Why Price Gouging Is Good

When a natural disaster strikes, it is almost guaranteed that there will be yet another uproar about price gouging. Media pundits will take to the airwaves to virtue signal against people who would dare to exploit disaster victims. Government officials will use the crisis to score political points by portraying themselves as defenders of the common people against greedy capitalists. But how accurately does this reflect reality? Let us explore the nature of price gouging to see the economics of such a situation and explain the behavior of journalists and state agents.

Economic Forces

In order to intelligently approach the concept of price gouging, one must first define it. Price gouging is a sudden, sharp increase in prices that occurs in response to a disaster or other civil emergency. Though this defines the act well, it does not explain the mechanisms behind it. When a disaster approaches, there are certain goods that people wish to acquire in greater quantities than normal, such as clean drinking water, non-perishable foods, wooden boards for protecting windows, and so on. If supply is held constant, then this sudden increase in demand for such goods will produce a sudden increase in their prices.

If left unhindered by the state, this upward pressure on prices will produce important benefits. First, it serves as a signal to producers and distributors of those goods that more supply is needed. The producers and distributors thus learn where their goods are most urgently in demand, allowing them to engage in mutually beneficial transactions with disaster victims. This is how free markets are supposed to function in order to meet the needs of customers.

Second, price gouging encourages proactive preparations. A potential business model for a firm is to invest in equipment that allows it to operate when a disaster would otherwise force it to close, and use the proceeds from price gouging to amortize the cost of the equipment. This helps consumers by allowing them to purchase goods at higher prices rather than be left without essential items during a crisis.

Third, price gouging provides an important benefit by conserving the fixed amount of resources which are present before more deliveries can be made to the disaster area. The higher cost of scarce goods disincentivizes people from buying up supplies that other people need, thus helping to keep the items in stock. This keeps scarce resources from being wasted on marginal uses, directing them toward their most valued uses and the people who most need them instead.

Markets And Malice

Unfortunately, not every instance of price gouging is so benevolent. Business owners who seek to exploit vulnerable people in order to make money do exist. But engaging in such behavior in a free market produces a short-term gain followed by a long-term loss. In a pure capitalist environment, reputation is everything for a business. Whatever profits may come from gouging disaster victims in the present will be more than outweighed by the sales that one will lose in the future because of the damage that this does to one’s brand. After all, most people would view such behavior as adding insult to injury and vote against it with their wallets. Though it is impossible to accurately count sales that do not happen, to dismiss this effect as nonexistent is to commit the broken window fallacy.

Enter The State

Most people are economically illiterate, so they tend to focus on the malevolent type of price gouging and be unaware of the benevolent type. In a democratic state, this has predictable results. Politicians and other government agents will frown upon price gouging and seek to punish anyone who they believe to be engaging in it. But it can be difficult to distinguish the natural effects of demand spikes and limited supplies upon price from the efforts of greedy exploiters of disaster victims, especially for government officials who are too far removed from the disaster area to be intimately familiar with the economic dynamics there. Thus, all price gouging is suppressed by the state, and while this may protect a few people from exploitation, it causes more harm than good by disrupting the market signals which would have informed producers and distributors that their goods need to be sent to the disaster area. The end result is that scarce goods are depleted and not replaced, leading people to once more blame the market for failing them when the actual cause of their shortage was a government failure.

Suppression of price gouging has several deleterious effects. First, by placing price controls on goods, the state deprives entrepreneurs of the profit motive to bring additional supply to the disaster area. Without state inteference, people who live outside of the disaster area and are willing to travel there in order to bring supplies could charge enough for their goods to recover their travel costs and be compensated for the inconvenience of spending time in a disaster area, all while making enough profit to make such a venture more attractive than other economic opportunities. Price gouging laws remove such action, leaving only state agencies and altruistic private groups to provide aid. Note that like all government regulations, price gouging laws are subject to regulatory capture by the largest businesses.

Second, removing the incentive for proactive preparations makes untenable the business model for operating during a disaster described above. Third, removing the conservation effect of price gouging forces business owners to sell goods below their market-clearing price. This incentivizes hoarders to buy more than they need and scalpers to buy goods for resale. The existence of scalpers also makes desired goods more difficult to find, as resellers will be more difficult to locate than established stores. Thus, laws against price gouging do not eliminate the practice, but rather shift it from primary markets to secondary markets and cause a different set of people to profit. Taken together, these effects result in artificial scarcity that makes conditions in a disaster area even worse.

A Pair of Razors

Given the clear case in favor of price gouging, one may wonder why so many people in positions of political power rail against it. Reece’s razor suggests that we look for the most cynical explanation when attempting to determine a motive for state policy. No other possibility prioritizes the self-interest of politicians and their minions over the lives and properties of citizens quite like the idea that government officials want to suppress the natural response of markets in order to make government disaster relief agencies look effective and necessary, thus justifying their existence and expansion, so Reece’s razor selects it.

However, it is not in the rational self-interest of elected officials to increase the suffering of disaster victims who are capable of removing them from office in the next election. A better explanation is offered by Hanlon’s razor, which says that one should not attribute to malice what can be explained by stupidity. In this view, government officials are not trying to increase the harm done during a disaster; they simply know no better because they are just as economically illiterate as the electorate, if not more so. This razor is a better fit for the available logic and evidence.

Conclusion

It is clear that price gouging has an important economic role in ensuring that goods both go to those who need them most and remain available in times of emergency. Market prices are important signals that tell producers and distributors where their goods are most urgently needed. When the state interferes with this process by imposing price controls, it turns off the signal and incentives for market actors to send aid, encourages hoarding and scalping, and discourages conservation and farsightedness. These effects mean that laws against price gouging harm the very people that they are ostensibly supposed to help. Therefore, price gouging should not be punished by the state or demonized by the press.

On Immigration and Outlawry

By any objective measure, the immigration system in the United States is a joke. Current estimates find at least 11 million illegal aliens living in and working in the United States. There is a possibility that the real figure is significantly higher, given the fact that criminals do not normally volunteer to tell census takers about their criminal exploits.

If one needs any more proof that American immigration policy is a logical mess built on wobbly legs of moralism, then one need look no further than the current controversy over DACA. Deferred Action for Childhood Arrivals, which produces so-called DREAMers, is nothing more than warmed-over pablum about each new arrival making America more “American.” The Left fights for illegal immigrants and their children because Hispanics and Asians, who make up the majority of America’s immigrant population, are among the most solidly Democratic voters in the country. Mainstream Republicans tend to favor “amnesty” or “immigration reform” because their corporate overlords have an unending appetite for cheap labor. The mushy middle either keeps silent or pretends to support DREAMers and other illegal aliens simply because they do not want to look like the “bad guy.”

