Agreeing With Statists For The Wrong Reasons: Cryptocurrency Bans

Since shortly after its invention, cryptocurrency has had the attention of central bankers and government regulators all over the world. Without the slightest hint of self-reflection, they have repeatedly warned that Bitcoin, Litecoin, Ethereum, Ripple, and all the rest may be scams or tools to be used by terrorists, drug dealers, money launderers, and other ne’er-do-wells. Several countries have either considered cracking down on crypto exchanges or have already done so. Sometimes satire just writes itself; the fiat currencies that they create and inflate are far more commonly used in the criminal underworld, not to mention the criminal overworld that they run. Speaking of scams, currencies that lose 95 percent of their value over a century have proven quite effective at snatching the wealth out of people’s pockets without them even knowing it.

But perhaps the politicians and legacy financiers are on to something with their desire to ban cryptocurrency. Let us see how government efforts to ban crypto could actually strengthen crypto and do themselves in, and thus why one might agree with statists for the wrong reasons.

If cryptocurrencies are banned, they will not magically disappear, nor will many of the people who use them stop doing so. After all, did bans on drugs or guns ever eliminate those? Of course not; both are more common where they are banned than where they are legal but heavily regulated. Cryptocurrencies perform valuable services for people, and that which has a demand will have a supply. If this cannot happen legally, then it will happen illegally, as with any other commodity. States are good at destroying other centralized entities, but disrupting a decentralized system with no clear point of attack has never been their strong suit. Just look at how much copyrighted material is illegally available online. States cannot stop it because every time they arrest someone, seize a server, or shut down a website, dozens more pop up to replace them. So it would be with cryptocurrencies and sites that accept them. Showing such bans to be ineffective will be an important propaganda victory for crypto users, as will the very fact that it was tried. For why would the state and its central bank have to ban competitors unless their money was too inferior to compete?

To be fair, the blockchains and websites that do come under government attack may have some difficulties. Government hackers may be able to compromise a blockchain with weak cryptography or a website with weak security measures. But adversity breeds innovation, and most people who hack computers for the state have those jobs either because they lack the skill to make more money in the private sector or because the state has some criminal evidence hanging over them. The former are incompetent, while the latter have an incentive to do the minimum to stay out of trouble instead of their best work. Just as website owners appreciate script kiddies who think they can hack for the free security testing they provide, so will cryptocurrency developers come to appreciate attempts by government intelligence agencies to rewrite the blockchain. Customers, meanwhile, can thank the state for providing the electronic equivalent of a eugenics program, killing off the weak currencies and websites to make room for the strong.

On the subject of customer benefits, a ban could make cryptocurrency trading very profitable. Shutdowns and rumors of shutdowns of these venues have already caused exchange rate volatility, presenting excellent buying opportunities. Should a more concerted effort occur, cashouts by people who want to be law-abiding could provide a better opportunity for scofflaws than anything thus far. This process would get the financial establishment out of the crypto world, and much of their financial trickery with them. A more honest marketplace is a better marketplace. Meanwhile, the culture of crypto would return to its anarcho-captialist roots, as those would be the people still using it.

Again, banning something does not get rid of it; it simply goes underground into the black market, which has several important side effects. First, the amount of violence involved in a trade increases, as official means of dispute arbitration are no longer available. But the nature of blockchain technology counters this effect. That is why Silk Road was so popular; it reduced violence in the drug trade by using technology to provide peaceful means of resolving disputes over drug deals while giving users higher quality products. Second, the risk of arrest and the security measures to mitigate that risk drive up prices. This stands to make a tidy profit for those who buy crypto during the cashout before the ban and sell it on the black market afterward. Third, while the state can easily gain information concerning taxable income from legal, regulated exchanges and go after customers who do not give the taxman his cut, they will have a much harder time tracking all of the black market trades that would occur on a peer-to-peer basis in the absence of an exchange. In the words of Napoleon Bonaparte, “Never interrupt your enemy when he is making a mistake.” If Leviathan wants to cut off one of its own food sources, then by all means let it.

Another effect to consider is the migration of legal businesses. If the exchanges and merchants are banned in one country and do not want to keep operating illegally, then they will move to other countries that either want to host or lack the means to ban them. In practice, this means that the cryptocurrency economy will shift toward third-world countries without stable governments. To the extent that this has already happened, it has given people who lacked basic modern economic functionality the financial tools they need to begin improving their lives. Banning crypto in the most developed countries will help the poorest countries by sending jobs there. The resulting localization of usage would lead to cryptocurrencies being used more as money and less as technological curiosities or speculative vehicles, leading to exchange rate stabilization and greater economic security in such places. This would do more than any foreign aid program to lift third-worlders out of poverty, without any of the bribery that enriches despots and provides operational funding to war criminals.

Finally, banning crypto will motivate agorism more generally. With the official link between the fiat economy and the crypto economy severed, some people on the crypto side will end up staying there, especially if they had no success in the legacy system. Necessity is the mother of invention, and these people will have to innovate in order to survive. This has the potential to create the sort of dedicated counter-economics that can support an effective and hostile challenge to the globalist establishment. Friedrich Nietzsche once wrote, “That which is falling should also be pushed.” How much better it is when that which is falling manages to push itself. This, more than anything else, is why one should agree with statists for the wrong reasons when they seek to ban cryptocurrencies.

Book Review: Reactionary Liberty

Reactionary Liberty is a book about libertarian philosophy by Robert Taylor that approaches this and related subjects from a reactionary perspective. The book is divided into fifteen chapters, with a short introduction preceding.

Taylor begins with a four-page introduction in which he explains his motivations for writing the book. Mostly, this involves the decisive leftward shift in American libertarianism since the Ron Paul presidential campaigns of 2008 and 2012, including a notorious open letter to Paul read at the 2015 International Students for Liberty conference and Gary Johnson’s disastrous presentation in 2016. He briefly explains what is wrong with left-libertarianism and gives an outline of the structure of the book.

In the first chapter, Taylor begins with the non-aggression principle (NAP), self-ownership, and private property rights. Although Taylor notes the important distinction between just property and currently-held property, he fails to properly account for the role of conquest in determining property rights over the long term. Taylor goes on to explain the social and economic difficulties that arise without secure property rights. The failures of central planning are discussed, as are the differences between negative and positive rights. He lays out the history of natural law in Western philosophy, beginning with early Christian thinkers, continuing through Enlightenment philosophers, and culminating in Hans-Hermann Hoppe’s argumentation ethics. Taylor contrasts this with the state, which routinely violates natural law and rights. He details the many crimes of nation-states, war and debt slavery being chief among them. Taylor concludes by proposing an alternative to Marxist class theory which vilifies the state rather than the capitalist, and elevates the producer rather than the parasite.

The second chapter deals with the Austrian School perspective on the subject. Taylor takes the reader through praxeology, the action axiom, marginal utility, and the role of prices in efficiently allocating resources. Next, he explains why government and central bank interference with prices is so destructive. The section on money deals with the history of money according to the regression theorem, beginning with barter and commodity money, then progressing to precious metals and receipts for those metals. Taylor shows the reader that modern fiat currencies are a corruption of these receipts into instruments of inflation and debt slavery that facilitate unduly risky financial behavior, state largesse, and wars. In the Austrian view, these behaviors fuel the business cycle of booms and busts by distorting interest rates, which leads investors astray.

Spontaneous order and free markets are the subjects of the third chapter. Taylor begins with the economic calculation problem, the knowledge problem, and public choice theory, showing that central planning cannot succeed because it cannot calculate prices without the market and is further hampered by cynical concerns. He then covers the concept of spontaneous order, making the important and oft-overlooked observation that “there is no such thing as an unregulated market; the issue is, rather, who is doing the regulating.” These regulations take the form of trust, reputation, and freedom to dissociate, unless the state interferes by imposing its coercive regulations. Taylor frames the difference between state and market in terms of who gets profits and who suffers losses. The state privatizes profits and socializes losses, while the market does the opposite. Next, Taylor proposes the term marketization to describe the proper procedures for converting state monopolies into free-market entities, as privatization has acquired the meaning of turning over state monopolies to politically-connected oligarchs, as happened in Russia when the Soviet Union collapsed. He concludes the chapter by providing an outline of how businesses may function in a purely libertarian market while noting that the particulars can only be observed in the future, not precisely predicted in the present.

The fourth chapter offers a much-needed treatment of Cultural Marxism, a concept often (and incorrectly) dismissed by leftists as a conspiracy theory. Taylor traces its roots to the failure of political and economic Marxism in Europe after World War I, at which time Antonio Gramsci and Georg Lukacs resolved to apply Marxism to culture and use it to destroy traditional Western culture, which they faulted for the failure of communism to take root in most of the West. Taylor traces the ‘long march through the institutions’ from its beginnings in the 1930s all the way to its modern manifestations of identity politics and campus craziness. He calls on libertarians to refute Marxism’s cultural application, just as they defeated its economic application. The next section begins to do this by making the case against egalitarianism, showing it to be both impossible and self-defeating in practice. The second half of the chapter traverses more dubious ground in the form of r/K selection theory. This is an interesting analogy for attempting to understand political dynamics, but it places too much emphasis on nature instead of nurture and encourages dichotomous thinking in complex problems. That being said, it correctly suggests that some authoritarian leftists are beyond reason. The chapter ends with an explanation of the necessity of traditional social and sexual norms, as well as how and why Cultural Marxists have attacked them.

Decentralization is the focus of the fifth chapter. Taylor gives the reader a history lesson in the creation of Western traditions and common law through decentralized institutions after the fall of the Roman Empire. He blames centralization elsewhere in the world for preventing those peoples from enjoying the liberty and prosperity of Europeans. Turning to America, these two descriptions show the difference between what the United States was supposed to be and what it has become. As a remedy, Taylor proposes breaking up the US into at least 100 smaller territories. He concludes the chapter by praising those who have taken a strong stand for decentralization in the face of oppressive state power.

The sixth chapter attacks state power as a concept. Taylor explains how people are ruled indirectly through propaganda and mythology rather than directly by force, as the masses are sufficiently numerous and armed to defeat such an effort. He discusses the role of government schooling in indoctrinating the masses to accept such an arrangement, as well as the insufficient efforts to resist the imposition of compulsory indoctrination in the 19th century. The concept of situational Leninism comes next, followed by an overview of famous psychological experiments that demonstrate the willingness of people to obey authority toward reprehensible ends. After this, the role of language control and thought policing in maintaining authoritarian leftist control is examined. Taylor finishes the chapter with Ludwig von Mises’ concept of statolatry, in which statism becomes a sort of secular religion.

