Book Review: The Euro

The Euro is a book about the shortcomings of the eurozone currency project by American economist Joseph Stiglitz. The book makes a case against many of the policies pursued by European leaders thus far and recommends several alternatives, including further integration, a flexible euro, and the exit of one or more members. The book is divided into twelve chapters which explore different aspects of the problem and possible solutions.

A short preface details Stiglitz’s view of the economic problems of Europe as being largely attributable to the creation of a single currency zone without the creation of other institutions that are found in other such places elsewhere in the world. He compares the euro to the gold standard, repeating the flawed mainstream view that deflation is bad. His Keynesian approach to economics and thoroughly statist worldview is apparent from the beginning. That being said, Stiglitz appears to want to solve problems and correctly identifies some people and institutions as being uninterested in doing so.

The opening section begins with a chapter that expands upon the preface and outlines the rest of the book. There is little here that is not covered in greater detail later, so let us move on. In Chapter 2, Stiglitz argues that the poor results of the euro should have been expected because economic integration of this sort cannot come before political integration. Here, he contends that military might no longer shapes outcomes as it once did, but this is dubious because nothing short of a nuclear exchange that no one wants could have stopped the United States from conquering and colonizing Iraq if that had been the intention and American leadership had used its full power. So too for Russia in Ukraine and Crimea. His responses to other arguments for a single currency make more sense. He states the fallacious mainstream position on public goods, claiming without logic or evidence that it is impossible for markets to provide basic research and common utilities. This amounts to a confusion of collective action with state action. Even so, Stiglitz does recognize that localization is better than central planning from afar, though his disdain for German policies makes him inconsistent on this point. He then turns to economic integration, discussing the importance of German history with hyperinflation and its prominent role in modern Europe for understanding the European Central Bank. Next, Stiglitz writes about effect that a shared currency has on economic integration, which is mixed. Like many Keynesians, he accuses the market of failure when this is actually impossible; such events are actually failures of government, resources, or individual people. He also regards economics as scientific, even though the scientific method cannot be applied to subjects in which counterfactuals are so important but also unobservable. As usual, the word ‘neoliberal’ says more about the person using it than anything else. He concludes by arguing that there is a democratic deficit in Europe, even though he argues elsewhere in the book against incentive structures which are necessarily part of any democracy.

Europe’s lackluster economic performance since the 2008 crisis is the subject of the third chapter. Stiglitz begins by claiming that Keynesianism is a success because it has lengthened business cycles and shortened downturns, but it has also made the downturns that do occur so much worse that markets were better off before such interventionism. Much of the chapter consists of empirical data for Europe since 2007. When discussing unemployment, he seems not to recognize that unemployment benefits subsidize a negative behavior and will thus produce more of that behavior. Stiglitz relies upon the Gini coefficient when discussing inequality, which is a faulty metric because it measures pre-tax income rather than after-tax consumption. This causes it to exaggerate the amount of income inequality. His detailing of the long-term adverse effects of recession in terms of destroyed human capital is largely correct, but he again recommends interventionism that tends to worsen such problems. He also takes the position that the state should protect those at the economic bottom, though almost every economist would avoid social Darwinism on this front. Stiglitz then commits a fixed pie fallacy by arguing that trade surpluses necessarily cause trade deficits elsewhere, when the reality is quite different. He concludes by correctly noting that the counterfactuals help critics of the euro, and that there is no better explanation for many of Europe’s troubles than sharing a common currency across uncommon societies and economies.

The second section argues that the euro suffers from a flawed initial design. In Chapter 4, the requirements for a single currency region to be successful are considered. Here, Stiglitz uplifts full employment and market stability as goals while denouncing those who favor economic freedom as a “lunatic fringe.” This leads him to contemplate a false dilemma between national control of money and supranational control. He blames market fundamentalism (which he calls neoliberalism) for the crisis of 2008, despite the fact that markets were altered by central bankers in such a way as to cause the crash, which he all but says elsewhere. In explaining the differences between the United States and the eurozone, Stiglitz highlights the freer movement of Americans, the identity of Americans at the national level rather than the state level (at least in modern times), and the federal nature of monetary and fiscal stimulus. He is correct to say that there must either be “more Europe” or “less Europe,” but sides with the former. He describes the Keynesian theory of business cycles, but makes no mention of the Austrian theory. Stiglitz then repeats the tired fallacy that austerity caused the Great Depression and the current malaise, rather than central bank shenanigans and tariff policies. His blame for the gold standard is similarly misguided. He somewhat fixes an error from the previous chapter by clarifying that trade imbalances are not a problem if currency exchange rates can change to compensate for them. He straw-mans the laissez-faire position on unemployment by saying that it views unemployment due to market adjustments as good rather than as simply necessary. Stiglitz then gets a few points correct: low wages undermine worker morale and productivity, falling wages may not amount to falling prices if firms are worried about their solvency, and monetary stimulus has a breaking point at which interest rates cannot be lowered further. But he again blames the private sector for being excessive when it is only reacting to perverse incentives created by governments and central banks. There is little to fault in Stiglitz’s explanation of why currency areas are prone to crisis except for the preceding error, but it never occurs to him to simply not have such an area. The chapter ends by repeating many of the fallacious arguments from the previous chapter concerning trade surpluses and deficits.

The fifth chapter considers the economic divergence of the eurozone countries. Stiglitz argues in favor of institutional frameworks to prevent the need for bailouts, as well as funds to make depositors whole and provide bailouts. This ignores the moral hazard created by such a regime that causes bankers to take excessive risks, as well as the powerful incentives that an absence of protection would have on depositors to act responsibly and hold bankers accountable. His view of regulation is starry-eyed, missing the entire concept of regulatory capture. This is especially striking, given his focus on institutional capture in the following chapter. Stiglitz rightly complains of capitalized gains and socialized losses among bankers. In his consideration of other sources of divergence, he again fails to consider the possibility of turning over infrastructure to private development, instead proposing expansion of the European Investment Bank, which is certain to become another statist boondoggle. His view of knowledge markets is flawed in the same manner as his view of economies; it fails to account for the distortions that statism necessarily causes which lead to various types of failure. He concludes the chapter by showing how policies in the eurozone have caused greater instability, but cannot seem to avoid blaming the private sector for responding to the incentives imposed upon it.

In Chapter 6, Stiglitz examines the European Central Bank. He begins by saying that open markets and free competition can efficiently allocate resources only in the presence of adequate government regulation. This is a contradiction because an absence of government regulation defines an open market with free competition. His arguments concerning the inflation-only mandate of the ECB and the problems it causes would be much stronger if the Austrian business cycle theory were anywhere to be found in the book. His description of events in Chile under Pinochet does not agree with the long-term result of economic prosperity relative to the rest of South America and neglects how much worse conditions would have been under Salvador Allende. His claim that markets are supposed to be efficient and stable are a straw man; instability in the form of creative destruction and inefficiency by some metrics rather than others are inherent in a market economy. Stiglitz correctly writes that monetary policy is always a political question, pitting creditors against debtors for control of the central bank. But he leaves unclear how democracy is supposed to hold central bankers accountable. He also must not know any libertarians, or he would know that some people have proposed taking away spending power from governments to ensure that they do not misbehave. The chapter ends with a history of fashionable central bank policies over time and what was wrong with them from a Keynesian perspective.

The next two chapters delve into the Greek situation in particular, as Greece has suffered a more severe economic crisis than any other eurozone country. The seventh chapter explores the effect that the Troika’s policies had on countries in crisis. Stiglitz accuses some European leaders of acting in bad faith by purposefully attempting to punish governments with different political views from their own, which may be accurate. He continues his misguided attack on austerity, though it has more merit against what Europeans have actually done than against real austerity. He correctly explains the problem with primary surpluses, but then commits the broken window fallacy by embracing Keynesian multipliers. Stiglitz accurately diagnoses the problems of increasing taxes, but seeks to aid governments in collecting them rather than encourage economic freedom and stronger property rights. He describes his ideal system of property taxation in the same tone that a proud and unrepentant thief might use to boast of his crimes. Although he is correct to say that particular moves toward privatization and economic freedom may produce adverse results in particular contexts, this is a justification not for state intervention, but for undoing even more statism so as to remove the problematic context. Stiglitz notes that the hegemony of American military power has put Europe into a Pax Romana problem in which it cannot fend for itself against a real threat, but advises that this problem be worsened in the name of fiscal restraint. He compares reductions in pensions to wage theft when the two are clearly different. It is the responsibility of workers to figure out that they are being offered terms which may be impossible for the employer to meet in the future and practice caveat emptor. As for bank bailouts and debt restructuring, Stiglitz describes the situation well except for his faulty view of austerity.

Chapter 8 delves into structural reforms in Greece that made matters worse. Again, Stiglitz’s views of austerity and democracy corrupt an otherwise sound analysis of trivial and counterproductive actions taken by the Troika. He claims without proof that industrial policies are required to advance countries that are lagging behind in technological development, neglecting that markets are not doing this because they are either disallowed from doing so or are assuming that the state will do this for them. He criticizes intergenerational transmission of advantage and seeks to use the state against it, when it should be championed as both eugenic and important for maintaining a natural aristocracy. Stiglitz argues for a price on carbon emissions and claims that the private sector will not address climate change, when again the state has kept this from happening. He finishes by discussing counterfactuals, which is interesting given his empiricist thinking on economics.

The final four chapters deal with various proposals going forward. In the ninth chapter, Stiglitz offers his advice for fixing the eurozone. As before, he embraces what Henry Hazlitt called “the fetish of full employment” as the goal of his policy proposals. Much of the content of the chapter rehashes proposals from previous chapters. He seeks to create common deposit insurance and common resolution while abolishing place-based debt within the EU. This will create moral hazards and work against people who wish to escape debt slavery inflicted upon them by their ancestors. He calls for wages to be raised in countries with surpluses, which will lead to unemployment in those countries as workers whose labor is not worth higher wages are laid off. He fundamentally misunderstands precious metals, failing to understand their role as a store of value and medium of exchange, even if no longer officially used in such capacities. Stiglitz seeks to make the financial sector and other corporations serve society, but fails to recognize that the organs of a statist social order inherently and irrevocably serve themselves at the expense of the society. The shortsightedness of markets of which he complains is actually caused by the institutions that he seeks to use to solve the problem. One of the few sound recommendations made in this chapter is the creation of a super-Chapter 11 bankruptcy procedure to quickly restructure debt. He goes on to propose that EU taxes be based on citizenship, and that some of the proceeds be used for foreign aid or resettlement of migrants, further impoverishing and culturally endangering Europeans.