Curtailing illegal immigration is a public safety issue. Contrary to establishment media propaganda, illegal and legal immigrants are overrepresented in American crime statistics. They are nine percent of the U.S. population overall, but make up about 27 percent of the federal prison population. It is also a cultural issue that directly weakens the original American promise of liberty. Freshly arrived immigrants and well-established immigrants both use welfare at higher rates than the native-born. 48 percent of all immigrant households are on some kind of welfare. Hispanic immigrants alone use 73 percent of this 48 percent share. Such welfare dependency expands the vampiric state, and in turn promotes the continuance of anarcho-tyranny (more on that shortly). Such a state will never voluntarily shrink itself; therefore, the more immigrants America has, the more the American Leviathan will expand and consume.

Illegal immigration has helped wages for working-class Americans to either stay the same or decrease since the 1970s. These Americans, many of whom have failed to get the stamp of approval of the neoliberal world order that is known as a college diploma, the opportunities for ascending the economic ladder have virtually become null and void. This is a direct suppression of economic liberty via the coercive force of the state and its unwillingness to enforce its own laws.

Finally, curtailing illegal immigration means protecting the unique heritage of the United States. America is not a “proposition nation,” nor can such a thing really exist, despite all of the starry-eyed propaganda to the contrary. America and its culture can be traced back to the English Reformation of the 16th century. New England received the rebellious Puritans, who dissented from the Stuart’s practice of the divine right of kings and the supposedly godless idolatry of the “popish” Anglican Church. Virginia on the other hand became the home of Englishmen from the Vale of Berkeley, a part of old, Anglo-Saxon England with a strong tradition of slavery and hierarchical social relations. Subsequent waves of Scots-Irish, French Huguenot, and German Protestants added to this English culture, thus creating a firmly Anglo-Celtic and Protestant nation by the 18th century. The Declaration of Independence and the Constitution did not make America; these failed pieces of paper merely tried to document a culture and a people that already existed. This culture is precious and should not be beholden to the whims of transnational corporations or academic aristocrats who control the moral economy.

A true libertarian alternative to America’s broken immigration system would emphasize the concept of outlawry. This pre-modern designation, along with attendant penalties, would not only help to decentralize border enforcement, but it would also prioritize punishments for those individual aliens who enter the United States illegally and who commit crimes against people and/or property. By branding illegal aliens who also attack Americans as outlaws, enforcement would fall to local jurisdictions, not to the monolithic federal government.

Anarcho-Tyranny

The term anarcho-tyranny was first coined by paleolibertarian writer Samuel T. Francis. According to Francis, this is a state of affairs in which real crimes are not policed, while innocents are tyrannically controlled. Francis’s concept echoed the wisdom of 18th century conservative Edmund Burke, who noted that “Society cannot exist unless a controlling power upon will and appetite be placed somewhere, and the less of it there is within, the more of it there must be without.”

When it comes to state-enforced multiculturalism, freedom of association is curtailed under the auspices of keeping the peace. Ingrained tribal prejudices must either be shamed out of existence or injected with happy drugs. Christian bakers must create wedding cakes for gay couples so that the neoliberal state maintains the consent of homosexual voters. Americans who exercise the right of self-defense in some states have to deal with the prospect of police officers invading their homes and confiscating their guns because someone claimed that they were crazy. All of these are examples of anarcho-tyranny in practice.

Anarcho-tyranny can be seen when Antifa and Black Lives Matter agitators are allowed to riot while the Unite the Right demonstrators faced down riot police after suffering the slings and arrows of the control-left. Every violent protest in recent memory could have been put down with extreme prejudice against radical leftists, but the police almost invariably hang back either because they do not want to be called “racist” or because their superiors told them to give the rioters room to blow off steam. (When they do not hang back and instead form and hold a protective line, events tend to remain nonviolent.) These decisions not only cost private businesses and business owners millions of dollars (when was the last time that violent protestors in America seriously attacked state buildings?), but they also directly oppress law-abiding citizens. After all, what does the state do better; capture real criminals or harass individuals exercising their liberty?

When it comes to illegal immigration, the state has the money and resources to enforce existing immigration laws. It simply refuses to do so because it is in its rational self-interest to behave in this manner. A multicultural society with low trust levels between citizens is the ideal state for those who seek to create statism. When neighbors do not trust each other or do not even interact with each other, each threat, real or perceived, becomes the job of outside forces, namely the police. What this does is remove the responsibility of personal and communal defense from individuals, thus further legitimizing the idea that the state is the only entity that has a right to use violence.

The Concept and Practice of Outlawry

In pre-modern societies, outlaws were those individuals or families who directly threatened the security or private properties of the community. Since these communities managed their own security and made their own laws, they had a very visceral idea of why branded outlaws were dangerous.

In ancient Greece, organized thievery was considered a somewhat legitimate way of earning money. Later Balkan cultures (for instance Serbia) relied on bandit warriors named hajduks in order to resist Ottoman Turkish control. British Marxist historian Eric Hobsbawm would later characterize the hajduk figure as an “invented tradition”—a masculine folk hero that lived outside the cloying strictures of both Turkish and official Serbian rule.

The ancient Romans did not take the Greek view of banditry. The Roman Republic considered outlawry to be the antithesis of Roman virtues like Industria (industriousness) and Severitas (self-control). The later Roman Empire similarly took a dim view of outlaws. The punishment for banditry was fierce—all outlaws became “non-persons” and were barred from maintaining or earning Roman citizenship. Furthermore, outlaws, which were known in Latin as latrones, faced the threat of losing all property rights, crucifixion, or being used as animal bait during gladiatorial games.

Several famous outlaws struck against Rome, thus showing why the Senate and the Caesars took outlawry so seriously. Between 147 and 139 BC, Viriatus, a Lusitanian sphered led a rebellion against the Roman government. After surviving praetor Servius Sulpicius Galba’s massacre of the Lusitani, Viriatus swore revenge and created a peasant army in what is today Portugal and Spain. Viriatus’ army initially had the upper hand during the Lusitanian War, especially when Celtiberian tribes decided to join his cause. Ultimately, Rome crushed the insurrection by renewing the war after Viritaus agreed to a peace with Fabius Maximus Servilianus. Servilius Caepio bribed war-weary Lusitani emissaries with a money and peace if they assassinated Viriatus, which they did. Rome would rule Hispania until the 5th century AD.