The attack continues in the next chapter, as Taylor turns to the flawed ideas of minarchism. He returns to the American example to show how limited government does not stay limited. He explains that the Constitution was not actually written to limit government, contrary to popular belief. It gave the federal government more power than it had under the Articles of Confederation, which Taylor praises in relative terms. He shows how Americans of the time were deceived, taking the reader through the tax rebellions of the 1780s-90s and the Alien and Sedition Acts. In the next section, he contrasts traditional monarchies with modern democracies, finding the former to be far less limited and more destructive due to inherent incentive structures. The chapter concludes with a strong explanation of why democracy grows the state and harms the cause of liberty.

In the eighth chapter, Taylor addresses police statism and what Samuel Francis termed ‘anarcho-tyranny’, a situation in which real crime goes unpunished while those who try to defend themselves are attacked by the state. He begins by noting the difference between a peace officer and an agent of the state. His description of several US Supreme Court cases is accurate, but misses the larger point that a coercive monopoly has no enforceable obligations because no one can enforce obligations against them, regardless of any court rulings. Taylor reviews Cultural Marxism through the lens of anarcho-tyranny, then explains some of the more obnoxious leftist behaviors in terms of Saul Alinsky’s Rules for Radicals. The successes of the alt-right are explained in terms of their willingness to use the left’s tactics against them, unlike conventional conservatives. Next, he covers the origin of modern policing in the UK and the US, then proposes a private alternative to state police forces. The last section contemplates violent resistance against the state, though not with nearly the length and depth that the topic deserves.

While the eighth chapter considers the enforcers, Chapter 9 is concerned with what they enforce. Taylor begins by illustrating just how much poorer everyone is today as a result of lost economic growth due to regulations. Next, he refutes the progressive narrative about the antebellum South and the industrial captains of the 19th century, showing the negative aspects of both to be the result of government intervention rather than its absence. He then profiles James J. Hill, a largely forgotten hero of free-market capitalism in the late 19th century. Hill’s good deeds are contrasted with those who used the state to get undue favors and suppress competition. Taylor also corrects the record on John D. Rockefeller. The following section covers the history of expanding regulations after the Civil War, through the Progressive Era, and on to the present. He accuses those who point to regulations as the cause of improvements in safety and reductions in pollution of committing the broken window fallacy and ignoring the fact that some regulations have made people less healthy. The chapter concludes with many examples of faulty regulations that do more harm than good.

The transition from voluntary mutual aid to coercive welfare statism is the subject of the tenth chapter. Taylor introduces the subject with the age-old statist question, “Without government, who would take care of the poor?” Of course, one must begin by pointing out that government does no such thing, as Taylor does. He spends the first part of the chapter educating the reader about mutual aid societies, which were common before the Progressive Era but were destroyed by government intervention into the healthcare and insurance industries. Taylor shows how the state has reduced the supply of medical care, thus increasing its cost and decreasing its availability. Unfortunately, Taylor’s approach ignores the Social Darwinist perspective that natural selection should be allowed to remove the least successful humans from the gene pool. The second half of the chapter debunks at length the myth of Scandinavian socialism.

The eleventh chapter deals with civil disobedience. Here, Taylor stumbles in the way that most libertarians do, in that he fails to understand raw power, celebrates small victories that will not occur on a large scale, and confuses the downfall of a particular regime with ending the state itself. He does this even while reciting the history of preparedness for the use of force among civil rights leaders and noting what the state has done to leaders of nonviolent resistance efforts. Taylor also manages to celebrate the effects of Western degeneracy among Middle Eastern youth. His encouragement of government agents to refuse unjust orders, leak information detailing abuses to the public, and otherwise engage in whistleblowing is more on point, though he notes the powerful incentive structure against doing so. The second half of the chapter details a plethora of private alternatives to services which have long been monopolized and/or heavily regulated by the state.

The growth of cryptocurrency and other peer-to-peer technologies is the focus of Chapter 12. Taylor provides a decent layperson’s overview of Bitcoin, then moves on to practical applications of cryptocurrency, such as funding dissidents suppressed by legacy financial networks, evading capital controls, and engaging in commercial activities forbidden by the state. Next, he covers the P2P revolution, which has greatly expanded liberty and privacy online and in the physical world. The remainder of the chapter runs through various examples of how P2P and blockchain technologies have solved problems and exposed corruption.

In the thirteenth chapter, Taylor addresses the open-borders dogma held by many libertarians. He demonstrates that open borders and forced integration are a form of the aforementioned anarcho-tyranny, with closed state borders being sub-optimal but less evil. The role of forced diversity in creating internal conflicts that lead to less liberty is considered, as is the biological phenomenon of kin selection in creating cohesive groups. Taylor makes the case that open borders are contrary to private property rights because in order to have open borders, the state must override the wishes of property owners who do not want migrants to enter. He then examines the history of US immigration policy from 1790 to the present, noting the shift in demographics admitted after 1965. The contention that the real problem is the welfare state rather than demographic shifts is rebutted both on the practical grounds of American politics and with the counterexample of European nations surviving socialism but falling into turmoil due to migrants.

The fourteenth chapter furthers the themes from Chapter 11 by discussing secession, nullification, and political migration. Taylor notes the myriad benefits of secession, but only briefly mentions the history of larger states violently suppressing such movements. Next, he covers the history of both legislative and jury nullification in opposing unjust laws. Taylor’s exploration of political migration is rather America-centric, but it can be adapted to other situations. His praise for the Free State Project comes off as overzealous, given the thoroughly leftist nature of that organization. He finishes the chapter with a concept called the Benedict Option, in which those who wish to preserve a tradition and begin a restoration retreat from the public and urban life of a degenerate culture.

The final chapter of the book is an argument against democratic government. This reads much like Hoppe’s Democracy: The God That Failed, quoting and borrowing from it extensively as Taylor explains the perverse incentive structures inherent in democracy and makes the case that monarchy has a superior incentive structure. But unlike Hoppe, Taylor contemplates physical removal as a means of achieving a libertarian social order in addition to a means of maintenance. As Taylor writes on page 283, “Economics teaches us that there is no such thing as a free lunch. But in order to achieve and maintain a libertarian social order, there will be free helicopter rides.” His defense of Augusto Pinochet’s actions in Chile and Lee Kuan Yew’s rule in Singapore as better than the alternatives is common in right-libertarian circles, but his defense of Francisco Franco goes a bit too far. Taylor ends with an exhortation to and description of a libertarian revolution, but this is, as before, too brief.

Overall, the book is good, but not great. For a book called Reactionary Liberty, it could have used more reaction in the form of lengthy explanations of traditional norms and power dynamics. Taylor seemed to lack an editor and proofreader, as some typos survived in very unfortunate places that render a few sentences absurd. A few chapters can become tedious when Taylor features a laundry list of examples. That being said, it is a strong presentation of right-libertarianism that is impeccably sourced.

Rating: 4/5

On Leftist Academics, Respectable Opinion, and Civil War

In recent times, there is a burgeoning industry in popular books on academic subjects aimed at the layperson or the educated person who is not an expert in the field discussed in a certain book. Most of these books, particularly in the fields of politics, economics, and sociology, are written by authors who have a leftist bias. This is to be expected, as academia has long been dominated by such people. But this bias seems to consistently impair such authors whenever they attempt to understand perspectives which are fundamentally different from their own. Three examples of this can be found in books that were reviewed here at Zeroth Position in the past fortmoon. The shortcomings therein are evidence of a much broader and more serious problem. We will consider extant theories which describe this problem. Next, we will posit some potential origins for this phenomenon, as well as some possible solutions. Finally, we will consider the potential negative consequences of leaving the problem unsolved.

Good Guys With Guns

This is a book about concealed firearms, the culture around them, and their effects on society by sociologist Angela Stroud, reviewed here on December 12, 2016. True to leftist thought, the roles of gender, race, and class in firearm ownership are major themes of the book. The series of interviews included in the book illuminate many interesting aspects of firearm ownership which are not adequately discussed elsewhere, and Stroud makes a genuine effort to understand people who disagree with her. But she commits a multitude of errors which are common among leftists and sociologists, and seems to be unable to keep herself from doing so. Her most egregious and oft-repeated fallacies include the broken window fallacy, confusing objective reality with subjective social constructs, false dilemmas, accusing people of contradicting themselves when they do not, and conflating society with the state. She also does a poor job of recognizing and assessing potential threats, ignores information which undermines her case, blames free-market capitalism and patriarchy when they were not in use, assumes that any inequality is the result of institutional oppression, and blames white people for problems caused by non-whites.

While there are many insightful points made in the book, Stroud commits far too many fallacies along the way for the book to be enjoyable or read smoothly. What could have been an excellent work on an important topic is instead bogged down by postmodern discourse, social justice rhetoric, and shoddy reasoning.

Islamic Exceptionalism

This is a book about the relationship between Islam and the modern nation-state, the role that Islam has played in the development of the Middle East, and the currently ongoing conflicts there by Brookings Institution senior fellow Shadi Hamid, reviewed here on April 30, 2017. Hamid’s explorations of these subjects leads him to question the mainstream liberal narrative of Whig historiography, democratic supremacy, and progressive determinism, though he never quite manages to reject this narrative. He provides an informative history of Islam from the beginning, illuminating several points that frequently elude Westerners. But when Hamid interviews youths who wish to break the Westphalian order of nation-states and are willing to use violence to achieve political goals, he seems unable to truly understand them.

That being said, of the three authors discussed, Hamid is the most perceptive of the lot. He correctly recognized ISIS as a state at the time of writing because it had a monopoly on initiatory force within a geographical area while providing the common functions of a state. He knows that moderates tend to lose in civil wars and revolutions because they lack both the fervor and resolve to do what the extremists on all sides will do. He understands that there are no such things as universal values in practice. But the Western liberal democratic biases of the author are inescapable. Hamid is unable to process the possibility that democracy is inferior to the older pre-Westphalian order, especially for the Muslim world. This is especially irksome, given the amount of evidence that he himself finds for this possibility.

