Wednesday, November 26, 2008

Coming to a Country Near You

1923 Weimar Republic inflation: A German woman feeding a stove with Papiermarks, which were more valuable as fuel than as money.

This is what happens when your money becomes worthless. This is hyperinflation. Today, be thankful this isn't you. Yet.

Monday, November 24, 2008

Tomato(R) Tomato(D)

This country recently faced a difficult decision. Millions upon millions of Americans went to the polls to decide which of two men would lead our nation into the future. They cast their vote to determine whether tax and spend economics, foreign adventurism, government interference in the free markets, crony capitalism, violent oppression, vice laws, theocracy, and fascist control of businesses and private commerce were to be the law of the land, or, well, ummm...

While nearly half of those who recently voted in the national elections are somewhere between mildly disappointed and suicidal that their candidate lost in the election, I'd like to offer a slightly different perspective, which I believe may be both disheartening, and in its own way, comforting.

While the major media, both political parties, some corporate concerns, and members of academia would like you to believe that democrat and republican politicians can be easily pigeonholed, certain historical realities would seem to belie that fact.

You are supposed to believe that democrats want big government, social welfare, and peace, while republicans want small government, free market solutions, and war. Those in power propagate these stereotypes so that they can frame the argument to their immediate advantage in order to manipulate the people into voting for the leaders they want elected. In reality, both parties are more than happy to steal, spend, and kill whenever it meets their current needs.

Since Lyndon Johnson in the sixties, democrat presidents have overseen increases in spending which were smaller than the increases in revenue, while republican presidents have done the opposite. This means that while both parties have presided over constant increases in spending and debt, democrat presidents have actually increased spending less than revenue has grown, and republicans have drastically increased the debt by increasing spending far beyond the increases in revenue. So clearly, the myth that republicans want small government and less spending isn't historically accurate.

So what about social welfare? Well, since the fifties welfare spending has steadily increased, but it really started blowing up in the seventies. Regardless of which party was in power, the government has continued to increase welfare spending at an ever increasing rate. While they would like you to think that it is only democrats who increase welfare spending, this is simply untrue. And that is before you take into account corporate welfare.

Corporate welfare includes everything from tax cuts, and economic subsidies, to direct payments, loans, and bailouts from the state to private business concerns. In recent years, this kind of welfare has equaled something close to 100 billion a year, approximately one fourth of the total yearly cost of social welfare, but recently, this amount has exploded. 20 billion dollar loans to automakers, 160 million dollar loans to insurance companies, and 700 billion dollars worth of loans to wall street have all added up to nearly a trillion dollars in additional corporate welfare this year alone, more than twice the amount spent on social welfare programs, and all under a republican president.

This really only leaves the issue of war. While liberals cry out for peace while accusing those evil conservatives of being bloodthirsty warmongers, and those on the right wrap themselves in the flag and march ever onward into the teeth of the enemy, the history of this country has far more wars begun by democrats than republicans.

While modern republican presidents did get us into Grenada, Panama, Afghanistan, and Iraq twice, the modern democrat party is responsible for entering World War I, World War II, Korea, Viet Nam, Somalia, and Kosovo, as well as limited military action in Iraq, the Sudan, and parts of Russia, Africa, and Eastern Europe. You can hardly make the case that they have some kind of special monopoly on peace.

So if both parties believe in increasing government revenues and spending and debt, increasing the size and scope of government, and engaging in multiple overseas wars, which are used as an excuse to further increase the size and scope of government and its debt, then does it really matter which of the two major party candidates was elected?

Some of you still think it does. But I would propose that the difference between Obama and McCain was only in how they defined the problems facing this country. Obama thinks poor people are being taken advantage of. McCain thinks that people need helping sending their kids to college. Obama thinks that the government should pay for your health care. McCain thinks that the government should give you money, and you should pay for your health care. Both candidates think that the government should regulate your property rights, your right to bear arms, recreational drug use other than alcohol and tobacco and caffeine, your right to buy and sell goods, and to enter into contracts, among other things. Regardless of how they define the problems facing the nation, their solutions are the same. More taxes. More spending. More government oversight. More state authority. More power, less freedom.

So if your candidate won, I'm afraid you're going to be disappointed. He won't end war, or eliminate poverty and disease and injustice. He will increase the power of the state at the expense of the people. And if your candidate lost, don't feel too bad. Things won't be drastically different under the other guy than they would have been under your guy. You'll still have socialized medicine, an ever growing welfare state, and increasing public debt. Republican or democrat, they are almost all statists at heart. That R and D stuff is just to keep you distracted.

If you pay attention to their actions, instead of their words, the whole thing becomes pretty obvious. The two parties go back and forth, eating away at your liberties from the ends without every really repairing the damage done by the other. They aren't opposing each other, they're opposing freedom and liberty and reason. They're opposing you. Both of them. Always.

The only real difference between the two parties is the bumper stickers.

Saturday, November 22, 2008

It's Just Another Movie

I know a man who is a local business owner. He owns a restaurant. One day, the city approached him in his shop and told him he needed to install a mop sink in the floor of his shop. Health code demanded it.

Easy enough. The very next day, he opened up the phone book and called a plumber to come out and install this mop sink. He paid the plumber, got his signature on some of the paperwork the city had left for him, and mailed it all of to the city. Problem solved.

A few weeks later, he received a letter from the city informing him that he was being fined four hundred dollars for failing to comply with health codes. He contacted the city and asked what health code he was in violation of, and they told him that they'd warned him to get a mop sink, and he'd failed to comply. He explained that he had in fact gotten the mop sink, and had sent in the paperwork to prove it. They told him that yes, they'd received that paperwork, but the plumber who installed the mop sink had an expired license, and so his signature was unacceptable, and so he would have to get a new mop sink installed by a licensed plumber. Finally, they told him that instead of a new sink, if he got an architect to approve the placement of the mop sink, and a licensed plumber to approve the installation of the mop sink, then they would approve his paperwork.

So he called another plumber. This man came out, looked at the sink, and said, you need a new part here, it will cost you twelve hundred dollars. The owner of the restaurant couldn't afford twelve hundred more dollars, on top of what he'd already paid to have the sink installed, so he called another plumber.

Before the third plumber could come out, he had a city health inspector arrive to inspect his business. The inspector looked at everything. His sanitation, his food safety practices, his cooking temperatures, and his mop sink, and approved. He passed his health inspection.

Later on, someone else from the city arrived and explained to him that because he had failed to turn in the approved documentation proving that he'd installed a mop sink, they were hanging a temporary public health warning in his front window. He tried to explain to the person that he had a mop sink, and offered to show it to him, but the city employee wasn't interested. The paperwork wasn't properly filled out, so as far as the city was concerned, it wasn't safe to eat here anymore.

People would arrive every day to eat at this man's restaurant, and as they approached the front doors, they would see the big yellow public health notice, and turn around and walk away. Time after time, customers who had arrived to do business with him left before even opening the door because of the sign in the window.

Then another plumber came to look at the sink. He said everything looked fine, but before he would sign the cities paperwork, he wanted eight hundred dollars for the inspection. So my friend called another plumber.

One day, someone from the city came to do a building inspection. They looked at his handicapped access, they looked at his emergency doors, they looked at his facilities, and they looked at his mop sink. Everything being in order, they passed him on the inspection.

Later on, someone else from the health department showed up and noticed the public health warning hanging in the window. They asked him why it was there, and he explained the situation. They called there supervisor, and returned to tell him that he didn't have to have the sign hanging in his window, because he was addressing the problem, so they took the sign down.

Then he had another plumber come out and look at his mop sink. This one said everything looked fine, and agreed to sign the city's paperwork. The papers were signed and delivered to the city, and for now, the problem appears to have been addressed.

But in the intervening months, how many customers turned away at his doors while the public health notice was up? How many hours were wasted by city employees, private plumbers, and this business owner while he tried to address their concerns? How much money was lost in travel expenses, unproductive man hours, and lost business?

Not because the city mandated that he have certain equipment in his business. Once they told him he needed a mop sink, he got it the very next day. Not because the city was truly concerned with public health, after all, merely having a mop sink is no guarantee that it will be used. Not because the city was concerned with compliance, because he offered to show the city inspectors where the mop sink was, and they informed him it wasn't the sink, but the signature, that was the root of the problem. Not because he was failing to meet health or building codes, because he passed his inspections.

No, all that waste was the result of paperwork being filled out improperly. You can argue that it was his responsibility to ensure that his plumber was licensed, but once the work was done, and the paperwork sent in, he believed the problem was addressed. The reality is that this kind of thing can only happen under an oppressive state authority. He needed a mop sink. He called a professional. He got a mop sink. That wasn't at the root of the cities concern.

