Re: Let’s Amend, Not End, Capitalism

Justin L. Oliver:

Economic professor Aaron Johnson has a thoughtful post on the need for economic mobility.

I agree that income mobility is far too low, but I wonder to what extent the drug war contributes to that. Having an arrest record and being incarcerated would seem to reduce employment opportunities and result in more single-parent households, especially since the drug war seems to be targeted at poor people.

I agree with him that we need more focused education, but most people have already served years in government schools. It seems that a more grassroots and less political approach might be more amenable. Reducing barriers to entry like occupational licensing laws could also unshackle some people from the need for wage labor and increase entrepreneurial opportunities.

Originally posted on econprofaj:

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The United States prides itself as being the “land of opportunity”.  With the U.S. being a favored destination for immigrants across the world, that distinction still has merit.  However, there are disturbing trends where many are questioning the value of capitalism due to its contribution to income inequality.  Even so, we must acknowledge the role that capitalism played in lifting not only Americans out of poverty and into prosperity, but in Canada, Europe, and all parts of the world.  Having said that, we must recognize that our current economic system needs to be amended to level the playing field.

Many Americans are divided on the moral implications of income redistribution.  On one hand, there are those that believe that extravagant wealth is immoral and that there should be a limit on executive pay.  In fact, Japan has embraced this culture and have stifled executive pay.  Their executives must publicly disclose…

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Re: People who Piss me off: Free Market Anarchists

Ad hominem attacks aside, YouTuber hawanja’s video on free-market anarchists seems to make the point that people “naturally organize themselves into hierarchies” that require violence to be maintained, so anarchism runs counter to the human condition. It is left unstated why violence is needed or ethically justified to maintain these hierarchies if they were so natural. He further claims that a state is the historically necessary “institution that enforces order through violence.”

The first of hawanja’s misunderstandings has to do with his definition of “state.” A key distinction I and Barack Obama would make is that a state claims a territorial monopoly on its enforcement of order through violence. The insinuation of hawanja’s definition, which ignores the territorial monopoly claim, is that any enforced order necessarily signifies the presence of a state. Throughout the entire video, viewers are presented with this false dichotomy: statism or chaos. Anarchists do not oppose order. The etymological origin of “anarchy” means no ruler (not no rules), similarly how “monarchy” means one ruler. Regardless, statists generally insist on conflating “anarchy” to mean a conflict for rulership that takes place in a failed state. Anarchism recognizes that rulers are not justified in their actions and are counter-productive to a peaceful, productive existence.

Another unfounded assertion is that “this natural hierarchical structure to human beings” is justified in using force to maintain its power. After all, just as a good majority of people naturally like ice cream, I hardly think that would justify “natural hierarchical structures” enforcing the consumption of ice cream.

The Enemy of My Enemy

Another tried and true fallback in defense of the state is the canard that a state is necessary to protect us from corporations, which hawanja rightly pointed out are creatures of plutocratic state protections and subsidies. They are granted limited liability by governments and are under a legal obligation to pursue the interests of shareholders, not employees or the environment or the public. However, should the blame rest with corporations or also with their architects (governments) that created them and shield them from accountability?

He cites laws prohibiting discrimination and child labor and food safety and consumer protections as examples of good government. Of course, governments have historically been used to promote all sorts of racial discrimination, child labor, and made food and consumer protections harder to come by and more expensive. hawanja unintentionally, I presume, confirmed this point when he showed a picture of Rosa Parks, the civil rights heroine arrested for disobeying a segregationist city ordinance that ordered she give up her seat to a white passenger, when he mentioned government laws prohibiting discrimination.

I think it is all well and good that government-enforced slavery and Jim Crow apartheid, the more overt government measures used to uphold discrimination, have been removed. However, that does not do so much to help those past victims of discrimination. All the ways that governments prohibit wealth creation has meant that past victims of government-enforced discrimination continue to suffer at the hands of government-enforced poverty. As Charles Johnson summed up in his “How Government Creates Poverty as We Know It” essay, “The poorer you are, the more you need access to informal and flexible alternatives, and the more you need opportunities to apply some creative hustling. When the state shuts that out, it shuts poor people into ghettoized poverty.”

