Tucker, Spencer, Libertarianism, and Fascism

On February 18, white nationalist and alt-right leader Richard Spencer was present in the bar of the Marriott hotel that hosted the International Students For Liberty conference. He was invited by the Hans-Hermann Hoppe Caucus, a group of right-libertarians with no official affiliation with SFL. A sign and the claims of several Hoppe Caucus members made it seem as though Spencer was an official part of the event, although he was not.

“We started the Hoppe Caucus with just a small group of people to spread diversity of conversation into the libertarian movement,” said Mitchell Steffen, founding member of the Hoppe Caucus. “We don’t agree with what Spencer believes in a lot of ways, but we still wanted to hear his point of view.”

For the better part of an hour, he and a small gathering of supporters, other listeners, and some SFL attendees engaged in political conversation in a peaceful and mostly quiet manner. Things got more raucous over time, then Jeffrey Tucker and others arrived to loudly denounce Spencer. Tucker left the scene, but those who came with him kept yelling, prompting hotel security to ask the entire crowd at the bar to leave. Spencer requested an escort out by hotel security, which they provided.

“It was really unfortunate how it turned out,” Steffen said. “I think the Hoppe Caucus did a good job of pushing the envelope and exposing hypocrisy though. Spencer’s ideas should be challenged with better libertarian ideas. He should not be bullied.”

The Exchange

First, let us analyze the exchange between Tucker and Spencer, transcribed below from the source video:

“JEFFREY TUCKER: I think fascists are not welcome at an anti-fascist conference! Not welcome! Students For Liberty is about human dignity, about liberty for all and not about fascism and that is what that man represents! You know the only reason you’re here is because of public accommodation laws; otherwise you’d be thrown out immediately, buddy.
RICHARD SPENCER: Oh, its Jeffrey Tucker! (unintelligible)
JT: (unintelligible) Yeah, this hotel, because you’re devaluing this property, my friend.
RS: Oh, really? By you, Jeffrey? I’m not sure you could throw out a fly, little Jeffrey. Hey Jeffrey, I used to read those articles by you, Jeffrey.
JT: Look, you don’t belong here. You absolutely don’t belong.
RS: Oh, I don’t belong here? What?
JT: You know why? Because we stand for liberty.
RS: Do you support the deep state, dude? That’s awesome.
JT: You stand for fascism, and you don’t belong here. Students For Liberty opposes everything that you stand for, buddy.
RS: You tweeted that you support the deep state over Trump. I think you might be a little fascist there, little Jeffrey.
JT: You are a troll. You can’t organize your own conference, so you come to our conference.
RS: That’s not an argument.
JT: You know the last time you tried, you had a bunch of losers in a room making Nazi salutes. That’s what happened at yours.
RS: That’s not an argument.
JT: So you come to our conference and troll us. If you were on Twitter right now, we’d all block you.
RS: I was invited by people here to come speak to them, Jeffrey.
JT: You are a liar! You are a liar! Fascists are liars! (exits)”

Inaccuracies

First, despite potentially misleading statements and signage made by the Hoppe Caucus, Spencer was not technically at the conference. He never went inside the part of the building reserved for the conference that required paid admission, but rather remained in a bar outside which was not reserved for ISFLC participants. Nor did Spencer himself claim to be part of the conference. Tucker is free to voice his opinion that fascists are not welcome at an anti-fascist conference, and although he does not officially speak for SFL, SFL released a statement in support of Tucker’s actions. However, the wisdom of such a position is questionable. The reaction of Tucker and his ilk is precisely why the alt-right is growing. Neutral observers see a fascist engaged in rational discussion while leftists angrily shout him down and cause a disturbance that gets the venue’s security involved, thus making the fascist seem reasonable by comparison.

Tucker then said that SFL is about human dignity, whatever that may mean, which means that it is not really about libertarianism. 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. Libertarianism says nothing about human dignity one way or another. In a libertarian social order, those who overindulge in vices, engage in criminal behaviors, and/or refuse to be productive people could very well find themselves living a life without dignity, especially if their particular community has a more socially Darwinian ethos. To be fair, Spencer is in the wrong here as well; while peaceful methods could partially achieve his stated goals, many of his goals could only be fully achieved by initiating the use of force.

Tucker claimed that Spencer would be thrown out if not for public accommodation laws and was devaluing the hotel’s property. It is impossible to know whether this is so because it is a counterfactual, but the fact that Spencer has been there several times beforehand without incident suggests otherwise. Ironically, Tucker used the pragmatic libertarian case against open borders to justify his outburst. Open state borders are a form of public accommodation, in that they require the force of government to prevent people from using their freedom of association and private property rights to exclude other people. He cannot be unaware of this inconsistency at this point, so we may reasonably conclude that Tucker is being malicious rather than simply ignorant. What is known is that chanting obscenities, as people accompanying Tucker did, diminishes the quality of experience for bystanders, thus devaluing the hotel’s property.

As an aside, one must wonder if Tucker would be so quick to denounce a similar figure who is of a protected class, such as a member of the Hotep movement, which is in many ways the black counterpart of the white nationalist alt-right. Perhaps inviting someone like Ali Shakur would be a more effective move at ISFLC 2018 than inviting Spencer. Then we could see whether Tucker would be consistent or would fear the social justice warriors around him calling him racist.

Spencer asked if Tucker supports the deep state over Trump, and suggested Tucker might be a bit fascist for doing so. This referred to a February 15 article by Tucker, arguing that however bad the establishment may be, Trump could be worse. While his analysis in that article is suspect, the only hint of fascism from Tucker is in his reaction to Spencer’s presence.

Libertarianism and Fascism

Tucker claimed that SFL stands for liberty while Spencer stands for fascism, and thus Spencer did not belong there. Let us examine the relationship between libertarianism and fascism, for there has long been a link between the two. Ludwig von Mises wrote favorably of fascism in 1927, saying,

“It cannot be denied that Fascism and similar movements aiming at the establishment of dictatorships are full of the best intentions and that their intervention has, for the moment, saved European civilization. The merit that Fascism has thereby won for itself will live on eternally in history. But though its policy has brought salvation for the moment, it is not of the kind which could promise continued success. Fascism was an emergency makeshift. To view it as something more would be a fatal error.”

Mises was prescient on the matter of how fascism in particular and reaction in general arises. There is no need to fix that which is unbroken, so a healthy social order will contain nothing to the right of conservatism, meaning the desire to maintain the status quo. Reactionary thought arises when a society makes a mistake and the social order becomes unhealthy, and fascism in particular arises as a response either to the threat of a communist takeover or to the suffering caused by socialism. Libertarianism and reaction are pieces of a whole, and libertarianism and fascism can work together in some circumstances because they share the common enemies of democracy, socialism, and communism. There is a danger here, as Mises would learn the hard way when fascists forced him out of his academic position in Vienna and away to America, but history clearly demonstrates that as bad as fascism can be, communism and socialism wreak more havoc.

The 1973 Chilean coup d’état led to another confluence between libertarianism and fascism. Before Augusto Pinochet took power, Chile was suffering from 140 percent annual inflation and contracting GDP under Marxist leadership. Pinochet was willing to listen to Milton Friedman’s students, and although the Chicago School of Economics is not as libertarian in disposition as the Austrian School, this led to an important series of market reforms and improvements in the mid-1970s and the 1980s known as the Miracle of Chile. These policies were continued after Pinochet’s rule ended in 1990, and the percentage of people living in poverty was reduced from 48 percent to 20 percent from 1988 to 2000. In 2010, Chile was the first South American nation to win membership in the Organization of Economic Cooperation and Development, an organization restricted to the world’s richest countries.

In more theoretical terms, if a private property owner under libertarian standards wishes to administer his estate after the form of a fascist dictatorship, it is his right to do so. Being the owner of the property means that he has a right to exclusive control over it, including its governance structure. However, he cannot force people to stay, so a libertarian fascist will have to be far less oppressive than statist fascists in order to keep his regime populated. This kind of governance, which offers people no voice and free exit, has proven best at limiting state power throughout history. It would also be best for limiting the tyranny of the private property owner that so concerns critics of libertarianism. This sort of libertarian fascism is not what Spencer advocates, but Tucker’s claim that fascism is necessarily opposed to libertarianism is both logically false and contradicted by the historical case of Pinochet’s Chile.

Trolling, Heiling, Blocking, Lying

Tucker claimed that Spencer came to ISFLC because he could not organize his own conference, then contradicted himself by referencing Spencer’s National Policy Institute Conference in November 2016 at which Spencer said, “Hail Trump! Hail our people! Hail victory!,” and several people in the audience responded with Nazi-style salutes. Though Spencer’s conference was much smaller (275 attendees versus 1,500+ attendees), Tucker’s claim is clearly false.

Tucker accused Spencer of being a troll and of lying about being invited to the venue. Spencer was not lying about being invited, as the Hoppe Caucus invited him and Spencer never went into the part of the building reserved for ISFLC where he was not invited. Whether Spencer is a troll or not is mostly a matter of opinion. He is not the most informed person, having been caught in numerous errors of fact throughout the years, but he was engaging in a peaceful discourse. Being offended was a choice made by Tucker and his ilk because Spencer was attracting enough attention to make the SFL establishment uncomfortable. It is telling that Tucker and company would resort to causing a disturbance and involving security forces because his side appeared to be losing in the marketplace of ideas that night.

Tucker said that if the confrontation had occurred on social media rather than in the physical world, then all ISFLC attendees would block him. This is another untestable counterfactual, but judging by the amount of people engaging with Spencer, Tucker’s claim stretches credibility.

Aftermath

The Hoppe Caucus released a statement on their Facebook page, saying,

“The Hoppe Caucus hosted Richard Spencer at ISFLC not because we were trying to start some kind of commotion, but rather an important dialogue. Hans-Hermann Hoppe invited him to his own Property and Freedom Society Conference several years ago for that very reason. After all, event organizers thought it would be a good idea to have leftists and even full-blown communists at the event as apart of the ‘big tent.’ So why not discuss the alternative right? Why not enlarge the tent a little bit further? Furthermore, who gets to define the tent? Is it the big money funders? Is it the oligarchs? Is it is the intellectual elite? Or is it the rank-and-file libertarians? These are all questions we should be pondering considering what happened this weekend.”

SFL has declared that “[t]hose responsible for the disruption have been identified, and are no longer welcome at Students For Liberty events.” Again, this is their right, but Spencer was not inside the event proper and attempting to silence Spencer and the Hoppe Caucus only makes them look like winners of the debate to a neutral observer.

Robby Soave demonstrated an ignorance of the facts of the case and libertarian principles, as well as political autism concerning group dynamics in his write-up of the matter. This would not be so notable, except that media outlets from Salon to The Blaze ran with his deeply flawed narrative. But this is to be expected, as accepting a narrative from someone else is easier than researching and thinking for oneself.

Overall, this incident illustrates why the libertarian moment seems to have passed and the alt-right movement continues to grow. Regardless of what one may think of Tucker, Spencer, fascism, or libertarianism, the tactics employed by Tucker and his ilk ensured that Spencer and fascism emerged victorious while the flawed application of libertarian ideas by those who either do not understand them or intentionally misuse them harmed the cause of liberty.

The Political Autism of Anti-Protectionism

There is a certain species of policy analysis which exhibits many of the symptoms which are commonly found among high-functioning autistic people. Among these symptoms are an inability to understand context, a troubling need for routines, an obsession with particular topics, difficulty with abstract thinking, difficulty in understanding other perspectives, a lack of empathy, an inability to process social cues, repetitive use of set phrases, and an inability to identify or think about groups or shared interests. Analysis that suffers from some (or even all) of these shortcomings can be found all over the political spectrum, but it seems to come disproportionately from libertarian thinkers.