They didn't really want him to get a mop sink. They wanted him to get a signature from someone they had previously approved. Someone who was paying them money in exchange for permission to operate a business. When it turned out that the person he'd contracted to do the work wasn't paying his protection money, they punished my friend. Not because it was his fault, but because they have a vested interest in making sure that the only plumbers who can get business are the ones who have paid for the privilege. Otherwise, no one would pay.

And so like so many other government practices, they punish the consumer for the actions of the provider. Because the plumber failed to keep his protection money current, the consumer is punished for purchasing his services.

This is the kind of insidious consequence of living under subjugation. In order to ensure that people will comply with their theft, they set enforce their demands with violence. No men with guns arrived to shut down his business, but if the city had decided to shut him down, and he had decided to stay open, you can be sure the men with guns would not have been far behind. They can't allow for people to ignore their edicts, even in the simplest things, or else no one would listen.

What if the city had shown up and put him out of business, mop sink and all, just because he had the wrong signature on his paperwork? How much would have been lost then?

For want of their fees the signature was lost. For want of a signature the
mop sink was lost. For want of a mop sink the business was lost. For want of the business the savings was lost. For want of the savings the mortgage was lost. For want of the mortgage the home was lost. For want of the home the life was lost.

For want of a nail the kingdom was lost.

Friday, November 21, 2008

Santa Claus is Coming to Town

For now, congress has closed the door on a proposed bailout of the major American automakers. Lawmakers feel that the automakers failed to convincingly argue for their need for the money, as well as describe a plan for how they would restructure their business model once they had the money so that they wouldn't have to come begging for more in a few months.

But congress didn't close that door completely. They've given the automakers two weeks to come up with a new plan. If they can, and they are “convincing” enough, then congress will consider giving them 25 billion dollars of tax payer money. Of course, that would be in addition to the 25 billion dollars of tax payer money that congress has already given the automakers, just two months ago.

So if we just gave them 25 billion dollars, and just two months later they need 25 billion more dollars, then is it now the role of government to subsidize the American auto industry to the tune of roughly 150 billion more dollars a year from now on? Apparently, the successful self reliant people of this country are now being called upon to fund not only failed individuals, and failed banks, and failed insurers, and failed agricultural industries, but we are now to fund failed automakers as well.

Part of the defense of an auto bailout is that we can't afford the loss of jobs nationwide. By some estimates, as many as 1 in 12 American jobs is dependent on the auto industry, and every day the number of proposed job losses grows by leaps and bounds. They argue that if this industry fails then America will face further economic hardship, and that we just can't allow that to continue.

So you see, it's really in your best interest to bailout these auto manufacturers. After all, we can't afford to lose jobs, or to lose the revenue generated in the economy by this industry. But what if it were the porn industry? By some estimates, pornography generates between 4 and ten billion dollars annually. It also employs thousands of people, from actors, to directors, sound and lighting technicians, camera men, internet tech specialists, delivery drivers, and store clerks. If the porn industry were to suddenly face economic collapse, and all those people were facing unemployment, and all that money was going to disappear from the revenue stream, do you think congress would consider bailing them out, even though it would require far less money to do so?

Let's pick something a little less controversial. How about video games? In 2007 the industry made close to 19 billion dollars, more than twice that of pornography, and employs roughly 25,000 people in the U.S. alone. What if this industry were to face collapse, possibly causing programmers, marketing personnel, hardware manufacturers, delivery drivers, and sales clerks to all face unemployment? What about all the boutique stores which specialize in video games? They would also face shutting their doors. What about all the online video gaming services? What about all the ancillary marketing that takes place in and around video games? Even Barack “the future” Obama advertised in a video game recently. Would the government consider bailing out this industry, even though it would cost far less than the 25 billion dollars the auto industry is asking for again? What about all those poor video game fans who would lose their sole source of enjoyment in this world?

I think we all know the answer. While congress is more than happy to bailout insurance companies like AIG, and banks like CitiBank, and automakers like GM, there is no way they are going to bailout the pornography industry, or the video game industry, or the cigarette industry, or the firearms industry, no matter how many jobs stand to be lost. It doesn't have to do with the welfare of the people, and you know it. It has to do with who has the ear of the king. And because of that, you also know that the automakers will get their money, they'll just have to wait until christmas to open their present.

The idea that a proposed loss of jobs is any justification for government subsidization of private industry is based on pure fear mongering. You could be next! You could lose everything! If we don't act, the whole country will descend into chaos and zombies will roam the streets! It's ridiculous. Remember before they passed the 700 billion dollar wall street bailout bill, you know, the one they still haven't spent a dime of, and they were telling everyone that people would be thrown out on the street, and get kicked out of school, and no one would get their paycheck next week because business used credit to pay their payroll, and your ATM wouldn't give you money? Remember how they said that would all happen if they failed to pass this bill? Well, they still haven't spent a dime of it, and yet, you still have a home, and kids still go to school, and your ATM still works, and you're still getting paid. Now that doesn't make any sense. Hmmmm.

It is the same dog and pony show here. Everyone will lose their jobs and have to start eating rock soup if the automakers go under. Baloney. People will still need jobs, so there will still be jobs. People will still need to get places, so there will still be cars manufactured and sold. Maybe these companies won't be doing it, and maybe the companies that do won't be paying as much, but maybe that means they'll have a stable business model that won't require regular injections of government subsidies to survive.

Besides which, the worker doesn't own his job, and doesn't have any specific right to be employed. The company owns the jobs. The worker owns his labor. The company exchanges a job, and monetary compensation for the labor that the worker can provide. The more difficult, unpleasant, or skilled the labor the worker is able to provide, the more money he is generally able to get in return for that labor. It isn't GM's or our government's responsibility to employ anyone. If GM has a job, and you have labor, you may enter into a contract with them to exchange the two. Just because people might lose jobs doesn't justify using stolen money to prop up a failing business so that people can do jobs for which there is no current market demand.

I'm not saying there isn't a demand for cars, clearly there is, and so there is also a demand for people who can make cars. What I'm saying is that if there was a market demand for cars to be produced under the business model that these companies are using, then they wouldn't be facing complete financial collapse. Clearly, there are other auto manufacturers who are not facing complete financial collapse, because there is a market demand for their business model. It isn't that people don't need cars, it's that these failing companies are failing to produce them in a cost effective manner.

And that shouldn't be any surprise. After all, they know damn well that they can simply appeal to the king for money whenever their purse is light. And so what if it comes off of your back, the government is going to send you a bailout check soon too, so you don't need to worry. They'll just keep printing money, and passing it out, and everything will be fine. I'm sure that'll work.

It always has before.

Thursday, November 20, 2008

Those Who Reject the Argument

Well, there you go. It took a little longer than I'd expected, and certainly some of those articles were a bit dense and lengthy, but there are the answers to the six great challenges. They are by no means exhaustive. I was trying to inspire you to think about these concepts in a new light, not to put forever to bed the questions. As I said at the beginning, the answers I've given you here are only possibilities, no one can truly say how the market would meet the demand for education, or roads, or currency going forward, because we've never been truly free of the state.

Further, I told you at the beginning that no answer would suit the committed ideologue. That is still true. Many people support the state for many different reasons, and to some, no alternative, no matter how rational and well reasoned, no matter how their interests could be served, no matter how plainly you paint the image of their suffering, could sway them to deny it.

I believe that people support state authority for many reasons, but at their most basic, I believe these reasons can be summarized in four motivations.

The first is simple ignorance. I don't meant that in a derogatory sense, nor to imply a lack of intelligence or education. What I mean to say is that most people have either never been confronted with, or never even imagined, the idea of a stateless society, except perhaps in the most limited “Mad Max” sense of the concept. It's not that these are irrational or unintelligent people, they simply haven't looked at the issues yet. These people are the easiest to reach, you must simply present the cases for and against the state, and they are able to come to the conclusion on their own.

The second reason people support the state is out of base self interest. They are getting something from the existence of the state and so seek to maintain the status quo. They are not necessarily bad people, or even greedy people, but they believe they profit in some way from the state. This can range from welfare mothers to corporate executives, there is no social class which holds the monopoly on this position. These people see their lives as improved by state action, and so will cling tenaciously to their benefactor. These people can be reached. You must simply show them in a convincing way how their lives would be improved free from theft and violence. Just as no social class is singular in their view of the state as their provider, so too is no social class unique in their suffering under the weight of government authority. We all suffer the theft of wealth from the economy. We all suffer when innocent individuals are lost to the war on drugs, or poverty, or terror. How many innovations or works of art have we lost because the government stole the wealth of those who would have created them? How many philosophers and scientists have we lost because their ancestors were killed by government violence before they were conceived? All are punished.