The Euro

This is a book about the shortcomings of the eurozone currency project, the faulty policies pursued by European leaders thus far, and several potential alternatives by American economist Joseph Stiglitz, reviewed here on December 11, 2017. He is perhaps the worst of the three, in that while the others have difficulties in understanding right-wing thought, Stiglitz tends to either show no awareness of its existence, dismiss it out of hand, or mischaracterize it in ways which can only be deliberate for someone of his caliber. His Keynesian approach to economics is apparent from the beginning, as is his thoroughly statist worldview. He never mentions the Austrian School and ignores many practical possibilities for true economic and political liberty. The Chicago School earns nothing but contempt from him, as he recites the leftist caricature of Chile under Pinochet and derides monetarism. Meanwhile, he repeatedly blames markets for the 2008 crisis when they were only responding to the perverse incentives created by governments and central banks. He also blames austerity for Europe’s recent troubles when very little austerity has actually occurred.

Like Stroud, Stiglitz confuses collective action with state action. Stiglitz’s faith in democracy is even stronger than Hamid’s, as he never questions whether anything is wrong with democracy itself, even as he argues against incentive structures which are necessarily part of any democracy, advocates for a new monetary system which could offer states tyrannical control over their citizens, and denounces anti-immigrant groups in Europe which resist demographic replacement by a ruling class that they did not ask to replace them. Though Stiglitz does not appear to argue in bad faith, one could be forgiven for thinking that he does.

Current Theories

Before attempting to analyze the above examples, it is necessary to lay some groundwork concerning meta-politics. In political discourse, there is a range of opinions which are considered to be socially acceptable to varying degrees, with extremes on one or both sides of each issue regarded as anywhere from unfashionable at best to worthy of violent response at worst. This concept has been given various names; Hallin’s second sphere, the Overton Window, and the index card of allowable opinion, to name a few. Hallin’s analysis divides the world of political discourse into three spheres according to how the media covers various subjects. The first sphere is the sphere of consensus. This contains topics on which agreement is assumed. Hallin writes that for such topics, “Journalists feel free to invoke a generalized ‘we’ and to take for granted shared values and shared assumptions. …Journalists do not feel compelled to present an opposing viewpoint or to remain disinterested observers.”[1] The second sphere is the sphere of legitimate controversy. This sphere consists of matters on which rational, informed people have disagreements. Journalists are expected to be disinterested observers and reporters for topics in this sphere, not overtly supporting one position over another. The third sphere is the sphere of deviance. This contains topics which are believed to be outside the bounds of legitimate discussion. Hallin writes that in this sphere, “Journalists depart from standard norms of objective reporting and feel authorized to treat as marginal, laughable, dangerous, or ridiculous individuals and groups who fall far outside a range of variation taken as legitimate.”[1] Those who dispute the content of the sphere of consensus tend to find themselves here, as do those who lack sufficient influence to merit news coverage or are known for making baseless and outlandish claims. The boundaries of the spheres shift with changes in public opinion, journalistic standards, and media ownership, as well as advances in reason, science, and technology.

Joseph Overton’s conception of political discourse posits a range of ideas which are tolerated in public discourse. Whereas Hallin’s spheres describe media coverage, the Overton window describes voter sentiment and politician stances. Overton contends that the political viability of an idea depends on whether the idea is within the window or outside of it. Politicians who recommend too many policies which are outside of the window will be considered too extreme to be elected or re-elected. Most of the theory about the Overton Window is concerned with how to move it or keep it from moving, depending on whether the goal is to advance policies which are currently outside or inside of the window, respectively. Application of the door-in-the-face technique to Overton’s theory results in the deliberate promotion of ideas that are far outside of the window in order to shift the window toward ideas which are slightly outside of it. (This makes as much sense in ideological space as it does in physical space; one cannot push an object while one is standing on it, as such a force is both self-defeating and lacking in leverage.)

Tom Woods refers to this phenomenon as the index card of allowable opinion. Woods’ description combines the insights of Hallin and Overton, as the establishment media uses Hallin’s spheres while playing a large role in deciding where the frame of the Overton Window lies. Woods writes,

“On the left, sites like ThinkProgress and Media Matters smear and attack those uppity peons who stray from the ideological plantation that the Washington Post and the New York Times oversee. On the right, it’s neoconservative sites like the Free Beacon, who have built a nice little cabin on that plantation, and who rat out anyone who tries to run away.”[2]

One could easily add National Review and several others to the list of sites on the right (such as it is in modern America), as well as note such a presence in libertarian circles, denounced here as cuckertarians. The purpose of maintaining this range of allowable opinion is to prevent people from realizing the need for a radical change from the status quo by saturating them with ideas which never stray too far from the establishment narrative and presenting them with the illusion that they have meaningful choices in the current system. As Noam Chomsky writes,

“The smart way to keep people passive and obedient is to strictly limit the spectrum of acceptable opinion, but allow very lively debate within that spectrum—even encourage the more critical and dissident views. That gives people the sense that there’s free thinking going on, while all the time the presuppositions of the system are being reinforced by the limits put on the range of the debate.”[3]

The behavioral pattern that Woods notes later is the subject of the next section. He continues:

“The respectables of left and right do not deign to show where we’re wrong, of course. The very fact that we’ve strayed from the approved spectrum is refutation enough. …Once in a while they do try to show where we’re wrong, but they can almost never manage even to state our position correctly, much less muster an effective argument against it. [The] purpose of these alleged replies is not to shed light, but to demonize libertarians in the public mind.”[2]

Mechanisms and Remedies

The range of allowable opinion has the effect of a feedback loop on academia. The range of allowable opinion agreed upon by one generation of academics influences the next generation, limiting the range of ideas to which they are exposed in sufficient depth to truly understand them. Whereas true rightist thought is rigid, rationalist, and timeless while leftist thought is flexible, empiricist, and novel, it is no surprise that this process gradually pulls the Overton window leftward. There are several mechanisms by which this occurs, and if the problem is to be resolved, each requires its own remedy.

Whig History

Whig historiography views the past as an inevitable march of progress toward greater knowledge and freedom, culminating in liberal democracy and constitutionally limited monarchy. The name comes from the British Whigs, who supported the power of Parliament over the power of the monarch, thus opposing the Tories, who did the opposite. The term has acquired a pejorative use for good reason. Whiggism bears resemblance to Marxism, which follows the same narrative to a different end, namely that of a classless, egalitarian, communist utopia. It assumes without evidence that there will be no further progress past liberal democracy and limited monarchy toward greater knowledge and freedom. This explains why its adherents attack libertarians, as they propose further advances in freedom, which are disallowed by the Whig narrative. Indeed, Whiggism errs in assuming that history is necessarily goal-oriented at all, as this would require some collective unconscious and/or divine plan that is not proven to exist.

The present-mindedness of the Whig approach leads its adherents to believe that current ideals were held in the past, which ends up producing a great amount of ignorant eisegesis when historical figures are examined in a context that they would find to be alien. It keeps one from investigating the real causes of historical change by providing the false answer that the cause was the march toward progress.[4] Whiggism also motivates the sanctification of past leaders who advanced this progress and the vilification of those who worked against it[5] that is omnipresent in contemporary politics, for if an inevitable march toward progress is assumed, it follows that conservatives and reactionaries are engaged in a revolt against nature. As Allan Greer writes,

“They lost because they had to lose; they were not simply overwhelmed by superior force, they were justly chastised by the God of History.”[6]

The ongoing influence of Whiggism partly explains why leftist academics seem unable to grasp rightist thought. An inevitable march toward progress combined with the generally leftist nature of progress means that they view a rigorous understanding of and debate with rightist thought as unnecessary; we have progressed past it, never to return. Among the less academically inclined, this explains the “Its the current year!” response that is widely mocked among rightists.

The most potent antidote to Whig history is to relentlessly attack its fallacies while advocating alternatives such as cyclical history (a repeating cycle of ascent and decline) and agnostic history (the view that no such grand narrative can be known). Butterfield proposed a methodological remedy “to evoke a certain sensibility towards the past, the sensibility which studies the past ‘for the sake of the past’, which delights in the concrete and the complex, which ‘goes out to meet the past’, which searches for ‘unlikenesses between past and present.’”[7]

Filter Bubbles, Echo Chambers, and the Mirror-Image Fallacy

While Whig historiography can lead leftist academics to dismiss rightist thought as an unworthy opponent best left unengaged, other phenomena can leave them unaware of its existence. A filter bubble is a form of intellectual isolation that can occur when websites use algorithms to guess what a user wants to see based on the user’s history and other personal information. This keeps people from finding information that is presented from different viewpoints, thus trapping them in a cultural or ideological bubble.[8] This leaves them ill-equipped to deal with those who are unlike themselves. The term was coined by Internet activist Eli Pariser and discussed in his 2011 book of the same name. Pariser formally defined the concept of a filter bubble as “that personal ecosystem of information that’s been catered by these algorithms.”[9] The filter bubble is the technological manifestation of the echo chamber, a term describing the tendency of legacy media as well as one’s social and professional circles to create similar limitations in thinking and perception. Pariser notes that filter bubbles can harm a society by undermining civic discourse, creating confirmation bias, and increasing vulnerability to propaganda and other manipulations of public opinion.[10]

Although the extent of the effect of filter bubbles remains in contention[11], and some of the effect comes from user choice that emanates from and reinforces echo chambers in the physical world[12], the influence of exposure to only one’s own side of political issues is guaranteed to distort one’s perception of reality. In the worst cases, this can lead people to believe that everyone thinks and views the world as they do, a condition which Charles Krauthammer describes as the mirror-image fallacy. He writes:

“The mirror-image fantasy is not as crazy as it seems. Fundamentally, it is a radical denial of the otherness of others. Or to put it another way, a blinding belief in ‘common humanity,’ in the triumph of human commonality over human differences. …Its central axiom is that if one burrows deep enough beneath the Mao jacket, the shapka, or the chador, one discovers that people everywhere are essentially the same.”[13]

This predictably causes serious problems. Krauthammer continues:

“If the whole world is like me, then certain conflicts become incomprehensible; the very notion of intractability becomes paradoxical. …The more alien the sentiment, the less seriously it is taken. Diplomatic fiascoes follow… To gloss over contradictory interests, incompatible ideologies, and opposing cultures is more than anti-political. It is dangerous.”[13]

A more realistic approach is thus required, as Krauthammer describes:

“Ultimately to say that people all share the same hopes and fears, are all born and love and suffer and die alike, is to say very little. For it is after commonalities are accounted for that politics becomes necessary. It is only when values, ideologies, cultures, and interests clash that politics even begins. At only the most trivial level can it be said that people want the same things. Take peace. The North Vietnamese wanted it, but apparently they wanted to conquer all of Indochina first. The Salvadoran right and left both want it, but only after making a desert of the other. The Reagan administration wants it, but not if it has to pay for it with pieces of Central America.

