The Not-So-Current Year: 2017 In Review

Though the specific demarcation of the passage from one year into another is a rather arbitrary social construct, it does provide a useful annual period for self-examination and remembrance. Now that 2017 has entered the history books, let us take a look back at a year’s worth of essays and review the not-so-current year.

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

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

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

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

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

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

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

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

White nationalist and alt-right leader Richard Spencer was present in the bar of the Marriott hotel that hosted the International Students For Liberty conference. This did not go over well with Jeffrey Tucker, who loudly denounced Spencer, after which security removed everyone from the bar. I wrote about the incident and the philosophical underpinnings of it.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Eight Politically Incorrect Benefits of Cryptocurrency

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

1. Tax Evasion

Charles Stross famously complained that Bitcoin

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

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

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

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

2. Agorism

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

3. Undermining Prohibition

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

4. Circumventing Child Labor Laws

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

5. Circumventing Capital Controls

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

6. Financing Disapproved Activism

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

7. Thwarting Monetary Policy

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

8. Assassination Markets

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

References:

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

Book Review: The Euro

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Rating: 2.5/5

Book Review: Libertarian Reaction

Libertarian Reaction is a collection of fifteen essays by Insula Qui. The book explores various issues from a libertarian reactionary perspective. The book is divided into three sections; one focusing on reaction, one focusing on liberty, and a long final essay.

The first part begins with an essay on the limits of libertarian ethics. In Savages, Qui deals with several types of humans who cannot be properly be considered people, and must instead be dealt with as lesser beings. The point that there is a difference between colonialism (the imposition of law and morality on people who have no rational conception of it) and colonization (a parallel development of law and morality while not imposing upon others) is important and oft-overlooked. The essay finishes with a denunciation of both Islam and communism as incompatible with libertarianism if each is to be practiced rigorously. The arguments are correct but elementary, which the author has since remedied elsewhere.

In Borders And Liberty, Qui weighs in on the debate over border policy, concluding that while state immigration restrictions are not libertarian and the only justifiable borders are private property boundaries, closed borders are a lesser evil than the forced integration imposed by modern states. He recommends restoration of the right to discriminate, sponsorship of and vicarious liability for immigrants by those who wish to bring them in, and elimination of welfare programs as methods of improving the current situation. References to support the assertions regarding demographics would improve the case made here.

Prerequisites for Liberty deals with the problem of humans who are not savages as described in the first essay but are nonetheless inclined to aggressive violence. Again, references to support demographic arguments would be helpful. Qui notes several obvious but underappreciated truths here, most notably that a libertarian social order cannot exist below a certain intelligence level, as this would preclude people from understanding the necessary rules of such an order. He correctly states that some people may convert to libertarianism by seeing it in practice instead of reaching it through reason. In fact, this is by far the more likely method of conversion in the near future. The role of hedonistic practices in damaging a social order are discussed, as is the folly of accepting non-libertarians into libertarian circles simply to grow numbers.

The next essay is Voluntary Ethnic Separation, and it explains the difference between what libertarianism requires one to accept and the common caricature of all such ideas as hateful racism. Qui shows great insight in tackling common leftist arguments here. He also makes the important point that collectivism can arise as a benign heuristic to help with decisions because people lack the capacity to deal with individuals beyond a certain point. However, the same demographic claims resurface without proper support. Finally, the point that ethnostatism could be a step toward breaking up large nation-states into more local forms of governance is overlooked by most libertarians, but not Qui.

The Antistatist Case for Monarchial Government is a longer essay that Qui included despite having changed his views on the matter, as he views it as being theoretically important. He makes a distinction between government (a manager of land and provider of essential services) and state (an entity that exercises a monopoly on initiatory force) which is lost on many people. He also explains that while a libertarian society would be imperfect, a state has even worse inefficiencies. Later, Qui hints at a potential problem with wilderness areas falling victim to a tragedy of the commons, but this could easily be solved by homesteading such areas. There are two significant errors here: a lack of accounting for the arguments made by Stefan Molyneux and others in favor of private dispute resolution organizations with regard to how law courts could function without a state, and a contradiction concerning redistribution and efficiency. The final part of the essay reads much like Hans-Hermann Hoppe’s case that monarchy is superior to democracy, and is reminiscent of the real-world example of Leichtenstein.

Qui tackles an uncomfortable issue that perhaps interests too many people in libertarian circles with The Libertarian Solution to the Age of Consent. He quickly rebuts the left-libertarians who wish to let children make decisions regarding sexual conduct, describing parenting of young children as a sort of regency until the child gains the ability to use reason. But Qui errs in saying that damages done by improper parenting are no different from any other sort of crime, as one can never truly be made whole from the lifelong detriments caused by improper parenting.

Dysgenics and Market Nobility discusses the corruption of the phrase “all men are created equal” from a statement of equality before the law into a belief in human biological uniformity. In doing so, he distinguishes between the natural elite of a free society and the power elite of a statist society, which are often conflated by leftists. Qui then explains how the two tend to work together in statist societies to keep the same families at the top for centuries rather than let the rags-to-riches-to-rags cycle properly play out. The essay then turns toward dysgenics, which refers to programs that have the opposite of a eugenic effect. The roles of feminism, sexual liberation, and welfare statism are examined in this light.

The first part concludes with Civilization and Natural Law, which makes unconventional but strong arguments in favor of censoring and physically removing people on the basis of their political opinions. Qui’s case is more utilitarian and reserved than it needs to be, but he still reaches the correct result that freedom of speech is a privilege that comes with owning property, not a fundamental right. He then finds that the solution to intractable differences between people and groups is mutual discrimination and exclusion, as forced integration necessarily results in racial tensions.

The second section begins with The Freedom of Government, which revisits themes from several of the previous essays. Qui makes a powerful case that people who claim to believe in democracy but deny people the self-determination to choose their form of governance are charlatans. He also observes that a large enough number of small monarchies is effectively equivalent to a libertarian social order. The only problem with this essay is brevity, as more explanation of each point would greatly improve the presentation.

The Curse of Citizenship explores how the modern state makes its subjects into cogs of its machine through citizenship as a legal concept. Qui shows that democracy, contrary to leftist propaganda, only makes this worse by providing an otherwise absent appearance of legitimacy. He correctly recognizes the futility of localism as an ultimate strategy, as it fails to account for the supremacy of higher levels of government. But his contention that “corruption within the state is nothing other than the people who are creating the illusion themselves being aware of the illusion” is misguided; one can have this knowledge without weaponizing it into corruption, and one can be corrupt without such an awareness.