Chapter 10 examines the possibility of what Stiglitz calls “an amicable divorce,” in which countries exit the eurozone. He considers the example of Grexit, or Greece returning to its own currency that he calls the Greek-euro but would probably be called the drachma, as it was before the euro. He proposes that Greece create a new electronic currency to ease concerns over producing coins and banknotes, stop tax avoidance, bring everyone into the financial system, and facilitate the ability of central banks to create credit. Stiglitz fails to consider that people are likely to reject such a system in favor of cryptocurrencies, which have all of the benefits of such a system without most of the drawbacks, and that such a system could offer states tyrannical control over their citizens. His view of credit indicates magical thinking, although this is quite common in modern financial circles. He again blames the private sector for problems caused by politicians and central bankers, while ignoring peer-to-peer lending as a substitute for modern credit systems. Stiglitz describes a potential system of credit auctions which could be abused with much the same ease as the current system. He admits and supports what should be abhorrent to any decent person: that fiat currencies are ultimately given value by extortion in the form of taxation. Stiglitz correctly says that a new Greek currency would enable them to devalue it to correct trade imbalances, but his proposed system of trade tokens for the same purpose would be redundant. He equates deflation with a deficiency of aggregate demand, neglecting the possibilities of an abundance of supply or improvements in efficiency and/or quality. His description of currency change as a debt restructuring is insightful. To end the chapter, Stiglitz considers the alternative of Germany leaving the eurozone, though it is unlikely that they would give up their current position of power so willingly. This segues into the topic of the next chapter, which is a flexible euro consisting of several subdivisions.

Stiglitz uses Finland as a counterexample against those who claim that profligacy in southern Europe is to blame, rather than the structure of the eurozone. Most of his argument here is correct, except for his view of austerity. His proposal in this chapter is to have several eurozones with fluctuating exchange rates, which could be brought closer together over time as political integration occurs, eventually resulting in economic integration. The details are borrowed from the previous two chapters. Though more likely to succeed than the proposals in those chapters, it is also the least likely to be adopted. Stiglitz correctly recognizes that having a single currency area is an interference in the market in and of itself, monopolizing exchange and interest rates in the area, but cannot seem to fathom that his flexible euro proposal also does this on a smaller scale. He claims that it can be better not to simply rely on prices for the allocation of resources, but does not explain how to solve the local knowledge problem or the economic calculation problem in a superior manner. He also says that history shows free banking to be a disaster, when the truth is quite the opposite.

The final chapter sees Stiglitz review many themes from previous chapters, but he also covers topics which are barely mentioned elsewhere. He denounces anti-immigrant groups in Europe, which are only trying to resist demographic replacement by a ruling class that they did not ask to replace them. So much for the “democratic accountability” that Stiglitz extols in the same breath. He blames right-wing economic ideology for rising inequality in the United States beginning with the Reagan administration, but incomes really began to diverge ten years earlier, when Nixon ended the gold standard. Stiglitz expresses a desire to preserve the Enlightenment values of Europe, but cannot comprehend how letting in migrants with distinctly anti-Enlightenment values will jeopardize that mission. On the issue of trade policy, he understands that free trade is not always best for all parties involved, as it can destroy important societal arrangements that prevent conflict. But then Stiglitz incredulously asks how one could have expected that Europe’s leaders would create such economic dysfunction, with massive unemployment and lack of economic security. The answer is that a proper amount of cynicism would require such an expectation.

Overall, the best thing that can be said for the book is that it is not an effort made in bad faith. Stiglitz correctly identifies many of the problems with the current state of affairs in Europe and seems to want to help, but his proposed solutions are thoroughly misguided. Despite his palpable disdain for Milton Friedman and other Chicago School monetarists, he suffers from one of the worst of their faults: a desire to solve the immediate problems set before him combined with a lack of broader perspective. This leads him to propose a banking system which could be used to terrible effect against political dissidents, tax collection schemes that would indicate criminal intent in any non-statist context, and forced political integration by means of stealth and subterfuge. He also seems to believe that everything would be fine if only state power were used by the right people to implement the right policies. It never occurs to him that the power itself might be the problem. The Euro is an interesting case study in leftist economic thought, but those looking for real solutions to Europe’s economic woes should keep looking.

Rating: 2.5/5

Praise The Grinch Bots

This week, outlets across the spectrum of establishment media were outraged at so-called ‘grinch bots.’ These are automated programs that make bulk purchases online so that scalpers can resell the items at higher prices. This has caused the prices of some toys to increase several-fold. For instance, a Barbie Hello Dreamhouse retails for $299.99, but on eBay, one reseller is asking for more than $4,600. This phenomenon has caught the attention of Sen. Chuck Schumer (D-NY), who said, “Grinch bots cannot be allowed to steal Christmas, or dollars, from the wallets of New Yorkers. …Parents have a real dilemma: either they can’t get the toy because the bots have scooped them up, or they have to pay an enormous price.” In a letter to the National Retail Federation and the Retail Industry Leaders Association, he wrote, “I am calling on your associations to immediately investigate how these dishonest software programs are being used on your members’ sites and take all available steps to thwart computer systems from cheating America’s consumers.”

Schumer’s comments illustrate an economic illiteracy that is all too common among politicians and pundits. Contrary to popular belief, scalpers perform an important function in an economy. In this case, they also provide other benefits that extend beyond economics and into culture. Let us examine these phenomena in order to see why grinch bots are good.

The Economic Role of Scalpers

When a manufacturer produces an item for sale, it is impossible to calculate the market clearing price in advance. The market clearing price is exactly what it appears to be: the maximum price at which the producer can sell all of the produced items. Any price above this level will result in unsold product, while any price below this level will invite people to buy up the items and resell them, also known as scalping. Whereas overproduction is the worst inefficiency in manufacturing, a producer would prefer to err on the low side of the market clearing price. This naturally produces excess demand, which in turn leads to higher prices. Part of this effect occurs naturally in retail businesses, but scalpers act as an additional market force to accelerate the price correction up to its proper level.

Scalpers also function as risk mitigators. If a scalper buys products and fails to resell them, then the scalper loses the entire cost of the item while the manufacturer, retailer, and everyone in between are reimbursed for their expenses. If the scalper does make sales, then he makes a profit and people find the products they want. The scalper is thus strongly incentivized to connect manufacturers and distributors with customers who want their goods. Note that the scalper is behaving like a retailer, in that he buys large amounts of finite, potentially scarce products and sells them for a profit to people who want them. Yet hatred of scalpers is common, while hatred of retailers is rare.

Some people will argue that scalpers are responsible for higher prices and lower availability, but this is merely a result of arithmetic, and would happen with or without dedicated scalpers speculating on Christmas toys. Suppose, for an example similar to the case at hand, that doll houses are selling for an average of about $300, there are 10,000 doll houses for sale every day, and 15,000 people want a doll house. To avoid distributing reservations without price rationing, which would result in reservations being made available in an arbitrary and discriminatory manner, prices must rise to a level where only 10,000 people still want them. This level may be around $450 in this case. How this $150 per doll house increase is distributed is what will vary, depending on how much scalping versus internal revaluation in retail stores is occurring.

Schumer makes two more especially ignorant claims which are worthy only of a cursory rebuttal. First, he contends that scalping harms the poor. This ignores the fact that scalping is an excellent economic opportunity for the poor, as they can make large returns by engaging in scalping. Second, he says that grinch bots are engaging in acts of theft and cheating. The idea that voluntarily purchasing a product at the offered price could constitute theft and cheating is simply bizarre.

Cultural Benefits

When scalpers buy up Christmas toys and fail to resell them, there are additional benefits which extend beyond economics and into culture. There is an enormous opportunity cost involved with the holiday shopping season, as people spend money they do not have on items they do not need, then spend even more money on getting out of debt. One way of preventing this is for attempted scalpers to raise prices and thus reduce demand. This will cause people who are on the margin of shopping versus not shopping to reconsider in favor of the latter. Those who make one reconsideration are more likely to make other, related reconsiderations, so people who cease engaging in holiday consumerism may come to some deeper personal or spiritual understanding, or at least develop more concerns beyond immediate gratification. Although a few grinch bots may play a minmal role in the grand scheme, any lowering of time preference coupled with greater focus on the virtues embodied in Christmas traditions would be a cultural improvement.

Conclusion

The attacks on the grinch bots are understandable; they are an obvious target for the economically illiterate, and going after them makes excellent political hay for a senator looking to expand the state’s regulatory powers. Which of these best describes Schumer is debatable, but the above analysis clearly demonstrates that scalpers in general and these computer programs in particular should be praised rather than denounced.

The Economic Fallacies of Black Friday: 2017 Edition

Today, shoppers across America will participate in the largest shopping day of the year: Black Friday. The National Retail Federation is estimating that 164 million customers will be shopping on Black Friday weekend. For the first time, their estimate includes Cyber Monday, which had previously been treated separately. The 2016 estimates were 137.4 million between Thanksgiving and Sunday, and 122.2 million on Monday. The actual result from 2016 was 154.4 million between Thanksgiving and Sunday. A similar adjustment to the predicted value for 2017 would mean an actual number of shoppers close to 184.3 million.

The NRF estimates that total sales for the holiday season will be between $678.75 billion and $682 billion, up from $658.3 billion in 2016. This would be an annual increase of 3.6 to 4.0 percent. The estimate for 2016 was $655.8 billion, suggesting that the total sales for 2017 may be around $683 billion. This year, the NRF estimates that retailers will hire between 500,000 and 550,000 seasonal employees, compared with the actual 575,000 they hired during the 2016 holiday season versus an estimate of 640,000 to 690,000. We may therefore expect that retailers will actually hire about 453,900 seasonal employees. On the surface, this may appear to be a marvelous celebration of free market capitalism. But let us look deeper through the lenses of the broken window fallacy and the idea of malinvestment.

To view holiday shopping as a boost to the economy ignores the fact that people could either be spending that money in other ways or saving it. In other words, such an approach is an example of the broken window fallacy because it focuses only on what is seen and ignores opportunity costs. If people would save their money rather than spending it on various holiday gifts, then this money would be invested in one thing or another. As Henry Hazlitt explains in Chapter 23 of Economics in One Lesson, saving is really just another form of spending, and one that has a greater tendency to allocate resources where they are most needed.

Per capita spending is predicted to be $967.13 in 2017, up from the 2016 estimate of $935.58. The above problems get even worse if people use credit cards to spend money that they do not currently have. With a current credit card interest rate of 16.72 percent and a minimum payment of 4.0 percent, a debt of $967.13 would take 5.5 years to pay off and would cost $1,372.85. This is $405.72 wasted on interest payments that could have been kept in one’s accounts or put toward a productive purpose. Multiply this by the 184.3 million shoppers predicted earlier, and the result is that as much as $74.8 billion could be spent on interest payments.

When people purchase unwanted gifts and/or buy gifts with money they do not currently have, their choices encourage malinvestments. A malinvestment is an investment in a line of production that is mistaken in terms of the real demands of the economy, which leads to wasted capital and economic losses. The holiday shopping season contains a subset of shopping which creates systematic and widespread mistakes in investment and production. Although the effect is not as severe as what occurs during an Austrian business cycle bust and is both caused and resolved in fundamentally different ways, there is a noticeable hangover effect on the economy. A look at the average monthly returns on the Standard and Poor’s 500 shows that while the worst month for investments is September, the next three worst months for investing are February, May, and March. (April would likely be bad as well if not for income tax returns providing an artificial economic boost.) An economic downturn occurs in the historical average following the holiday season, but as this has become an expected annual occurrence, many analysts simply do not look for an explanation of these results, as they are perceived to be natural. Even so, this appears to be a small-scale business cycle that repeats annually.

