no third solution

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How 80,000 Jobs Disappeared

November 24th, 2008

According to the Financial Times (all the news that’s fit to print), in the last week, the world’s economies lost 80,000 jobs. I have one question: How?

Seriously, how in the hell does something like this happen? The world did not stop turning.

These 80,000 people don’t want to be poor. They don’t want to be unemployed and unproductive. They didn’t choose to reduce their standards of living. They didn’t just decide that all of their needs, now and forever, have been met. No, all of these people still need food, shelter, warmth, leisure, whatever. Everyone still wants goods and services; everyone still wants stuff, and those needs can only be satisfied by production, which requires people.

As long as needs and wants remain unsatisfied, it doesn’t make sense that people are losing jobs left and right.

The idea that resources have been allocated towards the production of goods and services that aren’t really wanted, is the very essence of the Austrian take on business cycles. This is the crippling malinvestment that squanders capital, destroys wealth, and leaves people jobless. The joblessness is the very real personal side of malinvestment.

Not unless we assume that most of these people were simply not producing anything that anybody really wanted or needed, does it make sense. But it’s not their fault that they engaged in such unproductive activities, as individuals they were simply responding to incentives in the form of wages.

Following the paper trail, as it were, something had to make these wages possible, something had to tolerate or even encourage the misallocation of so many scarce resources, towards the production of things for which there was never any real demand. Something exogenous had to destroy all of our productivity.

We didn’t do it on our own.

That something is price inflation. And inflation is always caused by manipulation of the money supply by a central bank. Far from “stabilizing” the economy, or the money supply, by creating money from nothing they are capable of indebting everyone, controlling everyone.

Jobs, wealth, productivity, capital: all squandered, destroyed. And now they say, “The free market has failed you!” Now, they say, “You need Government more than ever before!”

The very people who claimed stewardship for your safety, your well-being, your economic prosperity are the ones responsible for so thoroughly eviscerating all those things. Those who created so much on paper, to expropriate the real, do you reward their deception? Do you reward their abysmal failures with more of your blood, sweat, tears?

Do you believe them when they say, “You need us, now more than ever”?

Taxation is Still Theft, No Matter How Many Logical Fallacies You Employ

November 21st, 2008

Responding to Taxation Really Is Theft, smally pointed me to four essays by Liz Anderson (forgive my familiar tone; “Elizabeth” is just too formal for me to keep typing) which were, in smally‘s opinion, the most comprehensive arguments he’s encountered, against the “Taxation is Theft” argument.

I can save you a lot of time: at no point in Anderson’s four essays did she put forth an argument that was original or compelling to justify taxes.

If you’re still interested, Anderson’s posts begin with How Not to Complain About Taxes. Let’s see what she has to say:

[T]he fact that some property is mine does not entail that other people do not have rightful claims to some portion of it. I am entitled to my salary; it’s mine. But my children have a rightful claim to support from my income. In some states, such as California, I have a legal obligation to support my parents out of my income, if they cannot support themselves. I have to pay my bills out of my income. If I negligently injure someone, I am liable to pay them damages from my income. The fact that this income is mine does not settle anything about who else might have legitimate claims to some portion of it, and on what grounds. Note also that I did not have to give my personal consent for some of these others to have a claim on it.

In some of the cases above, the claim arises from an action or negligent inaction, that is, a creditor’s claim upon my income does not arise because I earned the income, nor does it arise simply because the creditor and I are members of the same society, however defined. His claim arises because of (and is validated by) an agreement between the two of us. Likewise, the injured party’s claim to a portion of my income is divorced from my having earned it, at all. The injured party claims my income because I injured him, it is required as recompense for damages caused, and for no other reason.

Even if we assume the validity of these arguments (the California example, in particular), we cannot begin with the presumption that “others” have rightful claims to some portion of our income. Instead what must happen, is for those “others” to make a claim for such portion of that income which can be justified. The mere existence of a State which does not recognize property rights should not be construed as disproving property rights, in general.

So here’s my second point: unless one is a bomb-throwing anarchist, an advocate of natural property rights must concede the legitimacy and indeed necessity of a state, at least as an institution for collective protection and impartial adjudication of claims–the so-called “minimal state.” And such a state will have a legitimate claim on every member’s property, to the extent necessary for everyone to pay their fair share for its maintenance, as Locke rightly insisted.

I should have stopped reading, here. I would like to call particular attention to the ad hominem in her “second point,” namely, that unless you accept the premise of her argument (that a minimal State is the only viable form of social organization and that said minimal state must be funded by taxes), then you are a violent, “bomb-throwing” anarchist.

