On the Supply Objection to the Gold Standard

Since the gold standard was abandoned in 1971, many people have sought to return to such a standard in order to combat inflation and rein in central banks. Keynesians and others who support fiat currency and central banking present several criticisms of this approach. One of these criticisms is particularly nonsensical, but occurs with increasing frequency: 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. Let us address this question from a scientific standpoint, return to economic matters, and address the claimed effects.

Physical Limits

Let us begin by finding the absolute limit of what gold can do for a monetary system. As the United States dollar is the world reserve currency at the time of this writing, it makes sense to use it as the currency to peg to gold. The smallest unit of gold is the atom, and the smallest unit of dollars is the penny. The most extreme possible case would be to set one penny equal to one atom of gold. What would this look like in practice? Any basic text on chemistry can lead us to the answer. The only stable isotope of gold is Au-197, and its molar mass is 196.967. This means that in about 197 grams of gold, or 6⅓ troy ounce coins of the type minted by many governments and private mints, there will be Avogadro’s constant of atoms, which is 6.022140857×10^23. Setting one penny equal to one atom of gold, this is $6.022×10^21 or $6.022 sextillion easily fitting in one’s hand.

This amount of money is so large that people cannot truly understand it due to the lack of a frame of reference for it. Few people will handle anything beyond millions of dollars at any point in their lives. Large businesses may deal with billions of dollars. The most powerful governments have budgets in the trillions of dollars. According to a History Channel documentary, the dollar value of the entire planet is in the quadrillions of dollars, checking in at $6,873,951,620,979,800, and subtracting Earth’s gold content leaves $6,862,465,304,321,880. As the limit of one penny per atom allows one to hold the current market value of a million Earths in one’s hand, it is clear that science imposes no physical limit to make a gold standard infeasible.

Another useful exercise is to try setting the value of all available gold equal to the value of the rest of the planet. The total available gold content at present amounts to 186,700 metric tons. Defining this amount of gold to be worth the above figure of $6,862,465,304,321,880 gives a gold price of $36,756.64 per gram or $1,143,259.40 per troy ounce. This is very expensive by current standards, but current standards do not come close to economizing the entire planet. The actual price would therefore be far lower than this, but this exercise is useful for setting an upper bound.

Current Prices

Perhaps critics of restoring sound money mean to say that the gold standard could not be reintroduced at current gold prices. In this, they are correct; at the time of this writing, gold trades at $1,284 per troy ounce. Multiplied by the 186,700 metric tons of gold available, this gives $7.707 trillion of gold-backed currency, which is not enough for the United States economy, let alone the entire world. The solution, then, is to devalue fiat currencies to fit the available gold supply. According to the CIA World Factbook, the gross world product in 2015 was $75.73 trillion. Covering this with the available gold gives a gold price of $12,616.75 per troy ounce, which is an order of magnitude above current prices, but not outlandish.

Possible Effects

Gold has gained several practical applications in recent times, particularly in medicine and technology. Critics claim that returning gold to monetary use would devastate these industries, along with the jewelry industry. In each case, critics are overreacting. Research toward creating substitutes which work nearly as well in electronics is promising. Gold salts in medicine have numerous side effects, monitoring requirements, limited efficacy, and very slow onset of action. Finally, there is no particular reason why we should care about an industry that produces impractical novelties to the extent of protecting it through fiat currency. It would be better to free up jewelers to do something more productive and helpful to others.

The other major criticism is that returning to a gold standard will cause a harmful episode of deflation. Paul Krugman writes,

“[W]hen people expect falling prices, they become less willing to spend, and in particular less willing to borrow. After all, when prices are falling, just sitting on cash becomes an investment with a positive real yield – Japanese bank deposits are a really good deal compared with those in America — and anyone considering borrowing, even for a productive investment, has to take account of the fact that the loan will have to repaid in dollars that are worth more than the dollars you borrowed.”

But those who are less willing to spend or borrow are necessarily more willing to save, which will allow them to spend more later or fund new businesses and investments. There is also the matter that one cannot hold out forever; one must eventually purchase goods and services. That the technology industry thrives despite producing the most deflationary goods shows that there is nothing harmful about this. It turns out that the value of using a current computer over the next year is worth more than holding out for a more powerful computer next year. It is also true that holding out for more food next month does not work if one cannot survive until then without food now. One may object that this would concentrate wealth in the hands of those who can hold out, but this is a feature rather than a bug because it redistributes resources to those who have been good stewards of resources.

Those who have already borrowed face a larger debt burden in a deflationary environment, and though creditors experience an equal gain, creditors are unlikely to increase their spending to offset the reduced spending of debtors. But again, this is a feature rather than a bug because it incentivizes saving over borrowing while pushing some debtors into default, thus punishing unwise lenders with loss of principal and unwise borrowers with bad credit ratings.

With falling prices, profits and wages usually have to fall as well. But profits are a function of prices and costs, which are also prices. This leaves profits largely unaffected on a percentage basis. Wages are prices as well, and the need to cut nominal wages in a deflationary environment could both incentivize firms to release their worst employees and provide pushback against minimum wage laws.

Finally, there is the belief that the sort of deflation that may be caused by returning to gold would cause a recession. But the above rebuttals deprive this problem of any mechanism by which it might occur. In fact, the empirical evidence suggests that deflation is linked to economic expansion, as occurred in the United States during the 19th century. The only period in which a correlation between deflation and depression does appear is the Great Depression (1929-34), and this may be linked to the central bank policies of the 1920s, which fraudulently inflated the money supply beyond the set gold exchange rates of the time.


While a free market in money would be the most desirable condition from a libertarian perspective, returning to a gold standard is a superior option to that of allowing fiat currency and central banking to continue as they are. The concerns about a lack of gold supply for returning to a gold standard are without merit, and the fears of deflation and devastation to industry are unfounded.

25 More Statist Propaganda Phrases

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

  1. Give back to the community”

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

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

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

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

  1. Pay your fair share”

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

  1. Income inequality”

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

  1. Society’s lottery winners”

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

  1. You didn’t build that”

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

  1. Gender pay gap”

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

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

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

  1. Social justice”

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

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

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

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

  1. Level playing field”

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

  1. Our Constitution”

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

  1. Our shared values”

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

  1. Our fellow (insert national identity)”

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

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

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

  1. National interest”

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

  1. Shared sacrifice”

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

  1. Rights come from the government”

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

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

  1. We get the government we deserve”

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

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

  1. Pay your debt to society”

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

  1. Rule of law”

This phrase is used by people who try to justify the state by fear-mongering about what could happen without it. But the truth is that rule of law is fundamentally incompatible with a state apparatus. Rule of law is the idea that people should be governed by laws rather than by the arbitrary decisions of rulers. A state is a group of people who exercise a monopoly on initiatory force in a certain geographical area. People who have a monopoly on initiatory force necessarily have a monopoly on the enforcement of laws. This means that they can choose the nature of the law and the enforcement thereof. Thus, in the presence of a state, those who wield state power rule the law. The law does not rule them. Therefore, the only possibility for rule of law is to have no state.

