Private Discussion: AnarchoCapitalism with Borodog and WillMagic

[MrWookie]

Here's a topic you didn't think you'd see here, eh?

I ducked into politics today out of curiosity for what things looked like under the new regime. I took a look at one of the AnarcoCapitalism (AC) threads. There was some pretty good debate going on, but, unsurprisingly to many who refuse to enter Politics, it was bogged down with a lot of garbage. Also, there were a number of concepts I just plain didn't understand, and I confess, I wasn't thrilled with the idea of weeding through a bunch of other similar threads to find all of it out, nor was I thrilled with starting a new thread and inciting another onslaught between ACists and Statists.

I got to thinking, though, about starting up a discussion on my own terms in my own forum, and without a lot of what people dislike most about the politics forum: politics posters [img]/images/graemlins/tongue.gif[/img] (at least certain politics posters). The Micro-Limit LHE forum didn't seem like quite the right fit, so I invited Borodog here to talk about AC. Technically, Borodog is a politics poster, but he's also been a good contributer in the Lounge and is both knowledgeable on the subject and amicable towards polite discussion.

I'm taking another page out of the politics forum for this one, too, modifying their private debate thread format. This will be a private discussion between Borodog and myself. Any posts made by anyone other than the two of us will be DELETED. I believe that this will help keep things civil, on topic, and informative, and it'll keep out disingenuous arguments and analogies that often plague more open threads on this subject. If you do have a question or something you would like to contribute, you're welcome to PM me. I'll be screening PMs to keep the thread up to Lounge standards, but I'll be sure to post the good questions that come my way and cite my source. I don't see making this sort of thread a regular Lounge fixture, since mostly I like talking about things with all Loungers. However, this format might let us raise some subjects that often get too personal, heated, sidetracked, or otherwise ugly that up to this point we've elected, as a forum, to avoid.

I'm envisioning this less as a debate and more as a Q&A session. I do plan on raising many of the common criticisms of AC, as well as some hopefully uncommon ones, and I'm sure Boro would expect nothing less of me. The difference is that we're not necessarily going to be hellbent on proving our points, but we're making figuring each other out job #1.

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So, Borodog, thanks for joining me in this little experiment. I think it's only natural that I ask you to start off with, say, 2-4 paragraphs as an introduction to what AC is and what are the basic principles behind it. What I'm sure will raise some eyebrows amongst people unfamiliar with this theory is my understanding is that we're not just talking about total market deregulation here. Instead, we're talking about the complete abolishment of the state and the privitization of any and all services it currently provides. Am I on the right track?

[Borodog]

Thank you MrWookie (that sounds so formal; I think I'm just going to call you Wook [img]/images/graemlins/wink.gif[/img] ).

Anarcho-capitalism is the philosophy that believes that the free market is better than a coercive monopoly at providing for the needs, wants, and desires of individuals; it is better at providing goods and services, including solutions to societal problems. That's it. In the free market, anyone is free to identify a problem, think up a solution, and attempt to market it. Entrepreneurs who are good at providing what consumers want will thrive, and poor entrepreneurs who are bad at it will suffer losses and fall by the wayside and be "forced" (you always have to be careful using the word in discussions such as these; some people cannot tell the difference between being "forced" by circumstance and being coerced by violence or threat of violence by another human being) to find more productive employment.

Contrast this with the government scheme of providing goods, services, and solutions. In the government system, a tiny class of elites gets to unilaterally decide what are the "goods" and "services" and "solutions" that everyone "needs", as well as unilaterally decide the price and forceably extract payment. Competing goods, services, and solutions are outlawed. Indeed, very often simply not purchasing the government's wares is outlawed. Bad goods (bads), bad services, and bad solutions cannot suffer losses and cannot fall by the wayside. Indeed they are institutionalized, and the problems they create become the basis for still more government "solutions" (a boon for government; more problems to "solve"). The inevitable result of such monopoly is, as always, ever falling quality and ever rising costs.

One of these systems: property, competition and freedom, or theft, monopoly and institutionalized coercion, is obviously better than the other. I prefer the former.

I think that's enough to get started.

[MrWookie]

Wook is fine.