I would like to pause for a moment, and remind Ms. Anderson that the most violent and oppressive bomb-throwers in recorded history have been nation States. In any event, I’d expect more from a professional philosopher than ad hominem attacks on her intellectual opponents, followed by a textbook example of the “No True Scotsman” fallacy. If you’re interested, here is some truth about what anarchists want.

However, I can’t disagree with everything she says. In particular, in Part 2, Anderson describes (farily accurately, IMO) what’s wrong with capitalism:

Advanced capitalism requires a vast apparatus of socially engineered institutions to sustain itself. To put some specificity on these claims, I’ll argue as follows. (1) Certain types of property rights and rules found in advanced capitalism have no sound basis in “natural” property rights but are nonetheless essential to advanced capitalism.

…Under the capitalist system we have today, people’s claims to property arise from a vast artificial system that has no natural foundation, and that rightly contradicts many natural property claims. The system couldn’t be capitalistic if it didn’t.

Again, I agree completely that many claims to private property, as we know it, “arise from a vast artificial system that has no natural foundation.” Where I disagree, is that this lack of natural foundation “rightly contradicts many natural property claims.” A general pattern that I notice in her writing is that she lauds State capitalism where lauding it might bolster her arguments, and she condemns State capitalism if it helps her arguments to condemn it. This is not a principled approach, it is cherry-picking at its finest.

She brings up the examples of Limited Liability Corporations, and Intellectual Property laws, which are state intrusions in the market, to which many libertarians (some more vehemently than others) object. All we can validly conclude from these arguments is that the current State-capitalist economy does not rely on natural rights principles. To extrapolate from this conclusion, that therefore natural rights do not exist, is a textbook example of post hoc ergo propter hoc, or, “after this, therefore because of this”.

Moreover, if rights do not exist independent of government, then no government can justifiably be established in order to protect those rights. The converse of this, however, that governments may exist to the detriment of human rights, is not falsified.

So far, I’m not impressed. Let’s see how she does with Hayek

Let’s consider first Hayek’s claim that prices in free market capitalism do not give people what they morally deserve. Hayek’s deepest economic insight was that the basic function of free market prices is informational

…Claims of desert are essentially backward-looking. They aim to reward people for virtuous conduct that they undertook in the past. Free market prices are essentially forward-looking. Current prices send signals to producers as to where the demand is now, not where the demand was when individual producers decided on their production plans.

I’ve not heard anyone put forth the argument that wages are due in exchange for virtuous conduct of the past. All this talk about “moral dessert” is a straw man.

One’s claim to income, in exchange for labor, is not made on the grounds that he “deserves it,” but rather because it was something to which he and his employer voluntarily agreed and pre-arranged. In this sense, the laborer does in fact “deserve” his wages, but only conditional upon the fulfillment of the agreement.

Free-market prices are indeed forward-looking, and profits accrue to those individuals who are most capable (or occasionally lucky) in forecasting uncertain future demand, while bearing risk for society during the time-to-completion. In a free market, unsuccessful businesses quickly and unceremoniously dissolve, and labor is mobile and competitive.

And so far, no argument that people have a moral claim to their pretax incomes, sufficient to preclude taxing it for insurance purposes, has survived critical scrutiny. Certainly, “I deserve it” doesn’t.

There’s this thing called Moral Hazard…

Look, I want to help people as much as the next guy. I don’t want to see pain and suffering. But it is at the very least, unimaginative, and at worst, downright cruel, to suppose that the only way we can possibly help Group A, is by positively inflicting harm on Group B. Perhaps more importantly, this is an argument that can cut both ways: just because one cannot establish that he “deserves” his income, is not sufficient to conclude that others do, in-fact, deserve a portion of it, nor to establish what portion would be appropriate.

Anderson’s “critical scrutiny” somehow avoided any research of fraternal orders, Friendlies, mutual aid societies, or more visibly and more recently, the billions of dollars and millions of labor hours that (e.g.) Americans donate to charity, domestically and abroad, every year. Despite the fact that we are taxed to the hilt (to her credit, Anderson is open to the argument that we are taxed too greatly), people still find a way to freely and voluntarily help those who are truly in need.

In part 4 of How Not to Complain About Taxes, Liz falls back on

[O]ur capitalist economic system does not in fact reward people according to the proposed principle–in this case, according to their individual productive contributions.

This is yet another indictment of State capitalism, not the principal. If people are not rewarded in accordance with their productive contributions, the problem is (most likely) not the rewards, but the system which tolerates such an injustice, and encourages rent seeking, which precludes others from earning their keep.