The third reason people support the state is fear. They are afraid of being preyed upon. They are afraid of their fellow man. They are afraid of responsibility. They are afraid of being self reliant. They are afraid of being unique. And so they turn their sovereign authority over to others. I've heard people say “humanity isn't ready to be free from subjugation.” I've heard people say “If I had a gun, I know I'd be irresponsible with it, so you shouldn't have one either.” This kind of thinking is irrational. They are so confined by their fears, that they blindly accept oppression and domination for some measure of perceived security. These people will be far more difficult to convince, because their position is not based in logic. You can't argue or educate or enlighten them out of this hole. You can attempt to show how their security would be vastly improved, and you can attempt to address the root of their fear, but since they are constrained by emotion and not reason, there is only so much you can do for them. We must teach our children to act on logic, not on feelings, this is the only way we can someday address those who would sacrifice everything, and everyone, to their passions.

The final reason people support the state is simple evil. They see the state as a means of gaining power over others, and they pursue that means as far as they can. They relish in the ability to crush hope and life and justify it all by hiding behind the morality of the majority. It's ok to hold slaves, because everyone agrees, except the slaves of course, but they don't get a vote. It's ok to put people in prison camps because we were elected to defend the nation. It's ok to imprison millions of non violent Americans because most people don't agree with their hobbies. Like sadists, these people find gratification in the suffering of others. They can not be reached. They are beyond reason, beyond emotion, and beyond compassion. There can be no compromise with evil.

I don't mean to imply that everyone who supports vice laws or terrorist internment or other forms of government oppression are evil. I believe that like all support of the state, their behavior can be generally ascribed to the four previous motivations. Certainly some are evil, but some are afraid, or gain from the system, or simply don't know any better.

I believe that most people fall into the first category, with the majority of those remaining falling into the second. There are a small amount which fall into the third, but they are mostly individual beneficiaries of state action. The fourth category is the most vile, but also the most limited. There are very few people, even amongst our government, who are truly evil. The woman working at the DMV, though she supports an oppressive idea that your property must be licensed and registered with the government, and that by extension you only own and operate it with their permission, is not an evil woman. She wants what most people want, to feed their family and pay their bills. She doesn't see that her paycheck comes from money stolen from her neighbors, and if you pointed it out, she'd say, “Well that's just tax money.” Just tax money. People say it everyday as though that justifies everything.

Even those charged with using violence on behalf of the state, law enforcement and military personnel, are not generally evil. They believe as they have been taught. That they are the protectors. That they are doing right. That they stand against evil. And often they do. When a cop kills a murderer to defend the innocent, he has stood against evil. But when he pulls a person over for failing to display their license plates, arrests that person, impounds the vehicle, and writes the person a fine, he has done evil. He doesn't know it, and wouldn't see it, but it's there none the less.

Most people can be reached. You must simply sit down with them, listen to their fears, and explain the situation. They don't always come around immediately, but if they are objective and honest, and seek truth above all else, they will eventually. There is simply no other logical consequence. Only those blinded by emotion could come to any conclusion other than a stateless society.

If uninstigated violence is inherently wrong. If theft is wrong. If slavery is wrong. If man has the right to create his own life with his own hands, free from the oppression of others, than there is only one solution. Half measures are a compromise with something we know to be wrong. There can be no justification for rape and murder, no matter how dire the consequences, nor how mitigated the act. If evil is wrong, than any evil, in any measure is equally so. There can be no question of degrees where upon doing evil becomes doing good. If we are truly to be free, we must be wholly free. We must put aside any state, and all states. One may be better than another, but none are truly righteous. Only individuals, in a perfect state of freedom, oppressing none, can be truly righteous.

We can be truly righteous.

Wednesday, November 19, 2008

The Scale of Economies part IV

Well, there is actually ample historical precedence for how this would be accomplished. When credit cards first achieved widespread usage in America, there were no stores accepting them. The credit card was invented before there were signs in every window proclaiming “We accept all major credit cards.” How was this possible? How could a private means of exchange become liquid?

By the provider of that means of exchange offering certain benefits to merchants willing to accept it. In this case, credit card companies offer guaranteed payment on debt, and simplified transactions. They even offer the less obvious benefit of encouraging customers to spend more money than they may otherwise by divorcing the expense from the point of sale. Because of the money illusion, customers are more willing to swipe their card for one hundred dollars, and send a hundred dollar check to the bank later, than they are to remove five twenty dollar bills from their wallet for the same purchase.

These may not seem like incredible benefits to you, but look around. What major company doesn't accept credit cards these days. By offering a few simple and inexpensive benefits to merchants, credit card companies have convinced nearly everyone to accept their private means of exchange, and even to pay a fee to do so.

Private currencies could do the same. They could offer benefits to merchants such as, guaranteed exchange in any currency of the merchants choice for their currency, or even offering to discount their currency to merchants who agree to accept it by 1%. While that may not seem like much, imagine what a business could do with a 1% increase in operating funds over the course of a year. The company providing the currency would make the expense back when everyone decided to buy and use their currency because of the vast number of merchants willing to accept it.

Merchants either accepting or requiring a variety of different currencies wouldn't be a major burden on the consumer either. Consider that regardless of your individual bank, all companies that accept checks will accept your check. This isn't because they know your bank and have an agreement with them specifically. It's because banks have agreements with each other to honor debts and credits. This is done through clearing houses who oversee the financial transactions. This system would continue to exist.

And if you used automatic deposit and withdrawal from your bank account? Banks that wanted your business would offer services where they would convert your currency to the currencies accepted by your creditors at the most favorable exchange rate to you. Any bank that didn't offer this service would run the risk of losing their customers to one that did.

So liquidity isn't really an issue either. Private local currencies, such as the Ithaca Hour, have no problem encouraging local companies to accept them as means of exchange. In fact, companies are happy to do so, because it increases their business and frees up other forms of currency for trade outside the community.

What other concerns do people have, now that we've addressed fungibility, liquidity, and stability? Well, what if the company providing the currency goes bankrupt? Would that leave the bearers of their currency penniless?

Any reputable private currency company would make their business and management practices open to the public and highly transparent. Any company that didn't would automatically be viewed with skepticism and avoided by most customers. In fact, some private currency companies already do this and as a result, the well managed companies are able to increase market share and stability. If consumers saw their currency provider struggling, they would have an incentive, and more importantly an opportunity, to take their business elsewhere. An opportunity you don't have under the current fiat money system.

Additionally, competitors who recognized a failing currency provider could offer incentives to his customers to move over to their currency, such as offering to exchange his currency for his competitors at 105% value. Customers would be only to happy to switch over to his currency for a 5% increase in their holdings. Again, this already happens between banks who offer financial incentives to their customers to close their checking accounts with their competitors and open new accounts with them. These aren't ground breaking concepts, their already in practice.

In reality, private currencies already exist in the form of private credit cards, checking accounts, local currencies, and electronic money transmitters. These are real private means of exchange, they just aren't generally thought of in those terms. They aren't a fairy tale or a myth, and the systems for their viability are already in place. The only real difference is that most of them are backed by fiat money instead of real commodities, and that change would only be for the better.

Governments don't want private currencies because in order to be viable they would have to be stable and resist inflation, and that doesn't allow for them to steal the wealth and leave the people empty handed. So they want you to be scared. Hopefully now you're less scared and more equipped to consider the idea of private currencies and stateless economies. Hopefully you can now take a rational view of how they would work, and what you stand to gain. Hopefully now you have begun to think about what you want in a currency, and who's offering to fill your market demand. Once we educate the uneducated, only the truly evil will stand in the way of rational thought.

That will be the easy part.

Tuesday, November 18, 2008

The Scale of Economies part III

The most common objections people have to private currency are fungibility, liquidity, and stability. By showing how private currencies can address these three fears, we are able to put to rest the reasoned objections to the idea, leaving us with only the blind irrational fear of the uneducated, and the malevolent self interest of those invested in the continuance of the state system, to overcome.

Fungibility is the property of good or commodity whose individual units are capable of mutual substitution. What this means is that any one unit of a commodity is equal in value, and can be traded for, any other single unit of that commodity. For instance, one united states penny has the same legal tender value of any other united states penny, or one barrel of oil has the same current value of any other barrel of oil. On the other hand, precious stones, such as diamonds, are not generally fungible, because one diamond is not the same as another diamond.

Fungibility has nothing to do with the trade value of the commodity against other goods and services. That is liquidity. An asset is liquid if it can be easily traded for other dissimilar assets without varying to any great degree the value of the assets being exchanged. For instance, a five dollar Federal Reserve Note has high liquidity because it can be traded for a great number of varying assets, such as McDonald's happy meals, without changing the value of either the five dollar note, or the happy meal.