  1. Law-abiding citizen”

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

  1. Common sense regulations”

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

  1. Corporate citizen”

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

  1. Don’t waste your vote”

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

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

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

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

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

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

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

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

  1. Freedom isn’t free”

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

  1. We need to have an honest conversation”

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

On Market Failure

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

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


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

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

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

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

Public Goods

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

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

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

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

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


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

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

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

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

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

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

Other Culprits

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

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

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

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

Resource Failure

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

Complainer Failure

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

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


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


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

The Strategic Libertarian Case For Supporting Hillary Clinton

The 2016 election season has been a contentious and divisive time for libertarians. Some have decided to side with Republican candidate Donald Trump as the lesser of two evils. Others are supporting Libertarian candidate Gary Johnson despite his long odds and shortcomings as a candidate. A few are turning to Constitution Party candidate Darrell Castle, despite his lack of sufficient ballot access to obtain victory. Some who do not understand or care about economic liberty have even suggested Green Party candidate Jill Stein as an option for libertarians. A significant number are disgusted with all of their options and plan to stay home on Election Day. What no one seems to have contemplated is the case for a libertarian to support Democratic candidate Hillary Clinton, so let us explore that case.

Clearly, there is no straightforward, face-value libertarian case for supporting someone with the track record of warmongering, corruption, thievery, and deception that Clinton has in their quest to preside over the most powerful and dangerous state apparatus in human history. But almost all libertarians have decided to stop there in their consideration of Clinton and look to the other candidates. What can be argued that has not been argued thus far is a bootlegger’s case for Clinton, in which she is supported not for the ostensible purposes of granting her the Presidency, but because her administration will cause effects that libertarians can exploit for their purposes. The overarching theme is that the leftward drive of statism in general and democracy in particular cannot be forestalled by the means at hand, so the alternative is to push leftism even faster and farther than leftists had planned in order to hasten its collapse. It is this sort of case which will be made here.

The Goal of Libertarians

It may seem odd at first glance to speak of a unifying goal for all libertarians, as libertarians have all sorts of goals, some of which are at cross purposes with each other. However, the root of the word ‘libertarian’ is ‘liberty’, so it is reasonable to conclude that a libertarian has the practical goal of maximizing the amount of liberty present in one’s environment. Liberty is generally defined as the freedom to do as one wishes as long as one respects the right of other people to do likewise and commits no aggression against them. But liberty is meaningless without private property in which to enjoy it, insecure without rule of law to defend it, precarious without peace and justice to preserve it, and absent without freedom of association. If a state is present, it will fund its activities through taxation and civil asset forfeiture, take private property through eminent domain, and restrict the use of property through intellectual monopoly, zoning, and environmental regulations. Its officials and agents will choose the nature of the law and the enforcement thereof, meaning that they rule the law and not vice versa. Its enforcers will initiate the use of violence against people who are known to disagree with government statutes and acts upon their disagreements, thus presenting a constant threat to peace. Its agents are allowed to do that which is considered criminal for anyone else to do, and the system is set up to keep them from being held to account. It will force people to associate with it regardless of whether they want to use or pay for its services. For these reasons (and many others), the maximization of liberty requires abolition of the state.

Abolition Requires Revolution

Unfortunately, the state will not abolish itself; the control and maintenance of the state apparatus is too valuable to give up for those who benefit from it. Those who bankroll political campaigns receive a far better return on investment than they would receive from any free market use of capital, and if they did not make such donations, their business rivals would. Wielding political power causes the same biochemical responses as drug abuse. There are people who carry weapons in the name of the state for the purpose of enforcing the edicts of politicians because they lack the skills and temperament to be productive members of society. There is a dependent class of people who have become accustomed to existing parasitically upon the productive members of society. All of these people are used to their way of life, and they will not give it up without a fight. Any strategy that does not deal with this fact, as well as the fact that an institution based upon initiatory force will resort to force to counter attempts to remove and/or dismantle it is doomed to failure. There are many other methods that libertarians have proposed and tried to increase the amount of liberty in society, and some have achieved some limited success. But electoral methods, agorism, cryptography, seasteading, civil disobedience, education, and peaceful parenting all fail to address the fundamental problem. Thus, they will fail to defeat the state by themselves at best. At worst, they will ease some of the pain of oppression, which allows people to tolerate more evil before they must take action to end it. Their usefulness, if any, is to push the state toward collapse while growing the population and resources of libertarians to such an extent that revolution becomes feasible.

A Successful Revolution

A revolution to end the state can only be successful if enough people participate. Moving too soon plays into the state’s hands, as it will only give the state more cause to grow and sour the reputation of libertarianism. The personnel and resources necessary to carry out a revolution are not yet assembled, so the task of the libertarian is to figure out how to assemble them. Let us begin by noting what the Declaration of Independence says about the matter:

“Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed.”

This is indeed what history shows us; people tend to overthrow governments only if they believe themselves to lack better options. Regardless of whether war, famine, or pestilence visits a population because of their government or in spite of it, a failure of a state to meet the needs of its people in a crisis has precipitated more revolutions than anything else. Although the tyrannies inflicted upon the American people by the federal government are far greater than those which inspired our forefathers to take up arms, the comforts of modernity and the civic religion of democratic statism have made evils more easily sufferable. That which would once have led people to revolt is now merely a minor inconvenience, to be brushed aside and endured because the next sports game is on. Clearly, conditions must get worse in order to make enough people believe that they must rise up against the system rather than keep trying to play the fool’s game of working within it.

Use It to Destroy It

Given that liberty requires anarchy, anarchy requires abolition of the state, abolition of the state requires revolution, revolution requires a sufficient number of participants, the number of potential participants is lacking, people revolt when they believe themselves to be out of other options, and more people will believe themselves to be out of other options if conditions get worse, the next order of business is to see what can be done to make conditions get worse. In a democratic state, the ballot box is the primary means by which decisions are made. Conditions sometimes change slowly in a nation with a deep state of unelected bureaucrats that is largely impervious to the winds of politics, but conditions do deteriorate when bad rulers are elected. While this is always the case, some candidates for office are clearly worse than others. The obvious strategy, then, is to intentionally vote for the worst candidates in an effort to push the current system toward ruin.

Who Is Worst?

With a strategy discovered, the next question concerns application. Which candidate in the 2016 presidential election would do the most to push the current system toward ruin? In other words, who has no intention or motive to make any significant changes to current policy? Who would amplify and accelerate the current course of the federal government?

We may begin by considering only the candidates who have a chance of winning, as a candidate who cannot get into office in the first place will fail a fortiori at making conditions worse while in office. This reduces our options to Clinton, Johnson, Stein, and Trump. All of the other minor-party candidates lack the ballot access to gain the Presidency, even if everyone voted for a particular one of them. Stein may also be dismissed, as polling has shown her to be in fourth place in nearly every national and state poll that has been conducted. (Though if Stein had a chance, this would be a case for supporting her instead of Clinton, as the implementation of her platform would accelerate the national debt, grow the size and scope of government, and push the nation toward economic ruin faster than the platforms of the other candidates.)

