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Journey into a Libertarian Future
 

Part I –The Vision

By Andrew Dittmer, who recently finished his PhD in mathematics at Harvard and is currently continuing work on his thesis topic. He also taught mathematics at a local elementary school. Andrew enjoys explaining the recent history of the financial sector to a popular audience.

Recently journalist Philip Pilkington has interviewed authors with unconventional perspectives on economic issues, including Satyajit Das and David Graeber. I thought it would be fun to interview someone too – but the man I interviewed uses a pseudonym. This is a six-part series.

 

ANDREW: Some people say that you represent a fringe view, and so interviewing you is a waste of time.

CODE NAME CAIN: If people obsessed with inside-the-Beltway conventional wisdom underestimate libertarians, so much the better.

ANDREW: Can you give any evidence that your ideas are taken seriously?

CNC: Well, people used to think that the financial crisis was caused by antisocial behavior in the finance sector. In September 2007, Tom DiLorenzo pointed out on the Lew Rockwell website that the crisis was actually the result of the government forcing banks to make risky loans to low-income borrowers. Although initially ignored, DiLorenzo’s thesis is now widely accepted among careful observers.

ANDREW: Is that your only convincing example?

CNC: Hardly. Did you notice how over the last year or so, everyone started to talk about how the threat of new taxes and regulations was making producers uncertain? And when producers are uncertain, the economy fails to improve? Well, the fact that worries about taxes and regulations cause uncertainty and so damage the economy is a key insight of Austrian economics that we have proclaimed for decades.

ANDREW: Wait, I thought people said that Obama was causing the uncertainty.

CNC: Obama is causing the uncertainty now. Before Obama, George W. Bush was causing the uncertainty. In general, democratic government causes uncertainty. Hans-Hermann Hoppe made all of this clear in his 2001 book “Democracy: The God That Failed.”

ANDREW: Are there things you have learned from the work of Dr. Hoppe that you had not found in the writings of other libertarians?

CNC: “Ludwig von Mises and Murray Rothbard were great men, but they lived in a time when supporters of freedom needed to be careful about what they said. As a result, libertarians often fail to describe their ideal future society in clear detail. But, as the Cato Institute’s Patri Friedman has recognized, Hans-Hermann Hoppe is an exception to this reticence. He is willing to speak the truth, no matter how much it makes “politically correct” people squirm, and he is so logical and eloquent that I routinely quote from his classic book on the failure of democracy. Please color such quotes in red – I would never try to pass off my own ideas as if they were on his level.

ANDREW: Tell us now about the libertarian society you are working to make possible.

CNC: It will be a free society – no government, no coercion. People will have their rights respected. Everyone will be free to do whatever they want as long as it doesn’t interfere with anyone else’s rights… why are you looking at me like that?

ANDREW: I was kind of hoping for less speeches and more details.

CNC: What do you mean?

ANDREW: In our society, the government is the only organization allowed to kill people. In the libertarian society, which organizations will kill people?

CNC: There will be no government that is allowed to use force against people and kill them.

ANDREW: Some people will be very rich, right?

CNC: Of course. Some people will always be stronger and more brilliant than others.

ANDREW: Will the wealthy people still be worried about people stealing from them?

CNC: Obviously – all property… is necessarily valuable; hence, every property owner becomes a possible target of other men’s aggressive desires. [255]

ANDREW: So who will protect property owners?

CNC: Insurance companies in a competitive marketplace.

ANDREW: So in your society, insurance companies will be sort of like governments. Can we call them security GLOs (Government-Like Organizations)?

CNC: Sure, as long as we stress that the insurance companies, as security GLOs, will be very different from the statist, coercive governments we have today.

ANDREW: Will security GLOs be different from governments because they will be small family firms?

CNC: No. One reason that insurance companies will be well-suited for the role of security GLOs is that they are “big” and in command of the resources… necessary to accomplish the task of dealing with the dangers… of the real world. Indeed, insurers operate on a national or even international scale, and they own substantial property holdings dispersed over wide territories… [281]

ANDREW: Will security GLOs be different from governments because they don’t use physical force against criminals?

CNC: You gotta be kidding, right? … in cooperation with one another, insurers [will] want to expel known criminals not just from their immediate neighborhoods, but from civilization altogether, into the wilderness or open frontier of the Amazon jungle, the Sahara, or the polar regions. [262]

ANDREW: So the security GLOs will be allowed to kill people, if they are known criminals?

CNC: The security GLOs will not kill people, they will just expel them to the Sahara or polar regions. What happens then is up to the criminals.

ANDREW: Can we say that the security GLOs will effectively kill them?

CNC: I really don’t like that choice of wording. You make it sound like the security GLOs will be committing aggression against the criminals. That’s backwards – the criminal commits aggression, and security GLOs will just defend people. They won’t violate anyone’s rights.

ANDREW: Maybe you would prefer that we say: the security GLOs will effectively kill people in a rights-respecting manner.

CNC: Yeah, that’s better.

ANDREW: Will everybody be able to get insurance from the security GLOs?

