Monday, October 27, 2008

Unfortunate delays

Unfortunately, when I got up this morning to post part one of a two part article addressing the first challenge to anarcho-capitalism, the bigger gun argument, the computer I use was completely dead. So, until I am able to repair it and continue my regular posting, I am unfortunately on hiatus.

I will try to return to form as soon as possible, until then, some excellent information can be found for free at Make sure and read the free online books Practical Anarchy, and Everyday Anarchy. You can find them here.

I'm hopeful that this will only be a temporary delay.

Sunday, October 26, 2008

Veritas omnia vincit

I didn't always believe that the government was the problem, and eliminating it the solution. While shunning party affiliation, I began as something similar to a small government, socially conservative republican. Over time, as I began to think and rethink my positions, and more importantly, my justification for those positions, I came to some realizations.

Government is inherently inefficient, and lacking competition, has only altruism to compel it towards efficacy. Because of this, private industry is capable of doing everything better, at less cost, and with greater consumer influence. If I am truly free, then I have the right to my body, my property, and my actions, so long as those actions do not directly cause provable harm to others, even if they do cause provable harm to me. Because of this, no one has the right to use force to protect me from the consequences of my own actions, similarly, I have no right to use force against others except in my own immediate defense.

Believing these things to be true, and I do to this day, I gradually moved away from a belief which had been instilled in me since childhood. That government was inherently good. That it had my best interests at heart. That it was made up of kind hearted, well meaning individuals who wanted to make my life better. I began to describe it as a “necessary evil.” I began to say things like “the government which governs least, governs best.” I began to support less taxation, and more personal responsibility. But I still believed that we needed some government. So I became more of a constitutional libertarian.

But as I continued to analyze my beliefs, and the arguments which supported them, I could not help but face the inconsistencies on which I relied. Taxation is theft, so let us only do it a little, when absolutely necessary. No one has the right to use force against others, except in immediate self defense, but let's allow police to arrest people who don't have driver's licenses. I am responsible for the government I elect, but they should be able to keep important secrets from me which may affect the decisions I make on election day, because we don't want our enemies to know. Something can be somehow “evil,” yet “necessary” at the same time. And more and more, I thought that government was not the answer, so we needed less of it. So I became a minarchist.

I understand the temptation to turn away from the truth. I understand the temptation to willingly believe a lie, because I was. And when I was confronted with the illogical position that government was the problem, so the solution was simply less, I would just change the subject with myself. Because I was still emotionally wedded to that belief. And every day, with every news broadcast, and radio show, and political campaign, that belief was reinforced. But eventually I had to listen to the truth. Because I couldn't respect myself knowing I was living a lie. So I became an anarchist.

But even then, I had questions. Questions which, I came later to learn, are not uncommon to anyone who honestly explores this idea. You see, we are born into government, we must grow into anarchy. And so no one who is today an anarchist “came by it honestly.” Questions which I feel we, as anarchists, must be willing to explore if we have any hope of convincing others of the nobility of our cause. A friend of mine said, “it isn't enough to prove their points wrong, we must present them with a vision of how great the alternative could be.”

He's right. So, in the coming days, I will seek to address what I believe are the most common questions about the idea of anarcho-capitalism. I call them the six great challenges.

Without government as a stabilizing force, wouldn't whoever had the biggest gun always be in charge?

Without government to build and maintain the infrastructure, where would basic utilities and services such as water, electricity, and roads come from?

How does a society without government law enforcement address evils such as rape, murder, theft, fraud, and arson?

How would an anarcho-capitalist society provide for the education of children?

How would a society without an established social welfare system adequately see to the needs of the poor, sick, disabled, and mentally challenged amongst us?

How would an economy devoid of fiat currency, issued, backed, and enforced by a central authority operate?

It is these questions which will be asked of anyone professing a belief in anarchism, and it is these challenges which we must be willing to address.

To some degree, the answers are unknowable. Just as no sports fan can predict the super bowl champion of 2020, and no computer science professional can predict the power of microchips fifty years from now, no anarchist can accurately describe the future. We can however make some predictions based on current trends, existing technologies, and natural laws. And it is those ideas which I will hope to present. Understand, no answer will suffice for the committed ideologue, but if you are intellectually honest, seek always the truth, and divorce yourself from prejudice, you may find my approach to these challenges provoking. Veritas vos liberabit? Perhaps.

Perhaps someday it will set us all free.

Saturday, October 25, 2008

You can always get what you want

Recently, I've discussed problems with the voting system, and according to this article, almost half of the voters polled do not feel confident their votes will be counted accurately. I've discussed the fact that politicians make a lot of promises that they will eventually fail to keep, and this article discusses the fact that both major party candidates may have no choice but to renege on many of their campaign promises in the face of a ballooning budget defecit. I've warned you of the growing call for international control over the world's finance sectors, and this article points out how world leaders are calling for, “new rules in dealing with international finance.”

It's not because I have some special ability to predict the future. In fact, these are very predictable results of the current system. Regardless of what those in power say, you can watch their actions and discern, with a high degree of success, what their intentions and goals are.

They want you to feel like you have a very real role in what's about to happen to the people of this country. So they have evolved an elaborate system of voter registration, local party officials, and campaign volunteers to make you feel like you are part of the solution.

They want you to be dependant on them to survive, so they attempt to involve themselves in every possible decision and transaction throughout your day, and consistently remind you that they're there to help when you can't do it on your own.

I know that some of my readers disagree with my position on the two candidates, and I understand that. To some degree, I agree that there are basic ideological differences between them, and even between their parties. However, whether tax money will be used to help crack addicted single mothers overcome their addictions, or to subsidize American farmers who are unable to compete in an international marketplace, or to “spread the wealth around,” or to build more military bases overseas, I still stand by my position that once the initial theft of private assets by the government occurs, all actions which result from it are immoral. If a person approaches you in the street and demands your wallet at knife point, are you concerned with whether he will buy whiskey or diapers with it? It is the theft which is important, not the way the money is spent.

Most people would agree that there is a point where too much taxation is unconscionable. Not everyone of course, some people support 100% taxation, but most people have a limit where they feel it is immoral for the state to seize so much of the fruits of their labor. If you draw the line anywhere, then I want you to consider what makes that action immoral. While not my argument originally, I think Stefan Molyneux is right to ask if some is bad, how can less be ok, but none be just as bad as some. If it is immoral to steal, how can it be moral to steal a little, but equally immoral not to steal at all?

Our government wants to use the same illogical argument. I pointed out in a recent post that they seem to think that taxation and federal interference are crippling during tough economic times, but when the economy is soaring, we can take the hit. If it's bad when we're down, it's bad when we're up. Just because we can absorb it during good economic times doesn't mean it isn't crippling. It is. They're just content to have crippled slaves, but not dead ones.

Now they're exploring lots of different ways to spend the 700 billion dollar bailout they recently approved. Remember, the one that they had to rush through in order for us to survive the crisis. You know, they one they promised was specifically for buying devalued mortgage-backed securities from tottering banks to unclog frozen credit markets? You know, the one they still haven't spent a dollar of? Good thing they rushed that through before the “catastrophe” occurred.

So now they want to put that towards insurance companies. But isn't risk an inherent part of insurance? Isn't that how they do business? If we bail out insurers for having to pay out on claims, then why have insurers at all? Why don't we just eliminate insurance and have the government bail us out directly?