Johnson and Trump offer respites from many of the failed policies of recent administrations, though to varying degrees and for different reasons. While both focus on economic matters, Johnson takes a more libertarian approach while Trump is more nationalist. The practical upshot is that a Johnson presidency would be likely to offer much more relief over the short-term but ignore important demographic concerns, while a Trump presidency would offer much less immediate relief but address concerns over demographic shifts which are hostile to liberty. But the strategy being discussed is to vote for the worst, not the best.

A look at Clinton’s platform reveals that she favors higher taxes, more programs for minorities, more taxpayer funding for college tuition, strengthening of entitlement programs, stricter gun control measures, universal healthcare, ending the sequester for both defense and non-defense spending, amnesty for illegal immigrants, more funding for clean energy, a continuation of unproductive anti-terrorism policies, curtailment of civil liberties, and more government intervention in the workplace. She is also far more likely to start new wars than the other candidates, and this would speed along the decline more than any other policy. In other words, she will amplify and accelerate the current course of the federal government much more than Johnson and somewhat more than Trump.

Resolution in Defeat

It is also necessary to consider the impact that the election is likely to have on the supporters of the losing candidates. If Johnson loses, his supporters will likely get the result that they expect, as third-party candidates have almost no chance in a system rigged to produce a two-party system. Although a Johnson victory is technically possible if everything plays out just right, the more realistic question is whether he can get 5 percent of the vote, which would make the Libertarian Party a more significant election machine going forward. As such, voting for Johnson is more of a punt on 2016 with hopes set on 2020. That said, a disastrous result for Johnson will affirm the need for the LP to stop running the milquetoast candidates they have fielded since 2008 and put forward openly radical, even anarchist, voices.

A Clinton loss will have the effect of opening a pressure valve on populist and nationalist resentment, just as the Brexit victory did in the United Kingdom. If liberty is the goal, then a pressure valve to release steam that is needed for a revolutionary explosion is counterproductive. For as long as Trump remains in office, the right would rally behind him, turn a blind eye to many of his negative tendencies, and forget their anti-state sentiments because their man is in charge. While Trump could cause some disillusionment when many of his lofty campaign promises do not come true, many on the right have some understanding that this will be the case and that he must speak bombastically to keep his base energized and motivated. Trump could also do some good in the form of neutralizing the tactics of social justice warriors, but he has already done this and could likely not do much more in this regard. Of course, the political pendulum will swing again, for Trump is not Pinochet and never will be. Trump has given no indication that he would do anything meaningful to abolish democracy or eliminate the programs which create left-wing moral degeneracy. The left would return to its excesses as soon as it regains the Presidency, using state power to press its thumb on the scale even harder to try to ensure that nothing of the sort can happen again.

With the exception of cuckservative neocons who would count Clinton as one of their own, a Trump loss would further inflame the right and grow the reactionary movement. The right would increasingly come to realize that the democratic process as it currently operates is no longer in their interests, just as many Southerners did after the election of 1860. Due to demographic shifts, a Trumpian candidate will likely never have an easier path than in 2016, and the path is quite difficult now. While a Clinton victory is unlikely to result in a revolt before the 2020 election, it could produce other interesting results, such as renewed interest in the idea of nullification, an Article V convention, or even a serious effort by a state to secede.


Naturally, a plan to deliberately worsen conditions in one’s own nation will invite sharp criticism. Let us consider some of the most likely objections to such a plan. First, there is the objection that this will harm innocent people. This is not necessarily the case, depending upon how one defines innocence. To return to the Declaration of Independence,

“But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.”

In this sense, the American people are in dereliction of their duty to throw off oppressors. While those who say that we get the government we deserve are victim blaming to some extent, they have a point in the sense that revolution is far more practical than most people think, yet the American people have not revolted against the state in a meaningful way since 1794. (The Civil War was a meaningful revolt, but it was not anti-state in nature; the Confederates sought to replace one government with another.) But even if we grant that this will harm innocents, it is not as though innocents will go unharmed otherwise. The state violently victimizes the innocent by its very nature, and other plans for ending the state will not prevent such victimization before the state is abolished. It is thus a question of degree and duration, much like that of ripping off a bandage rather than pulling at it slowly.

Second, there is the possibility that this plan will backfire. We may make conditions worse, but perhaps a sufficient number of people will never decide that they have had enough. This may occur because they blame those who voted us into a crisis and do not wish to fight alongside them, or because they simply lack the fortitude to revolt. This is a legitimate concern, but the possibility that people no longer have the fortitude to forcefully resist the state will be a concern regardless of the method used by libertarians.

Third, Clinton may also make leftists look for more radical methods, as she is likely to further upset the people who supported Bernie Sanders in the Democratic primary. This is actually a feature in a plan to overload and collapse the system, as it pushes the establishment toward ruin even faster. And if the far-left and the far-right come to blows in America, the rightists have a clear advantage in manpower, firepower, and the concern to target one’s enemies without harming bystanders (although neither side is perfect in the latter regard).

Fourth, there is no guarantee that Clinton will be worse than Trump. But there is no guarantee of anything promised by politicians to voters; this is the very design of democratic statism, and one of its intractable problems. Both major-party candidates are known to be serial liars, but based on their track records both inside and outside of politics, it is reasonable to conclude that they will at least attempt to advance the agendas in their platforms.


If one understands that the problems with which the democratic state presents us are intractable in its presence, and that the best use of the ballot box is to vote for the worst candidate in order to hasten the demise of this broken system, then supporting Hillary Clinton for liberty makes a great deal of sense. The common objections to such a plan do not withstand scrutiny, as other methods of action or inaction have the same or worse potential shortcomings. The effects of her defeat would only slow the decline rather than reverse it, and the effects of her victory would galvanize the anti-state movement like no other result that can be achieved in 2016.

Cut Puerto Rico Loose

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

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

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

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

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

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

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

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

The Not-So-Current Year: 2015 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 2015 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.

In December 2014, an assassination of two NYPD officers prompted many libertarians to signal hard against the use of force against agents of the state. I decided to argue the opposing case. The harassment of the Meitiv family by Child Protective Services prompted another such article. Julian Adorney resolved that good government police exist, and I responded by explaining why this is impossible. I used another NYPD incident to argue that when government agents and common criminals fight, we should pull for no one. When Tremaine Wilbourn killed a police officer during a traffic stop in Memphis, Tenn, I wrote a list of observations on the event which mostly follow the aforementioned articles.

Many libertarians praise decentralization, and rightly so. But it is neither good nor evil in and of itself. It can be used for good or evil ends, and I explored the latter.

On Burns night, I observed that a proper haggis was unavailable in the United States and found that as usual, the state is to blame. Staying on the subject of food, economically illiterate researchers blamed Walmart for causing obesity, and I explained why this is fallacious.

The 70th anniversary of the liberation of the Nazi death camp at Auschwitz gave cause to examine how such an atrocity could be carried out without the state. The answer, of course, is that it would be all but impossible.

Entering February, I allowed my cynicism to wax to the point of formalizing it as a razor. It could use more detailing and strengthening, which is a project for a later time. I used the razor to explain why the Obama administration might want to disarm elderly people.

Alleged Silk Road creator Ross Ulbricht was convicted on February 4 and sentenced on May 29. I made lists of observations on both of these occasions. Some people were none too happy with the state’s treatment of Ulbricht, and their displeasure got them in hot water. This occasion also merited a list of observations.

