The economic fallacies of Black Friday: 2014 Edition

Today, shoppers across America will participate in the largest shopping day of the year: Black Friday. The National Retail Federation is estimating that 140.1 million customers will be shopping on Black Friday weekend, down from the 2013 estimate of 140.3 million customers. The actual result from 2013 was 248.7 million shoppers, an increase of 77.26 percent over the predicted value. A similar percentage over the predicted value for 2014 would mean an actual number of shoppers close to 248.3 million.

The NRF estimates that total sales for the holiday season will be $619.1 billion, up from $592.6 billion in 2013. This would be an annual increase of 4.1 percent. This year, the NRF also estimates that retailers will hire between 730,000 and 790,000 seasonal employees, compared with the actual 768,000 they hired during the 2013 holiday season.

Many ordinary people, as well as many economists, think of this spending and the increase in seasonal jobs as a boost to the economy. To think this is to commit the broken window fallacy, as such thinking fails to account for what people would do with their money if they were not spending it on holiday gifts, or what they could do with money that they would not have to pay back in interest to lenders if they had not engaged in deficit spending during the holiday season. In other words, it focuses only on what is seen, and ignores opportunity costs. If people would save their money rather than spending it on various holiday gifts, then this money would be invested in one thing or another. As Henry Hazlitt explains in Chapter 23 of Economics in One Lesson, saving is really just another form of spending, and one that has a greater tendency to allocate resources where they are most needed.

There is also the matter of malinvestment, which according to Austrian business cycle theory, is one cause of recessions. Malinvestment occurs to the extent that people purchase unwanted gifts (which promotes overproduction and misallocation of resources) and/or use money they do not have (which squanders more resources in interest payments on credit cards). It must be noted that the case of holiday shopping does not exactly follow the Austrian business cycle theory, as there is no credit expansion by a central bank that drives the malinvestment, and the boom suddenly halts on its own when the holiday season ends. That being said, when we look at the average monthly returns on the Standard and Poor’s 500, for example, we notice that aside from the historically abysmal returns from investing during the month of September, the worst months for investing are February, May, and March. (April would likely be bad as well if not for income tax returns providing an artificial economic boost.) An economic downturn occurs in the historical average following the holiday season, but as this has become an expected annual occurrence, many analysts simply do not look for an explanation of these results, as they are perceived to be natural. Even so, this appears to be a small-scale psuedo-Austrian business cycle that repeats annually.

With these arguments in mind, would we all be better off if we just canceled the holiday shopping season? It is an open question, but the Austrian School of economics suggests that we could be.

Seven observations about events in Ferguson

Over the past three months, the shooting of Michael Brown by Officer Darren Wilson in Ferguson, Mo. has been the focus of much coverage in the media. The story has been misreported in many outlets, and it has been used as propaganda by race-baiters. If any good is to come from the tragic events which have occurred, then the situation must be examined logically. Seven such logical observations follow.

1. A government agent being tried in a government court is a conflict of interest. A grand jury is convened in a government court house filled with government agents. The case is laid before the grand jury by a government prosecutor, who gets to present a one-sided case. In a case involving a government agent, who has likely helped the prosecutor (or one of his friends) bring and try cases in the past, there is certainly a conflict of interest that could only be resolved by having an independent prosecutor and grand jury (although the latter no longer exists in the current system).

2. That being said, a conflict of interest is not by itself a cause for rejection. While a conflict of interest is cause to be suspicious, further evidence is needed to show that something untoward has occurred. This is especially true when the available evidence supports the conclusion reached. Sometimes, the available evidence for a case really is one-sided, and this case is such a case. There is not enough evidence to even say that it is more likely than not that Wilson committed an offense against Brown, which is the required burden of proof for a true bill of indictment from a grand jury.