Assets can be fungible, or liquid, or both. A mass produced plastic fly swatter may be fungible, but good luck trading it for anything of value. At the same time, while livestock can be easily traded, no two animals would be considered fungible.

Stability in this case refers to the property of a commodity to maintain a relatively predictable inherent value over time. With money, this is achieved by backing the currency with real asset and making that currency redeemable on demand of the bearer for is value in that currency. Currently, no major world economy practices this, which is why we have global economic upheaval, fluctuating exchange rates, and market inflation.

Generally, buyers of currency want their money to be fungible, liquid, and stable. That means that units of the same value are interchangeable, that the currency can be easily traded for real assets, and that the value of their currency will be relatively predictable going forward, allowing for real asset management. No widely held currency on this earth currently meets all three criteria. Most are fungible, many are liquid, and none are stable. So in discussing the possible pitfalls of private currency, we must first recognize the problems that exist with the “monopoly” money we use today.

By buyer of currency, I mean the individual. Any time you accept currency in exchange for goods or services you are in effect purchasing that currency. So, when you sell your used car, you are buying currency at the price of a car. When you collect interest on your savings account, you are buying currency from the bank at the price of allowing them to hold and invest your money for a short period of time. When you collect your paycheck, you are buying currency from your employer at the price of your time and labor. You are not a passive receiver of money. You are in fact, the purchaser of real asset, and as such, have a right to demand that that asset have and hold real value.

The reason its important to understand about your role in purchasing currency is because the makers of it, in this case central banks, understand their role in selling it to you. In fact, they make money doing it. Not only does the central bank make money by selling the money to the government, but when you purchase that currency yourself they stand to profit. For instance, if you collect the U.S. State quarters, then every time you buy one, but fail to spend it, the mint makes a profit. They count on this. Its called seigniorage. The government estimates they've made more than $5 billion dollars just on the state quarters that have been removed from circulation by collectors. Isn't that nice. Its like a secret little tax no one knows about that they use to increase revenue. A lot like a secret little tax no one knows about that they use to increase revenue.

So how could private currency address fungibility, liquidity, and stability? Well, fungibility is relatively easy. By printing consistently identical currency, and backing that currency with a commodity of real and sustainable value, such as precious metals or fossil fuels, each unit of currency will have the same relative value and can be easily interchanged. Stability is similarly addressed by the same measures.

When a currency is backed by, or even made of, a real commodity of consistent value then that currencies value will also be consistent. This is why historically currencies were either made of, or backed by, precious metals which hold a constant value by weight and purity. Unfortunately for the state, this made it hard to uncontrollably increase the money supply in order to fund the many wars they wished to participate in, and so they divorced the currency from its commodity backing and left it to “float.” The reason governments can get away with this is because of the money illusion.

The money illusion refers to the tendency of most people to think of their money in nominal terms instead of real terms. For instance, many people would say that there is no nominal value difference between a five dollar bill now, a five dollar bill ten years ago, and a five dollar bill eighty years ago. However, the reality is that in the last eighty years, the five dollar note has lost so much value, that what was five dollars then would cost you nearly sixty dollars now. Here's a quick little calculator to show you how worthless your money has become. By disguising the devaluation of the currency through inflation and seigniorage, and relying on the money illusion, the state is able to hide its theft from the people.

So private currencies could easily address fungibility and stability by backing their value with commodities. For that matter, so could fiat currencies, but then they wouldn't really be fiat currencies any more, and the state couldn't print them in any quantity they desired to fund their violence. So liquidity is the real concern.

How could private currency issuers insure their buyers that the currency would be accepted as means of exchange?

Monday, November 17, 2008

The Scale of Economies part II

Let me ask you a question. Go back to the nightmare scenario where you are starving to death, cold, alone, and in the dark. Someone approaches you and offers you food, shelter, clothing, and electricity, in return for your time, your labor, or some physical commodity you do possess. Would you be willing to discuss terms of exchange, rather than suffer and die?

If the answer is yes, then you are already on the path towards understanding how a stateless economy could work. If the answer is no, and not based on fear, or ignorance, or pride, but really truly objectively no, and you would rather suffer and die than engage in commerce then I have bad news for you. No system, with or without a state can help you. Your self destructive behavior will bring you only ruin, and you will accomplish nothing with your life.

For the rest of you, you have already grasped the basic tenant of commerce. I have something you need, I need something you have, and we trade. It's uncomplicated and rational. I explained in my post on Fiat Currency about the coincidence of wants and the need for intermediate forms of exchange, so you already understand why currencies exist. The question now is how currencies exist, and how they could exist free from the state.

While the government maintains its violent monopoly on the printing of currency, several independent organizations have attempted to introduce their own private means of exchange. Ithica Hours, Toronto Dollars, and Calgary Dollars are all examples of private local currency. These currencies are used by community businesses to buy and sell goods amongst themselves. Any company who agrees to accept these currencies as legal tender may, even if they are from outside of the community, but since most of the businesses currently accepting them are locally owned and operated, most of the currency is reinvested in the local economy.

Other forms of alternative currencies include electronic currencies such as PayPal, which buys liquid currency from one user in exchange for electronic credit, and sells that currency to another for a fee, and Mon€o, which allows users to convert French currency into electronic currency and then spend that at retailers, who can then convert it back to French currency. These types of electronic currency are essentially backed by the locally traded Fiat Currency, but exist as separate means of exchange. There exist also a number of companies which offer digital gold currency. This type of currency is similar to representative gold notes which are redeemable to the bearer on demand for an equivalent amount of gold in grams, troy onces, or on occasion dinars.

I give these examples in order to illustrate a simple point. Alternative currencies are a reality. They have existed in competition to national currencies, they exist now, and they would thrive in the absence of legal tender laws and government monopolies. Legal tender laws historically exist to force people to accept money that they would not if free from coercion.

On their own, sellers would never accept valueless currency over valuable currency. Instead, valueless, or “bad,” currency would disappear from circulation and only valuable, or “good,” currency would be used. It is only when governments enforce legal tender laws that buyers accept bad currency. Under legal tender laws, bad currency drives out good, because sellers use the bad currency to purchase goods while hoarding the good currency, and buyers have no choice but to accept it. Meanwhile, the good currency may have greater intrinsic value than face value, and so can be traded against its intrinsic value instead, or traded internationally at greater than face value where legal tender laws may not have jurisdiction. This is called Gresham's Law.

It is specifically because of Gresham's Law that governments attempt to prevent the printing and pressing of private currencies. They know that their currency could not possibly compete with real commodity backed currencies, so they force buyers to accept their bad currency by law, knowing that in so doing they will push good currencies out of circulation.

But even in the face of government raids, legal tender laws, and a coercive violent monopoly, alternative currencies are spreading. The internet is being used to further the creation and use of electronic currencies. Communities are using their own local currencies concurrent with, or even instead of, fiat currencies. More and more people are trading energy, precious metals, and commodities for goods and services. And this is all because people know that the fiat currency is garbage, and they wish to trade value for value. Even when the state tries to prevent it, the market seeks fair trade. Value for value.

So, knowing that alternative currencies exist, and knowing what we desire in an alternative currency, how could the market provide them? How could they address people's fears of fungibility, liquidity, and stability? How could banks simplify exchange between competing currencies? How could buyers and sellers make sure that they avoided the coincidence of wants problem by always trading in common currency? Well, there are answers to these questions, but before I lay them out for you, consider the situation we have now.

People all over the world use different currencies. How do international banks make sure that international debts are payed in the proper currency? How do border towns conduct business with migrant customers? How are sellers able to accept a variety of major credit cards for the same good or service? How does your local pizzeria accept your check regardless of what bank it is written against? How do online sellers do business with people all over the world? Perhaps competing currencies work better than the man with the gun would like us to believe.

Perhaps it would work after all.

Sunday, November 16, 2008

The Scale of Economies part I

When people are confronted with the idea of a society devoid of government, they inevitably ask how the economy would work. How would people purchase goods and services? How would those goods and services be produced? How could people have faith in any monetary system which wasn't universal and monopolistic? How could competitive forms of currency be accepted consistently by varying businesses as means of exchange?

It's easy to understand how this kind of question can be raised. First of all, many people have little or no education in economics. I'm not saying they're stupid, or that their question is stupid. I'm just pointing out that they may have never been instructed in some basic ideas about markets, competition, and currency. Think back to your education. How many classes did you take in high school that dealt specifically with economics? What instruction did you receive, even in basic household economics such as budgeting, and balancing credit and debt? How many college courses were you required to take which addressed free market economics? What did they teach you in school about the gold standard, commodity based currencies, planned economies, supply and demand, or basic business structure?

