Freedom in spite of government

[hmkpoker]

One of the most common and arguments against libertarianism/anarcho-capitalism is the undeniable positive relation in this world between government and quality of life. In fact, if you were to be randomly assigned a country in this world to live in, you would be very relieved to hear that you were going to a country with a great amount of government rather than less; no one would choose Somalia over Sweden.

The ACists have been quick to explain that "correlation does not imply causation," and that our civilized nations have prospered because the market succeeded in spite of government. This sounds like a very weak, handwaving defense. The evidence is obvious: nations with more government are better, and nations with less government are worse, no matter what a priori deductions they come up with.

The recent online gambling ban provides an excellent example as to why this reasoning is flawed. We are now at a (frightening) point in time where we Americans will now no longer be able to connect to offshore bank accounts and deposit money into poker sites. Another thread suggested that there is a chance that the government will soon require background checks for online dating. These are clear, undeniable examples of the government taking away freedom, taking away choice.

Yet, if you were to compare today's freedoms with the freedoms of, say, 30 years ago, you'll note that back in the seventies people still weren't free to put their money into a poker site, or to connect to other singles on a dating site. Your options included a B&M cardroom and a singles bar; that was it. Even if these legislations are enacted today, we are still able to play freeroll games and bet on certain things like horseracing, and hook up online (albeit with some greater restrictions). There has been a net gain in freedom in these regards since the seventies.

Is the government responsible for this gain? Certainly not. It obviously stood in the way of it; had Frist's and Kyl's parents used protection, our net gain of choice would be greater. Assuming that civilization continues in the manner it's going, 100 years ago we will see a much better quality of life with more useful choices, and more restrictions. Why?

Because a choice must be created before it can be taken away. Markets created choice; governments take them away. That is their job. The government's purpose is to protect us from choice, from the evils of the free market run amok. Markets, on the other hand, are designed to create choice, out of nothing and at no cost to the consumer prior to the voluntary transaction, through pure innovation. A government cannot restrict choice until the market first creates it.

The American Revolution was fought over tax rates that are lower than the tax rates Libertarians are asking for; had the early Americans suffered our tax rates, they would have starved to death. They simply didn't have enough resources to support such phenomenal taxes. Neither does Somalia; tax them at the rate Sweden is taxed, and their economy will be worse than it already is. And when they manage to have a worthwhile quality of life and have some resources that they can actually afford to lose, the statists of that nation will explain why they must sacrifice their economic freedom, and big government will emerge.

So what exactly creates the correlation? Government is indicative of a nation's prosperity; not the cause of it.

Prosperous nations have more freedoms to take away.

[DVaut1]

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One of the most common and arguments against libertarianism/anarcho-capitalism is the undeniable positive relation in this world between government and quality of life. In fact, if you were to be randomly assigned a country in this world to live in, you would be very relieved to hear that you were going to a country with a great amount of government rather than less; no one would choose Somalia over Sweden.

The ACists have been quick to explain that "correlation does not imply causation," and that our civilized nations have prospered because the market succeeded in spite of government. This sounds like a very weak, handwaving defense. The evidence is obvious: nations with more government are better, and nations with less government are worse, no matter what a priori deductions they come up with.

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In fairness, Hernando de Soto (the economist, not the explorer) -- after spending years researching Third-World economies -- concluded that it wasn't the size of government that made economies better (and therefore its populations more prosperous and ostensibly with a better quality of life), but the best economies are found in states where respect for the rule of law was highest -- and the worst economies are where respect for the rule of law is non-existent. This is probably something not foreign to ACists, and not very contentious.

Review of De Soto's Mystery of Capital

Most of this article is highly critical of De Soto, but this gives a pretty good summary:

"In the extralegal economy, the poor accumulate huge assets in their shanty homes and small businesses, but because they have no legal protections, they cannot access credit nor can they safely invest. Their assets are thus "dead capital" as opposed to "live capital" in the West. The big idea can basically be summed up as: "It's property law, stupid."

I happen to agree. I think ACists can make alot of headway demonstrating that property rights in a formal property system where ownership and transactions are clearly recorded (and respected) can function without a state. While claims of "zomg irrefutable logical deductions" are interesting, I'm not quite sure the empirical evidence supports the claim. I don't think anyone doubts natural property systems can and do exist outside and even in opposition to the state. But as you note, and De Soto agrees, natural property systems typically don't fare nearly as well as the artificial ones created by states, i.e., in colloquial terms: places without states really do suck at capitalsm, and obviously, it's not because the state interferes in these areas. And, as you also note, places with states are currently much more preferable. Whether or not this is normative is anyone's guess, but the correlation is currently so strong that you'd be remiss to deny it.

I won't propose to know what the future holds.

[cpk]

I don't think so, but nice try.

Take online poker and online dating. The Internet is the relevant technological innovation, and it is difficult to determine which parts of the Internet were created by government intervention and which parts were created by the market. And that's just the point--modern real-world capitalism is a symbiosis of government and market forces.

One of the driving forces behind the huge numbers of technological innovation of the last 150 years is capital accumulation. The development of the modern corporation is the sine qua non to the massive scale of capital accumulation necessary to develop key pieces of our technological infrastructure. And what is the corporation but a government-created fiction?