3. In a free (stateless) society, a person in an equivalent situation to what Wilson encountered would have been justified to act as Wilson did. Let us examine how a similar chain of events might unfold without a government. A man walks into a convenience store and commits a strong-arm robbery. As he leaves, the store clerk calls his private defense agency to report the crime. The video feeds from the store’s security cameras would show beyond any doubt that the man was guilty of robbery. The private defense agency issues an all-points bulletin against the robber, informing all property owners and service providers of his criminal status. At this point, the robber is effectively an outlaw. He would be unwelcome on private property, which is all property in a free society, including any roads or sidewalks on which he may be traveling. The robber is therefore trespassing on the road or sidewalk owner’s property by using the road or sidewalk to escape from the scene where he committed a crime. The road or sidewalk owner calls up his private defense agency to have the robber removed from his road or sidewalk. When he is found, he is walking down the middle of a road, blocking traffic. This creates even more incentive to remove him. An agent of the road or sidewalk owner’s private defense agency confronts the robber and trespasser, telling him that he is unwelcome on the road and that he will not be welcome anywhere or be a part of mainstream economic life until he makes restitution for his robbery. The criminal assaults the agent and makes an effort to kill him. The criminal starts to leave, still trespassing on the road or sidewalk. Then, he turns around for a second attack on the agent. The agent yells at the criminal to stop. The criminal keeps charging. The agent shoots to kill. The actions of the agent are in accord with defense of person and property under the non-aggression principle.

4. “Hands up, don’t shoot” is a nonsensical slogan. Even though no evidence supports the suggestion that Brown raised his hands into a surrendering posture, this has become a slogan among demonstrators motivated by the incident. As such, it must be addressed. Putting one’s hands up does not amount to a surrender. This can be shown by a simple counterexample. One can raise one’s hands, move toward someone, say that one is surrendering, and then deliver a double-fisted downward blow to that person’s head once within striking distance. Unless the approached person shoots in self-defense before the assailant gets too close, he or she can be attacked.

5. Demanding justice for black people while destroying businesses owned and/or operated by black people is contradictory. As Ferguson is a town composed mostly of black people, most of the businesses in the area provide employment to black people, and some are owned by black people. Violating the property rights of black people and depriving them of economic opportunities, as the rioters did, is the opposite of advocating for justice for black people.

6. Cameras should be worn by police. If Wilson had been wearing a camera that had recorded the entire incident, then there would be no questions about what happened, as there would be an objective record of the events that occurred, rather than just a litany of contradictory eyewitness accounts, the word of Wilson, and the forensic evidence. Outside of this matter, studies show that body cameras worn by police officers lead to a over 50 percent reduction in police use of force and a nearly 90 percent reduction in citizen complaints against police for their conduct.

7. Every aspect of this situation could have been avoided by respect for private property. If Michael Brown had respected the private property of the convenience store owner, this situation never would have happened. If demonstrators had respected the private property of the people of Ferguson, the looting and destruction of the businesses never would have happened. If the state had respected the private property of everyone, there would have been no taxation to pay for policies that lead to economic inequality, which motivates people to turn to criminal behavior.

Four uncomfortable truths about government militaries

Every year on Veterans Day, the establishment media is full of articles of hero worship for soldiers. But there are some truths that need to be confronted about government militaries which the establishment media will not address. Let us address some of those here.

1. The troops do not defend your freedom. The troops work for the state, not for you. Contrary to statist myths, the state does not work for you, just as masters do not work for slaves and farmers do not work for livestock. Of course, masters will take care of and protect slaves to some degree and farmers will take care of and protect livestock to some degree, but this is not primarily for the well-being of the slaves and livestock, as starry-eyed state propagandists would have us believe. It is only so that the master or farmer can more effectively exploit the slaves or livestock. After all, slaves and livestock who are ill-cared-for are less productive, and slaves and livestock who are not defended may escape and/or be exploited by others, which makes them less exploitable by the master or farmer.

One can also see this truth about the purpose of troops by empirical observation. Wars have been fought in the name of increasing liberty at least since President Woodrow Wilson’s claim that World War I was about “making the world safe for democracy.” Since that time, liberty has steadily been lost to encroachments by the leviathan state. The easiest way to silence a pro-military statist is to ask them to name one freedom that has been gained by the myriad wars and overseas misadventures following 9/11.

