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The FED is Trapped

Current Affairs Posted on Sun, September 20, 2015 12:51:34

The long anticipated 17th September final came. A lot of people thought that this would be the most important date of the year. The FED suggested that on this day they might final start raising rates from its 0-0.25% range by 25 basis points. And unfortunately, many people still take this committee of central planners seriously. They didn’t raise, in case you wonder. And I doubt that they will be able to raise in the future.

The reality is that the FED is trapped. The keynesian claim that it is possible to print an economy to prosperity simply is not true, in other words it is a lie. This lie however is so sweet that many people just really want to believe it. But the difference between reality and the keynesian model is slowly getting so absurd that even the biggest dreamer cannot ignore it anymore. And so this Thursday was probably a big steps towards waking people up.

The fact is that the US government has to cook the books to even make it look like there is a mild recovery going on. The measure of inflation is constantly redefined, to make it look lower than it is. This is done for example by so called Hedonic Adjustments. If a product in the basket of goods that is suppose to measure inflation is getting more expensive, it is simply being replaced by another that has not gone up in price and that the government thinks is equally good. So if for example beef is in the basket and goes up in price, but chicken is not in the basket and does not go up, then beef is replaced by chicken in the basket. The idea is that consumers can then substitute chicken for beef and therefore do not experience inflation. So you better like chicken! A cheeky trick to get a lower inflation rate. And that is just one of them.

The unemployment rate is another important statistic that is manipulated. If someone hasn’t found work in one year he is simply kicked out of the statistic as if he is no longer looking. That way the US now has an official unemployment rate of 5.1%. This, by historic standards is a really low rate that suggests that almost everyone who wants a job will find one. A good statistic to show how absurd this number is, is the labor participation rate, that means the rate of Americans in employment. That rate is at an almost historic low of 62.6%. How does that go together? The answer is that 5.1% unemployment is a fantasy.

Remarkable is that despite all the manipulation going on, the official growth of the US economy is only about 2% per year. That is of cause measured in GDP, which is a completely useless unit of measurement in itself. GDP does not measure the productivity of the economy. All it measures is the amount of money that is circulating. That means that if for example the government spends money, even borrowed money, it will show up as GDP growth, independent of how productive the money is spend. The government could employ people to dig ditches and others to fill them up again. The productivity of this work would obviously be negative, but GDP would still go up. GDP also goes up when unproductive asset prices like house prices go up. Amazingly, even though GDP can be manipulated, all the intervention by the government have not managed to get this statistic significantly up.

The FED is trapped. The interest rates in the US have been at 0% for over 80 month. In addition to that the FED has pumped over 3 trillion Dollars of printed money into the economy. And all that has done is to create official growth number of about two percent. The only effect it really had is the inflation of huge bubbles in bonds and equities. The reason for that is that the economy is simply at peak debt. Even at these low interest rates, people and companies cannot borrow more money, because they already have too much debt. The only people who can still borrow money are the financial sector who really gets this money for free and of course the government. Since they cannot kick start the economy again, the official line has been that as long as the stock market is OK, the rest of the economy cannot be too bad.

The trouble is that these bubbles are dependent on cheap money. In order to keep them inflated not only do interested rates have to stay as low as possible, they will soon have to start a new round of money printing. That is a problem, because in the long run, printing money will undermine the trust in the US Dollar. So far that has not happened, because the FED could make everyone believe that it has an exit strategy. Once the US economy is growing, it will hike rates again and buy back all the printed money.

But as I explained above, the US economy is very weak and based on debt. Therefore, if debt gets more expensive the rest of what looks like a productive economy will simply implode. If however they do not hike rates, then more and more people will realise that the exit strategy is not real. Therefore it will undermine the confidence in the Dollar. That way the US economy will also implode. So no matter what they do, it looks like that keynesianism has finally checkmate itself. With this month FED decision to rest rates at 0%, more and more people will realise that the economy is worse than it seems and that the FED is not really in control of the markets.

My guess is that they will not hike rates voluntarily. Eventually of course the market will force them to. There is a small possibility that they will raise rates by 25 basis point in the next few month, but even that is unlikely. The reason is that if they do raise rates, the economy will implode and they will immediately have to reverse the rise. That will make it look like they do not know what they are doing and undermine their credibility. And they cannot really raise rates without a really strong economy, because the US government is highly indebted too. That is the difference to 1981, when then FED chairman Paul Volcker raised rates to 20%. At that time the US government did not have a debt problem. Now they have one and if the economy implodes, tax revenues will go down and dept/GDP numbers will rise, making the debt situation of the government worse. If simultaneously interest rates go up, the government will quickly have to declare bankruptcy. And since the government has more guns than anyone else, they will get the policy that is best for them, that is low interest rates and lots of money printing. So hold on to your hats, there is an inflationary storm coming.



Debunking Hoppe on Immigration

Philosophy Posted on Thu, July 23, 2015 13:32:00

Hans-Hermann Hoppe is
known for his skepticism of open borders. He thinks that open borders
are inconsistent with libertarian principals. Therefore, real
libertarians have to oppose this policy, at least as long as the
state exists. I think Hoppe is mistaken on the issue. His arguments
seem deeply confused and I am going to show why. As he claims to be a libertarian and the state is basically illiberal, then in order to make a supporting statement of a very intrusive state policy like immigration, his argumentation just has to be very messy. There is no real
case for the support of this policy. To show exactly how this works,
let us look at two of his articles on immigration.

Recently,
LewRockwell.com re-published two of such articles. The first was
entitles “Free Immigration is Forced Integration” and the second
“Immigration and Libertarianism”. Let us start with the first,
“Free Immigration is Forced Integration”.

In this articles
Hoppe tries to make essentially one argument. The argument is that
“free” immigration violates the property rights of the locals and
can therefore not be libertarian. To get to this conclusion, Hoppe
needs to distract the reader with a number of argumentative tricks to
make it look like, his conclusion follows from his premises.

Let us go through
the article systematically. The article is divided into 7 parts. He
starts by summarizing what he describes as “the classical argument
for free immigration”. I am not sure if there is such a thing as
“the classical argument”. There are definitely a number of
different arguments in favour of open borders. Hoppe, in a side note
even concedes this in the second part of the article. But he makes it
incorrectly look like this is another route to dispute the open
border claim by calling it a “first shortcoming” of the free
immigration argument. No, what Hoppe calls “the classic argument”
for free immigration, is merely the economic argument for it. But
fair enough, it is an important argument and Hoppe, as far as I can
tell summarizes it correctly. He also explicitly agrees with the idea
that free immigration does not cause economic problems. He
understands correctly that this would be an argument against free
markets in general.

In the second part
of the article, he then goes on to say that trying to criticise open
borders by pointing out negative effects of the welfare state is also
not persuasive. These are problems of the welfare state and not of
open borders in and of itself. I think this is correct. If the
welfare state or for that matter any other state policy leads to
negative effects of freeing up markets, then libertarians should
attack these policies and not the freeing up of markets. So far,
Hoppe seems to make the case in favour of open borders. One thing that
is important to note until this point is, how he uses the word
‘free’. The word ‘free’ is used in the libertarian sense of “free
from constrains”.

Now, from the third
part of the article, Hoppe starts making the libertarian case against
free immigration. His argument is that in an anarcho-capitalist
society, everything worth owning is already owned. Therefore, there
cannot be freedom of immigration. So the property prevents the
freedom. Wait a minute, what? Why is property in contradiction with
freedom? This is a strange argument coming from the founder of The Property
and Freedom Society
. But maybe they serve free alcohol there? But
seriously, isn’t the whole point of libertarianism that property and
liberty are closely linked with each other? How can Hoppe make the
argument that since we have property, there cannot be freedom. That
sounds very confused to me. It should be clear that Hoppe at this
point has started to use the word freedom in a non libertarian way,
as in ‘free of charge’. He argues that we have property, therefore
immigration cannot be free of costs. In this sense of the word
however, libertarianism is also in contradiction with free markets. A
free market would be a market in which everyone can help themselves
to everything they like, free of charge. That clearly is not
libertarian. That is more a socialist way of using the word freedom.
Libertarians explicitly stress that their idea of freedom is to be
free from proactive impositions from others. Even more remarkable is
that Hoppe just a few sentences earlier has used the word in exactly
this libertarian meaning. And now he just changes the meaning of
“free” without even telling the reader about it. One wonders why?
Is he not smart enough to realise that he is using the word with the
different meaning, or is he speculating that his audience won’t be? I
don’t know the answer, but I know that at least one of the two needs
to be true.

