Curt Doolittle

Form: Critique

  • A Tiff : Hoppe and Tom Fleming and My Response

    Hans Hoppe posted what I thought was a sentimental statement on the five year history of his movement on the libertarian web site VDARE. It’s titled The Property And Freedom Society—Reflections After Five Years In this article, he gives us his interpretation of the history of his organization, the Property And Freedom Society. (of which I am a member.) It describes, as all members of these political groups tend to, the reason why the conservative and liberal wings broke up at The John Randolph Club: they were based upon a relationship between Murray Rothbard, a libertarian, and Tom Fleming, a conservative. And after Rothbard’s death, the society broke apart because there was no replacement for Rothbard that could work comfortably with Fleming. There is no mystery here. This is how the partnership process works. When one partner dies, the remaining partner tends to hold onto the previous set of commitments, and the new partners want to be seen as new peers, and to write new commitments.

    [callout] I care that my waiter is pleasant. I care that my intellectuals are either correct or insightful. [/callout]

    However, Hoppe states that Tom Fleming is ‘a difficult person’. Which is not just hoppe’s opinion, but pretty much everyone else I’ve mets opinion. And I’m not sure it’s an insult. I know I’m considered difficult by plenty of people. Intellectuals are rare, and for them, the unsophisticated are often a lot of work to deal with – it’s just frustrating. Coming to terms with people who have different metaphysics from you, is awfully hard work, and very painful at times. It’s just irritating. And these petty realities are just part of the problem of being a human being. I think Tom has done good work. I think a lot of people think he’s difficult. I think a lot of people are put off by Hoppe. That doesn’t matter to me. I just want to know if they’re right or not. I care that my waiter is pleasant. I care that my intellectuals are either correct or insightful. Their manners are immaterial to me. Tom’s response only served to confirm Hoppe’s statement. The title says it all Hans Hoppe Welcomes You to his Fantasy Island Now I’ve only met Tom I think once, and I’m not sure where it was. And he seemed an intelligent and civil guy. But, I was kind of thrown by his response. You should read it. Myself, I am over-reactive on purpose. I found that as a rhetorical device, false-hostility will give your opponent incentive to invest in, and stay with a complex argument — and that when you’re done, and get to agreement it’s more satisfying. I learned it from watching Friedman, who never gave in. And I supposed I picked up some of it from Hoppe.

    [callout]false-hostility will give your opponent incentive to invest in, and stay with a complex argument[/callout]

    The comments, per usual, are more interesting than the author’s post. My Response below is visible at Chronicles Magazine here. This is a very interesting series of posts to read. I’m a supporter of both LVMI and PFS. (I have given them money.) I’m probably one of the most literate members of the faction in the private sector. And I agree that it’s a tough crowd to spend time with. Yes, it was extremely difficult to get past the doctrinal attitude and Randian cultishness that you are complaining about in order to understand and make use of the philosophical content that’s in their line of thinking. What made it worthwhile was the number of answers provided by them, and the vast amount of effort they put into educating people of all stripes that made it easy to become involved in this branch of the history of ideas.

    [callout]I have never found Hoppe’s theatre anything other than entertaining[/callout]

    First, I don’t really care about someone’s rhetorical posture. I have never found Hoppe’s theatre anything other than entertaining, and have found him helpful and a good mentor if you’re worth his time – which I can count on having received in seconds or minutes at best. And if you accepted praxeology (I don’t for technical reasons having to do with closed systems of logic – and praxeology is a subset of behavior and so it’s a falsely closed system) you’d also look at the world as Hoppe does: if you disagree you’re just wrong because it’s logically impossible to disagree. I am pretty certain he actually believes it. And I have never pressured him on any point and found anything other than honesty underneath his posture. This posture is an incredibly effective, controversial, and therefore valuable, rhetorical device. But it’s important to understand that it’s a rhetorical device. Every single TV Producer understands this, or we wouldn’t have talking-head shows to entertain ourselves with. Part of his knowledge base, (as was Friedmans and Rothbards) is this somewhat intentionally antagonistic posture. It undermines the opposite posture: opting out of the argument. Again, this is an ancient rhetorical technique in the european model. In fact, I suspect that the members of this blog, who have left comments above, do not understand the emotive rhetorical device they themselves are using. Or rather, that Hoppe is baiting in order to obtain engagement, and most of the comments above are attempting to force methodological conformity derived from assumptions of equality under the civic republican tradition – the presupposition of majority sentiment rather than superiority of ones argument. While I’m not certain, Hoppe’s method may in fact, be the only device possible to use against the method that you’re using. And I think you’re relying upon that sentiment rather than the veracity of any argument you possess. I don’t think that needs to be the case. I think that your method lacks an analytical foundation and you’re stuck between a desire for positivist solutions to unarticulated moral problems, and relying upon majority sentiment and tradition as an argument. (WHich is the default human position in any field of endeavor.)

    [callout]Hoppe, Rothbard and Mises have fallen into, or intentionally embraced, a logical Godelian trap in an effort to find a pseudo-scientific device with which to fight the pseudo-scientific positivism underlying the rationalizations of democratic socialism.[/callout]

    Unlike your majority position, I think Hoppe, Rothbard and Mises have fallen into, or intentionally embraced, a logical Godelian trap in an effort to find a pseudo-scientific device with which to fight the pseudo-scientific positivism underlying the rationalizations of democratic socialism. So while they have advanced the body of thought, they have failed to date. Hayek failed as well, at least, to make a strong enough argument, because he relied too much upon psychology rather than calculation — and the two wings of theorists failed, (Along with Talcott Parsons) to actually uncover the problem. Despite these failings, as a research program the Anarchists have proved very fruitful. While Rothbardianism is flawed, for technical reasons this group members would not understand without quite a bit of unwilling-and-skeptically-expended effort, the structure of Misesian, Rothbardian and Hoppian argument is a strong analytical foundation for discussing what have been, for all of the history of thought, undefinable abstractions. [callout]Hoppian argument is a strong analytical foundation for discussing what have been, for all of the history of thought, undefinable abstractions.[/callout] They haves provided an alternative framework (property and calculation) to the process of balance-of-powers-through-debate, which is the technology of republican government. Or rather, they have show that WITHOUT reliance on a calculative framework, that rhetorical debate devolves into either error or fraud. They see property as a moral argument rather than necessary argument – and they do so because they failed to articulate the full spectrum of human behavior by relying on the easy-epistemology allowed by the records left from the exchange of money. They did not include the invisible institutional economy of sacrifices that people make by NOT doing things with their property, their time, their bodies and their money. I suspect the Misesians make these errors because they are a little too enamored of infinite property rights — a bias which stops them from seeing and articulating the limits of property rights, and how those limits can be calculated. (Calculation being necessary when time, permutation and content are beyond human perception without such tools.) And I suspect that they intuit, if not understand, that if they did explain that full spectrum of human action, that they’d be confronted with the necessity, rationality, and morality of redistribution and public services.

    [callout]Rothbardianism and Misesianism are an attempt to create a luddite religion based upon trade, rather than a technical political order based upon land holding, trade route holding, market participation, coordination, calculation and adaptation.[/callout]

