No Coercion

As many people prepare to celebrate America’s Independence Day, marking the beginning of a revolution that was to transform America into a land of relative freedom to which people would flock in vast numbers, one of our most recent new additions was welcomed by a bullet to the stomach from a government agent.

The man’s crime? He was suspected of having crossed an imaginary line on the ground drawn by politicians (who themselves subsist criminally by violently appropriating other people’s money) without following the politicians’ rules and procedures for such movement. Yes, a truly heinous crime.

Kind of makes me wonder what we’re actually celebrating on Independence Day. We remember that intrepid generation of Americans who gained their independence from one ruler but forget that another ruler immediately took its place and has grown progressively more oppressive ever since, to the point where something as simple and beneficial as immigration can be deemed illegal by the rulers.

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New Scientist has this article about how insurance could be used to at least partially mitigate the problems that poor people around the world might face as the result of some potential future climate change (warming? cooling? Krugmaning?).

As well as providing protection from the increasingly unpredictable weather, the premiums could also be a powerful way to get poor people to adapt to climate change by encouraging them to invest in measures like drought-resistant crops. Is this profit-driven endeavour too good to be true?

What’s so sadly amusing about this is that New Scientist describes it as if it’s some brilliant new discovery, but free market economists have been making that exact argument for decades. The magazine even tries to link it to tyrannical statists like former U.N. Secretary General Kofi Annan (saying he’s a supporter of it), with the implication I guess being that it’s not really a free market process (because as the government schools teach us, nothing about the free market can help poor people)!

Now a different type of insurance scheme is being rolled out in Adi Ha and many other places in Africa, Latin America and Asia, backed by corporate giants such as Swiss Re and Munich Re. Instead of insuring against lost crops, “index insurance” protects farmers against the vagaries of the weather. For example, if rain gauges at local weather stations drop below a certain level, insurance companies can automatically transfer a payout to farmers without having to visit them.

The fact is, it’s long been a profitable business to insure farmers against lost crops, and insurance companies have incentives to come up with ever more creative ways to help people manage risk (i.e. this new index insurance). It should be no surprise that they’re doing it again and helping (as free markets always do) the poorest of the poor, those who are preyed on by governments.

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When someone does something so completely and obviously at odds with what he should have done, it’s common to ask him if he is consuming a potent brain-destroying chemical, i.e., “Dude, are you on crack?”

So it’s only fair to ask the same question of Barack Obama and most of the members of Congress since they have been working incredibly hard to make our current economic situation even worse than it already is. In particular, this drive to “stimulate” the economy through public spending and the encouragement of private spending. Even the Republicans (who strangely label themselves the party of freedom and free markets) are, with a few exceptions, actually one-upping the Democrats by criticizing many of the public spending projects for not being “shovel-ready” (that is, not getting money spent fast enough)!

We could be forgiven for thinking that we had suddenly materialized in an episode of The Twilight Zone. We’re in the midst of an economic downturn resulting from the government’s monopoly over money and its manipulation of the supply of money and credit that caused (as it always does) a massive misallocation of resources (which the markets are now attempting to reallocate properly), and our keepers in Washington are doing their very best to put the brakes on the needed correction and prop up an artificial system that is not only unsustainable without violence (government action) but destroys vast amounts of wealth in the process.

I could understand if Obama and Congress came forward and said, “Look, we really don’t think you, our hapless subjects, should be allowed to engage freely with one another in mutually beneficial production and exchange and enjoy the resulting increase in your standard of living, and we’d really like to see you all dramatically impoverished in order to financially benefit us and our politically connected friends.” I mean, then it would all make sense.

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 A recent Gallup poll on political ideology was a great example of how bizarre the analysis of American ideologies is. The poll indicated (according to the pollsters) that conservatives were the largest ideological group in America right now. What it actually shows is that when given the artificial choice of “conservative,” “moderate,” and “liberal,” the greatest number (40%) chose “conservative.”

That doesn’t really tell me much.