The idea that government soldiers defend freedom carries with it an implicit assumption that if the government soldiers did not defend freedom, then this vitally important task would go undone. This is a positive claim which carries a burden of proof that statists generally do not bother to try to fulfill. Perhaps it is because they know they cannot; after all, government militaries are funded by taxation and currency debasement, which violate property rights and freedom of association. To quote Hans-Hermann Hoppe, an expropriating property protector is a contradiction of terms. And there is no reason why the market should fail to provide a service that is strongly desired by everyone for everyone (except for a few criminals, and even they want it for themselves but not for their victims), to the point that most people will tolerate the oppressions of statism just to obtain a counterfeit version of it.

From this, one can only conclude that either the troops are willfully doing the opposite of defending freedom or they are being deceived. Since they (like most other people) are propagandized to the point of saturation by government schools, churches, and establishment media programming and advertising, it is reasonable to conclude that the latter is usually the case.

2. Praising the troops is selfish and irresponsible. Self-defense is one of the most fundamental rights, and the most important personal responsibility, as the abdication of this responsibility endangers all other rights and responsibilities. Of course, there is nothing wrong with hiring another person or group of people to help one fulfill such a basic need. But as shown above, governments are not hired by you, do not work for you, and do not provide defense services in an objective sense. The troops are ultimately in the position they are in because too few of us do what is necessary to provide for our own defense, including self-defense against the state. It is therefore because of the selfishness (in the form of risk aversion with respect to confronting aggressors) and irresponsibility of most of the American people that the troops are risking their lives at the behest of politicians in the first place.

3. Uniforms are not moral magic. From the act of argumentation, one can show the fact that morality is a valid concept and that there are moral rules which should be considered binding upon all people at all times. We should therefore hold a soldier to the same moral standard as a private citizen. In the line of duty, a soldier commits actions which would be punishable crimes if you or I did them. Every killing of a civilian is an act of murder. Every act of invading a innocent bystander’s private property is an act of trespassing. Every act of destruction that damages an innocent bystander’s property should require restitution. Putting on a uniform and excusing such behavior as doing the job assigned by one’s superiors in the name of a collectivist concept is morally irrelevant.

4. Defense would be better without government militaries. Admittedly, there are no empirical examples of a free market of private military companies providing military defense services in lieu of a government military. Part of the reason for this is that governments will use as much force as they must to keep such an idea from being tested, as its success would doom the state by depriving it of its essential monopolies (the other being criminal punishment). But there are reasons to believe that this could work, and that common criticisms of this idea do not withstand scrutiny.

The first thing to note is that a government military has a monopoly, and that this monopoly is maintained not because they satisfy customers in a free market so well that no one cares to compete with them, but because the state will use its military to destroy any competition within its borders. The presence of a monopoly with involuntary customers necessary leads to inferior quality of service and higher costs, as the monopolists need not provide superior quality of service and/or lower cost of service vis-à-vis a competitor. The opening of provision of military defense to a free market of competing providers must therefore lead to superior quality of service and/or lower cost of service.

The most common criticisms of competing private defense companies are that they will fight each other, that they will lead to rule by warlords, and that they will become a new monopoly on force. Rule by warlords and monopoly on force describe the situation under statism, so if the worst-case scenario is that eliminating government militaries just gets us another government military, all other cases must turn out better than this, making these into powerful arguments in favor of privatizing military defense. This leaves the concern that the private service providers will fight each other. We must recognize that the current service providers do fight each other, which caused 90 million deaths in the 20th century. As such, the bar of service quality that private military defense providers must exceed is set rather low. Fortunately, private military defense providers are limited in ways that government militaries are not. A private service provider must bear the cost of its own decisions, and engaging in aggressive wars is more expensive than defensive actions only. A company that sells war is thus at an economic disadvantage against a company that sells peace. Without the government monopoly on legal services granting immunity to the private soldiers as it does to soldiers of the government military, the private soldiers will be subject to the criminal punishments made prevalent by the defense companies in the area in question. The agencies that decide to fight also must take care not to damage or travel on ground held by customers of other agencies, as this would be considered trespassing, and a trespasser with an intent to murder others in a war is a trespasser who may be killed in self-defense. Thus one could expect to see every private property owner not involved with the warring agencies taking actions to destroy both sides of the conflict whenever they occupy land that is not owned by their customers. (And with no state to forbid ownership of certain types of weapons, the private property owners would be much more capable of stopping military hardware than they are now.) There is no guarantee against such a fight, but there are enough incentives working against it to consider it a remote possibility.