In The Role of Co-Operation in Competition, Qui refutes several myths about capitalism. First, he proves that capitalism is not as anti-social as its critics claim. Second, he corrects the misconception of competition as being necessarily aggressive in nature. Third, he explains how competition can actually be a form of cooperation, in that individuals or groups can agree to compete in order to find out which methods are superior. Qui segues into several examples of cooperation that are not strictly competitive, such as food companies co-marketing with drink companies and agreements between private road companies. To complete the argument, he examines how the contrapositive is also true; namely, that removing competition also removes an incentive to cooperate. He finishes with a brief discussion of cartels and makes the insightful observation that a labor union is not commonly recognized as a cartel, despite functioning much like one.

It is only in Reverse Claims to Property that Qui truly goes off the libertarian reservation in his thinking, though he admits at the beginning that he may be doing so. Here, he tries (and fails) to invent an inverse of property rights to resolve questions of state-occupied property and wilderness areas. Qui again neglects other libertarian theories on how to deal with pollution. This un-ownership would, as he suggests, legitimize rights violations in some cases.

In Who Watches the Watchmen, Qui explores the libertarian answer to this age-old question, namely that the watchmen (in the form of private defense agencies) all watch each other. Here he enters an off-topic though informative discussion on the impossibility of eliminating the state by democratic means. He then returns to the topic to find that re-establishment of a state is the worst case scenario in a stateless society, but all economic and military incentives work against it. That it is the worst case means that all other outcomes must be better, setting this particular objection on its ear.

National Defence Without Coercion is the last essay in the second part, and it deals with the subject at length. Qui begins by noting the common fallacy committed by statists: using a state to defend people against other states does not change the fact that people are subjugated by a state; it only changes which state is in control. He covers the basics of how a private defense agency should function, but is a bit too enamored with nationalism. His comparisons between a private defense agency and an insurance company make one wonder where such arguments were in earlier essays. The latter part includes some novel thought on how the facilities of a private defense agency might be employed in other ways during peacetime. The conclusion discusses the difference between pre-modern gentlemen’s war and modern total war, with libertarianism likely to end modern warfare and return us to the less destructive pre-modern type of warfare. This essay and the previous essay could have been combined.

The final part consists of one much longer essay titled Examining Cultural Destruction. Qui examines the causes and symptoms of cultural decay, then proposes solutions. The role of the state and central banking in reducing time preferences is explained, then Qui shows how capitalism makes this worse not by being bad in and of itself, but by amplifying whatever inputs it receives. Egalitarianism is blamed in the Rothbardian sense of a revolt against nature, as is the loss of autonomy and identity that statism causes. Symptoms of these causes are identified as the demonization of productive work, the collapse of stable interpersonal and family relationships, the loss of spiritualism and hierarchy, the ascent of shallow materialism, the prevalence of escapism, and the expansion of empiricism into inherently rational disciplines. To solve these problems, Qui recommends absolute private property rights, abolition of central banking and as much of the state as possible, and a restoration of traditional values.

The first word that comes to mind when describing the entire collection is ‘incomplete.’ Qui lacked an editor for the book, and it shows. The grammatical constructions and punctuation are frequently in need of revision, and each of the essays would benefit from a much deeper bibliography. But the thoughts expressed therein are sufficiently intriguing to merit reading despite these flaws.

Rating: 4/5

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.

Eliminate The Debt Ceiling

The United States debt ceiling is a limit placed on the amount of money that the federal government can borrow. This is done by placing a cap on the amount of national debt that can be issued by the US Treasury. About 99.5 percent of the debt is covered by this ceiling, but $238 million in United States Notes and $74 billion owed by the Federal Financing Bank as of September 2016 are not covered.

Because the ceiling applies to the total national debt rather than to annual deficits, and expenditures are authorized by separate legislation, the debt ceiling does not directly limit government spending. As the Government Accountability Office explains, “The debt limit does not control or limit the ability of the federal government to run deficits or incur obligations. Rather, it is a limit on the ability to pay obligations already incurred.”

When this occurs and the ceiling is not increased by legislation, the Treasury must resort to “extraordinary measures” such as suspending investments into federal employee retirement funds or exchanging Treasury securities for non-Treasury securities. Should such measures be exhausted before Congress agrees to raise or suspend the ceiling, a default on at least some of the national debt would occur. Most mainstream economists believe that this could cause an economic depression as well as a financial crisis.

Whether the nature of this ceiling should be altered and whether such a limit should exist at all are subjects of debate among economists and political commentators. This article will overview the history of the debt ceiling, make the case that it should be eliminated on both practical and moral grounds, and deal with common objections to elimination.

History

Article I, Section 8 of the United States Constitution gives Congress sole authority to borrow money on national credit. Between 1788 and 1917, Congress would pass legislation to authorize each bond issue by the US Treasury, with the particular amount specified in each legislative act. This would authorize specific loans in some cases, while in other cases the Treasury would be given discretion over which type of debt instrument to issue for specific purposes. Except for a short time in late 1835 and early 1836, the federal government has continuously had a national debt. Although there were parliamentary procedural rules concerning debt limits, there was no debt ceiling in the current form until 1917.

In 1913, the Sixteenth Amendment and the Federal Reserve Act both became law, which greatly expanded the taxing and spending capabilities of the federal government. As originally defined, the Federal Reserve was not allowed to purchase debt instruments from the US Treasury because members of Congress understood the fiscal danger that could arise from granting such permission. The desire for financial flexibility regarding American involvement in World War I led Congress to pass the Second Liberty Bond Act of 1917. This Act allowed the Treasury to issue bonds and take on other debt without specific Congressional approval, and allowed the Fed to purchase Treasury instruments. The debt ceiling was created as part of the deal to pass these changes, and took the form of limits on the aggregate amount of debt that could be accumulated through each category of debt, such as bills and bonds.

In 1939 and 1941, Congress passed the Public Debt Acts, which establish an aggregate limit on nearly all federal debt. Since then, the mechanism for raising the debt ceiling has been to amend these acts. The 1939 Act consolidated the separate limits from the 1917 Act into one limit, while the 1941 Act raised the debt ceiling to $65 billion, eliminated the tax exemption of interest and profit on government debt, and consolidated almost all government borrowing under the US Treasury. The Act was amended to raise the limit in each of the next four years, then the limit was reduced from $300 billion to $275 billion in 1946. Increases resumed in 1954, and there have been 72 increases and four decreases since then, with no decrease since 1963. As such, the debt ceiling has usually been a mere formality. After the Budget and Impoundment Control Act of 1974 created more opportunities for Congress to hold debates and hearings on the federal budget, the debt ceiling became less useful as a budgetary tool.[1] From 1979 to 1995, the Gephardt rule was in effect, which was a parliamentary rule that deemed the debt ceiling raised whenever a budget was passed, effectively nullifying the debt ceiling during that time. This rule was removed during the resolution of the 1995-96 government shutdown.

