Hi everyone,
This is my first post here. I'm puzzled by the problem of interest. It seems to me that since money comes about through the creation of debt plus interest, there is always a greater amount of debt in the system than there is money. This creates an organic need in the system for defaults, and gives excessive power to the holders of money, not because they are productive, but simply because they hold money. As a system founded on this basis expands, it inevitably creates an unequal distribution of wealth. I raised these concerns to Tom Woods and he recommended this article by Robert P. Murphy - http://mises.org/daily/4569 .
In the article, he states that "my modest point in this article was to correct the widespread misconception that in a system of 'debt-based money,' further rounds of inflation are mathematically necessary to avoid default on previous loans. In general, this simply isn't true, because the bankers can spend their interest payments on real goods and services, thereby returning that money to the public, which can then use it again for further debt payments." But isn't it extremely unlikely that bankers would spend 100% of their interest payments back into the economy? They are more likely to save a large amount, or re-invest in some interest-bearing asset. So this doesn't really address the basic problem. Am I missing something here?
Thanks for your help,
Joe
Clayton: And when you agree to remove this monopoly - presto, there is NO government! It's just another service provider on the market! Shhhh, don't scare off the new guy. Clayton -
And when you agree to remove this monopoly - presto, there is NO government! It's just another service provider on the market!
Shhhh, don't scare off the new guy.
Clayton -
Don't worry I can take it
The difference I suppose is that the government would provide these services on a not-for-profit basis and the private sector would be for-profit.
Sounds great. Who is going to pay for this deficit in profits? I mean, how can an entity ("government") continue to operate in face of constant losses? The current government fixes this by making unwilling parties to make up for the deficit.
BTW, I like your approach, really good questions.
There's no reason competition can't be legalized,
Um, lots of men with guns who have absolutely no intention of allowing competition is not a "reason"?
The elimination of monopoly doesn't mean government suddenly would cease to exist.
Not overnight, but basically, yeah, it does mean that. The USPS would go bankrupt overnight if it were cut loose.
This sounds very nice (almost charitable) but "not-for-profit" is really a euphemism for "tax-funded". The problems with tax-funding go far beyond the simple fact that they are collected coercively. The de-rationalizing effect of taxation is at the heart of Mises's calculation problem.
But in the meantime, those who still want to pay into the government system may do so through taxes.
This doesn't work. I could opt out of paying for the Pentagon? I could opt out of paying for the judiciary? I could opt out of paying for the police? I doubt it.
The books of a company are not 100% transparent either, but that doesnt mean they can't provide a valid service. All i mean is that when someone pays taxes, there would be a list of services that they are buying into, and those that they don't want or would rather get elsewhere they are free to do so.
The problem with taxation is not lack of transparency. Of course the books of a company are not transparent, it's a private business. Why the hell should any private person be forced to open the books on his business except to auditors he himself has hired (perhaps to maintaint membership in a better-business-organization)?
The problem with taxation is that it is logically indistinguishable from robbery. The government takes by force. Wal-Mart does not rob its customers. They can't hold a gun to your head and make you pay them a price you don't want to pay for a good or service you don't want to receive. The government can and does.
Taxes have long been billed as a kind of "social duty" or any of a number of rationalizations and euphemisms. The root source of these self-serving rationalizations is invariably the State itself. Nobody wants to pay taxes otherwise it wouldn't be involuntary. The fact is that the act of taxing (stealing) is immoral and, hence, the State must obfuscate exactly what it's doing.
Here's a brief history lesson to put this in perspective. Many centuries ago, wealth taxes were far more common than they are today. You didn't owe the King a portion of your income, you owed him a portion of your wealth. The problem with this system is that people got better and better at hiding their wealth and pretending they had much less than they really had. Faced with wealth taxes, the economy went underground. With the invention of writing and the keeping of records, it became easier to tax transactions rather than wealth. The advantage of taxing transactions is that they are much harder to hide since there are always two parties to a transaction. A wealthy man may bury his children's inheritance in a secret location that only he and his eldest son can find again but if you want to buy or sell something, you probably have to involve a stranger in the transaction who will be perfectly happy to rat you out to the King rather than be punished himself.