What about the auto industry? Why are we bailing them out? If they can't make money selling a quality product, why do we want to subsidize their inability to compete? Do we want low quality over priced products that don't meet our needs and for which there is little demand? Or do we want the kinds of vehicles we desire to dominate the marketplace?

Subsidizing companies that can't compete just doesn't make sense. Remember, in a truly free economy, which we don't have, the only reasons you can't compete are product quality, customer service, and price. So if they aren't meeting our needs in those areas, don't we want them to fail so that those companies which do will succeed?

You always get more of what you subsidize. If we pay people to produce quality, we will get higher quality. If we pay people to make babies, we will get more babies. If we pay people not to produce, we will get less production. If we give the government more money, we will get more government. It's not rocket science, it's social science.

What do you want more of?

Friday, October 24, 2008

Fox and the henhouse

We are taught in school that the founding fathers believed that, like fire, government was, “a dangerous servant, and a fearful master.” It was their underlying belief in the dangers that government represented that led them to build a form of government rife with self regulation. We are taught that the inclusion of “checks and balances” in our government system prevents government from becoming overly large, intrusive, or powerful.

But what are these checks and balances? Think back, you were taught that the government is divided into three basic branches. Executive, which deals with law enforcement. Legislative, which deals with the creation of law. And Judicial, which deals with disputes over law. So, in theory, the Executive branch couldn't do anything not specifically allowed by the Legislative, and if they tried, it could be appealed to the Judicial branch, who would moderate the dispute.

Now, because we are told at a young age that this is just and in our interest, many people hold up this system as a prime example of why our form of government is safer than others. And they are right. It is safer than totalitarianism, or communism, or monarchism. It is not however, safe.

All three branches of government receive their money from the same place. The taxpayer. All three branches of government rely on the same mechanism to enforce their position, violence. All three branches of government have a vested interest in increasing government power and expanding government authority. What vested interest do they have in preventing the other branches from doing anything they want?

I suppose you could argue that there is a competitive factor. No legislator wants to be upstaged by any executive. I suppose you could argue that there is an economic factor, money diverted to the executive branch won't go to the judicial. I suppose you could argue that there is a territorial factor, no member of the judiciary wants legislators to usurp their authority. I suppose you could argue that people are just inherently good and would never do anything bad.

But competition doesn't interfere with them any more than it keeps teammates on sports teams from stealing the ball from each other. It would put their common goal out of reach. The economic factor doesn't hedge their behavior, because there is always more money which can be seized from the people. When you are holding the gun the only answer to “how much to take” is “as much as I want.” The territorial factor doesn't work, because, for example, judges make law all the time through legal precedent. And if there is any truth to the argument that people are inherently good and would never harm each other, than the argument in favor of the state has lost, and we can now do away with it forever. If we are too corrupt to self govern, how can we be pure enough to govern others?

Think. Either checks and balances work because people are inherently selfish and evil, in which case we certainly can't give them a gun and put them in charge of others, or they work because people are inherently giving and pure, in which case we don't need to give them a gun and put them in charge of others.

So then the argument becomes that some people are good, some evil, and we must put the good ones in charge of the bad ones. But clearly half the country think certain people are good, and the other half think they are bad. So is fifty percent of the country evil? How could we have decayed to a point where half of the country is so vile? And if that's your position, then you must recognize that under the current system, we allow for evil to triumph every two years.

What kind of system, which we are taught is the fairest, most just of them all, would allow for evil to control everyone and everything based on a popularity vote? Are we then to believe that the majority of people would get it right? But the majority of people supported slavery, segregation, the Japanese internment, vice laws, poll taxes and denying the right to vote to women. Now, in some areas, the majority of people are supporting the decriminalization of certain drugs, and allowing non-citizens to vote. What if the majority of people supported rape, or murder, or theft through violence? Does just being supported by the majority make it ok?

It does in a system where the majority is holding the gun on everyone who disagrees with them. If you are a conservative, do you want Barack Obama to have the right to pick up any person, anywhere on earth, accuse them of a thought crime and detain them without notification, cause, a trial, or any hope of release? If you are a liberal, do you want John McCain to have the right to take away everything you own, give it to someone else, and then force you to do labor for others for the rest of your life or face poverty and possible imprisonment?

The government will never self-regulate to any long lasting degree. Yes, in some cases, legislators will be tried by the judiciary for corruption. In some cases, judges will be denied the bench for past decisions which are deemed unjust. But in some cases the power of the executive will be increased, in contradiction to existing law, by the legislative branch. And in the long run government grows, and grows, and grows.

Imagine three thieves who agreed to share everything they acquired equally and took a vote before stealing anything. If the profit is shared equally amongst the three, why would any of them vote against another committing a crime? Each one stands only to gain from the avarice of the others, and so would encourage his actions, not deter them. Yes, there is a check, and he could stop the actions of his brother, but why would he? It isn't that their aren't checks and balances, it is that they are a ruse to disguise what is really going on.

Because what is really going on isn't pretty.

Thursday, October 23, 2008

That's not a knife

I promised that I would tell you about fiat currency and the damage it's done, not just to this country, but to the world. Some of my readers have pressed me to do so sooner rather than later, so today I will go into some detail about what fiat currency is, how it came to be, and why it's so dangerous. I'll think you'll find it illuminating.

Before any serious discussion on the importance of currency can begin, it's important to understand what money really is. Money exists as a symbolic representation of units of energy. In a barter and trade system, goods and services produced are traded between free people in exchange for goods and services needed. Unfortunately, what one person may produce may not be needed at all times by those people who produce what is needed. For instance, a dairy farmer produces milk. In exchange for the feed for the cows he milks, he could trade milk to the hay farmer. In exchange for chairs and tables, he could trade milk to the carpenter. As long as everyone is in need of milk, the dairy farmer can trade for his needs.

But what if the carpenter is lactose intolerant? What if the hay farmer needs goats milk instead of cows milk? Then suddenly the dairy farmer is unable to receive the goods and services he needs. This problem is referred to as the “coincidence of wants” problem. Now, perhaps the dairy farmer could trade his milk to the goat farmer in exchange for goats milk and then trade that to the hay farmer, but it is easy to see how this system quickly becomes overly complex and inefficient. Soon the labor required to perform a series of trades in order to acquire goods and services to exchange for those needed by the dairy farmer becomes cumbersome and exponentially increases the associated cost.

This is where money comes in. In order to facilitate the exchange of goods and services, societies create forms of currency which act as an intermediate, agreed upon basic unit of exchange, representative of the energy required to generate it. As long as this intermediate commodity is not perishable and is in relatively consistent demand year round, then it can be reliably traded between free people. So now, the dairy farmer converts his milk into gold coins, which are then converted into chairs and tables. Or feed for cattle. Or live chickens. Or whatever else the dairy farmer needs. This is the basic philosophy behind the concept of money.

Currency exists in several forms. The earliest forms of currency were commodity based, which means that they were actual items with recognizable value, such as gold, and silver, or in some cases spices, crafted goods, or animal hides. The value of these commodities was based on the labor required to originally acquire them, so for instance, gold's value is based on the amount of labor required to find, mine, and refine it into a valuable substance.