Treasury first implemented extraordinary measures on December 16, 2009 to avoid a government shutdown. Due to the lack of normal annual budgets during the Obama administration, Congressional Republicans used the debt ceiling as leverage for deficit reduction in 2011. This nearly caused a sovereign default, with Standard and Poor’s downgrading the United States credit rating and the Dow Jones Industrial Average dropping 2,000 points in late July and August. The Government Accountability Office estimated that this incident raised borrowing costs for the government by $1.3 billion in 2011, and the Bipartisan Policy Center extrapolated this estimate to $18.9 billion from 2011 to 2020. The debt ceiling was reached again at the end of 2012, which led to the Treasury adopting extraordinary measures again, as well as far more absurd measures being proposed.

On February 4, 2013, President Obama signed the No Budget, No Pay Act of 2013, which suspended the debt ceiling for the first time. This lasted until May 19. During that time, Treasury was authorized to borrow to the extent that “is required to meet existing commitments.” On May 19, the debt ceiling was raised to $16.699 trillion to accommodate borrowing performed during the suspension and extraordinary measures were resumed. In order to avoid a default when extraordinary measures were exhausted on October 17, the debt ceiling was suspended a second time until February 7, 2014. On February 12, the Temporary Debt Limit Extension Act suspended the debt ceiling until March 15, 2015, at which Treasury used extraordinary measures yet again. The debt ceiling was suspended again on October 30, 2015 until March 2017, and the suspension has been extended until the time of this writing.

Before And After

To begin making the case against the debt ceiling, let us consider the effect that having a debt ceiling has had on the national debt, which will show the effectiveness of the debt ceiling at reducing government spending over the long-term. Records begin in 1790, with the debt at the beginning of that year at $71 million. The debt grew to $127 million in 1816 from the War of 1812, then was steadily paid off until reaching zero in 1835. It would never be paid off again, growing gradually starting in 1836, then up to $68 million in 1851 as a result of the Mexican War. The next low was at $29 million in 1857. The Civil War caused an unprecedented debt, going from $91 million in 1861 to $2.77 billion in 1866, an increase of 2,962 percent. The next low was $1.55 billion in 1894, just before the Spanish-American War and other expansionist endeavors. The gradual growth during the early 20th century was accelerated by World War I, going from $3.06 billion in 1915 to $27.39 billion in 1919, an increase of 796 percent. Recall that the debt ceiling was instituted in 1917, with a national debt of $5.72 billion. The debt would be gradually paid off during the 1920s, reaching the next low of $16.8 billion in 1931. The debt grew again during the 1930s to fund government programs aimed at curtailing the Great Depression, reaching $48.96 billion in 1941. World War II ballooned the debt to $269.42 billion in 1946, an increase of 450 percent from 1941. The debt would never go below $250 billion again, gradually increasing past $300 billion in 1963. The Vietnam War accelerated the debt to $620.43 billion by 1976. In 1982, the national debt exceeded $1 trillion and has grown every year since 1958. On September 8, 2017, the debt passed the $20 trillion mark. Note that these figures do not include unfunded liabilities, which in recent times have become much larger than the official figure.

From 1790 to 1917, the debt increased by 7,946 percent, or 7.34 percent per year. From 1917 to 2017, the debt increased by 3,398 percent, or 8.5 percent per year. By this measure, the debt ceiling appears to be somewhat counterproductive for restraining spending, as the national debt has increased an additional 1.16 percent per year since its inception. However, one must be wary of cum hoc ergo propter hoc reasoning. National debts are influenced by a great multitude of variables, and attributing this change to a single cause would be fallacious. The larger role played by the United States on the world stage, with the attendant expenditures on military presence and foreign aid, contribute a great deal to the debt, as do social welfare programs, which were nearly nonexistent before 1917.

Now And Later

To make a stronger case, we must consider the current effects of having a debt ceiling versus the likely effects of eliminating it. In the process, we will make use of the neoreactionary concept of formalism. This is the idea that in human affairs, official reality should match actual reality, the underlying power dynamics should be brought into the open, and accounting practices should be honest.

The recent history is that the debt ceiling is always raised to avoid running into it. Starting in 2013, the practice has become to suspend the ceiling entirely. It goes without saying that a ceiling which is always raised and can be made to disappear is not really a ceiling at all. The effect of this is for the state to continually take on more debt rather than pay its bills properly. This is politically convenient, as it allows politicians to bribe voters with the fruits of the labor of their unborn descendants while avoiding the backlash that inevitably results from austerity measures. To call this a Ponzi scheme is an insult to Ponzi schemes, as all of the beneficiaries and victims in those scams are willing investors. A private sector Ponzi scheme involves no inter-generational debt slavery or other forced participation.

Although even the most ardent deficit hawks are loathe to be blamed for a sovereign default, the threat that a default will occur in this manner spooks investors needlessly. As mentioned earlier, the Dow Jones dropped 2,000 points in response to the 2011 debt ceiling crisis. If investors are convinced that a default may happen in spite of the apparent unwillingness of politicians to cause a default, then the markets will be sent into turmoil for no good reason.

Eliminating the debt ceiling would be a change that moves official reality closer to actual reality on several counts. First, the opponents of fiscal restraint know that those who would use the debt ceiling as a tool to reduce government spending will always cave before a default, even if they do cause the occasional partial shutdown of government functions. For this reason, their bluff is always called and they lose the hand by playing the debt ceiling card. Removing this card from the deck not only takes away an ineffective option, but forces reformers to seek out other methods which may be effective.

Second, eliminating the debt ceiling would signal that the federal government has no interest in paying off its creditors. It should be obvious enough that an entity which increases its debt burden every year for 60 years does not have fiscal responsibility as an objective, but the Treasury seems to have no shortage of lenders, especially because the Federal Reserve serves as a lender of last resort. Note that because the federal government monopolizes law, declares itself immune from suit, and has the firepower to repel those who would seek to collect by force, it is not accountable for the national debt in an absolute sense. Accountability thus becomes an indirect, external affair which would be aided by the consequences of signaling the aforementioned truth to the world.

The admission of no intention of paying off the debt, which is essentially an admission that a default will eventually occur, would make interest rates rise. This would be necessary in order to compensate investors for the fact that they may lose their principal, or at least take a haircut on it at some future date. Aside from the obvious benefit to savers, who would see financial progress for the first time in over a decade, the increased spending on interest on the national debt would force a combination of tax increases and spending cuts in other areas. This would make current supporters of government programs pay more for them up front through taxation and inflation, constrain the pathologically undisciplined federal government, and reveal the true priorities of the power elite when decisions about whom to tax more and which expenditures to cut are taken. As such, it both brings the underlying power dynamics into the open and makes accounting practices more honest.

Objections

At this point, let us consider some likely objections. First, there is the possibility that having no debt ceiling would cause the debt to grow even faster. The above examination of the history of the national debt suggests that this objection is ill-founded, as the annual percentage increase has been higher with a debt ceiling in place. But even if it is true that eliminating the debt ceiling would accelerate the growth of the national debt, this is not necessarily bad. The faster the debt accelerates, the sooner the events described in the previous section will occur, meaning that the current unsustainable dynamics will be replaced earlier than they otherwise would.