With these arguments in mind, would we all be better off if we just canceled the holiday shopping season? It is an open question, but the Austrian School of economics suggests that we could have a better economy if the burst of economic activity in late November and December were spread throughout the year and people did not spend money they do not have on items they do not need.

Should Libertarians Support Ethnic Nationalism?

The relationship between libertarianism and the alt-right has become a controversial issue in recent years. Views on the issue run the gamut from complete opposition to imperative alliance, with nearly every conceivable position between being advocated by someone noteworthy. Let us thoroughly explore the issue to see what support, if any, libertarians should provide to ethnic nationalist movements.

Ethnic Nationalism and Ethno-statism

Many people who support ethnic nationalism are also ethno-statists. That is, they seek to form nation-states that are ethnically homogeneous or nearly so, and they want these states to advance the interests of the majority population in an explicitly racial sense. While many ethnic nationalists advocate voluntary separation, it is unlikely that enough people would do this on a large enough scale to form the desired ethnic separation on the scale of contemporary nation-states. It would thus be necessary to initiate the use of force in order to achieve this goal, and this is nearly certain to occur regardless of whether leaders of ethno-state movements wish it to occur.

Libertarianism is a philosophical position on what constitutes the acceptable use of force. It says that initiating the use of force is never moral, but responding to an initiation of force with defensive force is always moral. This puts libertarians directly at odds with those who would use state power to force people into different associations from those which they would choose. In fact, libertarian philosophy justifies the use of any amount of force to defend against ethno-statists who attempt to forcibly separate people.

At first glance, this may appear to be an open-and-shut case, but there is far more nuance to consider. Unfortunately, most libertarian commentators stop here, failing to consider anarchic forms of ethnic nationalism as well as the role that ethno-statists may play in moving toward a free society, however unwittingly. Let us examine these and other considerations.

Anarcho-ethno-nationalism

The starting point for libertarian ethics is self-ownership; that each person has a right of exclusive control over one’s physical body and full responsibility for actions committed with said control. Note that in order to argue against self-ownership, one must exercise exclusive control of one’s physical body for the purpose of communication. This results in a performative contradiction because the content of the argument is at odds with the act of making the argument. By the laws of excluded middle and non-contradiction, self-ownership must be true because it must be either true or false, and any argument that self-ownership is false leads to a contradiction.

Each person has a right to exclusive control of one’s physical body, so it is wrong for one person to initiate interference with another person’s exclusive control of their physical body without their consent. This is how the non-aggression principle is derived from self-ownership. Each person has full responsibility for the actions that one commits with one’s physical body, so one may gain property rights in external objects by laboring upon unowned natural resources, and one owes restitution for any acts of aggression that one commits against other people or their property. The reason for this is that one is responsible for the improvements that one has made upon the natural resources, and it is impossible to own the improvements without owning the resources themselves. To initiate interference with another person’s property without their consent also violates the non-aggression principle because it denies them the just fruits of their labors.

It is possible to form and maintain an ethnic community using these principles. Someone may acquire land and form a community upon it, granting admission only to those who meet criteria chosen by the property owner. Alternatively, a group of like-minded people may purchase adjacent properties to achieve the same result. As long as no acts of aggression are committed, people who form a covenant community may choose whatever rules for admission and continued membership that they wish. As Hans-Hermann Hoppe explains,

“With respect to some pieces of land, the property title may be unrestricted; that is, the owner is permitted to do with his property whatever he pleases as long as he does not physically damage the property owned by others. With respect to other territories, the property title may be more or less severely restricted. As is currently the case in some housing developments, the owner may be bound by contractual limitations on what he can do with his property (voluntary zoning), which might include residential versus commercial use, no buildings more than four stories high, no sale or rent to Jews, Germans, Catholics, homosexuals, Haitians, families with or without children, or smokers, for example.”[1]

As Hoppe notes, these criteria may have a racial component, as a free society has no state to tell property owners that they may not discriminate on certain grounds that policymakers deem objectionable.

It would not do to leave unaddressed the apparent contradiction in anarcho-nationalism. This is a semantic problem; the word ‘nation’ has become convoluted in its meaning. In this case, nation is to be understood in the sense of the Old English word ‘thede.’ A thede is a group of people who share a heritage, whether this be cultural, genetic, linguistic, religious, or some combination thereof. They define an identity for themselves and consider themselves to be a group of which everyone else is not part. (The term ‘elthedish’ refers to those outside the thede.) A person may be part of multiple thedes or none at all, though the latter makes survival and reproduction much more difficult. Non-genetic thedes can and do exist, but as purely social constructs without a clear biological root, they are less stable and require effort to maintain. With this in mind, it becomes clear that anarcho-nationalism need not refer to the contradictory idea of a stateless state, but to the idea of a group of people with a shared identity and common heritage who reject statism in favor of voluntary forms of social order.

A Liberal Case for Illiberalism

Of course, at this point we may expect outrage from all of the usual suspects that one would lift a finger in defense of racists. The classical liberals among these people would do well to consider their own attitudes toward freedom of speech, freedom of the press, and other such freedoms that they hold to be universal human rights. When they defend these ideas, they frequently find themselves standing up for people who make controversial and/or reprehensible statements. This occurs because censors pursue such people almost exclusively. After all, they have no motivation to target people who make ordinary conversation that has no potential to cause meaningful change. Classical liberals defend their ideological opponents from censorship because they believe that there is a short and slippery slope between infringement of the rights of some and infringement of the rights of most. Thus, they follow the quote commonly misattributed to Voltaire but actually written by Evelyn Beatrice Hall, “I wholly disapprove of what you say and will defend to the death your right to say it.“[2]

What they fail to realize is that the same is even more true of private property rights. In the libertarian view, freedom of communication is not a universal right. As Hoppe explains,

“In a covenant concluded among proprietor and community tenants for the purpose of protecting their private property, no such thing as a right to free (unlimited) speech exists, not even to unlimited speech on one’s own tenant-property. One may say innumerable things and promote almost any idea under the sun, but naturally no one is permitted to advocate ideas contrary to the very purpose of the covenant of preserving and protecting private property, such as democracy and communism. …Likewise, in a covenant founded for the purpose of protecting family and kin, there can be no tolerance toward those habitually promoting lifestyles incompatible with this goal.”[3]

More generally, one has no right to communicate ideas on private property that someone else owns if doing so goes against the wishes of the property owner. Because private property is a more fundamental right than freedom of communication, restrictions on property rights are even more injurious to liberty than assaults upon freedom of speech or freedom of the press. As before, those who use their property in a mundane manner that is unlikely to cause meaningful change are unlikely to encounter interference. Those who are confronted about their non-aggressive use of private property rights will be those who use their property rights in a controversial and/or reprehensible manner, such as excluding people on the basis of race. Because there is a short and slippery slope from interference with politically incorrect uses of private property to all manner of interference with private property rights, those who use their property rights in a controversial and/or reprehensible manner (as long as no force is initiated in the process) should be the first people that libertarians (or classical liberals) defend.

Ethnic Separatism

As explained previously, libertarianism stands against an ethno-statist takeover of an existing state apparatus followed by ethnic cleansing, endorsing the use of force to defend against and stop such events from taking place. But ethno-statism need not manifest in this form. Another possibility is the concentration of people of the same ethnicity in a particular area, who then decide to secede that region from a larger state. Although ethno-statism cannot be supported by libertarians in an absolute sense because it is still a form of statism, there are several beneficial effects which may result from a race-based secessionist effort. This may allow libertarians to offer limited support for such a movement as a lesser evil than the current state of affairs with a possibility for greater potential for libertarian efforts in future.

First, let us consider the political orientation of the typical racial separatist. Overt and elevated in-group preference combined with statism results in an affinity for socialism, which tends to manifest as fascism or national socialism among white nationalists and as communism among racial nationalists of other races. If such people become concentrated in a certain area, it follows that the political climate in said area will become more socialist while the political climate elsewhere will become less socialist.

Second, it follows that ethno-statists are useful for breaking up large, powerful states into smaller, less threatening parts. If, for example, white nationalists were successful in seceding Oregon from the United States, and black nationalists were to do the same with Mississippi, then the United States government would be weaker than it is currently, and the two ethno-states would be weaker still. While there would still be much to be desired from a libertarian perspective, it would be an improvement over current levels of state power.

Third, the departure of the most bigoted and hateful individuals of all races into ethnically homogeneous territories would produce a significant reduction in racial tensions. After all, a multiracial society is more likely to succeed if those who deem it impossible remove themselves from that society, and an ethnically homogeneous society is the only way to satisfy such people. That such a scenario would distinguish the true separatists from race-baiting charlatans so as to expose the latter is a decided plus.

Next, let us consider the possible fallout from such a development. Secessionist movements, irrespective of their impetus, tend to inspire a nationalist response in other parts of a state. While this is fraught with its own dangers because nationalism is hostile to decentralization of power below the national level, nationalism is certainly a lesser evil than globalism, and may serve as a temporary makeshift on the path to a better political arrangement than that presaged by the United Nations and the European Union. If secessionists succeed in their efforts, it will inspire other secessionists to try their hand, some of whom may be far more libertarian than the ethno-statists who began the trend.

Just as altering the concentrations of racists and socialists are two-way streets, so is altering the concentration of libertarians. If people who reject libertarianism in favor of ethno-statism wish to concentrate somewhere and separate from the rest of a current state, this is beneficial for the cause of liberty in the remaining area because it raises the percentage of libertarians there. This could be a deciding factor in achieving the critical mass of libertarians necessary to form a libertarian social order.

Crossover Effects

It is necessary to explore the consequences for the libertarian movement from explicitly standing up for the rights of ethnic nationalists. Because any collaborative interaction between groups is likely to result in some degree of personnel exchange, we may expect that some ethnic nationalists would become libertarians and vice versa. If ethnic nationalists would embrace libertarianism, that means that they would accept self-ownership, the non-aggression principle, and private property rights. As a result, they would have to stop initiating the use of force in their advancement of racism and advocating for politicians to do so on their behalf. This should be regarded as a positive development by any sane person. The presence of such people would also help to counter the worrying development of entryism by social justice warriors and other leftists into libertarian circles by triggering them into leaving.

We may also expect that some libertarians will become ethnic nationalists. They are more likely to become the sort of anarcho-thedists discussed earlier than to ally with national socialists, though the latter is not unheard of. This may be a positive development, in that there is a tendency toward politically autistic hyper-individualism in the contemporary libertarian movement. This is an individualism so extreme that it fails to comprehend group identities or interests, and may even deny their existence and relevance. Mingling with ethnic nationalists may awaken libertarians to the realities of demographic issues and alert them to the fact that they will consistently lose to those who organize around a group identity unless they do so themselves.

The Nature of the West

The final matter to consider is the role of ethnicity in libertarianism itself. Anyone who has been to a libertarian gathering knows that the attendees at any such event will skew overwhelmingly white, and anyone who has studied libertarian philosophy will know that most of its authors are white and/or Jewish. Ethnic nationalists have an explanation for this that fits with the available logic and evidence. Like any other species, humans adapt to their environment. Although humans are uniquely capable of adapting the environment to themselves, differences between individuals frequently outweigh differences between groups, and there has been significant mixing of human populations, these do not completely negate the former effect. Humans in different parts of the world have also developed different cultural norms, governing philosophies, and religious traditions as adaptations to their particular environments. This explains why universally preferable values are not universally preferred and why there is a correlation between ethnicity and the acceptance of libertarian ethical norms. Those who view the West only as a portable set of ideas should consider the above explanation for why the portability of those ideas has been relatively poor and why the continued practice of them outside of the West is linked to a legacy of Western colonialism in such places.