CNC: Of course – in a market economy, shortages are impossible. Anyone can get anything by paying the market price.

ANDREW: What if the market price of insurance for some people is more money than they can pay?

CNC: Don’t worry, competition among insurers for paying clients will bring about a tendency toward a continuous fall in the price of protection… [281-282].

ANDREW: In the future everyone will pay less for security than they currently pay in taxes?

CNC: Well, certain government-induced distortions would be eliminated. Government taxes more in low crime and high property value areas than in high crime and low property value areas. [259] Security GLOs would do the exact opposite.

ANDREW: So in rough neighborhoods, most people might not be able to afford security insurance.

CNC: Possibly.

ANDREW: Suppose there are people who aren’t covered by any security GLO – would it effectively be legal to kill them?

CNC: They would definitely be rendered economically isolated, weak, and vulnerable outcast[s] [287].

ANDREW: Then people are effectively forced to join a security GLO?

CNC: Maybe you haven’t realized it yet, but this will be a free society. The relationship between the insurer and the insured is consensual. Both are free to cooperate and not to cooperate. [281] No one will force people to buy protection, and no one will force insurers to offer protection at a price they think is too low.

ANDREW: What are some other ways that you think this would be a good system?

CNC: Well, every property … can be shaped and transformed by its owner so as to increase its safety and reduce the likelihood of aggression. I may acquire a gun or safe-deposit box, for instance, or I may be able to shoot down an attacking plane from my backyard or own a laser gun that can kill an aggressor thousands of miles away. [256] In a free society, security GLOs would encourage the ownership of weapons among their insured by means of selective price cuts [264] because the better the private protection of their clients, the lower the insurer’s protection and indemnification costs will be [285].

ANDREW: Let’s see if I understand. In poor neighborhoods, most people will not be insured, and it will be legal to kill them. The people that are insured will be encouraged by the security GLO to carry weapons that are as technologically advanced as possible. It sounds to me like this would be bad for the poor neighborhoods.

CNC: On the contrary – in “bad” neighborhoods the interests of the insurer and insured would coincide. Insurers would not want to suppress the expulsionist inclinations among the insured toward known criminals. They would rationalize such tendencies by offering selective price cuts (contingent on specific clean-up operations). [262]

ANDREW: Suppose that security GLOs, or private groups that they sponsor, are looking for criminals. When the enforcers catch the criminals, will they always transport them to an uninhabited area, or will they sometimes put them in prison?

CNC: Prisons like the ones we have? With basketball courts and televisions for the criminals? How would that be fair?

ANDREW: Maybe other kinds of prisons?

CNC: Look, it’s not about putting people in prisons. It’s about people getting what they deserve. And in the libertarian society of the future, people will get what they deserve. Security GLOs can be counted upon to apprehend the offender, and bring him to justice, because in so doing the insurer can reduce his costs and force the criminal… to pay for the damages and cost of indemnification. [282]

ANDREW: So they’ll have to do forced labor for the security GLO?

CNC: How can you possibly think this could be worse than our current system? Where instead of compensating the victims of crimes it did not prevent, the government forces victims to pay again as taxpayers for the cost of the apprehension, imprisonment, rehabilitation and/or entertainment of their aggressors [259]?

ANDREW: Still, as a libertarian, aren’t you against coercion?

CNC: Coercion? Obviously you don’t understand what you’re talking about. Coercion is only when someone interferes with rights someone else actually holds. Criminals can forfeit their rights through their own choices. When that happens, requiring them to make restitution for their actions doesn’t violate their rights.

ANDREW: Will there be any other people in the free society who will be slaves?

CNC: Slaves?! Don’t you know that the first condition of a libertarian society is that everyone owns themselves?

ANDREW: Sorry, I meant to say: effectively slaves in a rights-respecting manner.

CNC: Oh. Hmmm. Let me think about that.

ANDREW: For example, suppose someone signs a business contract and then, later, can’t fulfill the terms of the contract. What would happen?

CNC: In a libertarian society, sanctity of contract is absolutely fundamental.

ANDREW: Let me be a little more specific. Suppose some guy can’t pay his debts. Would he be allowed to declare bankruptcy and move on, or would he become, in a rights-respecting manner, the effective slave of whoever had loaned him the money?

CNC: That would depend upon the debt contract that the lender and borrower had together voluntarily signed. If they had chosen to include a bankruptcy proviso, then the borrower could declare bankruptcy.

ANDREW: Suppose that in the libertarian society, lenders would rather encourage borrowers to focus on repayment – and so they decide not to give borrowers an easy way out. Suppose that no lenders offer loans with a bankruptcy proviso. Would that be okay?

CNC: Economic theory tells us that loans without a bankruptcy proviso will be made at lower interest rates than loans allowing borrowers to go bankrupt. So if no loans contain a bankruptcy proviso, it will just mean that borrowers prefer low-interest no-bankruptcy loans.

ANDREW: I see some problems here.

CNC: Look, it sounds from your question like you think that the lenders should be coerced into allowing borrowers to be irresponsible and go bankrupt! That would effectively make them loan their hard-earned money in ways that they don’t want. How is that any different than forcing them to work at hard labor?