A second objection is that this course of action may cause an economic collapse. This is entirely possible, but again, not necessarily bad. The end of the United States dollar would result in either a monetary reform and/or the replacement of government fiat currencies with something more sound, such as a gold-backed currency or a cryptocurrency. Because the US dollar is the world reserve currency, the US government can abuse its economic system more than other governments can. Losing this status would be another step toward forcing the government to behave more responsibly, as it would curtail the amount of debt that can be issued by reducing foreign demand.

The resulting collapse of the bond market leads to the third objection that this would cause a great amount of hardship. However, one must remember that the investors in government bonds have bought instruments which are funded by extortion and debt slavery. From a moral standpoint, those who lose on such investments deserve to lose. That being said, this course of action does not actually cause the collapse; rather, it makes the inevitable collapse occur more quickly.

Conclusion

The debt ceiling was created with the intention of limiting the ability of the Treasury and the Federal Reserve to behave irresponsibly as they were allowed to provide more liquidity to fund World War I. But over the past century, quite the opposite has happened. The national debt has grown significantly faster than it did previously, and is now on a path toward default which is not reversible given current political realities. Eliminating the debt ceiling may seem like a counterproductive maneuver, but it would do much to formalize the true nature of the American fiscal situation. The only real debt ceiling is that established by lenders and creditors. When they deem a borrower to pose too much of a default risk, they stop lending and call in their debts, thus forcing the debtor to behave responsibly. The sooner this happens to the United States government, the better.

References:

  1. Kowalcky, Linda W.; LeLoup, Lance T. (1993). Congress and the Politics of Statutory Debt Limitation. Public Administration Review. 53 (1): p. 14.

On Citizenship And Casual Totalitarianism

This article expands upon an essay found in Libertarian Reaction.

There are many statists who actively fight against totalitarianism. This may not seem inherently contradictory, but the key to understanding totalitarian ideology is completely ignored by them. The very machinations of the state require totalitarian control over the population. To say that there can be a state without totalitarianism is a contradiction. Totalitarianism originates largely from early fascist theory but has similarly been associated with authoritarian communism. This seems simple enough; a state that attempts to control all parts of society is totalitarian, while a state that does not is just liberal or conservative. Therefore, there is a distinction between a good justifiable state and an evil unjustifiable state. People can make more distinctions based on economic and political systems, but the vast majority agree that totalitarianism is ultimately what determines whether or not a state is ethical. Very few people act as if the Third Reich was a valid exercise in statecraft, and only a few more similarly defend the actions of the Soviet Union. There are also other such regimes, various authoritarian socialist experiments, and lower profile fascist states.

Control Through Law

It is physically impossible for a state to control the lives of everyone. This problem is solved by having the state legislate and regulate, then allowing the enforcers of these laws and regulations to have special privileges, so as to give the state the ability to convict any person the state wants to convict and punish in any way the state deems appropriate. In this manner, one may create a totalitarian state. For obvious reasons, these sorts of states have no regard for human rights or basic decency. Rather, they are directly opposed to the civilized nature of man. Although most people understand this, they do not understand that any state is inherently totalitarian. There are historical exceptions to this, but they are very few and far between and have long since disappeared. Because this is the case, we cannot act as if the historical possibility of a non-totalitarian state is a valid argument. Even if a state can be free of or largely lack totalitarianism for a limited time, this can never last.

Citizenship and Personhood

At the heart of the issue is the very thing that defines the state for all individuals: the aspect of citizenship. Every person under a state is the citizen of that state, which means that they have a relationship with the state in which the state is in a privileged position of control over the citizen. The relationship is even more integrated as without the state, no one can be a citizen. Due to the form of citizenship practiced in modern states, the ability to delegate citizenship gives the state the power to delegate legal personhood. In this system, a non-citizen is as good as a non-person, as they are without the legal protections that other people enjoy.

Because the actions of the citizens affect the relationship of the state with other states and the rest of the citizenry, the state has an interest in subjugating the people under it. This is because the people who live under a state are by necessity people whom the state must control and is expected to control by the rulers of other states and the citizens of that selfsame state. If the state does not control its people, then the state will lose perceived legitimacy as it fails to curtail adverse social effects that result from individual actors who act contrary to a state’s domestic and foreign policies.

From this, any actions taken in a statist system must not only require the consent of all parties involved, but also the consent of the state. The state effectively becomes a secular god, in that it can arbitrarily decide who is or is not legally a person and how people must or must not act. This must be the case with any state, no matter its size, scope, form, or ideological position. The state must hold a monopoly on law in a certain region, as failing to do so would both run afoul of the definition of a state and allow agents of the state to be held accountable for the crimes they commit under color of law. In order to do this, the state needs to make the people within its claimed territory into its citizens. The modern statist system relies upon citizenship, and the states within it would have no justification without such subjects.

Casual Totalitarianism

By this reasoning, there can be no state without totalitarianism. However, this is not the form of totalitarianism that was present in Nazi Germany or the Soviet Union. This is a casual totalitarianism, which is far more insidious than any explicit totalitarianism. In this totalitarianism, the state allows people to sell their labor to a crony capitalist who has swindled for himself special privileges from the state in what is called rent-seeking behavior. Thus, the worker has to either accept terms that no person would rationally accept if given a real choice or work in the black market. This is seemingly voluntary, and most people can get hired to work somewhere, so there can supposedly be no complaining. However, if a person actually tries to do the job that one wants to do as one wants to do it, one runs into mountains of regulations and legislation that an entire team of lawyers must review for compliance. They are also faced with licensing requirements and other privileges that the state keeps for itself and only distributes as the ruling class sees fit. Due to the involvement of the state, we cannot say that there is any legal voluntary economic activity in the current system, as there is no legal economic activity without the state. This is only possible because the state maintains a monopoly on law.

Furthermore, the state can legislate with regard to any relationship, whether interpersonal or political. One cannot engage in any activity without first getting the consent of the state. The state replaces faith and culture when it comes to marriage, as the state decides which marriages and types of marriages are valid and which are not. The state replaces any sense of morality when it comes to law through the doctrine of legal positivism. What matters becomes what is legal rather than what is morally righteous. The state assumes full control over one’s life without arousing suspicion in most people. The state even takes control over what happens between a citizen and himself. That is, the state replaces free will. In the modern world, the state may allow one to engage in any sort of degeneracy under the sun, but the moment the state is harmed or lessened in influence from whatever a person does with himself, the state will forbid it. The state is thus omnipresent, and for many people, this is enough; if they are forbidden from doing something by the state, even when it affects no other persons, they will not do it. People will actively avoid anything illegal, as the state has replaced morality and thinking for oneself.