At this point, a few caveats are necessary. None of this is to say that individuals of color cannot become libertarians, or that the failure of non-Western cultures to produce a tradition of libertarian philosophy thus far proves that they cannot. Nor should libertarians who are not of European or Jewish descent be anything less than welcome in libertarian groups. But in the aggregate, demographic disparities are natural and should be expected. The disproportionate number of white or white-passing people at libertarian gatherings is neither a problem to be solved nor an achievement to be celebrated; it is simply a result explained by evolution and history. Thus, there is cause for cautious optimism that some white nationalists may come to reject statism and socialism in favor of creating a libertarian social order in their ethnic communities.

Conclusion

Depending on circumstances, libertarians can support some forms of ethnic nationalism, as long as they only involve voluntary ethnic separation and seek to use private property rights to create their ethnic enclaves. However, libertarians should forcibly suppress those who insist on aggressive violence in pursuit of racial agendas. Regardless of whether they agree with such action, libertarians should defend the rights of anarcho-ethno-nationalists to do this, as it is both a litmus test for true belief in private property and the first target that enemies of libertarianism will attack in a larger quest to diminish or destroy private property rights. This is an actual slippery slope that must be vigorously guarded.

No libertarian can support statism or involuntary socialism in an absolute sense, but the kind of self-quarantine of such ideologies that ethno-statists propose may prove useful for libertarians who do not live in an ethno-state. If ethnic nationalism leads people to break apart larger states into smaller ones, this would be a positive step toward liberty. A more general sense of nationalism may develop in response to ethnic secessionist movements, and while this will present an obstacle to further localization in the long-term, it may be a useful temporary ally against statist globalism.

The West, and the liberty that has thus far uniquely developed from its traditions, is neither exclusively genetic nor exclusively ideological; it is partly both. Libertarian philosophy was mostly constructed by members of particular thedes, and other members of those thedes are statistically more likely to accept this philosophy. Ethnic nationalists can inform and remind libertarians of this so that efficiency may be increased by focusing more on the aforementioned thedes in our conversion efforts.

References:

  1. Hoppe, Hans-Hermann (2001). Democracy: The God That Failed. Transaction Publishers. p. 139.
  2. S. G. Tallentyre (Actual author: Evelyn Beatrice Hall) (1906). The Friends of Voltaire. Published by John Murray, Albemarle Street, London. p. 198-9.
  3. Hoppe, p.218.

Book Review: Libertarian Reaction

Libertarian Reaction is a collection of fifteen essays by Insula Qui. The book explores various issues from a libertarian reactionary perspective. The book is divided into three sections; one focusing on reaction, one focusing on liberty, and a long final essay.

The first part begins with an essay on the limits of libertarian ethics. In Savages, Qui deals with several types of humans who cannot be properly be considered people, and must instead be dealt with as lesser beings. The point that there is a difference between colonialism (the imposition of law and morality on people who have no rational conception of it) and colonization (a parallel development of law and morality while not imposing upon others) is important and oft-overlooked. The essay finishes with a denunciation of both Islam and communism as incompatible with libertarianism if each is to be practiced rigorously. The arguments are correct but elementary, which the author has since remedied elsewhere.

In Borders And Liberty, Qui weighs in on the debate over border policy, concluding that while state immigration restrictions are not libertarian and the only justifiable borders are private property boundaries, closed borders are a lesser evil than the forced integration imposed by modern states. He recommends restoration of the right to discriminate, sponsorship of and vicarious liability for immigrants by those who wish to bring them in, and elimination of welfare programs as methods of improving the current situation. References to support the assertions regarding demographics would improve the case made here.

Prerequisites for Liberty deals with the problem of humans who are not savages as described in the first essay but are nonetheless inclined to aggressive violence. Again, references to support demographic arguments would be helpful. Qui notes several obvious but underappreciated truths here, most notably that a libertarian social order cannot exist below a certain intelligence level, as this would preclude people from understanding the necessary rules of such an order. He correctly states that some people may convert to libertarianism by seeing it in practice instead of reaching it through reason. In fact, this is by far the more likely method of conversion in the near future. The role of hedonistic practices in damaging a social order are discussed, as is the folly of accepting non-libertarians into libertarian circles simply to grow numbers.

The next essay is Voluntary Ethnic Separation, and it explains the difference between what libertarianism requires one to accept and the common caricature of all such ideas as hateful racism. Qui shows great insight in tackling common leftist arguments here. He also makes the important point that collectivism can arise as a benign heuristic to help with decisions because people lack the capacity to deal with individuals beyond a certain point. However, the same demographic claims resurface without proper support. Finally, the point that ethnostatism could be a step toward breaking up large nation-states into more local forms of governance is overlooked by most libertarians, but not Qui.

The Antistatist Case for Monarchial Government is a longer essay that Qui included despite having changed his views on the matter, as he views it as being theoretically important. He makes a distinction between government (a manager of land and provider of essential services) and state (an entity that exercises a monopoly on initiatory force) which is lost on many people. He also explains that while a libertarian society would be imperfect, a state has even worse inefficiencies. Later, Qui hints at a potential problem with wilderness areas falling victim to a tragedy of the commons, but this could easily be solved by homesteading such areas. There are two significant errors here: a lack of accounting for the arguments made by Stefan Molyneux and others in favor of private dispute resolution organizations with regard to how law courts could function without a state, and a contradiction concerning redistribution and efficiency. The final part of the essay reads much like Hans-Hermann Hoppe’s case that monarchy is superior to democracy, and is reminiscent of the real-world example of Leichtenstein.

Qui tackles an uncomfortable issue that perhaps interests too many people in libertarian circles with The Libertarian Solution to the Age of Consent. He quickly rebuts the left-libertarians who wish to let children make decisions regarding sexual conduct, describing parenting of young children as a sort of regency until the child gains the ability to use reason. But Qui errs in saying that damages done by improper parenting are no different from any other sort of crime, as one can never truly be made whole from the lifelong detriments caused by improper parenting.

Dysgenics and Market Nobility discusses the corruption of the phrase “all men are created equal” from a statement of equality before the law into a belief in human biological uniformity. In doing so, he distinguishes between the natural elite of a free society and the power elite of a statist society, which are often conflated by leftists. Qui then explains how the two tend to work together in statist societies to keep the same families at the top for centuries rather than let the rags-to-riches-to-rags cycle properly play out. The essay then turns toward dysgenics, which refers to programs that have the opposite of a eugenic effect. The roles of feminism, sexual liberation, and welfare statism are examined in this light.

The first part concludes with Civilization and Natural Law, which makes unconventional but strong arguments in favor of censoring and physically removing people on the basis of their political opinions. Qui’s case is more utilitarian and reserved than it needs to be, but he still reaches the correct result that freedom of speech is a privilege that comes with owning property, not a fundamental right. He then finds that the solution to intractable differences between people and groups is mutual discrimination and exclusion, as forced integration necessarily results in racial tensions.

The second section begins with The Freedom of Government, which revisits themes from several of the previous essays. Qui makes a powerful case that people who claim to believe in democracy but deny people the self-determination to choose their form of governance are charlatans. He also observes that a large enough number of small monarchies is effectively equivalent to a libertarian social order. The only problem with this essay is brevity, as more explanation of each point would greatly improve the presentation.

The Curse of Citizenship explores how the modern state makes its subjects into cogs of its machine through citizenship as a legal concept. Qui shows that democracy, contrary to leftist propaganda, only makes this worse by providing an otherwise absent appearance of legitimacy. He correctly recognizes the futility of localism as an ultimate strategy, as it fails to account for the supremacy of higher levels of government. But his contention that “corruption within the state is nothing other than the people who are creating the illusion themselves being aware of the illusion” is misguided; one can have this knowledge without weaponizing it into corruption, and one can be corrupt without such an awareness.

In The Role of Co-Operation in Competition, Qui refutes several myths about capitalism. First, he proves that capitalism is not as anti-social as its critics claim. Second, he corrects the misconception of competition as being necessarily aggressive in nature. Third, he explains how competition can actually be a form of cooperation, in that individuals or groups can agree to compete in order to find out which methods are superior. Qui segues into several examples of cooperation that are not strictly competitive, such as food companies co-marketing with drink companies and agreements between private road companies. To complete the argument, he examines how the contrapositive is also true; namely, that removing competition also removes an incentive to cooperate. He finishes with a brief discussion of cartels and makes the insightful observation that a labor union is not commonly recognized as a cartel, despite functioning much like one.

It is only in Reverse Claims to Property that Qui truly goes off the libertarian reservation in his thinking, though he admits at the beginning that he may be doing so. Here, he tries (and fails) to invent an inverse of property rights to resolve questions of state-occupied property and wilderness areas. Qui again neglects other libertarian theories on how to deal with pollution. This un-ownership would, as he suggests, legitimize rights violations in some cases.

In Who Watches the Watchmen, Qui explores the libertarian answer to this age-old question, namely that the watchmen (in the form of private defense agencies) all watch each other. Here he enters an off-topic though informative discussion on the impossibility of eliminating the state by democratic means. He then returns to the topic to find that re-establishment of a state is the worst case scenario in a stateless society, but all economic and military incentives work against it. That it is the worst case means that all other outcomes must be better, setting this particular objection on its ear.

National Defence Without Coercion is the last essay in the second part, and it deals with the subject at length. Qui begins by noting the common fallacy committed by statists: using a state to defend people against other states does not change the fact that people are subjugated by a state; it only changes which state is in control. He covers the basics of how a private defense agency should function, but is a bit too enamored with nationalism. His comparisons between a private defense agency and an insurance company make one wonder where such arguments were in earlier essays. The latter part includes some novel thought on how the facilities of a private defense agency might be employed in other ways during peacetime. The conclusion discusses the difference between pre-modern gentlemen’s war and modern total war, with libertarianism likely to end modern warfare and return us to the less destructive pre-modern type of warfare. This essay and the previous essay could have been combined.

The final part consists of one much longer essay titled Examining Cultural Destruction. Qui examines the causes and symptoms of cultural decay, then proposes solutions. The role of the state and central banking in reducing time preferences is explained, then Qui shows how capitalism makes this worse not by being bad in and of itself, but by amplifying whatever inputs it receives. Egalitarianism is blamed in the Rothbardian sense of a revolt against nature, as is the loss of autonomy and identity that statism causes. Symptoms of these causes are identified as the demonization of productive work, the collapse of stable interpersonal and family relationships, the loss of spiritualism and hierarchy, the ascent of shallow materialism, the prevalence of escapism, and the expansion of empiricism into inherently rational disciplines. To solve these problems, Qui recommends absolute private property rights, abolition of central banking and as much of the state as possible, and a restoration of traditional values.