ANDREW: Obviously it would be better to have defaulting borrowers be effectively enslaved in a way that fully respects their natural rights.

CNC: Obviously. Now that we’ve cleared that up, can you turn off the tape recorder? I want to get started on my steak.

Now that Code Name Cain has indicated the promise of a libertarian society, in the next part of the interview he will give a step-by-step plan for how we can make this society a reality.
 

Part II – The Strategy

This is the second installment of a six-part interview. Red indicates exact quotes from Hans-Hermann Hoppe’s 2001 book “Democracy: The God That Failed.”

ANDREW: Do other libertarians agree with your idea of a libertarian society?

CODE NAME CAIN: Well, we do have our differences. For example, the Cato Institute is severely compromised by numerous left-leaning libertarians such as David Boaz. The Cato tag-alongs and certain other prominent libertarians imagine that an extremely small government would be better than no government at all. They are, of course, wrong. They have not yet recognized that every government is destructive of what they want to preserve [235-236].

ANDREW: It sounds like you and Dr. Hoppe and Murray Rothbard are strongly critical of those other libertarians. But when I looked through the Cato web site, I found that while they sometimes express disagreements, they are surprisingly respectful of Rothbard and Hoppe. Why do you think this is?

CNC: Three reasons. First, pro-government libertarians have probably realized how difficult it is to refute Rothbard and Hoppe, and so prefer instead to learn from their ideas. Second, many agree with Tibor Machan, who says that libertarians should not let their small differences over this issue “distrac[t] from the far more significant task of making the case for libertarianism in the face of innumerable bona fide statist challenges.” But third, you have to reckon with the Human Shield Effect.

ANDREW: The what?

CNC: Libertarian Bryan Caplan says that “hard-core libertarians’ comparative advantage is to play watchdog for moderate libertarians – and make them seem reasonable by comparison.” You see, on many areas other libertarians secretly agree with us, but they are afraid to acknowledge it openly. Instead, they prefer to let us take the heat for our principled positions, and to wait for us to turn previously “radical” ideas into common sense.

ANDREW: So you can count on at least some support from other libertarians. But in order to make your revolution happen, you will have to convince other people as well. Are you going to try to get a majority of U.S. voters to support the future libertarian society?

CNC: It won’t work – persuade a majority of the public to vote for the abolition of democracy and an end to all taxes and legislation? [...] is this not sheer fantasy, given that the masses are always dull and indolent, and even more so given that democracy… promotes moral and intellectual degeneration? How in the world can anyone expect that a majority of an increasingly degenerate people accustomed to the “right” to vote should ever voluntarily renounce [it]? [288].

ANDREW: If it’s not a good idea to try to persuade a majority of Americans to surrender the right to vote, what is the right approach?

CNC: It has to start with a small elite. As Étienne La Boétie said, these are “the men who, possessed of clear minds and farsighted spirit, are not satisfied, like the brutish mass, to see only what is at their feet, but rather look about them….” These people will start to secede from the United States.

ANDREW: Meaning?

CNC: It means one regard[s] the central government as illegitimate, and… treat[s] it and its agents as an outlaw agency and “foreign” occupying forces [91].

ANDREW: You don’t pay your taxes?

CNC: One tries to keep as much of one’s property and surrender as little tax money as possible. One considers all federal law, legislation and regulation null and void and ignores it whenever possible [91]. One needs to be ready in case the government makes a move, and invest in such forms and at such locations which withdraw, remove, hide, or conceal one’s wealth as far as possible from the eyes and arms of government [92].

ANDREW: Is this why you have a code name?

CNC: It took you a while, but you figured it out in the end.

ANDREW: How will a few people seceding lead to an anti-state revolution?

CNC: It won’t. … it is essential to complement one’s defensive measures with an offensive strategy: to invest in an ideological campaign of delegitimizing the idea and institution of democratic government among the public [92].

ANDREW: Did you say earlier that trying to convince the public would be difficult?

CNC: With the secession strategy, you don’t need a majority. That’s good, because [t]he mass of people … always and everywhere consists of “brutes,” “dullards,” and “fools,” easily deluded and sunk into habitual submission [92]. Still, there can be no revolution without some form of mass participation. … the elite cannot reach its own goal of restoring private property rights and law and order unless it succeeds in communicating its ideas to the public, openly if possible and secretly if necessary… [93].

ANDREW: Even if you do it secretly, convincing the masses that they are inferior sounds tricky.

CNC: That’s true, but you don’t have to convince Joe the Plumber that he is a brute. You can convince him instead that he is a hardworking, productive individual, and that other people are brutes who are making it so Joe has no control over his life.

ANDREW: I see.

CNC: Still, you’re right. Convincing the masses of the superiority of the natural elite is not the most important part of our communications strategy. The central task of those wanting to turn the tide… is the “delegitimation” of the idea of democracy… [103] It is not enough to focus on specific policies or personalities… Every critic and criticism deserving of support must proceed to explain each and every particular government failing as an underlying flaw in the very idea of government itself (and of democratic government in particular). [94]

ANDREW: Now that I think of it, I have heard people saying things like that.