    Rothbardianism and Misesianism are an attempt to create a luddite religion based upon trade, rather than a technical political order based upon land holding, trade route holding, market participation, coordination, calculation and adaptation. I suspect that this is simply an unconscious attempt to justify the Jewish maternal minority sentiment that comes from non-land-holding disaporic people, as opposed to the european majority fraternal sentiment of land-holding soldiers. These are sentiments, derivations and residues that we rarely if ever understand of ourselves. This Misesian and Rothbardian jewish wing is in direct contrast to the Hayekian and Christian wing’s sentiments of group persistence in order to be able to defend and hold land, and in holding and defending land, hold and defend markets and trade routes. These sentiments are the underlying difference between the Jewish and Christian wings of libertarianism: jewish reliance on words and systems of though and christian reliance on the republican and militaristic models of land holding. We cannot escape our Hayekian knowledge no matter how hard we try. and in turn, these two libertarian programs are attempts to find a solution to the problem of maintaining freedom and prosperity without having to confront the reality of the necessity of using violence to retain that freedom – when that freedom originated uniquely in the west precisely because it was obtained by, and held by, violence. In other words our political dialog is distracted by the contra-rational desire to ignore the necessity of using violence to retain sufficient power to retain freedom. [callout]our political dialog is distracted by the contra-rational desire to ignore the necessity of using violence to retain sufficient power to retain freedom.[/callout] The question remains which wing of classical liberal thought, whether it be the ‘liberal’ factions or the conservative factions, have made progress in articulating a framework for political economy once the epistemological boundary conditions imposed on the republican model by hard money were broken by the adoption of fiat money. The Austrian prescription is a return to the gold standard. Which is wrong, because the insurance provided by fiat money, or at least, paper money, is too valuable to ignore. This is simply the only solution that they can think of – and since they’re economists rather than information architects, they fall into a selection bias. We must understand that Misesian and Rothbardian thinking is that of luddites, just as was Marx – they are trying to return to a technology they understand without understanding why it’s necessary and what alternatives that there may be. These regressive ideas are conservative solutions — historical solutions to a problem of increasing individual participation in a market consisting of larger and larger numbers of people with increasingly localized and fragmentary knowledge, and operating in real time, in order to exploit opportunities that present themselves because of necessary and permanent asymmetry of information in a large population engaged in diverse production. The gold standard It is not the only solution. There are others. There is a very good one in particular. But you cannot understand that solution unless you understand the value of the methodology used in the Misesian, rothbardian, and hoppian models, and the limits of knowledge brought to bear by Popper and Hayek. This information-weakness in our existing political and economic institutions is the underlying problem of political economy with the civic republican model — If you can fathom it from the few and admittedly abstract words I’ve posted here. The problem is one of practical epistemology that allows experimentation and innovation without exposing us to the risk of human hubris on one end, and corruption, theft, and slavery on the other. [callout]The problem is one of practical epistemology that allows experimentation and innovation without exposing us to the risk of human hubris on one end, and corruption, theft, and slavery on the other.[/callout] And debates like this one over form and protocol, manners and arrogance, are frankly beneath me, and should be beneath anyone who is concerned about discovering real solutions to the problem of political economy. Both sides of this dispute, from my standpoint, are simply acknowledging their failure when they rely upon ideological, methodological, or rhetorical conformity as a means of argumentative discovery of the solutions we seek. All I read into Hoppe’s piece was sentimental reflection, and tame taunting elitism. Perhaps this is one of those debates among academics that is so important precisely because the stakes are so small. And I don’t think the above retort does much to disprove hoppe’s taunt. The tactical response would be to tease him and therefore disprove him rather than reinforce his position. And the real argument here is that everyone within this absurdly minority movement, just like all desperate little academic movements, is that it’s desperate for followers. And not operating logically, but instead, using silly socio-political tricks because we’re all desperately seeking confirmation biases in the face of a problem we cannot comprehend, rather than understanding each other’s position and desperately seeking a solution to political economy. Libertarianism is a fantastic research program within the branch of conservatism. And the world needs the movement simply because conservatives have failed to muster and articulate a rational and technical alternative to encroaching socialism. Historicism is insufficient because HISTORICAL MODELS FAILED. EACH OF THEM FAILED. The Austrians and Anarchists are very close to providing a rational solution to political economy. I suspect that they (myself included perhaps) will fail for the same reasons that this silly dispute of egos and manners illustrates. Even if someone were to publish an essay with the solution in it, and the truth of it were patently obvious, I would venture that everyone in every faction would desperately seek to use whatever content was inside that essay to justify his own position in order to keep his followers or demonstrate that he was right all along. Hume told us what the problem is. Kant failed to find a solution. A legion of political economists have spent a hundred and fifty years trying to find an answer. They came closest in the 1930’s. But Mises, Hayek and Parsons failed, just as Weber and Pareto failed. And because they failed the political sector reached out to Friedman, which provided a temporary solution even if it was the wrong one, and Hayek, because his sentiment was correct even if his solutions were faulty. The conservatives hoped to get enough people into the property society that they could counteract the dependence society. But they used general liquidity (cheap money) rather than direct investment, and so the money was used for consumption not innovation and increases in productivity. The liberals, having converted us from a saving to a debt society, the conservatives hoped to alter it, but only accomplished further indebtedness. Only the libertarians have attempted to reconvert us to mans greatest innovation: the saving and investment society. [callout]Only the libertarians have attempted to reconvert us to mans greatest innovation: the saving and investment society.[/callout] But the way we solve our political problem is not debt, or even monetary policy. It is to create an innovation over the greek city state and the roman empire and the anglo mercantilist and american consumer republic. And to understand why we need to innovate beyond that model: the limits of human perception in a complex division of knowledge and labor. And that when we break with hard money, AND at the same time pool information (accumulate quantities in categories using numeric values of abstract objects we call property) we launder the necessary causal information needed to make rational decisions. And in doing so we also remove the incentive for people to obtain and hold that information, and to be disciplined and truthful in their valuations. The information needed to evaluate Property cannot be embodied in numbers. It’s a perishable not conveyed by the number. Numbers and values are subjective judgements, not objective truths. This is the error of both liberal positivists and the general political fantasy of scientific politics sought by the socialists. [callout]The information needed to evaluate Property cannot be embodied in numbers. It’s a perishable not conveyed by the number. Numbers and values are subjective judgements, not objective truths. This is the error of both liberal positivists and the general political fantasy of scientific politics sought by the socialists.[/callout] The solution is to fix our institutions of banking and accounting, so that we possess sufficient information to make rational decisions under the economically stable civic republican model. This change in institutions is a technical problem, not a philosophical, religious or cultural one. And as a technical problem, it is a solvable problem. It does not ask anyone to ‘believe’ anything. Faith is not a strategy. Hope is not a tactic. As weber said, all advancement in institutions is calculative.

    [callout]it is bureaucracy that is a danger to us, not government.[/callout]

    The second half is to understand that it is bureaucracy that is a danger to us, not government. A bureaucrat lives outside the market, as does a priest, a politician, a union laborer, or a welfare recipient. They are no different – they are class descriptions of the same behavior. But government is the means by which we concentrate all forms of capital. It is a joint stock company whose membership is paid for by respect for property rights, and frankly, whose dividends are paid for in public services and redistribution. The problem we enter into is when public services become the purpose of government, rather than the concentration of capital necessary to provide the joint stock company with competitive economic advantage so that there are returns great enough that redistribution can be performed in one form or another. Aside from the transforming from the saving society to the debt society, the transformation of government from creating wealth to consuming it is the artifact of the 20th century. It is far easier for the houses of government to debate over spoils, than it is to debate over the creation of prosperity so that it can distribute the spoils. [callout]Aside from the transforming from the saving society to the debt society, the transformation of government from creating wealth to consuming it is the artifact of the 20th century.[/callout] The anarchists are working on solving, and have largely solved, the problem of bureaucracy. And the solution is not anarchy. The solution is privatization of the bureaucracy, and the improvement of our institutions such that the knowledge that was provided by individuals THROUGH hard money, can be provided by individuals through shared investment in borrowing from the public’s future commitments in exchange for mutual gain, while retaining accountability, and with those who are willing to be accountable because they possess knowledge by which to make rational decisions. Under this model, the government may make rational decisions about investments, and we are protected from enslavement by either debt or the bureaucracy. This is too much content for a posting, too poorly articulated for the scope of the problem. But I was trying to put the different factions into a context so that we could focus on the real problem: finding an answer to providing institutions that deliver both freedom and prosperity. And for my side, I consider Hans Hoppe a gift to all of us. He’s innovative, creative, pedagogically gifted, and most of all, funny.

  • NYT On Libertarianism

    The NYT posted an article today titled The Economics of Libertarianism, Revealed. And the usual NYT crowd followed with critical comments. Which is useful. Because we get to see what the proletariat think of a subject about which they know little to nothing. This is a very odd set of comments. Heresay on one end and incompetence and error on the other. Desipte that libertarianism is the most fully articulated political philosophy we currently possess, it is both incomplete, its authors mix semi-charismatic language with reason, and they start from a convenient and erroneous premise: non-violence. And thereby simplify the problem of political economy dramatically enough that they overstate the ease of attaining their goals. As a theorist in this field, I’ll try to correct some statements made here: 1) there are a numberer of libertarian sects. They share a preference forindividual freedom and property rights. But they vary greatly from a branch of articulated classical liberalism (cato – english sentiments) to articulated conservatism (hayekians – german sentiments) to articulated radical anarchists (rothbardians – jewish sentiments). You cannot take ‘libertariansim’ as a coherent body of work. Or better stated, you cannot take the words of any thinker at face value: most if not all human debate is an attempt to find a rational explanation for sentiments. And sentiments are residues of our cognitive biases. (Pareto) 2) Libertarianism is NOT anti-government it is anti-bureaucracy. This is the issue that confuses everyone by incorrectly framimg the debate. The terms Government and Bureaucracy are not synonyms. And libertarians are both right, rational, and supported by data when they argue against bureaucracy. It says that humans in bureaucracies (whether private or public) once they become insulated from the market and prices, live by self interest without the market function that puts their self interest to good use in the service of others. It is possible to live a life outside of the market by the homeless or hippie lifestyle, by making enough money to live on your wealth alone, or by joining the bureaucracy and simply living off the efforts of others, and ignoring their signals – prices. The underlying theory of libertarianism is a) economic calculation is competitively impossible without prices and the market. b) market incentives are necessary to create a prosperous advanced society. c) our cultural institutions are economic strategies that, much like our sentiments, we do not yet fully understand and they should be treated cautiously. Most importantly, our most cherished values are often false: people are unequal, cultures are not equal in value, diversity breeds discontent not happiness, people are racist, classist and culturist, and it’s in their interest to be so, even if it is not in their interest for legislation to be so. (Really.) d) Leglislation as we understand it is infereior to credit as a means by which we can change the behavior of people in a society. We must move from the law-society to the credit society, and our government is not organized to make that change, while the private sector is. Therefore we must push our ‘bureaucracy’ into the private secctor where the market will kill off organizations once they are no longer useful. e) insurance companies taht are highly regulated will do a better job than the governmetn of regulating most market activity. But we have over-corporialized both banking, insurance and management. In simple terms, your banker should personally back your loan, and not be able to resell it. Same for insurance. This is a complex topic but we cannot abstract all accountabilty without losing the knowledge to be accountable with in the process. f) All bureaucracies are anti-market, anti-prosperity, self-serving, eventually corrupt, and stagnate the culture and prey upon the citizenry. The market puts our selfishness to better use than the bureaucracy does. It’s that simple. The libertarian strategy is to push as much of the FUNCTON of government into the private sector where iti is subject to competitive market functions so that we can prevent the bureaucracy from forming. Because it is the bureaucracy, or, the market-exiting of people within the bureaucracy that is the problem, not government. None of the libertarians is right, word for word. They are attemtping to find a solution to a perrenial problem: coordinatoin and ocoperatin in a dynamic dividsion of knowledge and labor. They intuit solutoins based upon their cultural heritage then try to articulate solutions in a long term, vast attempt, to explain what it is that we do, and why it works. We’ve had markets for a long time. Economits don’t invent anything. They just try to explain it the best they can. Libertairnism is the best, most fully articulated political philosophy we have. But that does not mean it can be implemented without an ‘event’. Because our government is not structured to replace itself. And the citizenry will always favor democratically imposed tyrrany, commonly called Bonapartism, and teh certainty of it, over freedom.