So let me make
clear, what a libertarian like myself means when talking about “free
immigration”, or for that matter immigration. Immigration is a
collectivist term. It means the movement of people over some form of
collectivist borders. These can be cultural borders or state borders.
As such it is not always completely clear when to call the long term
reallocation of a person to another location immigration and when he
is just moving house. Simply moving house from Charles Street a few
miles down the road to Summer Lane is usually not called immigration.

In today’s statist
world, immigration is usually understood to mean the long term
reallocation of a person from one side of a state border to another.
Free immigration therefore means that people who would like to make
such a move are free from not interpersonal liberty maximising
compatible restrains. The biggest of such restrains right now is
state immigration controls. These come in the form of state issued
passport controls at state borders and visa licensing systems that
allow the state to control who is on its territory for how long and
what reason.

I am not trying to
argue about words. If Hoppe has a problem sticking to a consistent
meaning of a word let us just argue about the meaning itself. Can we
agree that the state is violating people’s liberty with these types
of policies or not? And can we therefore agree that these policies
have to go unconditionally or not? Unfortunately, Hoppe seems to
really believe that state immigration controls, to some degree are
not in violation of liberty. However, as I argue above, the attack on
open borders via redefining the word ‘free’ can hardly be taken
seriously. So what other arguments does Hoppe have?

Although, not so
fast. At first he seems to continue the article, explicitly rejecting
state immigration controls as unnatural in part four. However,
immediately after he has done so, he starts to develop a new way of
arguing that current immigration is violating the liberty of people.
Hoppe says that since we have a state, that state then employs
policies like building roads that are not market results. This
distorted market will also have a distorting effect on immigration.
And this is what he calls forced integration, because we now have
more roads than we would otherwise have and therefore the locals have
to put up with more immigrants than they would normally get.

This is a really odd
argument in many ways. To start with, he seems to contradict himself.
In part two of the article, he argued that trying to argue against
immigration with the welfare state would not be convincing, as this
is a problem of the welfare state, which will have to go. But now he
is applying the logic that he himself rejected earlier, to do just
that. If immigration leads to problems with other state policies than
libertarians need to argue against these policies instead of making
themselves advocates of more statism.

But his argument is
also not economically correct. Yes, the state is distorting the
economy. But it is hard to tell what the exact market result would
have been. How does Hoppe know, that we now have more streets then we
would otherwise have? If we could figure that out without the market,
then we would have a pretty good argument in favour of central
planning. Maybe the opposite is the case. Maybe now, we have less
roads than we would otherwise have. In that case the same argument
would lead to the opposite conclusion of forced exclusion. As a
scholar of Austrian economics, he should know that?

Next he argues that
in today’s world the government and not the market is fully in charge
of admitting people. That however, seems simply wrong. Behind the
state borders, especially domestic property is still mostly owned
privately. So despite the fact that we have state borders, the control
over who comes into the country is still to a large degree in the
hands of the market of that country. Without anyone renting out or
selling a property to the immigrant, the immigrant still has a
problem. But there does not seem to be a shortage of people doing
that and I cannot see why there would be a shortage without border
controls. Quite to the contrary, with the freeing up of markets it is
reasonable to assume that accommodation could become cheaper as
productivity increases.

Hoppe however argues
that immigration controls lead to forced integration and forced
exclusion. I can see how immigration controls are forceful
exclusions. If a property owner on the inside of the fence would like
to invite someone, the government can prevent this. That is why it is
not libertarian. I find it harder to see a case of forceful
integration. If the government lets someone through the state border,
the people inside the fence can still say no to the person. And if
everyone does, then the person would have simply nowhere to go, even
in today’s worlds. In order for this to be forced integration, it
would need to be the case that someone is invited by the government
and the government gives that person an accommodation. This does not
seem to happen very often. If it does however, it is indeed not
libertarian. But then again, instead of establishing general border
controls and a visa system, the way to deal with that would be to
abolish these state programs too. In fact, in this case, border
controls and visas are clearly of no importance, as this obviously
happens with or without these policies in place as well. So Hoppe is
simply wrong if he concludes that it is the immigration controls
itself that lead to forced integration.

Up to this point in
the articles Hoppe has failed completely to establish an argument in
favour of libertarian state border controls. However, in the
remaining three parts, his arguments actually get a lot worse. While
up unit now, he at least tried to make it look like he was making a
consistent argument, he completely loses this in what is coming. It
is a mixture of wild speculation and false conclusions that is not
concerned with principals or consistencies. Let us have a look at it.

In part five he
argues that if we had an absolute monarch that owned the whole
country, then we would get similar results to free market
immigration. It is beyond me how he comes to this bizarre conclusion.
I guess, his line of thoughts goes something like this:
Libertarianism is about property. If we had a single ruler, then the
country could be seen as property. Therefore this would produce
similar results to free markets.

Just like in the
case of the word ‘free’, Hoppe has probably confused himself with
words. He calls both property and therefore it becomes the same
thing. He does not seem to realise that a King owning a country has
absolutely nothing to do with property as being advocated by liberty
loving libertarians. To be fair, a lot of libertarians do not
understand the link between liberty and property. They therefore
cannot distinguish between liberty maximising and non liberty
maximising property. They simply think liberty is property. And
Hoppe’s argument is probably a result of that confusion.

But at the very
least, he should realise that it is very dangerous to even just
approximate a head of state to a private property owner. This is an
argument often done by statist who want to justify things like
taxation and regulations. They will argue that really no one owns
anything, everything is owned by the state and therefore the state
can tell you what to do with it or even take it away from you.

He continues this
strange argument into part six, where he approximates a democratic
government as the owner of the country. But since this owner, is not
a single person anymore, but a changing committee, it will produce
very different immigration rules than a king, so he argues. Fair
enough, but what does that have to do with libertarianism? The state
simply should go out of the way. The problems of immigration that
Hoppe correctly or not incorrectly describes in this part are not
problems coming from open borders, but from other state policies. And
as he himself argued in part two, that is not a good argument against
open borders.

He also takes this
ownership analogy way too far, as if the democratic state would
directly allocate people into properties. The reality however is,
that this rarely happens. Most of the residential properties in the
US as well as all the other western countries are owned privately.
The state in such an environment going out of the way is just a
policy of liberty.

Finally in part
seven, he comes to a conclusion. This is not a logical conclusion.
His argumentation so far was all over the place. He uses words in
different meanings as it suits him in every given sentence. He wildly
speculates about results of all kinds of systems and presents the
conclusions of his speculation as market results if he likes them.
And he simply is not very bothered with contradicting himself. In one
word, his argumentation is a big mess. And so he concludes not what
has followed, but what he wanted to conclude all along; that as long
as the state exists (and to his credit, he stresses that the state
will have to go), libertarians need to support certain state
immigration policies which Hoppe thinks are close to market results.
This is nonsense and I cannot see that he has even come close so far
to an argument that would justify such a conclusion on libertarians
principals.

A similar mess is
the second article, “Immigration and Libertariansm”. Here he
repeats a lot of the arguments that we have already seen. However, he
makes some new ones. But first he start by attacking
“left-libertarians”. He suggests that those are not real
libertarians. I can see some people who might be called left
libertarians that really are not, like Noam Chomsky. However, Hoppe
never explains who exactly he means by that. But from the article, it
seems that if you believe that the state should get out of the way of
immigration unconditionally, then you are a left libertarian as
opposed to just a libertarian. Silly attempt of an ad hominem attack.

His new arguments
are first, that one could see the state as a trustee of all its
citizens (he seems obsessed with constructing arguments that present
the government as legitimate property owners. He never talks about
liberty, property is clearly all he knows). On the basis of this
argument he then goes on to outline what he thinks a sensible
immigration policy would be. By that he means, what he would like to
see. It is not at all clear why his proposals should be the results
of a trustee.

Seeing the state as
a trustee of its citizens is of course absolute nonsense from a
libertarian point of view. Again, this is exactly the kind of
nonsense that statist are trying to sell us. The state is not a
voluntary and therefore legitimate organisation that can legitimately
make decisions on behave of its citizens.

Hoppe actually
concedes that seeing the state as a trustee is not a good way of
looking at it. But his reason for that is really strange. He does not
reject the idea because it violates people’s liberty, no. He think
this is a bad analogy because we don’t see the immigration policies
that he thinks we should see, as Hoppe sees them as market results.