This system is still cumbersome however, and so people began to use representative currencies. Representative currencies are notes of exchange which can be reliably traded for the commodities by which they are backed. So the value of representative money is equal to having that commodity in hand. The benefits of such a system are obvious. Now the dairy farmer could carry a bill fold filled with notes of exchange instead of a bag full of gold coins. Additionally, while commodity based currencies are actually made of commodities, representative currencies are backed by them, and as such, can be backed by a variety of commodities which are unrealistic as forms of currency on their own. Representative currencies could be backed by gold or silver, but also oil, water, whiskey, or pizza. It is the public's faith in the redeemability of the note which lends it its value.

This brings us to fiat currency. Fiat currency is not backed by anything. Anything. It is called fiat currency because its value is based on a government's order that it be accepted as a form of payment. It has no intrinsic value, and it can not be reliably exchanged for anything. In the absence of faith in the government which issued it, this money loses all value and becomes worth less than the paper it's printed on. Supporters of fiat currency will argue that it is backed by every commodity because it can be reliably traded for anything within the confines of the society which exchanges it, but in reality, even when traded for real goods or services, it is still not ultimately backed by real asset, and can never be redeemed by the holder. Essentially, the last person holding the bill when faith in the issuing government collapses is empty handed.

This isn't the worst part. The worst part is that because this money is not based on real asset, governments are free to print it at will. You can't create commodity based currencies in greater numbers than the commodities themselves exist. Representative currencies are protected from excess printing by the constant possibility of redemption. Any issuer of representative commodities who was unable to physically convert his printed currency would be guilty of an actionable fraud. But fiat currency can be printed in ever increasing numbers because there is no physical asset limiting its redemptive value.

Real commodity backed currencies hold their value. They resist inflation, devaluation, and counterfeiting. Even a sudden influx of their backing commodities wouldn't affect their value, because those comoodities still required energy to generate. The problem for governments is that these types of currencies act as a check on their power. You can't invade a foreign country, where the further you move from your revenue source the greater your constant operating costs become, if you have to trade in real currency along the way. You would have to bring your bags of gold and spices with you, and when you ran out, you'd be stuck. Effectively, this acted to leash aggressive nations to their homeland, and limited foreign adventurism. Now, countries only need a printing press, and they can generate limitless amounts of money, which they then order people to accept as payment.

There are other issues as well. Fiat currency is issued by central banks to the government as debt, which must be repaid with interest. While some argue that this is incorrect, such an arguement can be found here, even the numbers represented there clearly show that the treasury is not fully reimbursed for the cost of borrowing the reserve notes from the central banks. Saying that the treasury is reimbursed for some of its costs does not equate to "Federal Reserve Notes do not cost the Treasury any net interest." Additionally, some fiat money, such as the United States Nickel actually have an intrinsic value far below that printed on their face. This means that people are actually being forced, by government fiat, to trade for more than the value of the currency. The net result of all of this is that there is inherent debt in a fiat currency system, which must be passed from person to person like a hot potato.

Fiat money is nothing new. There are articles on the internet, such as this one, which describe the history of fiat money over thousands of years. It always fails. It's always eventually replaced by commodity backed currencies. But it is scariest in its terminal stage.

The terminal stage of fiat money is hyper inflation. Throughout the life of any fiat currency, there is constant inflation as a result of unrestricted printing. As people begin to lose faith in the currency itself, the issuing authority begins to print at a much more rapid pace in order to take advantage of its assumed value before it is lost. It is during this time that people begin wheeling buckets of money into the bakers to buy a loaf of bread.

It's not a joke, or a conspiracy theory. You can find more information on fiat money here, and here. It's been done again and again throughout history, and always to the same results. The government's argument is that this time it'll be different.

Don't bet the house on it.

Wednesday, October 22, 2008

The real victims of victimless crimes

Almost without fail, when the discussion begins someone brings up the example of WalMart as a justification for the need for central authority. WalMart practices unfair business practices. WalMart exploits Chinese child labor. WalMart puts smaller operations out of business. WalMart treats their employees unfairly. And we need a powerful state to protect us from these problems.

First of all, WalMart using it's huge purchasing power as leverage to negotiate for lower costs on goods and services is not an unfair practice. Most sellers will give bulk discounts to their customers in order to secure their patronage. WalMart exploiting foreign slave labor may disgust us, but in many of those cases the children and peasants working in those factories, while working under conditions none of us would ever accept, are still working under conditions far better than their peers. The inability of small operations to compete with WalMart is their own fault, not WalMart's. Anyone who can offer a quality product at a competitive price will always be able to compete. If you can't, that's the result of your product's quality, or it's price. Not the result of what your competition is doing down the street. The argument that WalMart treats its employees unfairly is a non-starter. Those employees negotiate for their wages and benefits. They compete for those wages through their value to the company, and if they don't like working there, they're welcome to work somewhere else. If WalMart is so untenable a situation for its employees, then they wouldn't have any. And in cases where there were employee abuses, those employees pursued legal recourse, as is their right.

But the silliest part of the entire argument is the statement that all these issues make the case for government. Even if we grant the premise, that WalMart is evil and corrupt and we need to be protected from their actions, then we must objectively say that government is part of the problem, not the solution. Any time someone argues that an ongoing problem is justification for government they are ignoring the fact that we have government now, and it's not fixing the problem. In reality, millions of people already don't do business with WalMart because they find their business practices objectionable, and when those lost profits outweigh the benefits of those practices, WalMart will change the way it does business. In fact, that has happened, and they are. You can find more information about it here.

You see, government isn't protecting you from anything. In point of fact, government policies create suffering that would not otherwise exist. Vice laws, such as those regarding drugs, gambling, and sex workers, will never successfully address demand, and so by extension supply. Drug dealers still have a market, gamblers find places to lose their money, and because of the difficulty they have in bringing their product to market, and the lack of real competitiveness in their industry, they are able to charge enormous prices at the consumer level. Worse, when customers are wronged by those with whom they do business, they lack any legitimate avenue of recourse, and must turn to violence or crime in order to seek restitution.

In places where prostitution is legal, sex workers are able to negotiate favorable terms with their employers, receive regular medical care, and seek legal redress for any wrongs they suffer. Where it is illegal, they are plied with drugs, extorted and beaten, and have no legal rights. In fact, studies show that where prostitutes work indoors in legitimate businesses they are less likely to be victims of violent crime. Your personal opinion of prostitution is not what is important here. In San Francisco they are spending 11 million dollars a year to battle the sex trade. That's 11 million that was seized from decent law abiding people. 11 million they could use to pay their mortgage, put their kids through college, or reinvest in a struggling economy.

You are more than welcome to look down on these women and their chosen profession. You can tell people you find it disgusting, sinful, reprehensible, and evil. You can choose not to do business with them and encourage others to do the same. But making it illegal isn't addressing the problem. Instead, vice laws are creating problems.

Some people will argue that regardless of the actual result of prohibition, it is an important moral statement for a society to make. It doesn't matter if it doesn't work, it says we don't support this behavior. But in reality it does matter if it doesn't work, because the money used to support it is being stolen from free people all over the country. And the government isn't accomplishing their stated goals, because it still happens, and the violence being used to enforce it is hurting many more people every day than can be shown to be harmed through it's practice.

Many people take issue with the harvesting and selling of elephant ivory. So, after receiving international pressure from customers and animal rights organizations, EBAY has decided to stop allowing the sale of ivory on its website. It didn't require a law or state to accomplish this, it happened as a natural result of the pressure placed on EBAY by the marketplace.