The movie American Sniper did well at the box office, but a metaphor therein was left incomplete. I decided to complete the analogy of sheep, sheepdogs, and wolves by adding farmers of human livestock to the mix.

A video by Stefan Molyneux about two different types of statists compared them to warriors and wizards. I made the case that countering the state requires libertarians to be both character classes at once.

Ron Paul made a video appearance at the International Students For Liberty Conference, but some attendees decided to interrupt this by reading an open letter to him which was filled with leftist entryist nonsense. I wrote an open letter against them which gained wide recognition and helped run some of the people involved out of libertarian circles. It remains one of my proudest moments as a writer.

At the end of February, Republicans tried to use brinkmanship to force spending cuts, which failed miserably due to their track record of caving at the last minute. I wrote a list of observations on the event.

On March 9, I published my most popular article to date, which is also one of my most shallow, choir-preaching works. The correlation between the two can be most depressing at times. At any rate, here are 25 statist propaganda phrases and some concise rebuttals.

Several commenters have told me that I am at my best when I provide a sound defense for an idea that most people find to be outrageous. I did this several times in 2015, defending the killing of innocent shields in certain circumstances, the proliferation of nuclear weapons, letting Iran develop a nuclear deterrent, and the replacement of democratic elections with jousts to the death.

I went on a rebuttal streak in the spring of 2015. President Obama proposed that voting be made mandatory, and I argued the case against this. Michael Eliot argued that a violent revolution is not the correct strategy for creating a free society, and that the use of methods such as seasteading will be more successful. I explained why this is false. Walter Block argued in favor of Rand Paul’s presidential campaign, and I demonstrated why he is not a good choice. Austin Petersen effectively made a case against libertarianism itself, and I rebutted it.

Paul Krugman delivered some rather standard talking points about public goods, and I showed why they are wrong. I revisited the subject later in the year.

Rolling Stone decided to go ahead with a completely false story about campus rape, and did nothing beyond wrist-slapping to those involved in creating and editing the story. They also defended the ideas behind the story, with which I took great issue. Another sex-related story occurred on April 21 when the head of the Drug Enforcement Administration resigned due to a prostitution scandal that occurred on her watch. I explained why we should not be surprised, and should actually expect more of such behavior. The purity spiral of campus feminism has grown to such an extent that even left-wing feminist professors are not immune. Rape accusation culture struck once more at Amherst College, and the victim took the university to court.

Baltimore police officers arrested Freddie Gray, who died one week later as a result of injuries sustained during the arrest. Riots ensued, and I wrote a list of observations on the event.

Charles Murray published a book detailing a novel strategy for fighting the regulatory state: overwhelm it with civil disobedience, create a legal fund to defend victims of regulation, and start treating government fines as an insurable hazard. I argued that this would fail, but that it needs to be tried anyway.

The prohibition of excessive bail and fines, as well as cruel and unusual punishment, is a much-revered part of the United States Constitution. I argued that it should not be.

Dylann Roof carried out a mass shooting at a black church in Charleston, and I wrote a list of observations on the event.

Late June is Supreme Court season, and they delivered at least two bad decisions in 2015. First, they ruled very narrowly in favor of raisin farmers, but left the rights-violating practice of eminent domain intact. Then, they crammed same-sex marriage down the throats of all Americans.

Litecoin exchange rates suddenly spiked in early July. I took an educated guess at why, but it ended up being pure speculation.

Turmoil in Greece threatened to boil over into a default or even a Grexit. I took a deep look into the situation and concluded that only anarchy can fix the problems there.

Two seemingly disparate stories concerning Planned Parenthood and the ongoing conflict in Ukraine had a common thread: there is no such thing as non-lethal aid to an organization that conducts lethal operations.

I wrote a three-part series about fascism and communism in America, as well as how a nation can be both. Although I lated discovered that Lawrence Britt does not appear to be a real person, I found the 14-point list of fascist characteristics to be sound, so I did not revise the article.

A problem which is frequently cited as a reason why we must have a state is the problem of pollution. I dealt with the issues of water ownership and pollution in order to show why the state cannot solve the problem of pollution.

In one of my more controversial articles, I argued that Vester Flanagan, the man who murdered a reporter and a cameraman in Roanoke, Va., was a model social justice warrior. Examiner decided to pull it for offending their audience, but you can find it here.

Everyone knows that the Libertarian Party is not exactly a bastion of excellent strategic thinkers. I decided to offer them help, and a response to my essay advocating an alternate strategy is also worth reading.

Liberty Mutual created a series of advertisements that air regularly in my area, and they are full of economic fallacies. They annoyed me enough to dedicate an article to debunking them.

Reservation scalping occurred at Disney World restaurants, which outraged many people. I applied Walter Block’s reasoning for defending ticket scalpers to argue against the outrage.

September 11 always brings about discussions on security. I argued that there can be no such thing; only temporary and imperfect protection from particular dangers.

The term ‘cuckservative’ arose from alt-right circles to describe those who are insufficiently conservative, selling out their constituents, and/or acting against their own rational self-interests. I created the term ‘cuckertarian‘ to describe a similar problem among libertarians. Another problem with the libertarian movement that I addressed is the embrace of hedonism when libertarianism only requires that we not use aggressive violence to stamp out non-violent degeneracy.

After several years in prison for tax resistance, Irwin Schiff passed away. I wrote a list of observations on the event that gained praise from his son Peter.

I belatedly refuted Matt Zwolinski’s six reasons for rejecting the non-aggression principle. I had meant to do so when he published his piece back in April 2013, but other work took precedence and it languished in development hell. Next, I dealt with Youliy Ninov’s arguments against anarcho-capitalism in what is my most verbose article to date.

Islamic terrorists attacked Beirut and Paris on November 12 and 13, respectively. I wrote a list of observations on the events.

Many libertarians misunderstand immigration and borders, so after several pro-open-borders articles published in quick succession by other authors, I tried to set them straight.

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

Robert Dear attacked a Planned Parenthood facility in Colorado Springs, Colo., killing three people and wounding nine others. I made the case that although the use of force against Planned Parenthood is defensive in nature, it is frequently impractical and counterproductive.

The success of the Donald Trump presidential campaign, as well as growing support for it in libertarian and reactionary circles, led me to examine the phenomena. I concluded that Trumpism is not a libertarian form of reaction, though we may have some common enemies.

My final article of 2015 addressed the common phrase ‘give back to the community.’ In short, it is communist nonsense that must be rejected.

I began work on another case against a constitutional amendment, but it was not completed for publishing before the end of 2015, so it will appear first in next year’s review.

All in all, it was an interesting year full of occasions to make sharp libertarian arguments. May 2016 bring more of the same. Happy New Year!

Why Fixing Greece Requires Anarchy

On July 5, the Greek people voted against the latest bailout offer from the European Union, moving the country closer to an exit from the Eurozone and a return to its former national currency, the drachma. The government had already defaulted on a $1.7 billion payment to the International Monetary Fund on June 30, which led to bank closures and strict capital controls at ATMs. It now appears that Greece will be bailed out again, go deeper into debt, and be back in a similar situation in a few years. What the Europeans fail to understand is that it is impossible for them to fix this problem by their current methods. Let us examine why.