CNC: There is still a long way to go. There remain far too many people who make unnecessary compromises with the idea of democracy. In fact, there must never be even the slightest wavering in one’s commitment to uncompromising ideological radicalism… Not only would anything less be counterproductive, but more importantly, only radical – indeed, radically simple – ideas can possibly stir the emotions of the dull and indolent masses. And nothing is more effective in persuading the masses to cease cooperating with government than the constant and relentless exposure, desanctification, and ridicule of government and its representatives [94].

ANDREW: A lot of Americans think that democracy has helped the country to be prosperous.

CNC: What better evidence of the limited mental horizons of the so-called “ordinary person”? Hans-Hermann Hoppe has debunked this idea entirely, but too many people still think that the collapse of the Soviet Union had something to do with the absence of democracy! [A]s for the economic quality of democracy, it must be stressed relentlessly that it is not democracy but private property, production, and voluntary exchange that are the ultimate sources of human civilization and prosperity. [105]

ANDREW: So let’s see if I understand. At this point, there will be a small elite dedicated to revolution. Meanwhile, many ordinary people will no longer believe that democracy is a good system. Will you try to do this everywhere, or just in a few key places?

CNC: It doesn’t matter if people in any one city think that what we’re doing is wrong and dangerous. As long as the people who oppose us continue to wring their hands together and to talk only to people who already agree with them, they will not obstruct our efforts to find or create secessonist majorities… at hundreds of locations all over the country [290].

ANDREW: Aren’t you a little worried about how the government might respond to all of these people choosing not to obey the law?

CNC: You mean, considering how the U.S. government has become entangled in hundreds of foreign conflicts and risen to the rank of the world’s dominant imperialist power[?] [How] nearly every president [since 1900] has also been responsible for the murder, killing, or starvation of countless innocent foreigners all over the world [244]? Of course I’m worried. The U.S. president in particular is the world’s single most threatening and armed danger, capable of ruining everyone who opposes him and destroying the entire globe. [244]

ANDREW: But then, what will you do?

CNC: We will work to create a U.S. punctuated by a large and increasing number of territorially disconnected free cities – a multitude of Hong Kongs, Singapores, Monacos, and Liechtensteins strewn over the entire continent [291]. This approach offers two advantages. First, a “piecemeal strategy” will make secession seem less threatening. Second, the more the secession process continues, the more the government’s strength will be eroded.

ANDREW: But there could still be conflicts between the new libertarian mini-states and the existing democracies.

CNC: If there is a conflict, it will be because a democracy has not respected the rights of the free mini-states. But you are forgetting that the mini-states will not be defenseless in such a conflict.

ANDREW: What will they do?

CNC: Since they will be no-tax free-trade haven[s], large numbers of investors and huge amounts of capital would begin to flow immediately. [132] It will therefore be possible to pay large multinational insurance companies to develop military forces capable of defending the free mini-states against government aggression. Keep in mind that, unlike the military forces of the democracy, these military units will be provided by private firms, and so will be much more efficient. If there were to be a conflict, these insurers would be prepared to target the aggressor (the state) for retaliation. That is, insurers would be ready to counterattack and kill, whether with long-range precision weapons or assassination commandos, state agents from the top of the government hierarchy [from the] president…. on downward… They would thereby encourage internal resistance against the aggressor government, promote its delegitimization, and possibly incite the liberation and transformation of the state territory into a free country. [264-265]

ANDREW: Will it stop there? Or will you eventually get rid of the small city-states as well?

CNC: At the correct moment, all remaining governments will be dissolved. Protection against violence will be provided exclusively by insurance firms. As I see it, public property should be distributed among taxpayers, with shares based on how much each individual or firm, up to now, has been forced to pay in taxes. Since public employees and welfare recipients are obviously recipients and not victim of taxes (theft), they will receive nothing.

ANDREW: Would you like to say anything else before I end this part of the interview?

CNC: Let me quote the conclusion of “Democracy – The God That Failed.” If and only if we succeed in this endeavor, if we then proceed to return all public property into appropriate private hands and adopt a new “constitution” which declares all taxation and legislation henceforth unlawful, and if we finally allow insurance agencies to do what they are destined to do, can we be truly proud again and will America be justified in claiming to provide an example to the rest of the world. [292]

In part 3 of this interview, Code Name Cain will show that he is unafraid to explain how a libertarian society will work in detail.

The Étienne La Boétie quote is from “The Politics of Obedience: The Discourse of Voluntary
Servitude,” New York, Free Life Editions, 1975, p. 65 (cited at Hoppe, p. 93).
 


Part III – Regulation

This is the third installment of a six-part interview. Red indicates exact quotes from Hans-Hermann Hoppe’s 2001 book “Democracy: The God That Failed.”

ANDREW: Let’s imagine that a future libertarian society has been established, and security and justice are provided by competing insurance companies. What will happen if two different people, covered by two different security GLOs, disagree about what their rights are?