First, how does someone like me (a libertarian who rejects the initiation of force in all facets of life) choose a point along a simple one-dimensional continuum that has at one end “conservative” (someone who tends to reject the initiation of force in markets but embraces it in social and foreign affairs) and at the other end “liberal” (someone who tends to reject force initiation in social affairs and certain foreign matters but embraces such coercion in the markets)? In my experience, many people who are much closer to being libertarian end up selecting “conservative” when given such limited options (possibly because they place more weight on the economic side of things).

And what does “moderate” even mean? Maybe that could be a libertarian, but maybe it could be someone who prefers a ‘moderate’ amount of coercion in all aspects of society, thus not fitting ‘conservative’ or ‘liberal’ categories. Or it could be a pure authoritarian or populist who prefers massive coercion in all areas. Or maybe it’s one of those individuals who, lacking any sort of internally consistent moral foundation, likes to “judge each issue independently” to decide how much they want to initiate force against their fellow man. The fact is that all these different people would have some reason to choose “moderate” on the nonsensical “conservative-liberal” continuum.

A pretty accurate way to determine ideology is to think about it as a two-dimensional space with one axis for economic issues and one axis for personal/social issues. The World’s Smallest Political Quiz uses this method. You could also construct a three-dimensional space, with the third axis being for how strongly you support military force to solve problems.

I get the sense that libertarians (again, those who oppose coercing their fellow man in any realm of society) are a growing segment of the ideological space in the U.S. It would be nice to see a major polling organization include that category in these kinds of polls.  Otherwise, they’re really just publishing nonsense.

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I just read a fascinating review by Katherine Mangu-Ward over at Reason Magazine of The Invisible Hook: The Hidden Economics of Pirates, by Peter Leeson. The author analyzes the actions and customs of 18th century pirates from the standpoint of their being economic actors structuring their lives to maximize their profit. The results were pirates that, in many ways, were quite libertarian.

Here are some particularly interesting excerpts:

But a pirate’s life had less publicized qualities as well: Ships were known among sailors for their relatively decent living conditions, profitsharing opportunities, democratic practices, and racially integrated crews. Life “on the account,” as pirating was known, was often far more civilized than legitimate seamanship.

…

Pirates…were outlaws, with no recognized authorities to settle disputes. So they invented their own ways of doing business. Decades before the American Founders got their act together, pirates were drafting documents full of voting rights, juries, checks and balances, rules for property allocation, even methods for impeachment. The buccaneers may have been less concerned with natural rights than with survival and claiming their fair share of booty, but the end result feels surprisingly like the kind of self-governance we expect from enlightened modern republics. Perhaps even better, since the deal was truly voluntary (for the pirates if not their prey). No one is born a pirate, and everyone has to swear into the contract on each venture.

…

Captains were elected, and they could be removed by a vote of the crew. Speeches were given for and against candidates…Speeches also contained warnings and reminders of the power of the people: “Should a Captain be so saucy as to exceed Prescription at any time, why down with him! it will be a Caution after he is dead to his Successors, of what fatal Consequence any sort of assuming may be.”

A ship’s captain received the same lodging and rations as ordinary sailors, and very similar pay…Additional payments, agreed upon in advance, went to those who lost eyes or limbs, a primitive sort of workers’ compensation.

Balancing the powers of the captain was the quartermaster, the captain’s peacetime counterpart. Sort of a den mother with a blunderbuss, he oversaw the distribution of loot and generally kept peace on the ship by enforcing the rules and arbitrating disputes. He too could be replaced at any time by a vote.

They may have been outlaws “without government,” Lesson writes, “but they weren’t without governance.” And here’s where Leeson gets to his lesson. The book is actually an argument for extralegal systems of regulation—for ordered anarchy.

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I want to talk about how the U.S. Food and Drug Administration (whose motto appears to be, “Protecting and promoting your health”) hurts people. I’ll first say that I’m fully aware that many people who go to work for the FDA are good people and do so because they honestly believe the agency does what its motto claims. Unfortunately, they’re mistaken. Also, I’m not one of those people who thinks the FDA can be made to effectively ‘promote our health’ by reforming it. The very idea of a single agency that has the power to approve or deny new drugs, medical devices, treatments, etc., is fundamentally unsound, bad for health care in America, and morally wrong.