For the record, I don't support prostitution. I think it's sad, unhealthy, and emotionally crippling. I also think that people should have every right to do stupid, dangerous things on a voluntary, contractual basis. If a person wants to engage in promiscuous sex, in return for a ten dollar movie and a fifty dollar meal, that's ok. But if that same person wants to engage in promiscuous sex in return for sixty dollars, we'll spend 11 million dollars per year to hunt them down, arrest them, and put them in prison with murderers and rapists.

I can't support that either.

Tuesday, October 21, 2008

Frightened animals beset on all sides

Thailand's former Prime Minister has been found guilty of corruption for facilitating, “his wife's purchase of lucrative Bangkok real estate from a state agency in 2003,” and sentenced to two years in prison. Of course, they'll have to get their hands on him first since he fled the country months ago. This may sound somewhat familiar.

If you recall, Senator Ted Stevens is still defending himself against accusations that he failed to pay for a quarter million dollars in home furnishings. His defense is that the items involved in the renovations were put there against his will, and that they were just loans. “We have lots of things in our house that don't belong to us.” Of course. When you put it that way, it makes perfect sense. You can find more of this ridiculous argument here. Apparently politicians around the world share at least some similiarities of philosophy.

It's important to apply some objective logic to the argument in favor of central authority. If people are so corrupt that they need to be governed, then how can you possibly justify putting those same people in power over others. If greed and avarice are so pervasive that voluntary self governance is impossible, then how can one justify the idea of governing over others? The very arguments they use to justify the need for central authority are self defeating and contradictory. And even a cursory look at the history of government corruption shows that. Never forget Lord Acton.

I've spent some time recently discussing the issues in the voting system. Here you can find an article about a dead goldfish receiving voter registration papers. Here you can find an article which mentions in passing how election officials in Palm Beach county, remember them, they were at the heart of the 2000 election recount, recently lost 3,500 votes in a judicial election. Or rather, as County Administrator Brad Merriman puts it, “They weren't lost. They were in the warehouse. They just were never counted.” Oh, never counted. That builds faith in the voting process.

Of course, some people are suggesting that we could fix many of the problems with the current process by which Presidents are elected by simply eliminating the electoral college. In this article proponents argue that the electoral college is unfair because one person could win the popular vote and still not be elected president. The counter argument is that a popular vote in urban centers would leave rural voters at the whim of their city dwelling brethren. So no matter how the vote is tallied, some people will always be ruled over by other people who do not share their beliefs, desires, or goals, and will be forced to act against their will by force. Perhaps it is time to scrap the system.

Americans are scared. They don't understand what's going on, because they were never properly educated. Just like everything else, the government does a lousy job of that too. Ask the teachers themselves. How often do they have to supplement the curriculum? How often do they have to buy supplies with their own money? How often do kids fail classes, only to be advanced by administrators so that they won't feel bad? It's not the fault of the educators, it's the fault of the system itself. People aren't taught to be rational, so they act on emotion. People aren't taught to be logical, so they don't question what they're told. People aren't taught to apply sequential reasoning so they don't think about the future consequences of today's decisions.

So they're scared. And it's understandable. And equally understandably, they're hoarding food, gold, and guns. Because the animal part of them knows that as security decreases, they may at some point be on their own. They may have to feed themselves. They may have to defend themselves. And the money they use to barter with may lose its value.

So while the candidates continue to waste time discussing how they'll fix the problem, and the government continues to waste resources pursuing non-violent trivialities as though they were serious criminal offenses, things get worse and worse.

Liberals like those at the Huffington Post believe that McCain can't possibly make things better, and conservatives say Obama can't be anything but a failure.

Is it possible they could both be right?

Monday, October 20, 2008

You gotta have faith

Today it was revealed that the British government has repeatedly encountered UFO's in the skies over Europe. While this was probably the most interesting news story of the day, it was unfortunately not the one with which you should be most concerned.

Several days ago I mentioned an op-ed article suggesting that governments bailout the auto manufacturers. This shouldn't come as a surprise due to the widely reported economic troubles of Michigan giant General Motors. After all, if funneling public funds to private companies is the solution to industry instability, then why shouldn't everyone try to get a taste?

In point of fact, French President Nicolas Sarkozy is suggesting that his government do this precisely. In the face of a sluggish European economy, Sarkozy is suggesting that France “take national measures to help the development of electric cars, to create a network of service stations capable of replacing batteries, or supporting research into fuel cells,” in order to, “get the economic machine going.” You can find more in the article here.

But the auto and banking industries aren't the only one's struggling. Electronics giant Circuit City is considering whether they should liquidate millions of dollars in assets, including closing stores and eliminating jobs, or whether they should file for bankruptcy protection. Larger than anticipated cuts in consumer spending, and an inability to acquire sufficient credit to continue day to day operations is forcing them to confront some serious financial decisions.

This is the way it should work in a truly free economy. Some sectors struggle, prices drop, customers step in and buy goods and services at a lower cost, and then businesses begin making money again. To be fair, never having operated in a truly free economy, Circuit City can not be held completely responsible for their failure to compete. They are suffering as a result of the state's interference in the banking and mortgage industries just like you and I are, but when companies are faced with cash shortages, they have to confront tough choices. Either they will have to close stores, find more cash, apply for bankruptcy protection, or shut down completely. And in doing so, their competitors, such as WalMart and Best Buy, will increase market share. That's business. Especially when no one is offering them a bailout.

You see, unlike the government, when private individuals and companies are faced with cash shortages, they can't just print more cash to take care of the problem. They have to find the money somewhere, whether that means freeing up cash by liquidating assets or cutting costs, because they have a finite amount of resources, and have to allocate them wisely.

The government on the other hand has other plans. Already unable to pay for their extravagant spending here and over seas, already leveraged to the hilt, already facing trillions of dollars in debt, already burdening state and local governments with the expenses associated with this election, they are considering cutting everyone another bribe check. You see, people aren't happy that the government is bailing out the banks. And despite their best efforts to convince us it's in our best interest, people aren't buying, and they're concerned. So their solution is to print even more money and send everyone another “economic stimulus” check to get us to quit whining.

Ask yourself where they're finding all the money for these expenditures. Bailouts, wars, “voter stimulus” checks, it has to be payed for somehow. They don't have a big pile of cash or gold somewhere that they're grabbing handfuls of and sending over to Wall and Broad. They're just printing more, and more, and more money to pay for it all.

Someday I'll explain how our money has no real value. How it is fiat currency, printed privately, borrowed on interest, and impossible to repay. I'll explain just how much of a hole we are in by using a currency based on no real asset and only backed by the faith people have in the American government.

But for now ask yourself, how much faith do you have in the American government?

Sunday, October 19, 2008

My new message board.

I wanted to provide everyone with a place where they could ask questions, present challenges to this idea, and leave comments about the things you read here or elsewhere, so I created a new message board. You can find it at,

I will also include a link on the right side of the page. If you have any questions, feel free to post them!

What does voting change?

Yesterday I presented some questions about the current problems with the voting system. Because the government wanted to improve the voting system, they now require that voter registration be centralized in each state. On its face, this would seem to simplify the system by taking several disparate lists and putting them together. However, if you believe that government is inefficient and corrupt, then the problems associated with this move are predictable.

Politicians and appointed government officials on both sides are engaging in everything from questionable to blatantly unlawful tactics to purge voters who might disagree with their party's candidate from the roles. Many voters are receiving letters in the mail informing them that they have lost their right to vote, and even when they are later informed that it was in error, either through their own actions or when the “mistake” is realized, many will probably still be discouraged from voting. And in an era when certain swing vote blocks, such as middle aged white women, could win the election for one candidate or the other, controlling turnout at the polls is essential.