The first word that comes to mind when describing the entire collection is ‘incomplete.’ Qui lacked an editor for the book, and it shows. The grammatical constructions and punctuation are frequently in need of revision, and each of the essays would benefit from a much deeper bibliography. But the thoughts expressed therein are sufficiently intriguing to merit reading despite these flaws.

Rating: 4/5

Eliminate The Debt Ceiling

The United States debt ceiling is a limit placed on the amount of money that the federal government can borrow. This is done by placing a cap on the amount of national debt that can be issued by the US Treasury. About 99.5 percent of the debt is covered by this ceiling, but $238 million in United States Notes and $74 billion owed by the Federal Financing Bank as of September 2016 are not covered.

Because the ceiling applies to the total national debt rather than to annual deficits, and expenditures are authorized by separate legislation, the debt ceiling does not directly limit government spending. As the Government Accountability Office explains, “The debt limit does not control or limit the ability of the federal government to run deficits or incur obligations. Rather, it is a limit on the ability to pay obligations already incurred.”

When this occurs and the ceiling is not increased by legislation, the Treasury must resort to “extraordinary measures” such as suspending investments into federal employee retirement funds or exchanging Treasury securities for non-Treasury securities. Should such measures be exhausted before Congress agrees to raise or suspend the ceiling, a default on at least some of the national debt would occur. Most mainstream economists believe that this could cause an economic depression as well as a financial crisis.

Whether the nature of this ceiling should be altered and whether such a limit should exist at all are subjects of debate among economists and political commentators. This article will overview the history of the debt ceiling, make the case that it should be eliminated on both practical and moral grounds, and deal with common objections to elimination.

History

Article I, Section 8 of the United States Constitution gives Congress sole authority to borrow money on national credit. Between 1788 and 1917, Congress would pass legislation to authorize each bond issue by the US Treasury, with the particular amount specified in each legislative act. This would authorize specific loans in some cases, while in other cases the Treasury would be given discretion over which type of debt instrument to issue for specific purposes. Except for a short time in late 1835 and early 1836, the federal government has continuously had a national debt. Although there were parliamentary procedural rules concerning debt limits, there was no debt ceiling in the current form until 1917.

In 1913, the Sixteenth Amendment and the Federal Reserve Act both became law, which greatly expanded the taxing and spending capabilities of the federal government. As originally defined, the Federal Reserve was not allowed to purchase debt instruments from the US Treasury because members of Congress understood the fiscal danger that could arise from granting such permission. The desire for financial flexibility regarding American involvement in World War I led Congress to pass the Second Liberty Bond Act of 1917. This Act allowed the Treasury to issue bonds and take on other debt without specific Congressional approval, and allowed the Fed to purchase Treasury instruments. The debt ceiling was created as part of the deal to pass these changes, and took the form of limits on the aggregate amount of debt that could be accumulated through each category of debt, such as bills and bonds.

In 1939 and 1941, Congress passed the Public Debt Acts, which establish an aggregate limit on nearly all federal debt. Since then, the mechanism for raising the debt ceiling has been to amend these acts. The 1939 Act consolidated the separate limits from the 1917 Act into one limit, while the 1941 Act raised the debt ceiling to $65 billion, eliminated the tax exemption of interest and profit on government debt, and consolidated almost all government borrowing under the US Treasury. The Act was amended to raise the limit in each of the next four years, then the limit was reduced from $300 billion to $275 billion in 1946. Increases resumed in 1954, and there have been 72 increases and four decreases since then, with no decrease since 1963. As such, the debt ceiling has usually been a mere formality. After the Budget and Impoundment Control Act of 1974 created more opportunities for Congress to hold debates and hearings on the federal budget, the debt ceiling became less useful as a budgetary tool.[1] From 1979 to 1995, the Gephardt rule was in effect, which was a parliamentary rule that deemed the debt ceiling raised whenever a budget was passed, effectively nullifying the debt ceiling during that time. This rule was removed during the resolution of the 1995-96 government shutdown.

Treasury first implemented extraordinary measures on December 16, 2009 to avoid a government shutdown. Due to the lack of normal annual budgets during the Obama administration, Congressional Republicans used the debt ceiling as leverage for deficit reduction in 2011. This nearly caused a sovereign default, with Standard and Poor’s downgrading the United States credit rating and the Dow Jones Industrial Average dropping 2,000 points in late July and August. The Government Accountability Office estimated that this incident raised borrowing costs for the government by $1.3 billion in 2011, and the Bipartisan Policy Center extrapolated this estimate to $18.9 billion from 2011 to 2020. The debt ceiling was reached again at the end of 2012, which led to the Treasury adopting extraordinary measures again, as well as far more absurd measures being proposed.

On February 4, 2013, President Obama signed the No Budget, No Pay Act of 2013, which suspended the debt ceiling for the first time. This lasted until May 19. During that time, Treasury was authorized to borrow to the extent that “is required to meet existing commitments.” On May 19, the debt ceiling was raised to $16.699 trillion to accommodate borrowing performed during the suspension and extraordinary measures were resumed. In order to avoid a default when extraordinary measures were exhausted on October 17, the debt ceiling was suspended a second time until February 7, 2014. On February 12, the Temporary Debt Limit Extension Act suspended the debt ceiling until March 15, 2015, at which Treasury used extraordinary measures yet again. The debt ceiling was suspended again on October 30, 2015 until March 2017, and the suspension has been extended until the time of this writing.

Before And After

To begin making the case against the debt ceiling, let us consider the effect that having a debt ceiling has had on the national debt, which will show the effectiveness of the debt ceiling at reducing government spending over the long-term. Records begin in 1790, with the debt at the beginning of that year at $71 million. The debt grew to $127 million in 1816 from the War of 1812, then was steadily paid off until reaching zero in 1835. It would never be paid off again, growing gradually starting in 1836, then up to $68 million in 1851 as a result of the Mexican War. The next low was at $29 million in 1857. The Civil War caused an unprecedented debt, going from $91 million in 1861 to $2.77 billion in 1866, an increase of 2,962 percent. The next low was $1.55 billion in 1894, just before the Spanish-American War and other expansionist endeavors. The gradual growth during the early 20th century was accelerated by World War I, going from $3.06 billion in 1915 to $27.39 billion in 1919, an increase of 796 percent. Recall that the debt ceiling was instituted in 1917, with a national debt of $5.72 billion. The debt would be gradually paid off during the 1920s, reaching the next low of $16.8 billion in 1931. The debt grew again during the 1930s to fund government programs aimed at curtailing the Great Depression, reaching $48.96 billion in 1941. World War II ballooned the debt to $269.42 billion in 1946, an increase of 450 percent from 1941. The debt would never go below $250 billion again, gradually increasing past $300 billion in 1963. The Vietnam War accelerated the debt to $620.43 billion by 1976. In 1982, the national debt exceeded $1 trillion and has grown every year since 1958. On September 8, 2017, the debt passed the $20 trillion mark. Note that these figures do not include unfunded liabilities, which in recent times have become much larger than the official figure.

From 1790 to 1917, the debt increased by 7,946 percent, or 7.34 percent per year. From 1917 to 2017, the debt increased by 3,398 percent, or 8.5 percent per year. By this measure, the debt ceiling appears to be somewhat counterproductive for restraining spending, as the national debt has increased an additional 1.16 percent per year since its inception. However, one must be wary of cum hoc ergo propter hoc reasoning. National debts are influenced by a great multitude of variables, and attributing this change to a single cause would be fallacious. The larger role played by the United States on the world stage, with the attendant expenditures on military presence and foreign aid, contribute a great deal to the debt, as do social welfare programs, which were nearly nonexistent before 1917.

Now And Later

To make a stronger case, we must consider the current effects of having a debt ceiling versus the likely effects of eliminating it. In the process, we will make use of the neoreactionary concept of formalism. This is the idea that in human affairs, official reality should match actual reality, the underlying power dynamics should be brought into the open, and accounting practices should be honest.

The recent history is that the debt ceiling is always raised to avoid running into it. Starting in 2013, the practice has become to suspend the ceiling entirely. It goes without saying that a ceiling which is always raised and can be made to disappear is not really a ceiling at all. The effect of this is for the state to continually take on more debt rather than pay its bills properly. This is politically convenient, as it allows politicians to bribe voters with the fruits of the labor of their unborn descendants while avoiding the backlash that inevitably results from austerity measures. To call this a Ponzi scheme is an insult to Ponzi schemes, as all of the beneficiaries and victims in those scams are willing investors. A private sector Ponzi scheme involves no inter-generational debt slavery or other forced participation.

Although even the most ardent deficit hawks are loathe to be blamed for a sovereign default, the threat that a default will occur in this manner spooks investors needlessly. As mentioned earlier, the Dow Jones dropped 2,000 points in response to the 2011 debt ceiling crisis. If investors are convinced that a default may happen in spite of the apparent unwillingness of politicians to cause a default, then the markets will be sent into turmoil for no good reason.

Eliminating the debt ceiling would be a change that moves official reality closer to actual reality on several counts. First, the opponents of fiscal restraint know that those who would use the debt ceiling as a tool to reduce government spending will always cave before a default, even if they do cause the occasional partial shutdown of government functions. For this reason, their bluff is always called and they lose the hand by playing the debt ceiling card. Removing this card from the deck not only takes away an ineffective option, but forces reformers to seek out other methods which may be effective.

Second, eliminating the debt ceiling would signal that the federal government has no interest in paying off its creditors. It should be obvious enough that an entity which increases its debt burden every year for 60 years does not have fiscal responsibility as an objective, but the Treasury seems to have no shortage of lenders, especially because the Federal Reserve serves as a lender of last resort. Note that because the federal government monopolizes law, declares itself immune from suit, and has the firepower to repel those who would seek to collect by force, it is not accountable for the national debt in an absolute sense. Accountability thus becomes an indirect, external affair which would be aided by the consequences of signaling the aforementioned truth to the world.

The admission of no intention of paying off the debt, which is essentially an admission that a default will eventually occur, would make interest rates rise. This would be necessary in order to compensate investors for the fact that they may lose their principal, or at least take a haircut on it at some future date. Aside from the obvious benefit to savers, who would see financial progress for the first time in over a decade, the increased spending on interest on the national debt would force a combination of tax increases and spending cuts in other areas. This would make current supporters of government programs pay more for them up front through taxation and inflation, constrain the pathologically undisciplined federal government, and reveal the true priorities of the power elite when decisions about whom to tax more and which expenditures to cut are taken. As such, it both brings the underlying power dynamics into the open and makes accounting practices more honest.

Objections

At this point, let us consider some likely objections. First, there is the possibility that having no debt ceiling would cause the debt to grow even faster. The above examination of the history of the national debt suggests that this objection is ill-founded, as the annual percentage increase has been higher with a debt ceiling in place. But even if it is true that eliminating the debt ceiling would accelerate the growth of the national debt, this is not necessarily bad. The faster the debt accelerates, the sooner the events described in the previous section will occur, meaning that the current unsustainable dynamics will be replaced earlier than they otherwise would.

