TGIF: Don't Police the World

"We" -- to be precise, U.S. policymakers and their quasi-private-sector, tax-nourished enablers-beneficiaries--  must not police the world, become directly involved in wars, covertly assist belligerents, or act as arms merchants and bankers.

The central government can't be a benign policeman, even if its intentions were as stated (which they may be): international rules-based order and economic stability. But it can wreak havoc by trying. We know this because it already has. Pick your start date, but the last 30 years present evidence beyond a reasonable doubt of what U.S.-sponsored "order" really looks like, thanks to an unbroken bipartisan chain of presidents and a bunch of presumptuous bumblers who wear weighty political titles from the executive and legislative branches. (The judiciary isn't off the hook either.)

The U.S. government's inherent ineptness speaks volumes. "Ought" implies "can," and the policy mavens cannot. Wishful thinking is no substitute for real thinking. Each new crisis is not so different from previous ones as to make it unique. We can and must learn from the past, even the past that is so recent it's still the present.

Government "crisis management" is a contradiction in terms. War typically has calamitous results, however optimistic the prognostications and later assessments. Helping a belligerent bloodies the hands of the helper, even if only metaphorically. Fighting proxy wars, which the policymakers might prefer to direct war these days, or engaging in covert operations is no moral shield. The horrendous consequences are foreseeable. Pleading that "We didn't intend the bad stuff" does not wash. Call it "collateral damage," whatever the policymakers call it, they enable the ruin of innocent lives and entire societies. We should have no part of it.

We know what war brings. It brings the death and dismemberment of innocents, always including children. It brings the utter destruction of the things that make life possible, such as food, water, homes, hospitals, and infrastructure. The chance of killing only bad guys is zero. I think the government's own war simulations would agree. Hypothetical rosy scenarios offered in somber tones from secure stateside arms chairs don't count. Even moves intended as defensive may understandably be perceived as aggressive, bringing snowballing countermoves that threaten more innocents and risk turning a local conflict into a big-power confrontation. The danger of nuclear war always looms.

Before considering joining in a war, assume the worst. Then don't join. It's the safe bet.

On top of that misery, intervening in wars sets the stage for terrible events to follow: revolution, dictatorship, government control of everyday life, atrocious recriminations, and plain chaos. That's the safe bet too.

Intervention also sets the stage for aggrieved foreigners who want revenge against the country that is seen to have enabled their adversaries. If that is not the lesson of at least the last 30 years, what is? Direct and indirect participation in wars can come home to roost traumatically. Policing the world or arming one part against another is no recipe for security. And let's not forget the excuse the U.S. government seizes to spy on and censor Americans in the name of national security.

The likely human cost of an interventionist foreign policy is prohibitive, but that's not the only cost. The money price tag is also gigantic, and the U.S. government doesn't have the money. It has to borrow it -- the debt is larger than the GDP and growing -- and that means Federal Reserve monetary creation and the theft of our purchasing power. It's a subtle form of taxation that politicians use when they believe that the taxpayers don't want a tax increase.

Finally, there is the lack of consent. It would be bad enough if the arrogant policymakers sowed their destruction on their own dime and in their own name. But they don't. They presume to speak for us and to make us pay for their adventures. I never signed that blank check, did you?

But they don't need our consent. The game was rigged long ago. Hypothetical consent is good enough, and most people go along because they're busy living and virtually powerless anyway. They also heard about it in the government's schools.

Helping other governments fight wars is crazy. That's not isolationism because the position embraces free trade with the world (unmanaged by governments) and the free movement of people. The word is nonintervention. When war breaks out, government personnel should be permitted to do only one thing: call for a cease-fire!

TGIF: Extend Tolerance to Commerce

Perhaps you've noticed that we live in intolerant times. Many people claim to be endangered by the mere spoken or written expression of views on a range of issues. This has led to direct action to disrupt speakers on college campuses and elsewhere and to indirect government efforts to censor users of social media, which so far the courts have frowned on.

Believe it or not, this has had a silver lining. It's elicited articulate renewed defenses of free speech and tolerance -- long taken for granted.

But the tolerance movement should go further to include what the late philosopher Harvard Robert Nozick called "capitalist acts between consenting adults." Those are also known in sum as the free market, an unfortunately unnoticed option these days. When it comes to human action, we find wide and increasing support for a host of government measures that interfere with the freedom of individuals to trade with one another on their own terms. Those who have become disillusioned with the intolerant so-called left seem to think the free-market alternative is unworthy of consideration. This may also be true of those who are disillusioned with the intolerant so-called right. They may embrace freedom of conscience, but they draw a line at freedom of exchange, as if conscience had no part in that.