The Past is Prologue

Such problems do not occur overnight. In order to understand the present, one must first understand the past. Therefore, let us see how Greece reached this point.

Greece was home to the first advanced civilizations in Europe, and many of the features of modern Western civilizations originated in Classical Greece. Among these are the modern conceptions of mathematics, philosophy, science, architecture, literature, and democratic government. These allowed the Greeks to drive out Persian attempts at conquest and eventually conquer the Persians under the leadership of Alexander the Great. Their dominance was not to last. The Roman Republic was able to turn some Greek city-states to its side and wage the Macedonian Wars against the others, eventually taking over all of Greece by 27 BC. After the Roman Empire split, Goths, Huns, and Slavs raided Greece. The Byzantine Empire took over Greece from the 8th century until its collapse in 1453, with some parts of Greece falling to the Franks and Venetians after 1204. After this, the Ottoman Empire conquered Greece and held it until a resistance movement began in 1821 and the modern Greek state was established in 1832. It was a kingdom until a democratic movement abolished the monarchy in 1924. The monarchy was restored in 1935, but a Nazi collaborationist regime took power from 1941 to 1944. The monarchy regained power until 1974, during which time a civil war between communists and anti-communists caused economic damage and social tensions. During the last seven years of the monarchy, a coup d’état ousted King Constantine II and replaced him with a military junta. The democracy was restored in 1974 and has continued until the present day.

This history helps to explain the behavior of Greeks toward the European Union. Having a tradition of originating the concepts of democratic self-government, then being subjected to external authoritarian rule for two millennia, then being subjected to domestic monarchs and military dictatorships, and finally regaining sovereignty would create a mentality of resistance among the Greek population to external control of the sort that the European Central Bank, the German government, and other creditors seek to exert over Greek economic policies. This mentality is of sufficient strength to overrule economic and mathematical reality in the view of Greek voters, such that they would reject fiscal austerity measures even though they are necessary to prevent an economic catastrophe.

Democracy Is The Problem

Greece is not the first democratic nation-state to endure a sovereign debt crisis and go into default. Since 1982, Mexico, Russia, and Argentina have defaulted on sovereign debt while practicing some form of democratic government. The United States government has defaulted on debts on seven occasions since 1779. But it should be no surprise that democracies would build up sovereign debt and eventually default because the incentives inherent in democracies lead toward such a situation, and the rational self-interest of everyone involved is to take what one can while affecting a tragedy of the commons on a massive scale. In the words of Elmer T. Peterson (and often falsely attributed to many earlier writers),

A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote itself largess out of the public treasury. After that, the majority always votes for the candidate promising the most benefits with the result the democracy collapses because of the loose fiscal policy ensuing, always to be followed by a dictatorship, then a monarchy.

It is at this point that a defender of constitutional republics will try to insist that these are somehow different from democracies. In practice, it is only a question of the average time it takes for democratic incentives to wreak havoc, and the checks and balances of republicanism do slow down the march toward disaster. In theory, this insistence is akin to claiming that making a chocolate cake multi-layered and decorating it in a certain way somehow makes it not chocolate.

Another notable aspect of democracies is that there is a minimum age for participation in the voting process. This means that influence is entirely held by people above that age, and that those who are below that age are helpless to stop any predations inflicted upon them by their elders under color of law. Abolishing the voting age would not help much, however, as those who are below the minimum voting age are unlikely to have a firm understanding of economic realities and the voters in the present day would still be able to sell unborn future generations into debt slavery.

Anarchy Is The Solution

First, I must clarify the type of anarchism advocated here. There are anarchists in Greece who are farther left than the communists and socialists in the Syriza government. Anarcho-communism, with its contradictions concerning the nature of private property and hierarchy, will only make matters worse. What is needed is the sort of anarchism advocated by Murray Rothbard, Hans-Hermann Hoppe, Robert Murphy, and many others, in which the state is eliminated in favor of free markets, private ownership of the means of production, and individual liberty.

We may either establish a direct proof for the need for anarcho-capitalism or show that statism makes it impossible to solve the problems in Greece. In essence, we must show that the state provides the necessary backing for the institutions which result in such problems, namely central banks and national debts.

National debts do not work like personal debts, despite the rhetoric of starry-eyed economists, politicians, and propagandists. Legitimate personal debts cannot be incurred without direct consent of the debtor, but a government can borrow upon the future productivity of its citizens, even those who are as yet unborn and could not possibly have a say in the matter. Personal debts are generally discharged when the borrower dies, but sovereign debts are interminable; for example, a sovereign debt in France that currently pays an annuity to creditors dates all the way back to 1738. While debtor’s prisons have fallen out of favor for personal debts, the non-payment of sovereign debts in the form of refusing to pay taxes is still punished by incarceration. When going into personal debt, the borrower chooses how much to borrow (and is limited by what the lender will lend!), decides how to use the money, and chooses a payment plan. With a sovereign debt, the citizens get no such choices; they may only try to vote out those who made bad decisions after the damage is done. The proof against the state here is straightforward; there can be no sovereign debt if there is no sovereign.

Central banks exacerbate the problems of sovereign debt, as they allow for the hidden tax of currency debasement that can hide the effects of overspending from the general population. As most people lack understanding of the operation of a central bank, politicians can use it to create the illusion of something for nothing in order to buy votes in the present and send the bill to the future. Of course, being forced to service the debts of one’s ancestors is a form of slavery, but if politicians and central bankers cared about morality, then they would not be politicians and central bankers. Central bankers lend to governments, make profits from the interest payments, and try to avoid losing their principal. This is antithetical to a free market, but a free market is against their rational self-interest until the debt reaches such a magnitude that a default becomes likely. Then, they suddenly purport to favor free markets rather than oppose them because free markets create the economic growth necessary to sustain their parasitism upon the people. This would be bad enough, but it gets worse. Sometimes the most profitable outcome for central bankers is to let a government borrow its way into default if there is the possibility of an external bailout, as the Europeans continue to provide for Greece. Even without a bailout, the rising interest payments on an unsustainable debt may be sufficient to compensate for a haircut that comes during a debt restructuring. Central banks also exacerbate war, the worst government program of all, by reducing a government’s borrowing cost and increasing the confidence of lenders. Along these lines, central bankers could make matters difficult for a government in arrears by funding its enemies, much as the Iron Bank of Braavos does in Game of Thrones.

Central bankers are evil, but they are not stupid, so it is difficult to believe that the above paragraph would be news to any of them. Once again, the state is vitally important to the maintenance of the problem. The state forces people to use the fiat currency created by the central bank by demanding that all taxes, fees, fines, etc. be paid using that currency and by demanding that the fiat currency be accepted as legal tender for all debts. Abolition of the state would not mean concurrent abolition of central banks, but the free market places central bankers at an enormous disadvantage, so it is unlikely that such institutions would survive for long.

