True Economics Applied in the Real World
“How can desired behaviors be enforced without a state?” you may ask.
Well, the greatest force that keeps the the state alive is voluntary moral condemnation and ostracism of all those who dare to question its necessity, and their ensuing voluntary desire for acceptance by means of conformity.
Thus the existence of the state is in itself the best possible proof that desired behaviors are totally enforceable voluntarily, that is without the existence of a state!
This is from a very interesting paper on Somalia:
Indicators of Somali welfare remain low in absolute terms, but compared to their status under government show a marked advance. Under statelessness life expectancy in Somalia has grown, access to health facilities has increased, infant mortality has dropped, civil liberties have expanded, and extreme poverty (less than $1 PPP/day) has plummeted. In many parts of the country even security has improved. In these areas citizens are safer than they’ve been in three decades (UNDP 2001). Somalia is far from prosperous, but it has made considerable strides since its government collapsed 15 years ago.
The entire paper is well worth a read.
This is exactly what I tell people who say that we won’t see the elimination of governments and religions in our lifetime:
“So what?! :)”
Since when is that thing called our lifetime of any relevance when it comes to the course of history? I already see the stateless and rational society right here and right now, in my mind. I think through all its wonderful solutions and benefits every day and I do my part to contribute to a logical and consistent body of literature that may some day be of use in that society.
I don’t need to see it actually unravel before me in my lifetime. I am proud to be among its pioneers and I value every day that our cause gets advanced a little bit more.
We’re not in a hurry, folks. Why? Because time is on our side. In the long run rationality always prevails. This is what gives me happiness, hope and certainty.
So don’t hurt your head about the present day bromides of priests and politicians – they’re not worth it.
Stop shouting at them in front of their palaces – they won’t listen.
Instead, take your pride and walk away. Set yourself free in your own life by dealing with the people in your immediate surroundings. This truly is the first step toward a stateless and rational society.
Always remember: It’s not a matter of if it will happen, only when.
OK, all you freedom worshiping nutjobs, all you anarchists, anarcho-capitalists, anti-staters, you who run around with mohawks and ripped pants, I really need to tell you: I agree that something is wrong with this government, but to pose as a solution to GET RID OF IT?? Are you completely out of your minds?? Obviously you never read anything about economics or ethics. Without government can you imagine the madness that would unravel immediately? The nation would plunge into a state of mass mutual warfare, the rule of law would disappear, trade would get crippled and we would all be yearning for an apparatus that keeps together the fabric of society … the government.
OK, I will stop that rant right here. This is pretty much the nonsense most of us here are familiar with. It is what we get every time we confront someone with the idea of a stateless society.
The problem is of course as we all know that when we propose the idea of a stateless society, THEY think we want to get rid of the functions that the state fulfills in their minds, while WE think of nothing but abolishing an apparatus that subsists solely by the means of aggression.
This of course really means that both sides have a very different definition of the term state. They have the fantasy high level conceptual definition, we have the one that simply looks at reality.
With those two opposing definitions it is obviously impossible to gain common ground.
I recently talked about it with a friend who is, I would say, a classic liberal, and a soon to be convert-anarchist (*evil laugh*). The following was conceptually the gist of the dialog:
He said: “I agree that something is wrong with the current way the government produces justice.”
I told him: “Well, I just think that the service of justice should not be provided by an institution that obtains its resources by the means of aggression, it should be voluntarily provided by DROs who compete for consumers.” (of course I explained him a bit more about DROs)
He said: “Well, then THAT’S your government, whether you want to call it DRO or whatever, it is a government. See, we NEED a government.”
Obviously he is wrong when we apply our commonly understood definition of government. But if we apply a statist’s definition of government, such as “That institution that produces justice.” he is actually very much correct.
Thus I would like to suggest that our Anarcho-Capitalistic position is actually not all that different from moderate statists’ positions. By saying we want to get rid of the state we will always and everywhere meet resistance and ridicule. As crazy as it sounds in our definition, we do indeed just want a DIFFERENT government from their point of view if we work with their shallow definition of government.
Thus I think we shouldn’t put the “abolish government” banner at the front lines of our march, but rather try to keep in mind what definitions most people are working with …
Example: I have had more people agreeing with me when I told them things like “yes we need roads and police, but how about we let the people in charge raise the funds for these efforts voluntarily from those they are serving, and allow other people to try and provide these services in a better way to bring more customers on their side”.
What I said above is 100% anarcho-capitalistic, however it will be a lot more agreeable to deluded and misguided statists. I’m not saying it will be absolutely agreeable right away, but certainly a lot more than to open with the idea that you want to get rid of the state …
As we all know bailouts accomplish nothing but making matters worse, create false incentives, and make all of us poorer. Thus, as can be expected, the TARP watchdog reports:
The government’s response to the financial meltdown has made it more likely the United States will face a deeper crisis in the future, an independent watchdog at the Treasury Department warned.
The problems that led to the last crisis have not yet been addressed, and in some cases have grown worse, says Neil Barofsky, the special inspector general for the trouble asset relief program, or TARP. The quarterly report to Congress was released Sunday.
“Even if TARP saved our financial system from driving off a cliff back in 2008, absent meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car,” Barofsky wrote.
Since Congress passed $700 billion financial bailout, the remaining institutions considered “too big to fail” have grown larger and failed to restrain the lavish pay for their executives, Barofsky wrote. He said the banks still have an incentive to take on risk because they know the government will save them rather than bring down the financial system.