Let’s look at the example of a new drug for curing multiple sclerosis. The government (the FDA) claims that it’s keeping patients safe by withholding approval of the drug until the manufacturer has met all the FDA requirements (testing, clinical trials, labeling, etc). That can take many years and cost hundreds of millions of dollars. In the meantime, many MS patients have suffered, and some have died, without even having the option of trying the new drug.

Did the FDA’s actions keep people safe? Well, even if we assume that the drug was dangerous and ineffective at curing MS, the FDA has still interjected itself between potential willing buyers and sellers and thus violated one of the basic tenets of a free society. And if, on the other hand, the drug was both safe and effective, then the FDA is responsible for harming the people who would have obtained that drug during the time taken by the FDA approval process.

Supporters of government pharmaceutical regulation argue that there’s no way to know whether a new drug is safe or effective ahead of time, so we have no choice but to violently prevent (since that’s what government regulation boils down to) our neighbors from even having the option of trying a new drug until it’s been thoroughly vetted by no less noble a group than the very thugs whom we’ve hired to initiate force against our neighbors on our behalf.

But they’re wrong. The multitude of voluntary interactions in the free market can quickly and non-coercively identify safe and useful drugs. It happens all the time in other industries. Consider the early adopters–the small group of people who are the first to try a new product. If a new drug for MS is introduced in a free market (i.e.  no FDA), most MS patients aren’t desperate enough to jump on it right away. But a smaller group of patients are suffering to such a degree (maybe having tried everything else) that it’s worth it to them to risk the unproven drug, even if there is concern it could kill them. As more of these early adopters move in, data starts to come in (picture something like Consumer Reports for pharmaceuticals or discussion forums on MS sites) indicating the level of the drug’s safety and effectiveness.

As more information comes out from the early users of the drug, the uncertainty starts to diminish, and (if the results are positive) those who are suffering a great deal (but not enough to be in the early adopter group) choose to try the drug (since their personal cost-benefit analysis has shifted based on the new information). This produces even more ‘user data,’ thus continuing the trend of increasing numbers of people using a drug that’s helping them and thus eliminating a great deal of suffering. And it’s all done quickly and voluntarily, with no one having options artificially kept from them by force.

In addition, the manufacturer, not being hamstrung by FDA rules, would be able to constantly improve the formula based on patient results, thus reducing suffering even more.

None of this can happen when a group of people with guns gets to say which drugs are approved. Those who want to improve health care and reduce it’s cost could start by calling for abolishing the FDA and allowing free markets to bring us new health care products the same way they bring us new cell phones–with rapidly advancing functionality and plummeting prices.

Update: the comments that ensued when I posted this to a discussion forum at one of my local network affiliate’s sites reminded me of another good point. The FDA has not proven itself particularly good at approving only safe medications. One of the leading causes of death in the U.S. is adverse reactions to drugs approved by the FDA. Part of the problem is that the FDA is subject to massive corruption by large pharma companies, something that would be nonexistent or minimal under a free market in which multiple drug testing and reporting companies were competing to be known as the most effective at researching drugs.

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I heard a guest on a news program this morning discussing Obama’s trip to Saudi Arabia and his hopes for a better Middle East. He said that Obama needs the help and support of many of the region’s autocratic leaders that oppress their own people and so will be unable to lecture them about changing their internal policies and institutions. He described this as the “conundrum” facing American foreign policy.

Now, the libertarian approach to the Middle East would be to follow George Washington’s advice and try to maintain friendly relationships with all the states in the region and ending any “entangling alliances” like the one with Israel. It’s not our place to be lecturing other countries about freedom and democracy, especially when our vaunted democratic process is currently doing so much to destroy our freedom. The best thing to do is to set a good example and try to keep trade and travel as open as possible so that the citizens of those other countries can see the benefits of a relatively freer and more open society first hand and be motivated to go back home to fight for their own freedom.