I was thinking about starting off with a series of questions about how an AC world would address providing needs currently provided by the government that most consider essential, and how to deal w/ the issue of freeloaders. However, I think I might get to that next. Instead, though, I'm going to ask about your point of "Bad goods (bads), bad services, and bad solutions cannot suffer losses and cannot fall by the wayside." In a system of government where the officials must be elected and reelected periodically by the electorate, how does that not constitute a system of accountability by which bad officials that offer bad goods, bad services, and bad solutions do indeed fall by the wayside? A monarchy or another system where the ruling class rules for very long periods of time I agree will naturally be extremely inefficient. A democracy has a built in system of checks. Now, granted, the current US system is not going to be perfectly efficient as an ideal free market (I'll be asking about your ideal free market a little later [img]/images/graemlins/smile.gif[/img] ), since unexpectedly bad officials may be around for 2-6 years most often before being replaced. If the average consumer is rational enough to vote with their dollar for which goods and services are optimal for them, why are they not rational enough to vote with their vote?

[Borodog]

[ QUOTE ]
Wook is fine.

I was thinking about starting off with a series of questions about how an AC world would address providing needs currently provided by the government that most consider essential, and how to deal w/ the issue of freeloaders. However, I think I might get to that next. Instead, though, I'm going to ask about your point of "Bad goods (bads), bad services, and bad solutions cannot suffer losses and cannot fall by the wayside." In a system of government where the officials must be elected and reelected periodically by the electorate, how does that not constitute a system of accountability by which bad officials that offer bad goods, bad services, and bad solutions do indeed fall by the wayside?

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Because quite obviously, empirically, they don't. The majority of Americans believe that the majority of Congress is corrupt, yet re-election rates routinely exceed 90%. Unsuprisingly, one reason for this is that the elected get to write the election laws. The elected draw the voting districts. In my state, hundreds of races would go unopposed if it were not for the Libertarian Party tilting at windmills, because the voting districts are so gerrymandered that the two major parties simply don't bother to run anyone in each other's territory; it would be a waste of time and money.

Furthermore, what good does electing new bums do? Do you honestly believe they are going to abdicate the powers that their predecessors usurped for the chair they now sit in? Historically this simply doesn't happen.

[ QUOTE ]
A monarchy or another system where the ruling class rules for very long periods of time I agree will naturally be extremely inefficient. A democracy has a built in system of checks.

[/ QUOTE ]

You actually have this exactly backwards. In a monarchy, where the ruler views the kingdom as in a very real sense his personal property, he has a vested interest in the long term capital value of the realm, such as to maximize his future personal return. In a democracy, where the rulers do not actually own the government and face the real prospect that their access to the levers of state power can end at any time, they have no interest in the long term prosperity of the country. Hence, their incentive is to pilfer as quickly as possible before their time is up. The situation in the United States would actually be far worse if we had the term limits that people keep harping for. Public government is essentially a tragedy of the commons, where the productive public is the commons, to be carved up as quickly as the ruling class can get away with. Obviously there is a limit to the speed with which this can be done without inciting a bloody revolt.

[ QUOTE ]
Now, granted, the current US system is not going to be perfectly efficient as an ideal free market (I'll be asking about your ideal free market a little later [img]/images/graemlins/smile.gif[/img] ), since unexpectedly bad officials may be around for 2-6 years most often before being replaced. If the average consumer is rational enough to vote with their dollar for which goods and services are optimal for them, why are they not rational enough to vote with their vote?

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Because the rational thing to do with a vote is to not vote. It's an obvious waste of time. I defy you to find me a single person who has ever voted in any government election where the outcome would have been different had they stayed home from the polls. The non-voters are not the irrational ones. The voters are. The consumer actually gets the use of the products and services he buys with his dollars. What do you get with a vote? More of the same.

All of this is aside from the fact that elections, at least on any level above the very local, are ridiculous shams anyway. The two "choices" you get to "choose" from have been annointed by the ruling class, and agree on every major point of policy. They both agree on massive interventionist governments, they both agree on massive confiscations and redistribution of wealth, the both agree on the drug war, the both agree on interventionist foreign policies, they both agree on the existence of a centralized counterfeiter, they both agree on trade restrictions, they both agree on protectionism, they both agree on institutionalized violence and monopoly. They are in fact almost ridiculously indistinguishable.