  • The New York Times Is An Organized Crime Syndicate – And Misrepresenting Libertarianism Is Fraud And Theft.

    THE NYT IS AN ORGANIZED CRIME SYNDICATE Why is the NYT an Organized Crime Syndicate? Because the NYT has committed as much journalistic fraud, at a greater scale, as any of the most controlled of state run media in modern history, and has brought to market a defective and harmful product, and profited from the sale of that defective product. And that defective product has caused harm to both the long term material economy, and the institutions and habits of the citizenry, that have been dearly paid for. We are repeatedly assailed by revelations that yet another corrupt New York Times journalist has stolen from society by creating artificial myths which they bring to the market of political discourse as fraudulently misrepresented products. We are confronted with editorial bias among most of the New York media, but systemically so by the NYT who not only editorializes, but conducts systemic hiring, encouragement of, and acceptance by those editors of authors who confirm the bias of those editors, rather than those who seek to falsify it. [callout] Falsification is the only scientific method we know of. If a news media wished to be engaged in rational and scientific discourse, each would list it’s editorial biases and ambitions and then seek to falsify them, rather than confirm them. But instead we use the MARKET for news to attempt to fix this problem, thereby subjecting the POPULATION to the problem of interpreting information that they are not equipped to qualify, and forcing them into the practical pursuit of confirmation biases rather than the pursuit of political truths simply by exhausting them.[/callout] What is the difference between a corporation that brings such a drug to market for profit, and a firm that manufactures journalism and brings it to market? They are both selling defective and harmful products into the marketplace. So what is the difference? Nothing.Organized Crime Definitions of organized crime vary according to the Mission and Scope of the organizations seeking to prosecute it. In general, organized crime is a form of organizational conspiracy for the purpose of profiting from illegal activities. Illegal activities are those that profit from theft of property or service. But there is another form of organized crime, that is within the mission and scope of another organization seeking to police and prosecute it: the citizenry. The citizenry must prevent systemic and organized theft of institutionally accumulated costs, paid for not with the currency of money, but with the currency of restraint: forgone opportunity costs. These crimes may be petty, such as those of manners, they may be material, such as those of ethics, and they are most commonly moral, as in those that undermine our institutions that assist us in saving and accumulating human capital. Free Speech Free speech is a product of the republican system of government, whereby debate is a proxy for violence. It is a means of resolving conflicts between peers. Its origins are among the strong and wealthy classes. The purpose of free speech is to create a political dialog for determining the optimum solution for the advancement of the polis among share-holding equals.

    [callout] [ It is ] the citizenry who must prevent systemic and organized theft of institutionally accumulated costs, paid for not with the currency of money, but with the currency of restraint: forgone opportunity costs. These crimes may be petty, such as those of manners, they may be material, such as those of ethics, and they are most commonly moral, as in those that undermine our institutions that assist us in saving and accumulating human capital.[/callout]

    Free speech universally degrades into the act of persuasion for pragmatic personal political and economic ends, whenever the cost of fraud becomes too low, and it becomes lowest when taken to it’s extreme under the principle of systemic non-violence. Free speech is only possible to employ without the subjective control of violence if there is a ‘science’ by which to constrain the debate. THe field of economic science is struggling to become that method of articulating moral, political action. ie: Rational debate is a proxy for violence. irrational debate simply trades violence for deception and fraud. Violence is immediate and it is of all things, HONEST, instructive and decisive. Fraud is dishonest, prolonged, confusing and indecisive. Over time we have developed a policy of tolerating errors in free speech because we assume that the truth will prevail. We assume that wise and honest men will honestly correct the course of debate. We assume that men desire the truth rather than simply victory by fraud, ad that when presented with the truth they will acquiesce. We model debate as if we are still peers in the house of lords, rather than disparate groups of common people promoting our elites to heroic status whereby they battle in public circles by allusions, deceptions, barbs and ridicule, rather than reason, logic, and facts. We are further cautious of free speech in media because of the inequality it gives to an individual’s voice, an because it gives our group heroic elites a distorted but unchecked monopolistic voice in a system of politics developed for orators in a forum.

    [callout]… conservatives desire to preserve their freedom, and keep down the cost of it, by creating institutions that meritocratically rotate the elites, and whose institutions are meritocratic and therefore privatized. Conservatives are not against change. They are against change that creates systemic corruption. [/callout]

    Conservatives are particularly cautious of these elites because the conservative’s preferred method of action is individual, functional and one of material commercial action rather than the left’s preferred method of coercion by politics, media, and anarchic violence. Or more simply stated, that conservatives desire to preserve their freedom and the cost of it, by creating institutions that meritocratic-ally rotate the elites, and whose institutions are meritocratic and therefore privatized. Conservatives are not against change. They are against change that creates systemic corruption. Perhaps, they are also cognizant of, and desirous of building a society where one is rewarded for good, honest, hard working and kind social behavior, and bureaucrats whether inside the state, or inside industry, who are not subject to market conditions are not incentivized to conform to good civic behavior as was illustrated by Adam Smith. Regardless of political spectrum, we are further skeptical of media, because media is a means for institutionalizing the act of profiteering from selling class and group conflict. JOURNALISTIC FRAUD IS ORGANIZED CRIMEThe Most Recent NYT Organized Crime Syndicate Initiative Is Against Libertarianism

    It was only government power that ended slavery and abolished Jim Crow, neither of which would have been eliminated by a purely free market.

    No, it was a set of LAWS called the “Jim Crow Laws” that the government instituted in order to create slavery, and maintain its persistence as a social and economic structure. The STATE created slavery. The state funded and protected THE SLAVE TRADE ROUTES. The state sanctioned, protected and taxed slave Markets. The state prosecuted and pursued escaped slaves. It was the STATE that created and built slavery. In fact, in all of human history, it was the a defining property of STATEHOOD that allowed one class of people to enslave another. The Israelites returned from the desert and enslaved people. The Entire egyptian and babylonian societies were enslaved or virtually so. Hellenic and Roman civilizations were slave owning. European civilization was slave owning. Almost all civilizations in agrarian history are slave owning because farming is hard labor.

    [callout]…The STATE created slavery. The state funded and protected THE SLAVE TRADE ROUTES. The state sanctioned, protected and taxed slave Markets. The state prosecuted and pursued escaped slaves. It was the STATE that created and built slavery.[/callout]

    Secondly, it is the innovations in technology by the private sector that have made slavery unprofitable. And it is the insight of libertarian economists that slavery is simply LESS PROFITABLE than turning your former slaves into consumers. Because as consumers they simply have superior incentives to be productive in the market place. No, it was not the state, it was individuals, largely Christian men, who promoted anti-slavery, because as christians they saw this as un-christian behavior. It was women who took advantage of this anti-slavery momentum as a political step in getting their own vote via the suffrage movement once the industrial revolution started to free them from home-drugery. And it was politicians in Washington and the north that promoted anti-slavery, and Lincoln in particular who promoted it as a means of forcing the north to war against the south for entirely political reasons. But these people were not anti-slavery at the outset. They were agitated by the fact that the north and south produced different market products (southern raw cotton versus northern manufactured goods) and that the south was paying the federal taxes that they funded the state. The south was consuming overseas goods, and the north wanted to decrease competition from overseas for their goods, and so the north wanted to use the STATE to force the south to ‘buy american’, and needed to overtake power. Slavery was simply a rallying cry by which the state could get the Christian population to support a war. Slavery was on it’s way out the world over because it is UNPRODUCTIVE under industrialization. Slavery was not conquered because it was immoral. It was for political and economic reasons. The anti-slavery movement only accelerated the natural process of abandonment of slavery under industrialization, for purely self-serving, economic and political motivations. Slavery would have been eliminated by the free market. It was the state that interfered with the process by prolonging it. It was the state that took credit for the dissolution of slavery that was in reality, a dissolution created by the free market. This is what the DATA SHOWS. Regardless of the ridiculous public utterances and pamphleteering in the political arena, slavery was of declining productivity.

    It was government that rescued the economy from the Depression and promoted safety and equality in the workplace.

    No that’s not true. There is a vast body of work on this topic and it is still in dispute. So no, this is not settled science. We know that the governments created the problems that led to the great depression by creating fiat money and rapid immigration. We know that the war is what got the country out of depression. We know the post-war-era prosperity was largely due to the conversion of manufacturing and construction to war-materials (panel products). But we do not know that the government got the country out of depression and there is a substantive and arguably correct body of work that states that the government both caused the rapid decline, and by it’s policies prolonged it. Just as the policies enacted during the depressionary period are the cause of the systemic crash of western economies, which despite warnings from libertarians, are the result of converting society from “cultures of saving and increasing production to inter-generational redistribution and inflationary consumption” which thereby exposed the civilization to cumulative and irreparable risk. Libertarians warned that progress was not eternal, could not be depended upon, and that our economic tools and theories could not provide us with the insights which we attributed to them. But to no avail.

    “Under this philosophy, the punishment for a lunch counter that refuses to seat black customers would be public shunning, not a court order.”