In reality, since
the state cannot be seen as a trustee, any policy that comes out of
the state restriction the free movement of people on the basis of
private property has to be seen as illegitimate, no matter what these
policies are. And Hoppe never comes up with an example of the state
actually violating the property of domestic people by letting
“foreigners” through the state gate. Sure there are plenty of
other policies in place that do violate private property rights. But
those are separate policies from immigration controls.

Policies like the
welfare state, which he goes on to blame for some negative effects on
immigration. The welfare state might or might not produce these
effects, the case is actually a lot less clear than he might think.
In any case, Libertarians are not advocating welfare, just open
borders. And again, Hoppe himself rejected the argument of conflating
the two in his other article, so why does he bring it up here?

At one point he
actually not only concludes that immigration is bad for the welfare
state, but that “a financial crisis of unparalleled magnitude would
result”. This is really beneath Hoppe. There is not a shred of
evidence that immigration is causing economic problems. If it did, it
would be an argument against free markets in general. And as we have
seen above, Hoppe knows this very well.

It is a bit
difficult to make a clear conclusion from all of this. Why is Hoppe
coming up with such a mess of an argumentation? Is he too stupid to
realize what he is doing? He might be, but it is not the impression
that I have of Hoppe. I think he knows what he is doing and he is
doing it deliberately. It looks to me like that he knows that there
is not a case for libertarian state border controls. But he really
does not like the outcome of this particular free market policy. So
he is deliberately creating a messy argumentation. That way he can
suggest to the anti immigration crowd that they are ok rejecting
immigration on libertarian grounds. And that crowd seems more than
happy to ignore the mess and pick up the ball. On the other hand, if
a critic comes along trying to suggest that he is not a libertarian,
he will point to the sentences in which he says that he does not like
the state and wants to get rid of it. But that does not change the
fact that these sentences are in contradiction with lots of other
things he writes. He is clearly trying to avoid that critics can
easily pin him down. It is easy to pin someone down who has a good
argument but is making little mistakes. Than a critic can point to
the specific mistake. But if someone’s arguments are all over the
place, criticism becomes more difficult as it is difficult to find a
starting point. It is also harder to totally dismantle the mess. And
so he can create the illusion that, although he might have made a
mistake or two, there still is a case for libertarian state border
controls. This is nonsense, as I have shown.

I don’t like what
Hoppe is doing. He makes libertarianism look disingenuous.
Libertarianism looks like statist conservatism, an ideology which,
like all statist ideologies is only in favour of some freedom, but
also has its favourite state programs. We do not have to trick people
into Libertarianism. If we cannot argue honestly, this movement will
fail.



The Economics of Intolerance

Economics Posted on Thu, July 16, 2015 12:37:28

Libertarianism is advocating to maximize the liberty of individuals. The idea is that every person should have the right to be left alone as much as that is practically possible. Originally, I was under the impression that Libertarians must be people who have a lot of faith in human beings. That is because, one of the major arguments against liberty seems to be that a lot of people are simply not fit to make their own decisions in every aspect of their lives. They need to be forced or at least guided with some mild pressure to make the right choices. While libertarians will be quick to admit that people are not infallible and not all of them are decent, they nevertheless believe that even a superior elite group, or a single genius, cannot get the right personal choice better for the average or even below average person than the person can for themselves. They also believe that there are only a small amount of potential or real trouble makers. The vast majority of humans are basically good, trustworthy people. This to me, seems to be a very positive and optimistic view of humans.

Over the years however, I came to notice that libertarianism does seem to attract some people who are not particularity positive about humans in general. Their attraction to liberty seems to be two things. Firstly, they are attracted to the idea of liberty allowing them to reject others so they do not have to deal with a lot of humans that they do not like. In other words, it is the ability to dodge others, to be intolerant of those that they do not like, that is attracting some people to libertarian ideas. And secondly, they seem to have come up with the idea that economic forces will be an even stronger restrain on people’s behavior than the state. In other words, they paint the picture of a libertarian society being mostly homogenous and conservative.

Their arguments never made much sense to me and I am going to explain why. I am going to argue that a libertarian society will most likely be very colorful and multicultural.

Let us start with the first argument that liberty is about the right to discriminate. It seems clear that we can only have absolute unrestricted liberty in a world of superabundance. But since we live in a world of scarcity, it is inevitable that our liberty will be limited by the liberty of others. What is the best way of maximizing the ability of people to be left alone in a world of scarcity? The libertarian answer to that is to grant people certain property rights. Only with these property rights, it seems possible to practically leave people alone at least to some degree. With property, I am at least able to do what I like with a small part of the real world, most importantly with my own body and life. Without property I would not be able to make any decision without asking all other people interested in the same property for permission first. Therefore, it seems correct to assume that property really does maximize liberty.

From this, the intolerance crowd will follow, “see, liberty is all about discrimination, therefore a libertarian society will see more of it”. Well, not so fast. Just because in principal you can do something, does not mean that it is always a good idea. Yes, it is absolutely true that liberty entails the right of people to exclude others from their property or business activity for very shallow reasons. But then liberty gives you the right to do all kinds of things. You could restrain from showering and being polite to other people. But from that does not follow that this is a good survival strategy. I would suspect that it is probably not.

People who stress the ability to intolerance through property overlook the fact that property is not absolute liberty. It is merely a strategy to maximize liberty in an otherwise scarce world. As such it also demands a lot of tolerance. While it is true that you can use your property in any way you like, it is part of the property deal that you absolutely respect other people to do the same with their property. That means that you can for example prohibit people from burning the Koran on your property, but you also must not interfere if your neighbor is doing something like that on his. This might not be an easy thing to do. Liberty therefore clearly demands tolerance from people.

Our well being as individuals very much depends on the cooperation of us with other humans on this planet. And the larger the amount of people we are cooperating with the better, in other words the larger the market in which we take part, the better off we are. This is causing a few problems to intolerant people. First, if you really do not want to be confronted with things that you find hard to tolerate, you will have to do more than just own a small piece of property. You will have to find a way to legitimately control your whole neighborhood. There are of course ways of doing that. But no matter how you do it, whether you are buying up all the properties in your neighborhood or join a gated community, the costs for this lifestyle will be higher than for people who are more relaxed about their neighbors. And the more intolerant you are, the further away from other people you will have to move, or the higher walls you will have to establish around you. This however drives up the costs to cooperate with others. This is the reason, why so many people are living in crowded cities. Having a large amount of diverse people around you, opens up a lot of possibilities. That means it is economically costly to pursue an intolerant lifestyle. Sure in a free market, everything will likely become cheaper as productivity rises. But the relative economic disadvantage compared to people who are tolerant remains.

And there is more economic disadvantage. Say you are running a company and you are a racist. In that case you are excluding a lot of potentially helpful people from your business. That should cause you disadvantages compared to a competition that is more open minded. There is a reason why racist societies force people to be intolerant by law. Left on their own, most people quickly start realizing that hatred is not a very attractive philosophy.

What about the claim that a libertarian society will likely see more conservative lifestyles. I don’t find this completely convincing either. I think conservatives are right in one aspect. Cooperation on a free market demands responsibility. So some of the irresponsible behavior we see being produced by the welfare state will likely go away. On the other hand however, markets are known to produce a lot of wealth. And particularly creative people are doing well on free markets compared to rigid bureaucratic structures. If people are more wealthy they are less dependent on others approving of their lifestyle. In other words, free markets tent to benefit individualism.

This can be seen historically. For example, to my knowledge it was not so much feminism or the welfare state that made women independent from their husbands. It was the industrial revolution. Factory owners often paid for facilities where mothers could leave their children while at work. That way they had access to their labor, which was needed. Or mothers were earning enough to pay for child care themselves. So it was the wealth production of free markets that allowed women to break out of conservative family structures.

I cannot see much basis for the idea that liberty is about intolerance or that a libertarian society has to be conservative. This seems to be wishful thinking from some libertarians. If that is true, then the question arises, are they really libertarians or are they people who see libertarianism as a means to achieve very different ends? And if the latter is true, are they trustworthy to stick with liberty even if liberty appears to produce different results?

I think a good test to answer these questions is state immigration controls. Are libertarians willing to support getting the state out of the way of the free movement of people or not. It seems to me that people who are arguing in favor of state immigration controls give away that they really are more interested in their conservative/racist idea of a society than in liberty. And they seem to sense that it really needs the state to produce this result. If we get the state out of the way, we will likely see an increase in multiculturalism. The economic incentive of people to mix seems too large.