A second objection is that this course of action may cause an economic collapse. This is entirely possible, but again, not necessarily bad. The end of the United States dollar would result in either a monetary reform and/or the replacement of government fiat currencies with something more sound, such as a gold-backed currency or a cryptocurrency. Because the US dollar is the world reserve currency, the US government can abuse its economic system more than other governments can. Losing this status would be another step toward forcing the government to behave more responsibly, as it would curtail the amount of debt that can be issued by reducing foreign demand.

The resulting collapse of the bond market leads to the third objection that this would cause a great amount of hardship. However, one must remember that the investors in government bonds have bought instruments which are funded by extortion and debt slavery. From a moral standpoint, those who lose on such investments deserve to lose. That being said, this course of action does not actually cause the collapse; rather, it makes the inevitable collapse occur more quickly.

Conclusion

The debt ceiling was created with the intention of limiting the ability of the Treasury and the Federal Reserve to behave irresponsibly as they were allowed to provide more liquidity to fund World War I. But over the past century, quite the opposite has happened. The national debt has grown significantly faster than it did previously, and is now on a path toward default which is not reversible given current political realities. Eliminating the debt ceiling may seem like a counterproductive maneuver, but it would do much to formalize the true nature of the American fiscal situation. The only real debt ceiling is that established by lenders and creditors. When they deem a borrower to pose too much of a default risk, they stop lending and call in their debts, thus forcing the debtor to behave responsibly. The sooner this happens to the United States government, the better.

References:

  1. Kowalcky, Linda W.; LeLoup, Lance T. (1993). Congress and the Politics of Statutory Debt Limitation. Public Administration Review. 53 (1): p. 14.

Book Review: The Art Of Invisibility

The Art of Invisibility is a book about methods of maintaining privacy and anonymity in an age of surveillance by American hacker and cybersecurity analyst Kevin Mitnick. The book gives advice on every aspect of modern technology which could expose one to nosy neighbors, identity thieves, law enforcement, and other sources of unwanted attention. The book is divided into sixteen chapters which advise the reader about various measures that can be taken to improve security.

The introduction begins with the revelations made about the NSA’s activities by Edward Snowden, then discusses the information that is publicly available about most people with very little searching required. The first chapter is about password security and security questions. Tips are given for choosing a strong password, using a password manager, creating answers for security questions, and using multi-factor authentication. The second and third chapters cover surveillance of email and phones. Mitnick covers the concepts of metadata, encryption, and social engineering. He explains how the Tor browser and MAC addresses work. He discusses several current and historic methods of wiretapping phone conversations and pinpointing the location of a phone, then explains how a burner phone may be used to obtain some privacy.

Chapter 4 is about the functionality and use of encryption to thwart eavesdroppers. This is discussed in the context of text messages, cell phones, and computers, each of which is remarkably vulnerable without it. The next chapter begins with the Sarbanes-Oxley Act, which is now being used to prosecute anyone who deletes browser history that federal prosecutors wish preserved. Mitnick makes the obvious recommendation of not collecting such history in the first place, then instructs the reader on how to do so. He then discusses how Internet browsers track a user’s location and how this may be countered. The chapter concludes with the dangers of connecting devices and cloud storage.

The sixth chapter details various tactics that websites use to track users, such as scripts, single-pixel images, cookies, and toolbars, then offers advice for stopping them. The chapter ends with a basic overview of Bitcoin for overcoming some current legitimate uses for tracking. The dangers of sharing an Internet connection make up the seventh and eighth chapters. Mitnick teaches the reader how to set up an Internet connection that is difficult for malicious users to find and use. Next, he discusses several cases in which webcams were used to spy on people, including underage students. The phenomenon of ransomware, in which a user’s files are encrypted by malware and can only be decrypted by paying an extortionist, concludes Chapter 7. After this comes the pitfalls of public computers and Wi-Fi connections. Lessons on avoiding man-in-the-middle attacks, using virtual private networks, resetting one’s MAC address, and more are found in the eighth chapter.

The second half of the book opens with examples of photo metadata being used to locate people, then tells how to delete such information and prevent it from being created. Mitnick then gives advice on how to get unwanted photographs of oneself removed from websites, though it may not always work. The dangers of posting sensitive personal information on social media or otherwise sharing it with strangers is discussed. The extent to which corporations track commentary on social media is detailed through examples of students found publicly discussing standardized test material. The absurdity of minors facing criminal charges for possessing nude photos of themselves is used to illustrate the potential dangers of Instagram and Snapchat. The chapter finishes with privacy problems that can come from using dating sites and mobile apps.

Mobile device tracking is the subject of the tenth chapter. Mitnick writes about the third-party accessibility of information recorded by fitness-tracking devices as well as the trackability of people through the GPS features of their devices. He also shares an interesting episode of social engineering combined with tracking in which he surprised a careless driver who almost killed him with a stern warning supposedly from the DMV. The use of drones and facial recognition to erode privacy come later in the chapter, along with some prototypical countermeasures. The next two chapters detail how cars and home appliances can be used to track people, then show people how to turn off many of these features. Doing so will deprive users of some convenience, but that is the general cost of privacy and anonymity.

Chapter 13 applies the information discussed in previous chapters to the workplace. The insecurity of copiers, printers, and other such office appliances is highlighted so as to warn readers not to use them for any purpose that one would not want one’s employer or any hacker to see. Videoconferencing and remote file storage systems are covered in the last part of the chapter, with advice given for increasing security on them. The fourteenth chapter details the myriad ways in which government agents violate privacy and interfere with private electronics and communications, then advises readers on how to protect themselves while being aware of the laws in various countries. Also included here are the privacy concerns with hotel keys, supermarket cards, and airline boarding passes should they fall into the wrong hands.

The fifteenth chapter is mostly about the arrest of Ross Ulbricht, describing the mistakes that led to his capture. Devices that masks geolocation, and could thus have hidden Ulbricht from law enforcement had they existed in 2013, are mentioned. The final chapter lays out a step-by-step guide to achieving as much anonymity online as possible.

From beginning to end, Mitnick shares a wealth of information with just the right amount of personal anecdotes and other stories to keep the reader engaged. The Art of Invisibility is an excellent reference that deserves a place on the bookshelf of all who care about online privacy and personal security until enough time passes to render the information within obsolete, which may be on the order of decades.

Rating: 4.5/5

Guns Are The Only Bulwark Against Tyranny

On October 5, the New York Times published an opinion column by Michael Shermer in which he argues that the rule of law is a bulwark against tyranny, but guns are not. In this rebuttal, I will show on a point-by-point basis that he has made an erroneous case while committing numerous logical fallacies, and that the opposing view is correct.

“In the wake of the Las Vegas massacre — the worst in modern American history, with 58 dead and some 500 wounded — the onus falls once again to those against gun control to make their case.”

Shermer uses the qualifier “modern,” but does not bother to define it. It seems that to him, events like the Wounded Knee Massacre, in which agents of the United States government murdered 300 members of the Lakota Sioux tribe, including 200 women and children, do not count because they occurred before some arbitrary cutoff date. Ignoring such events is also convenient for the arguments he will make later. That the onus is on the gun rights side rather than the gun control side is simply asserted and may be simply dismissed.

“The two most common arguments made in defense of broad gun ownership are a) self protection and b) as a bulwark against tyranny. Let’s consider each one.”

Another common argument that Shermer ignores is the right to own property in general, of which the right to keep and bear arms is part and parcel. But that would require him to deal in a priori logic, which does not appear to be his strong suit.

Self-Defense, Crime, and Suicide

“Stories about the use of guns in self-defense — a good guy with a gun dispensing with a bad guy with a gun — are legion among gun enthusiasts and conservative talk radio hosts.”

This is because such events happen regularly, to the tune of at least 338,700 events in America in between 2007 and 2011. As will be explained below, this is a low estimate.

“But a 1998 study in The Journal of Trauma and Acute Care Surgery, to take one of many examples, found that ‘every time a gun in the home was used in a self-defense or legally justifiable shooting, there were four unintentional shootings, seven criminal assaults or homicides and 11 attempted or completed suicides.’ That means a gun is 22 times more likely to be used in a criminal assault, an accidental death or injury, a suicide attempt or a homicide than it is for self-defense.

A 2003 study published in the journal Annals of Emergency Medicine, which examined gun ownership levels among thousands of murder and suicide victims and nonvictims, found that gun-owning households were 41 percent more likely to experience a homicide and 244 percent more likely to experience a suicide.”

It is curious that Shermer could not find and cite any more recent studies to support his case, but let us deal with his evidence, such as it is. All such studies suffer from two fatal flaws; they cannot count the number of crimes which did not occur because a potential criminal either saw a gun or believed a gun was present and chose not to offend, and empiricism cannot provide information about counter-factuals. For instance, criminals who have been killed by defensive uses of guns may have otherwise gone on to commit scores of murders, but they were prevented from doing so in this timeline. Without guns, other weapons would be used to commit homicides and other crimes, such as knives, bombs, and vehicles, as occurs in countries where firearm ownership is rare and difficult. That there is a difference between a legally justifiable shooting and a morally justifiable shooting further complicates matters.

Furthermore, Shermer implies that all suicides and accidents involving guns are bad, which is not the case. A person who has a short amount of time to live and will be in excruciating pain for the entirety of that time may decide that nonexistence (or going to whatever afterlife the person believes in) is better than existence as a terminally ill person. In such a case, a self-inflicted gunshot wound can act as a form of euthanasia compared to the protracted suffering which would otherwise lie ahead. (And because many governments still violate the sovereignty of their citizens over their own bodies by prohibiting physician-assisted suicide, these are cases of bad people with guns being defeated by good people with guns, albethey in a different manner.) The tragedy in such a case is not the gun death, but the terminal illness behind the gun death.

Another case can occur during an armed conflict. A person whose position is being overrun by enemy forces may commit suicide to avoid capture, interrogation, and torture at the hands of the enemy. Historically, many women did this to avoid becoming victims of war rape and many people with valuable knowledge did this to keep themselves from being tortured into divulging important information to the enemy. In such cases, a self-inflicted gun death can be the best of a multitude of bad options. Though these situations are unlikely inside of the United States, they are not impossible.

Third, a person whose brain does not function properly can come to believe that putting a bullet through one’s skull has some effect other than ending one’s life, or that self-preservation is not a worthwhile endeavor. While there are many cases in which intervention is needed and the death of the mentally ill person would be regrettable, there are some people who have a chronic and incurable mental condition. A strong desire to end one’s life in the absence of terminal illness or an impending worse fate is a mechanism of natural selection to eliminate organisms which are not sufficiently fit to reproduce and take care of the next generation.

On the subject of accidental gun deaths, some cases are best prevented by education of gun owners, but others are a mechanism of natural selection. The gun owner who handles his guns haphazardly or maintains them improperly can remove himself from the gene pool when the gun either shoots him or fails catastrophically in his hands. The gun owner who is a parent and fails to secure his guns around young children is less likely to get to be a grandparent, great-grandparent, and so on. At any rate, accidents are the fault of people, not guns.

With regard to the claim that gun-owning households are more likely to experience a homicide or suicide, to say that this is because guns are present is a cum hoc ergo propter hoc fallacy. Additionally, Shermer neglects to mention studies that show a decrease in violent crime as gun ownership has increased. Perhaps he realizes that such data would undermine his narrative. The aggregate is a wash; there is no clear correlation one way or the other.