And even if one admits universal ends, one still has said nothing about means, about what people will risk, will permit, will commit in order to banish their (common) fears and pursue their (common) hopes. One would think that after the experience of this [20th] century the belief that a harmony must prevail between peoples who share a love of children and small dogs would be considered evidence of a most grotesque historical amnesia.”[13]

The problem of echo chambers and filter bubbles is more difficult to solve than that of Whig historiography. This is not to say that solutions do not exist; one can make a conscious effort to look for these conditions and actively seek alternative viewpoints. Several websites have been created to aid people in that purpose, as have several browser plugins and smartphone applications.[14] In meatspace, this process is not as simple as installing a few programs, but there are a multitude of social clubs that one can join to meet new people with different perspectives. The difficulty lies in actually implementing the solutions. Just as the incompetent can lack the expertise to recognize their own incompetence, so too can those within an echo chamber fail to realize that they have a problem. In many cases, it will be necessary for people who are outside of such echo chambers to make an active effort to reach in.

Virtue Signalling

Whig historiography and echo chambers, while important factors, are only proximate causes of the intellectual limitations of leftists. A more fundamental source comes from the dynamics of social coordination and is known as virtue signalling. Virtue signalling is a conspicuous and/or invidious expression of one’s opinion on a moral issue done primarily to maintain or enhance one’s social status. The term originates from signalling theory, a body of work in evolutionary biology that examines communication between organisms. For example, a large mane on a male lion is a status signal that declares his fitness, as a less fit lion would lose contests with other males and have his hair torn out. The term later found use in economics, as an impressive building for a firm or a resume full of extraneous qualifications for a job-seeker declare financial and intellectual fitness, respectively. Less successful firms and less competent people would be unable to achieve such results.[15] Religious traditions frequently include rituals that serve a similar function for the purpose of aiding in-group cohesion.[16][17][18]

Beginning in the late 2000s, ‘virtue signalling’ came to be defined differently in various Internet forums. The newer meaning refers to superficial support for political views with the primary purpose of maintaining an appearance of respectability, as well as a focus on appearing to act rather than actually taking action.[19][20] As James Bartholomew writes,

“When David Cameron defends maintaining spending 0.7 per cent of GDP on foreign aid, he is telling us that the Tory party, or at least he himself — as a rather wonderful, non-toxic part of it — cares about the poor in the developing world. The actual effectiveness or otherwise of foreign aid in achieving this aim is irrelevant.”[21]

Notably, virtue signalling tends to involve expressions of hatred of the other, of the out-group. Bartholomew continues:

“It’s noticeable how often virtue signalling consists of saying you hate things. It is camouflage. The emphasis on hate distracts from the fact you are really saying how good you are. If you were frank and said, ‘I care about the environment more than most people do’ or ‘I care about the poor more than others’, your vanity and self-aggrandisement would be obvious… Anger and outrage disguise your boastfulness.

One of the occasions when expressions of hate are not used is when people say they are passionate believers in the NHS. Note the use of the word ‘belief’. This is to shift the issue away from evidence about which healthcare system results in the greatest benefit for the greatest number of people. The speaker does not want to get into facts or evidence. He or she wishes to demonstrate kindness — the desire that all people, notably the poor, should have access to ‘the best’ healthcare. The virtue lies in the wish. But hatred waits in reserve even with the NHS. ‘The Tories want to privatise the NHS!’ you assert angrily. Gosh, you must be virtuous to be so cross!”[21]

This ends up being counterproductive, in that it can harm the very people that those who are truly virtuous and not just signalling would desire to help. Bartholomew writes,

“No one actually has to do anything. …There was a time in the distant past when people thought you could only be virtuous by doing things: by helping the blind man across the road; looking after your elderly parents instead of dumping them in a home; staying in a not-wholly-perfect marriage for the sake of the children. These things involve effort and self-sacrifice. That sounds hard! Much more convenient to achieve virtue by expressing hatred of those who think the health service could be improved by introducing competition. …Virtue-signalling battles can soon take leave of any genuine concern for the low-paid or suffering. Indeed they can become highly damaging. The low-skilled whose abilities simply cannot command an absurdly high minimum wage become unemployable.”[21]

Virtue signalling is also responsible for the problem of Error Push, in which a factually incorrect position is advanced because a hated enemy is factually correct about a certain issue, and virtue signalling becomes more important to people than correct knowledge or telling the truth.

Fortunately, there are two powerful remedies against this sort of behavior. First, one may engage in the opposite behavior, known as counter-signalling or vice signalling. This should be followed by mercilessly criticizing the virtue signallers for their fallacious discourse when they resort to ad hominems instead of making appropriate counter-arguments. The purpose of this tactic is to show their support to be superficial and insincere, as a person with deeply-held, sincere beliefs should be able to defend them in rational discourse. Resorting to angry name-calling against a calm opponent who makes reasoned arguments is also damaging to the appearance of respectability that the virtue signaller so desires.

Second, one may take meaningful action concerning the subjects of the virtue signals. A person who supports minimum wage hikes and social programs for the poor may appear virtuous to the economically illiterate, but a person who directly helps the poor to become upwardly mobile is actually virtuous. A person who supports tougher environmental regulations against polluters may appear virtuous to those who do not understand regulatory capture, but a person who invents new technologies or uses capitalist principles to reduce pollution is actually virtuous. With “effort and self-sacrifice,” one can take the wind out of the sails of virtue signallers by acting while they talk. In the long run, the golden will defeat the merely gilded.

The Overton Bubble and Civil War

So far, we have considered examples of leftist failures to understand rightist thought, potential causes for this phenomenon, and possible remedies for each. Now, we will explore what may happen if this problem is not remedied. When the Overton window is combined with an ideological echo chamber and reinforced by copious amounts of virtue signalling, it can become thick and opaque, hardening into an ideological pocket universe which can only be entered or re-entered with great difficulty. This Overton Bubble, as neoreactionaries call it, can form when the establishment effectively controls the Overton window and uses this control to maintain political power. When the range of respectable opinion is policed with sufficient rigor, having an accurate understanding of opinions outside of that range is enough to make oneself the target of a political witch hunt.

When combined with the phenomenon of error push described in the previous section, an Overton bubble can leave a society in general and its elites in particular incapable of solving problems. As Neal Devers writes,

“If some thoughts are unthinkable and unspeakable, and the truth happens in some case to fall outside of polite consensus, then [the] ruling elite and their society will run into situations [that] they simply [cannot] handle.”[22]

It follows that wise elites would be exceedingly careful about allowing such a ‘polite consensus’ to form; in fact, they would take active steps to suppress the formation of such holiness spirals. Unfortunately, the perverse incentives inherent in political democracy ensure that the elite almost universally will be both unwise and insecure, thus perpetually goading them into destructive behaviors such as blowing Overton bubbles.

The problems that such an elite simply cannot handle may be domestic or foreign in origin. If foreign, then the typical result is conquest and subjugation under a power that would have no capability to assume control had a healthy system of governance and defense been in place. The particular dynamics of such events are outside the scope of this essay. Here, we are primarily concerned with political disputes within one society.

For centuries, the establishment exercised tight control over public discourse, burning heresies along with their authors. After such brutality fell out of favor in the West, the elites still managed to expel from official positions those who did not kowtow to the official narrative. Such exiles lacked the means to mount an effective counter-movement, so ‘point deer make horse’ was a favorite tactic of political control. Modern technology fundamentally alters this dynamic; being forced out of the Overton bubble is no longer fatal to one’s influence or career prospects, and as time marches on, existing inside the bubble will become a less and less attractive option for those starting out in life. But those who have established academic, media, and/or political careers inside the bubble will fail to understand the social dynamics in play, for gaining such an understanding would result in them being purged.

The trouble that lies ahead is thus clear. A leftist establishment that cannot peacefully engage with anything non-leftist and a non-leftist opposition that finally has the strength to organize an effective challenge existing in the same physical space is a recipe for violent conflict. Foreshocks of this political earthquake have already occurred in Chicago, Berkeley, and Charlottesville, to name a few. It is quickly becoming technologically impossible for the establishment to put the genie of opinion-making back into their bottle. Abolishing democracy, breaking up the institutions inside the Overton bubble, and secession into smaller, more politically uniform territories are considered unthinkable both by those inside the bubble and many of the people outside of it.

The immediate options will thus eventually reduce to the two options that all of us have in our personal lives: reason or force, words or weapons, truth or consequences, peace or utter destruction. Whereas it is not certain that the former set will be chosen over the latter set, and a civil war is always the most disastrous kind, it is necessary to de-escalate the situation before it reaches that point using the methods described in the previous sections. Only then can saner ideas be brought back into the realm of public discourse with a goal of either reaching a governing consensus or achieving an amicable geographic separation along political lines.

Conclusion

It may seem that we have traveled a long way from discussing three books to discussing civil war and its prevention. But the books were only meant to serve as small examples of a much larger problem. The formation of Overton bubbles is controlled by several key factors: a range of respectable opinion, the lingering influence of Whig historiography, filter bubbles in digital space, echo chambers in physical space, the plural solipsism caused by the previous two factors, virtue signalling, and the destructive incentives inherent in democracy. The civilization-destroying potential of our present bubble can still be thwarted if enough of these contributing factors are dismantled, but time is short and growing shorter.

