Praise The Grinch Bots

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

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

The Economic Role of Scalpers

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

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

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

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

Cultural Benefits

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

Conclusion

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

The Economic Fallacies of Black Friday: 2017 Edition

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

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

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

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

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

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

On Consumerism, Corporatism, Time Preference, and Modernity

Consumerism

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

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

Corporatism

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

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

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

Time Preference

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

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

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

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

Modernity

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

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

Conclusion

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

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.