In the medieval world, outlaws continued to plague private citizens as well as the state. In medieval England, outlaws were those individuals who were considered “outside of the law” (hence “outlaw”). These individuals had been accused of crimes in court, and if they failed to appear before a local judge, the sheriff was sent to get them. Robin Hood is the most famous outlaw of this period. In the late medieval courts, outlaws were those who committed treason, rebellion, or murder. A special writ of capias utlagatum could be issued by the Crown or Common Pleas. In these instances, sheriffs could seize the property of outlaws, which was then forfeited to the Crown.

As recounted in the work of Michel Foucault, pre-Enlightenment Europe disciplined all outlaws and criminals very publicly. For instance, in 1757, Robert-Francois Damiens, a domestic servant who tried to kill King Louis XV, was drawn and quartered by the command of the king. Such punishments seem ghastly to us today, but that is only because the Enlightenment took a completely radical approach to the entire concept of criminality.

Thanks to social reformers like Jeremy Bentham and others, crime became something that could be cured, or, at the very least, hidden away from society. This idea of criminality as something “antisocial”—as something against the mass of individuals that make up so-called society—led directly to the growth of the impersonal penal state. Rather than be punished and made to perform restitution by the Crown or the process of common law, modern-day outlaws are institutionalized by prisons that operate very much like schools and hospitals. In essence, outlaws are still those who go against the wishes of the state, but the modern state sees it as its duty to try and rehabilitate these criminals. Of course, the government seizes money from private citizens in the form of taxes in order to carry out these hare-brained designs.

For A New Outlawry

Officials in the modern state have no real conception of interpersonal violence because the state is not controlled by a small set of private individuals. The state is a monstrosity that moves forward with its own internal logic, regardless of which political party is in power. In order to reclaim any sense of liberty in the modern world, America must embrace the pre-modern sense of security and responsibility as primarily the province of local communities.

Rather than rely on labyrinthine state and federal laws that only seem to allow repeat offenders to constantly cross back and forth between borders, a more sane alternative would simply brand those illegal immigrants who commit serious crimes as outlaws, seize their property (if they have any), deny them the possibility of ever obtaining American citizenship, and force them to pay restitution to their victims.

Furthermore, like the “civil death” doctrine of medieval Europe, immigrant outlaws should face the wrath of the civilian population. Rather than promote further statism through the use of federal agents or local law enforcement, private individuals should be able to take the reins of enforcing immigration laws. In preparation for a stateless society (or at least a society that does not fit the current definition of the neoliberal state), free associations of individuals should be tasked with not only securing their properties and the border, but should be authorized to apprehend outlaws and bring them to court.

As dangerous as these laws may sound, they at least would show that this country and its people take immigration laws seriously. Similarly, so long as illegal immigrants only fear deportation, they will consistently break American laws in order to get on American welfare or to work for better wages in this country than elsewhere.

Physical Removal

Hans-Hermann Hoppe argues that culturally destructive forces like Marxism, both economic and cultural, should be physically removed from libertarian societies in order to guarantee the survival of liberty, free association, and voluntary transactions. Continued illegal immigration is clearly a threat to America’s precarious liberty, and as such should be met with a form of physical removal. This removal should be accomplished by private citizens or groups of private citizens.

First and foremost, the police, in the words of Robert Taylor, “do not exist to protect you, defend private property, or maintain the peaceful order of a free society.” Taylor further notes that the primary function “is to make sure that the state’s exploitation of the public runs as smoothly as possible.”[1] Therefore, security should become a private affair. This includes enforcing the law against illegal immigrants who directly threaten communities.

Criminal illegal aliens should answer for their crimes in front of the communities that they have injured. As Hans-Hermann Hoppe writes:

“Families, authority, communities, and social ranks are the empirical-sociological concretization of the abstract philosophical-praxeological categories and concepts of property, production, exchange, and contract. Property and property relations do not exist apart from families and kinship relations.”[2]

There is no need for a government corrective here. Immigrant criminals, many of whom come from countries where socialism is the norm, not only carry the possibility of political warfare (in the form of voting for or giving a raison d’etre for anti-liberty statists), but they expressly threaten the organic unity of American families through violence. As ever, the democratic state can grow from the chaos of illegal immigration, and as such, stopping criminal aliens without the overview of the state is one way of circumventing state power.

Objections

Such a draconian proposal is certain to meet with objections from both the political mainstream and from left-libertarians, so let us attempt to address some of the most likely criticisms. First, left-libertarians consistently make the argument that open borders are the only truly libertarian solution to the problem of state power and statism. However, as has already been noted in this publication, “maintaining a distinctive culture is a good reason to restrict immigration.” Of course, immigration has economic benefits, but all libertarians should ask themselves whether immediate economic benefits are worth the cost of potentially dissolving any chance for a libertarian social order. After all, Taylor correctly notes that the left-libertarian case for open borders often conflates state with nation. He notes that “the state is artificial, arbitrary, and coercive,” but calls a nation “a national identity, protected by borders.”[3] This is healthy and natural so long as private property rights on the border are respected.

Another possible libertarian criticism of the entire concept of national borders is the problem of state coercion, namely the fact that immigration laws are fundamentally about states using force to welcome or remove private individuals based on sloppy thinking or criteria that seems highly flexible and dependent on the whims of Washington bureaucrats. An answer to this criticism can be found in the words of Murray Rothbard, who summarized why libertarians should never overlook the fact that “nation” is a category separate from both “state” and “individual.” Rothbard writes:

“Contemporary libertarians often assume, mistakenly, that individuals are bound to each other only by the nexus of market exchange. They forget that everyone is born into a family, a language, and a culture. Every person is born into one or several overlapping communities, usually including an ethnic group, with specific values, cultures, religious beliefs, and traditions. He is generally born into a country; he is always born into a specific time and place, meaning neighborhood and land area.”[4]

To ignore this is the height of political autism.

A third criticism is that implementing outlawry encourages murder. The plan described above only labels unrepentant, determined aggressors as outlaws, and killing aggressors is defense, not murder. Furthermore, anyone who tries to kill an outlaw but instead ends the life of a non-outlaw would be guilty of premeditated murder and thus subject to life imprisonment or capital punishment, thus providing a strong deterrence against overzealous outlaw hunters.