The rise of Donald Trump has brought a protectionist view of trade policy back to the forefront for the first time in decades. Naturally, this gives libertarians pause, as protectionism violates individual liberties, is economically inefficient, and gives more money and power to the state. In a textbook-style vacuum, free trade is both more libertarian and more beneficial than protectionism. But to stop there and fail to address the relevant current conditions would be politically autistic by way of context denial. Thus, it is necessary to examine how protectionist policies can make sense in certain contexts, as well as the problems with supporting a policy of free trade in all circumstances.

On January 26, White House Press Secretary Sean Spicer floated the idea of a 20 percent import tariff on goods coming from Mexico as a means of funding a border wall. This prompted outrage from the establishment media, along with claims and analysis showing that Americans would pay the tariff rather than Mexico because Mexican products would be more expensive for American consumers as a result. This would be true if all else were equal, but this is not the case.

The Context

Mexico already has import tariffs which can be as high as 140.4 percent and average 13.97 percent. For Mexico to tariff US goods while the US does not tariff Mexican goods puts American companies at a disadvantage. While the libertarian may note that smuggling to evade the tariff would be a morally acceptable response, this is not feasible on the level necessary to conduct a national economy. Revolution to abolish the governments that impose the tariffs would also be morally acceptable, but this is likewise unfeasible, at least for the immediate future. Eliminating government interference in the economy that makes it harder to do business domestically is another option which is better than protective tariffs, but doing so to the extent and with the quickness which would be necessary is unlikely. The next best option, then, is for the US government to respond with an equivalent counter-tariff to attempt to even out the discrepancies caused by another state’s tariffs, with an aim toward negotiating abolition of the tariff on both sides.1 Given that 81.2 percent of Mexican exports for a worth of $309.2 billion go to the United States and 15.7 percent of US exports for $236.4 billion go to Mexico, the threat of a trade war clearly gives leverage to the United States. Peter Navarro, who heads the White House National Trade Council, said as much to CNNMoney:

“The tariff is not an end game, it’s a strategy…to renegotiate trade deals. Tariffs wouldn’t put U.S. jobs at risk.”

It is important to remember that much like nuclear weapons, the primary purpose of tariffs is not to be directly utilized, but to alter the behavior of other states by serving as a deterrent. The threat of a trade war by way of tariffs and counter-tariffs helps to keep the economic peace, just as peace through mutually assured destruction does with nuclear weapons. A response to another nation’s tariff to gain leverage against it is the secondary purpose, as explained earlier. Those who fail to account for this are exhibiting political autism by engaging in context denial.

The Analysis

A 20 percent tariff would discourage Americans from buying Mexican products. This would also raise the cost of goods which are currently provided at the lowest cost by Mexicans. The increase would not necessarily be 20 percent; to illustrate this, let us consider a simple example. Suppose that avocados from Mexico currently cost $1 each, while equivalent avocados grown in California cost $1.10 each. The tariff makes it so that initially, the Mexican avocados increase to $1.20 while the California avocados remain at $1.10. Initially, the American consumer pays 10 percent more but switches to the California source as much as possible. This diversion of funds from Mexico to California allows the Californian producers to make investments to improve their techniques and expand their operations, which will lower the cost of their products over time, potentially even below the $1 level that consumers originally paid to Mexico.

Whether this is a superior outcome for the American consumer depends upon a variety of factors, such as the available farmland in each location, the weather patterns over the next several years, the intelligence of American agriculturalists versus Mexican agriculturalists, and so on. What is known is that as few Americans as possible will be paying the tariff to the US government, and as many as possible will instead pay only part of it to American producers. This will not create net jobs, but it will have influence over where jobs will be created, which will give some American consumers more money to spend. The inability to think abstractly to get beyond the basic free trade position is an example of political autism.

Rationalism, Not Empiricism

Many economists will attempt to argue for free trade on empirical grounds, but this is a flawed approach. Economics is not a science, but an a priori discipline akin to logic and mathematics. The logical truths of economics can be illustrated by using empirical examples, but the discipline itself is not data-driven.

Most empirical cases for free trade rely upon David Ricardo’s theory of comparative advantage. But comparative advantage makes several starting assumptions which are not always true, such as non-diminishing returns, the presence of multiple trade commodities, inelastic demand, domestically mobile labor, and internationally immobile labor. Although the available evidence suggests that free trade raises living standards, increases purchasing power, and accelerates economic development, these studies suffer from both the cum hoc ergo propter hoc fallacy and the absence of counterfactuals for each case. This is not cause for dismissal, but it is cause for suspicion. A proper case for free trade must rest on logic, not observation.

Although free trade usually provides more net benefit than protectionism in the long run, people do not live in the long run; they live their lives and feel economic pain here and now. Furthermore, a net benefit does not mean that each individual person benefits; only that the sum of all benefits and malefits is greater than zero. It may be the case that a minority sees great gains while a majority suffers somewhat smaller losses, and this would explain why a democratic system would produce protectionist policies. Political autism manifests here in the form of the lack of empathy for those who are harmed by free trade in the short-term, the difficulty of understanding their perspective, and the inability to think properly about individuals versus groups.

Trump And Adaptation

The desire for protective tariffs among Trump supporters fits into a larger picture. Following Trump’s election, many leftists have criticized Trump supporters as being unwilling or unable to adapt to a changing world, and Trumpism as a reaction to that changing world. But an organism faced with a changing environment has three options: fail, adapt itself to the environment, or adapt the environment to itself. Most species are almost exclusively capable of the former two options, but humans are uniquely capable of the latter option. In seeking to reverse unfavorable societal trends, Trump supporters are doing something uniquely human and perfectly understandable. A libertarian may question their methods, but their motives make sense. Those who oppose Trump but express a desire to understand the other side would do well to consider this point.

Conclusion

There are good reasons to oppose protectionism in the abstract, but to simply state these reasons and fail to appreciate the context in which protectionism is advocated is an example of political autism. In theory, there are better courses of action, but these options are not always feasible. The threat of tariffs as a means to deter other states from imposing tariffs is an important tool for deterring trade wars, and a nation that refuses to consider such a deterrent is at a disadvantage against other nations that have no such scruples. The empirical case for free trade, while intriguing, is not true for all people in all circumstances, and does nothing to help those who have lost their livelihoods to foreign competition. In a perfect world, no protectionism would be justifiable, but that is neither this world nor the world of the immediate future.

Footnotes:

  1. Note that the use of barriers to free trade as a negotiating tactic is nothing new in US-Mexico trade relations. When Mexico tried exporting avocados to the US in the 1990s, the US government resisted at first, but gave in when Mexico started erecting barriers to US corn exports. The end result of using counter-barriers against barriers to free trade in this case was freer trade.

25 More Statist Propaganda Phrases

In the discourse of statists, there is a group of phrases of which one or more tend to be present in nearly every argument. The previous listing of twenty-five such phrases was a major hit, so here are twenty-five more of the most common phrases that statists use in their arguments. As propaganda has a tendency to be repetitive, some of these phrases contain the same logical fallacies, and will therefore have similar refutations. As such, the phrases are ordered so that earlier rebuttals also apply to some later phrases.

  1. Give back to the community”

This phrase is used by people who want business owners to support local charities or help the needy directly. There is nothing wrong with this sentiment. In fact, it is more likely to be efficient and effective than a government welfare program, and it is certainly morally superior. Private charity operations must compete for donations, which incentivizes them to be more efficient and effective in their efforts. They also have a better sense of who can be helped out of poverty versus who will only exist parasitically upon the good will of others. But the phrase ‘giving back to the community’ is misguided and dangerous.

That one is giving back something to people implies that one has taken away something from those people. This can lead to a perception of legitimate business owners as thieves who do not rightfully own what they have, when the truth is quite the opposite. To the extent that businesses in a free market thrive, they do so by voluntary trade. They give customers what they want at prices they deem reasonable. The customer wants the business owner’s products more than he wants his money, while the business owner wants the customer’s money more than he wants his products. They trade assets and both are improved from their subjective points of view. As such, a business is always giving to the community, and its profits are evidence of the value that its customers have received from the business.

If the charitable nature of business ended there, it would be good enough, but there is more. A successful business will be able to employ people. This allows people to accept a constant rate of payment for work done without having to take on the capital risks of starting and running a business oneself. Additionally, this gives the poor and the mentally deficient, who cannot start their own businesses, a path to prosperity and a sense of dignity.

The idea that such benevolent activity to improve one’s community is somehow exploitative of that community is nothing short of communist propaganda and should be rejected as such. Businesses that donate to charities are not ‘giving back to the community’; they are giving the community even more.

  1. Pay your fair share”

Phrases 2-7 are used by progressives who want to intervene in the market economy and make the wealthy pay more taxes. This is wrong on two counts. First, taxation would be considered robbery, slavery, trespassing, communicating threats, receipt of stolen money, transport of stolen money, extortion, racketeering, and conspiracy if anyone other than government agents behaved identically. An objective moral theory must be consistent, so it can be no respecter of badges, costumes, or affiliations. What is immoral for you and I to do must also be immoral for government revenuers to do. Second, the rich already pay the vast majority of the tax revenue collected, while many poor people pay nothing. If “pay your fair share” is to be logically consistent, then all of the poor should be taxed at least to some extent.

  1. Income inequality”

The income inequality generated by a free market is a feature, not a bug. People have different degrees of expertise, intelligence, and motivation, which results in different ability to earn income. This results in the people with the most resources being the people who are best at acquiring, defending, and properly investing those resources. This ultimately benefits everyone because it allows innovations to move past the initial stage, at which only the rich can afford them, and become inexpensive enough for mass adoption. To the extent that income inequality is a problem, it is due to state interference in the form of currency debasement and regulatory capture.

  1. Society’s lottery winners”

This is an open insult to the hard work that business owners have put into their firms to make them successful. A lottery winner invests money in a manner which one may expect to be wasteful and happens to get unearned wealth. A business owner invests both money and labor in a manner which one may expect to be productive, and some earn wealth.

  1. You didn’t build that”

The idea behind this phrase is that someone else built the infrastructure upon which a business relies in order to interact with its customers and make profits. But those who use this phrase make an unjustifiable logical leap from there to assert that a business owner should pay taxes to the state in return for that infrastructure. The problem is that the state monopolizes the infrastructure and forces people to pay for it, in many cases without regard for how much they use it, if at all. People should pay for what they use, but it is immoral to force people to pay for what they are forced to use. In a free society, the infrastructure would be privately owned and voluntarily funded. Those who say that the state must provide infrastructure, and in turn that people must pay taxes for it, have an unfulfilled burden of proof that they frequently shift, committing a logical fallacy.

  1. Gender pay gap”

Those who obsess over this issue point to an overall disparity in pay between men and women and conclude that some kind of unjustifiable gender discrimination must be occurring. But to some extent, a gender pay gap results from the natural differences between the genders. Intelligence testing shows that while the average intelligence level is almost the same for both genders, the standard deviation is much higher for males. This means that geniuses and dunces are both disproportionately male, which females are more likely to be of average intelligence. This makes sense from an historical perspective; in traditional societies, some men were planners and inventors, other men were manual laborers, and women were the support staff for both groups. (There were occasional deviations from this, but they were the exception and not the rule. The NAXALT objection is a sign of political autism and should be denounced as such.) As the highest-paying jobs tend to require great intelligence, and people with great intelligence tend to be male, it follows that a gender pay gap would result. Males tend to have more strength and toughness than females, and the nature of human procreation makes males more disposable. This grants males an advantage in taking high-risk jobs which have hazard pay bonuses, resulting in a gender pay gap. Behavioral differences between the genders, which are also partly genetic in origin, produce a difference in the ability to negotiate for higher salaries.

