no third solution

Blogging about liberty, anarchy, economics and politics

Police State

May 2nd, 2008

Let’s recap: Michigan’s economy flat-out blows.

And Michigan spends $2 Billion on its Prisons, annually. Is crime really 400% worse than it was in 1983? Are the police really 400% better at apprehending criminals than they were in 1983? No, and no. The state is simply locking up more and more people for minor and typically non-violent offenses. The Detroit News reported:

• The 50,200 inmates in Michigan prisons represent a four-fold increase in the number of prisoners over a quarter-century.
• One of every three state employees works in the Corrections Department, up from one in 10, 25 years ago
• The cost to house each inmate drains $31,325 annually from the state treasury.

The real effects on Michigan’s economy are probably probably much greater, since one in three State employees are in the Corrections Department, meaning that whatever income they “earn” has zero economic value. Also, if we consider that the prisoners would be earning taxable income, the real hit to the treasury is probably closer to $40,000 per year—just to keep them locked up.

Interestingly, these inmates cost the state more money than they would probably contribute, en masse. By virtue of being incarcerated, they’re earning $0 annually, which is may be conservatively estimated at $20K-$30K less than they would otherwise make. This is a real diminution of the State’s productive capacity, in the neighborhood of at least $50k or $60k per inmate: $31,325 of other people’s money plus whatever income the prisoner would earn, if freed.

When we consider some other intangible effects of such a police state, predominately the decimation of the family unit, the scene becomes even more bleak. By removing one income from a family which probably required two incomes to begin with, financial hardships are exacerbated, and the strain on social services like welfare programs, aid to dependent children, etc., increases.

My guess (and it is only a guess) is that each of these inmates costs the State in excess of $100,000 annually, in terms of real wealth.

Comments on Comments #14

April 28th, 2008

Olly wants some clarification from my response to his comment in Comments #13,:

David — just to be clear, I wasn’t espousing liberalism, or saying that Seattle should live up to “liberalism”…

Liberal, Conservative, it’s all the same results.

Duly noted—and I whole heartedly agree with you. Perhaps offsetting the term in quotes was misleading. The term liberal/liberalism has been co-opted by the Statist Left. I try to use it in the old tradition.

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Stephan left a comment on How is a Government Established?

Nice point with the fact that birth cannot be consent to government rules.

I like to bring up the “accident of birth” argument from time to time. Typically in the past I have used it in the context of immigration laws. Some people argue that the illegals from e.g., Mexico, are committing a crime. I say that the law preventing free migration of people is the crime. These people say things like, “I’m not against immigration, just illegal immigration.” When the root reason these actions are deemed criminal is the migrant’s misfortune to have been born outside of the United States, the act in itself is not wrong, but is deemed to be wrong because of circumstances over which the migrant had no opportunity to control. In a free market, there is no such thing as “illegal immigration.”

The “accident of birth” helps demonstrate the illegitimacy of governments: Even if we imagine a government that was unanimously and voluntarily entered into by the whole of the populace thereby governed, it would likely claim dominion over any child born to its citizens. Thus the accident of birth has caused that child to be under that government’s control. Unless this government acknowledges the right to secession, and hence renounces its territorial monopoly of power (in which case it ceases to be a government), the moment the first new citizen becomes involuntarily (that is to say: he had no choice in the matter) a citizen, it ceases also to be the model government by consent.

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John says “Democracy disgraces itself every day by giving us governance that is neither free nor voluntary.”

That’s the only sort of government that Democracy can offer! Only anarchy can give us a social order that is both free and voluntary. :)

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I saw a show about the Border Patrol in Arizona.

Eight men working full time, four ATVs, two jeeps and a helicopter were used to prevent three poor and thirsty Mexicans from finding work, and lifting their families out of abject poverty. I have no idea what a CBP agent earns, but I don’t think it’s unreasonable to assume that the money spent on preventing these people from entering the country is probably in excess of what they would’ve earned in a year’s time. If the government wields this amount of resources against people who are about to die of thirst, there is no reason to believe that they’ll bring anything less against you.

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Peter Boettke inquires

So who is afraid of Ayn Rand? Only those who don’t have the intellectual skill or gumption to meet the challenge of her claims on their world view. And if that is the case, we don’t want them teaching our college students anyway.

He also gives a great deconstruction of the failures of higher education

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Speaking of higher education, David Rockefeller recently granted $100 Million to Harvard. Rockefeller, one of the wealthiest men in the world, endows one of the wealthiest schools in the country. Does anyone else see anything wrong with this?

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The Detroit News mentions that Churches start drive to cover uninsured. I have to admit, I thought this was going to be an article talking about how churches were acting like the fraternal orders and friendly societies of years past. Unfortunately, I read all about how people are using the church to fight for universal coverage laws:

“I refuse to go to the hospital because I cannot afford it,” said [one uninsured] resident.