This line seems arbitrary. A product innovator or builder of an enterprise is a creator who may well be as passionate about this chosen life purpose as a writer or an artist. (Ayn Rand stressed this.) The creator offers the product to consumers (or downstream producers), who are free to decide if what's offered on given terms will serve their purposes. They are of course also free to decide that they do not want the offering and to go their own ways. Freedom of conscience permeates life in the marketplace, make no mistake about that.

Why should the work of people who dedicate their lives to such creations rank lower in our estimation than the work of artists? Is it because their products improve "only" material well-being and not spiritual well-being? That's not a good reason. We are not ghosts.

More pertinent, why should the government interfere in consensual transactions deemed merely "economic"? You can see the discrimination in the matter of free speech. Generally, freedom of speech, at least until recently, has been sacrosanct. The First Amendment says it must be. But commercial speech can be and has been regulated and even banned in various ways. It gets no respect.

The courts have long distinguished between so-called fundamental liberties and non-fundamental liberties, a distinction for which no support exists anywhere. What we think of as economic liberties are in the second category and so are deemed less worthy of protection from the government. That means politicians and bureaucrats can put themselves between consenting parties and either forbid or regulate transactions without even the semblance of a compelling reason. They just need to tell the judge that a decree is aimed at some articulated objective. Those who are interfered with may not tell the meddlers, "Mind your own business. If you think you have a better way of doing things, start your own business." That would get them heavily fined at the least. The consequences could be more severe.

Let's look at some common examples, so common they are taken for granted. We have minimum product standards (outlawing less-expensive options), the minimum wage (creating unemployment), price controls such as rent control and so-called gouging bans (creating shortages), housing regulations and zoning (ditto), restrictions and taxes on trade with foreigners (creating higher prices), immigration control (preventing the free exchange of labor, etc.), occupational licensing (barring the choice of one's work), industrial policy (picking winners), and drug and other "vice" prohibition (including the drinking of raw milk!). More could be added. In each case peaceful individuals are prevented from peacefully dealing with each other on mutually agreeable terms. Their freedom of conscience is intruded on by politicians and bureaucrats. Contracts are acts of conscience.

I object to the widely accepted distinction between personal liberty and economic liberty. As Thomas Sowell has pointed out, people select means to achieve all kinds of ends. Economics is a method of understanding the means-ends framework, but it does not provide grounds for distinguishing among ends. All ends are important to those who pursue them or else they would do something else. There is no personal and economic liberty. There is only liberty, which each person has a right to exercise in the pursuit of happiness.

If you believe people should respect each other, then you logically must extend that respect to freedom of commerce.

TGIF: Why Is Government Stuff Called "Public"?

Government facilities and services -- which are actually disservices overall -- are called "public" while services that are efficiently responsive to the public are dubbed "private." Why is that?

That way of framing the distinction could be intended to subtly denigrate the marketplace, or "private sector," where profit "selfishly" motivates people who, in the process, improve strangers' lives every day. That sector's record is noticeably better than the "public sector's." So we're taught to believe that the government's motives are purer -- the unselfish pursuit of the "public interest" by "public servants." That supposedly makes them superior to the profit-seekers, no matter how effective real producers of wealth -- entrepreneurs, investors, managers, and workers -- are.

The Public Choice school of political economy has established the more common-sense view that people don't become morally superior to the rest of us when they take government jobs. They're just people, except that the perverse incentives unique to the political/bureaucratic realm differ drastically from the productive incentives that distinguish the enterprise realm. We should call government jobholders "public" self-servants to lay bare that basic fact. They may be sincere in their rationalizations about helping people, but that doesn't change what they do -- coerce people, starting with the taxpayers. In contrast, people in the market have to ultimately satisfy free consumers or find something else to do.

Think about what we know as the public schools. Has anyone ever heard of a school that wasn't open to members of the public? Who else is there? Great Britain has it closer to the truth. Public schools are called "private schools," and government schools are called "state schools." Since everywhere you look, parents have to pay for the lousy and expensive government system whether or not they send their kids there, and many parents can't afford to pay twice, we might call the government's facilities "conscript schools."

But they are called "public" because that's who owns them -- theoretically, but not realistically.

With other "public services," even less choice exists. Consider public utilities. Most people can't choose their water, electric, and gas companies, although this is not entirely unheard of. Since competition has appeared in places, these so-called natural monopolies don't seem so natural after all. Had competition been legal everywhere, suitable technologies might have been invented long ago.

