Category Archives: Free Market

But What About…?

The ideas of voluntaryism are sometimes criticized as utopian fantasy because “it just won’t work”. These people come up with difficult questions and hard problems that a voluntary society would face, and because the person they are asking doesn’t have the answers (or no one does), they assume that the status quo of statism is the only workable system simply because it actually exists. The problem with this kind of thinking is that it will agree that voluntaryism may be the only moral society, meaning that it agrees that it is the only system that should exist, it just denies that voluntaryism can exist or that it will function well, therefore it should not exist and not be the libertarian end-goal. It is pretty obvious that this line of thought is contradictory because it believes that a voluntary society should both exist and not exist at the same time, and it is a non-sequitor that because you cannot comprehend a voluntary society existing in reality that it should not exist.

So regardless if you can’t imagine a voluntary way of solving a technical problem, it doesn’t magically justify aggression. Minarchists in particular are guilty of committing this fallacy. The only consistent position to take is the anarchist, or voluntaryist, position. It is not possible to know in advance how people will live and thrive without initiating force against each other, but it is possible to speculate on the likely free market methods for provision of things like defense, justice, roads, and protection. This has been the subject of many excellent books, some of which I will do here (all of these are free on Mises.org):

The Market for Liberty

The Myth of National Defense: Essays on the Theory and History of Security Production

The Private Production of Defense

The Privatization of Roads and Highways

 

Bitcoin: My Evolution

Bitcoin Goldcoin

     When I first heard about BitCoin, I thought it was an interesting experiment that would never pan out. I pretty much ignored it for a couple of years, until I came across an article explaining why BitCoin couldn’t possibly be money. The article stated that because BitCoin doesn’t have value outside of being money, it cannot be money according to the Austrian Regression Theorem. It made sense to me, so I became anti-BitCoin, because I believed that BitCoin would eventually collapse, leaving those who were bullish on it devastated.

     However, BitCoin didn’t go away, but grew, and more and more voluntaryists were coming out in favor of it. This astonished me, leading me to think that there was some kind of “BitCoin Bubble” going on. I eventually decided that I had to look more into the arguments in favor of BitCoin. Jeffrey Tucker is/was my go-to man on the subject. The more I learned, the more I found that BitCoin can be considered money (even in the eyes of the Regression Theorem), and offers a wonderful alternative to Federal Reserve Notes, and when that money system fails, may possibly become the most accepted medium of exchange.

     I will now attempt to address the Austrian Economic critique of BitCoin and put forward my theory as to why BitCoin may become in the (perhaps distant) future the most commonly used money.

     The criticism of BitCoin goes something like this: BitCoin has no value prior to being money. In order for something to become a true money, it must have a commodity value previous to becoming a medium of exchange. BitCoin is used only as a money, and has always been used purely as a money. Therefore, BitCoin cannot be considered a real money, and when faced with the competition of a true money like gold and/or silver, will be discarded as worthless.

     This is a powerful argument. However, this argument is wrong because BitCoin does have value prior to being money — just not as a commodity. The value of BitCoin independent of being money is derived from the fact that it is information (code) that is infinitely divisible, decentralized, anonymous, scarce, and instantly and directly transferable. The code, by itself, is worthless. It is the qualities that this code possesses that has value. These code qualities give the BitCoin value, but only for use as a money — prior to being used as money! Thus, there is nothing wrong with BitCoin, and there is nothing wrong with the Regression Theorem — the only thing that is wrong is some people’s application of the Theorem, and their incomplete knowledge of BitCoin.

     Now, you may be thinking, so what? Even if BitCoin could become a money, what makes you think that it actually will? Gold has already been proven to be the most prevalent money in history, so why won’t it be the same way in the future, after the collapse? The answer is that gold was money when most commerce was physical, taking place in person, as opposed to the mostly digital commerce that takes place today, and will take place to a greater extent in the future. The exact features that make BitCoin money are the precise features that characterize the perfect form of money — that’s the whole reason BitCoin is a money in the first place! This, and the fact that money gets value from its being used as money means that BitCoin will have affn advantage over other forms of money because it is already being used as such. Gold, on the other hand, is not the perfect form of money, it has just been the most perfect form of money in history — until now. Gold also does not have the advantage of currently being used as money. BitCoin already being used as money will add value to it as such.