Because of this, there is no such thing as individualism in the presence of the state. There is effectively only one real person, and that person is the state. No one other than the state can act in any meaningful manner without the consent of the state for fear of being shut down. The state will always make all decisions, even if we do not realize it. Neither will the citizens have a choice in their own minds, as the state has replaced them as people. Thus, we are stuck in a form of totalitarianism, which only differs from place to place and from time to time in the degree of apparent restriction. Some will claim that democracy counters this tendency towards totalitarianism, but if anything, liberal democracy only enables the total state. Without the apparent will of the people, the state cannot designate who the people are without breaking the casual nature of its totalitarianism. The citizens give up their own rights as humans and give the state the right to decide for them. The state needs some sort of mandate, as it needs the citizens to listen to its commands and the government agents to enforce these commands. This may be more or less explicit, but it is always present by necessity. Mass democracy demonstrates this better than any other system.

Ending Totalitarianism

The single greatest show of submission is to beg for the state to lengthen one’s leash, as no matter what happens, one will still be collared. The state will not be changed by begging, as the state is by necessity a totalitarian institution. The only meaningful exercises of power by the people are to subvert the state or overthrow it. The state is antithetical to morality, freedom, and humanity by design, and it cannot be designed otherwise. It is therefore necessary to create an alternative form of governance and defend it against the state. The precise nature of stateless organization will vary from place to place and must be decided by the organizers in each locality.

It is vital that we remove totalitarianism from society if we wish to ever achieve real human liberty. If one believes this, then the precise details become less relevant as it creates an entirely new paradigm of political theory. The alliances and conflicts of previous theories are subordinated to the point of irrelevance. This is not to say that we should support those who call themselves anarchists but simply want global socialism; rather, it is to say that regardless of whether people organize along socialistic, capitalistic, progressive, or reactionary lines, it will be of secondary importance because the highest priority for any living person today should be the elimination of the inherently totalitarian state. Personal preferences about the actions of others will only take precedence once we have freed ourselves from the state and created a society of distinct and free persons. If we do not do this, then we will necessarily choose totalitarianism.

Privatizing State Security

The title of this article is an intentional contradiction. Not only is the modern state a coercive body that initiates and sustains itself through violence (thereby lying through its teeth about “national security”), but the real aim of this article is to bypass the state security apparatus altogether. In short, this article will make a modest proposal: in order to subvert the military-industrial complex, citizens and parallel alternative institutions should think of security in private terms.

First and foremost, security is the duty of individuals. Everyone should realize that nobody can care about their own lives as much as they do. Therefore, owning a gun or any other weapon is neither an extravagance nor an antisocial threat; it is the most effective means of protecting one’s most fundamental right, the right to life.

If a disability or some other impairment makes self-protection an impossibility, then families or communities should fulfill that role. In contemporary society, many people suffer when these steps of self-defense are bypassed completely and the state is given total control over security, especially those who live in urban centers or states with restrictive gun laws. The police cannot be everywhere at all times, and much of their time and effort is consumed by enforcing useless laws which actually endanger the public.

Besides inefficiency, relying on the state for one’s personal safety is a gross waste of money. On a national scale, there is no entity that drains the coffers quite like the Pentagon. Late in 2016, the Defense Business Board released a report criticizing the Pentagon for trying to cover up $125 billion in bureaucratic waste. Besides wasting roughly $400 billion on the clearly deficient F-35 Joint Strike Fighter, the United States military apparatus wastes taxpayer money on such vague extravagances like “overhead” and “administrative fees.”

If such monumental waste is not enough to convince people that America has a problem, then the continuing mess in Afghanistan should. After sixteen years of warfare, the Taliban is still holding large swaths of the country, ISIS is putting up a fight, and the government in Kabul remains mind-numbingly corrupt. This is what $714 billion of taxpayer money has won us so far.

President Donald Trump came into Washington, D.C. with promises of making “America First” not only an economic slogan, but also a foreign policy motivation. Before he became a candidate, he railed against the waste of the Afghan war and hinted that, if elected president, he’d pull US troops out of the country.

The president had a chance to do just that in August 2017. He chose instead to send a small, additional force of 4,000 troops—the type of force that is big enough to look like his administration is doing something, but too small to have any meaningful significance on the ground. Half-measures usually mean nothing, but half-measures really mean nothing if they do not go hand-in-hand with policy changes or new modes of strategic planning.

President Trump’s Afghanistan strategy should only merit our attention because it briefly shined a light on a true alternative. Erik Prince, the former US Navy SEAL who founded Blackwater USA and now runs Frontier Services Group Ltd., proposed replacing America’s military with private contractors. Prince’s solution promised to not only save $40 billion a year, but its establishment of a “viceroy” (an old imperial term that Prince used in a somewhat cheeky fashion) and a smaller, more specialized American military force would mean less bodybags coming home on C-130s every year.

Prince’s proposal was not only shot down like an enemy plane, but, while discussing his plans on NPR, Prince was labeled a “warmonger,” criticized for trying to undermine the morale of military NCOs, and lambasted by nominal liberals for denying the state its right to unlimited control over violence. Throughout it all, Prince kept reminding his opponents that private warfare is as old as prostitution, and is certainly not uncommon in American history.

Private warfare is due for a comeback. However, not all mercenaries are equal. Each type of private warfare that can be found in history has had its downsides. Several will be discussed below with an eye towards finding which one could be best utilized in the fight against the tyrannical warfare-welfare state. A private military ethos could not only break the back of warfare socialism, which has become standard in the United States with or without war, but it could also begin the process of conditioning American citizens away from thinking about the state as being synonymous with security.

The Freikorps Model

Right after the armistice to end World War I was signed, millions of German troops returned to a Germany that they thought would welcome them as heroes. That is not what happened at all. Following the declaration of the German Republic, which was controlled by the Majority Socialists (the Social Democratic Party, or SPD), many on the German left seized the opportunity to formalize Karl Marx’s dream of a communist German state. The most organized of these groups were the Spartacists, a collection of radical Bolsheviks led by Karl Liebknecht and Rosa Luxemburg (the latter of whom was a naturalized German citizen of Polish-Jewish ancestry). The Spartacists and their sympathizers briefly controlled Berlin, and were in certain parts joined in their rebellion by mutinous sailors from the major German port of Kiel.

For the Sparticists, this revolution was not only in fulfillment of Marx’s dream of a proletarian utopia in Europe’s most industrially advanced nation, but it was also a way to kill the “sellout” republic in its infancy. In this one respect they were right, for many of the Social Democrats like President Friedrich Ebert and Minister of Defense Gustav Noske were Wilhelmian patriots who had supported the war and who were not entirely committed to the aims of the leftist elements in their party.

The new government needed to put down these rebellions quickly. The problem was that several members of the German defense establishment were on the side of the communists. The Chief of Police in Berlin at the time was Emil Eichhorn, a member of the Independent Social Democratic Party of Germany (USPD) and a man dedicated to supporting the Bolshevik takeover of the Prussian capital. At one point, Eichhorn released several political prisoners, including several well-known communists.