Even the FBI investigation into voter fraud by the group ACORN is now being called into question by the Obama campaign. His campaign's insinuation that the administration is trying to, “sap the American people of confidence in the voting process,” would seem to imply that the government can't be trusted. Maybe its just this government he doesn't think you can trust. I'm sure you can trust his government.

In reality however, this investigation may have to be taken out of the FBI's hands. Since 9/11 more and more of the FBI's resources have been diverted away from their traditional role in domestic law enforcement and towards terrorism related investigations. As a result, they are now scrambling to investigate “possible frauds of millions of dollars” in relation to the current financial crisis. With so few resources available for investigating domestic crimes, the FBI has had to rely on private investigators to do much of their legwork, including investigation, and even setting up sting operations so authorities can make arrests. So while they would like you to believe that in the absence of the state there would be unsuppressed violence and no remedy for fraud, in practice they turn to the very private solution they decry.

They will tell you that your vote can change the course of the world. Yet, with so much being done by both sides to suppress, obfuscate, and discourage the vote, is it the future of the world they're interested in, or just the future of their power structure? In the face of an increasingly confused and corrupt voting system, the state would like you to believe that the coming election is the most important in recent history. But that's what they always say, and we seem to have the same problems we've always had.

It would seem that elections have little in common with change.

Saturday, October 18, 2008

The integrity of the vote

If we grant the premise that a representative republic is a fair and better form of government, of which the integrity of the voting system is the heart, then it would seem that a benevolent government would take all necessary actions to maintain that integrity. Yet, even in the face of rampant voter registration fraud, the United States Supreme Court found yesterday that Ohio state election officials did not need to scrutinize thousands of questionable new voter registrations. How could this happen? Surely, if it is the vote which decides the future of a republic, then a government which has your best interests at heart would do everything possible to insure the accuracy of that vote. Why would they intentionally allow, or inject, fraud into such an important system?

Think about the question. Why would they seem to want fraud in the system? What possible reason could there be? Why, when the system is already rampant with fraud, computer problems, and human error, would they not decide to at least take a second look at thousands of potentially fraudulent registrations? What could their motivation possibly be?

In every election, there are some disputed votes. There are calculation errors, there are mistakes made by voters, there are incomplete ballots, clearly, there are problems. Now, instead of acting to clarify a confusing situation, the Supreme Court has acted to further muddy the waters. Why? What do they gain by acting in this fashion?

In the 2000 presidential elections, both sides were desperately trying to gain an advantage during the recount. There were absentee ballots that were deliberately not counted. There were voters turned away at the polls for no legitimate reason. There were voters who claimed they accidentally voted for the wrong candidate. And both of the two major parties lobbied to get the votes counted in their favor, dismissing those votes held in counties which did not historically support their candidate, and emphasizing the importance of those votes in counties which did.

So with so much ambiguity in the voting process, which has to be the most important part of a representative government, what do those in powers stand to gain from more? Is it possible that those in power want there to be ambiguity? Is it possible that they want elections to be in dispute? Is it possible that they want the outcome of elections to be decided by government officials, instead of by a clear vote of the people?

My readers know I don't support this system. But the question to those who do has to be, what is your government trying to achieve? People often want to blame these problems on the other team. In reality, I believe that the traditional delineation between democrat and republican is less important than the difference between statists and those interested in individual liberty. While I'm willing to believe that there are more statists on the democrat side, I think that is simply a result of the voter to whom they must pander. I believe the statists want the election to be in doubt. I believe they want to take the decision making authority out of the hands of the voter. After all, they know what's best. It's for your own good.

You can trust them.

Friday, October 17, 2008

The "anarchy" of Government

The word anarchy conjures up certain images in the minds of most people. Images of riots, violence, and madness. The implication, which is learned early on in government schools, is that without the stabilizing presence of the state, people would immediately revert to their basest instincts. Despite the fact that this is historically unproven, and that some of the expected loss of civilized behavior would be based entirely on the previous reliance on the state, most people immediately assume this is what you mean when you say anarchy. In fact, in practice, this is what they mean when they say anarchy.

So then when referring to the recent FBI investigation into voter registration they would use the word anarchy. When referring to the repeated jailing of innocent people they would use the word anarchy. And when referring to the chaos in the stock markets and prices they'd probably use the word anarchy. But the reality is quite different.

Voter registration chaos is a predictable result of a system based on the tyranny of the majority. When only the majority gets a voice, those in the minority will predictably attempt to inflate their numbers, it's their only option. Remember, in our current system, there is no minority voice. Even where so called “minority” candidates are elected, they are the majority locally. Only the majority in any election gets a role in the decision making process.

Humans make mistakes. Whenever you have a system where a small number of people are theoretically tasked with the protection of a much greater number of people you will have errors. Compound that with the enormous number of non violent financial disputes that officers of the law are required to enforce and the possibility for error increases based solely on their case load. Combine that with the very real possibility of corruption and it should come as no surprise that there is chaos in our legal system.

Where you should have some predictability and stability is in the markets. Prices should naturally go up and down in accordance with supply and demand. The value of individual companies should be related to the value they offer to the consumer. Unfortunately, when the government interferes that predictability is lost. The reason the stock market and commodities prices are wildly fluctuating isn't because people can't determine the value of beans or corn or computers. It's because they can't predict the effect of government interference. The government has said that they will “inject liquidity” into the market place, but so far, they've been vague on where, how much, and specifically to whom. How can investors make even reasonably accurate predictions about the future value of companies when they don't know which companies will be allowed to fail, and which will be buoyed up by the state? Once again, we have chaos.

But chaos is not anarchy. Anarchy is at its heart the absence of the state. Chaos is not a natural or necessary result of that. In fact, it is the state which creates much of this chaos. They use this chaos, and the feelings of insecurity it creates, as a tool to encourage people to rely more and more on them. It is the state which makes the future unknowable.

And it would not be unknowable without state intervention. When there is excess inventory, there will be decreased production. When there is a state system which requires production to subsidize non production, there will be failure and suffering. One of the richest men in the world, Warren Buffett, is right in saying that this happens in free markets, and it's not a disaster, it's an opportunity. This is not mad science, this is not insanity. The absence of government would not make a system less predictable, but rather more, because there would be fewer artificial influences on that system. When constrained only by natural laws, systems are efficient and highly predictable.

People need to eat, so there would be a market for food. People need shelter, so there would be a market for houses. People need clothing, so there would be a market for clothes. People would get sick, so there would be a market for health care. With or without government, these things are still true. The difference is that government interferes and attempts to act as an agent of social change. Historically however, they have rarely if ever truly single handedly been the agent of that change, and attempting to do so, they often replace one evil with a far greater one.

It is not the work of good to do evil in its pursuit.

Thursday, October 16, 2008

Elections are decided by promises and gifts

As an anarchist, I don't believe in the governmental system. I believe that it's a system of oppression, supported by theft. However, if we grant the premise that a representative or direct democracy is a fair system of government, we must still be disappointed with the manner in which this country vets its future leaders.

In last nights debate, there were questions about how much businesses should be taxed. There were questions about whether the solution to what some see as a “health care crisis” should be price controls or government subsidies. There were questions about how much oil we should import from other countries. No questions about individual liberty. No questions about personal freedom. No questions about private property. No questions about the role free people play in their own lives. What mattered to the moderator was whether or not the candidates were sorry about all the mean things they said about each other. This is how Presidents are elected under the current system.