    What it means is that any group should be able to ostracize what they see as anti-social behavior. And they have the right to determine what they consider anti-social behavior to be. Libertarianism states that if you want to build a homophobic, racist little town somewhere, go ahead, because you will descend into poverty by doing so. It says, quite conversely, that if you want to create a homocentric pluralistic city, that you can do so, and that economically you will benefit by doing so. Libertarianism states that it is up to the individual to choose which of those cities to live in. And that neither fantasy has the right to oppress the other. Libertarianism CELEBRATES DIVERSITY of choice, not choice-less mandated diversity. And it does so because it advocates that markets reward and punish. (( To counter argue this position no matter what angle one took, simply would require that you argue white europeans, or some other ethnic group, are a superior race. )) And any group that does engage in such economic ostracization such as refusing to seat customers of one race or another, would accomplish one of the following things: 1) go out of business by the loss of customers and the creation of competitors who serve the rejected customers 2) increase their business by the decrease in presence of anti-social behavior In fact, this is what people DO, in reality. Except in the very RAREST of circumstances in the very largest cities, in the most wealthy shopping and business districts, people congregate with people who look, and act, and speak, as they do. While this observation is trivial to any person on the street, yet escapes the Schumpeterian (( Schumpeterian Intellectual: someone who profits from selling his services as a public intellectual by criticizing the traditions of the society that made his idleness and therefore his criticism possible, and by consequence, subsidizing the bureaucratic evolution of totalitarianism. )) intellectual class, despite the data and evidence that proves uncontrovertibly that people are racist, act racist and always will act racist, and that the will do so for rational reasons: they obtain more status in-group than out of group. And business people are not motivated by social conformity. They are motivated by profitability. And RACISM IS UNPROFITABLE. Period. On the other hand bias against anti-social behavior IS PROFITABLE. And prevents the takeover via government sanction, by the act of denying businesses the right to choose customers, of the business by a market that is detrimental to the owners. Those same owners who risked their savings, retirement, homes and safety in order to buy, build, run and operate that business. And further more, ostracization is the only means by which a group in an advanced society can enforce the INTEGRATION that makes IMMIGRATION both tolerable and economically possible. Societies never have immigration problems. They have IMMIGRATION problems, and ostracization is the most effective method of enforcing integration into the social system. Limits Of The Market Libertairanism has it’s limits, because the market has its limits. It does have limits. The market has become large, far larger than that envisioned by Classical Liberals (libertarians) and too large to solve those problems of infrastructure development at scale, where the body of citizens can be served by long term investment in nuclear power plants, roads, and the electrical power grid. Even at that scale, it is a problem of financing and competing with regulation, not of execution – the market will execute better than the sate.. Liability Libertarianism would also indicate, that the use of media to make such misrepresentations, whether they be errors or deceptions for the purpose of concentrating political power, so that the violence of law and the state could be used to oppress people who seek liberty is a form of THEFT. Freedom of speech is not common to man. It is a sanction given by the nobility in a republic for the purpose of permitting exploration of the optimum set of ideas among a fraternal order of city-defending soldiers whose military tactics and military cost structure required enfranchisement of many men. But even among these people, free speech is not an unlimited right. It has it’s limits. And if we re-instituted liability laws so that one was required to be accurate in both political (fraudulent) and personal (libelous) speech, the NYT would be forced out of business, and the author of this piece, which is a cowardly and unsigned editorial, would be subject to prosecution. And it is that solution that many libertarians (like myself) would advocate. The Fully Articulated Political Philosophy Libertarianism is the MOST FULLY ARTICULATED CAUSALLY-COMPLETE POLITICAL PHILOSOPHY that has ever been created by human beings. (( It is arguable that Marxism produced a volume of literature under the erroneous tribal belief in familial bureaucracy, but it is a well understood dead political and economic philosophy, if a living moral philosophy. It can be argued that classical liberalism produced a body of literature under the principles of individualism and organized public debate. However, the contract model has proven non-durable in time against the bureaucracy’s circumvention of the constitution via the judiciary. )) Libertarianism is imperfect, because all political theory is imperfect. That’s because man continues to evolve into a greater and greater division of knowledge and labor — and as he evolves, he requires deeper understanding of what it is he does, so that he can better comprehend how to resolve the necessary conflicts that rise from the speculative but rewarding human interaction in the market. LIke any fully articulated systemic advancements in human thought, libertarianism requires comprehension before criticism can be levied against it. Because as a SYSTEM, it cannot be debated piecemeal, just as any political system cannot be implemented or discussed piecemeal. Because it is a SYSTEM of interlocking processes of coordination and epistemology. And any attempt to argue it outside of systemic comparisons rather than policy comparisons, is an attempt to compare apples and oranges, and as an attempt to compare apples and oranges it is a willful attempt at FRAUD, or a silly and vain error by the incompetent. Incompetence is not something we should tolerate among those who we grant sanctions, and whom we grant the special permission of free speech in media. Curt Doolittle The NYT article is included here for reference.

    Limits of Libertarianism By denigrating several of the signal achievements of modern American society, including the Civil Rights Act of 1964 and the Fair Housing Act, Rand Paul has performed a useful service for voters who are angry at their elected officials. He has helped to illuminate the limits and the hazards of antigovernment sentiment. Many Americans are sputtering mad, believing that government has let them down in abetting a ruinous recession, bailing out bankers and spending wildly. But is Rand Paul really the remedy they had in mind? His views and those of other Tea Party candidates are unintentional reminders of the importance of enlightened government. In a handful of remarkably candid interviews since winning Kentucky’s Republican Senate primary this week, Mr. Paul made it clear that he does not understand the nature of racial progress in this country. As a longtime libertarian, he espouses the view that personal freedom should supersede all government intervention. Neighborhood associations should be allowed to discriminate on the basis of race, he has written, and private businesses ought to be able to refuse service to anyone they wish. Under this philosophy, the punishment for a lunch counter that refuses to seat black customers would be public shunning, not a court order. It is a theory of liberty with roots in America’s creation, but the succeeding centuries have shown how ineffective it was in promoting a civil society. The freedom of a few people to discriminate meant generations of less freedom for large groups of others. It was only government power that ended slavery and abolished Jim Crow, neither of which would have been eliminated by a purely free market. It was government that rescued the economy from the Depression and promoted safety and equality in the workplace. Republicans in Washington have breathlessly distanced themselves from Mr. Paul’s remarks, afraid that voters might tar them with the same extremist brush. But as they continue to fight the new health care law and oppose greater financial regulation, claiming the federal government is overstepping its bounds, they should notice that the distance is closing.

  • Response to The Washington Post’s ‘Constitution in decline’ : Actionable Plans vs Sentiments

    Joseph Postell of the Heritage Foundation, whom I admire, posts an article in today’s Washington Times entitled Constitutional Decline. Keeping the tradition of picking on your friends, because it’s simply an easier way to make a point than systematic refutation of your enemies, I respond in this posting with a sketch of a more appropriately rational solution, and a more causally descriptive one, than Joseph’s comforting but in-actionable sentiments. His proposition is:

    If we are seeking the most effective means of defending – and restoring – the Constitution, we must pay attention to the rise of the administrative state and the decline of constitutional government in the United States. … The Founders confronted a basic problem: How to vest government with sufficient power to get things done without giving it the instruments to exercise tyrannical control? To protect individual liberty and rights, they established (among others) two basic principles at the center of our constitutional order: representation and the separation of powers. To assure that government operated by consent, they provided that those responsible for making laws would be held accountable through elections. Moreover, legislative, executive and judicial power would be separated so those who made the laws were not in charge of executing and applying them. …

    [callout]… our problem is that we have outgrown, … the civic republican model that is based upon a separation of powers and the … process of rational debate, because our legislators are not free of the limits that socialists fell prey to: the limits of legislative incentives and the limited information necessary for economic consideration, calculation and forecasting. … Our government literally consists of a technological strategy insufficiently informed to make the decisions with which we have empowered it. [/callout]

    Joseph blames the problem rightly on the corrupt bureaucracy. But does not know how to solve the problem: our model of debate is insufficient for our complexity of civilization. We have abandoned communism and socialism because of the problem of incentives and economic calculation in favor of redistributive democratic secular humanism, without understanding that conservative values and classical liberal procedural limits on power or not, our problem is that we have outgrown, by the division of labor and knowledge, and the increase in technological velocity, the civic republican model that is based upon a separation of powers and the calculative process of rational debate, because our legislators are not free of the limits that socialists fell prey to: the limits of legislative incentives and the limited information necessary for economic consideration, calculation and forecasting. Our government literally consists of a technological strategy insufficiently informed to make the decisions with which we have empowered it. Therefore it is open to abuse – not simply because of intention, but because of folly and a lack of means by which to conduct a rational argument. We must divide up the problem of governance differently – while adding computational capability and adding incentives for responsible actions to an increasing number of people – the vast majority of them citizens who are members of the private sector. In other words, the problem is one of calculation: we lack the data to make rational judgements and therefore rely on sentiments. We lack the incentives and therefore fall prey to the bureaucracy. Joseph, Your argument and your sentiments are admirable. But the institutional problem is well understood. It lies in describing the additions to the constitution such that we create alternative institutions free from bureaucratic corruption, yet which are practically implementable, and which would not require violent revolution, nor extraordinary suffering to implement. As well as a plan of implementation and schedule. Sentiments are easy. Sentiments are wishes in the wind. They are the dreams and fantasies of well intentioned men capable of nothing but exposition. They are the masculine version of a romance novel – experientially pleasant but materially vapid.