Since this is not a result that these libertarians expected, they are quick to proclaim that really this is all due to other state policies like non-discrimination legislature or the welfare state. But this is an odd argument in many ways. While these policies are indeed anti-libertarian and have to go, there does not seem to be much evidence that supports the idea that they have a big influence on immigration. At least no were near enough to support the idea that without them, we would not see a lot of movement of people from all over the world. And regardless of how many people will end up moving, it seems false to argue that the state cannot be rolled back unconditionally, as that would lead to problems. That argument can be used to prevent any rollback, as almost any abolition of a policy will cause some trouble for some people. So if this argument sticks, we will be stuck with the status quo forever. No, if the abolition of one policy causes problems with other policies in place, then we just need to abolish more state until the state is no more.

For all these reasons I personally remain skeptical of people who are interested in liberty because it promises them intolerance. Of course it is good when people are interested in libertarianism and want to call themselves libertarians. Any common ground is a basis for debate. However, I don’t know how much I can trust them when it comes to the fight for liberty. I also don’t believe this image of liberty is helpful to spread the message. We are sharing this planet with a lot of people. And we will have to find a way to live peacefully with them. Our standard of living is also very dependent on a maximum of collaboration with others. I therefore consider tolerance to be an important value. Intolerance simply does not seem to be a good survival strategy. But tolerance can be difficult. It needs to be learned. That will take some training. Telling people that it is perfectly fine to be intolerant is therefore not very helpful.



Let’s do something!

Politics Posted on Fri, June 05, 2015 16:21:39

If you attend a lot
of libertarian gatherings, you will start feeling like everything
talked about is very repetitive. Every argument being made sounds
familiar and if someone new might show up you can predict what their
objections are going to be. Nevertheless, I am not really getting
tired of them for a number of reasons. There is the psychological
aspect of feeling sane and understood. I know a lot of libertarians
who come to meetings for this reason alone, as it is an experience in
contrast to what they are experiencing in their normal environment.
And sometimes you might actually come across an interesting viewpoint
that you have not heart before. So despite all the repetition, you
might actually learn something. In any case, arguing a lot, even if
repetitive, certainly trains you in making your points in other
debates. In the end it helps spreading libertarian ideas.

But there is a
series of talks that come up fairly regularly that annoyed me from the
first time I attended one of them. It is a series that I would like to call ‘Let’s do something’. The ‘Let’s do Something’ talks follow a
common structure. Whoever gives the talk will start by saying that he
or she has observed that libertarians are arguing too much and spend a
lot of time with books. That is all nice and well, but he or she has
decided that now the time has come to stop this childish complaining
and take real action instead.

The proposal to ‘do
something’ is always presented as some kind of fantastic new break
through idea that obviously a lot of libertarians could not come up
with themselves. And the moment the words ‘Let’s do something’ have been
uttered you will find some libertarians getting overly excited. From
this moment, they do not let any argument count, as arguing looks
like falling back into the childish complaining status. As a result,
any proposal following these words will be seen as worth supporting
and superior to talking.

Don’t get me wrong,
I am all in favor of taking action. So are most if not all
Libertarians. One topic that is reliably discussed on every
libertarian gathering is, how do we get to a libertarian society or
at least, how do I get the state out of my life. Libertarians are
spending a lot of time trying to figure out a solution to the state
problem. However, this problem, not surprisingly turns out to be a
very difficult problem to solve. If the power of the state was so
fragile that all it needed to topple it was for some people to get
together and ‘do something’ it would have gone away a long time ago.

Having said that,
there are some strategies that libertarians have come up with that
actually might get us to a libertarian society in the long run. However, the
remarkable thing about the ‘Let’s do something’ talks is that they are
consistently disappointing in coming up with persuasive solutions.
People who start their talks with ‘Let’s do something’ will usually
not tell you about strategies like agorism, how to reduce your tax
burden, how to use alternative currencies or stop the state from
spying on you. No, none of that. People who start their talks
dismissing debate and demanding action fairly reliably will give you
the proposal to get involved in politics one way or another.

The most common one
is to propose a new libertarian party. “Hey guys, a lot of you are
just sitting around debating. But a few of us have decided to grow up
and we have founded this new libertarian party that will change things in this
country”. Sorry mate, but this is not new. It has been tried many
times with not very persuasive results. So why come up with the same
old non solution?

The last talk in
this series that I attended and that inspired me to write this piece
was from an MEP of the Tory party who somehow is sympathetic to
classical liberalism. Becoming an MEP I guess was his idea of doing
something. I could not quite figure out how this action is helping,
but then again if I were to fight MEPs I should probably start with
the less libertarian ones. At least he seemed like a sincere guy. Although, he did have this typical talking style of a politician of being deliberately vague to please as many listeners as possible.

He thought one of
the big problems of libertarianism is that they don’t have a good
answer to the problem of poverty. They are just assuming that the
poor will be better off in a free market, without delivering any proof
for it. That is why people do not understand the libertarian
solution. So instead of talking, libertarians should practically show
how the market helps the poor. He proposed going into the community and help poor
people run their own businesses. An example he gave was, how he
helped a drug dealer using his entrepreneurial skills to now run a
sandwich shop instead.

This proposal is odd
on many levels. First it smells a lot like central planning for
politicians to go around and tell people how to run their businesses.
It does not need the guidance of the state to run businesses. Maybe
the drug dealer is now better off selling sandwiches, or maybe not. I
don’t have a principal problem with either one of those businesses.
But for the life of me, I cannot figure out how getting him into the
sandwich making business is helping Libertarianism. No tax has been
reduced, no regulation has been abolished. The structural problem of
the state remains. I told him that, but his answer was that
regulations, while nasty are not the main problem. There are still
many entrepreneurs who succeed in a statist environment. So the problem has to be the attitude of people.

True, people in
state education are systematically educated to be irresponsible. But
then again, that is a structural problem of state education and the
welfare state. To say that regulations are not the main problem, is a
dangerously wrong analysis of why the standard of living of so many
people is going down. True, there are successful entrepreneurs in this
statist environment. Some people are so productive that even after
all the taxation and regulations they still are able to run a
profitable business. But these are strong people. This is exactly not
a solution for the poor, who tend to be a little bit less skilled.
The less skilled a person is, the more likely every stone you put
into his or her way will kill his or her ability to run a profitable
business. It is exactly the poor who are most dependent on us solving
the structural problem of the state, for they are the first to suffer
under it. And btw isn’t ‘not letting you being put off by regulations’
exactly what drug dealer are doing? Here you can see, how regulations are helping the strong. They get even richer than they
deserve to be, because the state has killed the competition.

It is indeed
unfortunate, that economics can be counter intuitive, as one needs to
understand that a lot of consequences are not directly visible. And
to be honest, my suspicion was that the MEP did not fully understand
that himself. He seemed to suggest that poor people really are benefiting from the state. Of course it is not intuitively clear why poor
people are better off if the welfare state stops giving them money.
But it is nevertheless true and therefore there is no alternative to
spreading this idea. If you do not spread the idea, whatever actions
you take could still produce non libertarian results.

Which brings me to
the biggest fallacy of the ‘do something’ philosophy. Ideas are not
useless chit chat. They are the most powerful weapon this movement
has. Therefore, spreading propaganda very much qualifies as doing
something. And it is probably the best thing most people are able to do. If we
look throughout history we see the powers of ideas everywhere. For
example, how did democracy or socialism become so powerful? They
started out as ideas of a few nutters. These ideas slowly started to
grow before their time finally had come. That is why you cannot just
implement a democracy in countries that never had any democratic
process. People do not yet understand the idea.

Because ideas are so
powerful, you will find strong forms of censorship in every
dictatorial system. The reason why a country like North Korea is so
cut off from everything is not because they fear the nice consumer
products from the rest of the world. Their real fear is that ideas
will come over and topple the regime.

Ideas are also the
foundation of actions. If someone acts against the state he first
needs to identify the state as a problem. There might be some people
out there who are really able to do something great against the
state. But first they need to understand that the state is a problem. Whoever invented the block chain for example certainly was
influenced by libertarian thoughts. With these ideas in mind, he then realized that he had some skills that could be turned into action. If it was not for libertarian propaganda, this might have never happened.