References:

  1. Hallin, Daniel (1986). The Uncensored War: The Media and Vietnam. New York: Oxford University Press. p.116–118.
  2. Woods, Thomas (2014, Oct. 16). “How To Shred The Index Card Of Allowable Opinion”. Lew Rockwell.
  3. Chomsky, Noam (1998). The Common Good. Odonian Press. p. 43.
  4. Butterfield, Herbert (1965). The Whig Interpretation of History. New York: W. W. Norton. p.12.
  5. J. Hart. “Nineteenth-Century Social Reform: A Tory Interpretation of History”. Past & Present 1965 31(1):39–61.
  6. Greer, Allan. “1837-38: Rebellion reconsidered”. Canadian Historical Review (1995) 76#1:1–18, at p. 3.
  7. Ashplant, T.G.; Wilson, Adrian. “Whig History and Present-Centred History”. The Historical Journal, 31 (1988):1–16, at p. 10.
  8. Bozdag, Engin (2013, June 23). “Bias in algorithmic filtering and personalization”. Ethics and Information Technology 15(3):209–227.
  9. Parramore, Lynn (2010, Oct. 10). “The Filter Bubble”. The Atlantic.
  10. Weisberg, Jacob (2011, June 10). “Bubble Trouble: Is Web personalization turning us into solipsistic twits?”. Slate.
  11. Pariser, Eli (2015, May 7). “Fun facts from the new Facebook filter bubble study”. Medium.
  12. West, Joshua Bleiberg; Darrell M. (2017, May 24). “Political polarization on Facebook”. Brookings Institution.
  13. Krauthammer, Charles (1983, Aug. 15). “The Mirror-Image Fallacy”. Time.
  14. “5 Questions with Eli Pariser, Author of The Filter Bubble”. Time. ISSN 0040-781X.
  15. Bowman, S. (2016). “Stop Saying ‘Virtue Signalling’” Adam Smith Institute.
  16. Bulbulia, Joseph; Schjoedt, Uffe (2010). “Religious Culture and Cooperative Prediction under Risk: Perspectives from Social Neuroscience”. Religion, Economy, and Cooperation. p. 37–39. ISBN 3110246333.
  17. Steadman, L.; Palmer, C. (2008). The Supernatural and Natural Selection: Religion and Evolutionary Success. Paradigm.
  18. Irons, W. (2001) “Religion as a hard-to-fake sign of commitment”. The Evolution of Commitment, Randolph Nesse (ed.) New York: Russell Sage Foundation. p. 292–309.
  19. Yudkowsky, Eliezer (2009, Feb. 17). “Cynical About Cynicism”. LessWrong.
  20. Yudkowsky, Eliezer (2009, Mar. 20). “Why Our Kind Can’t Cooperate”. LessWrong.
  21. Bartholemew, James (2015, Apr. 18). “The awful rise of ‘virtue signalling’”. Spectator.
  22. Devers, Neal (2016, Nov. 24). “The Overton Bubble”. The Future Primaeval.

The Not-So-Current Year: 2017 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 2017 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.

I began 2017 by addressing a recurring story throughout the 2016 election campaign; that of Russia hacking the DNC and phishing Hillary Clinton campaign chairman John Podesta’s email system. I argued that Russia would have been justified in doing not only this, but in actually altering the election to cause Donald Trump to win. I would later use this piece as an example in a guide on how to argue more sharply in order to throw opponents out of their comfort zones. The story lingered on, so I published a sequel detailing the benefits of a Trump-Russia conspiracy. The left’s activities after the election became ridiculous, so I decided to give them some free advice.

My first list of 25 statist propaganda phrases and some concise rebuttals was a major hit, so I started planning a sequel. I had no intention of taking almost two years to compile 25 more statist propaganda phrases to refute, but better late than never, I suppose.

Donald Trump became the 45th President of the United States, which of course meant that Gary Johnson did not. I explored in detail what was wrong with Johnson’s campaign that made him not only lose, but fail to earn 5 percent of the vote against two of the least popular major-party candidates ever to seek the Presidency. Once Trump was in office, the responses to his trade policies among mainstream analysts led me to explain why many of them are politically autistic.

Book reviews have long been a part of my intellectual output, but I decided to start doing more of them in late 2016. This trend continued throughout 2017, as I read and reviewed The Invention of Russia, The Age of Jihad, In Our Own Image, Come And Take It, Against Empathy, Level Up Your Life, Islamic Exceptionalism, The Science of Selling, Closing The Courthouse Door, Open To Debate, Calculating the Cosmos, The Art of Invisibility, Libertarian Reaction, and The Euro.

Antifa grew from a nuisance that rarely affected anyone other than neo-Nazis into a serious threat to anyone who is politically right of center and/or libertarian who wishes to speak in a public venue. A comprehensive strategy to defeat them was necessary, and I was happy to provide one. Kyle Chapman grew weary of Antifa’s antics and led the effort to take up arms against them, becoming known as Based Stickman. I praised him in song. After the events of February, April, and May Day, I revised the strategy.

The Walking Dead comic series and the television show based on it contain many themes which are of interest to the student of libertarian philosophy. I explored the many ways in which Negan’s group resembles a state apparatus. The first part covers the sixth season of the show, and the second part covers the first half of the seventh season. At least three more parts will come next year.

‘No Particular Order-ism’, or the belief that libertarians should take whatever reduction in the size and scope of government they can get, has become common among the more radical members of the Libertarian Party. I explained why this approach is misguided.

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. This did not go over well with Jeffrey Tucker, who loudly denounced Spencer, after which security removed everyone from the bar. I wrote about the incident and the philosophical underpinnings of it.

Sometimes, the lens of examination is best turned inward to correct one’s own missteps. Such was the case for an article I wrote in 2014 about the nature of fake libertarianism, so I published a revision.

Theories concerning the creation, acquisition, trade, inheritance, and defense of private property form much of libertarian philosophy. The role of conquest in the determination of property rights had gone largely unexplored, so I decided to remedy the situation.

Terrorism struck in London on the anniversary of the Brussels attacks. I wrote a list of observations on the event.

I argued against more amendments to the United States Constitution, namely the Second and the Eleventh.

A chemical weapon attack occurred in Syria, which led to US intervention via a cruise missile strike. I wrote a list of observations on the event.

Keynesians and others who support fiat currency and central banking frequently claim that there is not enough gold in the world to back the quantity of currency in existence, and thus returning to gold would set off a deflationary spiral while destroying several industries that depend on gold. I debunked that claim.

On the anniversary of the Oklahoma City bombing, I applied ethical theories to the event to gain a deeper perspective of what happened and the aftermath of the event.

The primary aim of politically active libertarians is to limit and reduce the size and scope of government, as well as to eliminate as much state power as possible. I made the case that in order to do this, it may be necessary to temporarily do the opposite.

On May 8, Fritz Pendleton published an article at Social Matter in which he argued that liberty is best preserved by authority rather than anarchy. He then proceeded to launch a misguided attack against libertarianism, all while misunderstanding authority, anarchy, liberty, and the nature of a libertarian social order. I rebutted Pendleton’s case on a point-by-point basis.

Fashion trends can be a useful barometer of the health of a society. I explained how the trend of clothing that is designed to mimic the appearance of wear and work for those who think themselves above the sorts of activities that would produce these effects naturally indicates that a revolution may come soon.

Memorial Day provides an opportunity to promote statist propaganda concerning the nature of service and the provision of defense. I decided to do the opposite.

The immediate danger standard says that using force against someone who is not presenting a physical threat at the exact moment that force is used constitutes aggression, and it has become far too commonly advocated in libertarian circles. I explained why it is wrong and why it has gained prevalence.

On June 14, James Hodgkinson opened fire on several Republican members of Congress and their staffers while they were practicing for the annual Congressional Baseball Game for Charity. I wrote a list of observations on the event.

The Supreme Court ruled against the stays on Trump’s travel ban, but he missed a greater opportunity by letting them decide rather than ignoring the courts. I explained how and why.

Political rhetoric has grown increasingly heated, with violence erupting as a result. I showed how democracy is the root of this problem and how abolishing democracy is the solution.

The meme of throwing one’s political rivals out of helicopters has become popular among certain right-wing and libertarian groups in recent years. Unfortunately, people from all over the political spectrum tend to misunderstand the historical context of the meme, and thus interpret it incorrectly. I wrote an overview of this context and explained why helicopter rides may not be the best option.

I welcomed Insula Qui, the first additional writer for Zeroth Position, in July. He provided two articles to keep the site going while I was preparing for, participating in, and recovering from the Corax conference in Malta. A piece describing the problems that led to the call for net neutrality and recommending against more state inteference in the Internet came first, followed by a critique of common libertarian strategies to date. Speaking of the Corax conference, a revised version of my talk may be found here, as they own the rights to the original. A topic that came up in the talk that needed further comment is that in the discussion of proper behavior beyond the basics of libertarian theory, right-libertarians in general and libertarian reactionaries in particular will use the term ‘degeneracy,’ but they do not always properly define the term. I attempted to do so.

In the August 2 episode of the Tom Woods Show, he asserted that libertarians and fascists are completely contradictory political perspectives and could never be combined, and that when one embraces fascism, one must have relinquished one’s libertarianism, as there is no other solution that would make sense. Qui countered these assertions and delved deeper into the relationship between libertarianism and fascism than I had previously, which is not as inimical as one might think.

An alt-right rally in Charlottesville, Va. on August 11-12 turned violent, with three deaths and about 20 injuries. I wrote a list of observations on the events. In response, the large technology companies of Silicon Valley, which have become increasingly hostile to right-wing and libertarian content creators over the past decade, ramped up their censorship efforts. I proposed a novel and radical plan to deal with this problem so as to avoid public utility regulation.

I welcomed Benjamin Welton, our second additional writer, in September. I had meant to write an article about using the historical concept of outlawry to deal with violent illegal aliens myself, but time constraints led me to outsource the project. He then explored several historical examples of private military defense, finding that something novel must be created in order to defeat the state and maintain a libertarian social order.

In the wake of two major hurricanes, the usual complaints about price gouging were made yet again. I explained why price gouging is actually beneficial.

Qui wrote a piece about the limits of the applicability of libertarian philosophy, explaining that humans can fall into the categories of personhood or savagery, and that it is important to deal with each accordingly.

Catalonia held a referendum to secede from Spain and become an independent nation on October 1. This was met with force, and much hostility ensued. I wrote a list of observations on the events.

Qui examined the role of the modern concept of citizenship in advancing a particularly insidious form of totalitarianism.

On October 5, the New York Times published an opinion column by Michael Shermer in which he argued that the rule of law is a bulwark against tyranny, but guns are not. I thoroughly rebutted his arguments.

Welton explored the history of judicial corporal punishment, then made a case for restoring its use as a replacement for imprisoning lesser criminals.

The debt ceiling became a political issue again. As it incites financial panic for no good reason and hides important truths from common view, I advocated for its elimination on formalist grounds.