    [callout]Sentiments are wishes in the wind. They are the dreams and fantasies of well intentioned men capable of nothing but exposition. They are the masculine version of a romance novel – experientially pleasant but materially vapid.[/callout]

    Plans are tangible things open to action, improvement and criticism. And since Mises, Hayek, Popper, Parsons and Rothbard failed to define a rational model for the post-agrarian world, there is no institutional model by which to deliver us from evil so to speak. Our problems are non-trivial, and vastly more complex than reverting to the debate structure of the framers, wherein a small number of men simply exaggerated the city-state model of the greeks, relying upon the wisdom of platonic pseudo-philosohpher kings to make good judgment despite their representation of craftsman, merchant and farmer alike. This is too simple a form of government for a nation of hundreds of millions producing tens of millions of products and services, and a worldwide empire of trade, trade routes, and a world monetary system we treat as third party, but which, like international policing and trade routes, is the primary source of our empire’s power. Our government has expanded and corrupted into exactly what was predicted by the Iron Law of Oligarchy: We have added judicial review – legislation from the bench. We have added a state sponsored religion: democratic secular humanism. And ostracized the church. We have allowed a bureaucracy to develop that cannot be shut down. We have become an empire over distinctly different cultures with distinctly different economic interests. We have become externally dependent upon our most competitive resource – energy. We have transferred the culture from saving while productive to lend while in retirement, to inter-temporal redistribution from the productive to the unproductive. We have converted government from it’s objective of increasing productivity for the purpose of international competition to the effort of redistributing hypothetical gains at the expense of international competition – we have created the predatory state instead of the productive state. [Callout]We have converted government from it’s objective of increasing productivity for the purpose of international competition to the effort of redistributing hypothetical gains at the expense of international competition – we have created the predatory state instead of the productive state.[/callout] We have converted from a culture of integration whose problem was to enfranchise farmers for the purpose of securing our interior from external conquest, to a culture of disintegration that actively undermines integration. We have all but dissolved the states and oppress the country’s center at the bequest of the coasts. We have destroyed our currency, overextended our empire, exhausted our cultural habits of saving and the ‘Protestant ethic’. And turned our cultural majority into a cultural minority open to conquest by tribal primitivism on a scale and at a speed which would have horrified and panicked Roman citizenry. We have instituted ponzi-insurance schemes under the premise of reducing risk for the few, but in doing so created a redistributive scheme of permanent debt, and insurmountable risk for the many.

    [callout ]We have instituted ponzi-insurance schemes under the premise of reducing risk for the few, but in doing so created a redistributive scheme of permanent debt, and insurmountable risk for the many.[/callout]

    We have squandered a century of post-european manufacturing advantage, not to improve our competitiveness, but to export our jobs in the silly believe that the price reductions would be worth the competitive loss of jobs, as if all men in america could be rocket scientists and engineers. We have immigrated cheap labor without understanding the cost of delaying our children’s entry into the work force. We have demasculineized our military without understanding that the secret to western individualism is in the fraternal order of self-sacrificing soldiers, who by their risk gain earned enfranchisement and after such risk would not become obedient to authority. We have allowed our military to become an administrative machine, and police force only able to operate hierarchically rather than a collection of warriors capable of post-industrial defense and conquest from multiple independent angles. We have adopted silly pseudo-libertarian monetary policy and exposed our lower classes to terrific long term risk, and privatized great wealth at the expense of our working classes. We have trained two generations of children to be lifestyle pets rather than productive and competitive citizens. We have demasculinated men and made vast numbers of them abandon society for the comfort of video games or sports, and allowed feminists to take our their wrath on men rather than on the church, the state, and ignorance itself. And forced men into aged poverty in order to secure a consistent standard of living for children who have yet to become productive. We are a debt society with a predatory redistributive kleptocratic state bent on accomplishing through debt slavery and constitutional circumvention what cannot be accomplished through the proscribed constitutional rules and voluntary democratic process. But worse of all, we have vastly increased the division of knowledge and labor and become a society managed by credit rather than law or religion, but we have not updated our government to consist of institutions that act as a bank, when the credit function is primary lever of our post-religion, post-law government. We must amend our constitution for this reality. Our government must act as a bank whose duty is to issue loans and cooperate with the private sector, and socialize the profits of competitive advantage. for redistribution to the common people. It must take only calculated insurance schemes that are the product of gains in productivity earned by borrowing on the promise of the common people. This institutional change will have behavioral consequences that will remake our state as one that is competitive, and resurrect us from the simpleton idiocy of the redistributive and irresponsible state whose actions are not measured, not earned, and only stopped by near revolt at the ballot box, but inescapable once implemented as law. We must relieve the house of commons from the act of taxation ,and allow it only investment and redistribution of the profits. We must close the department of education and institute a voucher scheme. We must privatize all functions of the state and open them to competition. We must vote directly with dollars against competing published contractual budgets, rather than competing individuals whose promises are immaterial. We must restore the senate to election by the state legislatures, and limit both the volume of taxation and origin to the senate.

    [callout]We must reform our lending system so that loans are not escapable by the originator, and vastly increase the number of bankers, and their quality, so that they are at the level of our lawyers, rather than at the level of our book keepers.[/callout]

    We must reform our lending system so that loans are not escapable by the originator, and vastly increase the number of bankers, and their quality, so that they are at the level of our lawyers, rather than at the level of our book keepers. We must restore local banking and personal advocacy of individuals by bankers, so that we do not devolve into an class of the enslaved, as ignorant of compound interest and risk as we are of laws and due process. We must sunset all laws so that they die along with the poor fools who write them. Laws too often institutionalize silly ideas that would be destroyed by the market of daily experience. We must disallow the development of regulations outside of the legal process, and destroy the power of the bureaucracy permanently. We must separate property definitions, and abstract property definitions (like CDO’s, patents, copyrights, stocks) from the legislative process by creating registries for all legally reconcilable traded property types, and remove the ability for patents to prevent products from seeing the market. Put to practice is insufficient a test for protection: put to market is the only protection we should offer. We must change corporate law to provide the same freedom to sole proprietors and partnerships and LLC’s and SC’s and Corps so that we only have one body of law for each, and one method of taxation for all. We must change taxes such that they do not distort human cooperation, require little or no overhead, and are all based upon both income and balance sheet, so that we encourage men to become independent, but protect the people from the political class of financial predators who circumvent the market purely by the application of capital. We can have redistribution. People under fiat money are DUE redistribution, because it is they who are borrowed against and whom take the risk.

    [callout]We can have redistribution. People under fiat money are DUE redistribution, because it is they who are borrowed against and whom take the risk.[/callout]

    We can maintain our empire, our freedom, our way of life. But it must be calculable to be responsible and accountable. Right now it is unregulated chaos of extreme borrowing using snake oil formulae peddled by charlatan economists, snake oil mathematicians and other hucksters who are no better than entrail-readers, oracles and bone-augers and less accurate it turns out at inter-temporal prediction than the average man on the street. THE FUNDAMENTAL PROBLEM FACING US IS THE WEAKNESS OF THE DEBATE MODEL OF GOVERNMENT IN THE FACE OF THE CALCULATIVE COMPLEXITY OF OUR CIVILIZATION. OUR MODEL IS JUST TOO WEAK. The problem of socialist calculation is still evident in the debate model of government. OUr problem is sufficient information to make decisions, and limiting decisions to where we have sufficient information, and avoiding legislation that uses quantitative, methodological and ideological charlatainism. Some of us who spend time on these theories are diligently working in back rooms, offices, academic institutions, think tanks, cars and showers to solve this problem. But it is not a problem of sentiments. It is a problem of execution.

    [callout ]Institutionalizing this degree of change will not come without violence or trauma. It never has. It never will. [/callout]

    Institutionalizing this degree of change will not come without violence or trauma. It never has. It never will. There are too many with vested interests feeding off the predatory state. But some of us are now more willing to take that risk than we were over the past decades. And it takes only about five percent of a population to force such a change, if that group is willing enough to act to enforce the change.

  • A Response To Arnold Kling’s: The Church Of Libertarianism

    Arnold Kling continues one of his themes by writing on one of my favorite topics, “The Churches Of Government”, where he laments the overlaps and conflicts between different conservative and libertarian philosophies.

    You see, I think that the overlap between liberals and libertarians is somewhat suspect. The libertarian thinks that government should get out of the business of regulating marijuana primarily because the libertarian believes in limited government. The liberal thinks that government should get out of the business of regulating marijuana because the liberal doesn’t think marijuana is such a problem.

    And later he explains the philosophical problem:

    Still, I believe that it ought to be possible for a conservative to be in the Church of Limited Government rather than the Church of Unlimited Government. In theory, I would think that a conservative might really care about education or health care without necessarily favoring government involvement. However, in practice many conservatives went along with President Bush when he expanded Medicare and the Federal government’s role in primary education. My sense is that his approach to conservatism has few adherents at the moment.

    To which I would respond, that the reason for confusion on this issue is the failure of the conservative, classical liberal, and libertarian movements, to provide an articulated alternative solution to socialism while at the same time, maintaining their long standing justification for taking power from the monarchy in order to implement a democratic republic managed by the capitalist class.

    [callout]… the reason for confusion .. is the failure of the conservative, classical liberal, and libertarian movements, to provide an articulated alternative solution to socialism while at the same time, maintaining their long standing justification for taking power from the monarchy.[/callout]