Finally, there are other aspects of the state itself which make the problem intractable. Stifling regulations have made it increasingly unfriendly to do business in Greece, and those who are employed in regulatory agencies exist parasitically upon the productive economy. The corporate tax rate in Greece is rather high, though many countries are worse. The true purpose of regulations is not to protect consumers or workers, but to allow the wealthiest business owners to capture them for use against their smaller competitors. This is the quid pro quo that the wealthy receive for funding political campaigns. Likewise, the true purpose of corporate taxes is not to raise revenue (as these are really just taxes on the end users of a corporation’s goods and services), but to create loopholes for the wealthiest people. There is also the matter of unsustainable pension programs which were created partly for the purpose of buying votes in the present at the expense of the future, and which must be eliminated before they cause an economic catastrophe. It is against the rational self-interest of politicians to eliminate these, so the only sure way to be rid of them is to eliminate the statist system itself.

Feelings Are The Enemy

That someone will feel economic pain from any approach to this problem is unavoidable. Many people will argue that the elderly have paid into the system and should therefore receive a return. To argue this is to confuse paying for an investment with paying an extortionist, as participation in the government retirement system is not voluntary. There is no money in the system with which to pay them, as it has not only been spent, but has been used as collateral for borrowing more money. Thus, there is effectively a negative amount of money in the system with which to pay the pensioners. Many people will also argue that the elderly pensioners are victims in this situation, but they are actually victims of their own making, and as such are not worthy of the same compassion as the victim of another person’s wrongdoing. (If anyone deserves such sympathy, it is the young and the unborn who have been victimized by the elderly by having massive debts run up in their names!)

This is also a matter of personal responsibility. When the empty promises were made, it was the responsibility of the people at that time to refuse the offers of economic snake oil salesmen, and to bear the cost of accepting such logical impossibilities as truth. Now that the con game is revealed, they should suffer the consequences of their decisions rather than be able to foist their maladies upon their children and grandchildren.

Of course, those who propose that the elderly are the homesteaders of their own misery and deserve to suffer for it will be the targets of name calling and appeals to emotion, but these are merely admissions of defeat and ignorance on the part of those who resort to such childish tactics. To solve such a problem as the situation in Greece, we must realize that logic trumps emotion and act on this realization.

Prospects Are Slim, But There Is Hope

Admittedly, the likelihood that Greece will follow the path recommended above is none for now and slim for the near future. Most people, and therefore most institutions, tend to do what is right when they have exhausted all of their other options, and the Greeks are not made of finer clay than the rest of us. That being said, there are signs of hope. The Greek people already distrust rulers because of the past two millennia of history. They evade taxes to the tune of at least €76 billion since 2009, with billions more unknown from Greece’s robust agorist economy, which equals almost 25 percent of the entire Greek economy. Overall, the Greek government collects only about half of the taxes that it levies. Greeks likewise have little respect for gun control laws, with an estimated 2.5 million guns in civilian hands but only 100,000 of them in compliance with gun laws. The Greek government, by comparison, has only about 1.57 million guns. The combination of an armed populace and a robust black market means that the Greek government would not be so difficult for its people to overthrow, despite its relatively strong armed forces and large welfare state. Should the Greek people decide to embrace rather than reject economic reality and overthrow not only their own rulers but those in Brussels as well, they stand a decent chance of becoming free and prosperous.

Why Paul Krugman Is Wrong About Social Security And Public Goods

On Apr. 10, economist Paul Krugman wrote an opinion piece called “Where Government Excels” in which he praises some Democrats who are calling for the expansion of Social Security and defends a role of government in the provision of so-called “public goods.” In this rebuttal, I will attempt to show that these ideas are unsound.

Krugman claims that “We …know that some things more or less must be done by government. Every economics textbook talks about ‘public goods’ like national defense and air traffic control that can’t be made available to anyone without being made available to everyone, and which profit-seeking firms, therefore, have no incentive to provide.” First, let us ask how it might be known that some things must be done by government. There is no logical proof that government must provide certain services, as this would require one to show that every possible effort of private enterprise to provide said services must fail. This requires one to not only examine every historical effort, but to predict every conceivable future effort. This is an inexhaustible proof by exhaustion, and therefore cannot be proven.

The specific examples that Krugman gives are national defense, air traffic control, healthcare, and retirement security. To a person who believes in some degree of central planning and has an empirical rather than rational understanding of economics, this may make sense. But let us examine the true nature of these services.

National defense is largely a myth, as nations do not exist apart from the individual people that comprise them. The valid concept is that of individual defense. The purpose of government police and military forces is not the objective protection of the civilian population, but the protection of the rulers from the civilian population, the protection of the statist system should the civilian population overthrow the rulers, and the presentation of a deterrent to rulers of other nations elsewhere in the world who might seek to take over the tax base for themselves. Moreover, individual defense is made impossible by the presence of a government because governments force their subjects to rely upon their armed forces for defense, use said armed forces to destroy any competitors who may wish to offer defense services, and force their subjects to pay taxes to fund said armed forces. All of these activities are incompatible with protecting the citizenry, as true protection from violence must include protection from violence done by the state as well, so objective defense requires anarchy.

As for the provision of military defense in a stateless society, the private sector actually has every incentive to provide it. This is a service which all people want for themselves, and which everyone except for criminals wants for everyone else in the society as well. We know that the demand for this service is very high because people are willing to endure all of the oppressions of statism just to obtain the counterfeit version of it described above. It therefore stands to reason that many people will be willing to meet this demand and be paid for doing so, with competition driving down prices far below what defense budgets of governments currently cost.

Finally, Krugman raises the “free rider” objection, that military defense cannot be provided to anyone if it is not provided to everyone. If true, then the argument must apply to governments as well, which would mean that governments can “free ride” on the military defense provisions of other governments, which fails to explain why all governments field militaries and seek a strong national defense. Secondly, a private defense agency could simply tell any aggressors who would seek to invade an area who is not under their protection. (Although without any gun control laws to stop such people from acquiring military-grade weaponry and lower costs for defensive weapons due to the free market in defense technologies, an aggressive militant group would have a much tougher time attacking the average person than they would now.) Also note that because the “free rider problem” has no solution, it is not really a problem, but a possibly negative fact of life that must be tolerated. It is not certainly negative because money spent on one thing cannot then be spent on another, meaning that eliminating free ridership by making everyone who benefits from a service pay for it will eliminate some other economic activities that were occurring. To ignore this is to commit the broken window fallacy.

The case against air traffic control as a public good is much simpler because the idea that profit-seeking firms have no incentive to ensure the safety of their customers (as well as those on the ground who may be hit by falling aircraft) is sheer lunacy. If the goal of a company is to maximize profits, then civil lawsuits and criminal investigations for wrongful deaths and injuries that occur as a result of a lack of safety precautions that reasonable people would expect to be in place will certainly be detrimental to that goal. The losses would be exacerbated by customers fleeing from less safe airlines to more safe airlines.

Next, Krugman claims that government is better than the market at providing health insurance and that while conservatives agitate for privatization, this will make healthcare less efficient and more expensive. What conservatives agitate for is not true privatization, as this would mean an end to government involvement. Instead, they seek a sort of fascism where healthcare industry leaders and government officials work together to set policies that protect each other at the expense of smaller competing companies and the average person. This fake privatization would move us in the wrong direction, as it would magnify the worst of both worlds by capitalizing risks and socializing losses as well as combining the efficiency of the market with the evil of the state. But real privatization is quite different. Striking down barriers to entry, such as the restriction on buying health insurance across state lines as well as individual and corporate licensing requirements, would give consumers more choices and thereby force companies to either provide better insurance policies or be outcompeted.