So, rather than taxing wealth stocks, governments today tax wealth flows. They bill this out as some kind of enlightened move towards greater fairness or some such nonsense. But the simple fact is the government can generate larger absolute tax revenues when it taxes wealth flows instead of chasing down ever-dwindling and ever-receding wealth stocks.
This shapes the entire face of modern life. Nearly every transaction in the entire economy is recorded. Why? So it can be taxed. Look at the VAT... it takes this to a whole new level - not only are transactions taxed but even stages along the production process are taxed. And perhaps the greatest distortion of all has been the income tax.
People don't understand that the income tax inherently favors the monied class. What I mean by this is that the income tax (I prefer to call it the labor tax) favors those who can earn an income from buying and selling something other than their labor. Most people don't have sufficient capital (and inclination) to be professional speculators. These people have only one thing to sell to feed and clothe themselves: their time and talents (labor). It's extremely difficult to hide the sale of labor because you must generally be bodily present to labor. It's much easier to hide the sale of non-labor goods or to strategically structure your transactions in such a way as to minimize (or eliminate altogether) your tax liability. So, the little guy is inherently punished by this system while the fat cats continue to rake in the dough. Then, the useful idiots take to the streets protesting "capitalism" never stopping to wonder how it is that those with money come to have so much power.
Warren Buffett had just $63 million of income last year. If you do the math, it would have taken him 624 years to build his present stock of wealth at that rate of income. What rubbish! Yet nobody even bats an eyelash at such asburdities.
Clayton: Um, lots of men with guns who have absolutely no intention of allowing competition is not a "reason"?
Well obviously in the present system that is the problem, but we are talking about hypotheticals here, no? Who are the people who keep this going? Our elected representatives. So if reasonable people are voted in there is no reason things can't change.
If that's the case then so be it! It would prove your theories right. The government would have to ask people in an honest, up front manner for more tax dollars to sustain the USPS, people would get fed up with it, and they would turn to the market for alternatives.
Yes, but it is not coercion if people are paying into it by choice. One of my problems with left-liberals is that they often have this air about them that they know what is best for everybody and want to "protect them from themselves" and foist their vision upon the masses. This is completely repellent to me. Whatever side we are on we need to be careful to avoid this. I think we have to realize that different people have different philosophies of life, and so if people believe in the idea of government, believe in paying taxes, believe that it is possible to run institutions in a non-profit manner for the common good, they can do just that. As long as government monopoly is cancelled, then the playing field is leveled. If the de-rationalizing effects that you mention are true, then they will become evident shortly after this monopoly is ended. But it would be better to let it play out so people see the two things side by side.
Honestly I would love the option to opt-out of funding the Pentagon. They waste such enormous sums of money it is unbelieveable. If people want that level of military presence, they should have to make a conscious choice about it. The way things are now, the money is already there, so people have no qualms about using our military in ridiculous ways. As far as the judiciary - if you want to use the government-run judicial system, then you'd have to pay for it, otherwise you'd have no right to a trial. Police is tricky since they respond to emergencies - they can't spend time looking up people's history of tax payments, so they would likely still respond to any emergency, and you would be charged after the fact. If you can't afford it, then the only penalty would be the social stigma of being helped by a system you reject and don't pay into. But I would assume that people who don't believe in such a system would in general not abuse it and would find other ways to manage their security.
-Joe-:I'm personally not anywhere near being a voluntaryist, but I don't see why we couldn't have some sort of opt-out system, where those who wish to live without taxation/government services are allowed to do so.
Hehe. I'm afraid you're already there, and the second and third clauses of that sentence prove it. But here's even more...
-Joe-:There's no reason competition can't be legalized, and if people see that the private companies are providing better service and lower prices, they will naturally shift in that direction. But in the meantime, those who still want to pay into the government system may do so through taxes. The elimination of monopoly doesn't mean government suddenly would cease to exist. The difference I suppose is that the government would provide these services on a not-for-profit basis and the private sector would be for-profit.