Another problem with the progressive narrative on gender and pay is that they look only at the aggregate and do not compare like cases. When two workers in the same profession who are equal in every measurable way except for their genders are compared, such disparities do not appear. In some cases, women even earn a few percent more than men when this is taken into account. Part of the reason for the aggregate pay gap is that women choose to work in different fields from men, and these fields do not pay as much.

Although baseless misogyny (and misandry) do occur, its elimination would only reduce the gender pay gap; it would not result in equal pay.

  1. Social justice”

The idea of social justice is that the state should ensure fair distribution of wealth and social privileges, equal opportunity, and equality of outcome. The implication is always that the current conditions are socially unjust. This idea has several major problems. Who defines what is fair, and why should they be allowed to define it? If opportunities and outcomes should be equal, who must make them equal? If an injustice is present, who is the subject of the injustice?

Fairness is a subjective concern, and should therefore be determined by those who are closest to an interaction, i.e. those who are directly involved or affected. As long as all parties to a interaction participate voluntarily and no external party is aggressed against, all involved may deem the interaction fair and the matter of its fairness should be considered resolved. But in social justice rhetoric, the idea of fairness is an excuse to stick one’s nose in where it does not belong and interfere in matters which are none of one’s business. Because doing this successfully involves initiating the use of force against peaceful people and all wealth and privilege can be traced back to a series of interactions, social justice perverts the idea of fairness into something intrusive and unfair.

Equal opportunity and equal outcome are advocated by right-wing and left-wing ideologues, respectively, but both of these are erroneous. Neither can exist without not only a redistribution of wealth, but a leveling of cultural norms and a medical erasure of genetic differences between people, for all of these give some people advantages over others. The resulting inequality of opportunity will necessarily cause an inequality of outcome. All of these measures require initiating the use of force against people who do not wish to be made equal in these senses. Thus, social justice twists the idea of equality into something which must be imposed by unequal means, as the state and its agents are legally allowed to do that which is disallowed for other people and organizations to do.

Ultimately, social justice is not a form of justice at all because there is no subject by which an injustice can be committed. Proponents of social justice will say that a collective is the victim, but this is impossible because collectives do not exist. To exist is to have a concrete, particular form in physical reality. To say that collectives exist is beg the question of what physical form they take, as all available physical forms are occupied by the individuals which are said to comprise the collective. Thus there is no collective existence apart from the existence of each individual said to comprise the collective. Those who advocate social justice cannot point to an individual victim of social injustice, but they seek to create a multitude of victims of real injustice.

  1. Level playing field”

This phrase is used by regulatory busybodies who see an innovation and decide to stand athwart history yelling “Stop!” In any sort of activity, some people will always have an advantage over others, whether it is a first mover advantage, a better idea, better marketing, greater intelligence, etc. The truth is that there can be no such thing as a level playing field, and that which cannot be done should not be attempted.

  1. Our Constitution”

Phrases 9-14 are used to foster a sense of collective identity. The idea that a constitution is “ours” assumes that a collective exists and has ownership of the constitution. As explained earlier, collectives do not exist apart from the existence of each individual said to comprise the collective. Additionally, to own something is to have a right of exclusive control over it. Part and parcel of this right is the right to physically destroy that which one owns. As governments would use force to stop anyone from attempting to destroy the constitution either literally or figuratively, the citizens are not the de facto owners of a constitution.

  1. Our shared values”

Although any recognizable social group will come together to further a certain set of shared values, this phrase is frequently abused by statist propagandists to create a sense of nationalism. In modern nation-states, there tend to be few (if any) shared values across the entire population. To the contrary, it is usually the case that large subcultures within the nation hold values which are diametrically opposed to each other, as well as to the values which are espoused by the ruling classes. To make matters worse, whatever constitution or other founding documents may be in use are frequently cited by all sides in the cultural conflict as a means to justify their own views and attack their opponents.

  1. Our fellow (insert national identity)”

Much like the previous phrase, this is used to lump together people who may or may not fit together by constructing a common identity around them which may or may not have any basis in reality. The implication is that even if people within a nation have disagreements, they are still part of the same collective. This is not necessarily the case because disagreements between subcultures within a nation can grow to a point at which they are no longer able to peacefully share a system of governance. This necessitates a peaceful parting of ways, and the unwillingness of political leaders to allow this to happen results in political violence and civil wars.

  1. That is un-(insert national identity)”

As sociologists are so fond of telling us, an in-group will attempt to clarify its boundaries by othering some people, i.e. defining them as part of the out-group. This is done for purposes of ideological purity as much as for any other reason. Politicians and pundits use this phrase in an attempt to define certain ideas as being out of bounds of the allowable range of opinions. But just as a nation has no existence apart from the individuals comprising the nation, a nation has no ideals apart from the ideals of the individuals comprising the nation. Thus, to tell a person of national identity X that they hold un-X ideas is a contradiction of terms.

  1. National interest”

There is no such thing as a national interest apart from each individual person’s interests because there is no such thing as a nation apart from each individual person. Because a nation will invariably contain individuals whose interests contradict each other, the idea of a national interest is false by contradiction unless everyone in a nation can agree upon a certain set of core interests.

  1. Shared sacrifice”

When government and central bankers interfere with the economy and cause a recession, both typically intervene with fiscal and monetary stimulus programs. As Keynesians, they do not understand that they are only sowing the seeds for another boom and bust cycle. When this happens, politicians and their minions will call for “shared sacrifice.” This phrase really means that they wish to pass off the costs for the mistakes of the ruling classes and the politically-connected wealthy onto the entire population rather than let natural selection eliminate the incompetent from the ranks of politicians, central bankers, and speculators. Of course, the people never get a proper return on their forced investment; rather, it is heads they win, tails you lose.

  1. Rights come from the government”

This phrase is used by progressives who wish to justify their view of the role of government, but it is contradictory. If rights are given by the state, then they can also be taken away by the state. But a right is not something which can be taken away by someone else; it can only be forfeited by the right-holder by violating the equivalent right of another person. This contradiction necessitates a different source for rights, such as argumentation ethics.

With the theoretical argument refuted, let us turn to practical concerns. Progressives claim that government is necessary as a defender of our rights, for the most brutish person or gang may rule and violate our rights otherwise. But a government is a group of people who exercise a monopoly on initiatory force within a geographical area. A government is funded through taxation, which violates private property rights. Its laws are enforced by the threat of arrest, fines, imprisonment, and possibly execution, which violates liberty, property, and possibly life rights. A rights-protecting rights-violator is a contradiction of terms, and the state is just such a brutish person or gang that the progressives say we need safeguards against. Note that although they have a burden to prove that this territorial monopoly is required in order to protect rights, they never do so. At best, they will ask for counterexamples, but this reliance upon historical determinism only shows their lack of courage and imagination to think beyond what has been to see what can be.

  1. We get the government we deserve”

This phrase commonly appears in the media immediately following an election, particularly after a result which entrenches the current system and fails to produce the changes which are invariably promised (which is to say, nearly always). The way that this phrase is used by the media is an example of victim blaming, as the people are going to continue to be violently victimized by agents of the state and the media is saying they deserve to be.

However, one could also interpret this as a call for revolution; in the words of Frederick Douglass, “The limits of tyrants are prescribed by the endurance of those whom they oppress.” There is a case to be made that if people are unwilling to abolish the state by force even though they could, then they deserve to suffer the consequences of their inaction.

  1. Pay your debt to society”

This phrase is used by commentators on criminal justice issues as a euphemism for serving time in prison. The problem with this phrase is that society cannot be a victim because it does not really exist; each individual person exists. A crime must have a definite victim; an individual and/or their property must have been aggressed against. Any debt incurred by a criminal should be payable to that victim, not to all people living within a geographical area.

  1. Rule of law”

This phrase is used by people who try to justify the state by fear-mongering about what could happen without it. But the truth is that rule of law is fundamentally incompatible with a state apparatus. 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. The law does not rule them. Therefore, the only possibility for rule of law is to have no state.

  1. Law-abiding citizen”

This phrase is frequently uttered by the common person as a sort of virtue signal that one is a good person. But whether abiding the law makes one a good person is dependent upon the nature of the law. In a statist society, the law is a collection of opinions written down by sociopaths who have managed to either win popularity contests or murder their competitors and enforced at gunpoint by thugs in costumes. When most people commit several felonies every day because the laws criminalize a vast array of activities which do not threaten or victimize anyone and purport to legitimize the victimization of the citizen at the hands of the state, a law abiding citizen is not a goal to which people should aspire.

  1. Common sense regulations”

This phrase is used by people who wish to restrict economic and/or personal freedoms on the grounds of some public good. But their proposed regulations often defy common sense, not that common sense provides an accurate understanding of reality. The purpose of this phrase is to demonize opponents of a proposal as lacking good sense without having to make a logical case for the proposal.

  1. Corporate citizen”

This phrase is used by people who wish to hold businesses accountable to various laws and regulations. It has its roots in the idea of corporate personhood, the idea that a corporation has rights and responsibilities similar to those of a person. This is wrong because a corporation is a legal fiction created by the state to shield business executives from liability. It is not an extant being with moral agency, as a real citizen is. If the object is to hold people fully accountable for their actions, then corporations must be abolished and full liability for one’s crimes must be restored.

  1. Don’t waste your vote”

This phrase is used by supporters of major-party candidates who wish to suppress votes for minor parties. However, the definition of a wasted vote is a vote which does not help elect a candidate. In an indirect election, such as the United States presidential election, only electoral votes matter. Therefore, all popular votes in such a contest are wasted unless there is a law which prevents faithless electors. In elections in which popular votes directly determine the outcome, all votes for losing candidates are wasted, as well as all votes for winning candidates which went above the amount necessary to win. Thus, the percentage of wasted votes in a race may be given as

W = 100% − (Second highest vote percentage)% − 1 vote,

which will be at least 50 percent unless only two candidates receive votes and the winner wins by only one vote.

  1. This is the most important election of our lifetime”

This phrase is used by the establishment media in the hopes of increasing voter turnout. It is a combination of pleading, manipulation, and crying wolf that is completely nonsensical. It assumes that elections matter, requires impossible knowledge, and contradicts physics.

For the ruling class in a democratic state, elections are just tools of social control that provide the populace with meaningless participation in a process in order to convince them that criminal conduct performed under color of law is legitimate because “they voted for it.”

In order for the upcoming election to be the most important of our lifetime, it must be more important than every future election in which current voters will vote. But the future is unknown and unknowable until we arrive at it.

It is known that altering a system at an earlier time gives it more time to develop differently, resulting in greater changes. As such, at least in terms of how different a counter-factual world in which a different candidate took office might be, the most important election of any person’s lifetime should be their first one.

  1. Freedom isn’t free”

This phrase is used by supporters of government militaries and their military-industrial complexes to stir up emotional support for soldiers, defense spending, and the occasional foreign invasion. But the fact that freedom must be defended at a cost does not mean that a government monopoly military is necessary or proper for that task. There is a logical gulf between the two that most people cannot even see because governments have monopolized military defense for millennia, but it is there. To simply jump across it without attempting to explain why a private, voluntarily funded, non-monopolized form of military defense would be insufficient is philosophically invalid.

