no faster than the trade links between the Rockies and the Pacific coast could move them, and simply could not be gathered in the local area. For all these reasons, ocean shells could well have served as an excellent trade medium for the time in which it was used. Of course, the introduction of the horse alone undermines this entire system.
Wampum was the "currency" of the natives of the eastern seaboard. It has been suggested "clovis points" were used as a form of currency. I once read in an issue of The Lighthouse about an island culture that used massive, specially carved rocks as a form of currency. All of these shared certain features. I don't know how durable wampum is, but certainly an oversized stylistic arrowhead is like a coin, and those massive rocks last for generations. They all require--in a technologically stagnant setting--a predictable expenditure of labor to create. They are all highly stylistic in form, making them easily recognizable. Given the amount of labor necessary simply to collect enough food to survive, let along make additional luxaries, the labor involved in making them ensured their rarity. The demise of "clovis points" is prehistoric, though both wampum and those big rocks were undermined with western machinery.
Imagine for a moment we live in a "Star Trek" universe. Gold would have long ago ceased to be "money," given replicator technology would have long ago undermined the value of gold. For non-trekkies, a "replicator" is a device that can transform raw energy into any form of matter, including food (though it never tastes as good as the "real thing") and including gold.
History is no more the determiner of great monetary devices than it is of great technological devices, and it was while considering what money is actually used for that I realized monetary inflation is not necessarily a horrible thing that must be avoided like a plague.
The "base case" for an economy is your basic agrarian barter economy, the only level where barter can be used exclusively, I think. Producers travel to a central location to trade their produce. You might have a wheat grower, a vegetable farmer, a grower of tree fruits, a blacksmith, a potter, someone from the nearby mine, etc. They hope to give what they produce in exchange for things they need that others produce. The miner brings raw iron, the blacksmith brings finished iron work, the potter brings, pots, the vegetable grower brings vegetables, etc. The miner might need a pot, but the potmaker has no need for raw iron. Either the potmaker needs to accept iron, and then find trade iron for something he needs from the blacksmith, or the the miner has to trade iron for something the potter needs, and then trade that for the pot. It's not that difficult at this scale.
However, as the divisions of labor get more complex, this process becomes increasingly cmbersome. The introduction of some sort of medium of trade, something that all will accept in trade, is an innovation of extraordinary value, and the thing that makes our modern economy possible. However, one thing to note is that money has not replaced the things that they were previously trading; rather, it simply facilitates the trade, itself. And this money HAS to lose value as time goes by. Why? Because the things the money represents lose value as time goes by!
Think about the produce of the vegetable grower. Today, even in my modern refrigerator, I know well that I HAVE to eat my bag of organic salad leaves within a week. Many of the leaves don't even last that long. You think a 40% loss in the value of your trade goods over fifteen years is bad? Imagine a total loss over the course of fifteen days!
Each producer's goods depreciate at varying rates. The blacksmith's goods will last for many, many ears, possibly even generations, properly cared for. Of course, part of that care is repairs. And rust happens. Pots break. Even jewelry wears, requiring occasional tooling. And the food has to be consumed soon, or it will spoil, wasted. Now, I can't communicate a good, solid logical connection right now, but I can't help but think that money must reflect in some fashion the average of the economic properties of the goods it is meant to substitue for in trade. Sure, the depreciation of money isn't as simple as taking an average of the depreciation rates of all goods, but surely some depreciation is a natural feature.
The only thing that keeps a currency increasing in value is economic growth that is faster than monetary growth. The lettuce made last year is certainly compost by now if it wasn't purchased and eaten, but provided enough people were wanting to buy lettuce, there may well be two lettuce farms where previously there was one; and thus, the money is worth more now than it was before. However, if a culture has reached the point where it has reached an economic equalibrium with its local ecology and technological progress has hit a wall, I can't help but think it would be natural for a currency to depreciate at a rate comparable to the actual goods that can be purchased with it.
Friday, December 29, 2006
The Scapegoat
Today, I will take you into a flight of unserious and pointless (though amusing) word-association, something that makes sense only if you lend credence to a link between ancient ritual and modern practice.