    And finally, a reader comments: “From a libertarian point of view, it would be inconsistent to advocate legalizing marijuana and banning trans fats.” And from there I try to use the author’s and reader’s inability to distinguish the reasons for regulating products differently as one of state intervention not of market management. Actually, the two issues are different. Marijuana The only reasons to ban marijuana are: 1) Because it impedes the mind, and therefore choice, and choice is a necessary capacity, and necessary assumption, in the libertarian model. This is a technical concept, not a practical one. 2) Because you can expose others to risk due to impaired judgement, largely while driving a vehicle. This concept is both technical and practical. Justifying the application of force must be both technical (epistemically rational) and practical (materially implementable). Epistemic applications alone are infinite and open to error. (ie: laws should be enforceable not specious.) Trans fats Foods are a voluntary health issue, not an externalized risk issue or capacity issue. The libertarian concept of freedom allows people to harm themselves. However, since it is not possible to make a rational choice over the content of goods , regulating labeling is not a question of freedom but a question of limiting fraud or accidental harm in a market. Libertarianism’s Failures Classical liberalism is an outgrowth of conservatism. Libertarianism is an outgrowth of Classical Liberalism. Rothbardian anarchism is an outgrowth of libertarianism. The only fully articulated philosophy is the Rothbardian. The Classical Liberal philosophy is analogistic, pragmatic, and contractual. But it is a practical moral philosophy, not a necessary logical philosophy. Necessity and utilitarianism are two different kinds of problems. Rothbard fully articulated his philosophy of natural law. But in doing so, by assuming the principle of non-violence, he avoided the problem of creating markets, the costs to people of having done so. And instead, by circumventing the natural law of violence ended up advocating a religion of property. Hoppe improved this line of thinking by developing private institutions that provided public goods, and reinforcing the concept of natural law, by the ARgumentation Ethic which purportedly demonstrates that property is natural to man. But these methods are flawed because they start with non-violence and trade, rather than the human capacity for violence and fraud, and the necessity of building and creating markets. In that sense, while anarchists have made innovations ( monarchic inter-temporal incentives, private insurance institutions ) they have failed to provide an answer for advances in abstract forms of property, and as such are providing solutions that are regressive as did Marx. A market is a joint stock company that was invested in by the fraternal order of soldiers who then collected fees for their service in creating that market. Merchants enter the market by registering products such that they meet the market criteria so that the shareholders experience an appreciation in value. The common people gain access to the market by respecting property, which is a material forgone opportunity cost. Everyone pays, and everyone profits from market participation. The history of economic thought is the history of demonizing monarchs for the purpose of transferring control of the market from it’s military founders, to the vendors – the middle classes. This demonization is nothing but falsehood. As it turns out, kings were kinder to their populations than are republican and democratic governments. But because of this demonization, the causal origin of civilization, of cities, of markets, of prosperity, and of western culture itself, is obscured by the rhetoric of demonizing the nobility who created this culture under which we prosper. Despite it’s variety of logical strengths, libertarian philosophy contains a number of errors, the most influential of which is in confusing the role of government as necessarily social in nature or necessarily defensive in nature, or a tool of class exploitation, versus the historical and causal origin of government as a protector and regulator of markets.

    [callout]Markets are the primary social institution of post tribal man. Governments have no reason for existence outside of Markets[/callout]

    Markets are the primary social institution of post tribal man. Governments have no reason for existence outside of Markets. Government IS a market function, because the purpose of government is determining the rules of the market which funds the government. Trade exists without government, but markets do not. Advanced markets for the trading of abstracts do not. All forms of property beyond portable personal property (several property) require registration, and rules for exchange in the market. The primary difference between the concept of trade and the concept of market is one of anonymity — whereby the market operator places some guarantee on the products offered so that the market’s shareholders can create a competitive advantage against other markets, and to reduce the cost of conflict administration within the market.

    [callout]The difference in cultures is simply in the definition of ownership of different forms of property that they permit in their markets.[/callout]

    The difference in cultures is simply in the definition of ownership of different forms of property that they permit in their markets. And these differences are material: the more granular the property the more liquidity and velocity it produces, and the greater the division of knowledge and labor that is possible. This culture of Market-Making is one of the three causal differences for western civilization versus the central and eastern models. (The other two differences being military tactics that required enfranchisement – leading to debate, reason an science, and IQ distribution mixed with resource and transport availability.). Libertarians confuse fear of abuses by the government with the necessity of constraining the government to the maintenance of the rules of the market, and the value in those rules as a means of increasing the productivity of the market and their yield from that market. Libertarians have abandoned the problem of managing the market, and therefore have become a religious institution not a political institution. That is the difference between religion and politics: the market and the absence of it. Because in large part, neither institution has been rational, only practical. Conservatives lack the ability to articulate their concepts in other than moral terms. Libertarians do significantly better. But both systems of thought are lacking in an understanding of what they argue for. Libertarians, despite being a minority selling a minority philosophy, seek to create a nation governed by a ‘religion of property’ in order to exit the influence of government. When in fact, government is responsible for making the market, and libertarians should lobby for additional rules to limit the state. Not limiting the state to social activities of dubious non-market nature, but to it’s role in regulating the market and evolutionary increases in defining the ever expanding set of objects and options we refer to as property, and which we frequently trade, so that we, as a people, maintain a competitive advantage against other markets. The problems with the anarchic movement are substantive in that they do not account for market-enhancing asymmetries, versus market-harming asymmetries. In other words, they are advocating the ‘buyer beware’ ethic of the Bazaar, rather than the ‘seller responsibility’ that is required of participants in the Market. This is not an advantage to the shareholders (citizens).

    [callout title=Trade and Market Are Different Systems][anarchists] are advocating the ‘buyer beware’ ethic of the Bazaar, rather than the ‘seller responsibility’ that is required of participants in the Market. This is not an advantage to the shareholders (citizens).[/callout]

    The problem with our institutions is that they do not separate redistributive efforts from market efforts. Libertarians (of which I am a member of the group of theorists) would be better served by abandoning our rhetoric of monarchic criticism, and instead develop a language and metaphysics such that we can provide an institutional response to an increasingly complex world in which we must register, trade and police a market of increasingly vast and complex products and services, so that we may maintain our competitive advantage over the rest of the world.

    [callout title=Separation Of Church And State]The problem with our institutions is that they do not separate redistributive efforts from market efforts.[/callout]

    And abandon luddite religions of all sorts. That includes all forms of the Church of Limited Government and Church of Unlimited Government. Instead, a rational epistemology can be applied if we simply look at the material problem of building and maintaining markets in an increasing division of knowledge and labor, where most of our inventions are abstractions that like large numbers, are beyond the ability of our perceptions. That is the one and only important function of government, after territorial defense and the policing of trade routes. And the implementation of rationalism is in separating our institutions such that redistribution is held by one house, and market regulation by another. Further, our separation of banking, including the currency, credit and interest (which has replaced both our religions and our code of laws as our primary means of maintaining social order) is insufficient for the current state of our division of knowledge and labor. That system of institutions and approach to analysis is Post-Rothbardian libertarianism. And it is the only rational alternative to encroaching socialism. Libertarianism was hijacked by Rothbard simply because Hayek, Parsons and Mises failed. And both Rothbard and Hoppe created extraordinary epistemological and institutional value with their research program. But they have failed, as did the libertarians, and the classical liberals, and the conservatives before them, to create a system of institutions capable of providing an alternative to the anti-market anti-civilization sentiments and philosophy of socialism by failing to articulate the causal purpose of government as market maker, and to create institutions that expand and evolve along with the objects that we exchange in that market. And that is your solution membership in A Church: the articulated causality of the market and it’s institutions and the purpose of government communicated by the technique which we call ‘reason’.

  • Don Boudreaux Swings And Misses The Entire Point: Sovereignty

    Over on Cafe Hayek, Don Boudreaux attacks Arizona’s policy, and in doing so, falls into the abyss of economic tyranny: the justification of economic outcome over freedom and sovereignty.

    By demonizing immigrants, these politicians exploit voters’ misinformation about the economic consequences of the alleged devils.

    My response was:

    Don, 

    You’re confusing the priority of people’s perceptions of their economic consequences with the priority of people’s perception of their political and cultural sovereignty, as well as their perception of their associated status. These people [Arizonians] have been wronged. They have been wronged by a loss of sovereignty, and a reduction in cultural dominance, and wronged by an ongoing diminution of their status. And people will act far more passionately to defend their social position than they will to an abstract economic benefit. That was, and is, the entire reason behind nationalism. Or did you forget?

    When the use of economic outcomes becomes the primary criteria that one uses to determine all policy, then the economist makes a fundamental error because he ignores the most important of ‘animal spirits’: status and sovereignty. And then the methods of economics become either a religion, or the error of intellectual myopia, or of intellectual vanity.

    Otherwise, economic policies are the tools of tyranny, and the justification of tyranny.

  • An Example Of Libertarian Redefinition Of Property – Fraud In Action

    Property Rights and the Paparazzi by JEREMIAH DYKE ….. one cannot own his image or reputation, nor can he own an actual image, a photograph, of himself. Like the mental construction of memory which is a product of one’s eyes and mind, a picture is a product of one’s camera. The question of ownership begins first with the individual, then proceeds to his labor, then the equipment via exchange, and finally to the property from which that equipment is employed. If you don’t want to be photographed, then you must remain where you are veiled from the public. You do not own the rights of another’s’ flashing camera the same way you don’t own the right to another’s gazing eyes. You may only own, or rent, the space from which they snap their pictures. Therefore, what celebrities really need is private roads and private sidewalks from which they may oust those that take pictures. They want more privatization so that they may enjoy their privacy. If not, then their privacy is not something they truly desire.

    This is a mischaracterization of the problem of paparazzi. It is a rare celebrity that does not desire publicity. The problem for most celebrities is to get any and all publicity possible. Instead, the property violation occurs when the paparazzi interfere with a person’s actions and movement, obstruct their conversations and social meetings, invade their homes, or attempt to create news by antagonizing the celebrity. These are all violations of the persons freedom, and paparazzi are granted special dispensation by the state to antagonize celebrities. The violation then, is that the celebrity is prevented from protecting his freedom and property by the intrusive state that has granted the rights of theft to paparazzi. You further mischaracterize the nature of reputation. Reputation exist in minds subject to constantly updated information — in other words, it exists in a market that experiences fluctuations in price. As Rothbard says, a reputation’s daily market PRICE is not controllable. However, it is still a person’s asset, regardless of price, because people ACT as if it is an asset, and that asset has material value to individuals, which we can determine by surveying the ACTIONS that people take, businesses take, regarding their reputations – PR firms are expensive (Mine is too). Hence, profiting by manufacturing damage to a person’s reputation is simply an act of theft. And therefore, if paparazzi are creating news by interfering with the celebrity, then they are engaging in theft. If they are capturing celebrity actions without interfering, then they are simply communicating an observation. Defining property according to your choosing is simply an attempt at fraud. Defining property according to the analysis of human actions is rational, scientific, praxeological, and consequently Misesian. Defining property according by any other arbitrary or constructed means is simply fraud. I do not mean to discount the other principles that Rothbard added to our toolkit – tools which I am using above. Nor to disagree with the value of privatizing what is currently public property. However, this rather foolish constructivist approach to private property is the reason we are frequently disavowed, and perpetuating this kind of error does us no good, not the least of which is because it is entirely FALSE. Constructivist views of private property are an attempted act of fraud. Property is not the name of material objects. Property is a claim on an opportunity to make use of any object, material or abstract, upon which men can act. Either that, or libertarianism is not a science of Human Action, but a silly metaphysical cult no better than the patent absurdity proposed by Marx, and a vast scheme of fraud and theft that we wish to foist upon a skeptical civilization which will have none of it. Instead, the anarchic research program has been terribly valuable in debunking the myth of good government and directing us to focus on the coordination and calculation problems rather than attempting to improve the political institutions – invalidating more than a century of self-congratulatory work on the merits of democracy. But conservatism lacks an argument sufficient to combat the constant evolution of socialist ideas. Libertarians are by and large the though leadership of the conservative movement that resists socialism. Libertarianism contains the necessary elements to provide that argument. It would be far better that we should focus on providing it, rather than perpetuate nonsense which undermines our ability to do so.