  1. We need to have an honest conversation”

This phrase is used by politicians and their propagandists when dealing with controversial political issues which tend to go unaddressed for long periods of time due to their third rail nature. But politicians have a tendency to either do nothing about such issues or to uniformly disregard the will of the people. The real purpose of this phrase is to set a trap for both the mainstream opposition and political dissidents. Either can be tricked into believing it acceptable to venture opinions which are outside of the Overton window, for which the establishment can then attack them as unreasonable extremists. In some cases, it is a way for authoritarian regimes to find out who to violently suppress. As such, it is best to rebuke those who make such a claim.

The Not-So-Current Year: 2016 In Review

Though the specific demarcation of the passage from one year into another is a rather arbitrary social construct, it does provide a useful annual period for self-examination and remembrance. Now that 2016 has entered the history books, let us take a look back at a year’s worth of essays and review the not-so-current year.

We begin, of course, with last year’s article of the same kind. Some articles in this list are sequels to articles in that list. Aside from that, we may move on.

My first article proper of 2016 was A Case Against the Nineteenth Amendment. It was intended to come out before the New Year, but I was not satisfied with it until January 3. If I were to rewrite this article, I would say more about biological differences between the sexes and why these make the entrance of women into democratic politics a danger to the stability and sustainability of a society. I took down the First Amendment later in the year.

The Bundy standoff at the Malheur National Wildlife Preserve began. I made nine observations on the event. Their later acquittal on several felony charges after the standoff ended in what was essentially an instance of jury nullification was cause for celebration.

As usual, leftists called for more gun restrictions and an end to gun violence without seeing that the former would both cause and be enforced by gun violence or the threat thereof. Rather than take the usual path of reductio ad absurdum, I argued the sharper point that gun deaths can be a good thing. This did not sit well with the editors at Examiner.com, who pulled the article. Given a long and contentious history with the site, I decided to part ways with them and start my own site. This proved to be a wise choice, as Examiner gave up the ghost less than six months later, with all content disappearing into the aether. My next task was to choose a name for the site and explain its meaning.

Christopher Cantwell argued the libertarian case for Donald Trump, and I gave him some pushback. Shortly afterward, Rand Paul suspended his campaign, and I wrote a list of observations on the event.

‘No victim means no crime’ is a common saying among libertarians, but an altogether too reductionist one. I explained why.

A Russian film crew flew a drone over the city of Homs and recorded the aftermath of Assad’s forces besieging the city. I rarely get emotional, but seeing the wanton destruction was quite triggering for me. Aleppo was conquered later in the year, and I wrote a list of observations on the event.

I decided to take an educated guess at whether Ron Paul could have defeated Barack Obama if he had been the Republican nominee in 2012. I believe he would have done so easily.

Twitter decided to give in to government and social justice warrior requests to censor their enemies. Unsurprisingly, this tanked their stock prices. I proposed several remedies for the situation, and Twitter has of course used none of them.

Jason Brennan published an article arguing that arguments made by libertarians against open borders have disturbing implications that said libertarians almost never address, so I addressed them and showed on a point-by-point basis that some such implications are not only not so scary, but are actually vitally important to the maintenance of a libertarian social order.

Charlotte City Council approved an expansion of its anti-discrimination ordinance to include transgender people, which I denounced as a violation of private property, freedom of association, public safety, and freedom of religion. Governor Pat McCrory and the state legislature responded with House Bill 2, and the controversy has brewed for almost a year.

An author known as Mr. Underhill published an article arguing that violent revolution is not the appropriate method for achieving liberty. I took the opposite view, which led to a lengthy exchange of four more articles on my part and four more on his part. Following this exchange, I decided to write about how I choose who to debate and for how long, which made me realize that I had entertained Mr. Underhill for far too long. Later in the year, I covered political violence more generally to argue that we need more of it as well.

When examining the intellectual foundation for private property rights, I noticed an unexplored quirk which turned into an original proviso. A critique in the comments section led to another article defending the proviso.

Islamic terrorists attacked the airport and a subway station in Brussels, killing 31 people and injuring 300 others. I wrote a list of observations on the event.

Social justice warriors seem to have their own language which is distinct from both the dictionary definitions and the common understanding of words by most of the general population. I created a glossary to help normal people better understand SJW rhetoric.

Donald Trump suggested that women could be punished for getting an abortion, which outraged both sides of the mainstream abortion debate. I weighed in with a view which did the same.

Having addressed water ownership and pollution in two articles in 2015, I decided to lay out a libertarian theory on air ownership and pollution.

Puerto Rico reached new lows of fiscal irresponsibility, and I explained why it is best to cut them loose from the United States to become an independent country.

The rise of neoreaction and the alt-right has brought reactionary thought back to the forefront. I deemed my first attempt at examining its relationship to libertarianism to be inadequate, so I took a second stab at it. A Jeffrey Tucker article prompted a third effort, and I made a fourth effort later in the year in response to a pro-Trump neoreactionary article by Michael Perilloux.

Peter Weber published an opinion piece arguing that the institution of the American Presidency is being delegitimized, and that this is a dangerous direction. I argued that this is actually a welcome and even glorious development.

Having already explained my decisions about debating other authors, I wrote two more articles explaining my lack of profanity and lack of satirical content.

Many incorrect arguments concerning libertarianism and punishment began to appear, so I laid out a theory of libertarianism and punishment which utilized heavy doses of Rothbard.

The Libertarian Party held its nominating convention, and it was a disaster from beginning to end. The Republican convention was not much better in terms of substance.

Many people have noticed a correlation between weightlifting and libertarianism. I explored this correlation and found many reasons for it.

A terrorist who pledged allegiance to the Islamic State attacked a gay nightclub in Orlando, Fla., killing 49 people and injuring 53 others. I wrote a list of observations on the event, but missed a major point in doing so. Democracy is partly responsible for terrorism because it gives the common person a political voice, which makes them viable targets in a way that absolute monarchies or stateless societies would not.

When the Supreme Court ruled against Abigail Fisher in her anti-white racism case, the Internet cheered. I did not, realizing that the decision was a rejection of pure meritocracy.

Against all predictions, the vote to remove the United Kingdom from the European Union succeeded. I wrote a list of observations on the event.

In my most controversial article to date, I argued the most extreme position in the gun control debate: a private individual has a right to own nuclear weapons, and this would be beneficial for liberty. The troll brigades were out in force making typical leftist non-arguments, and I thank them for granting me a then-record in daily page views (and thus advertising money). A few did raise legitimate criticisms which will require an addendum to be written in the future.

As the major-party presidential nominations were secured, the establishment media wasted an inordinate amount of time engaging in speculation about who would be the running mate of each candidate. When discussing the potential benefits that each potential vice presidential pick could have, they neglected the aspect of assassination insurance.

Several recent problems with the criminal justice system demonstrated that government will not hold government accountable, and that a market alternative is required.

Five police officers were killed by a sniper in Dallas. I used the event to argue that those who kill government agents now are not cowardly murderers perpetrating senseless violence, but neither are they heroic or helpful to the cause of liberty.

A certain type of policy analysis exhibits many symptoms which are also found in high-functioning autistic people. This is more common among libertarians than among people of other political persuasions, so I decided to address the phenomenon.

A significant portion of the media coverage leading up to the Republican convention focused on the possibility of violence on the streets involving leftist protesters and rightist counter-protesters. This possibility went unrealized for reasons which were covered up by the establishment media.

Hillary Clinton said that she was “adamantly opposed to anyone bringing religion into our political process” and that it is “just absolutely wrong and unacceptable.” I argued the opposite case.

Gardening is an enjoyable hobby and a useful metaphor for many things, a libertarian social order included.

Trump hinted at the assassination of Clinton should she win and threaten gun rights. Predictably, every element of the establishment went apoplectic. I argued that political assassinations are ethically acceptable, though not usually the wisest practical move.

Since the beginning of the Black Lives Matter movement, libertarians have had strong differences concerning how to engage with it. I explained the differences between their intentions and libertarian goals.

The 2016 Summer Olympics took place in Rio de Janeiro, Brazil. I wrote a list of observations on the event.

Whenever disasters impact an area in modern times, governments play a large role in the cleanup and recovery efforts. But this causes a behavioral problem in the population, not unlike that caused by the Pax Romana.

The Commission on Presidential Debates decided to exclude third-party candidates yet again. I made cases for peaceful and violent protest of this policy, and longed for a future candidate who might actually motivate people to engage in meaningful resistance.

Liberty Mutual created more advertisements that contain economic fallacies, so I did another round of debunking.

The establishment media tells us that every election is the most important of our lifetime. I proved that this cannot be the case, then psychoanalyzed the establishment media to explain why they keep repeating this, as if to convince themselves.

Argumentation ethics has been controversial since its introduction, but Roderick Long’s criticisms of it had gone unanswered. I remedied this state of affairs.

Rioters plagued Charlotte for three nights in response to a police shooting, which happened to involve a black officer and a black suspect. I wrote a list of observations on the event.

Congress voted to override President Obama’s veto of a bill that allows relatives of the victims of the 9/11 terrorist attacks to sue Saudi Arabia for any role in the plot. Though some libertarians argued against the bill, I celebrated it for chipping away at the anti-libertarian idea of sovereign immunity, giving victims of American foreign policy a peaceful means of addressing their grievances, and possibly revealing clandestine activities to the American people about which they have a need to know.

Having heard libertarians argue in favor of every presidential candidate except Hillary Clinton, I decided to give it a shot. Only a bootlegger’s case was possible, and it was rather grim.

The idea of market failure is a widely believed misconception which has found widespread use in statist propaganda for the purpose of justifying government intervention in the private sector. I gave the idea perhaps its most thorough debunking to date.

In the last quarter of the year, I began reading more books, which resulted in several book reviews. I can strongly recommend The Essential Guide to Freelance Writing and Our Sister Republics; The West Point History of the Civil War somewhat less so. Good Guys With Guns, on the other hand, is a disaster.

The month before the election presented several opportunities for rebuttals. Milo Yiannopoulos demonstrated both a misunderstanding of and an enmity toward libertarianism, and I rebutted his assertions, which gained a surprising amount of attention. Jeffrey Tucker tried to defend democracy as a superior alternative to monarchy or political violence, and I showed why this is misguided. Penn Jillette argued in favor of vote swapping, and I argued against it.

Finally, the 2016 election came and went, which presented many observations to be made.

Black Friday is revered by most libertarians as a celebration of free-market capitalism. I updated my explanation of why this reverence is somewhat misplaced.

Finally, Otto Warmbier spent all of 2016 detained in North Korea. I made the unpopular case that he should be left there.

All in all, it was an interesting year full of occasions to make sharp libertarian arguments. May 2017 bring more of the same. Happy New Year!

Neoreactionaries Are Off Their Heads About Trump

In a November 11 article at Social Matter, Michael Perilloux analyzed the election of Donald Trump with respect to its meaning for the neoreactionary movement, speaking in the voice of all neoreactionaries. In this much, he is mostly correct. But there is much to be criticized about the goals discussed therein as well as the means of reaching them. Let us examine what is wrong with the neoreactionary project and their thoughts on Trump through a libertarian reactionary examination of Perilloux’s article.

Hailing Trump

Perilloux begins with a statement of support and hope for President-elect Trump which would not be out of place in a mainstream conservative publication. Though it is debatable whether a Trump presidency or a Clinton presidency would have been better for liberty and/or Western civilization over the long term, Trump has positioned himself as an enemy of many enemies of liberty and Western decline while showing a willingness to boldly engage issues that other candidates would not touch with a ten-foot pole. For those who believe that there is hope for working within the system, this view of Trump’s victory is understandable.

However, as Perilloux correctly observes, being “a good president in the current system…will not halt the decline of America, and it will not truly Make America Great Again. If just being a good president is his game, there is no reason for us to get excited.” The neoreactionaries have a much different vision of what they hope Trump can do. But as we will see, this is where they lose their heads.