In Christianity, one of the names for Jesus is the Lamb of God. This is a reference to the yearly rite the ancient Israelites were supposed to practice to purge Israel of its sins. A lamb, pure and without defect, was sacrificed to atone for the sins of the people of Israel. Then the high priest would enter the Holy of Holies (an inner part of the Temple where even he was not allowed on any other day for any other purpose), and do something that would somehow get God to forgive His People. Jesus death on the cross is supposed to be the reality that the yearly sacrifice of the lamb was meant to symbolize. I'd provide references, but I just don't feel like it. :p
Many people refer to The Lamb without realizing there is a second animal involved in the ritual: a goat. A goat was chosen, and the sins of Israel were metaphorically placed upon this goat. This goat was then driven out into the wilderness, and called the "escaped goat" or "scapegoat." If Jesus is the Lamb of God, who, then, is the Scapegoat of God? Some people answer "Satan," but who the hell is Satan? Where is he? Is he here? Is he there? Is he anywhere? Jesus was a man, who came, went, and--some say--came again. He is an identifiable historical figure, and his followers, who sometimes refer to their brotherhood as "the body of Christ," are here with us today. "Satan" is nothing but a mythical figure who shows up in some stories that are so ancient we can hardly lend them literal credence. He certainly didn't show up in the New Testament, except possibly when Jesus went wandering in the desert. He simply isn't historical enough to be placed on the same field as Jesus. So who is the Scapegoat?
Irony of ironies: Who is identified by every conspiracy theorist who posits an identity to "Them?" When "They" are the cause of all the woes in the world, who are "They" in the rare instance a conspiracy theorist attempts to put a name beyond some faceless mass like "The Government?" We all know who they are: The Jews.
Irony of ironies: Judeism and Christianity came to the Temple together. First, Jesus was killed. Shortly afterward, the Jews were driven from Judea, and the temple destroyed, by the Romans. Or perhaps: First, the Lamb was sacrificed. Shortly afterward, the Scapegoat was driven out into the wilderness. People have been blaming and persecuting The Jews for everything ever since--the Ultimate Scapegoat.
Probably not much to this. I thought it up about ten minutes ago, found it amusing, and decided to post it. I accept no responsibility for idiots who find this an excuse to persecute their fellow man, Jew or otherwise.
Oh, and if you take this seriously, realize one thing. The yearly lamb, when sacrificed, was dead. Those lambs did not come back to life. The Lamb, however, did, according to the story, anyway. If the Lamb that was sacrificed can rise again, perhaps there will come a day when The Scapegoat will no longer be held guilty of the world's sins.
In Christianity, one of the names for Jesus is the Lamb of God. This is a reference to the yearly rite the ancient Israelites were supposed to practice to purge Israel of its sins. A lamb, pure and without defect, was sacrificed to atone for the sins of the people of Israel. Then the high priest would enter the Holy of Holies (an inner part of the Temple where even he was not allowed on any other day for any other purpose), and do something that would somehow get God to forgive His People. Jesus death on the cross is supposed to be the reality that the yearly sacrifice of the lamb was meant to symbolize. I'd provide references, but I just don't feel like it. :p
Many people refer to The Lamb without realizing there is a second animal involved in the ritual: a goat. A goat was chosen, and the sins of Israel were metaphorically placed upon this goat. This goat was then driven out into the wilderness, and called the "escaped goat" or "scapegoat." If Jesus is the Lamb of God, who, then, is the Scapegoat of God? Some people answer "Satan," but who the hell is Satan? Where is he? Is he here? Is he there? Is he anywhere? Jesus was a man, who came, went, and--some say--came again. He is an identifiable historical figure, and his followers, who sometimes refer to their brotherhood as "the body of Christ," are here with us today. "Satan" is nothing but a mythical figure who shows up in some stories that are so ancient we can hardly lend them literal credence. He certainly didn't show up in the New Testament, except possibly when Jesus went wandering in the desert. He simply isn't historical enough to be placed on the same field as Jesus. So who is the Scapegoat?
Irony of ironies: Who is identified by every conspiracy theorist who posits an identity to "Them?" When "They" are the cause of all the woes in the world, who are "They" in the rare instance a conspiracy theorist attempts to put a name beyond some faceless mass like "The Government?" We all know who they are: The Jews.
Irony of ironies: Judeism and Christianity came to the Temple together. First, Jesus was killed. Shortly afterward, the Jews were driven from Judea, and the temple destroyed, by the Romans. Or perhaps: First, the Lamb was sacrificed. Shortly afterward, the Scapegoat was driven out into the wilderness. People have been blaming and persecuting The Jews for everything ever since--the Ultimate Scapegoat.