In my experience it
is not that libertarians are too lazy to act. They are more than
willing to do so. But that does not mean they have big opportunities
to do so. Most people find small opportunities to increase the amount
of freedom in their lives. Few are capable of inventing something big
like Bitcoin. I certainly could not have done that. But I don’t have
to. The division of labor also works for Libertarianism. The best thing most of us can do is to spread ideas, so that
those with the exceptional skills to act on it can be influence by
libertarianism.

The problem with
ideas is that they don’t show immediate results. You will not step in
front of a crowd of statists, explain libertarianism to them and see
them collectively saying ‘I was blind, but now I see’. Whether people
are listening to you depends on many things like their motivation,
their age, intelligence, personality etc. Not everyone can be
persuaded and it is a slow process. That makes ideas very annoying
for impatient people. They start concluding that spreading ideas is a hopeless exercise. It also makes you feel like you are not in
control of the process. However, there does not seem to be a real
alternative to ideas if you want social change.

If your ideas are
correct and attractive, they will sooner or later win followers. The
good thing about ideas is that once they pick up steam, they can grow
exponentially. We also don’t need to win over everyone. A lethal
doses of ideas for the state is far below the threshold of persuading
everyone. We just need a significant number of the right people. So
let’s not complain about people not doing anything. Everyone does what they can do best, just like in the rest of the economy. But one thing that really everyone can do is to continue spreading ideas.



What is wrong with Democracy?

Philosophy Posted on Mon, May 04, 2015 21:32:22

This week, on May
7th, the local gang of thieves, also know as the UK government will
ask its subjects for approval of their crimes. And amazingly, people
will come out in flocks to give it to them. Their motivation for
doing so will be different. Many have been promised a share of the
booty. Some will have to live with the promise of one party robbing
them less badly then the other. And there are those whose survival
strategy seems to be, to not think at all and just follow the crowd.

The vast majority of
all of them will have in common to dislike my characterisation of the
government as a gang of thieves. “No Nico” they will say, “the
government is just everyone getting together as a community and
figuring out what is best for all of us. Everyone can take part.
Everyone has a voice. The government is not a gang of thieves. The
government is us.”

I would buy that
story, if I was 12 years old. In fact, I did believe it when I was
12. But in my view, it really takes the naivety and life experience
of a child to believe it. There are so many holes in that story, it
is difficult where to start. Maybe we should start with the idea of
the government representing the people.

Who are the people?
The people are all of us you might say. Great, so in that case
governance by the people would logically mean that everyone has to
agree with a policy. I actually like that. The government could never
do anything if everyone had to agree with it. The criminals would be
stripped of their power and therefore leave us alone.

Unfortunately, we
don’t have that. Instead, what we have is that a part of the people
will be enough to legitimise a policy. Here is my first problem. How
can the government act in the name of the people, if a part of the
people is systematically excluded? But hardly anyone seems to be
bothered by this contradiction. They think they have a solution. The
solution is that we can call it the rule of the people, when a
majority of the people approves a policy.

But what is supposed
to be so magical about a majority? Why should the majority part of
the people have a right to tell the minority part what to do and
still call this the rule of the people? As a famous saying goes,
democracy, that is two wolfs and a sheep voting for what is for
dinner. There seems to be nothing moral or logical about the idea
that a majority can legitimise the exercise of power. The only thing
the majority idea has going for it is that that way the exercise of
power becomes possible. But then again, why would we want someone to
exercise power over us anyway?

Nevertheless, even
though the whole majority story seems very much arbitrary, let us for
the sake of the argument assume for the moment that a majority can
indeed legitimise power. How is that then been implemented in the
current political system?

Currently, you can
vote for parties or candidates. Both represent a whole agenda of ideas and
political proposals. I shall be surprised if we could find anyone
voting for a party or a candidate, who really agrees with the whole agenda. But let
us get back to that later. First, let us take a simple example of an
election result. Let us say there are two major parties A and B and a
bunch of smaller parties. Let us assume 60% of eligible voters show up
at an election to vote. 10% of these vote for smaller parties. 26%
vote for Party A and 24% for Party B. Pretty much every western
democracy has election rules to keep small parties out of the
representative assembly. So we now have two parties, representing the
will of the people. Party A is going to provide the government.

But wait a minute.
Party A only has 26% approval of the voters. What kind of funny world
is it, in which 26% represents the majority and 74% the minority?
That means that the minority is almost three times as big as the
majority. This is the funny world of politics, in which most basic
principals of mathematics do not apply.

Right here we can
conclude that the whole rhetoric of the rule of the people and
majority rule is simply a fairy tale. But it actually gets worse. As
mentioned above, most people do not vote for the whole agenda of a
party. The system is set up in a way, so that you have to give your
vote to a party according to a few issues that are important to you.
This issue can be, and very often is as simple as, “party A
promises me to subsidies my bus ticket”. Now you have voted for
party A to get a cheaper bus ticket (btw who is paying for that?!)
and party A interprets your vote as a mandate to do whatever is on
their agenda. But since you haven’t voted for them because of the
rest of the agenda, this claim is simply false.

What does this mean
for the democratic legitimacy of party A’s policies? Well, it means
that many policies on the agenda of party A are actually not even
approved of by the majority of voters of the two major parties. If we
think this through, that means that it is possible for a policy of
the government to be only approved of by a tiny fraction of the
voters. In fact not only is that possible, but it is happening all
the time.

Almost everyone I
talk to seems to agree that the government is putting out too many
regulations in some area of their lives. How can it be that people in
general seem to agree that there is too much government in some areas
and yet we only seem to get more government? After what we have found
out above, it should be clear why that is. It only takes a small
fraction of the people to grow the government. A small interest group
that is giving out their vote only on the basis of a certain
regulation being put in place. While most people may disagree with
this regulation, they are more concerned with getting their own favorite regulations approved. So this has more priority than to
stop other regulations. Politicians know that and that is why they
promise everyone their favorite government program.

The government will
grow, no matter who wins an election. There is no way the government
can be shrunk by voting. If you want to shrink the government by
voting, you have to defeat the special interest groups. And since their issues are very important to them, you will likely lose. Even if
you do manage to defeat one of them at some point, defeating all of
them is impossible.

That means that since most
people are not voting out of moral principals, but just for
the benefit of their own bank account, the system has become a
gigantic exploitation machine. The only question in every election
has become, who is going to be the exploiter and who the exploited.
And that although the system has become so complex, that it is
impossible to really say on which side one will end up on. However,
since wealth creation is becoming increasingly difficult in the middle
of this battle, it is fair to assume, that we are probably all losing
a lot on the whole. Democracy is not the rule of the people. It is
not a noble system and the end of history. It is a fundamentally
immoral system that deserves to die.

It will die anyway,
since more and more people want to be part of the parasites. I don’t
blame them. As long as the system is set up the way it is, that is,
as long as we think we need a government to organize society, taking
part in the exploitation seems like a rational thing to do. The
problem with parasitic systems however is, that eventually they grow
so big that they kill the hosts. That is were most western welfare
states have gotten to right now. So either, people start realizing
that the system itself is the problem, or things are going to get
really messy. Humanity will not make progress until we have slayed
Leviathan in even its democratic form.



Inheritability of Intellectual Property

Philosophy Posted on Sun, April 19, 2015 17:11:34

Should Intellectual
Property be inheritable? Some defenders of IP, like Jan Lester think
it should. I would disagree. Why should anything be inheritable from
a libertarian point of view? If Libertarianism is all about maximizing interpersonal liberty, should dead people be still
considered a person whose liberty is worth maximizing? I don’t think
it should. Liberty is for the living, not the dead. The concept of
inheritance is basically giving a person property rights beyond his
or her death. Why is that supposed to maximize liberty, unless we
assume that the liberty of dead people still matters?

Having said that, I
am in favour of the inheritability of physical wealth. The reason for
that is that physical things cannot be in the public domain. That is
the reason why property is libertarian in the first place. Allowing
the concept of property on some scarce things is actually liberty
maximising. With the death of a person, his physical wealth does not
go away. If it is true that property in this wealth was maximising
liberty before his death, then it is reasonable to assume finding a
new owner after his death is liberty maximising too.

To put it
differently, physical wealth needs to be inherited to someone.
Putting it in the public domain is not really possible because of its
scarcity. And if the question is just who inherits the wealth, it
seem to make sense to let the previous owner decide who the next
owner should be. If not him, who else should decide it? It also seems
like a good solution, because the previous owner is likely the best
to make an educated decision of who is best suitable to inherit
certain things. This is most likely to keep the wealth in the most
productive hands.