Unless you chose a career in accounting or business, your formal education probably didn't include much about these topics. I know mine didn't. Even if you went into finance, you probably only learned a little about economic topics not directly related to your specific field of expertise. That's why I say it's easy to understand why people would ask these questions. For most people, their understanding of money, and it's role in their lives, is limited mostly to their day to day financial concerns. And that's what lies at the root of this question.

When people ask how an economy would work absent state oppression, they are asking a question which on its own may determine their position on voluntarism. What they are really asking, at its most basic, is will I survive. Will I be able to buy food? Will I be able to heat my home? Will I be able to even pay for shelter? Clothes? Much less other services such as education, transportation, and entertainment? What they are asking is, if the state disappeared, would I be able to survive, or would I die starving to death, alone and cold in the dark?

Fair question. Fortunately, the answer is that yes, you would survive. In fact, the quality of your life would improve dramatically. Freeing the monetary system from the currently established violent state monopoly would introduce more value, greater reliability, and more stability to all forms of currency. In a number of ways it would lead to both an improved quality of life for everyone, and a more efficient means of exchange, resulting in less waste and more purchasing power.

I've already established that our currency is worthless. It's backed by nothing, accepted in trade only because of the threat of violence, and has actually lost the vast majority of its theoretical value since its inception. In addition, the government has gone to great lengths to stamp out any perceived attempt by private individuals or groups to set up a competing form of currency. They have also attempted to teach in their government schools that un(state)regulated forms of currency and banking lead to chaos and suffering.

But the reality is actually quite different. Free banking, or systems of private currency and banking, benefit from the positive effect of competition which exists in any market system. In fact, an objective look at the history of free banking, will show you that while the systems were effective, it was repeatedly government intervention in the market system which led to bank and currency failures. When the government put laws in place which gave banks legal protection to change interest rates in violation of their customer contracts, they did so. Many of the concerns raised by people new to the idea of competitive currencies, such as would competing banks accept each other's currencies, have in fact already been encountered and addressed successfully.

But before we get too far ahead of ourselves, we must establish what it is that makes money uniquely important, and what features and benefits we would want to see in our currency. Remember, features are something a product does, and benefits are something a product does for you. Since under a free market system of banking and currency money would be bought and sold and subject to the same forces as any other good or service, providers would have to cater to us, the customers. So as a customer, what would I demand in order for them to secure my patronage?

Well, the value of money is that I can use it as an agreed upon basic unit of exchange to enter into commerce with a wide variety of individuals, offering a variety of goods. Instead of only trading the chickens I raise on my farm for everything I need, I can simply trade those chickens for units of currency and then trade those units of currency for the things I need. That way, I'm not prevented from acquiring milk just because the dairy farmer is a vegetarian.

So, understanding the importance and role of money, I would want money which was easily portable, widely accepted, held its value over time, and could be exchanged on demand for real asset. Not everyone will have the same criteria for their currency, and so competing currencies will inevitably arise. Some may wish their currency to be environmentally friendly. Some might wish it to be aesthetically pleasing. Some might wish it to be backed by specific industries or accepted internationally. Ultimately, it isn't important. Where there is a demand for a service, the market will meet it.

What we need to do is examine some ways that demand could be met, and how the consumer could protect himself from fluctuations in the marketplace. While opponents of free banking and alternative currencies will always resort to scare tactics and appeals to emotion, we must instead appeal to our rational selves, and seek the truth of these matters.

Please allow me to present you with my two cents worth.

Saturday, November 15, 2008

Those Poor Unfortunate Souls part II

In 1991, private citizens gave roughly 300 billion dollars worth of charitable donations, both in time and money. That included approximately 42% physical resources and 58% donated time. The same math gives us a total of nearly 700 billion dollars worth of resources donated in 2006. By comparison the American government spent approximately 1.3 trillion dollars on welfare in 1995, both through direct benefits and tax credits, roughly 20 percent of GDP. In 2006, the percent of GDP was roughly similar, but the growth in GDP in the United States resulted in that twenty percent increasing to roughly 2.6 trillion dollars in welfare expenditures.

So while the government stole and redistributed approximately 2.6 trillion dollars of private assets, individuals donated nearly a fourth as much on their own, free from government coercion, even after as much as 70% of their nearly worthless money has already been stolen from them.

But there is evidence that government subsidies to private charities actually decrease individual donations. This occurs for two reasons, one, private individuals are willing to allow their seized tax monies to replace their charitable giving, but also, charities reduce their fund raising efforts after receiving government grants. So when the government gives money to charities, it decreases the amount given by individuals.

And what about the people who are receiving money from the government? While there is some evidence that approximately 18 percent of welfare recipients move out of poverty within one year, studies show that more than twice that percentage amongst the poor not receiving welfare are able to do so. When left to their own devices, people are forced to find ways to survive. The majority of those who receive government welfare, more than 80% of them, do not move out of poverty.

One reason for that is the welfare trap. A person receiving welfare has an incentive to stay on the dole. People don't like the argument, and some will argue that it's cruel to point it out, but the reality is that in economics, you get more of what you subsidize, and you get less of what you tax. Welfare creates a perverse incentive, where some recipients are arguably better off to stay on the dole than to attempt to join the workforce.

Not all will feel that way of course, but the maximum amount of possible benefits ranges from $11,000 to $36,000 in some states. Those benefits can include housing, food and food stamps, utility subsidies, and even clothes, transportation, and a variety of other services. Not all people will be eligible for all benefits, and not all those eligible will elect to take advantage of all the services offered, but some will and many could. And those benefits are tax free.

So why would a person who was receiving between ten and forty thousand dollars a year, tax free, for doing little or no work at all, choose to get a minimum wage job working forty hours a week making less than $12,000 a year after taxes? Perhaps because they have pride. Perhaps because they see it as an opportunity to get ahead. Perhaps they see it as the start of a new life where they can move up from an entry level position through hard work and promotions. But perhaps they don't see the incentive at all. And that's why many of them, once on the dole, stay on the dole.

Private charities on the other hand are in a much better position to see to private needs. If a person on the dole has their car break down and can't get to work, the government will tell them to wait until their next check comes in. A private charity on the other hand, could give them money today to get it fixed, or pay for a taxi, or give them a new car. They are able to diagnose and address the need immediately, while the state can only incorporate them into their bureaucracy. Under the state, some will be helped, most will be hurt, and all will be oppressed.

I come from the teach a man to fish school. Even toiling under oppression, people are willing to do what they must to survive. Those who support the state as the solution to perceived social injustices believe that they are doing people a favor by adding their names to the welfare roles. I believe that we would do people a greater good by encouraging them to become self sufficient. And we could. And when we did, there would be far fewer people in need of real aid. And those in real need could receive it.

I've already shown how a stateless society would do a better job of educating the people, and education is an important part of staying out of poverty and off welfare. In fact, a study from 1992 showed that more than two thirds of welfare recipients had the lowest levels of literacy, well below that of unskilled laborers. Additionally, victims of child abuse are more likely to be on welfare later in life, and I've shown how a stateless society can address psychopathic behavior and reduce violent crime. Already we can see how the number of those applying for assistance would decrease in the absence of the state. But would charitable giving increase in the absence of the state? I believe it would.

And there's evidence to support that belief. For one thing, when comparing people with similar incomes, those who work give more than three times as much as those who receive government assistance, even though they have roughly the same expendable income. For another, those who believe that the government does not have a responsibility to take care of those who can't take care of themselves are 27% more likely to make charitable donations than those that do. The reality is not that people who don't support social welfare are selfish, or cruel, or uncaring. It's provably the opposite. They believe that charity is important, and should be the responsibility of individuals, not governments. Accomplished not through theft and violence, but consciously and freely given.

So once we reduced the number of people applying for charity by improving education, health, and opportunity, while decreasing violence, crime, poverty, and disease, what would we be left with? Well, there would still be some who through no fault of their own became mentally or physically disabled. There would undoubtedly be others who chose a life of poverty. I believe that the $700 billion dollars we already give would cover those truly in need, without even taking into account the increases which would occur in the absence of the state. When their money had more value, and 70% of it wasn't being stolen from them, people would be more willing to give to charity. So could a system with fewer hungry mouths and more to go around support those truly in need?

The answer is yes. And it wouldn't rely on violence and theft to do the job. No matter the need, there can never be a justification for inflicting suffering on one person so another person can benefit. That yellow brick road leads to evil. We tiptoe down it, thinking one step at a time can't hurt. But the reality is it hurts not only the person we intend to suffer, but also the person we intend to help.

Able bodied people can and will find ways to survive. The truly unfortunate can and will find help in the charitable acts of their neighbors. We need to find a path to humanitarianism which does not sacrifice the rights to life, liberty, and happiness of some for the sake of others. The dogs of society will howl, but we have to ignore them.

We have to decide where our future lies.