Capitalism and consumerism are distinct phenomena, with the latter caused by high time preference, which in turn is caused by the flaws inherent in modernity. Qui explained this at length.

I welcomed Nathan Dempsey, our third additional writer, in November. He runs a project called Liberty Minecraft, and wrote an introduction to the project.

The relationship between libertarianism and racial politics has become a controversial issue in recent years. Views on the issue run the gamut from complete opposition to imperative alliance, with nearly every conceivable position between being advocated by someone noteworthy. Many libertarians either provide the wrong answer or are afraid to address the question, so I decided to address libertarianism and support for ethnic nationalism.

Black Friday is revered by most libertarians as a celebration of free-market capitalism. I updated my explanation of why this reverence is misplaced. I weighed in on holiday shopping again due to some misguided criticism of computer programs designed to scalp popular gifts. Finally, I detailed the problems with Santa Claus.

Qui offered a message of hope in dark times by demonstrating how the socialists and anti-capitalists of today are not usually as fanatical as those that the early libertarians opposed, then offered advice on how to argue against them. He quickly followed this with an explanation of his concept of autostatism, which closely echoed one of the other presentations from the Corax conference. He then dealt with traditional views on degenerate behavior, and how a compassionate, non-enabling approach is necessary.

Due to surging exchange rates, the opening of Bitcoin futures, and the likelihood of Bitcoin exchange-traded funds in the near future, there is renewed mainstream interest in Bitcoin and other cryptocurrencies. There are benefits of cryptocurrencies which will be cheered by political outsiders to the chagrin of the establishment, and I listed eight of them.

Qui finished out the year by explaining why individualism and nationalism are not as incompatible as many people believe.

All in all, it was an interesting year full of occasions to make sharp libertarian and reactionary arguments. May 2018 bring more and better. Happy New Year!

Eight Politically Incorrect Benefits of Cryptocurrency

Due to surging exchange rates in the past few months, the opening of Bitcoin futures, and the likelihood of Bitcoin exchange-traded funds in the near future, there is renewed mainstream interest in Bitcoin and other cryptocurrencies. Mainstream investors tend to be attracted to the profit potential, portfolio diversification, and technological curiosities of cryptocurrency. But there are other benefits of cryptocurrencies which may scare away the average investor. Let us consider eight activities which can be performed with or aided by Bitcoin and its alternatives that will be cheered by political outsiders to the chagrin of the establishment.

1. Tax Evasion

Charles Stross famously complained that Bitcoin

“looks like it was designed as a weapon intended to damage central banking and money issuing banks, with a Libertarian political agenda in mind—to damage states ability to collect tax and monitor their citizens’ financial transactions.”

The problem is that he views this as a negative. From a moral standpoint, taxation is armed robbery, slavery, racketeering, trespassing, communicating threats, receiving stolen money, and conspiracy to commit the aforementioned crimes. If anyone dared to challenge the state’s monopoly on tax collection, they could face any of these criminal charges. By doing business in cryptocurrencies and taking additional steps to protect one’s identity (Bitcoin is pseudonymous rather than anonymous, though other cryptocurrencies are fully anonymous), one can keep part or all of one’s income and stored wealth away from Leviathan’s watchful eye. Establishment politicians and pundits will decry tax evasion as immoral. But as Murray Rothbard writes,

“Just as no one is morally required to answer a robber truthfully when he asks if there are any valuables in one’s house, so no one can be morally required to answer truthfully similar questions asked by the State, e.g., when filling out income tax returns.”[1]

The weapon of cryptocurrency is thus more of a shield than a sword, though it may be employed in an offensive posture (see #8).

2. Agorism

One way to reduce the size and scope of the state is to starve it of funds. Agorism is a strategy introduced by Samuel Konkin for reducing and eventually eliminating state power by expanding the size and scope of gray and black markets. As more people rely on the informal economy to a greater extent, they will develop a culture of resistance against state power while depriving governments of revenue by keeping their taxable income out of official records. This will incense people who believe that the state is necessary for the provision of essential services such as military defense and legal systems, but those services could be performed by private entities if they were not forcibly stopped from doing so by state monopolies. It will also worry those who believe that governments must take care of the poor and down-trodden, but private charity is quite capable of solving the problem, especially with tax burdens removed.

3. Undermining Prohibition

From the beginning of the original Silk Road, cryptocurrency has played a role in helping people to obtain goods and services that are prohibited by state laws. Though that site was shuttered by government intervention, this had more to do with the incompetence of Ross Ulbricht than with any inherent flaw in Silk Road or Bitcoin. Since then, many other sites have been created to serve the same purpose. This is a terrifying prospect for drug warriors and gun control advocates, who believe that strict laws against the sale of such goods are necessary to keep communities safe. But the available evidence suggests that state bans only raise the prices of banned goods while increasing the violence involved in their trade. Thankfully, online black markets will continue to undermine prohibitionist policies while reducing the amount of violence involved in both law enforcement and black market disputes.

4. Circumventing Child Labor Laws

Most developed countries prohibit children under a certain age from working. Proponents of child labor legislation believe that it is necessary to protect children from exploitation and lack of education. However, in most places where child labor is still prevalent, it is better than the alternatives of lackluster schooling, child prostitution, or starvation. In more developed countries, child labor laws prevent children from earning income, learning useful trade skills, building a work ethic, and avoiding indoctrination by the state. Cryptocurrencies provide a framework to allow people to hire and pay children outside of official channels (see #2), while smart contracts on a cryptocurrency blockchain can prevent wage theft and other exploitation.

5. Circumventing Capital Controls

In many countries, there are laws that forbid carrying more than a certain amount of money or goods out of the country. Such laws are easy to enforce when currencies are centralized in a specific country, and when money and goods must take physical form, as precious metals and cash do. But cryptocurrencies are not particular to any physical location and do not require a physical form. This allows a person to trade one’s fiat currency or precious metal in one country for cryptocurrency, travel to another country, and either sell the cryptocurrency for fiat currency or precious metal in the other country or use the cryptocurrency directly. Economic protectionists may argue that this weakens the economy of the nation that experiences capital flight, but capital flight would not be occurring if the nation experiencing it had a more responsible government that was not creating adverse economic conditions.

6. Financing Disapproved Activism

Political dissidents and the causes they support are frequently rejected by the legacy financial system. Banks, credit cards, Paypal, and other money handlers have a long history of closing accounts and denying service to people and groups that oppose the current power structure with sufficient ardency and effectiveness. This occurs partly because these companies tend to be controlled by virtue-signaling members of the establishment, and partly because government regulators can make business difficult or impossible for companies that refuse to crack down on dissidents. If there were no other options, then the establishment would be able to effectively eliminate its opposition by starving them out. But ever since Wikileaks came to depend on Bitcoin donations for funding, cryptocurrencies have provided an alternative financial system that allows activists to make a living, engage in commerce, and perform their activism despite the disapproval of ruling elites.

7. Thwarting Monetary Policy

Ever since Keynesian economics became prevalent among policymakers, central bankers have sought to manipulate interest rates and the money supply to stimulate the economy. But in practice, this only distorts the economy further, encouraging those with capital to make malinvestments. True to the Austrian business cycle theory, this forms yet another economic bubble that then breaks, after which misguided commentators blame markets and call for yet more intervention. Over the long term, central banks also destroy the purchasing power of a currency, with the US dollar losing 96 percent of its value since the Federal Reserve was formed in 1913. In order to continue to function, central banks must have a critical mass of economic transactions occur in the currency that they manipulate. Should enough people make the switch away from state-backed fiat currencies, monetary policy will lose its effectiveness. Cryptocurrencies threaten this critical mass by offering an alternative to people who wish to opt out of the scam of central banking and own an asset that appreciates over time.

8. Assassination Markets

Perhaps the most controversial application for cryptocurrencies is known as a death pool or an assassination market. First theorized by Tim May and fleshed out by Jim Bell in the 1990s, assassination markets predict the date on which a particular person will die and provide payment to those who guess correctly. This incentivizes an assassin to bet on a certain date and kill the person on that date. The original proposal was made long before cryptocurrencies were invented, and thus called for the use of anonymous remailers. Cryptocurrencies render remailers obsolete, as they better serve the purpose of compensating the assassin without leaving evidence that law enforcement can use to discover the identity of the assassin and/or the crowdfunders. The goal is to increase the level of occupational hazard for being a politician or minion thereof to such an extent that the benefits of wielding state power are no longer worth the cost. The theoretical result is that if politicians, central bankers, enforcers, and other such people suddenly become frequent targets of assassination, then these occupations will cease to exist due to a lack of interest in assuming such roles. Although the establishment will only ever view such an approach as murderous, and cryptocurrency enthusiasts are deeply divided over the concept, there will almost certainly be many attempts to create assassination markets in the coming years.

References:

  1. Rothbard, Murray (1982). The Ethics of Liberty. Humanities Press. p. 183

Book Review: The Euro

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Rating: 2.5/5

Praise The Grinch Bots

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

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

The Economic Role of Scalpers

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

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

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

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

Cultural Benefits

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

Conclusion

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

The Economic Fallacies of Black Friday: 2017 Edition

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

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

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

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

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

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

Building Liberty in Minecraft

The defining feature of this time period is the Internet, which provides unprecedented freedom of speech and access to information. But the more things change, the more they remain the same. Millennials have suffered from the same steady march against economic freedom. We understand much about social media and relatively little about free markets. But a new generation can know about a free society right now, and this led me to build Liberty Minecraft.

Prior Developments

For the past quarter century, the Internet has generated emergent digital economies in which people exchange digital items for analog items, usually fiat currency. These economies offer pay at any rate, avoiding minimum wage laws that remove low rungs on the economic ladder. Digital economies also exist in massively multiplayer online games.

In 2007, more than one hundred thousand people were employed as gold farmers in World of Warcraft for as little as thirty cents per hour.[1] A gold farmer is a person who plays multiplayer games to earn in-game currency for the purpose of selling it for real-world currency. Earning in-game wealth takes time and effort. Because online games can be accessed all over the world, people can earn a competitive wage in relatively low-wage markets by selling in-game currency to players in high-wage markets. Gold farming uses server bandwidth in exchange for money that players wish to spend on the game, and this costs game developers. It was once typical for game developers to ban gold farmers, but in recent years they have turned toward economic freedom as a solution to rising costs due to gold farming.