Isn’t it interesting how using the libertarian approach eliminates the supposed “conundrum” and would even allow us to get rid of probably hundreds of State Department employees currently being employed in the complex machinations of our interventionist foreign policy?

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The mayor of Boston, Tom Menino, had a nice moment of libertarianism Friday when he said he would not be approving the police department’s request to arm patrol officers with M-16 rifles given to them by the U.S. military. It’s a basic libertarian tenet that giving the government’s enforcement arm additional firepower is bad for the prospects of individual liberty. Militarization of the police is a hallmark of oppressive regimes and something we should oppose at every turn. Of course, he didn’t rule out arming “specialized units” with such weapons, and he most certainly did not do a truly pro-liberty thing like pushing for the rifles to be sold on the free market to private buyers and sending the proceeds back to Uncle Sam with a demand for the money to be applied to the debt or somehow returned to the American tax payers. But it’s a start.

Of course, the argument in favor of such enhanced armaments (an argument often put forth by well-meaning law-and-order conservatives) is undoubtedly that the police need those weapons to combat the well-armed gangs who thrive on illegal drug trafficking. Unfortunately for their position, that’s like liberals who are arguing that the current government-regulation-induced financial crisis should be cured with more government regulation.

Rather than engage in an arms race with better-funded and more highly motivated drug gangs, resulting in innocent casualties and an ever more powerful and dangerous government, we should (thinking to ourselves, what would Sun Tzu do?) remove the traffickers’ very raison d’etre by legalizing all currently illegal drugs. Then we’d be simultaneously ending an un-American policy of keeping people from putting certain things in their bodies and ending the violent drug black market over which the gangs are fighting (and bribing cops, lawyers, and judges). After all, since the end of the disastrous prohibition of alcohol, you don’t see people battling in the streets over liquor turf, do you?

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Covering the nomination of Judge Sotomayor to the U.S. Supreme Court, a CNN anchor today was attempting to enlighten her viewers regarding Sotomayor’s judicial decisions regarding business issues. The anchor said that we could determine if the judge is “pro-business” by looking at how often she’s ruled in favor of “huge corporations” (or something along those lines). Apparently, this anchor (and probably CNN in general) fails to grasp an extremely basic truth of reality: that government policies and rulings that favor large, powerful corporations are very often detrimental to business overall. The extensive taxation and regulatory powers of our government result in larger companies expending great resources to persuade politicians to write laws that favor established players (and sometimes even specific companies) and hinder smaller companies or newcomers to the market. That’s why so many “safety” and “quality” rules for consumer goods are pushed by the big players in a given industry–they want to use the government to crush their competitors. And, ironically, the ‘pro-consumer’ Ralph Nader’s of the world come out in force in support of these anti-competitive and anti-consumer regulations.

Since CNN seems to have trouble with such concepts, maybe they’d be less confused (and confusing) if they used more appropriate terminology. They should ask whether a judge’s rulings are pro-free-market or pro-government-control.

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 Here’s a post on intellectual property (or monopoly) from Art Carden of the Independent Institute and reposted on the Mises blog:

Intellectual Monopoly is an Unnecessary Evil

There are some interesting points about whether things like patents and copyrights actually hinder technological progress and economic growth (rather than stimulate it, as their defenders claim).

But it seems to me that the fundamental problem with government-granted intellectual property rights (from a libertarian perspective) is that they’re granted by government. The very fact that these rights can only exist through the workings of a coercive, monopoly government indicates that they are not true rights. It’s the same as the socialists who say that there exists a ‘right’ to health care or a minimum wage or a certain level of housing. We know these are not true rights because they require initiation of force against someone else. Since the creation and enforcement of today’s patents, copyrights, etc., also requires the initiation of force (at the very least in the form of taxes confiscated to fund that part of the government), it seems that those are not real rights.

However, I do imagine there could develop some form of market-based IP in the absence of the government system depending on how the costs and benefits play out in different situations.

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