Things look a little
bit differently for IP though. There are certainly many parallels
between the concept of physical and intellectual property. However,
there are also some crucial differences. In particular there are two
differences that make the idea for inheritability of IP look
questionable.

The first one is the
fact that the usability of physical property is always limited to a
few people. For example, if I have a chair, only one person can sit
on it at a time. The same limitation applies to every other physical
property I can think of. That means that for physical things, it is
inevitable to have a rule according to which we can determine, who
can use a desired object for which purpose at a certain time. Most of
the time, the best solution will be to grand people property rights
on these objects. Less often it might be enough to have a simple
possession solution in place.

IP on the other hand
is lacking this characteristic of physical property. In principal,
information can be used by an unlimited number of people
simultaneously. There is no limitation on the information itself. For
example, me reading The Wealth Of Nations does not limited someone
else to read the same book at the same time. This is a big difference
between physical and intellectual property. The only limitation would
be the availability of the physical medium on which the information
are stored. But as I already said, inheritable property rights on the
medium are not a problem to me.

The second
difference is that physical wealth decays. There seems to be no
exception to this, although some things are so robust that for all
practical purposes they can be seen as not decaying. This makes it
necessary to maintain physical things. Maintaining things usually is
a capital intense process. People will less likely engage in this
process if they are not allowed to have some control over the result.

Information on the
other hand do not decay. The pythagorean theorem for example has not
decayed one bit, despite the fact that it is thousands of years old.
One might argue that the physical medium it is stored on needs to be
maintained otherwise the theorem would get lost with the medium. That
is true, but is not much of an argument in the digital internet age.
Desired information will be stored in many different locations at
almost no cost.

These two
differences make the idea of the inheritability of IP questionable.
Other than physical property, IP can actually be in the public
domain. If that is true, than what justifies giving it a new owner,
after the old one has died? This seems to be an unnecessary
imposition on everyone who is not the new owner.



The Police and the Rule of Law

History Posted on Mon, April 06, 2015 12:40:36

Apparently, one of
the major responsibilities of the state is to protect our rights
against criminals. It is this responsibility that even a lot of
libertarians think we cannot get rid of completely. To fulfill this
responsibility, we are told, the state needs to have a monopoly on
using violence. The institution of the executive, which carries out
this violence domestically is the police. To make sure that this
monopoly in and of itself does not become a problem, the advocates of
this system have implemented democratic controls. That way, the
police can function as an efficient security service provider for the
people. That is at least the idea. But does it all work as the
architects of this system imagine it?

On first sight, this
system does not seem to be a bad idea. For a society to function, we
certainly need to have a rule of law. That means we indeed need to
make sure that if it comes to a stand off between a criminal who is
violating the rights of someone and the enforcers of the law, the law
will ideally always win. And if you want to win battles it seems very
useful, if not inevitable to have the majority of force on your side.
If this line of thought is correct, does this automatically mean that
we need to have an institution that at all times has a monopoly on
force? Is there even a possible alternative to this approach?

To answer these
questions let us start by having a deeper look at the basic idea. It
seems to me that there are several flaws in it that need to be
addressed. The most obvious one is, who is controlling the monopoly?
The major assumption behind having a monopoly is that not all humans
are of good character. Some are more than willing to violate other
people’s rights for their own advantage. If that is true, how do we
make sure that these people are not taking over the monopoly? For
that is what these bad guys are most likely planning to do.

There are various
ways with which criminals could do that. The most successful one
would be to take over the control of the whole state. This could come
in various shapes and forms. One example might be a very primitive
military dictatorship, in which everyone is aware that a group of
people are controlling the system in their own interest. However, it
could also come in more subtle forms. The state could still have the
appearance of a rule of law, while a group of powerful people pull
the strings in the background. The latter approach is probably more
successful in securing the control of power in the long run. In
whatever form it might come, the process of criminals taking over the
whole state seems to have been completed in most states that we
observe around the world.

However, there seem
to be a few states on the planet that still have some form of
division of powers and a rule of law. Having said that, I do not know
of any state that is completely free of criminal influence.
Corruption comes in different forms. The most simple attempt to beat
the monopoly is to try to have some influence on the people enforcing
the law. In other words, criminals try to influence the police.

The UK is worldwide
one of the most respected states for its rule of law. But how
justified is this respect? Compared to the total corruption observed
in most countries, the UK indeed appears in a positive light. But of
course this island is no exception to the fact that some people are
not nice guys. These bad boys, here too have long realized that it
might be a good idea for their ‘business’ to try to get in control of
the monopoly. And they have been far more successful than most people
might realize. Last year The Independent reported a number of leaked
documents, suggesting that the legal system in the UK is indeed
infiltrated by criminals up to the highest levels.

The whole idea that
a monopoly on force can be controlled to serve the rule of law,
really is a contradiction in terms. Any such system relies on the
assumption that humans can be trusted to not abuse this position. But
if humans were all nice guys, why would we need such a system in the
first place? In truth, this system logically cannot solve the problem
of dealing with criminals. All it does is taking the problem to a
different level.

One might object to
this by saying that the system might not be 100% perfect, but at
least it works most of the time. I certainly agree that we cannot
come up with a perfect system. No matter which system we come up with
to protect the rule of law, we will likely see cases in which it
fails. So the best we can ask for is a system with a good track
record. I do not believe that all police officers are crocks. In
fact, the vast majority are probably decent human beings, just trying
to do their jobs as good as possible. We might see police forces in
certain places on the globe who are systematically trained to fight
the people. But I do not see any evidence that this is what is going
on in the UK. However, despite of that the idea that the current
system works most of the time seems very questionable to me.

Even if we assume
that we are dealing with a lot of good police men, we are still stuck
with some other problems. The business model of running a monopoly
service provider is the business model of a central planner. So we
can expect to see the same problems from centrally planning the
police that we see in any other centrally planned business.

In a centrally
planned service organization, resources are not allocated by prices
and therefore the needs of the people paying for the services.
Instead they are allocated according to the needs of the people
running the organization. The same is true for the rules put in place
to run the organization. These rules will likely serve the needs of
the people providing the services instead of the needs of the
recipients of the services.

What does that mean
for the policing services? On the one hand, we will likely see a prioritizing of activities that are easy to execute and bring in
revenue for the organization. On the other hand, we are likely to see
activities that are hard to execute and drain resources to get a low
priority. To be more concrete, activities like fining law abiding
citizens for overstepping minor laws are likely to see a relatively
good enforcement. These activities bring in revenue through the fines
and are easy to enforce. Law abiding citizens are likely to simply
comply with demands from the police. On the other hand, chasing
criminals like muggers, burglars, rapists and murders are dangerous
activities that don’t even bring in any revenue. These activities
will likely get a low priority. They will likely be carried just as
much necessary to keep people from actively rebelling.

On the rules side of
things, we will likely see rules being made that serve predominantly
the well being of the police officers and less so the needs of the
receivers of their services. Everything that might put officers in
danger or even just cause inconvenience are bad rules and everything
that gives ‘costumers’ the power of complaining or creating
alternatives to the provided police services are good rules.

Is this what we are
seeing? From the data I know and my personal experience, I find this
to be exactly true. I myself have been on the receiving side of fines
a number of times. And this seems to be true for most people I know.
These were fines for overstepping rules that are minor or outright
silly. Some of them are so counter intuitive that I might not even
have been aware off them. For example I recently got a fine of £130
for standing too long (more than 10s) with my car on one of those
yellow striped areas you find at busy crossroads. The purpose of
these areas is to stop people from driving into the middle of the
crossroads on a green light and get stuck there, blocking cars from
other directions during their green light interval. The problem is
that it is often hard to see when exactly the cars in front of you
will stop. It was Friday night at about midnight, I thought I would
make it to the other side but ended up getting stuck at the very end
of the yellow area. I was not blocking anyone, there was still plenty
of space. But, since London is completely surveyed with cameras,
someone watched the CCTV footage, actually counted the seconds I was
stopping on the yellow lines and issued a fine.