Last, Krugman makes a case for Social Security. He argues that it is necessary because people are not rational actors and therefore cannot be trusted to save and invest based on a realistic assessment of what they will need in retirement and an intelligent understanding of risk and return. But what comprises the state? Is it run by a super-intelligent race of aliens who can centrally plan everyone’s lives? Of course not. Those who wield state power are people as well, subject to the same shortcomings as everyone else. He then says that people are losing billions of dollars because investment advisors are looking out for themselves first and their customers second, but if this is a surprise to anyone who uses their services, then they are paying the price for failing to observe caveat emptor.

Some will say, and Krugman does, that people should not be at fault for saving too little and making poor investment decisions. But the essence of liberty is the freedom to take one’s own risks, reap one’s own rewards, and suffer one’s own consequences without external molestation. While Krugman is correct to say that the economy “should not be an obstacle course only a few can navigate” and “is supposed to work for real people leading real lives,” the obstacle courses that few can navigate are arranged with state power on behalf of those who can buy political favor, and this prevents the economy from working for the average person.

Social Security is not the shining example of a working system that Krugman says it is. Since its inception, it has been worse than a Ponzi scheme, as Ponzi schemes at least spare the unborn and only take money from those who willingly enter them. Since the Reagan administration, the trust fund for Social Security has routinely been looted by politicians to fund their pet projects without raising the budget deficit as much as it would otherwise be raised. This sleight of hand would not be possible if people were allowed to completely manage their own retirement funds. While Krugman claims that expanding Social Security is necessary because of the replacement of private pensions with 401(k) plans, the reality is that pension plans for life are both economically unsustainable and logically indefensible, as they amount to paying people for not producing something of value just because they once did produce something of value.

Ultimately, there is no such thing as a right to a retirement. Until relatively recently, a period of relative relaxation and unproductivity between an arbitrary age and death was unheard of unless a person had earned the means to engage in such. Those who did not earn such means either had to continue working or be cared for by other family members. With government interference, the responsibility of a particular children paying for particular parents as well as full responsibility for one’s own financial affairs were erased, thereby creating moral hazards that have led to malinvestments. Krugman asks why we should not make Social Security bigger. The short answer is that malinvestments ultimately cause recessions, and the entitlement bubble is a potential killer of the economy as we know it. The impact of the collapse of this unsustainable system will be large enough without efforts to make it even larger.

Book Review: Freedom!

Freedom! is a book about libertarian theory written by activist Adam Kokesh. The book discusses the philosophy of libertarianism, applies it to various socioeconomic issues, and discusses its potential.

Mr. Kokesh begins by discussing the nature of freedom from a self-ownership perspective, and shows how government is philosophically incompatible with this perspective. He then shows how the non-aggression principle and the right to claim property derives from self-ownership. The validity of the self-ownership perspective has been argued with more robustness elsewhere, but we can assume that Kokesh omits a deeper discussion of argumentation ethics for the sake of brevity. Strangely, Kokesh does not include the precise definition of government that he has used repeatedly elsewhere (a group of individuals who exercise a monopoly on the initiation of force within a geographical area). He finishes the first chapter by proposing a society in which people only engage in voluntary relationships.

The second chapter is about the history of the state and how we might evolve past it, with an emphasis on the role of technology in helping people see through the lies of government propaganda and become productive enough to oppose the state in meaningful ways. The overall tone is rather Pollyanna-ish, as governments have become far more dangerous with recent advances in technology, and technology alone is not guaranteed to lead to the end of the state. There is also an alternative interpretation of the available data which is not directly discussed; namely, that the evolution from more crude forms of government to democracy did not occur because common people wanted more influence in government, but because rulers found that human livestock are more productive when given the illusion of freedom.

The third and fourth chapters briefly discuss the nature of self-defense and justice in a free society, with much more space devoted to the ways in which governments have corrupted these concepts with their monopolies on legal systems and military defense. Such corruptions include military interventionism, foreign aid, conscription, the military-industrial complex, wars against abstract ideas and tactics rather than physical foes who may be defeated, laws that criminalize victimless behaviors, laws that restrict access to weapons, courts that give agents of the state cover to assault peaceful people, the prison-industrial complex, and a legal system of punishment rather than a justice system of restitution.

The fifth chapter discusses taxation and explains why it is immoral, in both direct forms and indirect forms such as central banking. Kokesh shows that attempting to use the state to rein in the excesses of the rich will fail because the rich control the state by funding politicians. He then demonstrates that taxes discourage production because removing incentive to work in the form of income taxation will lead to less work being done (at least officially). After explaining how fiat currencies are imposed and how they are used to make it easier to tax a population, he argues that eminent domain and property taxes violate private property rights and are yet another form of theft. Kokesh finishes the chapter with a glimmer of hope; that a generation of people will come who will disown national debts because such debts legitimately have nothing to do with them. There are two problematic arguments in this chapter. First, there is the idea that taxation can be voluntary if one believes that governments serve people, one’s tax money is used properly, and one willingly pays taxes. This is false on two counts. Truth is independent of belief and morality is objective, so taxation is immoral even if one does not believe that it is. Also, consent under duress is not valid consent. As it is impossible to distinguish consent given only because of duress from consent given despite duress, it is impossible to consent when duress is present. Second, Kokesh claims that the only options for fighting taxation are to fight tax collectors in court and to conduct economic activities out of the view of tax collectors. This is false because the use of defensive force against agents of the state is also an option, even if there are not yet enough potential practitioners to make it likely to succeed.

In the sixth chapter, Kokesh begins by explaining the ideal of trade without force, fraud, or coercion, then examines how destructive government interference in trade is to the economy. He then goes into more detail about how central banks and fiat currencies distort the economy, and suggests cryptocurrencies as a possible way to solve this problem. Next, there is the problem of corporations, which led to the formation of unions. Kokesh explains that corporations are legal fictions created by the state to protect the wealthy who bribe politicians, and that this led to strong unions as a reaction by workers to the formation of powerful corporate interests. After this, he discusses the effect of government monopolization on infrastructure and utilities, which has hampered advancement beyond current technology and raised the cost of all goods and services by eliminating the increased efficiency that results from competition among service providers. The fifth section of the chapter is devoted to the method of ostracism and boycotting to bring about change in a peaceful manner. Unfortunately, the shortfalls of ostracism are not fully explored. Kokesh ends the sixth chapter by making the case that everything should be viewed through the lens of economics.

In the seventh chapter, Kokesh demonstrates how government interference in schooling, medicine, assistance for the poor, drug use, environmental protection, and the free flow of ideas has harmed everyone. Free market solutions to these problems are discussed perhaps too briefly, but discussing them at full length would make the book several times longer, and this has been done elsewhere by other authors.