We do find alternatives to government in ways that might strike some as surprising. Two irreplaceable centers of government are said to be the courts for resolving disputes and the police for security against harm-doers. For a long time people have sought to peacefully resolve disputes without the inefficient and at times corrupt government courts. In the Middle Ages, merchants from all over the world traded their goods at fairs in Europe. Disagreements over contracts sometimes arose. So the merchants sought a fair and efficient alternative to the local princes' courts. The outcome was the complex and spontaneous Law Merchant. Disputes arising over contracts, which in effect created private law for the parties, were taken before people who had acquired reputations for being knowledgeable, fair, and efficient. The merchants valued speedy resolutions so much that they agreed not to appeal rulings against them. It was more important to move on to the next transaction. Failure to abide by a ruling would get around and limit future opportunities.

The Law Merchant was so good that it evolved into the commercial law that much of the world operates under today. We can see signs of it in private arbitration, which today is big business. Many contracts we sign specify that disagreements will be resolved in what amount to private courts. Unfortunately, the U.S. government claims the authority to nullify arbitrators' rulings on vague grounds. If that were impossible, arbitration would likely be even more common than it is today. The government won't compete fairly.

Similarly, private security companies watch over shopping malls, factories, colleges, and other facilities. It's also a big business. The government's "services" are inadequate despite high taxes, so people find alternatives, and businesses respond, fully liable when they screw up. That doesn't happen with government police.

Who owns government facilities? Most people would say that in a democracy the public owns them. But that really isn't so. Members of the public can't sell or buy shares or do other things that real owners do. They never consented to being owners. That's just a symbolic claim. In cases of real ownership, people acquire property rights through unambiguous volitional action involving contracts with reasonably clear terms. The social contract exists only in the imagination.

Aren't the real owners of government facilities those who actually control them? A rough guide might be whoever has the authority to put up "no trespassing" signs, which adorn much "public" property. (Private property has those signs too, but that's because two kinds of private property exist: the kind that is open to the public and the kind that is not, such as homes.)

We shouldn't be led astray by the fact the people can vote for officeholders, who then in theory act as the people's agents. The accountability of those pseudo-agents to the so-called owners is virtually zero when you consider how politicians and bureaucrats can easily misdirect attention from the bad consequences of their actions and/or their culpability for those consequences. Besides, one vote barely counts, and campaigns to really change things are prohibitively expensive and subject to free-rider problems.

In contrast, accountability is powerful in for-profit society. Bankruptcy is an ever-present threat to unresponsive and irresponsible businesses, and reputation imposes significant discipline. Injured parties also can sue people in the market. Suits against the government are often not allowed or limited.

It's time to open to competition as many government functions as feasible now. What seems impossible today may not seem that way next year. So let's look for new moves toward better and cheaper services -- not to mention liberty.

TGIF: A Market for Law?

Great part of that order which reigns among mankind is not the effect of government. It has its origin in the principles of society and the natural constitution of man. It existed prior to government, and would exist if the formality of government was abolished.

--Thomas Paine, Rights of Man, 1792

Sometimes an idea that at first sounds nuts isn't really nuts at all. Case in point: the market-anarchist principle that people should be free to buy the law and protection they want in the market.

Even a subscriber to Murray Rothbard's anarcho-capitalism might raise an eyebrow because Rothbard formulated a libertarian law code that he expected would be carried out in a market-anarchist society. In contrast, the market-for-law market anarchist doesn't see things that way. How would a single code even be implemented? It's not as if libertarians agree on everything. Think of intellectual property, abortion, defamation, and more.

David Friedman, a veteran anarcho-capitalist, explicitly favors a market in law, not just in police and arbitration (that is, court) services. Here's how Friedman describes it in The Machinery of Freedom (chapter 29; free pdf here):

In such an anarchist society, who would make the laws? On what basis would the private arbitrator decide what acts were criminal and what their punishments should be? The answer is that systems of law would be produced for profit on the open market, just as books and bras are produced today. There could be competition among different brands of law just as there is competition among different brands of cars.

In such a society there might be many courts and even many legal systems. Each pair of rights enforcement agencies agree in advance on which court they will use in case of conflict. Thus the laws under which a particular case is decided are determined implicitly by advance agreement between the agencies whose customers are involved. In principle, there could be a different court and a different set of laws for every pair of agencies. In practice, many agencies would probably find it convenient to patronize the same courts, and many courts might find it convenient to adopt identical, or nearly identical, systems of law in order to simplify matters for their customers.

As Friedman sees things, individuals would not directly choose among the competing arbitration firms. They would choose defense firms according to the services offered. Those firms would typically have contracted with others about which arbitration firms they would use if their clients were in a conflict. (Insurance companies already do this.) Customers of course would know about this and would choose defensive firms partly on that basis. The defense firms and arbitrators want to attract customers. These are profit-seekers, remember. Also remember that individuals are customers here, not taxpayers or subjects -- an important distinction.