Finally, the most likely objection to this plan is that it would lead to vigilante justice, but in a sense, that is precisely the point. And is not vigilante justice preferable to anarcho-tyranny? A world wherein outlaws are chased down is better than a world wherein immigrant criminals rape and murder, get deported, then rape and murder some more before being thrown into a money-making machine run by the state.

Conclusion

The outlaw solution would encourage communities, towns, and counties to mobilize their independent resources to protect their own people from the threat of criminal illegal aliens. If a serious crime is committed, then these localities could extract just punishment from the criminals without feeding into the state’s prison system. Outlawry not only takes away the state’s monopoly on violence; it is also preferable to any open or quasi-open borders situation wherein wanted and unwanted immigrants used public roads and public property that once belonged to private individuals.

The concept of outlawry as a way to combat illegal immigration may only be feasible in a truly libertarian state. However, certain measures could be put in place at present that could dramatically change the on-the-ground reality. Namely, the rise of border militias like the Minutemen is a positive development. America should go further by abolishing the Border Patrol and replacing it with private security agencies that have to answer to those citizens who own the land on the American border. Unlike federal employees, these private agents could be fired for doing a poor job and/or for colluding with Mexican drug cartels.

Illegal immigration has not only helped the cause of “Brazilification” in America, but attendant criminality is a direct threat to all private citizens, their properties, and their freedom of association. Given this reality, criminal illegal aliens who return to the United States after being arrested, convicted, imprisoned, released, and deported should be treated as outlaws and should face the possibility of death for impinging upon American liberty. This proposal has the added benefit of legitimizing decentralized power structures in the face of anarcho-tyrant state.

References:

  1. Taylor, Robert (2016). Reactionary Liberty. CreateSpace Independent Publishing Platform. p. 125.
  2. Hoppe, Hans-Hermann (2001). Democracy – The God That Failed: The Economics and Politics of Monarchy, Democracy, and Natural Order. Transaction Publishers p. 203.
  3. Taylor, p. 221.
  4. Rothbard, Murray. Nations by Consent: Decomposing The Nation-State. Journal of Libertarian Studies 11:1 (Fall 1984). https://mises.org/library/nations-consent-decomposing-nation-state-0

A Consideration Of Helicopter Rides

In recent years, the meme of throwing one’s political rivals out of helicopters has become popular among certain right-wing and libertarian groups. Unfortunately, people from all over the political spectrum tend to misunderstand the historical context of the meme, and thus interpret it incorrectly. Let us consider the backstory of helicopter rides in order to better understand their use, ethics, and utility.

Socialism in Chile

In 1970, Socialist candidate Salvador Allende became President of Chile, winning a plurality of votes and allying with the third-place Christian Democrats to gain the necessary majority to rule. He was the first openly Marxist head of state in a Latin American country to come to power through democratic means. The CIA and KGB both spent significant amounts of money to interfere in the election.

Once in power, Allende’s government took over control of large-scale industries, health care, and education. He expanded government theft and redistribution of land initiated by his predecessor Eduardo Frei Montalva, such that no estate exceeded 80 hectares (198 acres) by the end of 1972.[1] Payment of pensions and grants resumed, and social programs were greatly expanded. The arts became funded by the state. Diplomatic relations with Cuba were restored, and political prisoners were released. Price fixing for bread, wages, and rent occurred. Taxes on small incomes and property were eliminated. College was made tuition-free. The voting age was lowered to eighteen and literacy requirements were removed. Between October 1970 and July 1971, purchasing power increased 28 percent.[2] In that year, inflation fell from 36.1 percent to 22.1 percent, while average real wages rose 22.3 percent.[3]

Like all socialist experiments, the short-term results were good. But as Margaret Thatcher would later observe, “Socialist governments…always run out of other people’s money.” Government spending increased 36 percent from 1970 to 1971.[3] The national debt soared and foreign reserves declined. Declining prices in copper, Chile’s chief export commodity, only worsened matters. Black markets in staple foods emerged as rice, beans, sugar, and flour disappeared from store shelves. The Allende government announced its intent to default on debts owed to international creditors, including foreign governments. Strikes began in 1972, to which Allende responded by nationalizing trucks to keep truckers from halting the economic life of the nation. The courts intervened and made Allende return the trucks to their owners.

By the summer of 1973, Allende’s government was ripe for overthrow. On June 29, Colonel Roberto Souper surrounded the presidential palace with a tank regiment but did not succeed in overthrowing Allende. In May and again in August, the Supreme Court of Chile complained that the Allende government was not enforcing the law. The Chamber of Deputies accused Allende of refusing to act on approved constitutional amendments that would limit his socialist plans, and called on the military to restore order. Following embarassment and public protest, General Carlos Prats resigned as defense minister and commander-in-chief of the army, being replaced in the latter post by General Augusto Pinochet. Allende accused the Congress of sedition and obstruction, and argued that the accusations were false.

The Chilean Coup

On September 11, 1973, the Chilean Navy captured Valparaiso by 7:00 a.m. They closed radio and television networks in the central coast. Allende was informed of this, and went to the presidential palace. By 8:00, the army closed most broadcast stations in the capital of Santiago, while the Air Force bombed the remaining active stations. Admiral Montero, the Navy commander and an Allende loyalist, was cut off from communication. Leadership of the Navy was transferred to Jose Toribio Merino, who worked with Pinochet and Air Force General Gustavo Leigh in the coup. The leaders of the police and detectives went to the palace with their forces to protect Allende. Allende learned the full extent of the rebellion at 8:30 but refused to resign. By 9:00, the armed forces controlled all but the city center in Santiago. The military declared that they would bomb the palace if Allende resisted. Allende gave a farewell speech, and Pinochet advanced armor and infantry toward the palace. Allende’s bodyguards fired at them with sniper rifles, and General Sergio Arellano Stark called in helicopter gunships to counter them. The palace was bombed once Air Force units arrived. At 2:30, the defenders surrendered and Allende was found dead by his own hand.

Following the coup, the military killed around 3,000 leftists and imprisoned 40,000 political enemies in the National Stadium of Chile. Ninety-seven of those killed were eliminated by the Caravan of Death, a Chilean Army death squad that flew by helicopters in October 1973. The squad, led by General Stark, would travel between prisons, ordering and carrying out executions. The victims were buried in unmarked graves. This is one origin of the meme of helicopter rides, though squads other than Stark’s were responsible for the literal act referenced, having thrown 120 civilians from helicopters into the ocean, rivers, and lakes of Chile.