Friday, November 14, 2008

Those Poor Unfortunate Souls part I

Only a monster could be confronted with the amount of suffering we see in the world and not be moved. Poverty, sickness, death, crime, man's inhumanity to man. In the face of such things, most people are stricken with a great sense of loss, and helplessness.

Often, when confronted with the idea of a stateless society, people fear that the weakest amongst us would be left behind. Children, the disabled, those barely able to achieve subsistence due to poverty or disease. Regardless of what group of people you are most concerned about, they are the unfortunate. Those who, either through some unfortunate twist of fate or through their own missteps, have fallen by the wayside. Perhaps they have become wards of the state. Perhaps they exist only due to the efforts of charity. Perhaps they have lost everything and slipped through society's cracks, and live now homeless and hopeless, waiting only to die.

Most people are caring individuals, who want little more than to feed, clothe, and shelter their families, and be able to enjoy some measure of peace and freedom in their lives. When they are confronted with the idea of the unfortunate, they see in these sad examples their own mortality. How often have you heard things like, “What if it was your sister,” or “I can't imagine having to live like that,” or, perhaps darker, “Better him than me.”

It is their immediate and visceral reaction to empathize on some level with the unfortunates. They see that part of their humanity which all people share reflected in these poor souls, and feel fear. It is understandable. To do otherwise would reveal them to be uncaring.

And so, having never before entertained the idea of an alternative to the state to address the unfortunate, they fear for them and by extension for themselves. What would happen if the “safety net” of the state wasn't there. What would happen to these poor souls without the state there to help them out of poverty, to help them out of sickness, to help them recover from disabilities or at least to exist with them, to help sick children recover? What would happen if the same fate were to befall us? Who would be there to help?

First, you must consider the question. If a person is really, honestly concerned with the well being of the unfortunate, then they are already presenting the solution to their own problem. The unfortunate have always been, and will always be, on the receiving end of charity and benefaction. Those who truly care about others will see to their well being. The other alternative is that the person presenting the challenge doesn't really care about the unfortunate and is simply arguing the point, in which case they are hypocrites who are attempting to obfuscate the situation by raising concerns they don't genuinely hold. So, if you are presenting this challenge, then ask yourself, do I care about the well being of others, or am I simply antagonistic to voluntarism and really couldn't care less about my fellow man? I'll not judge your response, but understanding your motivation will help you to define your position.

I choose to assume that most people who raise this objection are genuinely concerned with their fellow man. They legitimately care about what happens to the weakest amongst us, and want what's best for them. If I am right, and what's best is their concern, then it is incumbent upon us to determine what is really best.

In order to do that, we will look at how private and public charitable acts work. What is their effectiveness? How many people are helped, and how successfully?

It is my position that people are helped best when they are helped just enough to succeed, but not so much as to encourage them to become dependent on the assistance to the exclusion of their own action. They should be taught to be free, not kept in perpetual bondage. A slave need not fear for shelter or food, because his master will wish him to be strong enough to work. A free person must effort his own existence, but in so doing will find opportunities far beyond those offered in subjugation.

So, does government create a system which encourages self reliance, or does it create a system which encourages reliance on others? How are private and public systems of charity funded, and which use their funds to greater effect? These are the kinds of questions we must answer in order to determine what is truly best, not only for the unfortunate, but also for ourselves. Remember, it is our own fear, our recognition of our universal humanity, which drives our empathy for others. It is in our own best interest to aid them, not in any way we can, but in the best way we can.

Are we?

Thursday, November 13, 2008

Educating the Children part III

The average cost per student to the government schools is often quoted as being somewhere in the range of $8,000 dollars per year. However, this figure only considers direct spending on student instruction, and fails to account for the associated costs of infrastructure, including future pension obligations and administrative costs. In some districts, once adjusted for these considerations, the cost per student is tripled. In D.C., the average cost per student is nearly $25,000.

By comparison, the average tuition cost of private schools is less than $5,000 per student. And already 11% of America's children are being educated in private institutions, even though their parents are already paying for them to get a “free” education from the government.

In fact, while the government schools are failing our children, private schools are succeeding. But that isn't the concern raised by most people. The concern you hear most often is that private schools are only for rich people. This however, is also patently false.

If you research the government school system in America, you will find reference after reference touting the benefits of universal “free” education. Think back to our discussion about the roads. The schools are not “free.” We can easily see that it costs as much as $25,000 dollars to educate a student in some government schools, where do you think that money's coming from? It's coming from the taxpayers. It is privately held asset, seized through force, and directed towards a service many people will never use.

I've already pointed out the cost difference in educating children in government versus private schools. The reality is that private schools spend far less to educate students than do government schools. Part of the reason people are afraid they can't afford to privately educate their children is because of the burden put on them by government.

In order to afford the ridiculously inflated cost per student in the government school system, the government must spread that cost across the entire taxpaying base, not just those who have children currently attending the schools. That means that many people who don't use the schools are paying for them anyway, and in order to educate your children privately, you must in effect pay twice for their schooling, once to the government, and once to the private school.

Often people argue in favor of taxation by pointing out that you get something in return. But my parents pay taxes to fund the government school system and their children are not in it. I pay taxes to fund the government school system and I have no children. You may argue that we all benefit from a well educated youth, and I would agree, but we've already seen that the product of the government school system could hardly be considered well educated.

Think of it this way. If I mug you on the street, but in return I give you a poorly crafted hammer, does that justify my crime? Is it ok to steal as long as you give something in return, even if that item is of poor quality, was never asked for, and may never be used? The answer has to be no. Yet that kind of logic is used to support taxation to pay for government schooling.

In reality, if you eliminated taxation and the government school system, there would still be a need for education. There always has been, and as you have seen, that need has historically been fulfilled in the absence of government intervention. The concern about cost exists in part because families are having to pay twice for private education, and in part because there is no perceived need for low cost private schooling for low income families. After all, they can attend the “free” government schools.

But where there is a need for low cost private schools it is being filled. In economically depressed parts of the country, there are still private schools, and they charge some of the lowest tuition rates in the country as a reflection of the local economy. If the government school system was abolished, there would be an immediate rush to fill that void with a wide range of schools offering different services at different prices.

Look at it this way, not everyone eats at Red Lobster. Not everyone eats at The Four Seasons. Not everyone eats at McDonald's. But everyone eats. Entrepreneurs have filled every market niche in food service, because there is a need. And they have established a menu of prices and services to fit every economic level.

It would be the same in education. Private schools cost less than you think. There wouldn't only be schools for the rich, because the poor have money to spend as well, and someone would find a way to offer a service to them, at a lower cost, and yes, possibly a lower level of service, which they could afford.

Before you argue that that means only the rich would get the good education, I must remind you of a few things. Right now, the government school systems use force to fund a poorly performing system which graduates one in five functionally illiterate pupils. In the absence of government, there would be far less poverty than there is now, resulting in far more people being able to attend more expensive private schools. The cost to the average consumer, to attend a good private school now, is less than $5000 per year. In the absence of the state, with valuable currency and no taxation, in a system where schools truly had to compete and parents weren't paying twice for their children's education, $5000 would be easily affordable.

And there would be schools which charged far less than that. All those students who are currently attending the “free” public school system would still need an education. Schools would rise up overnight rushing to fill the need of the consumers. This always happens. Remember when everyone got excited about low carb diets, and suddenly every restaurant was offering burgers wrapped in lettuce and every grocery store had lean chicken and low carb frozen entrees? When the market perceives a need, it fills it. In a variety of ways, at a variety of costs, it finds a way to get every consumer it can to buy every product they can. That's how the market works. It works in food service. It works in transportation. It works in communication. It works in education.

If we're smart enough to let it.

Wednesday, November 12, 2008

Educating the Children part II

Prior to the institution of government schooling in America, there was near universal literacy. In 1840, nearly 97% of the free adult population could read and write. Additionally, between 55 and 70 % of free school aged children were attending private academies. Another 20 to 30 percent were still being educated at home at that time. The overall rate of education for free people in America was roughly 75 to 99% by region. This was prior to government schooling.

It was around this time that the States began to separately legislate compulsory schooling. At first, the laws only required that students attend what we would today consider “elementary” school, and allowed for private schools. Over time, and under the banner of “common education for all,” states attempted to outlaw private schools all together, allowing for a government created monopoly on schooling, but in Peirce v. Society of Sisters, the Supreme Court ruled that free citizens had the right to determine the course of their children's education, although the more basic question of whether or not the state had any right to compel education was not addressed by the Justices. In fact, the appellants argued that,

No question is raised concerning the power of the state reasonably to regulate all schools, to inspect, supervise and examine them, their teachers and pupils; to require that all children of proper age attend some school, that teachers shall be of good moral character and patriotic disposition, that certain studies plainly essential to good citizenship must be taught, and that nothing be taught which is manifestly inimical to the public welfare.