Understanding The Problem

The neoreactionary diagnosis of the problem is much like the libertarian reactionary diagnosis: the way that power works in liberal democracies is fundamentally flawed. The notions of division of power and checks and balances are false because the power is divided not among different societal organs (let alone competing non-monopolized service providers in a free market), but among different branches of the same organ. Just as one would not let one’s legs quarrel with one another lest one fall over, those who run a state apparatus have a powerful incentive not to diminish the effectiveness of said apparatus by setting different parts of it against each other. The incentives in a liberal democracy are particularly damaging; whereas a king owns the capital stock of his country and has an incentive to leave a good inheritance to one heirs, an elected official with limited terms controls only the usufruct of public lands and has an incentive to take what he can while he can. Rather than accept donations from and grant favor to special interests that help the society, elected officials are incentivized to do what is best for themselves at the expense of the citizens they are ostensibly representing. The citizens themselves are also subject to perverse incentives in a democracy, as they can vote themselves handouts from the public treasury, conflicting their personal interest with that of the nation. The citizens can also use state power to attack each other by using the ballot box to impose their criminal intent upon their fellow citizens without suffering the normal criminal penalties for engaging in such behavior oneself. The end result of subjecting everything to a vote is well described by Nick Land:

“[T]he politically awakened masses [are] a howling irrational mob, …the dynamics of democratization [are] fundamentally degenerative: systematically consolidating and exacerbating private vices, resentments, and deficiencies until they reach the level of collective criminality and comprehensive social corruption. The democratic politician and the electorate are bound together by a circuit of reciprocal incitement, in which each side drives the other to ever more shameless extremities of hooting, prancing cannibalism, until the only alternative to shouting is being eaten.”

Of course, kings can be bad and elected officials can behave better, but the incentive structures favor good monarchs and corrupt elected officials. But in either case, it is in the interest of the state to grow, so long as it does not interfere with private commerce to a sufficient extent to choke off its supply lines of tax revenue. There is nothing counter-intuitive about this, but it does require an intuition which is outside the realm of modern mainstream political thought. When we see government tyranny and deliberate cultural destruction, one need not choose between thinking that state power is bad in and of itself or asking why it is doing such things. In fact, contrary to neoreactionary thought, a thorough study of the latter leads to the former conclusion.

Two Different Ills

While it is true that elites damage and/or weaponize the civilized structure of society because it helps them to acquire and maintain power, this problem is present in monarchies as well. A truthful and inquisitive press may uncover and report embarrassing details about the king’s activities. A powerful economy that provides great wealth and options to the citizenry while creating a strong middle class may cause the public to question the king’s necessity, as occurred with the classical anarchists of the 19th century. Strong communities with strong virtuous culture may also question the need for a king to rule over them, viewing him as superfluous at best and malicious at worst. Big old families and religious leaders may challenge the king’s power and lead a rebellion against him on secular or religious grounds, respectively. A strong belief in free association can lead to anarchy, as people may seek to stop associating with the state apparatus. A strong belief in law and order can also lead to anarchy, as people may seek to hold agents of the state to the same moral standards as everyone else. The most important difference, then, is that monarchists would be more inclined to damage these societal organs while democrats would be more inclined to weaponize them. But both monarchy and democracy produce these ill effects to one degree or another, so both are enemies of liberty and restoration.1

Overthrow The Crown

In his examination of absolute monarchy, Perilloux demonstrates a complete ignorance of how challenges to monarchical power occur and succeed. When people are denied a voice and are either unable or unwilling to exit, they effect change by revolt. The royal military is generally unfit to deal with a hostile populace, as it is meant to protect the realm from foreign centralized threats, not the sort of decentralized but violent revolution which could depose a monarch by rendering his lands ungovernable. As long as the dissidents do not make the mistake of attempting to fight Goliath on Goliath’s terms, they can create a nightmare for the Crown through the use of guerrilla tactics and disappear back into the general population before they present a target to the royal military. Though the royal military has powerful weapons which are denied to the public, the use of these weapons will destroy the lives and properties of innocent people, as well as infrastructure that the Crown needs. This will only anger the public and cause fence-sitters to side with the rebels.

There was a time period in which adept rulers could shut down or co-opt conspiratorial challengers, but technology has made this all but impossible, and further technological development is both unstoppable and more helpful to rebels than to the Crown. Should one king decide to crack down, his subjects will either seek to move to a less restrictive state or, if this option is denied them, begin to revolt. If a large interest of some kind gets out of hand and the Crown tries to nationalize it, the people in charge of that interest could resist in a multitude of ways. They could shutter their business and blame the Crown, thus denying people of beloved goods and services while raising their ire against the king. They could move their headquarters to another country, thus presenting the Crown with the option of banning their products, which again raises the ire of the public. If they were desperate, they could attempt to assassinate the king to protect their business interests. Though this option was rarely used in history, it could make sense if there is nowhere to run or hide.

Though it is true that the Crown could relax and let civilization flourish as long as it maintains a decisive lead in political power, it is also trivial because advances in technology and philosophy have made divine right monarchy impossible in all but the most backward of societies (e.g. North Korea, and even that is debatable). Therefore, the libertarian reactionary must ask, given that monarchists are at a structural disadvantage against democrats, what protects your shiny new monarchy from the next wave of democratic revolutions?

Historical Errors

Perilloux writes:

“So this is the king-pill: that power we shall always have with us, and that it is thus much better for everyone to kneel, hail, and do the King’s will than to wear ourselves out in endless political conflict at the expense of our civilization.”

It is important to be careful with the word ‘always,’ for it denotes a very, very long time. The king-pill is a poison to those who swallow it, trapping them in an outlook of historical determinism that lacks both intellectual courage and imagination. This is one of the most notable quirks of neoreaction; neoreactionaries frequently show great intellectual courage and imagination on other questions, but imagine that the future must be like the past and present with regard to the presence of state power. Though there are many reasons to prefer monarchy over democracy, both are inferior to the sort of stateless propertarian social order favored by libertarian reactionaries. This possibility breaks the false dilemma between kneeling to a king and wearing ourselves out in endless political conflict.

Perilloux responds to a likely objection by democrats by asserting that the eras of history in which power was consolidated and secure were eras in which conflict was eliminated and society was the finest. To the contrary, violent conflict was exported to the edges of the realm, which were in constant need of expansion in order to obtain the plunder necessary to sustain imperial growth. Inside the empire, violent conflict was replaced with less destructive forms of exploitation, such as taxation and conscription for public works, but these are a lesser evil rather than a good. The plunder from foreign conquests disproportionately made their way into the coffers of elites, resulting in public resentment and populist uprisings. Once those empires fell, they left many people in a condition of helplessness, as they had monopolized essential services and left their subjects unable to provide those services for themselves. Finally, it is quite strange to suggest that life was finer in the Roman Empire or the Mongol Empire than it is in contemporary Western countries, at least in terms of knowledge, wealth, life expectancy, and respect for individual rights.

Bad Kings

Unlike the neoreactionary, the libertarian reactionary has no concern with a bad king, as a stateless propertarian society has no political power to accumulate, and thus no king to worry about. Instead, the power vacuum is artificially maintained through the continuous application of defensive force. Just as matter is forcefully expelled from a vacuum chamber, the state must be forcefully expelled from a libertarian-controlled area. Once this is done, there will be attempts by government agents, warlords, terrorists, mafiosos, and lone wolf criminals to re-enter the resulting stateless society in order to establish a new coercive enterprise, just as atoms attempt to re-enter a vacuum chamber and restore atmospheric pressure. These people must be physically separated and removed from the society, just as atoms must be continually pumped out of the vacuum chamber.2

Perilloux claims that a king should turn his will toward “the improvement of our race, the betterment of our civilization, and the glory of God” without any discussion of what that means. It is unfortunate that he does not dial this in because it could mean almost anything, as race is a social construct, betterment is partly subjective, and God is not proven to exist. Hopefully, the king would have a correct understanding of genetic differences between population groups, a proper sense of what betterment means, and an eutheistic concept of God. To his credit, Perilloux does understand that it is unlikely for elites who have gained power in the current system to meet these criteria.

Libertarian reactionaries agree with neoreactionaries that “[w]ithout democracy, [the elites] would either consolidate power and refocus on the problem of how to run a civilization, or they would find themselves replaced by someone who could.” The difference is that the replacement process in a neoreactionary monarchy or oligarchy is likely to be violent, while the same process in a stateless propertarian society need only involve people choosing to do business with different service providers who are more efficient and responsive to consumer demand, with mutually assured destruction between private defense agencies and the possibility of competitors gaining market share keeping the peace.

To leave the problem of whether a proposed king would have the right vision for future generations is not only a cop-out, but an impossibility. As Friedrich Hayek explained, no central planner can have the necessary knowledge and foresight to have a proper vision for the future because a central planner does not have access to all of the decentralized information in the market economy. All that could be hoped for is a king who would oppose degenerate behaviors and ideas while keeping his hands off the market. Unlike neoreactionaries, libertarian reactionaries would not consider Trump to be good enough in this regard. Much of his core platform was abandoned by other political factions many decades ago not because elites wished to bring about decline by moving in a different direction (though this certainly motivated many of their other actions), but because protectionism and welfare statism are bad economic policies. Also, should the king’s vision be sufficiently wrong, the neoreactionary project will come to a screeching halt as the king is overthrown and democracy restored by an angry citizenry.

Statist Pathologies

Though libertarian reactionaries may sympathize with the neoreactionary view of democracy as cancer, the libertarian reactionary view is that if society is an entire human body, then any kind of state apparatus is a malignant cancer. Cancer is a corruption of healthy cells and functions, it grows at the expense of healthy cells, it can kill the body if it becomes too prominent, and it can come back with a vengeance following an unsuccessful attempt at removal. All of these aspects are true of governments as well. The effect of democracy might be better compared to the effect of HIV in humans, in that it weakens a society’s natural defenses against mob chaos, correlates strongly with degenerate behaviors, and accelerates the course of other societal ills.

What Trump Can Do

Perilloux’s assessment of Trump’s potential is generally correct. Trump does not have the “very strong, sufficiently large, and ideologically conditioned organization to pull off any serious change in Washington,” if serious change is defined as fundamentally altering the system rather than just being a breath of fresh air within it. Given his loss of the popular vote, the historical antipathy of the American people toward monarchy, the rather desolate intellectual foundation of Trumpism, and the dearth of competent statesmen who could assist him in building a new governance structure and/or dismantling the current one, there is no way that Trump could elevate himself from President to King by normal means. Even if a crisis occurs and Trump is able to convince people to entrust him with singular executive power, the tolerance of the American people for a king would not outlast whatever crisis prompted them to grant him such power. Like the dictators of the Roman Republic, Trump would be expected to divest himself of such power once the crisis has passed. In sum, he will only be able to prepare the way for someone in the future. As Perilloux suggests, Trump can do this through his deal-making abilities as long as he refrains from kicking leftists too much while they are down and engaging in sideshows which have temporarily derailed his efforts on numerous occasions thus far.