CODE NAME CAIN: The two people would find an independent arbitrator that would be the unanimous choice of both parties [251].

ANDREW: Suppose that one of the two parties is stronger, and so will likely outlast the other in a direct conflict. Wouldn’t that party prefer to refuse all arbitration and, during the delay, squeeze the other party into submission?

CNC: No.

ANDREW: Suppose someone annoys you, and you pay their GLO a sum of money that is significantly more than the present value of that person’s future insurance payments. Would the GLO kill the person for you?

CNC: No.

ANDREW: Suppose that one security GLO is much stronger than a competing GLO, and it wishes to expand its market share. Will it strategically assassinate clients of the weaker GLO in order to advertise its superior security capabilities?

CNC: No.

ANDREW: These scenarios all appear plausible to me. Why are you sure they won’t happen?

CNC: Security GLOs will understand that the sort of aggressive behavior you describe is economically irrational. In fact, insurers will [not engage] in any form of external aggression because any aggression is costly… implying the loss of clients to other, nonaggressive competitors. Insurers will engage exclusively in defensive violence… [287]

ANDREW: Suppose the CEO of a security GLO understands his own self-interest differently than you do, and starts killing people. What would happen then?

CNC: A security GLO that started assassinating people would represent a threat to stable order not just for the insurer of the murdered individuals, but for all security GLOs. Therefore, the security GLOs would cooperate and defend weaker GLOs from aggression.

ANDREW: How can we be sure about whether you’re right? What if the security GLOs fail to cooperate in the way you say?

CNC: There is nothing that would stop the GLOs from cooperating in order to establish stability. Already today, all insurance companies are connected through a network of contractual agreements… as well as a system of… reinsurance agencies, representing a combined economic power which dwarfs that of most existing governments. [248] Under pressure to settle questions about intergroup conflict, competition would promote the development and refinement of a body of law that incorporated the widest… consensus and agreement… [250-251]

ANDREW: So the insurance companies, taken together, will constitute a sort of global, non-coercive, non-government GLO, established in a consensual and rights-protecting manner.

CNC: Exactly.

ANDREW: Although it can be very difficult, ordinary people in America can sometimes influence what their government does. I get that the global GLO will be different in that ordinary people will have no voice in what happens – but in what other ways will the global GLO not be a government?

CNC: First, you’re wrong – not only will consumers have a voice in the global GLO, they will be sovereign. They will completely control the GLO through their decisions about where to purchase insurance.

Anyway, to answer your question, a government is an organization that exercises a compulsory territorial monopoly of protection and the power to tax [256]. The global GLO will be very different.

ANDREW: The global GLO will protect people through the security GLOs that are part of it. Those organizations will be paid money by people who desire protection: noncoercive Tax-Like Payments. Aside from everything being completely voluntary, what is the difference here?

CNC: The fact that everything will be completely voluntary is, of course, a very important difference. But there will be another difference.

Governments not only monopolize the business of protecting people, but they also monopolize control over territory. In the libertarian society, security GLOs will protect people, but they will not hold final authority over a specific piece of real estate.

ANDREW: Oh, I see, private homeowners will rule over territory instead.

CNC: Not exactly. Most of the time, houses will be part of “proprietary communities,” like modern-day gated residential communities… owned by a single entity, either an individual or a private corporation… The proprietor [will be] an entrepreneur seeking profits from developing and managing… communities… [215]. The residents will not have full title to their homes, since the proprietor will retain the right to enforce covenants – i.e. rules about who can live there under what conditions.

ANDREW: Since these real estate corporations will have authority over specific territorial areas, could we call them territory GLOs?

CNC: We can call them whatever we want, as long as we use our terms precisely.

ANDREW: So I guess the idea is that even though the global GLO and the security GLOs will impose a few basic rules on everyone, there will be a lot of room for each territory GLO to create its own individual culture.

CNC: You’re finally starting to understand. Catholics will be able to live by their principles, Muslims by Islamic principles, and Non-believers by Secular principles.

ANDREW: So these local communities will increasingly separate from each other… That might not bother some people, but given that Dr. Hoppe is an economist, isn’t he worried that the world will divide up into small, economically isolated units?

CNC: That won’t happen – just because one does not want to associate with or live in the neighborhood of Blacks, Turks, Catholics or Hindus, etc., it does not follow that one does not want to trade with them from a distance [140].

ANDREW: Uh… will a lot of people not want to live with blacks or Catholics?

CNC: Each territory GLO will have entrance requirements (for example, no beggars, bums, or homeless, but also no homosexuals, drug users, Jews, Moslems, Germans, or Zulus) and those who [do] not meet those entrance requirements [will] be kicked out as trespassers. [211]

ANDREW: If you’re only allowed to live in certain areas depending on your race, behavior, and religion, that might sound to some people like a less free society.

CNC: Those people are clearly uncomfortable with free individuals making decisions that they think are mutually beneficial. Maybe they would prefer living in the United States of today, where [d]iscrimination is outlawed… [t]eachers cannot get rid of lousy or ill-behaved students, employers are stuck with poor or destructive employees… banks and insurance companies are not allowed to avoid bad risks… and private clubs and covenants are compelled to accept members… in violation of their very own rules and restrictions. [210]

ANDREW: Presumably, some people will not mind living with people of other races.