“The Second Amendment protects your right to own a gun, but having one in your home involves a risk-benefit calculation you should seriously consider.”

The Second Amendment’s utility in this regard is questionable at best, and Shermer’s empirical arguments are highly suspect, but the idea that the decision to have a firearm in one’s home involves a risk-benefit calculation is technically correct.

Tyranny and Rebellion

“Gun-rights advocates also make the grandiose claim that gun ownership is a deterrent against tyrannical governments. Indeed, the wording of the Second Amendment makes this point explicitly: ‘A well regulated militia being necessary to the security of a free state, the right of the people to keep and bear arms shall not be infringed.’ That may have made sense in the 1770s, when breech-loading flintlock muskets were the primary weapons tyrants used to conquer other peoples and subdue their own citizens who could, in turn, equalize the power equation by arming themselves with equivalent firepower. But that is no longer true.”

Shermer unintentionally makes a strong argument that the right to keep and bear arms should be greatly expanded. In order to “equalize the power equation,” let us repeal the National Firearms Act of 1934 to remove taxes on certain categories of arms, the Atomic Energy Act of 1946 so that private citizens can own a nuclear deterrent, the Gun Control Act of 1968 to eliminate licensing of arms dealers and manufacturers, the Firearm Owners Protection Act of 1986 to decriminalize private ownership of machine guns manufactured after that date, and numerous other federal, state, and local measures that further restrict what kinds of weapons may be owned by private citizens.

“If you think stockpiling firearms from the local Guns and Guitars store, where the Las Vegas shooter purchased some of his many weapons, and dressing up in camouflage and body armor is going to protect you from an American military capable of delivering tanks and armored vehicles full of Navy SEALs to your door, you’re delusional.”

Shermer follows in the pattern of most other leftists in straw-manning the nature of a violent uprising to overthrow the state. No one seriously believes that a single individual is capable of going up against the armed forces of a nation-state and emerging victorious. Instead, such an effort would require a few percent of the civilian population to use self-defense against agents of the state just as they would against common criminals. Nor is it necessary to achieve the sort of victory that one nation-state would enjoy against another in a war in order to succeed in such a revolution. A sustained effort of decentralized, anti-political, guerrilla attacks need only make the prospect of being a government agent within a certain territory too dangerous of an employment option to be worthwhile, thus physically removing the state from that territory without the need to meet the state’s forces in regular warfare. Note that even a single instance of government agents being killed can greatly reduce oppression, at least in the short term.

As Shermer suggests, a state is likely to deploy its military domestically in an effort to put down such a rebellion. If the rebels are competent, they will blend into the general population when they are not actively engaging their opponents. Thus, using military hardware against the revolutionaries would cause many civilian casualties, especially in the case of area-effect weapons. Just as drone strikes that kill innocents overseas cause more people to join terrorist organizations today, the state’s response to the rebels would cause more people to join the rebels to try to avenge their fallen friends and family members. The state would also damage the infrastructure that it needs to operate in order to maintain public support and carry out its functions.

Shermer seems to believe that military vehicles and personnel are invincible juggernauts that the average citizen could not hope to defeat. This is quite false, as many resistance movements have conclusively proven. Military vehicles are quite vulnerable to ambush in close quarters. Improvised explosives can destroy or disable them, as can large amounts of fire, such as from multiple Molotov cocktails. Aircraft are harder to deal with if the rebels present them with a target and cannot keep them grounded, but drones can be hacked and thermal evasion suits are not terribly difficult to build. Of course, an ounce of prevention is worth a pound of cure. All vehicles need to be fueled, controlled, and maintained, and all offensive vehicles need to be armed. Someone must perform each of those tasks. Someone must deliver the resources for both those tasks and the personnel involved. Those people are far more vulnerable than the vehicles themselves.

While leftists tend to deride such suggestions as pure fantasy, anyone who has bothered to seriously think through such possibilities knows that they are not, including high-ranking United States military personnel who are responsible for preparing plans for such scenarios.

“The tragic incidents at Ruby Ridge, in Idaho, and Waco, Tex., in the 1990s, in which citizens armed to the teeth collided with government agencies and lost badly, is a case study for what would happen were the citizenry to rise up in violence against the state today.”

That these are not useful case studies for the possibility of rebellion against the United States government has been demonstrated in the previous section. One must also consider the difference made by Timothy McVeigh. Although his actions cannot be defended from a deontological perspective, the Oklahoma City bombing appears to have had positive consequences with regard to how the state handles armed resistance. By the standard of Ruby Ridge and Waco, the Montana Freemen standoff in 1996, the Bundy Ranch standoff in 2014, and the Malheur standoff in 2016 all should have ended in mass casualties. But because McVeigh made such massacres costly for the state in terms of blowback, responding to such armed standoffs with overwhelming deadly force has become unpalatable.

Government Failure

“And in any case, if you’re having trouble with the government, a lawyer is a much more potent weapon than a gun. Politicians and police fear citizens armed with legal counsel more than they do a public fortified with guns. The latter they can just shoot. The former means they have to appear before a judge.”

The previous two sections clearly refute the idea that the politicians and their agents can just shoot the public. As for citizens armed with legal counsel, they are going into a government courtroom, of government law enacted by those very politicians, presided over by a government judge, funded by taxes that the government extorted from them via the guns carried by those very police. This is a conflict of interest of astronomical magnitude that would never be tolerated in any situation that does not involve the state. The idea that a lawyer is a much more potent weapon than a gun for resolving trouble with a government is thus risible at best.

“A civil society based on the rule of law with a professional military to protect its citizens from external threats; a police force to protect civilians from internal dangers; a criminal justice system to peacefully settle disputes between the state and its citizenry; and a civil court system to enable individuals to resolve conflicts nonviolently — these institutions have been the primary drivers in the dramatic decline of violence over the past several centuries, not an increasingly well-armed public.”

The correlation between declining violence and the civil society he describes does not establish a causal link, so Shermer commits another cum hoc ergo propter hoc fallacy. He also assumes that the state is necessary to provide these essential services. In fact, the opposite is true. Rule of law is the idea that people should be governed by laws rather than by the arbitrary decisions of rulers. A state is a group of people who exercise a monopoly on initiatory force in a certain geographical area. People who have a monopoly on initiatory force necessarily have a monopoly on the enforcement of laws. This means that they can choose the nature of the law and the enforcement thereof. Thus, in the presence of a state, those who wield state power rule the law and not vice versa. Therefore, the only possibility for rule of law, as well as the peace and justice that follow from it, is to have no state.

The civil society Shermer describes has its own set of intractable problems. First, the professional military may protect its citizens from external threats, and the police may protect civilians from internal dangers, but this is the security of a farm animal rather than the security of a free person. The state uses its military and police to prevent exploitation of its subjects by other powers only so that it may monopolize their exploitation. And should this monopoly decline and fail, the citizens will be less secure than they were before its inception. The criminal and civil courts cannot perform their functions correctly due to both the conflict of interest explained in the previous section and the doctrine of sovereign immunity.

“States reduce violence by asserting a monopoly on the legitimate use of force, thereby replacing what criminologists call ‘self-help justice,’ in which individuals settle their own scores, often violently, such as drug gangs and the Mafia.”

The goal of those who wish to create a superior form of social order should be a reduction of aggression, which does not necessarily entail a reduction of violence because aggressive violence may be reduced by overwhelming displays of defensive violence. That being said, government agents murdered over 200 million people in the 20th century, which is hardly a reduction in violence compared to pre-modern conditions.

Shermer then presents a false dilemma between a state monopoly on criminal justice and a vigilante free-for-all, completely ignoring the possibility of market provision of criminal justice through competing private businesses. He also neglects the fact that drug gangs and other organized crime make much of their income through goods and services which do not involve aggression against people or property but have been outlawed by the state regardless. Without state interference in the economy, much of the economic activity which currently involves violent dispute resolution between criminals would instead involve peaceful dispute resolution between legitimate business interests.

Finally, given that the state monopoly on force creates a system in which justice for the crimes of its agents is functionally impossible coupled with anarcho-tyranny, there are cases in which “self-help justice,” better known as vigilante justice, is superior to no justice at all.

“Homicide rates, for example, have plummeted a hundredfold since 14th-century England, in which there were 110 homicides per 100,000 people a year, compared with less than one per 100,000 today. Similar declines in murder rates have been documented in Germany, Switzerland, Italy, the Netherlands and Scandinavia. (American homicide rates are around five times higher than in Europe, owing primarily to the deadly combination of guns and gangs.)”

Again, this does not tell us why homicide rates have fallen. Better economic circumstances and declining exposure rates to toxic substances that increase aggressive behavior also contribute to declining violence. That guns and gangs are primarily responsible for the higher homicide rate in America is simply asserted and may thus be simply dismissed.

“There’s no question that tyrannical states have abused the freedom of their citizens. But it is no longer realistic to think that arming citizens to the teeth is going to stop tyranny should it arise. Far superior are nonviolent democratic checks and balances on power, constitutional guardians of civil rights and legal protections of liberties.”

There is indeed no question that tyrannical states have abused the freedom of their citizens. What Shermer fails to understand is that all states are necessarily tyrannical and must abuse the freedom of their citizens in order to perpetuate their operations. The idea that it is no longer realistic to think that arming citizens to the teeth is going to stop tyranny should it arise has been thoroughly refuted above. Nonviolent democracy in the context of statism is a contradiction of terms because the state rests upon a foundation of aggressive violence, and democratic forms only pour gasoline upon the fire by setting part of the citizenry against another part. Checks and balances do not really exist in practice, as the various parts of a state apparatus invariably come to conspire together toward their common goal of dominating the society under the leadership of the most powerful branch of government. The Constitution itself and the laws passed under it are similarly useless as guardians of rights and protections of liberties because the very powers they are supposed to limit (if we ignore the fact that the Constitution expanded state power far beyond what the Articles of Confederation allowed) are in charge of their interpretation, enforcement, and amendment.

Conclusion

Shermer’s case is deeply flawed from beginning to end. His cherry-picked studies fail to demonstrate his case, as studies with opposing findings exist and the aggregate is inconclusive. He makes unfounded assumptions regarding self-defense and suicide, has thoroughly failed to understand the use of self-defense against the state, and presents a view of civil society that is starry-eyed and naive. Contrary to Shermer, the only bulwark against tyranny is the credible threat of forcible removal of tyrants from power, and this requires the possession and use of guns.

Twelve Observations On The Catalonia Independence Vote

On September 6, the government in Catalonia announced that it was going to hold a vote on October 1 to decide whether the region should secede from Spain and become a nation-state unto itself in the form of a republic. It also announced that should the people choose independence, the government would declare secession within 48 hours. Spain’s constitutional court declared the vote unconstitutional, and the central government in Madrid said that it would attempt to stop the vote. Neither side backed down. The Spanish government seized ballots and tried to shut down polling places, resulting in violence that left over 840 people injured. The vote still took place, with nearly 90 percent voting for independence. In response, pro-secession protests occurred throughout Spain and a general strike was called across Catalonia. Spain and the European Union have rejected Catalonia’s requests for mediation, and King Felipe VI has denounced the secession movement. Twelve observations on these events follow.