That’s why [she] signed a petition Sunday at her church, Mount Calvary Lutheran Church, to push an initiative onto the November ballot that would require Michigan lawmakers to come up with a plan for universal health care.

She refused to go to the hospital because she couldn’t afford her medical care. Admirable, I suppose. But then she turns around and signs a petition that asks for universal coverage. Deplorable!

She refuses to use one system that is financed by everyone else (i.e., a hospital can’t refuse you for emergency services) but favors some other system that forces everyone else to pay for any conceivable medical need! I didn’t read any further.

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This article on InsuranceNewsNet.com says that if you’re helping your family members financially, you’re probably breaking a bunch of tax laws. If you let your octogenarian mother live in your basement apartment without paying rent, you’re actually giving her a “gift” to which the IRS will attribute a monetary value. If the sum of such “gifts” exceeds statutory limits, there are tax implications and penalties.

Innocuous as this may seem, being generous can also subject you to gift tax. While helping a family member often occurs under the radar, if the gift exceeds a certain value and the I.R.S. catches it, you could be forced to pay the tax as well as interest.

…If you lend money to family members — say, to buy a house or a car, start a business or pay off an unfavorable bank loan — you must charge a minimum rate of interest set each month by the Treasury, called the applicable federal rate.

Sometimes I argue that Government destroys community and charity. Case. In. Point.

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This article on InsuranceNewsNet.com wants to examine the differences between Obama’s health plan and Clinton’s proposal. One is a mandate for children, the other is a mandate for everyone. The article questions whether either proposal is Constitutional. Since the Constitution is of no authority, I think it’s a moot point. Sometimes its fun to pretend that the Constitution does have authority. The State pretends this from time to time. And even though you can’t beat them in a game where they write and re-write and interpret the rules, it’s fun to play along.

This part of the article caught my attention:

The federal government does not ordinarily require Americans to purchase particular goods or services from private parties. The closest we come is when government imposes a condition on the grant of a discretionary benefit or permit. For instance, in most states, you must have auto insurance to drive a car or you are required to install fire sprinklers when building a new house. But in such cases, the mandate is discretionary – you don’t have to drive a car or build a house. Nor do you have a constitutional right to do so.

Really? Actually, you do.

Remember that part about “Life, liberty, and the pursuit of happiness” ? What about the 9th Amendment? Of course, in practice the exercise of non-enumerated rights is void, but just because the government has usurped these rights doesn’t mean that they’re not allegedly enshrined in the Constitution.

Comments on Comments #13

April 17th, 2008

Eric Sundwall encourages me to think about “Allodial title” in a comment left on The Zoning Board.

Nice piece David. This type of idiocy goes on unabated everywhere. Its nice to see a super critical eye make the effort that must be absolutely time and patience consuming . . . think Allodial title.

First, thank you for paying your compliments, they are appreciated. I had been drafting a post on the subject of allodial title for quite some time, without really knowing in which direction I wanted to take it. Your comment resulted in the completion of Why Can’t You Buy Allodial Title?

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FSK suggests that I made an error in Why Can’t You Buy Allodial Title?

Assume your land is worth 100 ounces of gold, and the price remains unchanged over time. Suppose property tax rates are 1%. In that case, your property tax bill is 1 ounce of gold per year *FOREVER*. What is the present value? It’s 1+1+1+1+1+1+1+…! In other words, the “present value of future property taxes” is *INFINITE*.

Since Government is always able to raise taxes or steal money through some other means, it need not concern itself with time preference. What I did not make clear is that the present value of future property taxes at the present, is infinite because Government doesn’t have a discount rate.

Time preference suggests that money now is worth more than the same sum of money in the future. If you have a discount rate of 5%, and I owe you $100 in one year’s time, I ought to be able to satisfy my obligation by giving you about $95 today. But Governments don’t have time preference. If Governments had a discount rate, d, the NPV of expected future taxes would not be n(1) to infinity, but rather the geometric sum of: 1+(1/(1+d)^1)+(1/(1+d)^2)+…+(1/(1+d)^n-1)+(1/(1+d)^n). This geometric sum has a limit determined by d. If d = 5%, the present value of $1, say, 80 years hence, is about two cents and after about 300 years, Excel tells me that the series sums to $21. That is, $21 today at 5% is equivalent to receiving a perpetual annuity in the amount of $1.

I might not have done it correctly, but I checked my math here .

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In reference to What to do When You Can’t Refinance, FSK says I’ve made a huge error.

With fiat debt-based money, it’s irrelevant to talk about “time preference”. If you are prudent and “save money” in a money market account, you’re *GUARANTEED* to be ripped off by inflation.