Desperate to suppress this communist rebellion, the Republic turned to the new private militaries known as the Free Corps (Freikorps). Not wanting to return to normal life and what they saw as the constraining norms of the bourgeoisie, thousands of soldiers volunteered to serve in regiments headed by authoritarian junior officers. From the very outset, these troops loathed the new German Republic and saw its supporters as the chief reason why they lost the war (the “Stab-in-the-Back myth”). But, for the time being, Ebert and Noske believed that these battle-hardened veterans would need little encouragement to begin attacking communists on German streets. They were right.

However, in making a pact with the devil, the Weimar government spelled its own doom in 1919. After all, Freikorps soldiers despised liberal democracy and always saw the eradication of “Western” values in Germany as their raison d’être. In the book Vanguard of Nazism, Canadian historian Robert G. L. Waite quotes one Freikorps soldier as saying that their mission was always political:

“These people still believe that could build on the same lies and false sentiments with which—in spite of unheard of sacrifices on the part of soldiers—they had lost the war against the Western world. Now this lie was fulfilled through the acceptance of Western democracy. Now this blasphemy was made official. The western bourgeoisie had triumphed…We [the students of 1918] replied: We must become nihilists in order to crush tis rottenness underfoot.”[1]

Not long after performing services on behalf of the government, the Freikorps soldiers became, in their own words, “outlaws” who rampaged and pillaged ostentatiously on behalf of German nationalism, but, more truthfully, on behalf of their own desire for action. Freikorps units, which designated their commanding officers as Führer, believed in the principle of “primitive man.”

One of the admirers of Captain Hermann Ehrhardt, the leader of the best Freikorps unit, the Marinebrigade Ehrhardt, was positively described as having a “primitiveness and simplicity” that exuded a “stoic soldierly instinct” that had no time for “political or philosophical convictions.”[2] Such mindless destruction saw Freikorps units pillaging the Baltic territories on behalf of Germany and the White Russian Army. Other Freikorps soldiers found more appeal in the violent radicalism of the Bolsheviks and the Führer Vladimir Lenin.[3] These “Freebooters” craved action and violence. They became a law unto themselves, as evidenced by the Feme murders, a series of political assassinations that may have killed as many as 354 “traitors” on behalf of the German Volk.[4]

The problem with recreating a Free Corps movement in America is obvious: such political militias can never be fully trusted by owners of property or those who seek a stabilized social order. The Freikorps glorified in chaos, and chaos is the enemy of liberty. The story of the “beefsteak” Nazis (brown on the outside, red on the inside) also sheds light on the fact that Freikorps soldiers routinely switched their allegiances, especially between the two most powerful totalitarian ideologies.

While a Free Corps movement made up of American veterans may not be so prone to utopian ideologies, America in 2017 is not Germany in 1918. American degeneracy is caused by prosperity, not material poverty or the shame of military defeat.

The Condottieri Model

It is easy to romanticize the military engagements of the Middle Ages. After all, unlike modern wars perpetrated by nation-states, warfare during the medieval age was a small-scale affair between kings and their private armies. Most of the time, medieval cities and villages were left alone so long as they paid a fee and offered up no resistance. In Anatomy of the State, Murray Rothbard quotes F.J.P. Veale in saying that “the rich burghers and merchants of medieval Italy were too busy making money and enjoying life to undertake the hardships and dangers of soldiering themselves.”[5] Therefore, these townspeople hired foreign mercenaries to defend them. When a threat was neutralized and the job was done, these mercenaries were paid and told to go away.

The benefit of this system was that civilians were mostly left alone and could continue with life and trade. Theoretically, these mercenaries would try to avoid unnecessary casualties, and would only attack villagers and burghers if their payment was not forthcoming. Unfortunately, this is not always how it played out. As noted by Joseph R. Stromberg, many mercenaries of the Early Modern period set out to become territorial lords, which essentially meant that they began wars of aggression in order to claim private kingdoms. “Many mercenary captains aspired to become outright political rulers—men on horseback—rather than mere subcontractors in the business of security provision.”[6]

Although these mercenaries, known in Italy as condottieri, did not engage in the type of warfare that indiscriminately killed civilians or created undue hardships to lives and property, they nevertheless injected political chaos wherever they went. Then as now, mercenary bands attracted men of action who grow easily bored with too much peace. Such men are prone to engaging in conflict only to satisfy their boredom. In the 19th century, American filibusters (not to be confused with the parliamentary tactic) undertook private military expeditions to Latin America in order to aid local liberals, establish private fiefdoms, and/or spread the business of slavery. In the 20th century, adventurers have had a hand in destabilizing Germany, Africa, and Asia.

The idea of creating modern mercenaries in America is downright silly. First, foreigners should never be in charge of another nation’s security. Second, mercenary warfare in the presence of states is almost always offensive in nature, thereby making imperial expeditions all but a certainty.

The Militia Model

The militia has a long and storied tradition in American history. Militia troops were key to the American victory in the Revolutionary War, for militia units utilized small-scale tactics, guerrilla warfare, and targeted assassination of British commanders that forced the British to penetrate deep into the American hinterlands. This over-extended British supply lines, thereby making it easy for American militia fighters to win the day in small to medium-sized battles.

Militias are also synonymous with republics. The Second Amendment not only enshrines the right to self-defense, but the right to form militias as well, though both came under heavy attack by the Supreme Court in the intervening years. In a better world, all American communities would be able to form their own militias in order to protect their property rights and dissuade the vampiric state from overstepping its official limitations. Militias do not have to be standing forces, but it would be in the best interest of a community if all able-bodied men were well-trained and adequately prepared for emergencies and insurgency-style warfare. The best feature about militias are that their small size and local focus make them best-suited for defensive warfare rather than offensive warfare. Militias are not designed for long, extended wars of conquest. Rather, a militia unit is designed for low-intensity conflict wherein they have the advantage in regards to intelligence, knowledge of terrain, and maneuverability.

Modern America will undoubtedly recoil at the very proposal of forming militias. Thanks to a campaign of disinformation during the 1990s, when homegrown militias became synonymous with white supremacist politics and domestic terrorism, any militia that forms today will be quickly infiltrated by government agents. A militia directly threatens the state’s monopoly on violence. The state and its supporters know this. Look no further than the overreaction surrounding the standoff between Ammon Bundy and Western ranchers against the Bureau of Land Management. The same people who fret over “Islamophobia” and police brutality towards blacks were the same ones advocating for dropping bombs on American citizens.

Conclusion

The painful truth is that all these options would be snuffed out by the modern Leviathan state. From a purely logical perspective, an American Free Corps might work, so long as sympathetic junior officers decided that it was right to let their men become political soldiers. The US military has many regulations dictating what service members can and cannot do while in uniform. Therefore, any Free Corps creation would automatically go against the oaths that many of its potential members took upon enlisting in the US military. Most take these oaths very seriously.