In a Free Market, wages and prices tend towards their respective opportunity costs. Under such constraints, the decisions and consequences thereof are left solely to the individuals, to whom they impact the most. If people should earn what they deserve (whatever that means), the first step towards achieving this goal is the eradication of any impediments thereto, up to and including the dissolution of labor cartels, license restrictions, state-sponsored monopolies, etc. She continues,

More generally, market wages don’t track any physical measure of positive productive benefits conferred on others, since they vary with factors independent of the firm’s production technology. Wages vary with the number of other people competing for the same job, the power of competitors to hold out for better terms, the costs to the worker of changing jobs, the availability of alternatives, and the costs the worker can impose on the firm by quitting. These factors don’t track physical measures of a worker’s contribution. Rather, they track people’s bargaining power.

Liz, if you’d like to have your cake, you can’t eat it, too. Whereas she previously lauded State capitalism as all that’s good and right in the world, she is now vilifying it. Anderson fails to recognize the role of the State in the market-power disparities. (As an aside, I find it comical that it took four blog posts to recognize that economic phenomena like “market wages” are subject to the laws of economics.)

For example, the availability of alternatives can be severely impacted by State interference. Try establishing your own TelCom and let me know how it works out, or, better yet, try starting a School. Or a Police Department. Furthermore, bargaining power may be reduced by the non-transferability of health insurance, a not insignificant portion of many workers’ total compensation packages. Many of the “costs” associated with changing jobs are artificially high, due to State manipulation of industry and the labor market.

I am, frankly, embarrassed. Anderson is the one making the positive claim, and accordingly the burden of proof is upon her, a burden that can’t be overcome by saying “this straw-man caricature of an opposing viewpoint doesn’t prove the opposing viewpoint!” Instead, she has literally run the gamut of logical fallacies, with which her arguments are so riddled, she couldn’t pass Philosophy 101 at the local community college.

I believe that I am now dumber for having read them.

It’s possible that the only way it could get any worse, is if Anderson stuck her fingers in her ears and started screaming “LALALALALALA!”

Why Can’t We Secede?

November 20th, 2008

I read about a Zogby Poll a few months ago, that suggests something like one-fifth of Americans support the idea of secession (at least at the state level), unfortunately,

The more education a respondent had, the less likely they were to support secession – as 38% of those with less than a high school diploma would support it, compared to just 10% of those with a college degree.

I think the correlation here is: The more pro-State brainwashing an individual has received, the less likely he is to believe in anti-State ideas, like secession, or freedom.

In What Libertarianism Isn’t (Part 2), John from Blagnet inquires:

Why is it a violation of the Statist moral code to non-violently abstain from participating in State functions?

That’s a damn good question, Mike, and it’s one that few people have ever thought about answering. The key point here is that I’m always talking about non-violent abstention, and I will not recognize or respond to any straw-man arguments suggesting otherwise.

Anyways, imagine a State that decided to secede from the Union. In the context of the current government, of course it would not tolerable, the Constitution does not address the topic, instead permitting new States to be formed within the jurisdiction of existing states only upon Congressional approval according to Ariticle 4, Section 3.

This conveniently subjects State sovereignty to the very entity with which it may wish to sever all ties. But Article 4, Section 3 doesn’t really address secession. It only says that you can’t start gerrymandering the existing State to suit your desires, nor can you establish your own State to that effect. It does not address the possibility that some people might want no State at all, and these people are forbidden from pursuing that goal.

It is clear, then, that the people whose opinions matter most, don’t count, that the venerable “Consent of the Governed” is taken as an immutable absolute, that dissent or repudiation in practice is forbidden. If man is not free to withdraw his Consent, then it can never be said that he truly offered it, in the first place.

What should happen to those who wish to secede?

Let’s take our hypothetical one step further: imagine an individual who wanted to secede? Accepting the government’s claim to legitimacy (resting upon the foundation of the now defunct “consent of the governed”), is it acceptable to violently prevent this individual from exercising this choice? To take up arms against him? To force his acquiescence or his death?

By what right do men claim the moral authority to kill someone simply because of a disagreement? Can it be tolerable, under any circumstances, for the government (a government indisputably lacking consent) to kill these people, whose sole crime is an attempt to exercise their free choice to not belong? I submit that it cannot.

The good thing is that most people aren’t morally bankrupt enough to kill over a disagreement, so with that said, there is some modicum of hope. The bad thing, however, is that most people are just morally bankrupt enough to delegate that crime to someone else, someone who is willing to get his hands dirty.

How embarrassingly nonsensical is it, for a group of men to say, “We want you to be a part of our group, our enlightened ‘Society’ so badly that we’re willing to kill you if you reject our offer?”

It is worse than nonsensical. If you’re willing to kill someone, in order to get his cooperation, you’re clearly not interested in his cooperation. Your interested in enslaving him. It is a damnably brutish and subhuman appeal to violent force; it is ultimately the foundation upon which any appeal to government rests.

no third solution

Blogging about liberty, anarchy, economics and politics