Peronism in Argentina

In 1946, Juan Perón of the Labor Party became President of Argentina. The majority of the Radical Civic Union, the Socialist Party, the Communist Party, and the conservative National Autonomist Party had formed an unusual alliance against him, but lost by 10 percent. His two stated goals upon becoming President were economic independence and social justice, but he had no serious plans to achieve those goals other than to attempt to hire the right advisors and underlings while refusing to side with the US or the USSR in the Cold War. Perón was intolerant of both leftist and rightist opposition, firing more than 1,500 university faculty who opposed him[4], shuttering opposition media companies, and imprisoning or exiling dissident artists and cultural figures.

Perón’s appointees encouraged labor strikes in order to obtain reforms for workers, which aligned large business interests against the Peronists. Upper-class Argentine’s resented Perón’s reforms, feeling that they upset traditional class roles. He nationalized the central bank, the railroads, public transport, utilities, universities, and merchant marine. He created the Institute for the Promotion of Trade (IAPI), which was a state monopoly for purchasing foodstuffs for export. Average real wages rose by 35 percent from 1945 to 1949,[5] while during that same period, labor’s share of national income rose from 40 percent to 49 percent.[6] Healthcare and social security were made nearly universal during Perón’s first term. GDP expanded by over 25 percent during this time,[4] which was largely due to spending the $1.7 billion in reserves from surpluses from World War II.

The economic success of Perón’s reforms would not last. The subsidized growth led to an import wave that erased the surplus by 1948. A debt of roughly $650 million owed by Great Britain to Argentina went mostly unpaid, further complicating matters.[4] The Argentine peso was devalued 70 percent between 1948 and 1950, leading to declining imports and recession. Labor strikes began to work against Perón, who responded by expelling the organizers from the unions and calling for a constitutional reform in 1949.

Perón faced no serious opponent for his 1951 re-election campaign, despite being unable to run with his wife Eva, who had fallen ill and would die the following year. Exports fell as low as $700 million in 1952, producing a $500 million trade deficit. Divisions among Peronists grew, and many of Perón’s allies resigned. He accelerated construction projects and increased rank and pay to top generals in an effort to reduce tensions. After Eva’s death, opposition to Perón intensified. On April 15, 1953, terrorists bombed a public rally of Perón supporters, killing seven and injuring 95. He responded by asking the crowd to retaliate. They responded by burning down the Jockey Club building and the Socialist Party headquarters.

In March 1954, Perón had to replace his Vice President, and his preferred choice won in a landslide. This, combined with stabilized inflation rates, motivated him to create new economic and social policies. This brought in foreign investment from automakers FIAT, Kaiser, and Daimler-Benz, as well as from Standard Oil of California. But Perón’s legalization of divorce and prostitution turned the Roman Catholic Church against him, which excommunicated him in June 1955. Perón responded by holding a public rally, and for the second time it was bombed, this time by Navy jets that fled to Uruguay afterward. 364 people were killed, and Peronists again carried out reprisals by attacking eleven churches. This led to the coup that ousted Perón on September 16, performed by nationalist Catholics in the Army and Navy led by General Eduardo Lonardi, General Pedro E. Aramburu, and Admiral Isaac Rojas. Perón barely escaped to Paraguay.

Resistance, Return, and Repression

Shortly afterward, Peronist resistance movements began organizing among disgruntled workers. Democratic rule was partially restored, but political expression for Peronists was still suppressed, so guerrilla groups began operating in the 1960s. Early efforts were small and quickly quashed, but more successful movements formed toward the end of the decade. The Peronist Armed Forces (FAP), Marxist–Leninist-Peronist Revolutionary Armed Forces (FAR), and the Marxist–Leninist Armed Forces of Liberation (FAL) were the three major players before 1973. The FAR joined an urban group of students and intellectuals called the Montoneros, while the FAL and FAP merged into the Marxist People’s Revolutionary Army (ERP).

In 1970, the Montoneros captured and killed Pedro Eugenio Aramburu, a military leader in the 1955 coup. In a few years, such events happened on a weekly basis, as did bombings of military and police buildings. Some civilian and non-government buildings were also bombed. Juan Perón returned from exile and became President again in 1973, and sided with the right-Peronists and the government against the left-Peronists. He withdrew support of the Montoneros before his death in 1974. His widow Isabel Martinez de Perón became President after his death, and she signed a number of decrees in 1975 to empower the military and police to defeat the ERP and other such groups. The right-wing death squad known as Argentine Anticommunist Alliance emerged at this time. Isabel was ousted by a coup in 1976, and the military took power. Up to this time, leftists had killed 16,000 people in their guerrilla efforts. The United States government financially backed the Argentine military, while the Cuban government backed the left-wing terror groups.

The juntas that held power between 1976 and 1983 repressed leftist dissidents, being responsible for arresting, torturing, and/or killing between 7,000 and 30,000 people. Many were Montoneros and ERP combatants, but others were civilians, students, left-wing activists, journalists, intellectuals, and labor organizers. Some of those executed were thrown from airplanes to their deaths in the Atlantic Ocean, providing another basis for the meme of helicopter rides. The worst repression reportedly occurred in 1977, after the guerrillas were largely defeated. The junta justified its action by exaggerating the threat and staging attacks to be blamed on guerrillas.

The “National Reorganization Process,” as it was called, failed in its efforts to suppress the left. As the roundup was overbroad, it sowed resentment. Some of those arrested had done nothing other than witness others being arrested in public places. Severe economic problems only added to civil unrest. The military tried to regain popularity by occupying the Falkland Islands, but their defeat by Britain in the Falklands War led them to step aside in disgrace and restore democracy.

Aftermath in Chile

In Chile, Pinochet remained in power until 1990. His 1980 constitution remains in effect, though significantly amended in 1989 and 2005 and slightly amended on eleven other occasions. In the 1990 elections, a coalition of democratic and socialist parties with the Christian Democrat Patricio Aylwin at the head was successful. Eduardo Frei Ruiz-Tagle, the son of Allende’s predecessor, led the coalition from 1994 to 2000. The Socialist Party and Party for Democracy led the coalition from 2000 to 2010. The center-right National Renewal won in 2010, but the Socialist Party regained power in 2014.

During Pinochet’s rule, Chicago School economists influenced the regime to adopt free market policies. Despite the prevalence of leftists in power since Pinochet’s rule ended, many of his economic reforms have remained in place and the economy is among the freest in the world. Aylwin and Ruiz-Tagle increased spending on social programs and reformed taxes, but avoided radical changes. Chile managed to avoid serious impact from the Mexican peso crisis of 1994 by using capital controls.