Probably not much to this. I thought it up about ten minutes ago, found it amusing, and decided to post it. I accept no responsibility for idiots who find this an excuse to persecute their fellow man, Jew or otherwise.
Oh, and if you take this seriously, realize one thing. The yearly lamb, when sacrificed, was dead. Those lambs did not come back to life. The Lamb, however, did, according to the story, anyway. If the Lamb that was sacrificed can rise again, perhaps there will come a day when The Scapegoat will no longer be held guilty of the world's sins.
Monday, December 18, 2006
On Readiness for War
I've been writing about peace, writing against the administration, writing against the war, writing my belief that it would be better for both America and Iraq if we lost this war. I've been writing this so much that one might come to the conclusion that I am either against all war, or simply biased against America in favor of everybody else. I feel the need to write something less timely, something that will indicate this is simply not the case.
Actually, there is a part of me that IS against all war, that part of me that is influenced largely by biblical teaching. While I am aware that God ordered the Israelites into war from time to time, the impression I get from the new testament--particularly the gospels--is that it is no longer a time for war. "If a man strikes you on the cheak, offer him the other. If a man takes your coat, give him also your cloak. If a man forces you to march a mile with him, go with him two." This, to me, is the clearest statement ever given in the Bible regarding how followers of Christ are to react to violence. Jesus demonstrated this ideal by willingly going to the cross. I really fail to see how people, calling themselves Christians, manage to justify war, and even fight in them.
However, it is but a part of me that feels this way. I am not a churchgoer. I do not think totally according to what I read in the Bible. There are times when I wonder if I might resolve this internal inconsistancy, but for now, that is not my way.
War happens. There are always those who believe their desires might be fulfilled through the deaths of others. This conflict can be seen in the non-human world, as various organisms have evolved either the strength to frighten off predators (like the elephant, or the bison), or the appearance of strength (like the puffer fish). It is no different among men, except that we often regard one another as beings of another species: we often prey upon one another.
For this reason, individuals, communities, and states must be prepared for war. If they posess strength, or at least the appearance of strength, the expense of war goes up for any that might attack them, therefore the profit of war goes down, meaning that, at the very least, those who go to war based upon economic calculation (whether concious or otherwise) would avoid it. Those who go to war foolishly can be eliminated.
It is also good for individuals, communities, and states who are committed to peace to ally with one another for mutual defense, not necessarily formally, but in principle. This decreases the amount of preparation necessary to maintain that optimal appearance of strength against those that would attack them, a larger force being available in the event of war. All of this decreases the profitability of war for those who make war for profit, deterring them. It also makes it more likely that those that make war for the sheer hell of it will, first off, have fewer allies (the raiders having been deterred), and second off, be utterly destroyed should they decide to fight anyway.
One must remember that any armed group has the potential to be every bit as criminal as those other groups. Indeed, the traditional model for the state, in claiming for itself the privelage of seizing anything it "lawfully" comes to the decision to seize, is nothing more than a criminal organization large enough to end the competition between criminal organizations. In a democracy, "lawful decision making" means a majority of voters approves it, which can at times degenerate into the democracy of three wolves and a sheep, voting about what they should have for dinner...
I fully agree America needs to be prepared for war, and willing to fight it to the finish when it is necessary to do so. However, we are placing all of our military might under the control of very few men... and I believe this is extraordinarily dangerous. It doesn't take long for the enemies of peace to figure out how to play the new game, gaining control of our armies and the power to tax... and, once again, we break up into feuding, warring powers, each seeking to seize as much as they can in the name of "self defense;" only this time, we war against each other at the ballot box, using the tax collector as our mercenary. I believe most people agree that it would be better if taxes were lower and government were smaller, but a minority that profits from this game use our fear of each other and of people abroad to continually increase their own power.
Currently, there seems to be a focus on how big and scary we can look, in an attempt to deter others. This works for animals. The best way to deal with a hungry bear is to appear as large and threatening as you can. The bear just wants a meal, and wants the easiest meal he can get. Bears engage in violence in respond to what might be called an "economic calculation;" they want to meet their dietary needs with the least risk and caloric expense. If you look big and scary, predators will generally not attack.
People are different. If something simply looks strong, we will avoid messing with it, but if it looks really scary, we arm ourselves and kill it before it can kill us. Anything that not only secures its own safety, but also appears to threaten our own safety, we will attack, and this is as true in human interactions as it is in human-animal interactions.