There is no possibility of limited government. If there exists a special class of people that are given the power to create law, they will do so, and they will do so in their favor, until there are mountains of ridiculous laws that could fill libraries, until every person is violating some law at every moment of their lives, creating unending legal uncertainty and jeopardy. If there exists a special class of people that can print money, they will, ceaselessly inflating the money supply for the same reasons that any counterfeiter seeks to print money: to get something for nothing. If there exists a special class of people that can tax, they will, and that level of taxation will ceaselessly rise. All of these things that those in government do would be easily recognized as at the very least farcical and at worst criminal if done by private citizens. But because we have the meme of government, people meekly buy into the "necessity" of having a monopolist of legitimized crime. Especially since one of the most important things for a modern state to control is the educational system.

[Borodog]

By the way I know that quoting everything you write annoys you, but that's just how I roll. Please don't take it as rude, nitty, or obnoxious. [img]/images/graemlins/wink.gif[/img]

[MrWookie]

I think I'm going to have to continue to disagree with you on the monarchy. I agree that a monarch has a vested interest in maximizing his own benefit, but that could be very, very much out of line with maximizing the utility of the population of the bulk of his kingdom. The average member of the populace would look to make out much, much worse, even if the royal family does much, much better than the average Congressman. It seems to me that, with all you're railing on the so called ruling class, that a free market promises to be maximally efficient and beneficial for all who elect to play the game. I don't want to belabor this point, though, since we still have much to discuss. Maybe we'll come back. I want to get into government services. Since you mentioned counterfeiting, let's start there.

This one just occurred to me earlier today, actually, before we started this thread. Where does currency come from in an AC system? Now, we obviously could return to a barter economy, but even while if this would work out to be more efficient for the market, it's a real PITA for the average guy. Does some company take up printing currency for us to use? Do we have several competing currencies vying for our use? What checks could a market put on the currency company that would cause it to go BUSTO if it was guilty of counterfeiting (awfully loaded term, btw)? Would we go back to a gold standard? Fill me in here.

[MrWookie]

A couple asides:

Boro,

It's less that the actual quoting gets to me and more that it gets to me when it looks like people are taking me out of context, not responding to the whole idea, and making excessive use of sarcasm. I can deal with this style for sure.

All,

ShakeZula sent me a helpful link to an AC FAQ. I hadn't seen this, and I'm glad I did before I got to some of the other questions I'd planned on asking. On the other hand, it's given me some good ideas for new questions where I think the points in the FAQ could, at the very least, use some fleshing out.

[Borodog]

[ QUOTE ]
I think I'm going to have to continue to disagree with you on the monarchy. I agree that a monarch has a vested interest in maximizing his own benefit, but that could be very, very much out of line with maximizing the utility of the population of the bulk of his kingdom. The average member of the populace would look to make out much, much worse, even if the royal family does much, much better than the average Congressman.

[/ QUOTE ]

This is just assertion as near as I can tell. During the entire monarchic age the tax burden rarely exceeded 5% and the percentage of the populace in the employee of government rarely exceeded 2%. Today the tax burden (including inflation) often exceeds 50% and the population in public employee often exceeds 20%. These numbers must come at the expense of the private sector.

[ QUOTE ]
It seems to me that, with all you're railing on the so called ruling class, that a free market promises to be maximally efficient and beneficial for all who elect to play the game.

[/ QUOTE ]

I don't know what this means.

[ QUOTE ]
I don't want to belabor this point, though, since we still have much to discuss. Maybe we'll come back. I want to get into government services. Since you mentioned counterfeiting, let's start there.

This one just occurred to me earlier today, actually, before we started this thread. Where does currency come from in an AC system? Now, we obviously could return to a barter economy, but even while if this would work out to be more efficient for the market, it's a real PITA for the average guy. Does some company take up printing currency for us to use? Do we have several competing currencies vying for our use? What checks could a market put on the currency company that would cause it to go BUSTO if it was guilty of counterfeiting (awfully loaded term, btw)? Would we go back to a gold standard? Fill me in here.

[/ QUOTE ]

First, you have to understand what money is and where it comes from. Money predates the state's monopolization of it, but is so incredibly important that it has always been one of the first things that governments seek to gain control of.

From this thread on capitalism:

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A money is a market commodity who some smart fellow realizes is more easily exchanged than what he has produced. If he can exchange his goods for this more readily exchanged good, the value of his own goods and his ability to get what he wants have both gone up. There is a snowball effect in the market, and a few commodities will rapidly become moneys, and will [gain] value as a medium of exchange (in addition to whatever uses they already served in the market). Market moneys compete against each other, and ultimately there are usually only one or two. Historically there have been many moneys, including salt, sugar, seashells, tin, etc. but ultimately gold won out (with a few places still using silver) in the 19th century. The reasons that gold makes a good money is that it is durable, easily recognizable, easily divisible, hard to counterfeit, and has a high value to weight ratio.