Aftermath in Argentina

In Argentina, voters elected Raul Alfonsin of the center-left Radical Civic Union once democracy was restored in 1983. He both created a commission to investigate forced disappearances and passed an amnesty law that stopped the investigations until 2005. His administration was unstable due to friction with the military and economic issues, leaving office early to let Peronist candidate Carlos Menem take office early after winning in 1989. Though he privatized many industries that Perón nationalized, he expanded both executive power and the role of the state in the economy. He won again in 1995, but the Radical Civic Union was growing and a new alliance called FrePaSo formed. By 1999, all three major parties supported free market economics. UCR and FrePaSo allied behind Fernando de la Rua to defeat Peronist Eduardo Duhalde. After some resignations and turmoil, Duhalde would get his chance in 2002. He managed to bring inflation under control, then called for elections in 2003. This brought another Peronist, Nestor Kirchner, to power. He overturned the 1986 amnesty for members of the military dictatorship and oversaw a strong economic recovery. His wife, Cristina Fernandez de Kirchner, took over in 2007. She distanced herself from traditional Peronism after Nestor’s death in 2010, favoring instead the La Campora movement that reveres the Montoneros guerrilla group. In 2015, her party lost to Mauricio Macri and his Republican Proposal party, which was allied with the Radical Civic Union.

The governments from the 1930s to the 1970s used import substitution to increase industrial growth, but this came at the expense of agricultural production. Import substitution was ended in 1976, but growth in government spending, inefficient production, and rising national debt led to inflation problems in the 1980s. The government responded to inflation in the 1990s by auctioning state-owned companies and pegging the Argentine peso to the US dollar. De la Rua followed an IMF-sponsored economic plan to deal with the government budget deficit, but an economic collapse occurred at the end of 2001. The peso was devalued again, and recovery occurred by 2005. A judicial ruling in 2012 led to a selective default in 2014 that was resolved in 2016.

Contemporary Application

Now that the context from which the meme of helicopter rides emerges is understood, we may consider its potential application against contemporary leftist rulers and agitators. Helicopter rides for political enemies are a form of ultraviolence, which is the use of force in an excessive and brutal manner as a public display to make an example out of a particular person or group. This is done for the purpose of establishing dominance and suppressing rivals within a territory, from which peace and order may follow. Utilized correctly, this will break the spirit of resistance movements and solidify one’s hold on power, which will prevent further death and destruction that would otherwise occur from terrorism and civil war. If misused, whether by subjecting overbroad numbers of people to cruel punishment or by utilizing methods that the population deems to be completely beyond the pale, ultraviolence will create resentment that will resurface later as another, stronger resistance movement. Misuse will also have a negative psychological impact on the perpetrators, causing them to lose their humanity through the commission of needless atrocities.

The above examples of Chile and Argentina suggest that ultraviolence by rightists against leftists appears to be insufficient to counter the leftward slide that naturally occurs in politics over time. One possible reason for this is that a continual march leftward is the political variant of entropy, the physical process by which the universe becomes increasingly disordered and chaotic over time. If so, this would explain why all great civilizations eventually fall and all attempts by right-wing movements to use the state to advance their agendas fail to produce lasting change. Another potential explanation is that the state is an inherently leftist institution, in that the nature of the state is to allow some people to do with impunity that which would be considered criminal if anyone else behaved identically, and the nature of the left is to disrespect individual rights in favor of their view of the collective good. This meshes well with Robert Conquest’s second law of politics; any organization not explicitly right-wing sooner or later becomes left-wing. A third explanation is that power does what it wants due to its inherent lack of accountability, meaning that a military junta has no real incentive to limit its removal of leftists to those whom have actually committed crimes. Thus, the use of helicopter rides naturally becomes overbroad when coupled with the state, and the distrust and resentment that fuels a revolution against the military government naturally follow.

Many alt-rightists who suggest the use of helicopter rides to eliminate their political rivals do not understand the above context with sufficient clarity. This leads them to long for the day when they get to pilot a massive fleet of helicopters that drops their enemies from staggering heights. For their stated goals, helicopter rides are a tool not fit for purpose, as the cost of helicopters, fuel, and pilots far exceeds that of other methods of physical removal. Helicopter rides as historically practiced also fail at performing ultraviolence, as rumors of helicopter rides pale in comparison to theatrical executions carried out in the public square on live television. The obvious retort that the victims should be dropped onto a hard surface in the public square is likely to fail by being too gruesome for the public to stomach. And ultimately, no matter how many leftists are killed, their ideas and the state apparatus to implement them remain. Overall, the alt-right approach fails because its adherents seek to use the ultimate enemy (the state) against the proximate enemy (the left) without any intention or plan to eliminate the ultimate enemy afterward, which results in long-term losses for short-term gains.

Moral Issues

While the alt-right seeks to misuse the practice of helicopter rides, libertarians and leftists tend to decry the idea as mass murder. The leftists will typically assert that the use of deadly force against someone who does not pose a deadly threat at the moment is murder. But the immediate danger doctrine, as it is known in legal circles, is a standard used by the state to perpetuate itself by creating an artificial demand for its functions of legislation, security, criminal justice, and dispute resolution while rendering the population dependent and irresponsible. Such a standard is not provable from first principles and is clearly at odds with libertarian theory on the use of force.

Libertarian theory allows one to use any amount of force necessary to not only defend oneself against aggressors, but to make people who refuse to perform restitution do so, to stop people who recklessly endanger bystanders, to reclaim stolen property, and to eliminate crime bosses and other unrepentant aggressors. While this does not allow for the full extent of the helicopter rides given by the militaries of Chile and Argentina, it can allow for statists who held power and those who carried out certain acts of aggression on their orders to be executed. Of course, rightists who wield state power (or libertarians who wield private power) in an overzealous manner against leftists would also be legitimate targets for helicopter rides if they kill people who have not committed crimes worthy of death.

A more appropriate libertarian use of helicopters is not to execute anti-libertarians by throwing them out, but to transport them out of a libertarian-controlled territory and warn them not to return. Exile and ostracism, after all, are perfectly legitimate exercises of property rights and freedom of association. Furthermore, removing people who advocate against the norms of a libertarian social order from a libertarian community is a necessary preservation mechanism, but such removal need not be fatal unless all reasonable efforts that do not involve deadly force have been tried without success.