Don't look now, but you just described a voluntarist system. ;) If the payments were voluntary, they wouldn't be taxes. If there were no taxes, there would be no real way to enforce a monopoly on force...this would mean what you're calling "government" wouldn't actually be a government.
I realize it's a big shift to wrap your head around, and you intuitively feel uncomfortable with the idea, but it's not so outlandish.
Have a look here, then check out the Mises Wiki page for the book he's talking about. There's quite a few article links (as well as a link to a free download of the book itself)
I don't feel uncomfortable to give up the idea of government by force. I guess the most uncomfortable thing is the idea that we need profit as a motivating force in society at all times and there is nothing we can achieve collectively through government, that absolutely everything must be handled by the free market. It is an idea I've honestly never heard anywhere else. And I've followed Ron Paul for a while, but he doesn't speak quite as openly as the people here about it. Also I have trouble squaring environmental concerns with a pure-market philosophy. It seems to me that some collective action is needed in this area. I will certainly read the book you linked to and share my reactions to it.
It's quite short...I wouldn't even call it a book. It might just be called a "double essay." Only about 50 pages. And the articles in that links section (which are by the same author as the "book") are obviously just article length, but are also incredibly helpful.
But just for conversation, what do you mean handling things "collectively through government"? I'm not sure how you're defining that term. If it doesn't have a monopoly on force, and does not collect taxes, how is it a government?
And if it's not a government, what sort of "collective action" are you talking about? People group their efforts all the time. The groups are often called "companies", "churches", "universities", "charities", "think tanks", "institutes"...many of which do not operate for profit, yet are not government affiliated in any way (other than exemptions from the tax laws). What exactly is it you're thinking of that could not be handled by private individuals through voluntary action? Why is force necessary?
I guess the most uncomfortable thing is the idea that we need profit as a motivating force in society at all times and there is nothing we can achieve collectively
This is a caricature of the idea of rational self-interest or what Mises termed human action. Economics he placed in the study of catallacty (voluntary social interactions). Frederic Bastiat says of the domain of economics (then called "political economy"):
The subject of political economy is man.
But it does not embrace the whole man. Religious sentiment, paternal and maternal affection, filial devotion, love, friendship, patriotism, charity, politeness—these belong to the moral realm, which embraces all the appealing regions of human sympathy, leaving for the sister science of political economy only the cold domain of self-interest. This fact is unfairly forgotten when we reproach political economy with lacking the charm and grace of moral philosophy. How could it be otherwise? Let us challenge the right of political economy to exist as a science, but let us not force it to pretend to be what it is not. If human transactions whose object is wealth are vast enough and complicated enough to constitute a special science, let us grant it its own special appeal, and not reduce it to talking of self-interest in the language of sentiment. I am personally convinced that recently we have done it no service by demanding from it a tone of enthusiastic sentimentality that from its lips can sound only like hollow declamation. What does it deal with? With transactions carried on between people who do not know each other, who owe each other nothing beyond simple justice, who are defending and seeking to advance their own self-interest. It deals with claims that are restricted and limited by other claims, where self-sacrifice and unselfish dedication have no place (Economic Harmonies, ch. 2)
This describes the vast bulk of how almost everyone on the planet spends their day. Doing things on behalf of people they don't know and may not even personally like in order to defend and advance their own self-interest.
Here are some quotes from Mises on the subject.
The primary purpose of introducing economics into political discussion is not to justify unjustifiable behavior or wish society to be even more avaricious than it already is. Rather, the purpose is to impose some discipline on the discussion by acknowledging the constraints of reality. So often, political discourse is of the form "the government should do this" and "the government should do that" without asking the rather obvious question of where the government is going to get the resources to do this and that. While it is true that the government has a unique power to motivate people through the threat of whip and jail instead of merely the promise of monetary payment, the history of humanity is nothing if not a lesson in the superior productivity of free labor versus slave labor.