Barofsky also said his office is investigating 77 cases of possible criminal and civil fraud, including crimes of tax evasion, insider trading, mortgage lending and payment collection, false statements and public corruption.
One case concerns apparent self-dealing by one of the private fund managers Treasury picked to buy bad assets from banks at discounted prices. A portfolio manager at the firm apparently sold a bond out of a private fund, then repurchased it at a higher price for a government-backed fund. A rating agency had just downgraded the bond, so it likely was worth less, not more, when the government fund bought it. The company is not being named pending the outcome of Barofsky’s investigation.
Barofsky renewed a call for Treasury to enact clearer walls so that such apparent conflicts are less likely.
Treasury said it welcomed Barofsky’s oversight but resisted the call to erect new barriers against conflicts of interest. The new rules “would be detrimental to the program,” Treasury spokeswoman Meg Reilly said in a statement. The existing compliance rules “are a rigorous and effective method of protecting taxpayers,” she said.
Much of Barofsky’s report focused on the government’s growing role in the housing market, which he said has increased the risk of another housing bubble.
Over the past year, the federal government has spent hundreds of billions propping up the housing market. About 90 percent of home loans are backed by government controlled entities, mainly Fannie Mae, Freddie Mac and the Federal Housing Administration.
The Federal Reserve is spending $1.25 trillion to hold down mortgage rates, and millions of homeowners have refinanced at lower rates.
“The government has stepped in where the private players have gone away,” Barofsky said in an interview. “If we take government resources and replace that market without addressing the serious (underlying) concerns, there really is a risk of” artificially pushing up home prices in the coming years.
The report warned that these supports mean the government “has done more than simply support the mortgage market, in many ways it has become the mortgage market, with the taxpayer shouldering the risk that had once been borne by the private investor.”
Barofsky’s report echoed concerns raised by housing experts in recent months, as home sales and prices rebounded. They warn that the primary reason for the turnaround last year has been billions of dollars in federal spending to lower mortgage rates and prop up demand.
Once that spigot of cash is turned off, they caution, the market will be vulnerable to a dramatic turn for the worse. Daniel Alpert, managing partner of investment bank Westwood Capital, wrote in a report that national home prices are bound to fall 8 to 10 percent below the lows of last spring.
“The lion’s share of the remaining decline will occur in markets that saw sizable bubbles but have not yet retrenched,” he wrote.
Officials from the Obama administration counter that massive federal intervention has helped the housing market stabilize and prevented more dire consequences.
Barofsky’s report also disclosed that, while the Obama administration has pledged to spend $75 billion to prevent foreclosures, only a tiny fraction — just over $15 million — has been spent so far. Under the Making Home Affordable program, only about 66,500 borrowers, or 7 percent of those who signed up, had completed the process as of December.
He said the key to preventing future crises is to reform Fannie Mae and Freddie Mac, create and improve loan underwriting and supervision of banks. He stopped short of endorsing specific proposals for overhauling financial regulation, but said many of the proposals would go far to improving the system.
Sorry, but that conclusion is just hilarious. This really is akin to a woman in an abusive relationship who continues to believe her boyfriend will change and continues to run back to him, no matter how many times she gets beaten up.
The entire article points out how incapable of solving any one problem the government is and concludes with the solutions of “reforming” nationalized banks, “creating” loan underwriting, and doing some more bank supervision. Who does all these things? Of course, that same government! That is supposed to solve the structural problems in the financial system?
No, what needs to happen is to bring down what has brought about the financial crisis in the first place.
Who has created all the excess fiat money that flowed into the system to blow up price bubbles? The Federal Reserve Bank – so just close it down already!
Who has created all the excess credit that blew up the bubble? The fractional reserve banks – so just end the system of fractional reserve banking already!
Who has granted oligopoly status to the rating agencies who one after another failed to assess credit risk appropriately? The SEC – so end the credit rating cartel already!
In fact who has taken away oversight from the stock exchange companies to try and oversee all stock exchanges in the country, missing one giant fraud after another? Which organization was close to Making Bernie Madoff their chairman?? The SEC – so get rid of it already!
Even after some of the worst excesses of subprime lending, who proudly remains the sole subprime lender in the country? The government owned banks! – So close them down already!
Who has been propping up financial markets in secret over decades with taxpayer money, creating malinvestments and false incentives left and right? The mighty President’s Working Group on Financial Markets! – So get rid of it already!!
What is it that made the common man put so much money into the stock market? It comes to a large degree from the incentive through tax savings for retirement accounts. If the taxes weren’t there in the first place, surely people would think twice about transferring their hard earned and saved money over to Wall St.
On top of that a policy manipulating and suppressing interest rates makes it completely unattractive to put money into savings accounts, and encourages people to be foolish. – So again, stop meddling with the credit markets, get rid of the central bank and with it would go all fractional reserve lending.
Why do you think it is so hard for honest small businesses to obtain funding in a flexible and straightforward manner? Why does it feel to most people like they are secluded from the majority of the action while Wall St. thrives? It is because every single government policy aiming at financial regulation has been designed to herd money into the stock market and lock it up in there for the kids to play with.
Which institution, out of all, is the least capable to be responsible about its finances, stay out of debt, live within its means? … it is of course the government itself.
Folks, wake up to reality, leave fantasy island. Come to your senses and work toward closing down that institution which is the root cause of all your problems: Close down the government and all the things I pointed out above and many more evils would automatically go with it.