Conclusion

There is a rich historical context behind the idea of helicopter rides for leftist agitators. Unfortunately, most modern advocates of such methods do not understand this context, which leads them to make recommendations which do not align with reality. Though leftists and some libertarians decry all uses of helicopter rides as murder, there are cases in which such acts are morally justifiable.

References:

  1. Collier, Simon; Sater, William F. (2004). A History of Chile, 1808–2002. Cambridge University Press.
  2. Zipper, Ricardo Israel (1989). Politics and Ideology in Allende’s Chile. Arizona State University, Center for Latin American Studies.
  3. Larrain, Felipe; Meller, Patricio (1991). The Socialist-Populist Chilean Experience, 1970-1973. University of Chicago Press.
  4. Rock, David (1987). Argentina, 1516–1982. University of California Press.
  5. Dufty, Norman Francis (1969). The Sociology of the Blue-collar Worker. E.J. Brill Publishing.
  6. Dornbusch, Rüdiger; Edwards, Sebastian (1991). The Macroeconomics of populism in Latin America. University of Chicago Press.

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.

Conclusion

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.

The Economic Fallacies of Black Friday: 2016 Edition

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

The NRF estimates that total sales for the holiday season will be $655.8 billion, up from $633.0 billion in 2015. This would be an annual increase of 3.6 percent. The estimate for 2015 was $630.5 billion, suggesting that the total sales for 2016 may be around $658.4 billion. This year, the NRF estimates that retailers will hire between 640,000 and 690,000 seasonal employees, compared with the actual 675,300 they hired during the 2015 holiday season versus an estimate of 700,000 to 750,000. We may therefore expect that retailers will actually hire about 619,400 seasonal employees. On the surface, this may appear to be a marvelous celebration of free market capitalism. But let us look deeper through the lenses of the broken window fallacy and the idea of malinvestment.

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

Per capita spending is predicted to be $935.58 in 2016, up from the 2015 estimate of $805.65. The actual result from 2015 was $952.58. A similar adjustment to the predicted value for 2016 would mean an actual per capita spending close to $1,106.21. The above problems get even worse if people use credit cards to spend money that they do not currently have. With a current credit card interest rate of 16.28 percent and a minimum payment of 4.0 percent, a debt of $1,106.21 would take almost six years to pay off and would cost $1,567.57. This is $461.36 wasted on interest payments that could have been kept in one’s accounts or put toward a productive purpose. Multiply this by the 153.1 million shoppers predicted earlier, and the result is that as much as $70.6 billion could be spent on interest payments.

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

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

On Market Failure

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

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

Monopolies

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

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

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

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

Public Goods

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

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

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

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

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

Externalities

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

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

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

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

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

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

Other Culprits

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

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

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

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

Resource Failure

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

Complainer Failure

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

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

Standards

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

Conclusion

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

The 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.

Objections

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.

Conclusion

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.

Disasters and the Pax Romana Problem

Whenever disasters impact an area in modern times, governments play a large role in the cleanup and recovery efforts. People file claims with the state to recover their losses while simultaneously inflicting those losses upon taxpayers elsewhere in the nation. Building codes are enhanced, and because resources spent on one expense cannot be spent on another, the result is less resources available for communication, medical care, and transportation to warn people of disasters, get them away from danger, and treat any injuries or diseases that result. The usual pork barrel spending and high-profile boondoggles will rear their ugly heads among the disaster relief spending.

But there is an even more insidious problem at work here, which we may term the Pax Romana Problem. Students of history will be familiar with the time of relative peace and stability from the time of Augustus (r. 27 BCE-14 CE) until the time of Commodus (r. 177-192 CE). During this time, the economy, the arts, and agriculture flourished because the tribal battles that predated Roman conquests as well as the rebellions and riots that predated the Pax Romana were largely suppressed. But there was a dark side to this, particularly in parts of the empire which were much closer to the border than to Rome. With Roman forces in charge of law, order, and security, many peoples suffered losses in the ability to provide these services themselves. After all, societal organs tend to decay from disuse just as individual people do. When the Pax Romana ended, these peoples were without the stabilizing forces which they had come to rely upon and were out of practice in providing these services for themselves. The end result was that several of these peoples were raided and conquered by various barbarians and empires.

At first glance, this may not appear to have much to do with disaster relief. But there is a similarity between what happens when governments step in during disasters and what happens when a large empire takes over security for formerly independent smaller tribes. Before there was massive government intervention to help disaster victims, people had more of an incentive to plan ahead and be ready for potential disasters because they knew that if something were to happen, they would have to rely upon themselves and the people in their communities to survive and recover. Without the potential for government agents to step in, people were less likely to view disaster relief as someone else’s problem and thus more likely to donate to relief efforts. When one relies upon people one knows for support during hard times, defrauding people is disincentivized due to both the loss of reputation in the community as well as the potential for reprisals. Looting is also less of a problem when security is handled directly by private property owners without involving the state because they and their hired help are both more competent at and more concerned with solving local crime problems than distant bureaucrats and their minions. Of course, these conditions meant a stronger social fabric and less dependence on the state, so governments found it all too tempting to interfere.

Before there was significant government involvement in the insurance industry, insurers would either refuse to insure or charge exorbitant rates to cover properties which were at a continually high risk for being destroyed by floods, earthquakes, volcanoes, and other such periodic catastrophes. This was an important market signal that certain areas are not good places for humans to build permanent residences. Of course, some people ignored those signals and suffered the consequences of their stupidity, but this has better outcomes for everyone else than rewarding such stupidity with government handouts which incentivize people to stay in places where they are likely to suffer disasters.

Now that governments play an active role in disaster relief, all of the problems that one might reasonably expect are present. When politicians have a choice between doing what is best for the people and doing what helps their public image, they will almost invariably choose the latter. Because the state has a coercive monopoly, it cannot be fired or have its funding suspended by normal means, regardless of how terrible its performance is or how much it interferes with private efforts which are trying to help people. To the contrary, failure means that statists can claim that insufficient funding is the reason for failure. There is also the matter of vote-buying, in that the people have an incentive to elect politicians who will deliver them the most funds from the government treasury. Disaster relief is not as reliable a payout method as welfare programs, but it is still a means of legal plunder available to those who live in disaster-prone areas.