And I doubt that someone like yourself really wants to apply the whip and jail. Without those, the government really has no magical abilities that any private firm does not also have. The government can organize? Private individuals invented organization. The government keeps records? Private individuals invented the keeping of records. And so on.
John James:But just for conversation, what do you mean handling things "collectively through government"? I'm not sure how you're defining that term. If it doesn't have a monopoly on force, and does not collect taxes, how is it a government?
I'm kind of thinking out loud at the moment, so I'm not exactly clear on what I mean, to be honest. I guess without the rule of law backed by threat of force, it is not government as we know today. So by government I mean a set of elected representatives who make laws for the "greater good" (supposedly). Then that leads to the problem of the "tyranny of the majority"... I guess it really comes down to the fact that many of the elites (whether power elites or intellectual elites) believe that the masses are too stupid and immoral to organize themselves and chaos will break loose without that central controlling force. It may be that that was true at some point and in some societies in human history, I don't know. Actually, I have some Chinese friends. many of them smart people, who speak that way about China - that the vast majority of the people there are too ignorant and it is better to have the government in control. Of course they are only having the success they are now because of the introduction of some market forces there.
Clayton, thanks for that quote, that's really powerful stuff. I have a lot of reading to do... hope to keep this thread alive, though, as I gain more exposure to these ideas. Thanks for all your input thusfar.
Joe: Happy to help. Anyone who's just interested in learning and finding the truth in their own way is always welcome on this board... we even keep a token revleft guy around just to maintain an appearance of diversity. :-P
But seriously, starting with economics back in 2007, I have begun a journey of "personal englightenment" - if that term is not too grandiose - and realized that what really matters is seeking the truth in whatever form it may come and however much it might upset my beliefs about the way the world is. Many atheists report undergoing a similar transition when they deconvert from religion and relinquish many of the cognitive dissonances they maintained as a believer. Gerald Celente uses the term "political atheism" as in "I don't believe in any political religion - Democrat, Republican or otherwise" and I think that's where I'm at right now.
It's not so much that I want to see a dramatic upset of the social order - I do not. I'm not a disgruntled youth. I have a professional job and two children. Nevertheless, I do not believe that any political party has my family's interests at heart. I do not believe that the government or anyone running for office has my family's interests at heart. They are all - with negligible exceptions such as Ron Paul - thieving, lying, conniving, spin-mongering crooks.
And painting it as a simple "public/private" dichotomy is an over-simplification. Is Lockheed-Martin really a private corporation? Or is it just a sub-bureaucracy of the Pentagon that happens to pay its top bureaucrats much higher salaries? I can go on and on with this. The Republican privatization mantra is just a slightly more fascistic way of organizing the very same system of exploitation and oppression. To hell with it.
That said, I've realized over time the importance of change by degree. We need a radical revolution in ideas and a gradual evolution in governance. But without the radical revolution in ideas, the gradual evolution is impossible because it has no direction. The Republican party is the perfect illustration of this. Their ideas are "moderate"... slightly shrinking the size of government, shifting the focus of government expenditure more towards military spending and less on education and welfare. But with their milquetoast ideas, what have they actually done? They've expanded Federal medical spending to record levels, they've expanded the military budget to unprecedented levels, the debt has been exploded to unprecedented levels... all before Obama took office.
What is the radical revolution in ideas? Well, it starts - and Ron Paul is leading the charge, here - with ending the system of central banking because this is what has enabled the precipitous expansion of the welfare-warfare state over the last century. And it's worse today than ever. Everybody wants to get stuff from the government and nobody wants to pay taxes. The central bank is what enables the government to give the illusion that it can do both, at once. "Deficits don't matter" Dick Cheney said. And he's right, they don't matter because the government doesn't actually need to repay its debts to the Federal Reserve. But we all pay, in the end, at the grocery checkout and the gas pump ... right where it hurts the poor the most. This system is heartless and anti-human and needs to be exposed for what it is.
