Anthony Martin’s Weblog

You should listen to the talk by Roger W. Garrison, who spoke at this year's Mises University.  One of the things he mentions is this idea of a NRA.  No, not the National Rifle Association.  In 1933, the NRA was a program President Franklin Roosevelt established to deal with prices (among other things) in The Great Depression, and it stood for National Recovery Administration.

This NRA symbol was later banned to prevent misuse.  That shows how powerful symbolism is.  The Obama version is called Recovery.gov.  History just repeats itself.

Garrison talks about how the Cash for Clunkers program was supposed to last until November, 2009.  Congress originally allocated $1 billion, which was supposed to last that long.  But the program was more popular than they realized.

As you recall, the bill requires that the cars be destroyed.  No resale, no charity, no exports to foreign nations.  Not even a moment’s consideration to whether the drive-train could be used by anyone, for anything, anywhere.

Garrison mentions the fact that Roosevelt had pigs slaughtered in the fields and left to rot, in a vane attempt to bring prosperity to all.

So an interesting comparison to the wastefulness of these programs, by Garrison's estimate, Roosevelt had 24 pigs killed for every car Obama destroys, up to the $1 billion point (adjusted for inflation).  Garrison made that estimate back in late July of this year, so at the time, he didn't know it was going to be extended due to popularity.

To extrapolate, I think that means when Congress spends $3 billion on the revised version of the plan, the equivalent pigs slaughtered per car will become 8 to 1.  Many countries in the EU have made their Cash for Clunkers program permanent, so how long before Obama will have crushed more cars than Roosevelt slaughtered pigs?

At the end of the MU talk, Garrison shows a public service announcement made in 1933 for support of Roosevelt's National Recovery Administration, urging employers to hire.  Moe Howard from the Three Stooges appears as an exterminator, whom Jimmy Durante urges to hire more men.

Source: YouTube

I also highly recommend listening to the MU talk.  It was given on July 31st, 2009.  Amazing stuff.  Just listen and look for the parallels to today.

Click here to download:

MU2009_Garrison2_07-29-2009.mp3 (13318 KB)

Let's imagine I have extremely troublesome neighbors living next door to me.  And they're not just troublesome, they are downright rotten and they violate my private property with nuisances like noise, smells, occasional vandalism, and verbal threats.

If there was no government solution to everything, there would pretty much always be a voluntary market solution.  Government gives you one-size-fits-all, so that's why they can only think of dumb ideas.  They also have no incentive to avoid waste since they take their resources by force.

The above simple answer is usually not enough for people, so a more detailed solution is as follows:

Protection (Insurance) Agency Example

In my scenario, since there is no government solution, I would hire a private insurance agency to deal with the problem neighbor matter.  I would agree to pay a monthly premium to the agency that they decide on after observing my situation.  They would have an interest in setting the premium to the right level depending on how the neighbors act when they do their inspection(s) before we sign the contract.

I may have a high premium because my neighbors are unusually difficult.  If I have a high premium, I might tolerate my neighbors until I feel I have evidence that they have sufficiently transgressed against my property.   When my neighbor transgresses against my property, I will make a claim and let my agency will decide how to handle it in the most effective manner.

So I don't have to personally think of ways of dealing with the problem because I have paid experts who have a financial incentive to get it done for my particular situation.

If my agency cannot deal with the problem, my contract stipulates that my agency will pay to move me to a new location, lock, stock, and barrel.  So they have a huge incentive to figure out a creative solution.  Either way, problem solved.

Arbitration Agency

I outlined that the contract was between me and my insurance agency. Let's assume this would be a reputable, well know insurance agency. If I have any disputes with them, we both agree to take our dispute to an arbitrator.  If either of us are unhappy with the decision, we can appeal the first arbitrator to a second.  If the first arbitrator is overturned, the first arbitrator pays, so they have an incentive to do it right the first time.  In fact, it would always be "loser pays" for any dispute.

If the loser cannot appeal and does not make the winner whole, they are financially ostracized, which can ruin a business and an individuals who want to make future contracts.  So civilized people would want to avoid it at all costs; they will abide by the arbitrators decision.

This is called a "voluntary society."  As opposed to a society that operates on coercive violence.

You may wonder if police still exist in this scenario, and I think they certainly could, as long as they keep to themselves when there is no calls out for them and when people have other arrangements.

The less we look to government solutions, the better off we'll be.

