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
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.
The whole idea of abolishing government monopoly on security is to abolish any aggressive monopoly, public or private. You would only need to know "your" 911, the same way you need to know the phone number for your car insurer. If you find someone murdered on the road, call your private defense agency (PDA), they'll contact the owner of the road who will then probably clean up the scene (likely preserving any forensic evidence to avoid liability once the relatives of the victim find out and begin pursuing justice).
Contracts are not necessary for entering public space. Unowned property is unowned and is governed by common law, not contract.
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?
Common law otherwise known as customary law. It operates just like what we currently have, except there is no coercive monopolist of law who may compel you to use his services. I have written about this at length.
III. Collusion Wouldn't it be relatively easy for corporations to collude with arbitrators, leading to corruption?
That's the current system. In a competitive market, brand and reputation is everything, particularly for someone in the business of impartially settling disputes. Corruption will happen, and so will bankruptcies as a consequence. In the current system, corruption goes on uncorrected until it becomes so hairy and multi-headed that something has to be done about it.
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.
Again, you're describing something that is very much like what the modern State is. You are assuming that there is an inherent animosity between business and government. There is not. They work hand-in-hand and each benefits from the other in more ways than not. Businesses make it easier for the government to collect taxes by deducting them at the point of payment (weekly paycheck) and government reduces competition in the marketplace through regulations that favor incumbent business interests.
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.
I think you're misunderstanding the essential idea. "Social" insurance is an inherent part of every society, whether it's provided as part of a brick-and-mortar business or more indirectly through the assumption that your relatives can be collected on whether through direct liability or through legal extortion (help your son pay his bankruptcy settlement or see him go to jail). You can always do whatever you want on your own property or on any unowned land or water.
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.
You keep ignoring the cartelizing effect of government regulation. Health insurance is an insanely heavily regulated industry. You don't think that the cartelizing influence of these regulations grant the last companies standing enormous power over consumers? Of course it does. Compare the customer service (in ascending order) of: the DMV, your local power company, your health insurer, your grocery store, the nail salon. Now, compare the amounts of regulation on each of these and ask yourself if there is or is not a definite correlation. Regulation reduces competition between producers. Reduction in competition between producers increases prices and reduces quality, thereby punishing consumers.
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.
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.
There are a few things to consider, here:
- All nature-given resources ought to be treated as unowned until they are appropriated and any seizure of such appropriated property ought to be treated as theft. For example, the native Americans had appropriated much of the North (and South) American continent before the arrival of Europeans, who proceeded to commit genocide and seize all this property for the simple reason that they could. Unfortunately, we are too remote from most of the crimes to correct them, so we're at a new status quo and the same goes for all sorts of natural resources that are locked up by governments and government-created corporations who have no more right to them than the man on the moon.
- Property is not the enemy... in fact, it is your friend. Property in land always has some capital value. When a private owner defaces and destroys a piece of land, he is squandering this capital value. Squandering will happen and so will bankruptcy and dissipation of the wealth of those who manage their property foolishly. in the present system, the temporary caretakers of public lands have no vested interest in them and really do a horrible job taking care of them. I live in the Northwest where trees are a primary natural resource. Millions of acres of forest land in the US have been burnt up over the decades. In fact, our national forest service explicitly says that allowing forest fires is "nature's way" and we just have to let it burn. This is nonsense. Private ownership of forests would result in better maintenance of these lands. Forest fires would not be permitted to just start and burn to exhaustion.
- Common law or customary law is not incapable of handling the concept of natural resources that are a cultural heritage and may not be appropriated by virtue of community easement. Let's say a town has an unmaintained road that goes down to a river. Everybody uses this road. One day, a wealthy capitalist buys up all the land between the town and the river, including all the land which the road passes over. Libertarian legal theory says that the wealthy capitalist still does not own the road because he cannot buy the easement which exists by virtue of the long use of the road by the town's inhabitants.
Similarly, let's say there is an area outside of town where the inhabitants gather once a year to celebrate an annual festival that is as old as anyone can remember. The wealth capitalist buys up the land on which the festival grounds exist. He does not own the festival grounds themselves, nor the path into and out of them again by virtue of the easement which exists by virtue of the townspeople's long use of these grounds.
What does or does not constitute a valid claim of easement is something that can only be determined through customary law, that is, through a competitive system of law arbitration.
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.
Quite the opposite. Private ownership incentivizes the preservation of capital value. If you own a tract of forest, no one has to tell you to replant it after you cut it down, that's obvious. It's only "public" forests which suffer from over-harvesting.
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.
You're way off on this one. Rothbard and others have written extensively on this subject.
Clayton -
Clayton:You keep ignoring the cartelizing effect of government regulation.
Are there any books or videos you would recommend that discuss this effect? I think it might help if I study this a bit more first, in order to gain a greater understanding of the problems in the current system. I have a fairly good idea of the problems in monetary policy, the FED, etc. but I'm not well versed in the problems with regulation in other areas.
Regarding the transition to more private ownership - in the selling of currently unowned/public or government owned land, who would receive the profits from the initial sale? Do you think it is important to keep ownership fairly local or at least within national borders, or do you see no problem with the sale of assets to foreigners, sovereign wealth funds, etc.
I'll look up some Rothbard writings on this.
Joe, Clayton already addressed your post nicely. I wish I had more time these days to dig into it myself. I just had to quickly comment on this part:
-Joe-: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.
Do you think that insurance is more of a "mandate" (or more indispendable) to a person than food? Following your logic, shouldn't food producers "charge the absolute maximum they can, wring every penny out of their customers, knowing that they are indispensible"? If they would/should, why do you think they (obviously) don't?