Governments are not responsible for ending child labor. As a thought experiment, just consider what would happen if child labor was prohibited by law in Nepal. It would have the same effect as enacting California-style building codes in Haiti: absolutely none, because there is no wealth to implement those laws. The credit for the advancement of human civilization rests with the grandest form of human cooperation, the wealth-creating division of labor.

Coincidentally, I would think the issue of discrimination would create another dilemma for supporters of the state. Historically, racism, sexism and slavery would have been considered “natural hierarchical structure[s] to human beings,” just as the state is said to be. Yet, left-liberals, as I suppose hawanja is, do not propose that the enforcement of racism, sexism or slavery was just. Based on what principle though? And how would that principle not equally apply to racism, sexism and slavery?

hawanja also appears to be under the impression that governments were responsible for the abolition (or near abolition) of child labor, neglecting the fact that child labor is still legal in the United States under some circumstances. More to the point, mass child labor was an example of a problem exacerbated by the heavy hand of government. Had it not been for mercantilist and protectionist Robber Baron economic policies of the 19th century, wealth creation for the average family would have been realized much more broadly and quickly so that parents could afford to send their children to school sooner. Many social problems, including institutional discrimination, that governments are credited with fixing were largely already successfully being addressed through direct action before legislative interventions took place.

Consider consumer protections against price fixing. Historic examples of consumer protection during the Progressive Era were done at the behest of business interests. As noted liberal historical Gabriel Kolko wrote of the implementation of the Federal Trade Commission, in “The Triumph of Conservatism”:

The provisions of the new laws attacking unfair competitors and price discrimination meant that the government would now make it possible for many trade associations to stabilize, for the first time, prices within their industries, and to make effective oligopoly a new phase of the economy.

He called it a triumph of conservatism because federal intervention into the economy was able to secure the existing economic structure, what Kolko called “political capitalism” and what we know today as “crony capitalism” and “corporatism.” In Kolko’s conclusion, he said:

The varieties of rhetoric associated with progressivism were as diverse as its followers, and one form of this rhetoric involved attacks on businessmen—attacks that were often framed in a fashion that has been misunderstood by historians as being radical. But at no point did any major political tendency dealing with the problem of big business in modern society ever try to go beyond the level of high generalization and translate theory into concrete economic programs that would conflict in a fundamental way with business supremacy over the control of wealth. It was not a coincidence that the results of progressivism were precisely what many major business interests desired.

Kolko’s book is something, documenting how nearly every aspect of the Progressive Era legislation — from food inspections, environmental conservation and banking reforms, for example — were used as covers to cement the existing cartelized trusts already in power.

The book does a great job of documenting the problem with hierarchical institutions, that the people who already have the most access to the government are going to have the most influence in shaping what solutions are offered, how they are interpreted and how they would be implemented. Regulators — like all self-interested creatures — are sure to implement solutions that preserve their power and prospects for future employment, since their interests closely align with those of the regulated. If regulators or politicians are corruptible with bribes, the powerful can leverage their influence to a greater degree than they could in a freer market. For just a fraction of the cost, favorable regulations worth millions of dollars can be bought with campaign contributions. On a free market, it would be more costly to bribe someone who did not have the luxury of using taxes, as government regulators can, to pay for the enforcement of regulatory or legislative cronyism.

Making More Trouble

Next, the video documents social problems that libertarians typically attribute to government. In the past, I might have been guilty of short-changing why those problems are a consequence of government intervention, so I will take the time below to make the points clear.