You don’t necessarily need to “save” money in a market account, per se in order to exercise time preference. But you do need to live within reasonable expectations of your future economic means. If you’d like to eat some cake tomorrow, you can’t eat it all today. If you’d like to enjoy some luxuries tomorrow, don’t spend all your money, today. That’s what I mean by time preference. A lot of people got themselves into financial trouble because they wanted to have their cake and eat it, too.

Of course, the case could be made that the government can rob you as much in the future as now, but I think people should still avoid over-leveraging themselves as much as possible in order to best weather whatever the future brings.

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Olly comments on State Evicts Man from Land Nobody Owns:

David — do some reading on Seattle’s mayor, and our general city council — you’ll get the picture of political correctness and “properness” taken to new extremes. After all, we’re the supposedly “liberal” city that banned lap dances.

This makes me so freakin’ angry. With all the homelessness everywhere, we can’t even see fit to leave a guy alone who’s managed to make his own way in the world, without being a burden on anyone, and we’re going to turn him into a shelter victim?

Among other things, Olly! Seattle’s brand of “liberalism” would make Mises roll in his grave. Seattle’s “liberalism” succeeded in banning malt liquor in certain neighborhoods, and according to the sheriff, resulted in some people being “run out of town.”

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Regarding The Benevolent Invader, FSK says that I make

[A]n argument that seems sort of silly. Suppose you are invaded by a dictator who offers SLIGHTLY BETTER TERMS than the current government? Technically, you should not resist the invasion. That’s thinking in the wrong direction.

Technically, what I said was that your current government should not resist the invasion, if it is in-fact interested in your freedom. “The Benevolent Invader” was set up to demonstrate that States don’t protect your freedom. If State B says to State A, “Relinquish power over your citizens to us, we promise that they will have a better life and that they can leave whenever they want,” State A will not permit this. The fact that State A will not permit its citizens to choose between Dictators is proof that the State is not interested in protecting their freedom.

“The Benevolent Invader” began as a precursor to the subsequent How is a Government Established?, in which I make an argument for self-governance. I felt that both posts were stronger standing alone.

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In a comment left onIs Resale a Copyright Infringement?, Kip, Esquire says:

[L]et’s not overreach. “There is no upside to this sort of prohibition”? Really? Never ever?”

Contract rights can indeed supercede property rights. But like all contracts, the terms should be clear and the parties should be entering into it voluntarily and fully informed.”

As I commented on his post:

I have no qualms with the point you make with regards to contracts. But I don’t see “copyright” and “contract” being synonymous terms. In fact, I don’t think that “copyright” as we know it is a valid “contract” at all.

Of course contracts could be written in such a manner to aim at securing something similar to “copyright”, but I don’t think it’s likely that anything approaching copyright as we know it could be sustained by a free market. In fact, I conclude that the likelihood that a free market could (or would) concern itself with copyright infringement is near zero.

I don’t think that “contract” and “copyright” are synonymous, or even near-substitutes, because the environment under which copyright exists is the brutality of government. “Copyright” is no more freely consented to than taxes. We can’t pretend that copyright is a contract to which parties freely consent; the very system of “copyright” is created and enforced by governments.

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In Comments #12, Tony inquires about my opposition to fractional reserve banking:

As you understand it, how much of the problem with fractional reserve banking is the concept and how much is the people who practice it? How, if at all, is your objection tied in with fiat currency?

Is that clear? It’s open-ended, I know. I’m just trying to get an understanding of an anarchist approach to the topic. Thanks.

Tony, I’m working on a well-thought out response to this inquiry which will be a stand-alone post. Right now, it is a work in progress.

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Peter Boettke asks:

Right now the economics profession has not had a clear intellectual leader step forward to challenge the emerging statist hegemony…

How do we find [the next Ludwig von Mises, F.A. Hayek, or Milton Friedman] and how do we cultivate them? And without them can we survive the statist onslaught on our economic freedom?

It is hard to cultivate free-market thinkers in a system that is controlled by the Statist elite. Most education and academic research is publicly funded and directed. In “The Free Banking Alternative,” Lawrence H. White notes that:

[C]entral banks subsidize monetary policy research. The Federal Reserve System employs over 400 research economists on its staff, and subsidizes hundreds of academic economists each year as visiting scholars and consultants. Tariffs employ many fewer economists and have many fewer defenders.

This is still a battle of ideas and ideals, but I don’t think it will be won in the classroom. There are many people who espouse the same principles, and perhaps many more who might be inclined to do so, and I suppose its our job to find them and educate them a bit less formally. Not to discount the work done by those in Academia, but a thousand people believing and practicing and communicating these principles will be more effective in winning the battle than the next magnum opus like Human Action, which most professional economists have probably never read.

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Tony says that Barack Obama is a threat to your freedom of speech. “Senator Obama likes the outside role until he’s an insider. Just like every other politician.”

Apparently, Obama is for free speech, you see. As long as you express your freedom as a Republican or a Democrat. A third party might “overwhelm the system.”

Who knew?