In other words, our big scary army actually reduces our security, from more than one angle. It frightens people in other countries, thus people who would otherwise ignore us constantly scheme for a way to bring us down... and the more actively we use that army, the more people we turn to this endevor. With so many minds dedicated to the cause of bringing us down, it is only a matter of time until someone figures out how to do it... assuming that isn't what's happening right now.
The second threat, however, is from the minority that controls the machinery of the state using that power to cow their own people. There was a time when, if taxes were raised too high or rights were infringed, there was the threat of civil war, forcing politicians to restrain themselves somewhat in the name of civil order. Indeed, both of the rebellions that have occured in this country were essentially tax revolts. The "whisky rebellion," a far more important conflict than our textbooks lead us to believe, was over a tax that benefited the eastern seaborad at the expense of westerners. The Civil War, though we are told it was about Slavery (and was, indeed, toward the end), but it started not over slavery, but over the Tarrif of Abominations, a tax that benefited the industrial North at the expense of the agricultural South. Seek to advance the interests of the one at the expense of another, and this is what you risk.
That is no longer the case, since everybody knows you can't fight City Hall, let alone Washington D.C. Control over this resource is extremely valuable; lack of control is extremely dangerous. And so, we battle for control, with no reguard for truth or justice.
I firmly believe security is best established by a balance between individual readiness, communal readiness, and state readiness. No arms should be denied to individuals. Communities should maintain forces just large enough both to give their judicial systems teeth, and to act as a first line of defense against larger invaders. The state should maintain a force just large enough both to prevent communities from subjugating one another, and to act as a first line of defense in war, giving communal and individual forces time to organize under its banner.
If there is no balance of force, the monopolist of force inevitably ends up being used immorally to fulfill to desires of those who wish to profit by violence. Only if there is a balance of forces does violence cease to be a profitable alternative, allowing people the freedom to get down to living free.
Action points: Shrink the federal military. Release the national guard from federal authority. End arms control in all forms, with the possible exception of weapons capable of destroying entire communities in a single blast.
And to those that serve in our current military in the belief that it is your role to do so to defend our country, while I question your judgement, I do not question your honor, just as I do not question those that attempt to educate children in the only manner it is currently legal to do so. We all have a way in which we are to serve society, and I do not envy the position of those whose domain is currently monopolized by the government.
And, to the Christians: You're already on the right side of the Resurrection, so why risk your salvation by participating in the wars of pagans, atheists, and psuedo-christian charletans? (I probably answered my question with that last item.) You may die in battle, and then hear the words "I do now know you." Did not Paul say it was better to suffer wrong, than to commit it?
Actually, there is a part of me that IS against all war, that part of me that is influenced largely by biblical teaching. While I am aware that God ordered the Israelites into war from time to time, the impression I get from the new testament--particularly the gospels--is that it is no longer a time for war. "If a man strikes you on the cheak, offer him the other. If a man takes your coat, give him also your cloak. If a man forces you to march a mile with him, go with him two." This, to me, is the clearest statement ever given in the Bible regarding how followers of Christ are to react to violence. Jesus demonstrated this ideal by willingly going to the cross. I really fail to see how people, calling themselves Christians, manage to justify war, and even fight in them.
However, it is but a part of me that feels this way. I am not a churchgoer. I do not think totally according to what I read in the Bible. There are times when I wonder if I might resolve this internal inconsistancy, but for now, that is not my way.
War happens. There are always those who believe their desires might be fulfilled through the deaths of others. This conflict can be seen in the non-human world, as various organisms have evolved either the strength to frighten off predators (like the elephant, or the bison), or the appearance of strength (like the puffer fish). It is no different among men, except that we often regard one another as beings of another species: we often prey upon one another.
For this reason, individuals, communities, and states must be prepared for war. If they posess strength, or at least the appearance of strength, the expense of war goes up for any that might attack them, therefore the profit of war goes down, meaning that, at the very least, those who go to war based upon economic calculation (whether concious or otherwise) would avoid it. Those who go to war foolishly can be eliminated.
It is also good for individuals, communities, and states who are committed to peace to ally with one another for mutual defense, not necessarily formally, but in principle. This decreases the amount of preparation necessary to maintain that optimal appearance of strength against those that would attack them, a larger force being available in the event of war. All of this decreases the profitability of war for those who make war for profit, deterring them. It also makes it more likely that those that make war for the sheer hell of it will, first off, have fewer allies (the raiders having been deterred), and second off, be utterly destroyed should they decide to fight anyway.