  1. Food prices — Yes, governments subsidize cattle and meat production at the expense of healthier, more natural forms of food, and place restrictions on the importation of those products. It is not a market phenomenon that it costs more to purchase a salad than a hamburger. All the resources devoted to feeding cows and other animals and creating bio-fuels like corn-based ethanol could have been used to produce food for organic diets. In addition, the federal government has sealed off arable land that could be used to farm, and city ordinances often place restrictions on mixed-use property, some of which could be used for home or community gardens on abandoned property.
  2. Low wages — The ways in which labor organizing is discriminated against is too long to list. Just to list some examples, I would point to the ’35 Wagner Act, which was championed by business interests and conservative unions to clip the more wildcat unions like the anarchist International Workers of the World. Typical demands, like collective bargaining and calling for limited strikes, that unions are legally permitted to make today are pretty meek by comparison. Before the era of having to get government recognition, when most of the historic gains of the labor movement were actually realized, unions could call for general strikes and indirect boycotts, opened union hiring halls, signed closed-door contracts or demanded worker management of the firm. Other government interventions are through occupational licensing laws, use-restricted zoning regulations, legal tender laws, capitalization requirements and capital-favored taxation policies that mean more people have to work for wage labor in the first place.
  3. College expensesIt is not a coincidence that college tuition expenses increase at the same time that governments actively encourage people to go into debt by providing low-interest loans and restricting the establishment of new higher education options. The government and the corporate credentialism fetish is also partly to blame. One major expense of college is the cost of textbooks, which are artificially marked up do to the enforcement of artificial intellectual property claims.
  4. Environmental conservation — It is also no secret that common law environmental tort protections were removed from courts in the 1900s, which is how pollution problems were handled until environmental legislation that legalized greater environmental damage took power out of the hands of property owners. That is not to mention that the largest polluter in the entire world is the United States federal government.
  5. Drug safety — Yes, illicit drugs are more dangerous because of government. They cannot be made under true laboratory conditions; there is no possibility of any legal redress for fraud; and every year millions of people acting consensually are terrorized by government agents and hundreds if not thousands are killed by those government agents. The crime and escalated costs associated with drugs are a consequence of prohibition.
  6. Terrorism — See “Blowback: The Costs and Consequences of American Empire” by Chalmers Johnson.

At the beginning of the video, hawanja criticized the favoritism that governments grant corporations, only later to praise the cronyism of farm subsidies for multimillion dollar farm conglomerates. He said that government protection has led to stable food prices in the United States, which is not so true of late. However, the relative stability has only come because Americans already pay much higher prices for foods like sugar than do residents of developing nations. In terms of dollars, the average American family transfers an additional $146 to large agribusinesses every year because of these policies, which do not include the approximate $300 per family given directly to mostly multimillionaires through the federal budget. The costs of milk, butter and meat products would be deflated if trade restrictions on international markets were abolished, helping to reduce poverty overseas.

Looking at the unintended consequences of those subsidies, the abundance of corn, some of which is used to sweeten sodas, has been linked to increased obesity in Americans. There is also the problem that developing nations wanting to compete in farm production are constantly being underpriced by subsidized farmers, leading developing nations to become dependent on subsidized farmers for food. That is something developed nations hold over developing nations as part of “Open Door Imperialism,” but it is not a fact I would cheer. Without government protectionism, land use could become more environmentally friendly, as well. A Reason magazine article said:

The distortions and perverse incentives of U.S. agricultural policies have encouraged practices that damage the environment. Trade barriers and subsidies stimulate production on marginal land, leading to overuse of pesticides, fertilizers, and other effluents. A central if unstated purpose of American farm policy is to promote production of commodities that would not be economical under competitive, free market conditions. This often means emphasizing crops better grown elsewhere, requiring more chemical assistance.

The conclusion of the video makes a laundry list of mandates that hawanja thinks the free market could not provide, like affordable housing and health care, public transportation, environmental and consumer protections, expanded broadband internet coverage, protection for the homeless, protection of endangered species, food and medical safety and national security. He said that the free market cannot do these things; “we do these things because we need them to survive.” His unstated argument is that these are public goods that markets cannot provide for.

I have argued in the past that with a little creativity, public goods can be provided, assuming there is public support for those goods, which would also have to be the case in a democratic government. To quote Kevin Carson, “As always, it’s not a question of what we’ll do when the state stops solving the problem. It’s a question of how to stop the state from creating the problem.”