Today, players of Runescape and Eve Online may exchange in-game wealth for tokens called Bonds or CCP, respectively. These tokens are purchased for cash by one player, traded in game to another player, and may be used to pay for membership services that would otherwise cost $10-$15 per month. Game developers like play-to-pay business models because they can sell membership services for a 30% premium and use their own players to regain market share from gold farmers.[2] For gamers, play-to-pay models can provide dollar-equivalent hourly wages of less than $1, but highly skilled players can earn $5 or more. One may earn a wage during the least productive periods of their daily lives, producing at least some value instead of none.

Transactions are not always small. For example, a player of Entropia Universe spent $2.5 million to purchase virtual real estate in 2012. This was done because in the game, land owners share the revenue generated by player-to-player transactions, and this revenue is directly convertible to US dollars. This speculative bet may have yielded annual returns of 27 percent.[3] By their nature, speculations infrequently generate a profit, but one develops ability by trial and error.

Digital economies make it easier to learn about economics. Many capitalist acts between consenting adults are illegal in the real world,[4] but such barriers are rare in online games. Digital exchanges execute billions of trades per month for any of a thousand virtual commodities. Players of all ages can make thousands of equity decisions in those markets without having to file capital gains taxes. People can lose a digital shirt and learn real economic lessons.

Experiencing economic freedom in games is all well and good. This may partly explain why millennials were so attracted to Ron Paul’s “End the Fed” movement. However, organizing society by libertarian principles is about more than economics. Non-aggression and private property require freedom from the state. No such freedom presently exists in the real world. The lack of such empirical examples may help one understand why those same millennials support Bernie Sanders and Donald Trump just four years later. We do not understand freedom from the state, and this has not changed. Because a libertarian society is foreign to our experience, people ask questions like “who will build the roads?” The answer is actually simple. Without a state, people who want roads and are capable of building them do so. I have seen this in action because of Minecraft.

Original Conditions in the World of Minecraft

Minecraft is a sandbox game. Play is self-organized within a block building, 3D world. Players may select one of three basic game modes. In Creative, one may access a menu with infinite resources. In Survival, one must gather and consume resources to live but will respawn if they die. Hardcore mode is like Survival, but death is final.

Minecraft worlds are large by default. From an origin, a player may travel 30,000 kilometers along any axis and may build 256 meters to the world’s zenith. This is roughly half the size of Neptune by surface area (if it were a terrestrial planet) or seven times the surface area of Earth. Each Minecraft world has three dimensions of this size and depth. Each world is generated algorithmically from an 8-byte seed, a string of numbers. There are 264 possible 8-byte strings, leading to over 18 quadrillion possible Minecraft worlds.

The Virtual State of Nature

Online, Minecraft is lawless. Before modifications of any kind, the only rules which govern player behavior are physical laws. You have exclusive control over your player character but anyone may attack and try to kill you, thereby gaining access to resources that you carry or protect. However, in such large worlds with abundant ‘natural’ resources, violent conflict is relatively rare because it is simply easier to work for what one wants.

Competition among Minecraft servers is unfettered and meritocratic. Engagement is high; Minecraft is the best-selling computer game at present. The barrier to entry is low: a Minecraft server can be created or copied in minutes, deployed online at low cost, and operated by anyone. In less than one minute, a player may select and visit any of thousands of servers. Participation is voluntary; players always have the option to leave a Minecraft server at once.

Minecraft servers have diverse rule sets. An infinite number of server configurations are possible with server plugins that modify the game. Within commercial use guidelines and technical limitations, server operators establish rules according to their preference. These rules need not and often do not conform with existing laws in the real world. These rules can be and are often enforced by computer code. In this way, all Minecraft servers are new principalities which may or may not be governed by smart contracts.

Social orders are spontaneously created within Minecraft. Players develop institutions that are optimized to solve problems. Users build means to produce, distribute, and trade valued goods, especially food and building materials. They create farms, roads and shelters, and also chests to organize and store items for later use. Players create and promote their own social norms. If a player does not fill in potholes or replant trees to replace those that they have felled, other players may try to change their behavior. This may take various forms, from warning them in the game’s chat to attacking problematic players. Those who share values and aesthetics build their own communities and exclude (sometimes by violence) others with opposing values. Spontaneous order thus develops with or without an explicit ethical framework.

In Minecraft, people experience social orders with arbitrary rules. So, what happens if one creates a Minecraft server that defines rules by libertarian ethics and Austrian economics? In my case, the result is Liberty Minecraft.

Long Experience in a New Order

Liberty Minecraft is a sandbox for freedom. The goal was to establish a practice environment where people may test ideas within a digital free society and may learn about freedom by playing it. For over nine months, this goal has been achieved. Play is ordered spontaneously within the physical laws of Survival Minecraft. In a number of other ways Liberty Minecraft is different.

Liberty Minecraft is not as large as a default Minecraft setting. As before, there are three dimensions but their size has changed. The Overworld is seven kilometers on a side; just under nineteen square miles in surface area. This is roughly the size of Manhattan.[4] The Nether, another region, is just as large. The End, a place devoid of most resources, is ten times larger.

Some resources in Liberty Minecraft are renewable, while others are not. Resources must be gathered in order to be used or exchanged. Products are either created by the players or discovered in scarce structures that are native to Minecraft worlds. Liberty Minecraft could someday run out of trees, water, or soil, among other things.

Liberty Minecraft has few rules. Only one rule constrains player behavior; resolve nonviolent disputes nonviolently. Players of Liberty Minecraft must seek nonviolent solutions to the problem of scarcity. Two other rules further specify conditions that permit a player to use my server: read and understand the rules, and do not hack the server. The fourth rule is followed by myself and by the server itself. This rule does not bind the players, but rather provides them with an option and a promise: everything you claim is yours; if someone else claimed it first, then it is not yours. Private property rights within Liberty Minecraft are enforced by smart contracts.[5]

To claim property, a player may use a claim tool on unclaimed land and must spend claim blocks to create a claim. Claim blocks cost $20 each. A player may also purchase land from an existing claim holder. In both cases, smart contracts are optional and available to execute these transactions. Smart contracts also enforce all other forms of property on the server. This applies to player characters.

One may engage in combat with others provided that each player turns on the ability to do so. In Liberty Minecraft, a player character is protected from other players by default. This protection is optional. A player may disable these protections and enter player-versus-player mode. By entering this game mode, a player consents to be attacked at will by other players. This allows for combat between two or more people to take place, but only if all parties involved agree to enter into mutual combat.

Competition within Liberty Minecraft is unfettered and meritocratic. In under one minute, anyone who owns Minecraft for PC can join the server and begin to act within a libertarian social order. Player interactions are voluntary, with complete freedoms of association and discrimination. No one is required or forbidden to provide for others.

Liberty Minecraft uses Diamonds, one of the in-game commodities, as money.[6] At present, Diamonds are used to create the best tools and armor in Minecraft. They are also scarce, durable, and fungible. Within Survival Minecraft, diamonds cannot be farmed or produced synthetically. To obtain a diamond, one must search for hidden chests in scarce structures or dig underground for diamond ore.

Minecraft players seem to have freely chosen Diamonds as the medium of exchange. Thus, I have chosen Diamonds as money. However, a Diamond is indivisible. This problem was addressed by creating a Diamond Exchange to split a Diamond into $1,000. The value of a dollar is measured to fifteen decimal places, so there is plenty of room for revaluation if money becomes too valuable to perform ordinary transactions.

Engagement is strong so far; since the official launch in March 2017, players have engaged in more than 100,000 trades using our shop system. A single trade may consist of anything from one item to more than a thousand items, all player created. More than 8,000 hours have been logged by the players at the time of this writing. Liberty Minecraft is also cash flow positive and profitable.

Some Problems with Liberty Minecraft

There are four clear problems with Liberty Minecraft. First, the money is inherently disinflationary. Land claims as private property can only be traded when players have a “claim blocks from play” value that is larger than the size of the claim being traded, which is a technical limitation. To provide a real estate market with existing smart contracts, players must somehow accumulate claim blocks from play. To achieve this, players accumulate 20 claim blocks per hour, which is an arbitrary amount. All players receive the same amount per hour of play. Claim blocks are worth $20 each, so players currently receive a universal basic income of $400 per hour of play. Universal basic income is an obviously anti-libertarian element, but it does present the opportunity to solve this problem and observe what happens when a libertarian society eliminates universal basic income.

Second, within Liberty Minecraft, power is centralized in a single, flawed operator. I, Nathan Dempsey, make mistakes and correct them. Both types of actions can cause problems. For instance, when I created the world border in The End, I incorrectly calculated the area. The End was roughly ten times larger than I intended, and if I had left it that way, our world would become far too large for me to economically perform regular backups. I recalculated and changed the world size. This changes the availability of resources that are found in The End. I will make more mistakes as time goes on. However, if any player decides that my choices are intolerable they may (with some work) use software to download the world and their property. Then, they may put their version of the world online with server software and compete with me for players. This functions somewhat like a hard fork of a cryptocurrency. Following a land dispute, a player decided that absolute property rights are intolerable and left after downloading the world, which proves both that new competitors may enter my line of production and that I cannot be an ultimate decision maker.[7][8]

Third, the conditions of the game and server make theft and assault impossible. A player might create a death trap, but these can only be made on one’s own property, on unclaimed land, or on land in which they have been granted permission by the claim owner to create such hazards. Because property claims are impossible to violate (unless I chose to or a hacker managed to alter the server status), Liberty Minecraft does not provide a model for dealing with aggressors against property rights aside from having the server owner (me) remove someone from the server.

Finally, the Terms of Commercial Use prohibit anyone from selling soft currency for hard currency. Therefore, I cannot offer the play-to-pay model described in the opening without violating the Terms of Commercial Use. The terms provide a narrow range of ways that I can provide value to players in exchange for money. This even applies to affiliate marketing (which is not permitted), such as with Amazon. The consequence is that I must innovate within these narrow terms, which creates an interesting problem but deviates from a libertarian order. And ultimately, Mojang, the company that developed Minecraft, is regulated by the state, so Liberty Minecraft still operates within a statist framework to some degree.