But perhaps we should raise that question. With the advent of compulsory education, the government was now able to use their monopoly on education as a tool with which people could be trained, coerced, and punished. White legislators denied funding for black schools, and even poor white schools in the south. In the north, where the local governments saw fit to educate their black citizens, literacy amongst black people was significantly higher.

Further, while they claimed that their interest was in promoting literacy to boost the economy, we have already seen that literacy was near universal prior to compulsory education. In fact, from the inception of compulsory education to 1993, functional literacy had fallen by between 30 to 50%. Roughly half of adults surveyed were barely able to fill out basic information about themselves on a form, find and interpret simple phrases from short passages, or do basic single digit mathematics, “using numbers that can be easily located in printed material.”

So if in fact, the stated goal of government provided compulsory education is literacy, they have failed miserably. Worse, public schools have become a breeding ground for juvenile crime and violence. In 1999-2000, 71% of schools reported some incidences of violent crime, with 20% of public schools reporting a serious violent crime such as rape, assault, or murder. The frequency with which students at public schools reporting being the victim of violent crime is nearly 50% higher than that of their private school classmates.

Government schooling, which was pitched as an effort to increase the educational level of the people, has clearly had the opposite result. Rates of functional literacy have lowered, basic knowledge and skills has decreased, and scores on standardized testing have actually fallen, as reported by the government itself. Either we are to believe that the state truly has our best interests in mind, and they are completely incompetent and so we must seek alternatives, or we are to believe that this is a systematic attempt to dumb down the education level of the proletariat, making them more dependent on the state and less likely to seek their own freedom. Either way, the results are clear, and so too must be our actions.

Poor education leads to poverty, crime, sickness, depression, and death. A good education is no promise of freedom from these things, but it gives a person a better chance going forward. So how can we get a good education, and how much would it cost?

How much is government education costing us now?

Tuesday, November 11, 2008

Educating the Children part I

Many consider the education of the future generations to be one of the most important responsibilities of any society. I have already shown you that education leads to less crime and less poverty. It can also lead to less sickness, less depression, healthier marriages, and longer lives. Even pre-school education has a proven positive net effect both on the individual and on society as a whole. It would seem irrefutable that education is the foundation on which any successful thriving society must be built.

Perhaps that is why so many, when confronted with the idea of a stateless society ask, but what of the children? How would they be educated? Who would fund their education? Without compulsory education, how could we be sure they would receive any at all?

It is the fundamental duty of society, in the eyes of many, to provide for the education of the young, and without the constant threat of state violence, how could we possibly fulfill that duty? That is what I hope to answer. I will provide you with some evidence of how education was provided before compulsory government education, and show you how it is provided now. I will offer some ideas of how it could be provided in the absence of the state, and some on how it would be funded. It is my hope that even if you fail to fully accept the ideas I will present, you will at least be opened to the idea that the government is not the only answer to the question of how education can be provided, and that in fact, it is a poor provider which has failed our children in every way.

I have already conceded the need for a good education. Even the very poor education which our children receive under the compulsory government school system can be shown to increase longevity, wages, and mental health, and decrease poverty and incidences of destructive behavior. I will not argue against the positive role education plays in the lives of everyone who is blessed with it, nor will I effort to convince you that anyone would be better off without it. Some would argue that education isn't for everyone, I strongly disagree. Regardless of the career path a person chooses, be they inventor, author, or garbage collector, an education can only serve to improve their quality of life. Certainly, the world needs garbage collectors, but I would rather live in a world where they are well read men of reason. No one's quality of life is diminished by expanding their mind and increasing their potential.

The fear that without the state many would go uneducated is based in large part on faulty reasoning and fear mongering, both of which I argue are encouraged and propagated by the state. It is based in the misconception that prior to compulsory government education, only those privileged and wealthy few had access to education, and that the vast majority of boys and girls were unlettered and ignorant. This is simply untrue.

In prehistoric man education was generally passed through oral tradition. Men and women were generally grouped in small, nomadic communities, and information was transmitted from generation to generation through poetry, dance, song, and practice. Children were taught all the skills they needed by example. It was a system which relied heavily on apprenticeship and immersion.

With the advent of animal husbandry and crop domestication communities began to move away from hunting and gathering and towards settled communities based around an agricultural economy. While this resulted in more stable social and technological advances, it also resulted in a move away from a system of economic egalitarianism, where each member of a society was required to know all the basic skills to survive and had equal access to resources, to one of specialization and division of labors, where different members of the society developed a range of unique skill sets specific to their role in the community. This also made it more difficult for the full range of necessary skills to be translated to the next generation through oral tradition, and so with the advent of written languages in roughly 3500 BCE, information could now be transmitted through the written word and specific knowledge could be taught individually to those members of the community who required it. Over time this would lead to knowledge being concentrated in libraries and institutions of learning, where interested students could have access to an ever growing collection of knowledge.

In some parts of the ancient world education was reserved for those in service to the state, or the very wealthy, while in other countries some degree of basic education became generally widespread. As time would go on, vocational education and basic knowledge would become more and more the responsibility of the family and the employer, while higher education was available to those who could afford it.

During the middle ages education was closely related to the activities of the local religious organizations. Whether in Asia, Europe, or the Middle East, it was primarily those religious leaders who were charged with the education of the young. Much education took place in Buddhist temples, or Mosques, or Churches, and was heavily influenced by the local religious traditions of the teachers. Much of what we think of today with regards to institutions of higher learning comes from this period in history. During this time, education became available to more and more people, both as a consequence of its growing importance in society, and due to the increasing economic power of the people brought on by advances in technology and trade.

Around the 16th century, countries throughout Europe and Asia began to institute laws regarding compulsory education. While many of these laws called for the universal education of children, they did not initially require that the educational institutions to be provided by the state. In fact, many of these laws required that communities establish private schools which were to be funded by tuition funds.

Even after the general institution of compulsory education, most education remained private. In America, it wasn't until the mid to late 19th century that universal government schooling became the law throughout the country. Today, while the majority of the education in America is provided by the state, a growing percentage of students are being educated in alternative school settings, including private schools, charter schools, and home schooling.

I offer you this brief history of education so that you can see that it has not traditionally been the state which educated children. Traditionally it has been provided, either for profit or charity, by communities, religious institutions, families, and employers. It is only in the last few hundred years that it has even been mandated by the state, and only for slightly more than a hundred that it has been provided by the state, and even then only in the first world.

But what was the quality of schooling before compulsory education? What opportunities were available to parents who wished to educate their children? What was the literacy rate and education level of the population at large? What did society look like before the state took over the education of the youth?

And what has society looked like since?

Monday, November 10, 2008

The Problem of Evil part III

David D. Friedman wrote a poem called “Anarchy is not Chaos,” the final verse of which reads,

Now law and order, on the other hand
The state provides us for the public good;
That's why there's instant justice on demand
And safety in every neighborhood.

Even removed from its context, the absurdity of this verse is obvious to every person living in this country now. A study done in 1999 by the Hearst Corporation showed that,

81% agree that politics influences court decisions; 56% feel that most juries are not representative of the community; 68% do not agree that it is affordable to bring a case to court and 87% feel that having a lawyer contributes a lot to the cost of going to court; only 10% felt that courts in their communities handled cases in an excellent manner with 20% feeling that criminal and family cases are handled in a poor manner and 30% feeling that juvenile cases are handled in a poor manner; and 44% felt that judges were out of touch with what was going on in their community.

Obviously, citizens of this great nation feel little faith in the system of justice they are presented with now. They feel that the system of “blind” justice which we are currently being afforded by our leaders is politically corrupt, out of touch, and ineffective. Under a stateless society, justice would be purchased on the open market, just like anything else. Systems of justice which were viewed as corrupt and ineffective would soon find themselves out of business. Judges whose decisions were seen by the public as unfair or innapropriate would no longer be hired to arbitrate. There are already examples of this kind of justice system elsewhere in the world.

Another solution to this kind of problem would be Dispute Resolution Organizations. Dispute Resolution Organizations, or DROs, would oversee contract agreements between parties and arbitrate any disputes over those contracts. For instance, if one person contracts to provide labor for another, they would submit their contract to a DRO for ratification. Implicit in the terms of the contract may be clauses dealing with early termination of the employment, such as forfeiture of monies or property.

What's more, the DRO needn't resort to violence to enforce the terms of the contract, they could simply record the offenders failure to abide by his contractually agreed upon obligations, making it impossible for him to engage in future contract action until and unless he abides by any outstanding arbitration. Ebay already uses a similar system of reporting on their website. Users who do business in an honest and positive manner increase their reputation, and by extension their business, while those who are dishonest or fail to meet customer expectations get a lower reputation and lose customers as a result. A more detailed explanation of how DROs can handle civil disputes can be read here.