     This is not to say that gold will not be used as money, although there is a tendency for there to be only one money in existence (although I wonder if that would only come to be in an evenly rotating economy), but rather that BitCoin is the preferable money. I believe that gold will be used as money, because it does have many favorable qualities, along with having a “tried and true” status. After the collapse of fiat currency, I believe that their will be many different monies, all competing with each other, with a small handful winning out. My bet is on gold, silver, and BitCoin. I think that it is unlikely, but there is a possibility that a new crypto-currency will come about that will outdo or match BitCoin, but as of right now, the only one that I can think of as even plausible is a crypto-currency called Steemit, which is something like pieces of ownership of popular content (like articles).

     In any case, be sure to get your cash out of Federal Reserve Notes and into a real money before it’s too late and your Notes become worthless!

How Courts and Police Could Exist and Function Under Anarcho-Capitalism

A powerful objection to anarcho-capitalism is that judges, acting in their self-interest, will simply rule in favor of the highest bidder. This is the objection I will attempt to address, and in so doing, come up with a theory of how and why justice will be served and property protected in an anarcho-capitalist country.

In order to discover the functioning of judges in anarcho-capitalism, one must start from the beginning. Some, if not most, people desire their property to be protected. These people will be willing to exchange their goods or services for this protection, leading to the formation of private defense agencies, which would act as a private police force. We already have a situation where government police have gotten so bad that people are turning to various forms of private policing: bodyguards, security systems, and security guards. These private defense agencies (from here on referenced as PDAs) will tend to provide the most security at the least cost (the exact opposite of government police), and their reputation will be of the utmost importance; if they got a reputation for either protecting criminals or poorly defending their customers, the customers would patronize a different agency. It is also in their interest not to protect criminals from prosecution because doing so would lead to more crime — something that would drive up their costs and lose them customers to agencies that actually protect people. A PDA will not only be wanted to defend people while an act of aggression is occurring, but will also be desired to exact restitution, which means that an equal amount of force that the aggressor used against his victim can be justified by the victim against the aggressor. Take, for example, the case of a theft. A takes $5 from B. According to libertarian theory, B can defend his property by taking his $5 back from A and he is justified in taking an additional $5 of A’s money, along with the cost of the time it took to get this money and the expense it took to get it. In order for a PDA to maintain an excellent reputation and to ensure that it will not get into any battles with other defense agencies (which would be very costly), the PDA would make sure that a person accused of a crime actually committed that crime, and that the amount of restitution to be exacted is just. This is the role of judges — the difficult job of proving to everyone that either a person accused of a crime is guilty or innocent, and what a just compensation to the victim (if there is one) is. Judges would compete with each other in terms of their reputation for producing thorough and convincing judgements, and would lose customers for providing poor or corrupt judgements (which, if obvious that the judge was corrupt, or had judged wrong, would be considered invalid and ignored). The purpose of judges is not to provide justification for the use of force, but only to demonstrate that a use of force is, in fact, justified (or not). Whether a judge worked for a PDA or had a private practice or belonged to a judging company (private court) would be immaterial. In order to demonstrate fairness, a process of appeals could exist and may work like this: A accuses B of committing a crime, then the judge of A’s choosing either rules B innocent, in which case the process ends, or the judge rules B guilty, in which case B could appeal to a second judge. If the second judge rules B guilty, the process ends, but if the second judge rules B innocent, A could appeal to a third and final judge that is agreed upon by both the first and second judge, or both A and B. The cost of the judging service would go to the loser of the court case, which would mean that if someone is obviously guilty or innocent, the person who is going to lose the case would not want to increase his or her costs by appealing a judge’s (clearly correct) decision. Of course, if someone was undisputedly guilty and the restitution owed was undeniable, a judge would not be necessary. I have thus sketched a rough outline of how anarcho-captialistic police and courts could work, and will go on to address a few objections.

A common objection to anarcho-capitalisim made by minarchists (small-state libertarians) is that “justice” is some kind of a public good and no one has a desire to produce it while everyone wants it, so it must be provided by a government. This assumes that public goods exist, and that they should be provided by a legitimized institution with a monopoly on the use of force, or, in other words, a state. The theory of public goods have been demonstrated false in this article by Hans-Hermann Hoppe, this article by Walter Block, and this article by Randall G. Holcombe. Furthermore, as I demonstrated above, it is in everyone’s self-interest to both enforce and obey the non-aggression principle, and both police and courts could be provided on the free market.