The problem becomes that regardless of the possibility of providing those public goods on an open market, those goods become harder to achieve with a government in place, which creates an entirely new set of obstacles for achieving those original public goods governments were purportedly created to solve in the first place. Public goods, like security and safety, are not impossible for governments to provide, just costlier and more difficult than they would be on a free market. The first new public good created by the presence of a democratic government would be an informed electorate. It is not in the average person’s economic interest to know much about the issues at hand or the candidates running for office. That is because a single individual’s vote has almost no significance in the outcome of an election, and even if a single vote could turn an election, a voter has no method of holding a politician to his or her campaign pledges. It gets worse. A single politician in Washington, D.C., is one of 535 votes in the legislature. The idea that a citizen’s vote would make any noticeable difference to the his or her life is almost inconceivable.

The second public good that must be provided for in order to solve the original public goods problems is the creation of just laws. When thinking about it, there are thousands and thousands of pages of legislation and regulation under discussion. It would be next to impossible and meaningless to read every line of every bill introduced or regulation proposed in order to find out if some special benefit is being given to this or that special interest lobbyists. Even if we could decipher what the legislation or proposed regulation meant and its impact in the future, which would be difficult enough, contacting a congressman or regulator is going to have a negligible impact on influencing policy. Even if we could change the policy, it most likely only means a savings of a few dollars or cents per voter. Special interests who stand to gain millions or billions are always going to have the time and money to devote to gaining special favors.

Since human beings are not perfect or all-knowing, market failure is possible, but as David Friedman notes, “In the political system, market failure is the norm. If you think of the political system as a marketplace, we cannot expect individual rationality to produce group-rational results.” So the idea that government would work if we could only get the right people in charge is a failed strategy in practice and beyond naïve in theory.

When a government does try to address public goods that allegedly cannot be provided by the market, policies are going to serve the powerful and wealthy. Seeing how I would actually like to see those public goods provided to people, I cannot support a government, because a government makes those products less attainable for the people who most desperately need them.

Escaping the Poverty Abyss

Escaping the Poverty Abyss

A resurgence of scholarship documenting the structural causes of poverty has been surfacing, according to the New York Times. I think researchers are making some valid insights into the causes of poverty, which sits atop a 15-year high and reaches 44 millions Americans, but they have a huge blind spot for the underlying reasons for the generational poverty of those in the inner cities.

Some of the latest studies have concentrated on the “culture of poverty,” which predominantly has been the domain of conservatives for the past 40 years to rest blame for the plight of the poor. As the Times reported, today’s studies differ in that they assign blame for the “destructive attitudes and behavior not to inherent moral character but to sustained racism and isolation.”

Though I am not one to reject the historical legacy of racism that denied blacks equal opportunities and equal treatment under the law, I tend to reject both conventional liberal and conservative explanations for poverty. That is, I do not believe poverty is a result of the market, nor is it the result of laziness.

Harvard sociologist Robert J. Sampson said the “poverty trap” is “related to a common perception of the way people in a community act and think,” again according the article. Sampson conducted a study whereby he dropped stamped, addressed envelopes in different neighborhoods to see how many were returned. The results were dramatic. In a former housing project, no envelopes were returned, but more than half were returned in another neighborhood with a similar income demographic. He said the differences were due to cynicism people had about their communities.

Others are looking into how growing up in a violent neighborhood reduces socialization and hinders the development of linguistic abilities by some six IQ points. Family structures are also an important piece to understand the persistent state of inner-city poverty. One-parent families are much more commonplace today than ever before, which reduces the level of parental development and caretaking.

I have to say that these latest studies are a blessing, even if the researchers are not yet hitting on the root of these problems — statism.

A lot of the cynicism stems from a genuine distrust of the law and the people trusted with enforcing the law. Those trapped in poverty have no alternative justice services to support, as allowing competing justice services would compromise “what essentially sets a nation-state apart, which is the monopoly on violence,” Barack Obama acknowledged.