[/ QUOTE ]

In other words, if there were not a state granting itself (or some private firm, as many people will argue about the Federal Reserve) the right to legally counterfeit, yes, we would almost certainly end up back on a gold standard, as the conditions that led to gold being the best medium of exchange have not changed. Nobody "chose" gold, by the way. It simply won the competition. It was "selected" by the market; survival of the fittest and all that.

As far as "money companies failing", if there is a hard currency, there isn't any worry of it. The worst that could happen would be competing mints attempting to alloy their metals to lower the gold content. But this is easily detectable, and market competition would punish any firm that tried it; their coin and bullion would be quickly devalued accordingly.

Nor does everyone have to carry around sacks of gold dust, coin, or bullion. Money substitutes, essentially warehouse receipts or tickets (what our paper dollars used to be), would of course exist. There is some contention about whether fractional reserve banking would exist in a free market. In my opinion FRB is simply fraud; printing and distributing more titles to property than there are pieces of property that exist. This is why banks used to fail from bank runs; they distributed far more paper money and created far more checkbook money entries than they actually held gold to cover. Eventually something would set off the bank run, people would want their money, which of course did not actually exist, and the bank would fail. Of course this could only happen because banks were specially protected by government to have this power; you couldn't do this with any other kind of property; everyone recognizes it is fraud to create multiple titles for the same beach house hoping that the multiple owners won't all want to vacation at the same time.

Anyway, some people argue that FRB could exist in the free market, as long as it was fully disclosed. These are the so-called "competitive note issue" crowd. Different banks might practice FRB with competing money substitutes (don't get your panties in a wad about this; it happens all the time; businesses accept checks, paper money substitutes, from dozens of different bannks), allowing them to inflate the money supply (a bad thing). But market competition would always keep that inflation in check. There would be a flight from notes that are being inflated relative to other notes. If you are going to have FRB, it is always better to have competing notes; if a central bank monopolizes this capability, inflation essentially becomes unchecked (well, the same sort of effect occurs between international fiat currencies, which again limits inflation, but to a much lower extent).

My own personal opinion is that in the environment that would have to obtain for a free society to exist, few people would buy into the idea of FRB. Today, the vast majority of people do not have any idea that banks practice FRB, even though it is "fully disclosed" in incomprehensible mice type somewhere. So even if there were competitive note issue, I think the market would drive to a 100% reserve anyway.

Last but not least, electronic transfers are entirely consistent with a hard currency. Gold warehousing facilities would simply make account entry transfers, and interfacility shipments could be made as necessary (as paper money is routinely shipped today between banks).

The argument that a gold standard cannot accomodate a growing economy is silly. It was the excuse used to complete the monopolization of the money supply and move us onto a fiat currency. The world, and the US in particular, saw a steadily growing economy in an environment of steadily falling prices for decades at the end of the 19th and beginning of the 20th centuries. Within 20 years of going off of the gold standard, inflation by the central bank had plunged the US, and then the world, into the Great Depression.

[AlexSem]

my apologies, plz delete

[MrWookie]

Yes, I realize that some of my assertions about monarchy there were empty. I will probably be doing something similar for many of the answers to your questions. Rather than thinking of my comments there as making an argument, consider it more like me just making a note about something that I'm not totally satisfied with at this point. I may come back to them later with more detailed thoughts and questions, but since we have so much material to cover, I'd rather not get bogged down by some details at this point.

That being said, though, I do want to ask you about one detail of banking before we move on. Your rant about FRB is compelling, but I have to ask, isn't that the system on which loans and such depend? I am somewhat naive on this issue, yes, but isn't this the way the things work? Say, customers A, B, and C deposit their money in the bank in exchange for the service of keeping it save and making it convenient to access. Customer D comes to the bank for a loan. The bank gives him one out of the funds deposited by A, B, and C, all the while promising A, B, and C that all their money is there. In exchange for not actually having all their money there, the bank pays A, B, and C a nominal interest fee on their money from the larger interest fees paid by D. Since A, B, and C don't usually go on a bank run all at the same time, things don't break too often. Is this the kind of system you're against, or is it something else? Would an ideal AC bank only be able to give out loans from the fees paid by A, B, and C for keeping their money safe? That would make it pretty darn hard to offer home loans before you had a huge customer base, don't you think?