We continued to hear about the global financial mess. What you may not have heard is that things aren't as bad as they would like you to think. Although still high, jobless claims have fallen, consumer prices for clothes, gasoline, and automobiles has remained flat, and where there is some economic turmoil, it has more to do with the weather than the financial climate.

Yet countries around the world continue to move towards socialism, putting more and more of the burden of their economies on the backs of their tax payers. Despite concerns that the global economy is going into a recession, the EU plans to impede economic growth by placing emissions caps on businesses in order to fight global warming. Those countries which have expressed very real concerns that such measures will only deepen the recession are quickly shouted down by President Sarkozy of France and other powerful voices within the EU.

President Sarkozy was the same person who blamed “laissez-faire” capitalism for the current economic crisis. He claimed we needed “a better regulatory system” to inject “a strong dose of morality” into the markets, yet he has recently increased the travel budget for himself and his wife in the coming year by 29%. His defense that, “this is not tourism,” seems pathetic in the face of his accusations that the free market is unable to self regulate. It would seem that it is once again government which is unable to self regulate its spending of public monies.

It is not that free markets are unable to self regulate. It is that they are not allowed to do so. Whenever these companies are faced with billions of dollars in losses, the government moves in to shore them up instead of allowing them to restructure or fail as necessary. Remember, if your money has real value, then that value still exists. When one business fails because of their own practices, the remaining businesses who made wiser choices and stayed in business will increase their market share accordingly. If there is a genuine demand for their product or service, there will still be one even if they fail. But when you bail them out, again and again, the results are predictable.

But don't worry, there's enough free money to go around.

Wednesday, October 15, 2008

Let them eat cake

Inevitably, when ever I mention Anarchy to someone, I immediately hear the same arguments. We need police to protect us. People wouldn't provide for their own defense. When confronted with violence, we can always call 911. People always argue that without government we'd have poverty, violence, and war. The reality is that at this time, we have more, and more powerful, government than at any time in history, and we are still laboring under all the same threats we always have. In fact, the government itself uses these very tactics to accomplish its own goals. If you really believe that government exists to protect us, then you must admit that it is a complete failure. Governments can't even get people to wash their hands.

The reality is that we will always have crime. You can't eliminate murder, rape, and arson. You can't get 100 percent of the people to be good to each other and stop stealing and lying. You can make whatever laws you want, with the most draconian enforcement policies you can imagine, and some people will still commit crime. The reality is that the only person who is ever responsible for your defense is you. You can't obligate someone else to provide you with protection without advocating slavery. You can assume someone else will protect you, but ultimately, that position is foolishness. You can't abdicate that responsibility. You can refuse to accept it if you wish, but whether you accept it or not, the responsibility for your defense still lies with you. And the government agrees.

While governments all over the world struggle with fixing the global economy, the fallout of the recent rescue bill is already being seen in other industries. Predictably, where other companies are struggling with the current financial climate, some are already calling for a bailout of more American industries. Will the government now talk of nationalizing the auto industry? Soon we can all get credit from the government, to buy cars from the government. When the government controls the means of production as well as the distribution of goods, you have something called socialism.

Some people have said that we need a government as a stop-gap during tough economic times. The reality is that in a free market, resources shift. If the currency has real value, then that value still exists, it's just shifting to other areas of the economy. While we might wish the money went to us, and not to places like pawn shops and repo men the reality is that money is still being exchanged for goods and services. People still have to eat, but maybe right now they're eating Campbell's instead of steak. That's ok.

I'd rather eat soup than eat cake.

Tuesday, October 14, 2008

Hammers and Nails

This week the corruption trial of Senator Ted Stevens continues. He's accused of writing laws in such a way as to profit himself and his family personally, but his trial revolves around $250,000 dollars worth of home remodeling he may or may not have paid for in full. Such fine gentlemen as former Secretary of State Colin Powell and Senator Orrin Hatch are supporting Stevens in his defense.

While it seems obvious why some people refer to Stevens as the most corrupt politician in Washington, and I certainly don't support his funneling of public funds to friends and family, it does seem odd that he's being persecuted by the state for which he's worked so diligently, while Senator Dianne Feinstein is largely being given a pass for funneling over a billion dollars worth of defense and civil engineering contracts to companies her husband has financial interests in. Once again, we see that while any politician can personally profit from the hard work of innocent Americans, only the truly elite can get away with it.

In other news, not to be outdone McCain has introduced his own plan to “rescue” America from its current financial woes. While his plan does rely more on cutting taxes than government spending and is for this reason clearly the better plan, it still fails to realize that these should not be temporary emergency solutions. If ending taxation and removing regulation which discourages saving and spending are good for the economy in a down time, why aren't they good for the economy all the time? It would seem that the message is when the economy is doing well, we can afford for the government to leech off of its largess, but when it's down those parasites can kill it.

While the candidates argue over who will fix the problem better, the current administration is hard at work making things worse. Buying up stake in private banks, and removing the cap on the amount of money insured by the Federal Government in some private accounts will only burden the federal coffers, and by extension you and I, that much more. Ultimately, there simply won't be enough money to cover all of these promises, and much like social security in the near future, the government will have to renege on them.

So why make promises you know you can't keep? When individuals do it, we call it lying. We look down on liars and refuse to do business with them in the future. Yet when government does it, most people just consider it par for the course and keep going back to the well. And time after time, lie after lie, most people are content to place the blame for the failed promises on the other team.

In part, this may be because it's clear that government's don't respond well to dissent. Whether it's in Zimbabwe, or America, when confronted with a competitive, anti-state voice, governments respond the only way they know how, with force.

When your only tool is a hammer, everything looks like a nail.

Monday, October 13, 2008

A rose by any other name

While the EU is entertaining the idea of an unprecedented power grab in an attempt to “rescue” the world's economies, they are simultaneously condemning Zimbabwe's President Robert Mugabe for taking, “control of key ministries in defiance of a power-sharing deal with opposition parties.” Apparently what's good for the goose isn't good for the gander. I'm not going to say that this has anything to do with race, or class, or politics, but it seems clear that in certain circles seizing powers which are historically reserved for the private sector is considered the privilege of the elite.

While still laboring amidst one of the worst financial crises in modern history, the American government has already decided to up the ante by introducing a second economic stimulus picture worth an additional 150 billion dollars, and Obama has a new plan to lend money to states and cities from the federal treasury, force mortgage holders to give their customers additional time to repay their loans outside of their original contractual obligations, and create financial incentives for businesses to give jobs so he can “spread the wealth around."

While on it's face, these may seem like sensible responses to the current situation, the reality is that it's just another example of increased government intervention in the economy. Companies don't need financial incentives to create jobs. There is already a financial incentive to create jobs. It's called profit. Companies will create as many jobs as there is a market demand for. Unless you set a precedent that the government will pay them to do so. Then they will hold out for government money they know will eventually come before hiring more workers, and in the meantime, the economy will stagnate while there aren't enough employees to produce the goods and services demanded by the customer base, driving up prices and lowering productivity.