1. One cannot understand the present without knowing the past. The formation of the current Spanish state can be dated to 1469, when the Christian kingdoms of Castile and Aragon were united by the marriage of Isabella I of Castile and Ferdinand II of Aragon. Under their leadership, the last Muslim rulers were expelled from Spain, Christopher Columbus was sent to the New World, and royal power was centralized at the expense of local nobility. Even so, Spain has always been a multi-ethnic state, composed of Basques, Catalans, Galicians, and others. In the 19th century, nationalist feelings among these groups grew. These aspirations took a back seat during the Cuban War of Independence, Phillipine Revolution, and Spanish-American War. Regions of Spain were granted greater autonomy in the Second Spanish Republic (1931-39), but this was brutally repressed during Francisco Franco’s dictatorship (1939-75), such that people were not even allowed to give their children Basque, Catalan, Galician names. After Franco’s death, Spain was turned into a semi-federal state with 17 autonomous communities, some of which have their own languages and cultures, as Catalonia does.

2. The Catalan independence movement cuts across ordinary political lines. Some people in Catalonia believe that independence would bring order to the region’s finances, or make taxes paid by Catalonians provide more benefit to Catalonians. Others are migrants who became involved with the Catalan movement and have no loyalty to the government in Madrid. Still others have particular political objectives that they believe to be easier to achieve on a smaller scale, such as an independent Catalonia rather than the entirety of Spain. In American terms, the parties which are in a temporary alliance to achieve independence run the gamut from the Constitution Party to the Green Party.

3. The harder one clenches one’s fist, the more sand slips through one’s fingers. For the Madrid government, responding with peaceful dismissal of the independence vote would have been more effective. Instead, they met peaceful efforts by Catalans with violence. In the words of a Spanish politician, “We have given them the pictures they want.” By forcefully opposing the self-determination of Catalans, the Spanish government is pushing swing voters toward the independence movement, as such actions raise the specter of Franco that is still remembered, particularly among older people. Furthermore, the creation of a new state is much easier if existing states recognize it, and images for foreign consumption of people trying to vote and being hit with truncheons and shot with rubber bullets for it will create pressure on other governments from their people to recognize Catalonian independence.

4. The voting results are questionable. The Catalan government rushed through the legislation for the referendum and passed it in a late-night session without the opposition being present. They vowed to secede even if turnout was low, and engaged in smear tactics against those who opposed independence. Turnout was only 42.3 percent, and the anti-independence side did not campaign because the government in Madrid declared the vote to be illegal.

5. This will provoke greater nationalist sentiment in the rest of Spain. Whenever separatist sentiment grows in one part of a nation, a unionist sentiment tends to grow elsewhere in reaction to it. In some cases, this occurs because the separatists threaten to remove an economically important area from the nation, such as a mine or a seaport. In others, such as the American Civil War, the separatists are engaged in activities that the unionists find morally reprehensible. Sometimes, a central government simply wishes to keep separatists subjugated so as to discourage other separatist movements elsewhere in the nation, such as in the Basque country. Whatever the case may be, nationalism in Madrid is likely to grow alongside secessionism in Catalonia. This will be bolstered by the fact that Catalonia is more leftist than the rest of Spain, as nationalism tends to be more common on the right.

6. Nationalism is not an ally of liberty; merely an enemy of some of liberty’s enemies. The nationalist sentiments of Catalans or anyone else in Spain will not lead to liberty in and of themselves. Only by coupling such sentiments with the principles of self-ownership, non-aggression, and respect for private property can a libertarian social order emerge. Nationalism is also hostile to any decentralizations of power below the national level. That being said, nationalism is certainly a lesser evil than globalism, and may serve as a temporary makeshift on the path to a better political arrangement.

7. The EU will be weakened regardless of the end result. If Catalonia becomes independent, it will be outside the EU, having to either apply to rejoin or have its move toward independence also serve as a Catexit, so to speak. Given Catalonia’s population of 7,522,596 and GDP of $255.204 billion, this would remove 1.47 percent of the population and 1.23 percent of the GDP from the EU. By contrast, Brexit will remove 12.83 percent of the population and 13.45 percent of the GDP from the EU. Even though Brexit is a much larger issue, the impact of a Catexit would still be noticeable. Catalonians are unlikely to want to exit the EU, but doing so may be unavoidable if they cannot gain admission once they are independent.

As per the previous point, it is also necessary to contemplate a Spexit, with or without Catalonia included. Growing nationalism in Spain as a reaction to growing separatism in Catalonia may lead to euroskepticism there. This, combined with longstanding economic issues in Spain such as high unemployment, may lead conservatives to contemplate the possibility of a brighter future outside of the European single market. A complete Spexit would remove 9.08 percent of the population and 5.94 percent of the GDP from the EU, while only Catalonia remaining in the EU would remove 7.61 percent of the population and 4.71 percent of the GDP from the EU. Though not as impactful as Brexit, a second member state leaving the EU could signal the beginning of the end.

Finally, regardless of whether any exits occur, the EU will almost certainly appear to be weak and ineffectual as a result of recent events. Calls for it to mediate the dispute have gone unanswered, and the EU seems intent on ignoring repression of a democratic vote. Given the EU commission’s threats of sanctions against Hungary and Poland for their anti-democratic policies, this seems rather hypocritical. One must also consider that the EU has no mechanism for dealing with such an issue. Article 3a of the Treaty of Lisbon calls for the EU to “respect their essential State functions, including ensuring the territorial integrity of the State, maintaining law and order, and safeguarding national security,” so it is unlikely to help the separatists. Nor is it in the rational self-interest of anyone who wields power in the EU to intervene, as doing so would encourage separatists in other EU nation-states.

8. Secessionist movements are fueled by economic hardship and government mismanagement. The role of the Catalan people in Spain is both privileged and marginalized. Even though Catalans have maintained a distinct identity, they contribute more to Spain than they receive in return, especially in terms of institutional influence, which remains dominated by Madrid. Since the 2008 financial crisis, this has exacerbated tensions, and the continued economic problems in Spain lead some Catalonians to believe that they could do better for themselves with more local governance.

9. The state is legitimized only by force. The simple truth is that any other basis for legitimacy is subject to reason and defeated thereby. A deity fails because no such being is proven to exist. A constitution fails because any person or group can write one, leaving the state’s legitimacy constantly imperiled. An appeal to tradition fails because all traditions and states must begin somewhere, leaving them unable to be formed in the first place. A supranational body fails because it begs the question of how it gets its legitimacy. A social contract fails because a valid contract must be entered into willfully by all parties. Democracy fails because it is a logical impossibility, which could not even appear to function without the state already in place, thus resulting in circular reasoning.

Mao Zedong spoke truly on the nature of state legitimacy; “Political power grows out of the barrel of a gun.” A state continues to operate because it violently subjugates anyone who would attempt to end its operation, and it maintains territorial integrity by violently suppressing any efforts by its people to secede from the state. The only factor preventing individuals or sub-national groups from gaining sovereignty is the fact that they lack the force of arms and/or the willingness to use them for that purpose.

10. Self-determination must be taken and defended by force. Given the previous point, the path to true independence is clear. A separatist movement must first declare independence, but this will never be sufficient. The larger state will seek to retain any breakaway provinces by force, and if the separatists wish to form a new nation rather than be imprisoned or executed on charges of sedition or treason, they must respond with defensive force to the aggressions of the larger state. This has been the norm at least since the American Revolution, and the Catalonian situation is shaping up to be no different.

In a more general theoretical sense, self-determination must be taken and defended by force because the failure to do so will result in some group of aggressors infringing upon one’s self-determination. As Vegetius said, “He, therefore, who desires peace, should prepare for war.” Only by doing this can one present an effective deterrent against those who would return a free people to a state of bondage.

11. Repression by the Spanish government may provoke terrorism. Should the violence escalate, as appears likely, some Catalonians may end up following the Basque model. In the Basque Country, there is a moderate nationalist and separatist movement, much like the Catalonian independence movement. But there is also the ETA, a paramilitary group that has engaged in terrorist acts for decades. The group was founded in 1959 during Franco’s regime, but continued carrying out attacks for decades after the restoration of regional autonomy. Other examples of this throughout the world include the Irish Republican Army and the PKK in Kurdish regions of Iran, Iraq, Syria, and Turkey. Notably, the Kurds are also attempting to create a new state for themselves at the time of this writing.

12. The international community functions as a cartel. Catalonia and Iraqi Kurdistan are currently attempting to become independent nation-states, and both are being met with a mixture of indifference and contempt from existing nation-states. That such movements provoke hostility from the remainder of their current states is understandable and has been addressed above, as has the uneasiness of foreign governments to recognize the independence of separatist movements. But there is more at work here, which may be explained by considering the role of cartels in a marketplace and the effects that decentralization would have if taken to its logical conclusion.

The standard libertarian view is that cartels are inherently unstable, as the incentive of each member has a profit motive to betray the cartel. This incentive is frequently countered by state interference in the economy to protect a cartel from this effect. There is no more profitable venture in the current system than the management of a state, so this profit motive is amplified alongside the protectionist motive as an equal and opposite reaction. But libertarians tend to under-appreciate the role of aggressive violence in the marketplace, which is a service for sale like any other. This keeps them from fully understanding situations like these, in which established players seek not only to out-compete upstarts or hamstring them through regulatory capture, but to engage in direct violent suppression of competitors.

Finally, the rulers of nation-states must be aware at some level that the entry of new polities into the established order has the potential to remove that order from power. In the words of Murray Rothbard,

Once one concedes that a single world government is not necessary, then where does one logically stop at the permissibility of separate states? If Canada and the United States can be separate nations without being denounced as in a state of impermissible ‘anarchy,’ why may not the South secede from the United States? New York State from the Union? New York City from the state? Why may not Manhattan secede? Each neighbourhood? Each block? Each house? Each person? But, of course, if each person may secede from government, we have virtually arrived at the purely free society, where defense is supplied along with all other services by the free market and where the invasive State has ceased to exist.”[1]

Taken to its logical conclusion, political exit may be disintegrative, but stopping somewhat short of atomized individualism would both remove the Cathedral from power and create the opportunity to build a superior form of social order. The establishment has no interest in allowing this to happen and would rather nip it in the bud at the expense of looking oppressive and/or indifferent than risk losing their global hegemony.

Taken together, these explanations help one understand why the established nation-states, despite their contrary interests, can agree that no new members should be able to join their club.

References:

1. Rothbard, Murray (2009). Man, Economy, and State with Power and Market. Ludwig von Mises Institute, Scholar’s Edition, 2nd ed. p. 1051.

Lecture: Libertarianism and Reaction

On July 28-30, 2017, the second annual Corax Conference took place in Sliema, Malta. To my great surprise, I was invited and sponsored as a speaker. I decided to seize upon the opportunity to spread part of my message to a live audience, as well as leave the United States for the first time. While there, I gave an early version of the lecture linked below. That version, and all other materials from the conference, may be purchased here: https://cor.ax/coraxconf-remote

This is a lecture about libertarianism and its relationship to reactionary thought of several types.