CNC: Of course, every territory GLO would be free to discriminate in whatever way it wishes. But we need to be realistic. Notwithstanding the variety of discriminatory policies pursued by different proprietary communities… no proprietary community can be as “tolerant” and “non-discriminatory” as left-libertarians wish every place to be. [212]

ANDREW: What do you mean by “left-libertarians”?

CNC: Murray Rothbard likes to call them “modal-libertarians” (MLs). As Rothbard says, “the ML is an adolescent rebel against everyone around him,” who only hates government because it is something else to disrespect. MLs think that profanity, drug use… homosexuality… pedophilia… or any other conceivable perversity or abnormality… are perfectly normal and legitimate activities and lifestyles [206]. What these countercultural libertarians fail to realize… is that the restoration of private property rights and laissez-faire economics implies a sharp and drastic rise in social “discrimination” and will swiftly eliminate most if not all of the… life style experiments so close to the heart of left libertarians. [208]

Left-libertarians and multi- or countercultural lifestyle experimentalists, even if they were not engaged in any crime, would once again have to pay a price for their behavior. If they continued with their behavior or lifestyle [in public], they would be barred from civilized society and live physically separate from it, in ghettos or on the fringes of society, and many positions or professions would be unattainable to them. [212]

ANDREW: I can tell you’re excited about this… But maybe you’re getting your hopes up. After all, you’ve said that every territory GLO will be free to develop its own culture. What if some territory GLOs make it so people are rewarded for smoking weed?

CNC: Every territory GLO is free to develop its own culture, but only subject to the constraints of inexorable economic laws. First of all, the proprietor and largest investors in the territory GLO would, in order to protect and possibly enhance the value of their property and investments, [216] be very careful about whom to welcome to their territory, and these leaders would set clear standards on what kind of behavior is acceptable for local residents.

Second, the security GLOs would also have a say on who immigrates into the territory GLOs, and even more than any one of their clients, insurers would be interested in… excluding those whose presence leads to a higher risk and lower property values. That is, rather than eliminating discrimination, insurers would rationalize and perfect its practice. [262]

ANDREW: So the security GLOs would regulate the territory GLOs… Let’s see if I understand. Suppose that the security GLOs decide, based on their research, that watching television makes people more docile. Do you think maybe they would require every family to watch television for a certain number of hours per day?

CNC: No, you don’t understand. If one security GLO tried to do this, they would lose business to competing security GLOs that allowed people not to watch television.

ANDREW: Suppose that the security GLOs decide, based on their research, that kids who are home-schooled are more likely to oppose a libertarian society. Would they refuse to insure territory GLOs where kids are home-schooled?

CNC: Once again, you fail to reckon with the power of market competition. Security GLOs will only cooperate when doing so leads to positive consequences. For example …insurers would… be particularly interested in gathering information on potential… crimes and aggressors… [A]lways under competitive pressure, they would develop and continually refine an elaborate system of demographic and sociological crime indicators. That is, every neighborhood would be described, and its risk assessed, in terms of a multitude of crime indicators, such as… its inhabitants’ sexes, age groups, races, nationalities, ethnicities, religions, languages, professions, and incomes. [260-261]

ANDREW: Do you think that the security GLOs might offer people they consider to be potential criminals the opportunity to wear a device keeping them under surveillance – as a condition for granting them insurance?

CNC: Now you’re coming up with more practical ideas. But the insurance companies are good at thinking outside the box – they’ve probably already thought of that.

ANDREW: Let’s see – so security GLOs will set up precise financial incentives to segregate residential communities by race, etc., following detailed mathematical models. Many people will be effectively forced, in a rights-respecting manner, to be under 24-hour surveillance. I’m curious – what kind of society do you think this will produce?

CNC: I think most people would agree that under such conditions, all … regional, racial, national… religious, and linguistic wealth redistribution would disappear, and [so] a constant source of social conflict would be removed permanently [262].

ANDREW: I know that you think this is very unlikely, but suppose people living in the free society of the future decide that they don’t like it very much, and would like to go back to living in a democracy. Could they do it?

CNC: That will not be possible.

ANDREW: You mean, you are sure that no one will want to go back to democracy?

CNC: No, I mean they won’t be allowed to discuss that possibility. In a covenant… among proprietor and community tenants for the purpose of protecting their private property, no such thing as a right to free (unlimited) speech exists, not even to unlimited speech on one’s own tenant-property. One may say innumerable things and promote almost any idea under the sun, but naturally no one is permitted to advocate ideas contrary to the very covenant of preserving and protecting private property, such as democracy and communism. There can be no tolerance toward democrats and communists in a libertarian social order. They will have to be physically separated and removed from society. [218]

ANDREW: But all of these outlaws, excluded from the libertarian society – how do you know they won’t try to rebel against the civilization you’ve created?