In this scenario I describe, it would be highly unusual to look to any kind of government judges after already agreeing to a private solution.  Someone who appeals to government after a getting a private arbitrator would also be ostracized.  They don't mix well unless all parties agree to mix them.  It's like using baseball rules in a game of cricket.

Take the SMS ban while driving.  That should most certainly be an insurance arrangement.  Your insurance company should ask if you intend to SMS while driving.  If you say yes, you should pay more.

The Altruistic Body

It might be hard to believe that it is never necessary to look to government for any reason.  Maybe you are looking for a wise, altruistic, disinterested body with unlimited resources that knows the likely outcomes of the great many schemes of man?

This person knows if you've been bad or good, right?  I think I have heard of him.  He wears a red coat and has a white beard, right? Rides a slay, I think.

Yeah, I stopped believing in Father Christmas a long time ago.

I joke.  But I don't.  I'm sorry if that seemed glib or condescending, but that's what I think of the "all seeing eye" of government.  It's fiction.  It's Santa Claus.

Yet I do believe there is a set of overarching laws that all market actors must follow without exception.  They can be boiled down to:

1. All parties do what they agree to do.
2. Non-aggression Principle is in play (which means do not initiate force).
3. Failure to follow 1 or 2 will result in ostracization.

You may wonder if the above rules I set out require a governing authority.  I do not believe they do.  That's the point.  Enforcement turns completely on the idea of ostracization.

P.J. O'Rourke said, “When the legislature controls what is bought and sold the first thing that is bought and sold is legislators.”

Therefore it follows that if ostracization controls what is bought and sold the first thing that is bought and sold is ostracization.  Meaning you will do everything to protect against, and buy protection from, whatever limits you in the market place.  It becomes a commodity.

At Least Repeal Regulation

In America, Vice Presidente Dan Quayle once talked about how something like 100 or 100,000 regulations being eliminated in a particular government agency.  I can't remember the details.  But it resulted in a net savings of $20 or $25 billion for the businesses being deregulated.  How much do you think would have been saved if they just got rid of the whole ball of wax?

Regulations cost money to implement and enforce.  Obviously someone has to benefit or else why would regulations come about?  Government is one body that benefits.  But market competitors also benefit.  So they lobby to regulate their own industry.

Regulation is really just government backed "cartelization" (as in "to make a cartel").  A private cartel that has no government privileged to back it cannot last very long.  Someone in the cartel will lower their prices to take advantage of the other cartel members who made a pact to keep their prices high.  Once one member lowers his prices, the whole thing falls apart.

Government regulations have the same effect, but they are harder to bust than cartels because government regulation carry the "color of law."

For example, in Virgina, there's a town that requires professional photographers need get a special license.  Illegal photographers cannot advertise their business in the paper or the phone book. Regulation was supposed to improve the industry but all it did was increase the capital required to start.

Another example, in 1934, the last taxi license was issued in New York City for $10.  A fixed number of licenses traded back and forth from then on.  Now, those licenses trade for around $100,000.  So taxi drivers cannot start their own business without very heavy capital.The little guy has been excluded and the big guy likes this arrangement.

That's all regulation does.  It makes people feel good (a false sense of security) and gives the big guy a huge advantage.

I think private (for profit) certification is a better option instead.  We have the Better Business Bureaus and Consumer Reports, but their role is undermined by government regulations that overlap with them.  Ever hear of the UL?  That's the private body that tests and certifies electrical equipment.  The UL is successful *because* the government never really got into that field.  Many people think the UL *is* a government agency, but it's nothing of the sort.

The certification companies position their business so that they profit by their expert opinions.  They spend limited funds judiciously to test and certify.  If it turns out they fudged something, they are putting their name and business on the line.  Without regulation, someone is always ready to compete with them, just waiting for the smallest slip-up.

Child Molesters

You might ask, "Do I really think a voluntary society can deal with things like child molesters?"

I think the incentive to fix problems is there if you look and are free to innovate.  Remember, if I knew exactly how the free market would handle each opportunity, I could be dictator.  There are innovative solutions we could never dream of.  The way it might work is thusly:

Imagine there exists a child with only one parent and that parent is pretty much the only one who knows the child exists.  So for the most part, nobody cares if the child exists or not.  Then assume the child is abused by his or her parent.

Let's suppose a private protection agency is formed to seek out evidence to suggest children like this could exist.  Let's further suppose that this protection agency could put together evidence by using investigative technique like interviewing neighbors and going through people's garbage, etc.  These techniques are not aggressive techniques and therefore do not violate the non-initiation of force principle.  And *if* they are perceived by anyone as a violation, they can go to arbitration.