Another objection goes like this: all this is well and good for customers of PDAs, but what about the provision of justice between individuals not belonging to PDAs? Wouldn’t conflicts between non-customers of PDAs simply devolve into fights to the death? I can answer this in two different ways; first, I could say that if you don’t pay for justice, why would you expect to receive it — it’s like any other service! Second, I don’t think that this would be the case because 1) anyone who wanted to could arm themselves with weapons, discouraging anyone from committing acts of aggression against each other, and would allow for individuals to enforce justice even without a PDA, and 2) people who were criminals or were thought to be criminals would be ostracized; in the interest of keeping themselves and their friends/family/customers safe, people would forbid those whom they thought were criminals from entering their property. As a side note, there would probably be very expensive and very secure stores and housing that would be specifically for blacklisted criminals. Therefore, if you don’t belong to a PDA and someone aggresses against you, you still would charge the aggressor in a court instead of just showing up at his house with guns, taking back your property and taking some of his money, because you wouldn’t want the public to believe that when you were enforcing justice you were acting as an aggressor. So yes, in an anarcho-capitalist country, you could provide your own protection, but would still usually make use of courts. Also, I think that the wide availability of weapons, ostracism, and the relative absence of poverty under anacho-capitalism would be very effective at discouraging crime from occurring.

A further objection is that a PDA would simply take over and become the government. Even if this were the case, and I think that this would be very unlikely to happen, then we would be in the exact same situation that we’re in now, so we have nothing to lose! The thing to keep in mind here is that under anarcho-captialism, there is no legitimized institution with a monopoly on force, and that any prospective government would inevitably have to convince the populace that it is in their interest to have a government. The reason for this is not readily apparent, but is the case; if the government is not legitimate in the eyes of most of the people, then people will tend to defend themselves from that government because it is in their interest to do so. The government can only use the resources that come from the populace, but if the source of those resources, the productive citizenry, are mobilizing those resources to defend against that state, then that government will not be able to continue in its existence. It can either kill everyone, and lose all its funding, or it can battle everyone and eventually lose, expending all of its remaining resources to survive. The reason for this is as follows: the state expends resources on suppressing a revolt, but can’t get those resources back because the very resources they want to take are being utilized to resist them. This leads to the state having decreasing funds which are consumed in its bureaucracy and in the course of fighting a war on its people, while the productive populace keeps on producing funds and resources with which to defeat the state. Note that this only works if the vast majority reject the state in favor of anarcho-capitalism. This is the reason that it would be unlikely but not impossible for a state to arise out of anarcho-capitalism; only if someone were to come along and convince the bulk of the people that they would benefit from a government, which, under anarcho-capitalism, would be almost impossible to do for the obvious reason that a state is not beneficial, and the people would be experiencing that fact first-hand.

In conclusion, the state is not necessary for the provision of justice, and, being the monopoly that it is, has no reason to  provide the best service at the lowest cost like the private courts and PDAs in anarcho-captialism, but to provide the least service at the highest cost. Furthermore, the state is inherently immoral, and therefore should not exist. Any question as to how a society would function without one is a purely technical question and is not relevent to the question of whether or not the state should exist. However, as I have written above, society would (surprise surprise) be much better off (and have a better provision of justice) without a state and with a purely voluntary method of protection.

Further Reading

The Market for Liberty

For a New Liberty: The Libertarian Manifesto

 

Licensing, Regulation, and a Free-Market in Healthcare

When most people consider healthcare deregulation they have mental images of quacks with rusty scalpels butchering their unfortunate customers, and feel relieved that good ole’ Uncle Sam is watching out for them. This is founded on false assumptions and propaganda.