  • The Sentiment Of The British And Their Pseudo Intellectual Hypocrisy

    I read a number of the UK papers every day online. They are better than US papers for a variety of reasons. (( In the current ‘intelligence system’ it’s recommended that americans read Al Jazeera, Pravda, China News Daily, BBC News as well as the NYT. All are biased but the important issue is to know how biased our own papers are. )) US papers in general, formed to create homogeneity in the community. That community-centricity is why they’re going out of business in this post-community era. The web allows communities to have disparate voices (like normal people do) rather rather than having a self-centered referee edit, and dramatically bias their opinions toward the fantasy of democratic secular humanism. UK papers are more like the web: they represent factions. Our only ‘faction’ is the financial press. The rest, of the papers are almost universally are left-leaning along with our universities, that by and large, teach the religion of democratic secular humanism, as do our grade schools – a notion notion that has something to do with the fact that our children start to lose competitive ground in education about the time we start teaching them the religion of democratic secular humanism. If a religion has such a negative competitive impact can it be useful for any productive reason? Is not the measure of any philosophy the competitive standing of it’s practitioners? Of course, these ‘priests of democratic secular humanism’ attribute the a supposed american exeptionalism to their religion. But american exceptionalism is clearly false. Differences between US and european productivity are accounted for by differences in the number of working hours. While this productivity generates a lower cost of living in the united states, and while american government consumes less of the GDP than governments do in europe, and while americans live generally better lives, even if they live RISKIER lives, than do europeans, there is no exceptionalism to the culture that is caused by democratic secular humanism. American exceptionalism, which is almost entirely the product of selling off a continent, the military strength to do it, the system of private property rights that allows us to do it quickly and easily, and the use of those profits from selling off the continent being directed to the maintenance of the system of international money, defense and trade and the demand for our primary product: “dollars”, and the profits made by selling those dollars because of that militarily constructed system of money, trade, and soldiery. In other words, “property”, which is the prerequisite for trade, and the conversion of violent efforts at acquisition to peaceful efforts at production and trade, is created by vast military expenditure. The system is prolonged like any social system, by the promise of violence if it is broken. Unlike other systems, it is a system that increases production and makes the ‘pie bigger’ rather than decreases production by wealth transfer. Militarism for the purpose of ENFORCING PROPERTY RIGHTS is part of capitalism’s virtuous cycle of dividing labor, increasing granularity of property rights and types, increasing production and decreasing prices, instead of the use of violence to abuse the system of property rights. Militarism is, and can be, a good thing, depending upon how a culture defines it’s property rights. And the more granular the property rights and the better enforced, the more prosperity that people in a culture can generate by virtue of being ABLE to calculate USES of that property. People are not pacifist by nature. Humans are the most successful super predator that has ever occupied the planet. People are pacifist because they are weak. (( See Kagan in Power and Weakness, as well as Sorel in Reflections On Violence, as well as Keegan’s History Of Warfare )) They are predatory by nature when they are strong. Only by maintaining violence over this system do we make the system one where participation in the game of the virtuous cycle is the only possible solution to the improvement of one’s life and resources. And membership requires two payments: respecting property and control of, and responsibility for, your breeding. So, in today’s Times Online there is another article about the desire of the Taliban to start peace talks with americans. The reason for these talks is that Pakistan is no longer allowing the taliban safe haven, and that they are perfectly willing to wait until the Americans leave to reassert their power over their society. By giving the americans a reason for virtuous exit they buy themselves time to regroup, rebuild their numbers, rebuld the poppy and heroin trade, rebuild tehir finances, and retake social positions in the gangster state of afghanistan. America took over the British Empire, it’s trade routes, naval bases, currency position, after the first world war. Americas policy difficulties stem almost ENTIRELY from british and french colonial history – the foolish organization of territory by other than tribal boundaries, in the foolish presumption that humans do not act, and prefer to at, according to tribal preferences. If America STOPPED maintaining that system, does anyone live under the illusion that there would not be VAST and VIOLENT attempts at filling the vacuum of power? It would be the greatest commercial land grab in human history. It would be bloody. It would be violent. It would involve massive wars, starvation, trade interruption, an the only choice for those that choose not to participate would be to participate or be doomed to poverty and ignorance. As an island nation lacking the resources to support itself, with a culture of feminized men so comfortable in their weakness that they have lost the Civic Republican Tradition of the Fraternal Order Of Soldiers (where the British ‘mates’ cultural concept comes from) how would the UK fare in this new world? It would collapse into either switzerland or return to it’s historical position as a backwater. Just as there are plenty of silly americans in daily press, there are an almost unlimited of silly, ignorant, self deluding brits commenting as well. And these comments are important because they express popular sentiment. One of the comments left on this article is by a nobody named Peter Codner who aside from being a barrister and apparently confusing analytical psychology for something other than another post-christian cult of absurd metaphysics, states that “The semblance to Vietnam which was an humiliating defeat for the americans is uncanny. the yanks will run away.” While I understand that short time preference is a result of social class – meaning that we can educate people to use advanced tools and logic but not if we do not extend their time preference so that they can think beyond their experience, and learn that their experience and ability to comprehend that experience is profoundly limited – I fail to understand how one can live in today’s society and not grasp the problem of extending time preference so that we see all actions and outcomes in both their short, medium and long term contexts. Running from an unnecessary battle for political reasons is very different from both running away from your history, and your own failure as a nation, and your responsibility as a nation for the problems you created. The Yanks won almost every battle in Vietnam. The loss was political, because of home political tensions not a military or economic defeat. And it still achieved it’s strategic ends. As did subverting the soviets in Afghanistan. Democracies lack the stomach for sustaining war. And they do so because of people like you. Of course, such sentiment comes comfortably to Brits, who lost their entire empire trying to stop Germany from taking it from them. Frankly the world would be better off if we had let them. Certainly Americans would be – we would not have to become an empire and live under a government-of-empire, if we did not have to take over the British empire when Britain collapsed, like reed. We would not have to protect a world trade and financial system that only served to inflate our entablements. We would not have to deal with the after effects of poor British (and French) judgement that left behind a post colonial Network of violence and poverty around the world. Brits are a silly, petty, pointless people who inhabit little more than an empty client state living off it’s heritage, and propping up it’s ridiculous system by immigrating it’s way into a temporary fictitious prosperity, by fomenting consumption at the expense of it’s heritage and culture, at the expense of producing increases in productivity, where the government consumes 50% of GDP, the military is only slightly less of a Potemkin village than is the laughable Canadian. I expect this kind of behavior of the french, who ceased being a world power when the effects of killing off their aristocracy and descending into Bonapartism ( democratically justified totalitarianism ) and are happy today to simply rest on past glory, consume their accumulated historical investment in a single century, and who because of it are simply obstructionists – obstruction is the only political power they have – so it is the political power that they exercise. Brits are happily self-congratulatory to live under the US common man’s soldierly umbrella of protection, and his society’s necessary militarism while criticizing him on a daily basis. (( What will happen if the middle-american cultures who supply military talent ever figure out how much contempt that they are held in both by their coastal and international critics? )) A “thank you” might be more appropriate than your petty slander. But then again, while no man is a hero to his debtors, a decent man does not slander his debtors. Only an indecent one. False wisdom is the last refuge of the weak whose current technique is to hid behind the cloak of intellectual and moral fraud. But then, isn’t that the purpose of all religions?

  • IEA Thinks Taxis Are Not A Public Good

    Over on the IEA Blog, Eric Masaba asks the question: Why do black cabs cost more than Concorde? I couldn’t point out ALL the holes in this article, because the IEA blog limits the number of characters per comment. I find the argument for the virtue of brevity a ‘cute’ one because affirmations are the most brief of comments, while refutations are the longest. The state subsidizes the ‘Black Cabs’ of London.

    Hackney cab drivers inexplicably enjoy a rule stating that no one else can describe a taxi service as a “taxi” in their marketing, and the important restriction that no one else can pick up passengers on the street. These regulations have deep historical foundations, dating back to the days of Dick Turpin. In today’s world, they are anachronistic, anti-competitive and pointless.

    London cab drivers are a pleasure to deal with. They are an intrinsic part of the tourist trade. The Danes pay an entire social class to stay home so that the average clerk in a train station is educated, literate, well mannered, and a pleasure to deal with.

    When there are price comparison sites for insurance, airlines, hotels, holidays and office supplies, where we can buy the same product from a myriad of suppliers at different prices, how is it that there are very strict rules requiring that Hackney drivers receive a minimum wage for every mile driven yet private hire drivers do not?