You may say great,
these CCTV cameras see everything. If they caught you breaking such a
minor rule, they must have a great track record finding real
criminals as well. Unfortunately, that is not really the case. For
example, an ex flatmate of mine got mugged in the middle of the day
on a London bus in Chelsea. They stole her smart phone. Every bus in
London has 16 CCTV cameras on it. She went to the police demanding
they would analyze the footage and look for the criminals. However,
she found herself a little bit surprised to get the answer that “it
is not worth our time to look into this”. In this case, nothing was
to gain for the monopolists. They were dealing with real criminals,
so looking into this case would have been potentially dangerous and
drained their resources. So why do it? Why not analyze CCTV footage
for how long cars are stopping on yellow lines? Much safer and much
more lucrative.

Another friend of
mine got jumped by a few thugs on his way home in the evening. He was
less lucky. They not only robbed him but also beat him up so heavily
that he almost lost an eye. So he went to the police to report it. To
his surprise the police at first refused to even write the incident
down. After a while of arguing with them, they finally agreed to make
a note of the incident, but they were very blunt about the fact that
they had no intention looking into this case any further.

In December last
year and February this year, my flat got burgled twice within two
month by the same guy. The burglar was after cash and computers. The
first time he stole some cash from me and two computers, including a
MacBook Pro that I was using for work. Knowing the bad experiences
that almost everyone I ever asked had made with police in London, I
was not very keen in calling the police. I did it anyway for two
reasons. First, I remembered that the MacBook was covered by my
business content insurance. Second, I am a skeptical person. I always
like to test whether my theories work. So I was curious to see what I
could get for my tax money.

Within an hour two
police officers showed up, together with a Lady to secure the
evidence. They were reasonably friendly and documented the case.
After that they closed the case without solving it within a few days.
So no success, but at least an appearance of caring. I looked into
how many cases of burglary are actually being solved by the state. I
didn’t expect much, but was still negatively surprised to find out
that the success rate was in the low single percentage digits. That
is a remarkable incompetence. So protecting citizens from burglars is
definitely not something that appears to work most of the time.

The burglar seemed to
have been aware of this incompetence too. He did not hesitate to come
back two months later. This time a desktop computer from my flatmate
was stolen, and the burglar caused some severe damages to doors and
some windows. My flatmate called the police, but this time only a
police officer showed up. No one wanted to come along and secure the
evidence that evening. They postponed that till the next day. Not
very good, given that we could not leave the broken windows as they
were throughout the whole cold winter night. But my flatmate, not a
libertarian, still was full of respect. “They are probably very
busy”.

The next day a man
showed up to secure the evidence that was left. I had a very
interesting conversation with him. First, I asked him whether he was
indeed very busy. His answer “no, not at all. Very quite”. He did
not seem to realize that the reason I might ask that was, because he
showed up a day late. Then he said something very interesting. “Crime
in general seems to go down. But we have no idea why that is.”
Whether it is true that crime is going down or not, I don’t know. But
his statement that he did not know why it was going down really
surprised me. Here is someone working for an organization aiming at
fighting crime. He observes crime to go down, but it does not cross
his mind to take the credit for it.

This is interesting
for a number of reasons. First, being an insider at the police, the
pure thought that the work of the police is reducing crime was a
non-starter for him. Having put some thought into this phenomenon,
the explanation he came up with was “London is probably getting too
expensive to live for these criminals and they all have to move out”.
Fair enough, to me too, that certainly sounded like a much more
plausible explanation than ‘the Met Police is doing a good job’.

Second, his answer
told me that I was probably dealing with an honest man. He did not
seem to be part of a conspiracy against the rest of society. He was
probably really just trying to do his job as good as he can. However,
he was operating within a system that just could not produce good
results even if it wanted to. It is the organization that is flawed,
not necessarily the people working within it.

Lastly, his honesty
was a clear indication that he was under no illusion that I was
something like a customer of his services. Any business man would
have taken the opportunity to take credit for the lower crime rates.
But he was not trying to sell me anything. At the end of the day, it
was of no importance to him whether I was satisfied with his services
or not. He gets paid anyway and his job is secure no matter how bad
the outcome.

Wouldn’t it be great
if there was more than one security service provider? In that case I
could have told him that I was unsatisfied with his services and was
going to change to be protected by XY Policing in the future. But as
far as catching criminals is concerned, there is no real legal
alternative to the state police at the moment. If you were to hire a
private investigator, there would be no chance of rolling over the
costs for that to the criminal once he is caught. Given the rules in
place, this alternative is not economical. Therefore, this business
model does not really exist in this country. It is not allowed to
exist, competition not wanted.

Catching criminals
once they have committed a crime is one thing. A real solution to the
crime problem would of course involve the prevention of crimes in the
first place. I wanted to hear the police officers opinion on what I
could do to not being burgled again. He said “the trick is to make
your house secure enough so that the burglar looks for an easier
target”. Again, I was surprised how open he was to reveal how bad
the system is. That is your solution? Push the problem down the road?
I should not have been surprised. Pushing problems down the road
seems to be the governments ‘solution’ for a lot of problems. This
really is a remarkably bad solution. It is essentially survival of
the fittest in its most brutal form. The problems are being pushed
onto the weakest elements of society at the end of the road. So this
is what the praised state solution for the rule of law really comes
down to. It is the law of the jungle.

When it comes to
preventing crime the most important thing is of course the ability of
people to defend themselves. Unless you are rich enough to afford
professional security services, you will always be the first who has
to act when becoming a victim. The state has a couple of reasons to
dislike self defense. First, it makes the police look bad, if the
citizens are doing a major component in the security production. It
is much better when people feel helpless. That way the state can
present itself as absolutely necessary for their security. Second, if
people can defend themselves, they might use that ability one day
against the state itself. This makes the work of everyone within the
monopoly much more difficult. Especially police work gets much more
difficult and dangerous when people can fight back. Therefore, states
around the world are keen to make citizens as helpless as they can
get away with.

The UK is one of the
most advanced states when it comes to making people helpless. One of
the tips the police officer was giving me, was to put some small
nails on the top of the wooden gate the burglar had to climb over to
gain access. That way he would cut his hands the next time he would
try to burgle me. “But pssst” he said. “You did not get this
from me. The council does not like it for health and safety reasons.
Technically the burglar can sue you for damage if he gets hurt.”
What? The burglar can sue me for hurting himself during his criminal
activities? This statement seems so bizarre it is almost hard to
believe. Unfortunately, it seems true.

This it is typical
for the UK. Self defense is more and more seen as a naughty thing.
How dare you actually try to hurt a burglar going after his day job.
Citizens in this country have been stripped of almost any tools that
could help them to defend themselves. Since it is a European country,
it goes without saying that it has long fallen for the totally
perverse philosophy of gun control. If you publicly suggest that gun
control might not be such a good thing, you are immediately categorized as either evil or stupid and probably both. But even
purely defensive, and therefore harmless weapons like pepper spray are
unavailable in this country. The most weird story I have heart was,
when a friend from Scotland reported to have been stopped by the
police in always sunny Glasgow for carrying an umbrella. He was
carrying it in a way that looked like he could use it to beat
someone. Therefore, they argued it could be seen as a weapon. You
cannot make this stuff up.

In the UK, we are
back to the stone ages where physical body strength to a great deal
determines how safe you are. The only reason that it might still be a
pleasant place to live in is that it still has a relatively rich and
civil society. Most people have simply little interest to hurt you.

The idea that we
need a monopoly of force to have a rule of law, to me looks more like
a self fulfilling prophecy than a necessity. Since alternative
solutions are being outlawed, it starts to look like there is no
alternative to a monopoly. But we see this monopoly produce the same
poor results that we would expect from any other centrally planned
service provider. It is about time that we start to rethink this
solution. However, most people think that allowing competition will
only lead to criminals taking over. This is really a strange idea,
given that this is exactly what we are seeing in the current system.

A free market
solution to secure the rule of law will unlikely lead to criminals
having free range and terrorize society. That is because the vast
majority of people are not criminals. They have an interest in the
rule of law. If the rule of law were to be left to market forces, the
combined economic power of law abiding citizens would be greater than
anything a crime family could come up with by orders of magnitude. To
the contrary, the current solution of having a monopoly already in
place is a dream for criminals. Taking over, or at least influencing
this monopoly is by far cheaper than having to establish a monopoly
themselves. This is amplified by the fact that this monopoly is
currently helping criminals gaining revenue by enforcing victimless
crimes like drug prohibitions. The police is not the last thing to
go, before we abolish the state. Instead we should make it a priority
to expose the police to market competition as soon as possible.