Many people assume that if healthcare is of a poor (relatively speaking) quality, that means that it causes harm, and it would be beneficial if its production were forcefully stopped. Poor quality healthcare is not necessarily harmful(harm being defined as a reduction in wellbeing, or an increase in uneasiness) because some people prefer healthcare of a lower quality, therefore by definition it brings about a perceived benefit(benefit defined as an individual’s advancement towards their subjectively valued ends) to those individuals at the time of the sale (otherwise they wouldn’t buy it). Furthermore, the people who do prefer low-quality healthcare are hurt by the forceful prevention of the production of this care because there is a loss of benefit to that person; if the individual valued low-quality healthcare more than no healthcare or a higher-quality healthcare, that would mean that the person valued the high-quality healthcare or no healthcare at all less than the low-quality care, so banning the production of low-quality healthcare would cause the person to accept the next most valued alternative, thereby bringing about a decrease in benefit (harm) to the individual the ban was supposed to help, thereby defeating the purpose of the ban(to benefit people by getting rid of low-quality healthcare). Licensing and regulation are the most detrimental to the poor because they make the poor pay for expensive, unaffordable healthcare, which consumes a larger percentage of their income relative to wealthier individuals, or make healthcare impossible for them to obtain. In short, it is impossible to determine what constitutes “good” or “bad” healthcare for others – only individuals can determine that for themselves because whatever standard is being used can only be subjective to the value judgments of the individual making it, which means that any attempt to stop others from purchasing or producing healthcare is harmful, particularly to the poor.

If regulations and licensing can only be hurtful, why do people believe in and advocate for them? We can only guess, but there are a two likely motivations. First: ignorance. The common justification for regulations and licensing has a plausibility on it’s surface, and is easily accepted by people who don’t want to look into it further. Second: government-enforced monopoly. Regulations and licensing keeps those who don’t meet the requirements from competing with those who do. Decreased competition means higher profits, which means that it is in the interest of doctors’ unions and pharmaceutical companies to lobby for legislation that would restrict the permitted providers of healthcare to the lobbyists and prevent competition: regulations and licensing. Hence, most regulations and licensing is not so much focused on protecting people, but focused on making it cost-prohibitive and difficult to qualify for becoming a producer of healthcare. The FDA drug approval process which denies people access to life-saving and life-improving drugs so that drug manufacturers can prevent competing drugs from being produced and forbidding experienced doctors who received their medical education in a foreign country from practicing medicine so that doctors educated in the United States have a monopoly on medical care are two of the most obvious examples. The American Medical Association is a government backed doctor’s union that is responsible for much of the legislation and restrictive requirements related to medical practice – if the supply of doctors is restricted, their price increases. The AMA not only restricts people from competing with it’s members, but it also regulates which medical practitioner can practice which aspect of medicine and which colleges and universities “qualify” to give medical degrees and how big their class sizes are to be. The DEA and the FDA requiring prescriptions for the purchase of some pharmaceuticals is designed to benefit doctors by forcing people to pay a doctor to be able to purchase medicine. Also dangerous is that these organizations like the AMA and FDA put their official stamp of approval on healthcare providers, drugs, and devices, and lull people who believe these government organizations exist for their safety into a dangerous false sense of security. To conclude, licensing and regulations exist because special interests want to rob people, and the government is more than happy to accept lobbyists money in exchange for that power, and because people are bombarded with propaganda and not exposed to the truth.

What would free-market healthcare look like? Although it may seem counter-intuitive, the quality would increase and the cost would decrease, both of which would be caused by the increased competition. If people cared about safety and quality(and everything suggests they do), there could be rating companies which would inspect and rate the safety and quality of the healthcare provider’s procedures and environment. There would most likely be a contract between the provider of healthcare and the customer that stated the procedures the healthcare provider would follow(sterile equipment, doctors with medical degrees from good colleges, nurses who had been trained in nursing, etc.), and the provider would be liable for any complications resulting from non-adherence to the contract, along with having to pay restitution to the customer for fraud. People who purchased low-quality healthcare would do so at their own risk. Medical innovation, unencumbered by the FDA, would skyrocket. People could buy any drug they wanted, and pharmacies could offer the service of a pharmacist who would advise what drugs the customer should use, and the amount and frequency of use along with the side effects. Anyone who wanted to provide education on producing healthcare could. Simply put, anyone who desired to provide healthcare could(whether anyone would accept it is another matter), and anyone who wanted to purchase any kind of healthcare would not be restricted from doing so.

Needless to say, these reforms are not popular, but free-markets and freedom are more necessary than ever to fix the broken healthcare system that is too expensive, too primitive, and too callous to the needs of healthcare recipients. Licensing and regulations exist to benefit big pharmaceutical companies and doctor’s unions with monopoly prices by severely restricting competition at the expense of everyone’s health and prosperity.