The eighth chapter discusses government involvement in personal and family relationships. Here, Kokesh makes the case against laws forbidding consensual relationships as well as the case for peaceful parenting and treating children more like people and less like property vis-à-vis their current standing in society. This perspective is then applied to the problem of bullying in government schools. The chapter ends with a discussion of racism that examines its nature, its uses from a libertarian perspective, and how it is used by power elites to divide and conquer.

The last two chapters present Kokesh’s advice for living free in an unfree world, as well as his prediction for where the human species is going. His advice includes learning to master one’s emotions, becoming knowledgeable about taking care of one’s body and using that knowledge, living as debt-free as possible, doing work that one can be proud of, and choosing to have a positive state of mind. The last chapter returns to the theme of the second chapter; namely, that of technological advancement reaching an asymptote beyond which the state cannot function. Fortunately, the Pollyanna-ish tone does not return here, as Kokesh warns about the destructive potential of states with technology at a nearly asymptotic level. The next three sections discuss the methods by which people may transition to a voluntary society, which include education, civil disobedience, conducting business out of view of the state, and abolishing states gradually from the top level down rather than all at once. The use of force to topple governments is perhaps unfairly downplayed, however. Kokesh ends the book by explaining that the transition to a free society is not a revolution in the historical sense, but an evolution to something entirely new.

Overall, the book could explain some concepts in more detail and could avoid a few specious arguments, but it is what it was meant to be: a strong but concise treatise on the philosophy and potential of libertarianism.

Rating: 4/5

Arguments for stimulus and how to counter them

It has now been five years since the passage of the American Recovery and Reinvestment Act of 2009. Several commentators are claiming that the stimulus has been successful, despite its unpopularity, or that it was at least an improvement over a laissez-faire approach. Let us examine these claims.

The Federal Reserve, the TARP program, and the auto industry bailout prevented an economic collapse. The stimulus saved or created 6 million jobs.

Such claims are an example of the broken window fallacy. While they point out the jobs that were created by the stimulus, they ignore the jobs that could have been created if the money had been left in private hands. Many supporters of Keynesian stimulus have anticipated this argument and have offered rebuttals. Let us examine some of these.

The broken window fallacy does not apply because desired savings are not automatically converted into investment spending, so that government borrowing need not come at the expense of private investment.

To some extent, this is a fair point. The broken window fallacy is necessary but not sufficient to explain why stimulus is not effective. Due to the nature of debasement and borrowing, another argument is needed to explain why exploiting the velocity of money and stealing from the future to feed the present will not be effective.

Many proponents of austerity will say that the stimulus money must come from somewhere, but this is not true. Its fiat nature in modern economies allows it to be created out of thin air. But its value must come from somewhere. In the case of currency debasement (also known as quantitative easing), the value is extracted from all existing money in the economy. But as this extraction of value takes time to occur, the original spenders get to spend the money at its current value, while those farther down the line get to spend the money at its debased value. This effect helps to make the rich richer and the poor poorer, and is thus a form of income inequality caused by governments.

In the case of government borrowing and deficit spending, the value is extracted from the future productivity of the tax base, thereby selling the unborn into debt slavery. Thus, while stimulus does increase the resources used at present, this comes at the expense of having less resources to use in the future. The effect on the economy is much like the effect on a farmer who runs out of food in the winter and decides to eat his seed crop. He will be better off for a time while his resources last, but he is consuming the resources in the present that he needs to use next spring to provide for himself in the future. (This metaphor may fly over the heads of some younger farmers, but those who were farming before seed companies were able to use the legal fiction of intellectual property to force farmers to purchase seeds from them each year will understand.)

Governments had to spend because the private sector would not.

Spending occurs in the private sector when people have money to spend and believe that they will receive a reasonable return on investment. The problem is that a large amount of private capital was lost in the housing bubble. This bubble was caused by Federal Reserve policies from 2000 to 2004, which true to Austrian business cycle theory, set off a wave of malinvestments in housing that collapsed in 2008, following a tightening of monetary policy in 2006. As the Federal Reserve is authorized by Congress to perform its manipulations of the economy, we are left with the idea that government intervention is the solution to a problem created by government intervention, which is a contradiction.

Now let us consider what happens when governments spend money because the private sector will not. First and foremost, there is cronyism. The politically connected members of the 1 percent are most likely to receive stimulus funds. There is also a lack of profit motive. Governments do not have to earn a reasonable return on investment because they obtain their funds at gunpoint rather than by voluntary means, and they have excluded all competitors from their geographical areas. Thus, they have no incentive to invest wisely with stimulus funds, and they frequently do not. These malinvestments, in the worst cases, can help to fuel the next business cycle.

Spending cuts since 2011 have destroyed jobs. A sort of reverse broken window fallacy is at work here, as one cannot see the jobs that would have been saved if higher levels of spending had continued.

There is something to this argument, even though there is no way to be sure that spending cuts destroyed jobs because we have no control group to observe. But it must be remembered that jobs which are sustained by elevated government spending are temporary jobs which will end whenever elevated government spending ends. Eventually, such spending must end in one way or another, so these jobs were destined to be lost at some point. But again, we have the broken window fallacy of ignoring what the private sector can do if money is not taken out of it to fund stimulus, as well as the seed crop consumption problem if stimulus is funded by debasement or borrowing.

Now let us consider two more arguments:

Europe tried an austerity approach that failed, and this provides a control group which shows what happens without stimulus.

Quite simply, Europe did not engage in austerity. There have been riots in protest of proposed austerity measures, as well as theft from the bank accounts of private citizens to help keep government spending going, but very little in the way of actual spending cuts. According to Eurostat, only eight countries in Europe (out of 30) cut government spending between 2008 and 2012. But even if there had been austerity and accompanying economic hardships, short term losses are to be expected as the economy adjusts to a lack of stimulus, but this will result in long term gains.

Also note that unlike the US, individual European countries cannot use central bank manipulations to attempt to solve their problems. But this is probably a good thing, as will be shown below.

The stimulus should have been larger, but doing something was better than laissez-faire.

The historical evidence does not support this assertion. By comparing the laissez-faire approach used from 1887 to 1913 with the Keynesian approach used from 1933 to present, we find that while stimulus by governments and central banks spaces out recessions to an average of every 5.7 years from every 3.9 years, the recessions which do occur are much deeper, doing 46.11 percentage-point months of industrial production lost until previous peak is regained (PPM) of damage to the economy per year versus 40.98 PPM of damage per year with an Austrian approach. Factoring the time difference and damage difference together, this means that a Keynesian-managed recession is 64 percent worse on average than an Austrian-managed recession.

By using the same methods used by Adorney, we find that the period of monetary stimulus only from 1914 to 1932 resulted in a recession every 3.2 years on average, doing 137.3 PPM of damage per year. This makes an average recession managed solely by a central bank 67 percent worse than an average Keynesian-managed recession and 175 percent worse than an average Austrian-managed recession. Clearly, central banking alone produces by far the worst results. While a period of government stimulus without monetary stimulus would be interesting to examine, no data for such a period exists.

Like the seed crop consumption analogy discussed earlier, we see a short term gain followed by a long term loss. Increasing the amount of stimulus to get over one recession will set the stage for a much worse long-term recession, one which may not be responsive to stimulus.