The incentives to submit to and abide by binding arbitration without state-backing would be strong. A defense firm or a customer known for ignoring adverse rulings would have problems doing business in the future. This is the "discipline of constant dealings," Friedman writes. Its powerful influence cannot be ignored. Even now, it plays out everywhere. It is not mainly due to the state that people generally keep their contracts and even less formal promises. The government did not make eBay or the credit card a success. Rating systems are powerful. What Friedman has in mind is essentially an enlargement of the function of the ubiquitous contract, which creates obligations -- law, really -- for the parties, with binding arbitration by a specified agency in any dispute. (If the government didn't have the power to overturn arbitrators' rulings, this private alternative to courts would be even bigger than it is now.)

Wouldn't the defense firms simply fight when their clients had a conflict? That's what many people expect. But why expect it? Friedman reminds us that violence is costly in many ways, even for the winners. Understandably, it's not the business way of thinking. For one thing, a firm would have to pay its employees a steep hazard premium, raising its costs above those of competitors willing to negotiate.

Is this a perfect arrangement? No, but what other earthy arrangement could be perfect when it consists of fallible people all the way down? (See last week's TGIF, "Limited Government's Bait and Switch.") Governments have hardly been a guarantee of individual liberty. Think about the United States!

It's not impossible that everyone in an area who intends to commit murder or theft will patronize a defense firm that protects rights violators. But how likely is that to succeed? Most people don't plan on murdering or stealing and would buy protection against the few that might. (The streets, etc., would be private, remember.) Even would-be criminals don't want to be killed or stolen from. But what about states that commit murder, even mass murder, and theft, as they often have? What's the recourse?

Further, the objection that defensive firms might get together and become a new state also falls short. If people get used to seeing themselves as customers, they won't want to be turned back into taxpayers and subjects. Ideology matters. Friedman writes in chapter 36:

Anarchist institutions cannot guarantee that protectors will never become rulers, but they decrease the power that protectors have separately or together and they put at the head of rights enforcement agencies men who are less likely than politicians to regard theft as a congenial profession.

Some will object that law and the protection of rights and freedom should not be matters for bargaining. But what's the alternative? Who could seriously deny that all political systems entail bargaining? This is true even of a constitutionally limited government conceived by explicit champions of individual freedom. The Constitutional Convention in 1787 featured bargaining. So did the earlier deliberations over the Declaration of Independence and the Articles of Confederation. Even small groups rarely are of one mind. But we're not talking about small groups.

Obviously, bargaining goes on every day: between legislators, between legislators and constituents, and between the legislative and executive branches. It goes on among Supreme Court justices. Political campaigns are a form of bargaining. 

Where there are people and scarce resources, there is disagreement and therefore bargaining. It's the human condition. Better that people negotiate and enter defense contracts they choose than submit to a state monopoly: in politics, unlike the market, bargaining has victims, namely, the mass of people who had no real say. In the market, individuals make the deals that best fit their circumstances.

So a market for law isn't so crazy after all. It sounds great. Remember, market incentives and political incentives are entirely different. In the market, individuals choose knowing that what they choose is what they will get and that the costs and benefits will fall mostly on themselves. So they tend to make reasonably informed decisions.

In the political "market," individuals get one impotent vote each, which means that the candidate (policy set) they "choose" is not necessarily what they will get and that even if they get what they want, each voter knows he will experience only a tiny part of the total benefits and costs. The rest will fall on a large group of other people. Under those circumstances, few people have any incentive to choose in an informed way.

Finally, we may wonder whether the market would tend to produce pro-liberty laws. After all, maybe lots of people will want something else, like alcohol prohibition. Again, we can't have guarantees, no matter the system. But liberty has something in its favor: a pro-freedom asymmetry. Namely, people would probably be willing to pay more to protect their private lives from busybodies than others would be willing to pay to run other people's lives. The prohibitionists would have to foot the whole bill all by themselves. There would be no taxpayers.

Friedman gets the last word (chapter 31): "People who want to control other people’s lives are rarely eager to pay for the privilege; they usually expect to be paid for the services they provide for their victims.... For that reason the laws of an anarcho-capitalist society should be heavily biased toward freedom."

Also see:
John Hasnas, "Toward an Empirical Theory of Natural Rights."

Edward P. Stringham, ed., Anarchy and the Law: The Political Economy of Choice (an anthology that contains a debate on market anarchism's practicality and stability).