One must remember that any armed group has the potential to be every bit as criminal as those other groups. Indeed, the traditional model for the state, in claiming for itself the privelage of seizing anything it "lawfully" comes to the decision to seize, is nothing more than a criminal organization large enough to end the competition between criminal organizations. In a democracy, "lawful decision making" means a majority of voters approves it, which can at times degenerate into the democracy of three wolves and a sheep, voting about what they should have for dinner...
I fully agree America needs to be prepared for war, and willing to fight it to the finish when it is necessary to do so. However, we are placing all of our military might under the control of very few men... and I believe this is extraordinarily dangerous. It doesn't take long for the enemies of peace to figure out how to play the new game, gaining control of our armies and the power to tax... and, once again, we break up into feuding, warring powers, each seeking to seize as much as they can in the name of "self defense;" only this time, we war against each other at the ballot box, using the tax collector as our mercenary. I believe most people agree that it would be better if taxes were lower and government were smaller, but a minority that profits from this game use our fear of each other and of people abroad to continually increase their own power.
Currently, there seems to be a focus on how big and scary we can look, in an attempt to deter others. This works for animals. The best way to deal with a hungry bear is to appear as large and threatening as you can. The bear just wants a meal, and wants the easiest meal he can get. Bears engage in violence in respond to what might be called an "economic calculation;" they want to meet their dietary needs with the least risk and caloric expense. If you look big and scary, predators will generally not attack.
People are different. If something simply looks strong, we will avoid messing with it, but if it looks really scary, we arm ourselves and kill it before it can kill us. Anything that not only secures its own safety, but also appears to threaten our own safety, we will attack, and this is as true in human interactions as it is in human-animal interactions.
In other words, our big scary army actually reduces our security, from more than one angle. It frightens people in other countries, thus people who would otherwise ignore us constantly scheme for a way to bring us down... and the more actively we use that army, the more people we turn to this endevor. With so many minds dedicated to the cause of bringing us down, it is only a matter of time until someone figures out how to do it... assuming that isn't what's happening right now.
The second threat, however, is from the minority that controls the machinery of the state using that power to cow their own people. There was a time when, if taxes were raised too high or rights were infringed, there was the threat of civil war, forcing politicians to restrain themselves somewhat in the name of civil order. Indeed, both of the rebellions that have occured in this country were essentially tax revolts. The "whisky rebellion," a far more important conflict than our textbooks lead us to believe, was over a tax that benefited the eastern seaborad at the expense of westerners. The Civil War, though we are told it was about Slavery (and was, indeed, toward the end), but it started not over slavery, but over the Tarrif of Abominations, a tax that benefited the industrial North at the expense of the agricultural South. Seek to advance the interests of the one at the expense of another, and this is what you risk.
That is no longer the case, since everybody knows you can't fight City Hall, let alone Washington D.C. Control over this resource is extremely valuable; lack of control is extremely dangerous. And so, we battle for control, with no reguard for truth or justice.
I firmly believe security is best established by a balance between individual readiness, communal readiness, and state readiness. No arms should be denied to individuals. Communities should maintain forces just large enough both to give their judicial systems teeth, and to act as a first line of defense against larger invaders. The state should maintain a force just large enough both to prevent communities from subjugating one another, and to act as a first line of defense in war, giving communal and individual forces time to organize under its banner.
If there is no balance of force, the monopolist of force inevitably ends up being used immorally to fulfill to desires of those who wish to profit by violence. Only if there is a balance of forces does violence cease to be a profitable alternative, allowing people the freedom to get down to living free.
Action points: Shrink the federal military. Release the national guard from federal authority. End arms control in all forms, with the possible exception of weapons capable of destroying entire communities in a single blast.
And to those that serve in our current military in the belief that it is your role to do so to defend our country, while I question your judgement, I do not question your honor, just as I do not question those that attempt to educate children in the only manner it is currently legal to do so. We all have a way in which we are to serve society, and I do not envy the position of those whose domain is currently monopolized by the government.
And, to the Christians: You're already on the right side of the Resurrection, so why risk your salvation by participating in the wars of pagans, atheists, and psuedo-christian charletans? (I probably answered my question with that last item.) You may die in battle, and then hear the words "I do now know you." Did not Paul say it was better to suffer wrong, than to commit it?
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