Conclusion

Minecraft spontaneously generates social orders. Liberty Minecraft is an effort to create such an order based upon Austrian economics with libertarian ethics. Within Liberty Minecraft, players operate in an unfettered free market and experience social freedoms that are opposed by state aggression. This experience sharpens one’s thinking about economic and social affairs. Experiencing economic freedom online without freedom from the state has led people to reject the Federal Reserve System but favor the state at large. The goal of this project is to test libertarian ideas in a simulated environment and lead people to reject the state in favor of private property rights and non-aggression, which one experiences within Liberty Minecraft. Liberty Minecraft has some important problems that may be solved in future updates, and represents nothing less than a proof-of-concept for exploring social orders in games.

References

  1. Valdes, Giancarlo. “Jagex Wages War against Gold Farming in RuneScape 3 with Bonds” VentureBeat, 25 Sept. 2013. http://venturebeat.com/2013/09/25/jagex-wages-war-against-gold-farming-in-runescape-3-with-bonds/
  2. Dutton, Fred. “Entropia Universe player spends $2.5 million on virtual real estate” Eurogamer.net, 4 Apr. 2012. http://www.eurogamer.net/articles/2012-04-04-entropia-universe-player-spends-USD2-5-million-on-virtual-real-estate
  3. Block, Walter. “Fake Economic News | Walter Block” YouTube, Mises Media, 4 Aug. 2017. www.youtube.com/watch?v=FiwhlU4d-nY
  4. Dempsey, Nathan. “How The World Works” Liberty Minecraft, 14 Oct. 2017. www.libertyminecraft.com/how-the-world-works/
  5. Dempsey, Nathan. “How Private Property Works” Liberty Minecraft, 4 June 2017. www.libertyminecraft.com/how-private-property-works
  6. Dempsey, Nathan. “How The Money Works” Liberty Minecraft, 4 June 2017. www.libertyminecraft.com/how-the-money-works/
  7. Dempsey, Nathan. “Free Market Update: Land Disputes” Liberty Minecraft, July 2017. https://www.libertyminecraft.com/free-market-update-land-disputes/
  8. Hoppe, Hans-Hermann (2001). Democracy: The God That Failed. Transaction Publishers. p. 21.

On Consumerism, Corporatism, Time Preference, and Modernity

Consumerism

Capitalism is often blamed for consumerism. It is almost a certainty that whenever leftists run out of other arguments, they will make an argument related to consumerism. Consumerism is almost universally despised by people who have higher ideals, so it is easy to point out consumerism and then act as if it is an argument against capitalism. One reason for this is that socialism, the other major economic system in the modern world, eventually leaves people with nothing to consume, so capitalism is an easier target. But socialists make multiple critical errors in blaming capitalism for consumerism. While it is certainly true that capitalists benefit from a consumer culture, and that the capitalist system will not be toppled when people are attracted to consumer culture, this does not mean that capitalism as a system of free enterprise and private property is by necessity a cause of consumerism or oriented around consumerism. Furthermore, the capitalist class itself will be subject to consumerism and themselves be as hurt by it as anyone else.

When we look at why people engage in consumerism, we can see several major trends that cause consumerism. The first is having a corporate structure when it comes to enterprise. This means that for there to be consumerism there must be people who advance consumerism. There would be no consumerism if there were no beneficiaries of consumerism, and honest businesses do not need consumerism. Corporations are not honest businesses, as they hide behind a legal fiction created by the state. Without corporate structures, which are entirely constructed by the state, there is no party who would advance consumerism. Second, there must be people who are willing to engage in consumerism. Whereas people who have their lives figured out and have purpose beyond themselves do not turn to consumerism, these must be people who have nothing better to do than to consume. Such people see their lives as a series of capital transactions in which they seek immediate gratification. Consumerism cannot develop within healthy societies where people have cares beyond their own immediate interests. Third, consumerism requires that these people have money, as they cannot consume without first gaining access to a sufficient amount of capital. Thus, consumerism requires an abundance of consumer goods and services. Fourth, there must be a high social time preference within the society because people need to seek immediate gratification to value consumerism instead of being personally disgusted by engaging in consumerism. Finally, it is not only necessary that people have personal abundance, but that the capital structures that produce consumer goods are well-maintained. These capital structures will be maintained when people consume, but high time preferences will necessarily cause a form of stagnation, as there is insufficient investment to facilitate growth.

Corporatism

It is undeniable that the modern economy is largely driven by giant corporate structures, and it is similarly undeniable that these corporate structures are based on making as much money as possible in the shortest amount of time. Making profit is not inherently bad, but it is necessary to account for time preferences. The strategy used by megacorporations once they have attained their status is not to build up a honest reputation and a good name as valuable providers of quality services, but rather to profit in the moment and then leverage this profit for future gain. This is why many corporations operate in debt; they hope that they can be propelled by their profit and obtain investors by providing the potential for returns. This has much to do with the nature of corporations. Corporations are entities partially separate from the people and property legally represented by them. They shield people from personal responsibility, which creates a wide range of perverse incentives. If businesses were fully accountable, then there could not be such a large amount of corruption within them or such a high time preference by them. Without the ability to sustain debt through lack of responsibility, businesses would have to lower their time preferences.

Not only does the state indirectly advance predatory business practices in allowing corporate structures to take shape, the state also directly allies with corporations. Whereas attempting to create a corporation without involving the state will have no effect, incorporation is a government program and a corporation is a public-private partnership. Furthermore, politicians are funded by corporations, and corporations get special benefits from the state as a return on their investment in political connections. The result is that the state has been overtaken by corporate power, and the two work symbiotically in order to enhance their parasitism upon the rest of society. The largest corporations need their licenses, privileges, regulations, and other such competition-stifling measures to maintain their position, while the state needs to have control over the economy to maintain its position. Corporations are the only entities that can truly ensure that the economy is not outside the state. The entire modern political system is based on a mutual reassurance between corporations and the state, and separating the two at this point will cause an economic collapse.

At the highest level of business, the image of the humble CEO or board manager who does what needs to be done is a misconception; the people who run megacorporations are not the most virtuous people. Big business is not oppressed, and is not some heroic figure from an Ayn Rand novel who is fighting against the state for the freedom to compete in the free market. Rather, through regulatory capture, big business uses state power to oppress small businesses and individuals who seek to compete with them. For these reasons, the corporation is a fundamentally anti-capitalist institution.

Time Preference

There are the situations in which the state directly incentivizes high time preferences. People who are struggling financially are far easier to control than those who are financially secure. By contrast, when people save money and accumulate wealth, they are less influenced by the state. The state can make use of this to artificially create and expand a consumer culture by inflating away savings. This is done by printing fiat currency that loses its value over time, then watching people impoverish themselves by using that currency. People may have an abundance of consumer goods, but they are constantly struggling financially and feel as if they are much poorer than they are. These reckless spending habits that are bound to impoverish the spenders are extremely beneficial to the state and the politically connected corporate elites. Furthermore, the state can tax people more on their purchases if they spend beyond their means. It will also create more possibilities for taxing artificially successful businesses when they inevitably expand due to the calculation with inflationary currency being favorable towards them. However, this is unsustainable and always results in an economic contraction. Unfortunately, the state can also exploit this by picking winners and losers, bailing out favored megacorporations, creating new social welfare programs, and expanding the grip of central banking over the economy.

Having high time preferences also leads to an economy based on debt, in which people spend more than they have, and both governmental and private institutions support this spending. Banks earn most of their income from this overspending and from people who are unable to pay them back in full. Due to this over-reliance on debt, the population as a whole is saddled with debt that can feel impossible to ever pay off, which can cause them to lose their motivation in life. The population will be easier to control by both the state and the banks that run this debt-based economy, as the agencies who provide the debt for the economy are the agencies who make the reliance on debt possible. Easy debt also leads to price inflation, as there is more market demand without a corresponding increase in market supply.

People get addicted to debt when they need to spend more than they have. However, this results in a problem when a person’s available collateral shrinks in comparison to their debt. They will eventually hit a wall where they can take no more debt unless and until they pay off their old debt. This is a debt trap in which people must repeatedly take on new debt to pay off old debt, all while interest accumulates and clearing their debt is impossible. This keeps people from being able to prosper, and the number of people trapped under such a burden is increasing. This, in turn, causes much greater class divides, as lower-class individuals who do not keep a store of capital that they can use for various ventures will be unable to make profitable investments. They will always be subject to one boss or another and will never experience true independence.

None of this is the fault of a capitalistic economy, but rather the high time preferences exhibited by the consumerists. On the contrary, capitalism is the most benevolent aspect of this situation, as it punishes the destructive habits of consumerism. These people are stuck in poverty not because of capitalism, but because of their own consumption habits amplified by state interference. Their lack of advancement is not an unfair punishment, but rather a sign that they should change their ways. This requires a particular mindset of growth and improvement that is most often stunted by public education and the degenerate culture which most people inhabit. This mindset requires that people actually trust the market signals they receive instead of seeing capitalism as a repressive entity. Escaping poverty requires a willingness to do what must be done instead of waiting for someone else to provide a handout. People who blame capitalism for holding them down while engaging in mindless consumerism are as children who eat too much candy, become ill, and also complain that they have too little candy.

Modernity

The modern society allows people to live a life without meaning. It removes church as a higher spiritual goal, community as a higher social goal, family as a higher personal goal, and even denies the importance of individual goals that a normal person might have. Through the lens of modernity, it is better to remain free and untethered rather than have a family. Looking out for one’s own interests at an individual or group level is derided as selfishness that ignores the greater good of society or hateful racism. By society, modernists do not refer to the disaffected small villages or the impoverished sections in urban communities that are in the greatest need of strong and healthy communities. Instead, they almost exclusively refer to a central state and imply that people are only worthwhile when they work for the state or when they work for nothing of value. They only see the state as a representative of society, with the only acceptable substitute to focusing on the state being pure hedonistic nihilism. Ironically enough, this mindset is most often heard coming from people who oppose capitalism on the basis of it being anti-social.

People are thus left without a greater meaning to work towards. They are left not providing for themselves, their family, or something else they hold dear. People are left as freely floating agents who are reduced to nothing other than consumers, and material pleasures are the only things that allow these people to tolerate the otherwise meaningless lives that they lead. They are not some great paragons of modernity, but rather embody the lowest state of rot and decay.

Conclusion

Consumerism is caused by progressivism, corporatism, and impatience. Capitalism is nowhere near the root cause of consumerism. Free enterprise and private property do not create such a propensity to consume over doing more meaningful things. The reason why consumerism is such a prevalent phenomenon is not because there is too much capitalism, but because people lack self-restraint or purpose and are encouraged by the state to live in such a manner.