Just in Dallas County alone, a dozen people who were serving prison time have been exonerated based on DNA evidence. These are just a few of the thousands of cases in which DNA evidence was available. Most people languishing in prison are there for petty, non-violent crimes in which no one was put in danger. The drug war has disproportionately hit black men more than any group, so of course there will be more single-parent homes in predominantly black neighborhoods. Welfare programs also incitivize mothers to stay single, according to Mary Ruwart’s book “Healing Our World.” In fact, a Heritage study said that children who recieved aid show “cognitive abilities 20 percent below those who had received no welfare, even after holding family income, race, parental IQ, and other variables constant.”

Additionally, if you do not expect to receive justice, what good is there to care about the law, particularly when the law itself if so unjust? What hope could there be?

Drug prohibition, just like alcohol prohibition, is the cause of rampant amounts of violence and corruption among the police and politicians. For instance, during alcohol prohibition, the murder rate roughly doubled from its pre-war high. Since the war on drugs began in the 1970s, murder rates have nearly doubled again. Correlation is not necessarily causation, but it does put to the rest the idea that prohibition lowers crime.

Well-intentioned welfare-statism is not helping the poor much either. Most liberals recognize the income disparities and economic distortions created by government intervention on behalf of corporate interests. Instead of focusing on doing away with those government actions, in the name pragmatism most liberals insist on creating further distortions with the hopes of balancing the playing field, heaping further counterweights on an already unsustainable system that mostly benefits the program administrators. Economic distortions like the minimum wage do little to provide a safety net, but instead place a hurdle in which young people must leap.

That attitude, though counterproductive, is somewhat forgivable. It is nearly impossible to shrink the state; people in a monopoly government are more inclined than most to expand power and deflect blame in order to amass more control. It becomes evident that two wrongs cannot make a right.

While petty handouts are contemptuously put forth as a show of compassion, the big-ticket criminals who run this cartel can waltz home with a clear conscience. That is what the state does. “It bites with stolen teeth,” as Friedrich Nietzsche explained. You might too say it gives back your bootstraps but only after taking your boots.

Image credit: DG Jones, with a Creative Commons license

Talking about Poverty in a Libertarian Society

I was asked how I might resond to a political liberal sincerely concerned with the plight of the less fortunate in a liberatian society.

The first thing I want to know is if it would be better just to save my breath. I first have to know if the person I am are communicating with would want the message I am selling if the facts bear out my case. If the facts support it, would they want it? If not, then I tell the person that he or she sounds pretty happy with his or her current political beliefs and move on.

Assuming a person would like liberty if his or her concerns could be addressed, the first thing I would try to do is establish that I share his or her concerns for those in need. That is why I put more emphasis on cutting government programs like the military, which is far more destructive and wasteful than welfare.

However, the best books for these types of questions are Mary Ruwart’s “Healing Our World,” which is free online at Free Keene, or Harry Browne’s “Why Government Doesn’t Work,” also free at Liberty Activism. A recent podcast about mutual aid from Sheldon Richman is also good.

Initially, I might say something like this:

I understand how important to you to help those in need, and that is important to me as well. But let us suppose that tomorrow you won the lottery and decided to give half of your winning to help the poor. Would you give that money to a private charity whom you had thoroughly researched or would you give it to the government welfare department?

The answer is obvious and speaks for itself. Ruwart talks about how so-called intellectual property laws and other types of government intervention increase the costs of drugs and other life-saving devises (by causing artificial scarcities). I tend to get brushback from liberals, in particular, that these ideas are utopian or not realistic. To that, I think Kevin Carson of a Center for a Stateless Society sums up my own views when he said:

But apparently, in the mainstream liberal view of the world, it’s not utopian at all to believe that simple procedural rules and paper restrictions can prevent the state from being controlled by the same ruthless people for their own ends. …

It’s utterly naive and utopian to believe a majority of the public can exert meaningful control over the state apparatus. A minority of insiders will always have an advantage in time, attention span, interest, information, and agenda control over those of us on the outside. The average person on the outside only has a limited amount of time or energy for maintaining an interest in politics, after dealing with the primary issues of work and family, friends, and local community. But for the elites that control the state, politics IS a major part of their daily work and social life. Can anything be matched for sheer naive optimism with the belief that, in the long run, we can maintain a higher degree of vigilance over the functioning of the state than they can? …

So anything done by the state to make our lots more bearable will be done, not because the state is “all of us working together,” but as a side-effect of plutocratic and managerial elites pursuing their own self-interest. Apparently the same people who cannot be trusted in the economic sphere become fully trustworthy when they’re sitting in the “executive committee of the ruling class.