The protection agency has to take risks, but they have to also weigh the risk against losing settlements in arbitration.

The protection agency weighs the evidence and the risk against the incentive to put their reputation and livelihood on the line to break into the suspected house of a child abuser to rescue the child.  They then go to arbitration with hard evidence and an actual perpetrator in their custody.

For the initial incentive, we need to assume there is a standing bounty for child abusers in this voluntary society.  Voluntary charities can put up money and resources to give incentive to protection agencies.

The child will grow up and might eventually need protection agencies for him or herself.

This protection agency could be thinking of the long term goals of saving children in order to build a well known and successful brand, thereby offering service back to the children it saves.

This is just one isolated line of reasoning.  I think this line of reasoning can be adapted to a lot of different scenarios or even ignored and approached in a completely different, voluntary way.

No Utopia

I make no claim that any voluntary society would be utopia.  But wild-cards like serial killers would have to deal with an armed society.  And an armed society is a polite society, which would certainly be an improvement.  Neighbors would know each-other and look out for one another because they know they only have each-other and any mutual protection pacts they've developed.

I don't see how charity is Utopian.  Charity is something conservatives point to whenever they make arguments against high taxes.

I don't see how voluntaryism is Utopian.  Voluntary interaction is a very fundamental form of free association.  The notion of "unlimited contract" is just another way of talking about voluntary interaction.

There may in fact be situations where it's not lucrative to participate in a particular market.  That is called a wasteful enterprise.  Unfortunately, our current system keeps us in the dark about exactly which situations are lucrative and which ones aren't.  It's not a conspiracy, it's just how socialism works.

So if there's no money in belly-button-lint-removal, nobody should be trying to make a living doing it.  But if there's a government paying people to do it, they'll do it, even if it's wasteful, to the detriment of other tasks.  That's basically socialism.

Socialism distorts market signals.  Like right now, the cash-for-clunkers program is distorting market signals.  Car companies think there's demand for certain models, so they will move capital* to produce those models in order to meet the "demand."  But the demand is artificial.  If the distortion stops, the demand will fall.  It has nothing to do with real resources being traded.  It's all artificial.

* (Moving capital is a HUGE SERIOUS BIG deal.  Over time, it is where financial bubbles come from.  Moving capital, by definition, makes it hard to "go back" to another capital position.)

In a free society, it might not be lucrative to start a daisy-picking agency.  So if it's not lucrative, or if it's not mildly rewarding, it won't be pursued as a profession.  To suggest it should be perused by force for *any* reason, and force funds to be allocated to that pursue, is the very definition socialism.

So if catching a really smart serial killer is a wasteful enterprise, it shouldn't be anyone's profession.  Maybe it can be someone's hobby.

By the way, may I ask how police in our society, who are paid by force, can catch really smart serial killers who can not be caught in a voluntary society?

Everything we do is governed even though we're supposed to be the "land of the free." We are not free. We haven't been for quite a while. No, having the right to vote does not make anyone free. Having free speech doesn't either. Those things are nice to have. But if voting was really effective, they would have banned it long ago.

If you have the choice to vote for a pile of crap on the right and a pile of crap on the left, guess what? That's not freedom. If you have the right to voice your opinion but you can't act upon it, that's not freedom either.

But even free speech is being eroded. Just search for "first amendment" on YouTube. I first started doing that in 2007 and I was shocked even back then and it's only getting worse.

What kind of tolerance should we have for the loss of freedom? Is it alright to lose 1%? 2%? What percentage are you willing to lose? 50%? I think any amount of freedom anyone is willing to lose is proof of forfeiture of all freedom.

Think of it this way. How much of your child are you willing to lose?  1%? 2%? Is that a finger or a toe of your baby? If you are willing to part with a piece of your own flesh and blood, you don't love them.  You don't deserve them at all.

How do you feel when a cop is driving right behind you? Do you feel safe? Be honest, it's anxiety. That anxiety is what just a little lack of freedom feels like. Our government is good at one thing. It's good at trying to show people how to keep from feeling anxiety as long as they obey. That's not freedom either.

A person in a free society would only feel anxiety from protectors if he or she has harmed another person. But you and I feel anxiety from law enforcement even without harming another person. This is because we know laws no longer require a personal victim. Since laws allow society to be victims, we are all guilty. In a free society, cops only bother criminals who harm people, not society.

This is because society cannot be a victim. Only people can be victims. A victim or advocate of the victim must be able to face the one being accused. A victim should be a party that can be sued if a false accusation is made. Society cannot be a victim because no one can put society on trail. Since it can't work both ways, it can't work.