Any time you require a company to go beyond the contractual agreements it has established between itself and it's customers, you are obligating one person's productivity to another. Any time you obligate one person to provide another with anything, especially when backed by the coercive use of force you have institutional slavery. Whether it's socialized medicine, extending banking obligations beyond pre-existing limitations, conscription, or cotton picking, it's slavery, and Robert Heinlein, was right when he said,

I don't think that any people or nation has a right to save itself at the price of slavery for anyone, no matter what name it is called.

Guest of Honor Speech at the 29th World Science Fiction Convention, Seattle, WA (1961)

Neither do I.

Sunday, October 12, 2008

Consent of the Governed

I've spoken about the increasing calls for central authority to resolve the current financial crisis, and I'm not the only one. A recent meeting of the G20 nations, a group consisting of the 19 largest economies and the EU, discussed a plan to, “overcome the financial turmoil, and to deepen cooperation to improve the regulation, supervision and the overall functioning of the world's financial markets,” (,2933,436571,00.html).

They're here to help. They want to make you safer. You can't do it on your own. Without their “supervision” you'd ruin everything they've built.

Ask yourself. What singular ability or special knowledge is government endowed with which makes them uniquely equipped to handle the current financial crisis. They want you to believe that they are somehow superior to you. They want everyone to believe that without them, we'd all be starving and freezing to death alone in the dark. They keep the lights on.

Think back to the recent “rescue” bill. We were told that without it's passage, our economy would collapse. There would be, “a global financial meltdown,” and, “the consequences of inaction could be catastrophic,” ( Administration officials told us, “this is about the American people,” ( Even the presidential candidates stepped into the discussion, with Obama calling for legislators to, “do what's right for the country,” and McCain warning that, “the present crisis will turn into a disaster,” (

Yet when first presented with it's passage, congress balked. It wasn't until they received over 130 billion dollars of additional “pork” spending that they agreed to pass it. If this was actually as important and time sensitive as we were told, if we really were going to walk into work next week and not be paid, if it would really lead to the downfall of western civilization, why couldn't they pass it the first time? If they really care as much as they claim, if they really are the only bulwark against financial instability, why did they have to be bribed to pass this bill? Is it possible that people who would claim this problem is, “bigger than the private sector can fix by itself,” (, are actually more interested in using the very understandable fear of the citizenry, fear which they have partially contributed to by referring to disasters and catastrophes, to increase government power and spending?

This is the problem with government “supervision” of the markets. Governments grow. They grow in power, they grow in size, they grow in cost. And since they can't support their activities through their own productivity, they have to seize capital from elsewhere in order to function. And as they grow, they need more capital. And when people seem unwilling to contribute to their growth, they have to create a climate of fear in order to prey on the emotions of the governed for their own gain. If you don't fall for it, it's because you just don't get it. But the supporters of statism are more than happy to help the government correct your misunderstanding. All they need is the right approach. They'll convince you of the need for their “supervision.” After all, our government gets it's power from the consent of the governed.

But what if people realized they don't need to be governed?

Saturday, October 11, 2008

International Government Control of Finance

For the 21st time in the last 26 days the President spoke publicly about the current financial crisis. This time, it was following a meeting with finance officials from the G7, Japan, Germany, Italy, France, Britain, Canada, and the United States. The content of their discussions was, “a global response to the credit crisis that will lead toward a "path of stability and long-term growth." (,2933,436415,00.html).

This has been the theme at many meetings of financial and political leaders around the globe. The European Union's economy and finance ministers had a meeting on October 7th to discuss, “a European response to the international financial crisis, ( Great Britain has guaranteed over 430 billion dollars worth of bank debt, and would like the rest of the world to follow suit, ( In the worst case so far, the country of Iceland has nationalized its banking institutions, seized the assets of foreign investors and even foreign governments held therein, and is desperately seeking loans from Sweden, Norway, Russia, and anyone else who can help. At the same time, Great Britain is suing Iceland because some of the frozen assets in its now nationalized banking industry belonged to citizens of Great Britain, and in at least one case, close to 90 million dollars of British taxpayer dollars which had been placed in an Icelandic account has been frozen, (

So now leaders around the world have decided that simply nationalizing the banking and lending industries isn't enough. Calling for the end of “American style capitalism” isn't enough. Freezing their stock markets, covering private debt with public funding, and seizing the private property of foreign investors isn't enough. Now, in order to avoid acting at odds with each other while attempting to rescue us from the current credit crisis, there is increasingly a call for centralized control over the world's finance sectors.

Recently, Ireland insured all the deposits in it's banks in order to, “give a general guarantee that the banks can lend in security and safety,” ( This led to a massive influx of capital from other EU countries into Irish banks, where customers believed their money to be safer. In response, the EU's governing body condemned the move by Ireland saying they, “would like to plead with national governments today not to act unilaterally,” ( Other EU countries are afraid that their citizens will shift their assets to Irish banks, causing their own banks to collapse from lack of operating capital, but they have yet to state publicly the effect this will have on Irish banks when the government is unable to generate enough revenue to insure these deposits now that the total amount held in Irish banks is skyrocketing.

It is this fear that “individual governments” “acting unilaterally” will “contradict or undermine the actions” of each other which those in power are now using to call for central authority. Imagine not only an economy run entirely by the government, but a worldwide economy run by a central governing authority. One which has the power to decide which countries are allowed to lend or borrow money, and how much. One which can set import and export limitations on countries in the interest of international fairness. One which can decide to punitively refuse countries trade agreements because it disagrees with their foreign policy. Instead of spending, saving, lending, and borrowing money as you see fit, you won't just need the government's permission, you'll need the world's. Remember the golden rule.

He who has the gold makes the rules.

Friday, October 10, 2008

The end of American Capitalism

As the current financial crisis deepens and spreads around the globe, more and more people are beginning to feel its effects. In developed countries businesses are closing their doors (, innocent renters who have never missed a bill are being evicted from their homes because of the land owner's failures (, and more and more people are asking which presidential candidate will fix their problems for them (

At the same time, in the poorest regions of the world food riots have caused both starvation and political upheaval (, and price increases have unbalanced the trade differential between developing countries and the west ( Some financial leaders, such as World Bank president Robert Zoellick, even think this could reverse the movement of developing countries towards being successful self sustaining economies, (

Clearly, this is a time of great civil, political, and financial unrest. It is understandable that people would be afraid. It is understandable that people would feel powerless to affect their own futures. It is understandable that people would turn towards those in power for assurances, leadership, and hope.

And the governments of the world know it. They are more than happy to take charge in this current crisis. You've already seen that more and more they are placing the blame for all of this on the free market. You've already seen that more and more they're nationalize and recapitalizing the finance industries with public capital. Never forget that all public funds are either seized from the people through coercive use of force, or simply printed up new, adding to inflation and devaluation of the currency. Now, as the fear is reaching a fever pitch, with comparisons to one of the darkest periods in American history, the great depression, (, some politicians and commentators from around the world are calling for “the end of American style capitalism,” (

In the future, I'll point out how America has never enjoyed a truly free market. I'll show you how, since the very beginning, we've always labored under crony capitalism, and state supported capitalism, and government intervention. I'll point out how the only truly free market we've ever had has only occurred on the black market where it was free of government regulation, taxation, or control. But for now, think about how afraid you are and how willing the government is to take all that responsibility away from you to ease your fears.

Think about the end of American style capitalism.