From there, who knows where it will lead. I would like to see gradual, peaceful break-up of political unions - secession - which would increase localization of political power and enable people in communities to have a bigger say in how their smaller, more local government is run. One vote in 300 million is pretty much meaningless. Imagine how meaningless 1 vote in 6 billion would be. The idea of global democracy is laughably silly but this is what the Establishment has been trying to peddle as the solution to all the world's woes for at least the last half-century. The faithful are in Mogadishu with Predator drones and foreign troops "fighting the good fight", even as we speak, paving the way to make the world "safe for democracy."
We need a radical revolution in ideas and I think we're currently at a cusp in human history where such a revolution is a real possibility.
-Joe-:I'm kind of thinking out loud at the moment, so I'm not exactly clear on what I mean, to be honest. I guess without the rule of law backed by threat of force, it is not government as we know today. So by government I mean a set of elected representatives who make laws for the "greater good" (supposedly). Then that leads to the problem of the "tyranny of the majority"... I guess it really comes down to the fact that many of the elites (whether power elites or intellectual elites) believe that the masses are too stupid and immoral to organize themselves and chaos will break loose without that central controlling force. It may be that that was true at some point and in some societies in human history, I don't know. Actually, I have some Chinese friends. many of them smart people, who speak that way about China - that the vast majority of the people there are too ignorant and it is better to have the government in control. Of course they are only having the success they are now because of the introduction of some market forces there.
You're very quick. And you're right, plenty of people throughout human history have believed they were wiser than others, and the little people needed to be guided and taken care of (i.e. told what to do, i.e. forced into doing "the right thing" because they do not know what is best for themselves, but the elite do.) Even those being ordered around believed it was the best arrangement for them. And I do not doubt this is where your Chinese friends are coming from...Like I was saying earlier, never underestimate the power of indoctrination. When you grow up being told you need something, you tend to believe it. Hell, you tend to believe anything you were told in your formative years...even after you later find out it isn't and was never true.
I remember hearing a story about a group of circus elephants, all raised in captivity. From the moment they were born, most of their day was spent tied to a gate. They learned from a very early age, jerking at their leash never got them free, but did usually result in a beating or an electric shock. As the elephants grew, the trainers were able to use the elephant's conditioning such that they didn't even need to secure them to anything substantial. A full-sized elephant could be kept in one place simply by putting on a leash and tying it to anything...even a tent pole. During a show one evening all 6 fully grown elephants were secured to a simple guardrail, the movable kind used to designate how people should line up for a carnival ride, or to show that certain areas were off limits. A horrible accident occured, and one of the torches used by the jugglers caught the tent on fire...everything erupted so quickly, and there was such panic that everyone basically moved as quickly as possible to get out from the tent. All six elephants burned...still tied to the single rail...that one man carried into place.
Humans are not so different. Indoctrination is incredibly powerful. People remain tied down to things they could easily break free from, simply because of what they believe. They were always afraid something, so they remain afraid of it. They always needed something, so they think they still need it.
As for the elites, Thomas Sowell has written extensively about them. He calls them "the anointed." I highly recommend his works. His trilogy of books The Quest for Cosmic Justice, The Vision of the Anointed, and A Conflict of Visions deal with this very phenomenon, and tackle the very issue why humans maintain the ideological positions they do. And excellent intro to the latter installment is this video: A Tale of Two Revolutions.
I have a lot of reading to do
Hehe. There's plenty available for you.
...but before you get to that, I have a feeling you might actually want to start with this paper by John Hasnas. I think it will help clarify a lot on the topic we're currently discussing. Then you might start with those 3 videos at the bottom of that beginner link.
Excellent thread, guys.
I started reading Murphy's "Chaos Theory" and I have to say every other sentence makes me cringe. I'm operating under the assumption that this is just my government indoctrination trying to expel these ideas from my system :-) . This is gonna be a long post...
I. Contract Do you literally need to sign a contract for every place you enter? Sign a contract when I walk out on the street? What if someone is murdered on the street and the owners are not present to witness it? How do people know who to call, since there is no universal "911"? People would need to be aware of the private security firm for every area they enter? Since different "public" areas would have different owners, people would need to be aware of the "contract rules" for each area they enter. It could be that you walk across town and there is a completely different set of rules, depending on what the owner decides. Would I need to read a detailed contract in order to walk across town? Or could there at least be some kind of local town "government" (I apologize for using that evil word) that standardizes some basic rules (no murder, rape, fucking in public, whatever). I'd assume there is a possibility that each owner would use a different arbitration agency, so I'd also have to be aware upon entering a new area of which agency served that area, making sure they are fair.