The likelihood of American mercenary bands serving stateside is nil. While libertarian or right-wing mercenaries serving abroad is a bettter idea than current practices, these men will undoubtably face prosecution on charges of treason or terrorism for daring to fight for a country or an idea that goes against progressive liberalism.

In the end, a militia force makes the most sense if Americans are serious about maintaining their local liberty in the face of an increasingly tyrannical state. That said, this militia must function in strict secrecy. Wearing uniforms and bearing flags is a sure way to draw the attention of the FBI or local law enforcement. Conversely, without such uniformity, many military bands lose cohesion and fall into infighting.

Unfortunately, there are no perfect answers to this situation. The idea of a powerful state is now unthinkingly accepted by Democrats, Republicans, and centrists. Republicans rely on the votes of military members past and present, and so would be unlikely to support any measure that threatens the force and violence monopoly enjoyed by the Pentagon. Democrats would shriek “racism” and “terrorism,” and would run to the receptive state in order to have these units put down with extreme prejudice. It is also unlikely that many ordinary Americans will rush to join bands of guerrilla fighters, despite the promise of status and a bit of excitement.

At this point in time, the best thing that could be hoped for is that a wide swath of Americans would come to accept the reality that the security of their lives and the lives of their neighbors depends on them and their willingness to use force in defense of life, liberty, and property. This thought crime starts the process of rejecting the state’s monopoly on violence, and could ultimately lead to a new, more privatized model of security. But until we can produce more thought criminals, arguing over how to best create private security entities is a fruitless endeavor.

References:

1. Waite, Robert G. L. (1969) Vanguard of Nazism: The Free Corps Movement in Postwar Germany, 1918-1923. W.W. Norton and Company. p. 55.

2. Ibid, p. 165.

3. Ibid, p. 274-275.

4. Ibid, p. 216.

5. Rothbard, Murray (1974). Anatomy of the State. The Ludwig von Mises Institute. p. 49.

6. Stromberg, Joseph R. (2003). “Mercenaries, Guerrillas, Militias, and the Defense of Minimal States and Free Societies.” The Myth of National Defense: Essays on the theory and History of Security Production, ed. Hans-Hermann Hoppe. p. 219.

The Ethical Notions Of Personhood And Savagery

This article expands upon an essay found in Libertarian Reaction.

A fundamental fixture of Christian values is the inherent sanctity of life. Christian values are at the basis of all modern Western philosophy, and as such this also applies to libertarianism, as it is fundamentally born out of thinkers and theories from Christian Europe. Although the contemporary libertarian movement owes much to Jewish thinkers such as Ludwig von Mises and Murray Rothbard, it still has the Western Christian roots with which it began.

It is important to note that Christian values are somewhat divorced from the Christian faith. One can still agree with the basic values of Christianity without adhering to the religious practice, as evidenced by the idea of cultural Christianity, which regards Christian teachings as useful even if they are not necessarily true. Because of this influence, libertarians often assume at the basis of their ethics that any living human can be considered a person, and thus every living human can be held to the same moral standard. But this is demonstrably not the case, as there exist humans who are unwilling or unable to be moral actors.

We must consider these humans under a different set of ethics, and we must recognize that there are humans to whom we cannot apply our notions of personhood. There exist humans who reject the idea of a right to life. In order to effectively deal with their performative contradiction, we must exclude humans who reject the right to life from the protected status of having a right to life. If one assumes that life is valuable, then one must take one of two positions: either that life is valuable even if it goes against life, thus contradicting the main principle; or that life can cease to be valuable. With the second assumption, one can still hold that life is valuable. However, it has a clause that it loses its value when it goes against life. From this, we can formulate a theory that allows for killing in limited circumstances when this would preserve life rather than destroy life.

The Edge Of Personhood

At this point, we are introduced to both a fascinating and a potentially terrifying concept. There is a possibility that some humans are fundamentally incapable of mutual respect for life, and thus they are not persons in the ethical sense. If this is true, then libertarian theory needs to exclude certain humans entirely. After all, one cannot expect to achieve a libertarian world if it is populated by humans who do not respect life, liberty, or property, and respecting the latter two is meaningless if one does not respect life, as there is no liberty or property without life.[1] Due to this, there can be no cohesive libertarian social order without the exclusion of this subsection of humans who cannot be properly considered persons. These humans are incompatible with life, liberty, and property, and accepting them as people will create a theory and practice that cannot result in a libertarian social order.[2]

It is necessary to classify humans into two groups: those who have the capacity to observe ethics based on the preservation of life and those who do not. The first group are ethically and morally persons, the second are savages. One cannot conflate persons and savages without contradiction, moral relativism, or outright nihilism. In order to make such a classification, it is necessary to establish a set of criteria that would exclude someone from the classification of person and make one a savage. This may be done by observing that rejecting certain principles will make someone incapable of respecting the lives of others.

There are humans who cannot understand the ethical reasons for preserving the life of other humans even when it may be inconvenient to them. These humans value their own lives and will protest if anything is done against them. However, these protests are empty because they will not afford the same courtesy to others. To them, the idea of a right to life is not an inherent right for everyone, but a political weapon that they can use for their own benefit. They will defend their own lives at the expense of everyone else in their society. These humans will be a minority of any non-primitive society, but they are still a significant theoretical and practical concern, especially when one considers the rise of some groups who show increased tendencies to be opposed to the life, liberty, and property of others.

It would also be meaningless to introduce the notion of savages without defining the traits in humans that are capable of creating respect for life, liberty, and property. Since all action starts in the mind, there must be psychological reasons to explain why some humans are able to respect rights and others are not. One can attempt to rationalize why some humans are savages and try to use it as an excuse for savagery, but this ignores the main issue, which is that some humans are pathologically incapable of respecting life. The reasons for this are irrelevant in ethical considerations, and are only important insofar as one cares to prevent more humans from becoming savages in future. On an interpersonal level, we must show compassion for these humans, but compassion alone cannot dictate our philosophy.

Forming Morality

There are three conditions that must be met in order to form morality. First, people have to prefer morality over the lack thereof. Second, people have to prefer reason over the lack thereof. Third, people have to be capable of empirical observation. If any one of these conditions is not met, there can be no morality on an individual scale. Most humans are capable of all three. Many are poorly capable in some regard, which creates an inconsistent regard for life, liberty, and property, but it still is a degree of respect which makes humans able to function within a society based on law. A human who does not prefer morality cannot prefer to be moral over being immoral, which means that these humans cannot be moral actors and are therefore in the savage category. If a human is fundamentally incapable of preferring morality, then they can have no place in a society that aims to create virtue and/or wealth.