But DROs can also be used to resolve criminal action. Individuals could insure themselves against criminal action with their own DROs. Anyone who became the victim of criminal behavior would appeal to their DRO for satisfaction. Having done so, their DRO would contract with private investigation in order to determine the identity of the perpetrator. Once they identified the criminal, they would contact his DRO and inform them that he was suspected of criminal activity and that they would be pursuing prosecution.

If the prosecution was successful, his DRO would immediately contact the offender's banking institution and recommend freezing any assets held by the offender in order to pay for the prosecution as well as compensate his victim.

You see, our current criminal justice system is retributive in nature. At some point, we began to equate evil action with time out. Certain crimes call for a specified amount of time locked in a box. No effort is made to compensate the victim, or to return him to the state he was in prior to the crime. Instead, the criminal is punished for what he did to society as a whole, and the victim must find some measure of satisfaction in the suffering inflicted on the offender. Under a compensatory system of justice, the criminal is required to make reparations for his behavior directly to the offended parties, the victim is made whole again, and the criminal is made responsible instead of made to suffer.

If the crime were of a non-violent nature, and satisfaction could be achieved through financial reparations, then monetary compensation may be sufficient. The offender would be considered a high future risk, resulting in higher insurance fees and fewer opportunities to contract with others, but even these costs may be mitigated over time if he shows a real intention to reform his behavior.

If however, the crime was of a violent nature, and financial reparations were insufficient to make satisfaction, then his DRO could give him two alternatives. Either he could agree to a period of therapy and education while he worked to support the costs of his own rehabilitation, after which time he could return to society, or he could be blacklisted. No one would contract with him. He could be denied all services, including energy and water. Since the roads would be privately owned, he couldn't even leave his own home because people would deny him access to their property. If anyone chose to do business with him, they would be aiding a convicted and unrepentant offender and could be similarly blacklisted. With no food, water, or energy, and no way to leave to get resources, the offender wouldn't last long on his own.

But what of false accusations? A false accusation can be as damaging as the crime it alleges. Under a compensatory system of justice, false accusations would be resolved by the DRO of the accused counter suing the accuser. Once adjudicated, the falsely accused party would be compensated by the seized assets of the accuser. You can learn more about how DROs can address criminal behavior by reading Caging The Devils: The Stateless Society and Violent Crime.

It can be seen that the voluntary society has the ability to address civil and criminal justice in a far fairer and more reasonable fashion than our current system. It can help to prevent crime before it is committed by educating the youth more effectively, and decreasing the environmental factors which can contribute to psychopathic behavior. It can reduce poverty and increase opportunity. It allows for non violent arbitration of disputes and eliminates violent activity related to vice crimes. The small amount of remaining crimes which may occur can be effectively investigated, prosecuted, and resolved.

In the beginning, we established that the fear of crime was rooted in our fear of mortality. We are still mortal. But we can face it as free people. We need not let our fear prevent us from acting in our best interest. The state is oppressive and cruel. Behind its every action is the specter of the very violence we fear. We must allow reason to rule our passions. We must be willing to explore freedom as an alternative to subjugation. We must still face death, but we need not fear it. Seasons don't fear the reaper, nor do the wind, the sun or the rain.

We can be like they are.

Sunday, November 9, 2008

The Problem of Evil part II

The first and most important thing to remember is that violent crime is far less common than many people fear. I've already shown in the bigger gun argument that the odds of being a victim of a violent crime are less than half of one percent. What many people don't know is that only 3% of all crime results in injury. Violent crime is not the constant bogeyman that many people imagine, but it does occur, and we must try to understand why, if we wish to understand how to prevent it.

There is no single explanation for rape, assault, and murder. Any specific instance could have one factor or many, and there is no single theory for why these crimes are committed. Some common theories are anger, fear, and sadism.

Crimes committed as a result of deep rooted anger tend to be explosive and compulsive in nature. They may be brutal and violent, and may occur sporadically. Such a criminal may lash out, choosing his victim seemingly at random, and then behave for some time thereafter. But eventually he will lash out again when his anger reaches its boiling point.

Crimes committed as a manifestation of fear are the result of feelings of inadequacy on the part of the perpetrator. He or she feels weak and incapable of making themselves important or noticed. In these cases, the goal of the attack is to feel power over the victim. Often the criminal will only use enough violence to control the victim, and will demand that the victim validate them emotionally. Since this is inevitably a fiction unsatisfying, the criminal will offend again and again, thinking that their next victim will make them complete, often resulting in habitual behavior.

The final motivation is sadism. This criminal has so focused on their own aggression and violent tendencies that they have become sexualized. This criminal derives pleasure from the suffering of their victims and will often spend a significant amount of time planning the assault, which may become bizarre or ritualized. They will often attempt to extend the suffering of their victims so that they can take pleasure in their continued anguish, often culminating in the death of their victim.

All three of these motivations are the result of psychopathic behavior. Psychopathic behavior is the result of the interaction between genetic predisposition and environmental factors. While some genetic markers for psychopathic behavior will inevitably be passed from generation to generation, environmental factors, such as parental neglect, poverty, and a poor education can all be addressed by society, even in the absence of the state, thereby reducing incidences of psychopathy and by extension, violent crime.

A 1993 study found that nearly half of adult Americans are functionally illiterate. Another study by the Justice Department found that one fifth of high school graduates can't read their own diplomas. And while statistics show that slightly more than half of the of inmates in state prisons have a high school degree or its equivalent, only approximately 11% have any college education. And when a high school degree doesn't necessarily equate with literacy, it isn't exactly a sign of a good education.

A study performed by the Rand Corporation in 1996 showed that incentives to complete a high school education were among the most effective strategies to reduce crime rates, more than three times as successful as draconian “three strikes” laws. Even early education at the preschool level has proven effects on reducing adult and juvenile crime. In the Department of Justice's “Blueprints for Violence Prevention” they found significant evidence that training parents on proper parenting techniques, and encouraging the education of young people were important factors in preventing criminal behavior later in life.

But the government schools don't do a good job of either educating the young, or encouraging continued education. Studies have shown that private schools have almost twice the graduation rate as public schools when comparing students of similar income levels in the same area. Other studies have found that,

In the majority of cases, private schools are more effective than government schools, and more efficient as well given their lower expenditures. Academic achievement is usually significantly higher in private schools, holding student characteristics constant, and these gains are most often robust to controls for peer group effects when these are included. The earnings of private school graduates may be significantly higher as well, though the weight of evidence on this point is more limited.

Privately-managed schools tend to have better-maintained facilities and more orderly classrooms than government schools. This is true whether the private schools are government subsidized or not, but the difference appears to be largest between unsubsidized private schools and government schools.

The evidence is overwhelming that privatization of the schools leads to better education and higher rates of graduation. Since we have shown that education is a key element in reducing adult crime, it is clear that once again, the private sector is better equipped to address this issue.

I have addressed in previous posts how poverty would be drastically reduced in a stateless society by virtue of the increased value of currency and the removal of the drain of government taxation. We have now also seen how the state fails to properly educate its citizens, and how the private sector does a much better job. The final important factor is proper parenting.

Mistreatment of children doubles the chances of those children committing crime later in life. Additionally, approximately 20% of abused children grow up to become abusers themselves, leading to a repeating cycle of abuse, crime, and victimization. Helping parents to learn proper parenting techniques can reduce child neglect and juvenile crime by 50 to 60%. In Britain, the courts have begun ordering parents of delinquent children to attend parenting classes in order to reduce juvenile crime. The British government has done studies on crime prevention which they say have shown that parental education is “the most cost effective way to reduce crime.”

Many different organizations offer parenting education. A simple google search for “parenting classes” returns over one million results. Hospitals, churches, online courses, people have a wealth of resources to assist them in becoming better parents. Parents who fail to educate themselves can not blame a lack of opportunities. Instead, those most in need of education are the ones most likely to resist assistance.

So how could a stateless society encourage those parents most in need of education, and most likely to raise future offenders, to improve their parenting? One way would be through social censure. In a society owned entirely by free people, those who mistreat their children could face denial of basic services. Parents known to be guilty of neglect could face higher insurance premiums unless they enrolled in and completed education courses designed to reduce their high risk behavior. Since there is a proven connection between poor parenting and criminal behavior, all of society would have a vested personal interest in offering and promoting continuing education for all parents, not just those with a demonstrated history of neglect.

Having shown how a stateless society could holistically address crime prevention, we must finally address how it would handle those unavoidable instances of criminal behavior which would on occasion occur. How could a society, lacking the massive law enforcement apparatus of the state, protect the good from the bad and remove the true monsters from amongst the innocent?

How could it make you safe?