We can also see the typical one-size-fits-all policies rather than the more targeted solutions that a private effort would attempt. For example, following Hurricane Katrina in New Orleans, the Federal Emergency Management Agency announced a program to give away $2000 to every household that claimed to be affected by Katrina, regardless of size or need. Of course, this was subject to much waste, fraud, and abuse. Unlike private organizations who must rely upon voluntary donations, the state has no incentive to actually figure out how much help each household needs, so it overpays some and underpays others.

With government infrastructure management, people are encouraged to live in places which are at higher risk for disasters than would otherwise be economical to inhabit. To use the example of Katrina again, levees held back water from areas which have an elevation below sea level. Investigations into their failure showed cost-cutting during construction as well as poor maintenance. While there is no guarantee that a privately built and maintained system would have been successful, that which may or may not work is better than that which is known to fail. Then again, leaving infrastructure up to the private market could have meant that low-lying areas would have always been underwater and thus uninhabited, meaning that structures and lives would not have been at risk there because they would have been absent in the first place.

Government flood insurance programs also encourage people to take risks which would not make economic sense in a free market. What is incorrectly perceived as a market failure is actually a market success; the process of voluntary exchange and decentralized calculation produces the result that flood plains are inferior places to build a house or business. Rather than people rebuilding communities in unstable locations for the umpteenth time, a free market in flood insurance would cause low-lying areas to be abandoned and returned to a state of nature, as is proper. Perhaps in time, such places which are near coastlines and below sea level could fill in with sediment and become livable lands which do not require levees to keep water out of them.

Finally, government police and National Guard forces have largely displaced private security measures to prevent looting during disasters. Worse than that, they have actively engaged in attacks upon disaster victims who were trying to provide such defense for themselves, causing the very problem they should be trying to solve.

Fortunately, this perverse state of affairs will not last forever. Someday, the United States government will decline and fall, just like Rome and so many other empires throughout history. Just like the outer peoples of the Roman Empire after the Pax Romana ended, the American people will be left to fend for themselves in the absence of the federal government. The degree of government involvement in their lives will leave them weakened in the face of disasters which will not cease to afflict them when the state does. But a return to proper incentive structures will mean that in the long run, behaviors will be positively modified, the attitudes of the people will change to match those behaviors, and the community bonds which support a truly healthy society can be rebuilt.

Black Lives Matter Versus Libertarian Revolution

Since the beginning of the Black Lives Matter movement, libertarians have had strong differences concerning how to engage with it. On one hand, libertarians would agree that many laws whose enforcement results in deaths of black people at the hands of government agents should be eliminated, such as those forbidding drug possession. On the other hand, many people who protest under the BLM banner engage in activities which are at odds with libertarian philosophy, such as blocking roads, disrupting businesses, and rioting.

As time marches on, as tends to happen in most activist organizations with street presence, the more radical elements within the BLM movement are gaining more attention. The sister of a man who was killed by police on August 13 urged protesters,

“Don’t bring that violence here. Burning down shit ain’t going to help nothing. Y’all burning down shit we need in our community. Take that shit to the suburbs. Burn that shit down.”

At the beginning of the riots in Milwaukee, a rioter could be heard yelling to police officers,

“We do not want justice or peace anymore. We done with that shit. We want blood. We want blood. We want the same shit y’all want. Eye for an eye. No more peace. Fuck all that. Ain’t no more peace. Ain’t no more peace. We done. We cannot co-habitate with white people, one of us have to go, black or white. All y’all have to go!”

And at a protest in Portland, Ore. on July 12, BLM leaders told protesters concerning police officers,

“Whatever you do, you pull your pistol out and fucking bust them… Trust me when you see me move, I’m moving in violence. We need action. I don’t give a fuck if you knock them over, whether you run up on them, whatever you do, you better fucking take action.”

The urgings of some misguided libertarians notwithstanding, these sentiments should make it clear that there is not an alliance to be made between BLM radicals and libertarians. Although there are segments of the libertarian community who understand that violent revolution is necessary to abolish the state, and both would physically remove government police officers from their communities, this impulse for libertarians is radically different from what is illustrated above. The libertarian revolution proceeds from the realization that a libertarian social order is superior to that of either a democratic or authoritarian state, and that such a state stands in the way and cannot be expelled from a territory or completely eliminated by peaceful means. Anti-police violence advocated by BLM leaders proceeds from the realization that police are an obstacle to degenerate and criminal behavior which they would like to see removed, and that this will not happen by peaceful means.

While the libertarian revolutionary seeks to end a system which violently victimizes the innocent, the BLM radical seeks to impose such a system upon white people. While the libertarian revolutionary seeks to protect individual rights and private property, the BLM radical seeks to take private property from its rightful owners in order to fund government programs and give reparations to people who were never personally wronged. While the libertarian revolutionary seeks to free minds and markets, the BLM radical seeks to perpetuate government indoctrination and communize resources. While the libertarian revolutionary seeks to replace government monopoly police which are coercively funded with private competing security forces which are voluntarily funded, the BLM radical seeks to abolish police with no clear alternative in mind. It should be clear to all but the most cucked and autistic libertarians that these two groups cannot work together toward a common goal because they are aimed at cross purposes.

That being said, it is possible that this could change. BLM radicals could think things over and come to the realization that the real enemy is not society, white people, racism, capitalism, patriarchy, privatization, or any other false target that various leaders within their movement have pursued thus far. They could figure out that burning down their own communities (or other communities) grants the police that they claim to oppose the appearance of legitimacy and necessity that they need to continue and escalate the activities for which they claim to oppose them. They could figure out that making this about black versus white rather than blue versus you creates a sense among white people that they should enter this conflict on the side of the state against the black community rather than on the side of the black community against the state. They could figure out that calling for huge government programs and expanded government control of the economy will require far more of the enforcement agents that they claim to oppose while further ruining their communities by creating perverse incentives. They could figure out that the root problem is aggression by government agents, and that the only solution to this problem is self-defense against government without deliberately targeting anyone else.

But unless and until that happens, BLM is an enemy of libertarianism which happens to be in conflict with another enemy of libertarianism, namely agents of the state. It is important to recognize that the enemy of one’s enemy is not necessarily one’s friend, or even an ally of convenience. Though the United States government is the most powerful and dangerous criminal organization in human history, its power could fall into worse hands and be used for worse purposes. Its abolition by people with the wrong ideas could create the need for a counter-revolution against them in order to establish a better social order rather than a worse one (or the complete lack of one). As for how libertarians should deal with BLM as it is now, when government agents and common criminals fight, it is generally best to pull for no one and hope for heavy casualties on both sides.