CNC: You mean, what if the rejects continue to nurture ideas of democracy, and they make plans to take away the rights of rich people? Keep in mind that in the society of the future, a lot of jobs will be done by robots. As pacifist libertarian Bryan Caplan says, “rich people rarely take the ‘transition to socialism’ lying down…. [If you were a rich person in this scenario], you might want to reprogram your robots for civil war…. True, all of the soldiers of the future may be robots… But… [j]ust because robots do all of the killing doesn’t mean humans won’t do their share of the dying.”

In part 4 of this interview series, Code Name Cain will explain why an attentive survey of history shows that all of the rights of governments are illegitimate, and that all of the rights of modern corporations and property-holders are legitimate.

Notes:

Karl Widerquist envisions a fully sovereign state growing from landholdings like this (“A Dilemma for Libertarianism,” Politics, Philosophy, and Economics 8.1 (2009): 43-72).

“Now that I think of it, they already have”: Insurance 2020: Innovating beyond old models IBM
p. 2: “The… rising tide of technology… empowers insurance underwriters to bring their products closer to realtime interaction via sensor networks and enlightened privacy regulations.” See also p. 6, second paragraph from the top.

Bryan Caplan, however, points out that since the libertarian society will be incredibly wealthy, it will be “child’s play” for the numerous billionaires to support everyone else through “voluntary charity.” He therefore considers a revolution extremely unlikely.

 

Part IV – The Journey into a Libertarian Past

This is the fourth installment of a six-part interview. Red indicates exact quotes from Hans-Hermann Hoppe’s 2001 book “Democracy: The God That Failed.”

ANDREW: The GLOs in your future libertarian society will be continuations of GLOs that exist now – basically large corporations and high net worth individuals. And the modern GLOs are continuations of GLOs that existed in the past.

CODE NAME CAIN: True – GLOs have a long and proud history.

ANDREW: In our society and in the past, both GLOs and regular governments have certain legal rights.

CNC: That’s right. But the legal rights of the governments are all completely illegitimate, whereas the legal rights of GLOs are all completely legitimate. That’s why I act morally when I hide my assets from the U.S. government.

ANDREW: How did it come to happen that the GLOs split into two kinds – the good non-government kind and the bad government kind?

CNC: As the libertarian Robert Nozick says, “Whatever arises from a just situation by just steps is itself just.” When rights were first created, the non-government GLOs legitimately claimed them. Since then, they’ve handed them down to their heirs and traded them among themselves. All of these transactions were strictly voluntary, and so all of the rights of modern GLOs are legitimate. On the other hand, governments seized all of their rights unjustly, and nothing that has happened since can transform their illegitimate rights into legitimate ones.

ANDREW: Maybe you should tell us the whole story.

CNC: Prepare to be surprised – mainstream sources have mutilated this history almost beyond recognition.

A long time ago, everybody lived in a state of liberty. Now, in any society that is not entirely primitive, a few men acquire elite status. Owing to superior achievements of wealth, wisdom, [or] bravery… some individuals come to possess “natural authority,” and their opinions and judgments enjoy widespread respect. Moreover, because of selective mating and marriage and the laws of civil and genetic inheritance, positions of natural authority are more likely than not passed on within a few noble families.

…. it is these very leaders of the natural elite who typically act as judges and peacemakers, often free of charge, out of a sense of obligation required and expected of a person of authority or even out of a principled concern for civil justice, as a privately produced “public” good. [71]

ANDREW: So the first security GLOs were noblemen, and they got their power because other people recognized their superior leadership qualities. These nobles were basically like little governments, except better because they were non-coercive and respected natural rights.

CNC: Exactly. The great philosopher John Locke understood this principle well. Some bonehead living in Locke’s time had said that governments had much more authority than GLOs… because they sometimes led men into battle. Locke retorted,

A Planter in the West Indies has more [than three hundred slaves in his household], and might, if he pleased… Muster them up and lead them out against the Indians, to seek Reparation upon any Injury received from them, and all this without [being] a Monarch…

In other words, GLOs, such as planters in the West Indies, had the same rights that governments did as far as war-making was concerned.

ANDREW: This is the first time you’ve mentioned governments, as opposed to non-government security GLOs. How do governments enter the picture?

CNC: In big cities, there end up being many different and independent security GLOs, all exercising their authority in complete harmony. For a government to arise it is necessary that one of these judges, arbitrators, or enforcement agencies succeed in establishing himself as a monopolist. [177] How is this possible? Why would other security GLOs ever allow one organization to obtain a monopoly and to usurp their own rightful powers?

Clearly the only way that this can happen is for one of the security GLOs to promise to be more than an impartial judge in matters relating to one’s own race, tribe, or clan [178]. You see, in the state of nature a security GLO would treat all of its clients fairly, applying a uniform standard of justice. Governments come about when one security GLO pledges to enforce the law in a way that unfairly favors its own race or tribe – this unethical scheme allows such a GLO to seize power over its rivals. If racism stops being effective, the next resort of the rogue GLO is typically an appeal to the universal… feeling of envy and egalitarianism, i.e. to social class (the untouchables or the slaves versus the masters, the workers versus the capitalists, the poor versus the rich, etc.) [180].