Thursday, October 9, 2008

More of the same

On Tuesday I wrote an article pointing out that AIG was using government loans to go golfing and drink cocktails. Today, we find that AIG is getting another government loan to the tune of more than 37 billion dollars. That's 37 billion more dollars. (full story -

This is all in addition to the 700 billion dollar “rescue” bill which was recently passed by congress. Apparently, they've failed to correct the problems in their business model which have recently brought them to the brink of financial ruin. They've already spent more than 60 billion of the original 85 billion dollar loan. No word yet on whether they have a celebratory outing planned after receiving this loan.

In other news, I reported yesterday that world leaders are nationalizing their banking and lending industries. I'm sorry to report that that trend is not limited to foreign governments. Today, “senior treasury officials,” have been telling the press that the white house is, “considering taking ownership stakes in certain U.S. banks,” in an effort to deal with the current financial crisis. (full story -

This is called “floating a trial balloon.” The white house is letting the word out that their considering buying up the American banking system. Oh, just some banks, and only partial ownership. So now your government will just 'partially' own the lending and banking institutions in this country. If this goes through, you will be saving, borrowing, and spending only with government permission.

The reason they're floating this trial balloon is because there seems to be some disagreement between the people, and the people who think they know better than you do. Even some of the media outlets which are widely considered, fairly or unfairly, to be administration hacks such as FoxNews are publishing editorials condemning the bailout.
“...the bailout obviously wasn’t a quick fix. As we saw again with Monday’s huge stock-market drop, the markets don’t behave the way politicians tell them to behave. Just like voters don’t behave the way politicians tell us to.” (David Asman -
There is a widespread and growing disgust on the part of the people with the government's out of control spending and taxation, and while the statists in government think they can continue to steamroll over the objectors by telling us we just don't understand economics, the businessmen in the media know what products their customers want to buy, and right now, disgust with government is selling like hot cakes.

That's right. People are tired of it. There's a growing movement of people awakening to the sham that's perpetrated against them every two years. With access to multiple media outlets and sources of information, more and more people are awakening to the dangers of government. Oops, we didn't get the politicians who can change things elected this time, but two years from now it'll all be different. I can understand them getting away with that for the first 200 years or so, but it's starting to wear thin.

Fool me once, shame on you, fool me 100 times or more, shame on me.

Wednesday, October 8, 2008

How we got here, and who’s to blame

With increased pressure on the world financial system, governments all over the world are nationalizing banking and credit, and calling for more regulation and government interference. World leaders are blaming the free market for the economic crisis, with French President Nicolas Sarkozy saying,

"The present crisis must incite us to refound capitalism on the basis of ethics and work … Self- regulation as a way of solving all problems is finished. Laissez-faire is finished. The all- powerful market that always knows best is finished," (full story -

and British Prime Minister Gordon Brown blaming, “conventional thinking or outdated dogma,” and calling for, “the fresh and innovative [federal] intervention that gets to the heart of the problem.” (clarification added, full story -,2933,434284,00.html)

Of course, none of this gets to the heart of the problem. Blaming free-market capitalism fails to recognize that much of the current financial crisis is the direct result of government intervention in the lending industry. The lending giants Fannie Mae and Freddie Mac, both created by the federal government, (Fannie Mae as part of Delano Roosevelt's 'New Deal,' and Freddie Mac by congress in 1968 as a Government Sponsored Enterprise), are at the heart of the current lending crisis. These agencies were created for the express purposes of fixing what the government saw as a current crisis in the mortgage industry at the time. Fannie Mae was to provide liquidity in the mortgage industry by buying mortgages from banks and then converting them to guaranteed mortgage backed securities and reselling them. That means that whoever buys the mortgage on the secondary market has a guarantee from these firms that if the original borrower fails to repay, Fannie or Freddie will cover the loss.

Sound familiar? Economic crisis, need for liquidity, government interference in credit industry, loans backed by government sponsored enterprises? Any of this sound topical today? Doesn't this sound a lot like what the government is doing right now to “rescue” us from the current crisis?

One of the problems with these companies which has brought us to this collapse, is that they were buying bad loans. That was the entire reason for their creation. The reason they were needed to “inject liquidity” into the markets is because banks were holding a lot of unpaid debt because the economy was struggling and people were failing to repay their loans. By buying this debt off of these banks, they freed up capital within the banking system which could then be used to give more loans. Then, in 1995 the federal government began encouraging them to buy up sub-prime, (read riskiest possible type of secured debt), buy giving them financial incentives. Then in 1999 the Clinton administration encouraged them to increase lending to people of low income or poor credit. For a brief period of time, new regulations discouraged these kinds of loans, but the federal government again encouraged them by changing the regulations back in 2004 in order to increase credit to high risk borrowers, (full story -

Think about it. High risk borrowers. There's a reason they are high risk. There's a reason it's harder for them to get credit. Sarkozy wants to blame the “laissez-faire market” and Brown wants to blame “outdated dogma,” but in reality, the market wouldn't lend money to these people. It was the federal government which encouraged high risk lending. It was the federal government which created the lending giants, during another economic crisis, which are responsible in part for the mess we're in now.

When confronted with tough economic times, companies, like individuals, need to be more careful where they allocate their financial resources, not less. Yet each time, the government steps in and discourages conservative business decisions by removing the bad assets, funneling public funding to these companies, and transferring the burden of these bad decisions from the original actor to the public debt. In each case, this frees up money in the banking system which the government then encourages them to spend on high risk ventures in order to 'jump start' a sluggish economy.

If they simply allowed these businesses to fail, many would suffer. But in the long run, smarter lending practices would lead to more judicious and productive allocation of capital in the market place. Businesses would only get loans if they offered a product or service that could prove financially viable. Home owners would have to work to build savings in order to purchase homes they could invest in. Fewer banks would have fewer unpaid and unsecured debt listed as assets on their books, and there wouldn't be a credit crisis. Instead we are again faced with a huge government bailout. These are occurring closer and closer together, and the cost is increasingly exponentially each time. It is the intervention of governments which is at the heart of the problem, and as history shows us, it is hardly innovative or fresh.

Laissez-faire indeed. If only they would “allow to do.”

Tuesday, October 7, 2008

Government bailout exactly as expected

This should come as a surprise to no one. After being initially extended an 85 billion dollar loan, prior to the even greater 700+ billion dollar "rescue" bill, AIG spent close to half a million in one weekend at a luxurious corporate resort. Now, of course they have every right to spend as much as they want on expensive hotels, golf outings, and cockails, (see link for full story -, but if the government hadn't loaned them 85 billion, that's billion with a B, they would be doing it on their own dime instead of on yours.

This is of course, just one problem with the government funneling public funds to private corporations or individuals. Now, while in a desperate situation where every dollar must be spent wisely, these corporations can continue to make irresponsible business decisions.

Look at it this way, when your money is tight, and you're facing bankruptcy, you can't afford to take vacations. But in the case of these businesses, the influx of public assests not only alleviates their budgetary concerns, it also allows them to continue doing business as they have. So instead of being forced to confront the bad business decisions they have made which have brought them to this place, they not only perpetuate them, but now they can figure a government bailout into their future risk assessments.

When you don't allow the natural consequences of someone's actions to occur, you divorce cause from effect. By doing so, we have reinforced in the minds of the men and women responsible for the current global financial crisis that they will not be held accountable for bad business decisions.

Unfortunately, there is a limit to the amount of public funds which can be generated through taxation. At some point, even 100 percent taxation can not support a system where the productive sectors of society are forced to subsidize the non-productive sectors.

It's a house of cards, and it's coming down.