Twelve arguments for voting and how to refute them

Every year on Election Day, many celebrities, pundits, and other public figures tell us to “do your civic duty and go vote.” Numerous organizations make get-out-the-vote efforts to convince people to go to the polls. They employ several common arguments in such efforts. Let us examine twelve of these common arguments in favor of participation in electoral voting and explore how they may be refuted.

1. Voting is an act of self-defense.

An act of self-defense must target aggressors and only aggressors. Otherwise, the act is aggressive against the innocent bystanders who are harmed. Voting does not target aggressors and only aggressors; it targets everyone. Those who do not participate in a vote are still affected by the result of a vote. Even people who live in other countries and cannot vote are affected due to foreign policy. Thus, voting does not qualify as an act of self-defense.

2. If you do not vote, you have no right to complain.

This is exactly wrong. People who do not vote are the only people who have a right to complain. Those who vote for people who win elections are endorsing politicians and their minions who will engage in activities under color of law that would be punished as crimes if you or I did them. Those who vote for people who lose elections may not be vicariously responsible for state crimes in the same degree, but participating in the system helps to create the appearance of legitimacy for that which is inherently illegitimate.

3. You need to vote to cancel out the vote of other people who vote against your interests.

In the broadest sense, this is impossible. Every vote is against the interests of an individual, as every vote empowers the collective called the state at the expense of the individual.

4. Every vote matters.

The odds that your one vote will alter the outcome of an election are far less than the odds that you will be killed on your way to the polling place. And even if these odds were overcome, there is still no guarantee that your vote will be counted correctly. As Tammany Hall boss William Marcy Tweed once said, “As long as I count the votes, what are you going to do about it?”

5. If you do not vote, the bad guys will win.

The bad guys win when people do vote. Every vote helps to give the appearance of legitimacy to the process and results, regardless of which violent sociopath wins a particular popularity contest.

6. Voting is a fundamental right.

There is no such thing as a right to someone else’s justly acquired property, or a right to infringe upon someone else’s individual liberties. This does not change by cloaking one’s actions under euphemisms and asking agents of the state to commit the acts in one’s stead.

7. Voting is a civic duty.

A legitimate duty or obligation can only come from a legitimate right or contract. The social contract, from which civic duties and obligations emanate, is not a legitimate contract because it violates private property rights and freedom of association.

8. Your vote is your voice in government.

This statement assumes that there is no voter fraud, that votes are counted correctly, that vote results cannot be altered by courts, and that politicians will do what voters tell them to do. Each of these assumptions has an unfulfilled burden of proof at best, and is demonstrably false on several occasions at worst.

9. Just because voting has not worked in favor of liberty in the past does not mean it will not work in favor of liberty in the future.

One definition of insanity is the repetition of the same action under the same circumstances while expecting different results. Also, one would have to replace “voting” with “abstaining from voting” in order to be logically consistent, which makes for a good anti-voting argument.

10. Abstaining from voting is an apathetic action.

Doing nothing is preferable to doing something that is self-destructive and/or harmful to others. And who is really more apathetic: the person who continues to do that which has a proven track record of not advancing liberty, or the person who stops doing that?

11. Abstaining from voting will not accomplish anything.

Not necessarily. If enough people stop voting, the illusions of legitimacy and consent of the governed will vanish, revealing the true nature of the state so all can see it for the violent criminal organization that it is. In most elections, there are already more people who do not vote for anyone than there are who vote for any particular candidate, so we are not as far from this point as many people seem to think we are.

12. If we did not vote with ballots, we would vote with bullets.

The premise is asserted without evidence and may therefore be dismissed without evidence, but let us accept it for the sake of argument. If this is true, then voting has not prevented a Hobbesian war of all against all; it has merely sanitized such a situation. This has the downside of lowering the barrier of entry to committing violations of individual liberty and private property rights. If there were no agents of the state who could be asked to steal from others in one’s stead in the form of taxation or initiate violence against others in one’s stead in the name of law and order, then one would have to act on one’s own in order to do such things. Most people are not willing to engage in criminal activity so openly, and the few who are would be more easily identified and eliminated by moral people acting in self-defense if people had to use direct action rather than the indirect action of voting in order to commit aggression.