    Because the market is an unlimited physical space and the streets of London are a limited physical space (and the tube is a monopolized space. And therefore Cabs require a very simple set of regulations in order to maintain quality.

    Why is it good for certain stripes of taxi driver to be able to oblige people in London to pay higher rates than the market would support if such a law was not in place?

    Why is it a good for the state to regulate any kind of competition?

    Why do the same drivers, who expect to be able to choose what clothes they wear (and how much they pay for them) and which airlines and car insurance firms they use, want to deny travellers in London the basic freedom to choose another vehicle service they can hail at the airport or on the street?

    They don’t. You can hire a car from the airport. You just can’t pick someone up on the street.

    If people want to pay for the superior knowledge that the Hackney drivers clearly possess, they will do so. If they do not care, they will find cheaper alternatives until the market has informed the black-cab community what customers really think and what price they are willing to pay.

    They are not paying for the knowledge. The state is using a knowledge criteria to create a hurdle for market entry. Just like they do for just about every kind of specialist.

    Many people are disgusted with the special treatment bankers received, but through the price controls and regulations on taxis in London, transport markets are being distorted to favour one type of vehicle provider.

    Bankers recieved special treatment because the state printed money without regulating it and forced banks either to compete for profits or to go out of business. This process of moral hazard created large banks that are pseudo governmental agencies, that were so responsible for subsidizing the national payroll and cash disribution and management system that if they were not rescued then the crash would have been worse. On the other hand, the state CREATED the moral hazard. But it did not have to. The problem has been that creating the ‘rules’ of the fair game in banking (defining the properties of property and it’s rules of transfer) has become extraordinarily complex because the object of definition has become exceedingly plastic. Derivatives and new financial instruments were a new form of property that many of us decried at the time, but that was unregulated because both the state and the purveyors of these new devices foolishly bought the argument that it was possible to insure that kind of risk, and secondly, because So, I have to disagree with the IEA’s position. Travel to NYC, Chicago, LA and ask yourself if the London policy is better or worse for everyone involved. And if we subsidize transportation like subways why cant we subsidize Cabs. If price is a concern, then If you want another choice, call a less expensive cab company on your cell phone. Prices aren’t everything. In fact, low prices and full competition in a market often accomplishes the lowest cost service at the lowest quality that is tolerable by consumers, and bars quality from availability within a geography. (Home Depot and Walmart in the US, and superstores versus butchers, bakers and the like in Europe). I am happy that superstores exist to provide additional choice, but only if there is a replacement ‘tax’ for using them by distancing them. From this simple analogy of taxis and tubes versus superstores and specialty stores, we can illustrate that reduced prices and a free market within geographic boundaries produce commodities, and thereby prevent societies from capitalizing long term values of aesthetics, choice, and the ‘special’ environments we adore across all of europe in favor of a bland, disposable environment. We restrain competition in order to raise prices and therefore concentrate capital and we do it in many ways: political subsidy (money transfers like taxation, redistribution, and outright subsidy) constraining the market by qualification (lawyers, doctors and london cabbies), and constraining the market with monopolies (public transportation like Tubes and Buses). We unrestrain the market to reverse the concentration of capital and to reduce prices, and we do it in many ways: political subsidy of The natural order of man is to attempt to circumvent the market. The free market is a byproduct of the civic republican tradition’s advocacy of meritocratic equality. It is a rebellious movement against the control of markets and the expropriation of wealth by the state. Markets are a solution to corruption that asks us to create fair competition among equals and to maintain that set of ‘rules’ we call “competition in the market”. However, the natural behavior of man is to circumvent that market. The means by which he circumvents it are those tools we consider fair market competition: reducing prices, increasing choices, advertising and marketing. Not all cultures have taken this route. In fact, in history, the free market is an exception that concentrates wealth in hte hands of the monied, productive and creative minority. THis concentration benefits all by decreasing prices for nearly everyone. It limits the power of capitalists as long as there is enough money in circulation to create inexpensive competition. But since the culture or state determines the definitions of property (the means of calculating the use of opportunities to act) the rules for any ‘game’ are particular to that game. Rules are not universal to all games. They are plastic. And this comparison of Taxis to Tubes is perhaps one of the best ways to illustrate that these rules are inconsistent. But what may not be obvious is the DISTORTION that is created by the myth that rules must be equal for some things and unequal for others. Or, that lowest prices are the ultimate virtue to be sought by economsts and political economists. As a libertarian, I care that the choices available to me are not constrained by Concentrating capital attracts talent to the private sector where it is skimmed by private individuals, and those who lack talent to the public sector where it is skimmed by bureaucracy. Yet this is what most cultures seek to impose: expropriation by the bureaucracy. WE also constrain capitalists, and unconstrain capitalists. Capitalists can temporarily distort a market by applying capital that profits one company or anotther, requiring competitors to rely upon capital or depart. They can do this by simply extending debt, so that prices may be decreased in the anticipation of driving competition out of the market, and later increasing their share of the market as these competitors disappear. the problem with this technique is that talent accumulated in the industry is sometimes forced out. Niches are abandoned (the wall mart and home depot effect). The state acts like a disruptive capitalist creating temporary price decreases in return for decreased niche services, and in doing so makes it impossible to concentrate capital in niche excellences. It makes it impossible to subsidize a public good: choice of the more expensive, better, prettier. The purpose of the London cabbie is largely to create a public ‘good’. It enforces quality so that quality personnel can afford to work in the industry (rather than the horrid service, delivered by the filthy, ignorant and incompetent in US cities). Prices would drive down quality, and all that will happen is that you will need additional regulation to managed an impoverished and corrupt network of marginal businesses that deliver cheap but intolerable service that prevents quality competition from competing in the market. If you are willing to spend money on the tube. You have no argument against spending money to maintain a quality system of taxis. Just because market mechanics are POSSIBLE for taxis and IMPOSSIBLE for tubes, that doesn’t mean that taxis are not serving the same function as tubes. Lowest costs does not generally create a good. It creates a marginal enterprise. Aesthetics are forms of capital that are perhaps, the best investment that any civilization can make. For a country like the UK, whose history is an industry, you’d think that such a principle would be better understood. For a country that is creating demand through immigration, cash by selling off it’s assets, and the illusion of prosperity by dilution, inflation and redistribution, rather than by increases in productivity, it is understandable why a myth of exceptionalism would be a useful distraction from the fact that the UK is selling off its exceptionalism and it’s heritage, and would do even more so along with it’s taxi subsidies. Prices alone do not a world make. The purpose of the market is exploration. The purpose of unbridled market is prevent government exploitation. THe purpose of the regulated market is to capitalize SOMETHING for a social good. And not all social goods are consumables. Some social goods capitalize distortions to create beauty, which is a high return for a society, as all monuments, arts and architecture demonstrate. So, instead of universally pursuing consumption as an ultimate good. Instead of the keynesian virtue of spending. Perhaps we should balance our capitalist strategy with the art of saving. It took english civilization a very long time to create a culture of saving, and the institution of interest, so that the middle aged could save until they were old, and the old could lend to the young, in a virtuous cycle of investment that distributed the risk of long term calculation across a vast number of people, and wherein retirement security was an insurance scheme for the underclass rather than a mandate of the majority. This virtuous cycle was undermined. Perhaps we should return to it, and to other forms of capitalizing our civilization, so that we leave something behind for our heirs rather than the record of a visitation by locusts. Subsidizing quality is the entire point of aesthetics and the arts. And capitalizing everything from street signs, to cabbies to historic buildings to libraries and museums is an antidote to anti-historicism.

  • Yes We Could Have Prevented The Suffering Of Citizens

    Rebekka Grun, on The Growth And Crisis Blog writes that we could have protected the consumers rather than the banks, in her posting Conditional Individual Bailouts – a Potential Anti-crisis Instrument

    Why not save the individuals that went bust rather than their banks? Unconditional bailouts, of course, would generate the wrong incentives (for the banks as well, by the way). It is therefore important to attach smart conditions to discourage free riding. For example a course in financial literacy and commitment to a program of (maybe painful) debt restructuring, and possibly further measures to improve the education or health of the affected individual or family.

    Your sentiment is correct even if you haven’t done the math on it. In general terms, there is a simply technique for doing exactly what you’ve suggested, but we lack the infrastructure for it. The arguments against the solution at the time were that we didn’t know how far prices would fall (I’m not sure, I think we were about right), and that it would make very visible that the government was the source of the problem (true), that it would have geopolitical impact on the value of the dollar (of course, but so would the alternative), and that it could be unfair to people who had behaved well (that would be fixable), and that it would encourage a bubble (this is false). THe primary problem with distortions is that the distortions are in PRICING. Libertarians would call corrections ‘repricing’. The problem is that human beings must suffer a great deal and absorb a lot of stress to conduct that ‘repricing’. When the state, as the creator of the distortion by the manufacture of cheap credit, could easily reprice major (home) assets by repricing the DEBT of those assets. In other words, we could have easily corrected the economy by bypassing the banking system, and giving money directly to the citizenry as buy-downs on their mortgages, which would have provided them with cash to spend or to put into banks. Doing this is fine if you do it FAST. In other words, the state created both the BOOM problem and the CRASH problem because it relies on the irresponsible tool of providing general liquidity – easy money. In hindsight this is more obvious than it was at the time. Those of us who made this recommendation were the smaller voices, because the banks and the financial industry were so terrified and the impact on the economy if they failed, so severe. The problem for our country is to put this system in place, so that we are insuring citizens AGAINST their bankers, so that we can use the market to PUNISH bad bankers and their investors, rather than the citizenry. I’ve worked the mechanics of this process out in some detail, and it’s quite simple. It’s just novel. And it’s anti-bank. And that makes it dangerous to a lot of people in one of our biggest industries: finance.