Fifty percent of your wage is taken by taxation, if you count all forms of taxation. And the price of everything is at least twice what it would be if corporations didn't have all their tax breaks (aka corporate welfare). Economically, we are nowhere near freedom.

Can you eat a peanut-butter sandwich without breaking some law? Somewhere? Guess what, you can't. There is a law against eating peanut-butter sandwiches, but you never knew it. You would actually have to research this in order to know when and where it is appropriate.

Here's another example. Can you eat oranges in your bathtub without breaking some law somewhere? Nope. It's illegal somewhere. But where?

These are silly examples, I know. However, a serious approach to deal with this is for law abiding citizens who try to proactively avoid breaking the law. They think they can just get a permit to eat their peanut-butter sandwiches or oranges in their bathtub. Great idea, right? If there's a law, surly they wouldn't issue a permit.

But if you have to ask for a permit, that's just like asking for permission. In a free society, nobody asks for permission. In a free society, you have responsibility for your actions and deal with the ramifications without needing law to guide anyone. We can no longer do this, therefore, we are no longer free.

The exception in a free society to asking for permission is when you're on private property. But private property is a total fiction today if government can tell you not to smoke on private property. If they really have jurisdiction on private property, then that's just proof it's not private property.

The truth is, unlike most of the world and most of history, we are as free as we want to be, here in the US. Apparently we just don't want to be free because when freedom is outlawed, only outlaws will have freedom. Most people want to be law abiding, so there goes that. But there are unjust laws. In fact, most laws are unjust by their very framing.

So just ignore your rights and they'll go away.

I guess everyone is having a tough time economically.  TAL (This American Life) is asking for donations from its listeners to cover their bandwidth costs.  I can't say I feel that obligated to give them money, so instead, I'll help them out by hosting this episode on another server so they don't get hit by my review.  This is a link to the episode, but if you listen to the episode on this page, it won't cost them anything.  So there.

Anyway, there have been a few episodes of TAL about the economy that are noteworthy.  This one has to be the best so far.  They do an excellent job of explaining, in plain English, that the global economic collapse was in fact not caused solely by lack of regulation.  In fact, once the problem started to snowball, it was the existence of certain regulations that prevented the market from being able to move with agility.  You could say that market regulations made things worse.

No. 382: The Watchmen by Chicago Public Radio  

(download)

Click here to download:

#382 - The Watchmen.mp3 (14226 KB)

The Colombian government has imposed a price fix for face-masks of 180 pesos (about 8¢ US).  Violators will be fined, shut down, and/or imprisoned.  This is a basic economic mistake governments always make during emergencies (real or hype).  Even in emergency situations, the free market should dictate the price of things, not a centralized bureaucracy.

This is because forcing the price to stay low will only result in a shortage and distribution complications.  Likewise, allowing the price to rise mitigate these problems.  Will certain people be denied access to face-masks?  Yes, either way, they will.  But if denial of face-masks is brought on by government intervention, less people will actually receive them due to red tape than if they were merely unable to afford them.

This is why price gouging is good.  If a face-masks are fixed at 8¢ each even during an emergency, I am more likely to buy more than I need, which would bring about a shortage.  But if each face-mask is going for $10 each, I might be a little more careful and leave some for other people.

The free market solution is to allow the masks to rise to a point where no one can buy them, even in a panic.  Maybe they rise to $1,000 each.  Crazy, right?  Maybe one sucker would buy one mask and that's it.  After that, the seller won't sell any more until the price falls.  Eventually, it will fall to a level where more and more people can afford them.

People critical of the above free market solution would say this slows everything down.  They think it takes too long for the price to fall to the "proper" level.  They would say the government should step in because they know a) the proper price and b) the proper quantity.

Yet, if they remain at 8¢ each, the one person who would have used $1,000 for one mask is suddenly able to afford ten thousand masks.  This is where governments decide to impose limits which slow the whole process because they know the proper quantity, after all.

Trusting the free market is smart because it naturally addresses the problems associated with hording better than red tape ever could.  Private property and multiple wills react better and more quickly than government "experts" and red-tape.

Trusting the government that sucks at everything it does is just dumb.  What makes us believe they know the proper price and quantity for face-masks, especially in a hyped emergency?

Gouging protects against the effects of panic.  This applies to face-masks as well as medicine and generators.  Whenever the government monkeys with prices and quantities, unintended consequences abound.