II. Law Obviously law is rarely 100% clear cut, but with our system now, there is a long history of decisions and precedents that have been set. Jurors are trained to learn about these, and although they have their own interpretations, we can assume that there is at least some common basis of understanding in terms of the history of law. But it seems like in a system of private law the only thing on which to go by is the contract between the two parties. What happens if the contract is incomplete? There will certainly be many cases where an unforseen circumstance arises that was not anticipated by the contract. When this happens in our current system, there is a long history of precedent to turn to. In the case of market anarchy, all rests on that particular judge and that particular firm? Since everything is private, how does one get a sense of a firm's merits? What if the firms do not release detailed case histories?
III. Collusion Wouldn't it be relatively easy for corporations to collude with arbitrators, leading to corruption? What if a situation developed where a vast majority of major employers develop a close relationship with 1 or 2 arbitrators and refuse to use anybody else. An employer who is in a sound financial position is in a position of power compared to employees who need work. Businesses could choose to only use certain arbitration agencies known to be more "pro-employer". While they couldn't force employees to agree to a contract including these agencies, a different kind of coercive force, that of poverty or a need to feed one's family, might force a large number to sign anyway.
IV. Mandate Free market advocates talk about how bad it is to have a mandate - but with this system you are essentially making it mandated for people to have this "social" insurance. You may not be doing it by force of gun or government decree, but if people are unable to get a job or even browse through a store due to lack of insurance, it is essentially a mandate. This gives insurance companies enormous power. What would stop an insurance company from, say, making all black people pay a higher premium? Just as health insurance companies have undue power today, and can deny people coverage for ridiculous reasons, as well as charge outrageous premiums pretty much across the board, these social insurance companies could do the same. Living without health insurance is bad, but it isn't the end of the world. Living without this new kind of insurance is catastrophic, as you'd be unable to work, and unable to feed yourself. Now, in order to make money they obviously cannot charge so much that nobody can afford to pay. But just like anyone with a "mandate", they will charge the absolute maximum they can, wring every penny out of their customers, knowing that they are indispensible. I'm not far into it but the ideas are so foreign and radical to me that I'm forcing myself to read it slowly and go over things several times. I'm sure many more questions will be forthcoming...
On a more philosophical note, are you guys at all uncomfortable with the idea of "owning" every inch of everything? Aren't there some things, some aspects of nature, that are the natural domain of everyone born on this planet ? In a deeper sense, can you really "own" a river, a mountain, a forest? Should money have a limitless reach? If a billionaire wants to buy Yellowstone and turn it into a giant amusement park, is that something we should allow? In my opnion, ownership is an essential concept for a functioning society, but market-anarchists seem to elevate it to one of the main human values (life, liberty..... ownership??). I think there is something to be said for maintaining some areas of this planet "unowned", or owned by society. For me a meaningful philosophy of life has to recognize both the individual and his connection to a larger whole. The libertarian perspective taken to such an extreme elevates the narrative of "man as separate from nature" to never-before-seen heights. In my opinion, that is one of the most damaging ideas, and will eventually lead to us destroying the earth. In a pure-market environment, the incentive is always to destroy and "monetize" as much of nature as possible. I'm not a tree-hugger by any means, but at some point we need to realize that we grow "out of" this planet, and depend on it for everything we deem valuable. The resources we depend on for survival are limited, and the market incentive is to use them up, fast. The market incentive is also to pump as much carbon into the atmosphere as possible, so long as it means making a profit. I've noticed that I never hear libertarians discuss environmental issues, and I think this is a major reason - preserving this planet requires consensus, and strong collective action, which goes against this philosophy. I find the argument that "private property rights" will solve all environmental issues to be so hollow.