What Trump Should Do

The libertarian reactionary view of what Trump could accomplish is much different from the neoreactionary view. The neoreactionaries seek to secure a responsible long-term elite coalition, and would have us make peace with leftists in order to accomplish this goal, even if it means “mov[ing] left on key causes like economics and health care.” The libertarian reactionary understands that no such long-term coalition is possible because the elites in a natural order will not be static and the current elites are too invested in the current system to make for useful allies in a transition to a new order. Making peace with the left is exactly what the right has done for decades, and anger at the resulting decline is what allowed Trump rise to power in the first place. If he does the same, it would signal to Trump’s supporters that he has abandoned them and is just another phony politician who will say anything to get elected. That, combined with the radicalization of the Democratic base carried out by Bernie Sanders and his fellow-travelers, would make Trump a one-term President and lead the right away from both democracy and neoreaction.3

While it is true that the left will be radicalized by an overzealous Trump administration, respond by “working overtime in the areas he doesn’t directly control” now, and create more chaos and division when they regain power, this is not necessarily a negative in the long-term. The neoreactionaries seek to have the cup of violent revolution pass from them, but the libertarian reactionary understands that liberty requires revolution. For it is not only the leftist elite which must be purged, but the rank and file as well. As Hoppe so wisely said,

“There can be no tolerance toward democrats and communists in a libertarian social order. They will have to be physically separated and removed from society.”

Better to let the leftists fully reveal themselves in opposition to Trump so that we have a better idea of who must be purged. The backlash is thus not something to be avoided, but something to be encouraged.

Perilloux’s other suggestions for Trump are to

  1. rebuild the Republican Party,
  2. expose, purge, and destroy all the crooks and radicals, including non-governmental actors like the foundations and Soros,
  3. strategically change immigration policy,
  4. deconstruct leftist ideological propaganda and disable their propaganda organs and speech controls,
  5. build the wall,
  6. get the universities and media to play nice,
  7. sow dissent among the enemy, and
  8. weaken democracy.

The second, third, fourth, seventh, and eighth objectives are well worth doing and merit no critique. However, rebuilding the Republican Party is largely unnecessary at this point, unless Perilloux means to rebuild it in Trump’s image rather than being content with defending the significant majority of governorships and state legislators. Building the wall is largely infeasible and counterproductive; should matters get worse, such a barrier will be used to keep us in. There is also no way to make Mexico pay for it; the best Trump can do is to garnish their foreign aid, which means only that American taxpayers will be forced to fund one project instead of another. The immigration restrictions which are necessary to prevent Americans from being overrun by people who are demographically hostile to liberty can be accomplished through other means, such as E-verify, harsher penalties, and denying federal funds to sanctuary cities. Finally, the mainstream press and universities are never going to play nice with the right, as they are fundamentally left-wing institutions at present, and Trump has not the time or resources to alter this. All Trump will be able to do on the education front is to extricate the federal government from the student loan and grant business, encourage would-be college students to consider trade and technical alternatives, and possibly abolish the federal Department of Education. Trump can do more against the media, in the form of revoking media credentials of establishment news outlets and instead relying upon alternative media, independent journalists, and direct communication with the American people via social media to deliver his messages.

Conclusion

Perilloux writes:

“But whatever happens, it’s not going to be enough. Democracy and communism will not be defeated this time, and when Trump is done, if democracy still stands, all the worst of the modern world will come crawling back to us. …Trump will not end democracy and bring about the coming golden age…because no one was ready with a männerbund of a thousand virtuous statesmen with a full vision and plan. Therefore, if that’s going to happen, while Trump and company labor valiantly in the Potomac swamp, someone has to be building that intellectual and human infrastructure for the true Restoration in the future.

It is not immediate power we need for the long game, but wisdom, vision, virtue, and solidarity. We will not get these from Trump’s administration. These things can only be built without the distractions of power. The men of the Trump administration will be busy playing anti-communist whack-a-mole and thinking about a very different set of strategic considerations than a long-term Restoration-focused research team must be. Their work will be valuable I’m sure, but they will not have the time or attention to think about the long game.”

In this much, he is correct, but it is libertarian reactionaries rather than neoreactionaries who must build said infrastructure. We must build private alternatives to government services which succeed where governments have failed. We must create black markets to deprive the state of revenue and lessen its ability to harm the economy. We must infiltrate the halls of power to obstruct government functions from within. We must protest and practice jury nullification to obstruct government functions from without. We must educate people to understand the necessity of eliminating the state apparatus by any means necessary, as well as the need to rely on oneself and one’s community instead of the state. Perhaps most importantly, we must train ourselves to be competent in the use of defensive force and irregular tactics.

If we accomplish these tasks well in the coming years, we will be prepared for the task of defeating the current state and keeping a new state from filling a power vacuum. Nothing less than this will allow us to end democracy, monarchy, and every other parasitism upon innocent and productive people. The neoreactionaries, on the other hand, would restore the Crown, and much like the mainstream conservatives who would restore the Republic, will only condemn our descendants to re-fight our battles for liberty.

Footnotes:

  1. This may help to explain why democracies largely replaced monarchies through the 19th and early 20th centuries, as weaponized, less-damaged institutions have a combative advantage against non-weaponized, more-damaged institutions.
  2. Notably, libertarian reactionaries have two advantages over the physicist using a vacuum pump. First, a vacuum pump cannot destroy atoms, but a libertarian reactionary can kill an aggressor. Second, the physicist will never turn the entire universe outside of the vacuum chamber into a vacuum, but libertarian reactionaries can come close enough to turning the entire world into a libertarian-controlled area to be able to live all but free from aggressive violence while standing by to eliminate any new threat.
  3. This could provide the impetus for the necessary violent revolution, so perhaps Perilloux is accidentally correct on this point.

Read the entire article at ZerothPosition.com

The Economic Fallacies of Black Friday: 2016 Edition

Today, shoppers across America will participate in the largest shopping day of the year: Black Friday. The National Retail Federation is estimating that 137.4 million customers will be shopping on Black Friday weekend, down from the 2015 estimate of 135.8 million customers. The actual result from 2015 was 151.4 million shoppers. A similar adjustment to the predicted value for 2016 would mean an actual number of shoppers close to 153.1 million.

The NRF estimates that total sales for the holiday season will be $655.8 billion, up from $633.0 billion in 2015. This would be an annual increase of 3.6 percent. The estimate for 2015 was $630.5 billion, suggesting that the total sales for 2016 may be around $658.4 billion. This year, the NRF estimates that retailers will hire between 640,000 and 690,000 seasonal employees, compared with the actual 675,300 they hired during the 2015 holiday season versus an estimate of 700,000 to 750,000. We may therefore expect that retailers will actually hire about 619,400 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 $935.58 in 2016, up from the 2015 estimate of $805.65. The actual result from 2015 was $952.58. A similar adjustment to the predicted value for 2016 would mean an actual per capita spending close to $1,106.21. 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 16.28 percent and a minimum payment of 4.0 percent, a debt of $1,106.21 would take almost six years to pay off and would cost $1,567.57. This is $461.36 wasted on interest payments that could have been kept in one’s accounts or put toward a productive purpose. Multiply this by the 153.1 million shoppers predicted earlier, and the result is that as much as $70.6 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.

On Market Failure

The idea of market failure is a widely believed misconception which has found widespread use in statist propaganda for the purpose of justifying government intervention in the private sector. Though the term itself has only been in use since 1958, the concept can be traced back to Henry Sidgwick. It is used to describe a situation in which the allocation of goods and services is Pareto inefficient. This occurs when the rational self-interest of individuals is at odds with the optimal outcome for a collective. Such a situation is frequently blamed on conflicts of interest, factor immobility, information asymmetry, monopolies, negative externalities, public goods, and/or time-inconsistent preferences. Among these, monopolies, negative externalities, and public goods receive the most attention from mainstream economists.

But let us pause to consider what a market is. A market is a structure that allows buyers and sellers to exchange goods, services, and information. The participants in the market for a particular commodity consist of everyone who influences the price of that commodity. To say that a market has failed is to say that this process of assembling the information about a commodity which is reflected in its price and its change over time has failed. But the causes listed above are either inconsistent with a free market or unresolvable by interventions which bind the market. Let us explore this in detail.

Monopolies

While monopolies are frequently blamed for market failures, a monopoly in a particular market is typically the result of government intervention which has raised barriers to entry in that market. Through a vicious cycle of regulatory capture, larger businesses can put smaller competitors out of business by bribing politicians and regulators to favor the former and harm the latter. This continues until a market is effectively monopolized. Therefore, this type of monopoly is actually a government failure rather than a market failure.

Another type of monopoly can occur when there are natural barriers to entry, such as the need to build vast amounts of infrastructure in order to provide a good or service. This can give the first entrant into a market an insurmountable advantage. Consumers may then complain that this monopolist is abusing them rather than show gratitude that they are getting a service which was formerly nonexistent. But if the monopolist were really overcharging, then it would become feasible for another provider to either challenge the monopoly directly or provide an alternative service. This type of monopoly is actually a market signal that a particular good or service would be better provided by another means, and entrepreneurs should look for those means.

Third, a monopoly can arise in a free market if one business satisfies all consumers of a good or service to such an extent that no one cares to compete against them. This kind of monopoly is not a market failure, but an astonishing market success.

This leaves only the ‘public goods’ argument, which merits its own section.

Public Goods

Public goods and services are those whose consumption cannot be limited to paying customers. It is frequently argued that this produces waste in the form of unnecessary duplication and excess costs born by those who are not free riders. There is also the matter that non-excludable and rivalrous resources in a commons may be depleted without intervention. The latter can only be fully resolved by eliminating the commons, as restoring exclusive control to the resource is the only method of eliminating the perverse incentives created by a commons. The concerns over free riding and unnecessary duplication ignore incentives, prove too much, and commit the broken window fallacy.

If we wish to have a rational discussion, it is essential to define terms. A problem is an undesirable situation which can be remedied. This is because a situation which is not undesirable presents no problem to solve, and an undesirable situation which has no remedy is just a fact which must be tolerated. The free rider “problem” is a situation of the latter type, as it is impractical to make sure that everyone pays exactly what they should pay for the amount of public goods that they consume. That government monopolies destroy competition, and thus the market price system, makes the free rider “problem” impossible to solve, as the information needed to determine how much each person should pay for the amount of public goods that they consume is destroyed beyond repair.

If taken to its logical conclusion, the idea that no one should be able to consume more than or pay for less than their fair share of a public good means that the state should be eliminated, as the very presence of a state means that some people are consuming more than and paying for less than their fair share of the total wealth in the economy, as states are funded by coercive means which violate private property rights. Those who receive government welfare payments, bailouts, grants, or any other form of government funding are free riding upon the backs of taxpayers and anyone else who uses currency printed by a government’s central bank. The latter group of people are forced riders who are required to pay for public goods from which they receive insufficient benefit. Charity would also be unjustifiable if the concept of the free rider problem is taken to its logical conclusion, as those who receive charity are not paying the full cost for what they are using.

But suppose we ignore this as well. If we accept for the sake of argument that there are public goods and that no one should be able to consume more than or pay for less than their fair share of a public good, then the result will be a massive distortion of the economy, as both the state and private charity must go. While the demise of statism is nothing to lament, the absence of any form of private charity would lead to the very sort of Hobbesian war that statists fear and think that they are preventing. It must also be noted that the money for payments for public goods which are now being made was once being put toward another purpose. Whether that purpose was spending on other goods and services or investment (which is really just another form of spending), the diversion of spending away from these purposes and toward public goods will eliminate some other economic activities that were occurring.

Nearly all competitive production involves supposedly wasteful duplication, in that each provider must have the infrastructure necessary to produce that which is being provided. But if the duplication is truly wasteful, the market signals this by rendering the wasteful duplication unprofitable. Government intervention interferes with such signals, and government control over an industry completely eliminates them, leading to far worse government failures than any failure of the market.

Externalities

A problem related to public goods is the problem of externalities, in which costs or benefits affect a party who did not choose to incur those costs or benefits. When firms do not pay the full cost of production, each unit costs less to produce than it should, resulting in overproduction.