The most important of the three is the capacity for reason. Whereas rationality is the defining feature that separates humans from other animals and the basis of all morality, there is no personhood without rationality. Without reason, one cannot know what is moral beyond what one can instinctively distinguish or what one can absorb from external sources. This may be enough for some humans, but external conditions are always changing. The need to temper empirical results with logic produces a constant need for reason in morality. Abstract thinking requires well-developed rational faculties, and morality is based in abstractions of virtue. Additionally, even perfect knowledge of morality must be accompanied by the wisdom to properly apply it to real-world circumstances. There are situations in which different moral ideas will collide and without reason, these conflicts cannot be productively and consistently resolved.

Furthermore, there are moral values that are eternal and unchanging, and these too require reason to comprehend. These are values ingrained in the very nature of man which would require many generations of evolution to change, thus placing such contemplations outside of the context at hand. These are the base drives that manage to uphold and sustain society. Without reason, we can lose control over these drives. Humans are easily confused; our urges can be misdirected, and the only way to prevent this is with constant vigilance through reason. Without reason, humans are incapable of fully comprehending the purposes for the existence of morality. If humans lose touch with the purpose of morality, then they will lose touch with morality itself.

Finally, there is the capacity for empirical observation. If a human is incapable of seeing reality as it is, he may act immorally while trying to be moral. Moral theories must be subject to testing in the real world in order to be useful for creating and maintaining civilization. New knowledge and discovery must always be put to use when we discuss morality in the current state of society. Even though some staunch traditionalists will disagree, this is not fundamentally in opposition to tradition. Tradition is cultural knowledge that is both maintained and created, a millennia-long collection of best practices. Tradition is the only starting point which can provide this knowledge, but it should evolve in order to absorb new information. By carefully integrating new knowledge in new conditions into tradition, we are able to maintain morality on a societal scale.

The Nature Of Savagery

If there exist humans who are savages, then we must consider who they are and how they act. There are two groups of humans who are obviously savages; the power-hungry members of society who sacrifice the well-being of others to advance their own status, and members of uncivilized societies who are trying to integrate into civilized societies. In the Western cultural sphere, these manifest as leaders of large corporations, politicians, and immigrants from Islamic and African countries. It is a well-known fact that there is a correlation between sociopathy and other pathologies that make it difficult to care for the well-being of other humans, and the humans who hold high positions of power. In fact, almost every modern institution that controls our societies consists of these immoral humans who are in high positions of power. Their savagery is hard to see for many humans, as they perform most of their immoral actions through proxies and covert pressure, but they are still immoral.

There are obviously humans with the same pathologies who do not manage to reach high positions of power, but due to the current institutional incentives, the institutions of power are built to accommodate their behavior. However, we can elaborate that all humans who are narcissists, psychopaths, or other mentally disturbed individuals do not possess the capacity to value the lives of others. In fact, the only way they can demonstrate that they can value life is if they are actively seeking help. Perhaps more importantly on a cultural level, the rejection of individualism and enlightened self-interest is in large part due to this sort of subnormal behavior. Few would associate self-interest or individualism with evil if it was not portrayed as such by humans who are incapable of respecting others. If those who wish to create a society of self-interest and individualism, which is supposed to be beneficial for those within the society, do not reject anti-social behavior, they will fail on both a philosophical and cultural level.

The obvious examples of the second group are devout Muslims and many third-world immigrants. We may just act as if they lack the capacity for reason, but that is only the truth with certain immigrants from the third world. In parts of Africa and Latin America, the development of societies based on rational laws has not occurred. This has not been improved by the political, economic, and social colonization of Africa by whites. There can be no principled opposition to conquering land if it was previously occupied by savages, but this cannot justify the current affair of near-total control over developing nations. It is not the business of first-worlders to interfere in the workings of others, and it will only result in a worse condition of the world for everyone. However, due to the current institutions of the West, there is an influx of immigration from the third world. Many of these humans are irrational and do not assimilate to rational laws. There are exceptions, but the majority of these migrants will only serve to decivilize more advanced countries.

With devout Muslims, the issue is not that they are unable to understand reason alone, but rather that they are incapable of applying it to the real world. Their religion distorts their worldview to such an extent that they often apply their morality in extremely inconsistent and often reprehensible ways. Even though the extreme social conservatism may appeal to some reactionaries in the form of white sharia, it is important to understand that their beliefs are borne not out of principle, but rather the dominance of their religion. It is also clear that Islam in its current state is a misogynistic religion, as tainted as that word has become, and it is important to protect women in healthy societies. Furthermore, the opposition to homosexuality and other degeneracy in Islam is not the civilized sort that is present in Christianity, but simply violence and often perversion. However, ex-Muslims in general and female ex-Muslims in particular show a capacity to function normally in society.

In the previous group, we also must include Antifa and some other communists. This may seem shocking, as they have been raised in civilized societies and have mostly lived in civilization for their entire lives, but many of them have been decivilized by their college educations. The constant drive to go against morality, “whiteness” (European values and cultural attitudes), and society in these institutions causes some humans to lose their ability to comprehend reason and empirically observe reality. They create their own culture, which is based on a system of analysis that only feeds more into their own culture, resulting in them functionally living in a different reality than the rest of us. As such, they are not acclimated to civilization and we cannot consider this group of young humans to be capable of civilization until they learn how to observe reality and use logic again.

The final group consists of humans who commit such heinous crimes that one must assume that they lack one or more faculties necessary for morality. They are savages because they have demonstrated their savagery, and not because we know how they lack certain attributes. These are the pedophiles, sadists, rapists, and mass murderers. They are humans who are not capable of moral reasoning and are savages due to how they behave. One may not understand the mental deficit of each of these humans, but they must lack something in order to commit crimes of such a depraved degree. Although it may be fashionable to oppose the death penalty, there cannot be an ethically sound argument against the death penalty once one considers that not all humans are in the same category of personhood. Note that this does not mean that the state should hold the power of the sword; only that it is morally possible for someone to do so.

Conclusion

A society can use coercive sociopolitical systems to counteract savage tendencies, but this is unacceptable as a solution from a libertarian perspective. Thus, libertarians must ensure that communities founded on libertarian principles are intolerant of humans who are incapable of being virtuous. Otherwise, there can be no libertarian social order. The notion that everyone should sacrifice their freedoms for the protection of the social class of savages should be thoroughly immoral to all libertarians. Savages will always bite the hand that feeds, so it is only detrimental to feed them. This does not mean an extermination of savages, but rather a systematic exclusion of savages from libertarian societies. While the result may be the same if they cannot survive without parasitism upon civilized people, morality is not dependent upon results.

Footnotes:

  1. It is important to note that some people violate the rights of others in certain moments of criminal passion, and that this is a separate concern from what is being discussed here. We are concerned here with those who are pathologically opposed to fundamental ethical norms.
  2. Note that the need to create an exception for those who are pathologically incapable of ethics both defeats and makes possible the common notion of universalist ethics. It is vital to create two classes of humans; however, one may argue that if these two classes exist, then ethics cannot be universal.

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.