A defense of intellectual property

Liberty Posted on Sat, December 13, 2014 14:45:44

Intellectual
property is a sensitive subject in the libertarian community. It is
one of the subjects where libertarians just cannot agree what the
libertarian position should be. There are a lot of very vocal
opponents of the concept. While I think they have some valid
arguments, their radical case against all intellectual property
always failed to convince me. That is why I would like to lay down
some arguments of why I continue to defend the basic concept of
intellectual property.

That is not to say
that I am a big fan of current intellectual property legislature. I
am a passionate anarchist, I want the state completely out of the law
production business. However there are forms of intellectual property
where I don’t understand why we should get rid of them.

Before we start
arguing about the pros and contras, let us first start with defining
the main characteristics of intellectual property. Only when we are
clear about what characterises intellectual property we can identify
it when we see it. Intellectual property means the ownership of
information. This can be anything from music, design, literature or
in case of patents even the simple knowledge about something.
Characteristic of ownership is that someone has the exclusive right
so use, distribute or even change these information. As a
consequence, that means nothing else, but that the owner can prohibit
other people the use of his owned information.

If this
characterisation is valid, my first thought is that I cannot see how
you can completely get rid of this concept. There is one form of
intellectual property that has been around for a very long time and
is essentially the basis of contracts. I am talking about what today
would be called a brand, that is the exclusive right of one company
to use a certain name for their products.

Why can we not get
rid of this? Let us take an example. Let us say we get rid of
intellectual property. Then, tomorrow every soft drink producer would
have the right to label their drink coca cola and even use the same
design as the current owner of that brand. How could you make sure in
such a world that if you have a contract with someone to deliver coca
cola to you that that person is delivering the right coca cola? I
don’t see how. Words need to have a clear meaning in order for
contracts to make sense. Interestingly, opponents of intellectual
property are willing to admit that indeed a company delivering the
‘wrong’ type of coca cola would commit a fraud. However, they are
categorically denying that what we are dealing with is intellectual
property. But why is it not? If it is indeed fraud than that would
mean that one company has more right to call their product coca cola.
And if one company has more right to use these information then it
seems to fulfil the characteristics of intellectual property as
described above. As the saying goes, if it looks like a duck and
quacks like a duck, then it is probably a duck.

I may be wrong, but
my impression is that opponents of intellectual property have such a
hard time calling this just that, because once there is a precedent
for intellectual property, the debate would change from if to how
much intellectual property we need. That seems to make them
uncomfortable for two reasons. Firstly, they have identified some
problems with intellectual property. And secondly, because of these
problems there needs to be a limit to intellectual property, but it
is hard to tell exactly where these limits would need to be.

Let us look at some
of the alleged problems. The biggest problem for libertarians seems
to be that intellectual property limits physical property rights.
Since intellectual property always needs a medium, the intellectual
property owner effectively has the right to control to some degree
how people use their physical property. This can go as far as to
control how someone uses his body when singing a song to which I own
the copyright.

This is a problem
because most libertarians seem to really be propertarians. That is
they think that property is liberty or at least that liberty is
defined through property rights. They seems to overlook that property
rights are just a strategy to maximise interpersonal liberty in a world of scarcrity. Interpersonal liberty in my view should be the ability
to do whatever you want as much as that is practically possible
without limiting the ability of others to do the same. If that is
true, then property is only libertarian in so far as it maximises this
liberty. Most physical property seems to do that. However, there can
very well be forms of property that do not serve that function and
should therefore be rejected. David Friedman points to a couple of
problems with propertarianism in his machinery of freedom.

If we were to live
in an ideal world without any scarcity, we would not need property to
maximise interpersonal liberty. Indeed, property in such a world
would limit the freedom of people. That means that if our goal is to
maximise liberty, we should only support forms of property that are
serving that purpose. And I would argue that there are forms of
physical property that do not qualify as libertarian and that there
are forms of intellectual property that do.

But is the
limitation of physical property really a unique feature of
intellectual property? It seems to me that it is a general feature of
property. When I own my body, a lot of Libertarians would say that I
should be able to do with it whatever I want. However, does that mean
I can slam my fist into your face? Of course not. Your face is your
property and I cannot damage your property with mine. My property
rights are always limited by other people’s property rights. Property
as a social concept is therefore always limited by certain
boundaries. So the notion that unless I can do whatever I want with
it, it is not property seems false. The only debate we can have about
property is, how far should this concept go. So yes, intellectual
property limits the physical property rights of other people, as does
every property right. This should not be a criteria to reject it.

The real criteria
is, does it limit the liberty of people unnecessarily. I think in
some cases it does and in some cases it does not. I would argue
whenever intellectual property is needed to create desired content,
it clearly enhances the liberty of people.

Let us take an
example. Currently the last episode of Peter Jackson’s Hobbit trilogy
is coming into the cinemas. The first two episodes where already a
big success. People rushed to watch it in cinemas and bought it on
discs or as a download later. Therefore the third instalment will
predictably be another success. Clearly, the production of this film
makes a lot of people happy and they are willing to spend some money
to see it. The total production costs of all three films are
estimated to be about 561 million dollars. This is not because there
was a lot of wast of money, but producing a film like this really
costs that much money. But with copyright laws in place the film
will bring in more than enough money to compensate for these costs.

However, I cannot
see how this film would have come into existence if it was not for
copyright laws. What would be a possible alternative business model
to bring in that much money? In the dream world of the Hobbit it
would be hard to sneak in any advertisement, like letting him wear
the latest nike shoes or drive a certain Mercedes model.
Advertisement later also does not work. Why would an advertiser pay
to get the rights to advertise in the middle or before the film, if
he could just copy and distribute the film himself.

You might say that
this is a classical case of special interest policy. Why should
people be forced to pay for your film. If you cannot finance it
voluntarily then it should not exist. Of course I agree, people
should not be forced to pay for the film. However, the case is a bit
different here. We know that people are willing to pay for the film
voluntarily. The only thing that copyright laws make sure is that
those revenues go to the producers, so that they can be compensated
for their costs.

Does this
unnecessarily infringe on the liberty of copiers? I cannot see how,
for when the film is not being produced they would not have anything
to copy. So clearly they would not be better off without copyright
laws. In a nutshell, when this film is not being produced no one wins
anything, but a lot of people lose. This is exactly the difference
between this case and a special interest policy case like the famous candlestick makers petition from Bastiat. It is a ‘everyone loses’
situation. How does that maximise liberty? Why should that be a
libertarian position? And if ‘everyone loses’ does not bother you as
a libertarian position then why not oppose property in general? What
justification is there for property if it wasn’t for the fact that
property enhances everyone’s choices in life. Not having property
would also be a ‘everyone loses’ situation. Economic progress would
be impossible and the scarcity would be greatly increased. But at least I
would not be restrained by the boundaries of other people’s property.
In fact there are people calling themselves libertarians who do argue
against all property. To me, this seems silly in a world of scarcity.

Even the person who
is copying wins with this type of copyright protection. After all now
he has something to copy. He may have to pay a small fee, or he may
just do it secretly, but at least he has something to copy, which
clearly enhances his choices in life and therefore his liberty.

On the other hand
there are clearly bad intellectual property rights that should be
rejected from an interpersonal liberty maximising position. A good
example of bad intellectual property rights are rules like the
copyright still lasting long ofter the producer of it has died. This
is clearly not helping to produce more interesting content and
therefore infringes on other people’s liberty unnecessarily.

This also addresses
another common argument against copyright. Which is that information
are not scarce. This is overlooking that intellectual property tries
to protect good, new information. Good intellectual content is very
scarce. If you argue otherwise then tell me where I can find the
information how to cure cancer. If it is not scarce, it should be
easily accessible.

All other arguments
against intellectual property rights that I have come across are
essentially dealing with current wrong legislature of this idea. Yes
there are lots of problems here, reaching from silly rules to using
copyright as a tool for censorship. However, this is simply a general
problem of having a state running a society. We also have this
problem when it comes to physical property where the state provides
very unlibertarian concepts of what that is supposed to be. In any
case I believe, if you cannot protect your rights on a free market,
you probably should not have them. And if it were to turn out that
intellectual property rights are unenforceable in an anarchist
society I am certainly not going to call for the foundation of a
state to do so.

To sum up, I cannot
put myself behind the cause of completely abolishing intellectual
property rights. There definitely seem to be intellectual property
rights that are helping to create interesting new intellectual
content. This content is definitely enriching my choices in life and
therefore my liberty. I do not want to give up on that.



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