The most frequent examples given are pollution, traffic congestion, and overuse of natural resources, but all of these contain externalities because the market has been prevented by governments from internalizing the costs. Air and water pollution are externalities because government intervention on behalf of polluters has eliminated the common law system of private property rights with regard to pollution. Before the Industrial Revolution, pollution was correctly viewed as an act of aggression against people and their property. Those victimized could sue for damages and obtain injunctions against further pollution. Polluters and victims can also bargain to reach an optimal level of both production and pollution. Additionally, the victims would be justified in using violence in self-defense against polluters, though this is an historical rarity. But government monopolization of environmental regulation has prevented these market solutions from being implemented. Therefore, pollution is a government failure rather than a market failure.

Traffic congestion is another tragedy of the commons that causes externalities in the form of pollution, wasted fuel, and lost time. But this is another case in which governments have monopolized a good and produced it out of accordance with market demand. Without competing private firms to build different traffic systems in search of more efficient ones and without private property rights determining location and control over the transportation system, we are left with a non-excludable good that is incentivized toward overuse. Attempted solutions of congestion pricing, mass transit, and tolls mitigate some effects, but not to the extent that private service providers might implement such methods. Again, we have government failure at work.

A third example of externalities occurs with overuse of natural resources, such as fish and lumber. But once more, we see government intervention against private property mechanisms creating problems. Because state personnel in modern democracies do not personally benefit from maintaining the value of state-controlled property and work almost solely with the usufruct thereof, they are incentivized to engage in bribery and corruption. When states sell only the resource rights but not the territory itself, they get a renewable source of income. But firms that harvest renewable resources can abuse this system, stripping the resource bare then vanishing when it is time to replenish. These ‘fly-by-night’ lumber companies, fishers, and other such exploiters lead to the fast demise of resources which were harvested and preserved for centuries prior to state intervention. In short, government fails yet again.

Before moving on, a quick word about positive externalities is in order. This is another way of talking about the free rider problem, so the same criticisms discussed above apply. But we should also consider the benefits of free riders. Although some people will argue that free riders are responsible for higher costs, they are actually signaling that a good or service is overpriced. While degenerate freeloaders do exist, most free riders who are aware of their free riding are willing to pay for what they are receiving but believe that said goods or services are overpriced. In the state-enforced absence of another provider, they choose to “pirate” the public goods rather than pay the cost which they believe to be too expensive. If there are rational, knowledgeable people in charge of a public good that has many free riders, then they will respond by lowering the cost to convince more people to contribute, which can actually raise the total contribution.

The above result is rare, of course, as rational, knowledgeable people tend to be productive rather than become part of the state apparatus. The more useful role of free riders is to crash government programs which cannot be ended by normal political means. Most government programs help a few people by a large magnitude while harming a much larger number of people by a much smaller amount. This means that an irate and tireless minority will work to keep their sacred cow from being gored, while the majority is not being harmed enough to take action to end the harm. Thus, there is nothing more permanent than a temporary government program, and it is politically impossible to abolish entitlement and welfare programs. While the strategy of overloading such programs was first proposed by leftists who wished to replace them with far more expansive redistributions of wealth, it could also be used by libertarian-minded people who wish to replace such programs with nothing.

Other Culprits

The less-discussed causes of market failure are conflicts of interest, factor immobility, information asymmetry, and time-inconsistent preferences. This is mostly because government intervention is more widely known to either cause these problems or fail to solve them. Conflicts of interest typically occur when an agent has a self-interest which is at odds with the principal that the agent is supposed to serve. For example, a lawyer may advise his client to enter protracted legal proceedings not because it is best for the client, but because it will generate more income for the lawyer. A politician may vote for a law not because it is in the best interest of the people in her district, but because she was bribed by lobbyists who support the law. The only solution to a conflict of interest is to recuse oneself from the conflict, and government offers no answer, especially since it inherently operates on conflict of interest.

Factor immobility occurs when factors of production, such as land, capital, and labor, cannot easily move between one area of the economy and another. This sometimes occurs due to malinvestment caused by government distortions of the economy; in other cases, it results from technological advancement that puts an industry into obsolescence. In any event, government regulations frequently make it more difficult to change occupations and maneuver capital than it would be in a free market. Interventions to help workers in a declining field typically fall victim to the knowledge problem; it cannot accurately retrain workers or educate future workers because it cannot know what the economy will need by the time the retraining or education is complete.

Information asymmetry occurs when some parties in a transaction has more and/or better information than others. This creates a power disparity which is sometimes called a market failure in the worst cases. Common sub-types of information asymmetry include adverse selection and moral hazard. Adverse selection occurs when one party lacks information while negotiating a contract, while moral hazard involves a lack of information about performance or an inability to obtain appropriate relief for a breach of contract. These cases are made worse by government laws, as laws can lead to both adverse selection and moral hazard. For example, an insurance firm that is legally disallowed from discriminating against high-risk customers is itself put at a higher risk through no fault or will of its own, being unable to turn away those who cost the most to insure or cancel insurance policies for reckless behavior by the insured. Fortunately, there are market methods for resolving informational asymmetries, such as rating agencies.

Time-inconsistent preferences occur when people make decisions which are inconsistent with expected utility. For example, one might choose to have ten ounces of gold today rather than eleven ounces tomorrow. Time preferences are expressed economically through interest rates, in that interest rates are the premium placed upon having something now rather than waiting for it. Governments interfere with interest rates through central bank monetary policies, leading to alterations of time preference that can be inconsistent. This is still another example of government failure rather than market failure.

Resource Failure

Another possibility for market failure which is rarely discussed is that of resource failure. If an economy becomes dependent upon a certain non-renewable resource, that resource becomes scarce, and there is no viable alternative, the result can be devastating not only to markets, but to peoples’ lives as a whole. For example, if peak oil occurs and there is no alternative energy source available to meet the energy demands fulfilled by fossil fuels, a market failure will occur due to resource failure. Another historical example is the destruction of trees on Easter Island. Resource failure is generally not amenable to government policy, and may be exacerbated by it if subsidies alter the market to keep it from finding the best solution to a resource shortage.

Complainer Failure

The last type of failure is not a market failure at all, but a failure by a critic to understand the nature of the market. Consumer demand does not drive the economy; capital investment does. The over-reliance on gross domestic product (GDP) as a measure of economic output has fooled many people into believing otherwise, but GDP neglects intermediate production at the commodity, manufacturing, and wholesale stages of production. As such, consumer demand and spending are an effect of a healthy economy and not the cause.

With this in mind, the idea that the market has somehow failed when it does not produce everything that a particular person might want and deliver it exactly where they want it for a cost that the person finds agreeable is ridiculous. A person levying this criticism should be advised to check their hubris. If a certain good or service is not produced in a free market, it is because such production is not sufficiently worthwhile for anyone to make a living through doing so. The fact that everyone gets by without that good or service indicates that no failure has taken place. Those who desire that good or service so much should make an effort to provide it so that they can have it.

Standards

The entire idea of market failures is based on Pareto efficiency. But there is no reason why we must choose Pareto efficiency as the measure of market success. One could just as well define market efficiency as the degree to which it permits its participants to achieve their individual goals. (Note that these are equivalent if the conditions of the first welfare theorem are met.) Another possible standard is that of productive efficiency, which is optimized when no additional production can occur without increasing the amount of resources, time, and/or labor involved in production. An economy with maximum productive efficiency cannot produce more of one good without producing less of another good.

Conclusion

In every case, that which appears to be a market failure is actually a failure of government policy, natural resource management, or economic understanding. We may therefore reject the very idea of market failure as yet another form of statist propaganda.

The Economic Illiteracy of Liberty Mutual, Part II

Every insurance company has a target demographic. For Geico, it is government employees. For State Farm, it is farmers. For Liberty Mutual, it appears to be people who are economically illiterate. Last year, the company released a series of nine advertisements, most of which commit economic fallacies. At the time, I examined and debunked them. Some of those have been phased out, while others remain. They have also made four more advertisements, all of which commit more fallacies. Let us analyze each one and find the fallacies therein.

Blah Blah Blah (Coverage Compass)

A woman says, “Your car insurance policy is 22 pages long. Did you read every word? No. Only lawyers do that. So when you got rear-ended and you needed a tow, your insurance company told you to look at page 5 on your policy. Did it say, ‘Great news, you’re covered!’ on page 5? No. It said, ‘Blah blah blah blah blah blah blah…’”

Reading and familiarizing oneself with the policy that one has purchased should be expected, as it is the car insurance customer’s responsibility to know what is covered and what is not. A person who does not read the fine print before agreeing to legal terms has no one to blame but oneself.

Mistake (New Car Replacement)

A man says, “Your insurance company won’t replace the full value of your totaled new car. The guy says, ‘You picked the wrong insurance plan.’ No, I picked the wrong insurance company.”

This man picked the wrong economics textbook, assuming he has ever read one at all. The reason that many plans cover the current value of a car rather than the original value is that depreciation occurs over time. Wear and tear begins as soon as a car is used for the first time, meaning that a car’s value begins its descent from new car price to scrap metal price as soon as it is driven for the first time. It makes no sense to insure anything for more than it is worth, as this only incentivizes the owner to destroy the insured object and file an insurance claim on it.

Of course, there is nothing inherently wrong with a New Car Replacement policy, but it will cost more, and for good reason. When the potential payout for a claim increases and all else is held constant, the insurance rate must increase in kind so that the insurance company can remain profitable. There is also nothing inherently wrong with an insurance company which chooses not to offer such a policy, so the man’s statement about picking the wrong insurance company is only a matter of subjective preference.

Perfect (Accident Forgiveness)

A man and woman present a dialogue.

Man: You both have a perfect driving record.

Woman: Perfect.

Man: No tickets, no accidents.

Woman: That is, until one of you clips a food truck, ruining your perfect record.

Man: Yeah.

Woman: Now, you would think your insurance company would cut you some slack, right?

Man: No, your insurance rates go through the roof. Your perfect record doesn’t get you anything.

Woman: Anything.

Man: Perfect!

Of course their perfect record does not get them anything, for it is not perfect anymore. Damaging other vehicles makes a driver a greater liability for an insurance company because it makes the insurance company pay out claims to the owners of those other vehicles. As past behavior is a useful predictor of future behavior, an insurance company raises rates on drivers who have had accidents recently in anticipation of having to pay more claims caused by those drivers in the future.

While there is nothing inherently wrong with an Accident Forgiveness policy that does not increase rates for the first accident, it will cost more, and for good reason. The money required to keep the insurance company afloat must come from somewhere, and it can only come from raising rates on accident-free drivers, raising rates on drivers with two or more accidents, lowering claim payouts, or some combination of the aforementioned.

Wife’s Car (New Car Replacement)

A man says, “You’re late for work. You grab your 10 gallon jug of coffee and back out of the garage, right into your wife’s car, with your wife watching. She forgives you, eventually. Your insurance company, not so much. They say you only have their basic policy. Don’t basic policies cover basic accidents? ‘Of course,’ they say. ‘As long as you pay extra for it.’”

Again, it is the car insurance customer’s responsibility to know what is covered and what is not. If the policy says that the circumstances are not covered, then it is up to the customer to either deal with such a mistake out of pocket or pay extra for a plan that covers such a mistake. And perhaps such a driver should not have a 10 gallon jug of coffee, as that level of caffeine would certainly impair one’s driving abilities.

Conclusion

This set of advertisements is appealing to the economic illiteracy and sense of entitlement of the general population, especially younger people. Unfortunately, because economic illiteracy is so widespread, Liberty Mutual seems to have a winning marketing strategy.