While the telegraph and telephone were invented by enterprising individuals on their own time, the infrastructure necessary to make these devices world-changing was provided by the capital accumulation enabled by the modern corporation.

It was the largest telephone corporation which invented two of the most important pieces of technology of the 20th century--the vacuum-tube amplifier and the semiconductor. The latter was also subsidized by a large amount of tax dollars.

It was market forces, on the other hand, that convinced AT&T that it needed these technologies. Automated switching technology, once again, was invented by an entrepreneur in Kansas--not a Bell Labs scientist. But the technology to apply this invention to universal long-distance coverage required the investment of billions of dollars, which required the structure of the world's largest corporation to accumulate.

Back-and-forth it goes--government here, market here, more government there. Very often, the government screws up and does things which are inimical to freedom and innovation. However, most of the things you take for granted today are the result of a symbiotic relationship between the market and government.

However, perhaps you are right that this relationship is beginning to reach the breaking point. . . .

[hmkpoker]

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In fairness, Hernando de Soto (the economist, not the explorer) -- after spending years researching Third-World economies -- concluded that it wasn't the size of government that made economies better (and therefore its populations more prosperous and ostensibly with a better quality of life), but the best economies are found in states where respect for the rule of law was highest -- and the worst economies are where respect for the rule of law is non-existant. This is probably something not foreign to ACists, and not very contentious.

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This is comparing apples to oranges. Different economies, different time preferences, different rules. You and I have probably never had to commit a crime to get something to eat; it's extremely rare in America. Even our homeless don't have to do it; they eat the food that other people throw away. In third world countries, stealing to secure basic needs is much more common, and social norms that are non-existant in more prosperous nations must exist to preserve social order.

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But as you note, and De Soto agrees, natural property systems typically don't fare nearly as well as the artificial ones created by states, i.e., in colloquial terms: places without states really do suck at capitalsm, and places with them are currently much more preferable. Whether or not this is normative is anyone's guess, but the correlation is currently so strong that you'd be remiss to deny it.

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Please read my posts before criticizing them. I explained why the correlation is strong.

[DVaut1]

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Please read my posts before criticizing them. I explained why the correlation is strong.

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I read it, my post wasn't a criticism, and I don't agree with the explanation but that's sort of beside the point. If anything I was posting to voice my agreement with the first half of your post.

[DVaut1]

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This is comparing apples to oranges. Different economies, different time preferences, different rules. You and I have probably never had to commit a crime to get something to eat; it's extremely rare in America. Even our homeless don't have to do it; they eat the food that other people throw away. In third world countries, stealing to secure basic needs is much more common, and social norms that are non-existant in more prosperous nations must exist to preserve social order.

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When De Soto talks about a respect for property laws and respect for the rule of law in general, he's not really talking about theft. Natural property systems seem relatively well equipt to prevent theft and I don't think anyone doubts that. Surely ACists have posted enough images of big guns to get the point across.

[hmkpoker]

All anarcho-capitalists are against the existence of corporations. They accomplish two things: 1) shield their shareholders from fraud (which is not a good thing imo), and 2) produce tax benefits, which is just protection from something that the government is wrongly doing to them in the first place. It's like buying "insurance" from the mafia.

I agree that some market innovation has been facilitated by government subsidies, just as I believe that the government has passed some laws that did good (the pure food and drug act, for example). But overall, I believe the net result is wholly negative.

Calling American business "capitalism" is preposterous. Capitalism specifically denotes a free market, and ours is anything but.

[cpk]

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All anarcho-capitalists are against the existence of corporations. They accomplish two things: 1) shield their shareholders from fraud (which is not a good thing imo), and 2) produce tax benefits, which is just protection from something that the government is wrongly doing to them in the first place. It's like buying "insurance" from the mafia.

I agree that some market innovation has been facilitated by government subsidies, just as I believe that the government has passed some laws that did good (the pure food and drug act, for example). But overall, I believe the net result is wholly negative.

Calling American business "capitalism" is preposterous. Capitalism specifically denotes a free market, and ours is anything but.

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OK, fine, but you can't have your cake and eat it too. You can't claim on the one hand that the free market provides all that is good about our society and then turn around and claim that the free market doesn't even exist.

And I realize that ACers are against the concept of the corporation. But that's just the rub--the corporation has been fundamental to the technological growth of the last 150 years, and it continues to be so. And government is fundamental to the existence of the corporation.

If there is any force that decreases time preference better than anything else, it's technology. But as I look at anarchocapitopia, all I can see is a map with two dots and a legend that states "you can't get there from here."

[Exsubmariner]

What you are both missing is that a strong government provides a military to defend the market and protect capital from foriegn looters. The same was true in Athens and Rome as it is in the USA. Both of them had relatively free markets like us protected by a strong military like ours. The thing that the market does not provide which a government does is a military. In our case, the government has found a way to encourage the market to come up with a better and better military by diverting significant tax revenue into awarding military contracts. If someone manages to accumulate enough wealth in a free market situation where there is no government, typically they will divert some of that wealth to protecting the rest of the wealth. In that case, they typically become the government as others seek to align themselves with that protection. You cannot keep or own what you cannot defend.

[HumanACtor]

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The thing that the market does not provide which a government does is a military.

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Demonstrate logically why a market would not provide militaries for property protection against invaders.