I always try to emphasize that I want more money to go to those in need, but unfortunately so much of it wasted on middle class social workers. So practically speaking, I do not expect the government to solve government-created problems. Proven alternatives like mutual aid societies are tangible solutions to the conditions of poverty and a whole host of social problems. The principle is that the social benefits of decentralism outcompete hierarchy all the time.

I tend to be patient though. Many people have never given consideration to how a market-based society would provide for people. One idea to get someone’s mind rolling is to ask how he or she might solve some of those problems in the community in the absence of a government to lean on. If he or she refuses to answer, then you know you are wasting your time and politely move on.

War on Drugs and Handgun Licenses Impair Self-Defense

The number of people in North Texas obtaining a concealed carry license has been on a dramatic rise the past two years. Across the state, 40 percent more women last year, 31,000 in all, successfully applied for a permit than the previous high in 1996, when legislation took effect allowing residents to carry loaded handguns if they obtained a license and completed a safety course.

Contrary to popular perception, Texas is one of the more restrictive states when it comes to self-defense. In fact, open carrying a handgun is effectively illegal as it runs the probable risk of being charged with disorderly conduct.

According to a Dallas Morning News story, the current crop of applicants are younger and more often from the suburbs. Part of that is a response to the decreased expense of attending a state-licensed training school.

Concealed handgun licenses in Tarrant County nearly double the number issued to Dallas residents. According to state records, Tarrant is one of the more gun-friendly counties, with nearly one permit issued to every 173 residents.

The article cited some reasons why that may be. Alex del Carmen, chair of the University of Texas at Arlington’s Department of Criminology and Criminal Justice, said there are more affluent people than in Dallas, so more people are able to afford them. Also, people in Tarrant are less likely to have a criminal background that would legally preclude them from carrying a firearm.

He also said that property ownership ties closely to gun ownership because people have a greater interest in defending themselves and their land. This last point seems to be more of a correlation than do the other factors, like criminal history and wealth.

In Texas, possession of more than three ounces of marijuana is a felony under state law. In some counties, one in seven adults have been arrested for marijuana possession. Arrests for simple possession are increasing at three times the national average [PDF], costing approximately $655 million in 2006 alone. Marijuana accounted for about half of the drug-related arrests, meaning the drug war expense in Texas runs more than a billion dollars per year.

There are also social impacts from Texas drug laws. By population, blacks are three times as likely to be arrested for marijuana possession than are whites. Meanwhile, blacks are only half as likely to own a concealed carry permit than are whites. Part of that disparity is because of their greater likelihood to be charged with a drug crime.

A second major factor impeding the right to self-defense is the cost of obtaining a permit. It can cost between $250 to $350 to attend a training class and obtain the license, which must be renewed every four years.

Gun ownership may not necessarily lead to lower crime, but there is strong evidence that at least increased gun ownership does not lead to a net increase in crime, as is made evident from a recent article, “Gun Ownership Rises to All-Time High, Violent Crime Falls to 35-Year Low.”

The distribution of gun ownership is also relevant for determining if violent crime will be diminished. If the poor and defenseless are systematically denied access to a means of protection, those with the means of enacting force — such as the police — will feel more inclined to escalate that imbalance of power in their favor. The best we can hope for is that access to gun ownership is made as widely available as possible.

Whether you think guns are the best tool for self-defense or not, it would be rank hypocrisy to use the guns of government to prevent otherwise peaceful people from using guns for their own protection.

Image credit: Robby Mueller, with a Creative Commons license