Cut Puerto Rico Loose

On May 2, the Puerto Rican government missed an interest payment on bonds it has issued to an extent of $422 million. Worries of default on the territory’s general obligation bonds are continually rising, as it appears that a $2 billion payment due on July 1 will also go unpaid.

Of course, the usual suspects are calling for intervention to “save” the island from its financial woes. Some Democrats are openly clinging to Keynesian ideas of bailouts for troubled financial instruments, despite the abject failure of such measures to repair the mainland U.S. economy since 2008. Meanwhile, House Speaker Paul Ryan has made the statement that “[o]ur primary responsibility is to protect the American taxpayer and to help bring order to the chaos that will befall Puerto Rico if the status quo continues going in the direction it’s going,” which is contradictory because attempting to rescue Puerto Rico will require victimizing not only the American taxpayer, but everyone who holds U.S. dollars.

That such a bailout would be funded by money gained by the state through extortion and currency debasement is terrible enough, but rescuing Puerto Ricans from the just consequences of their actions also creates a moral hazard. If Puerto Rico, then why not Detroit? Chicago? California, even? If $72 billion in debt plus $44 billion in unfunded liabilities for a outlying territory, then why not more for the U.S. mainland? Rewarding and subsidizing bad behavior only encourages more of it, not only from some irresponsible actors, but from all of them.

It must also be noted that in the current political climate, Republicans will be demonized by Democrats and the lapdog media regardless of what happens, and the Republican rank-and-file will be given the shaft. If there is no bailout, then Democrats will accuse Republicans of being too stingy to help people in need, especially ethnic minorities. If there is a bailout and trouble continues, which it will under such circumstances, then Democrats will blame Republicans for not using enough stimulus and/or for allocating the funds poorly. If one will face accusations regardless of one’s actions, then one might as well get one’s money’s worth and do the right thing. And what is the right thing?

Do not only abstain from bailouts; cut Puerto Rico loose.

Let us face facts; Puerto Rico has never really been a part of America, not in terms of economics, culture, language, or identity. In fact, it was not a part of America at all until 1898, when the United States gained control of it from Spain (along with Guam and the Philippines) under the Treaty of Paris, which ended the Spanish-American War. For four centuries prior since being claimed by Columbus in 1493, Puerto Rico had been a Spanish colony. The people there used the Spanish language, but developed their own sense of culture and national identity. (This commonly occurs upon islands, as the ocean makes for a clear barrier between in-group and out-group.) That they may call themselves U.S. citizens is only a matter of law.

The economic well-being of Puerto Rico is not on par with the rest of the United States. If it were an independent nation, it would rank between 60th and 62nd in GDP, with a similar economic output to Angola, Morocco, and Slovakia, none of which are exactly paragons of economic development. If it were a U.S. state, it would rank 37th out of 51. The difference is far more pronounced when considering other measurements. In terms of public debt to GDP, Puerto Rico has a debt of 66 percent of GDP, while no U.S. state exceeds 25 percent. The per capita public debt of Puerto Rico is $19,486.60, which exceeds that of every U.S. state but is lower than that of the District of Columbia. The per capita income in Puerto Rico is $11,241, placing it just above half of the worst U.S. state (Mississippi, $21,036) and far below the best (D.C., $45,877; Connecticut, $39,373).

While cutting Puerto Rico loose is a matter of rational self-interest for mainland Americans, it is also a way to end their victimization at the hands of central bankers and the investors who react to their pernicious policies. While a free market would have much higher interest rates and no currency debasement, central banks like the Federal Reserve have kept interest rates artificially low and have greatly expanded the monetary supply. Savers who are used to getting a reasonable rate of return in a savings account thus have to seek riskier alternatives. Those who have enough capital to access hedge funds, high-risk sovereign debt becomes an attractive option. Those who are poorer either sit on fiat currency as it loses value or venture into precious metals and cryptocurrencies, which can pose even more risk and volatility. While Puerto Rico would likely form a central bank and issue its own fiat currency if it were cut loose, this would keep the Federal Reserve from imposing an economic system which encourages booms that favor foreign investors at the cost of busts that burden Puerto Ricans. A problem of this sort has already been seen in Greece, and the mistakes made by the European Central Bank should not be repeated.

On Air Ownership and Pollution

The question of how to deal with air pollution is frequently asked of libertarian theorists, as it is an issue which has been dominated by governments for far longer than a human lifetime. Accordingly, it may be difficult to transition toward a free market alternative to government environmental regulations. Several other attempts have been made to address this issue, but let us tackle the problem rigorously from first principles.

The starting point for all of libertarian ethics is self-ownership, that each person has a right to exclusive control of 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 is false by contradiction.

Because each person has a right to exclusive control of one’s physical body, it is wrong for one person to interfere 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. Because each person has full responsibility for the actions that one commits with one’s physical body, 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. But because the non-aggression principle and private property rights are derived from self-ownership, they are dependent upon it. That which is dependent cannot overrule that upon which it is dependent, therefore self-ownership takes primacy if there should be a conflict between the self-ownership of one person and the external private property rights of another person.

Now that a logical framework is established, let us consider the problem of air pollution through this framework. The essential fact about air pollution is that the polluter adds harmful substances to the air against the wishes of those who are exposed to it, either through inhalation, external contact, or ground or water pollution as the contaminants are left behind once polluted air has passed through an area. When such exposure occurs, the pollution is not only an act of aggression against private property, but against liberty and life as well in the event of illness or death caused by the pollutants. This means that a polluter may be guilty not only of damaging property, but of assault or homicide.

But what about the air itself? We can deduce what it means to own the air from what it means to own something in general, which has already been discussed. Given the above theoretical framework, a person may own land, but the air above the land is not labored upon and is not static upon the property. (One could gain ownership of some air by performing some labor upon it, such as enclosing in a container or pressurizing it therein, but this is mostly a separate issue from that of air pollution.) But a person must have some reasonable clearance above the land to be able to move freely upon it and generally enjoy the private property right in it. This clearance might also allow one to hunt game birds and to be free from spy drones flown by other people, but could not extend high enough to impede commercial air or space travel overhead. The extent of this clearance is impossible to determine a priori and must be dealt with on a case-by-case basis through negotiations and contracts.

At this point, one may be led to think that far from the leftist caricature that libertarianism is unconcerned with environmental pollution, this framework is actually too sensitive to pollution, as any amount of air pollution could be considered an act of aggression. If true, this would require a radical reorganization of society so as to eliminate all emissions. But this is where the Reecean proviso rescues libertarianism from a practically untenable position. Because self-ownership overrules external property rights, pollution that is required for survival is permissible. As Friedman points out[1],

“Carbon dioxide is a pollutant. It is also an end product of human metabolism. If I have no right to impose a single molecule of pollution on anyone else’s property, then I must get the permission of all my neighbors to breathe. Unless I promise not to exhale.”

Another example is the burning of wood in one’s fireplace or campsite to prevent hypothermia, cook food, sanitize drinking water, etc., as disallowing such activities (or their more modern equivalent of burning fossil fuels to generate electricity and heat) would result in a massive depopulation, which in turn would destroy the institutions of private property. But the Reecean proviso cannot defend non-essential pollution, such as that produced by modern transportation or tobacco smoke, as there is no self-ownership to weigh against private property rights. Fortunately, we need not alter civilization quite so radically, as there are other theoretical considerations which are somewhat more permissive.

The distinction between non-harm, non-violence, and non-aggression means that the maxim of ‘no victim means no crime’ is an oversimplification; the more accurate statement is that no victim means no restitution can be owed and no punishment beyond what is necessary to stop acts of aggression should be meted out. This distinction allows us to differentiate[2] between noticeable trespasses and unnoticeable nuisances, the latter of which are only actionable if some damage may be demonstrated. This is because a substance which cannot be noticed and does not demonstrably cause harm is functionally equivalent to being absent, and a lack of cause for restitution leaves a court with no sentence to impose.

The dispute resolution standards in use by the polluter and the pollutee also play an important role, as a different result will occur if both use a reasonable doubt standard versus a preponderance of evidence standard. Still another possibility is that the polluter will use a private court company with one standard of proof while the pollutee will use a different private court company with a different standard of proof. Such instances would need to be negotiated and contracted on a case-by-case basis, but any competent court company would be staffed by people who are aware of such problems and capable of performing such negotiations. Coase explained[3] that such negotiations will result in some level of pollution and some restitution that is satisfactory to both. Perhaps this is not ideal for nature, but it does minimize pollution levels beyond what alternatives to voluntary negotiations have produced thus far.

Another matter is that not all property claims are established at the same time. This means that it is possible for a right to pollute to be homesteaded, in that if all of the pollution generated by a property owner falls upon unowned wilderness and stays there, then anyone who establishes property in that wilderness tacitly consents to the current conditions of present and continuing pollution. Of course, another instance which would need to be negotiated and contracted on a case-by-case basis is that of a polluter ceasing operations for a time, as the newer property owners may come to expect this new, cleaner state of affairs and take action if the polluter resumes operations.

These deviations from a strict ban on air pollution still leave in place a far greater protection of the environment than do statist environmental regulations. Whereas a private owner both exercises exclusive control over a resource and may sell either the resource or stock in it, government officials cannot generally do the latter. This means that government officials lack an important economic incentive to take care of the air. A private owner of an airspace whose air becomes polluted would sue the polluter for damages and seek injunctive relief, but the Environmental Protection Agency or its state-level subsidiaries tend to block such lawsuits when filed by concerned citizens. This lack of incentive also leads governments to pollute the air, to the extent that the U.S. military is the worst polluter in the world.

It is clear that governments cannot be trusted to defend its citizens from such aggressions, but it has done worse; it has prevented free market solutions from being implemented. During the 19th century, people whose property was damaged by factory smoke took the factory owners to court, seeking relief from the pollution in the form of injunctions and damages. The government judges, realizing on which side their bread was buttered, sided with the factory owners, claiming that the “public good” of industrial progress outweighed private property rights. Legislators, also knowing who was more capable of funding their campaigns and bribing them, joined in for the polluters and against the pollutees by eliminating the option of class action lawsuits against polluters who cause damage over a large area. Rothbard recognized[4] that technology has therefore developed to produce air pollution because governments have interfered with private property rights in this area, and a society where this was far more restricted all along would have developed in a more environmentally friendly manner.

The criticism of libertarian theories of air pollution that is least addressed is that they do not effectively deal with situations in which responsibility is greatly dispersed, such as the pollution from driving automobiles leading to smog in large urban areas or places with geography that traps harmful particles. Pollution is no more acceptable if a million people produce it than if one person produces it, but the responsibility of each person becomes so small as to be unmeasurable for purposes of restitution. There is also the matter that crime consists of both an actus reus and a mens rea, and the everyday driver does not operate an automobile with the intent to harm the environment. As with individual cases, we may expect that a Coasean negotiation will occur to minimize both pollution and damages, but the major reason that theorists tend not to address this concern is that no theory can solve a problem of mass action; only a mass counter-action, such as driving less or using more environmentally friendly fuels, can solve such problems.

In closing, a libertarian approach to air pollution does not produce perfect results, but neither does anything else, and turning this problem over to the state has only produced and will only produce ecological disaster.

References:

  1. Friedman, David (1989). The Machinery of Freedom. p.168
  2. Rothbard, Murray (1982). Law, Property Rights, and Air Pollution. Cato Journal, p. 55-99
  3. Coase, Ronald (1960). The Problem of Social Cost. Journal of Law and Economics, p. 1-44
  4. Rothbard, Murray (1973). For a New Liberty: The Libertarian Manifesto. p. 317-327