ANDREW: Noblemen and masters were obeyed because their serfs and slaves recognized that some people were naturally superior to others – but then some GLOs came in and started messing everything up by appealing to racism and jealousy. These “rogue GLOs” are where governments come from.

CNC: That’s right. Now let me tell you about the history of territory GLOs. This part of the story is even more important – you see, libertarianism… is a systematic law code, derived by means of logical deduction from a single principle, the validity of which… cannot be disputed without falling prey to… contradictions…. This axiom is the ancient principle of original appropriation [200].

Now what does “original appropriation” mean? It means that you find something that no one else owns and you claim it. Whenever you claim rights in this way, it makes some people better off and no one worse off.

ANDREW: It does?

CNC: Well, it obviously makes you better off. At the same time, [your] action does not make anyone else worse off… Others could have appropriated those resources, too, if they had considered them valuable. Yet they… did not do so. Indeed, their failure to appropriate them demonstrates their preference for not appropriating them. Thus, they cannot possibly be said to have lost any utility as a result of [the] appropriation. [122]

ANDREW: Let me see if I understand the idea. Suppose that I find the only oasis in a desert and claim it as mine. Suppose some refugees flee into the desert and want to drink at my oasis. Can I threaten to gun them down if they come too close, unless they agree to become my effective slaves in a rights-respecting manner?

CNC: Of course – it’s your oasis.

ANDREW: Can you give me some real historical examples of how GLOs have justly appropriated rights?

CNC: [T]he English settlers [in] North America… demonstrated how… private property originated naturally through a person’s original appropriation… of previously unused land (wilderness). [267]

ANDREW: North America was uninhabited when the English settlers got there?

CNC: Opponents of libertarianism love saying “What about the Indians?” They get excited at the thought that libertarians will be forced to defend the property rights of dispossessed native peoples, which a lot of libertarians would rather not do. What they don’t realize is that John Locke solved this problem three hundred years ago. Locke explained that

…the Benefit Mankind receives from [an acre of land in England], is worth 5 [pounds], [whereas the benefit from an acre of land in America] possibly not worth a Penny, if all the Profit an Indian received from it were to be valued, and sold here; at least, I may truly say, not 1/1000. ‘Tis Labour then which puts the greatest part of Value upon Land, without which it would scarcely be worth any thing…

ANDREW: Wait. Did Locke just start to suggest that since the Indians did not do efficient agriculture, they did not really own the land?

CNC: Exactly. To properly claim land, you have to do real economic work on the land, and the Indians did not do that because they were too primitive. So Locke proved that that the Indians did not own the land. That meant the settlers could treat the land as if it was unclaimed.

ANDREW: Are you sure that’s what Locke meant? Locke is famous for defending liberty and natural rights.

CNC: Why are you surprised? In this example, Locke defended the liberty of settlers to claim unused land, and their natural right to keep that land once they had claimed it. And yes, I’m sure that’s what Locke meant – go read his second Treatise on Government.

ANDREW: Were the original territory GLOs in Europe also security GLOs?

CNC: Well, you can get wealthy by claiming unused land, and security GLOs were typically wealthy noblemen with long-established records of superior achievement, far-sightedness, and exemplary personal conduct [71]. So there was probably a lot of overlap.

ANDREW: Didn’t a lot of people in Europe get land because their king or queen liked them and granted them land as a gift?

CNC: Well, you have to remember that the king or queen, being a government, did not own the land legitimately. Land can only be justly claimed by individuals or corporations, and so all “public” property is… the result of some form of expropriation [135].

ANDREW: So if you could prove that part of a particular organization’s wealth came from inheriting a royal land grant, would that wealth be illegitimate? Would you consider yourself justified in claiming that wealth as unowned, provided that no one could stop you?

CNC: Interesting question… But you see, sometimes we have to accept that bad things happened a long time ago, and it would be too confusing to try to correct the injustice. Sometimes you have to let bygones be bygones.

ANDREW: So governments that were established a long time ago might have rights that we have to respect, because it would be too confusing to correct the injustice?

CNC: No. The injustice done to GLOs by forcing them to accept man-made laws (“regulations”) and to pay taxes must never be forgotten. Every day that governments usurp rights, the debt owed to GLOs grows. The voice of that debt cries out from the ground for redress, and it will be heard.

ANDREW: I’m not sure why this question just popped into my mind – why did you choose “Cain” as your code name?

CNC: The fact that you have to ask that question shows that you have been misled by the conventional description of Cain as a thoughtless psychopath. That view is a caricature, spread by religious intellectuals subservient to modern democracies. A more measured appraisal of Cain leads to the conclusion that he was, in reality, a hero.

ANDREW: Maybe you’d like to explain further?

CNC: In the Cain and Abel story, Cain is a farmer, whereas Abel is a nomadic shepherd. Cain is therefore a representative of civilization and economic progress, while Abel represents a more primitive and superstitious form of society.

Cain and Abel go to make sacrifices to God. According to extra-biblical sources, Cain comes up with an idea for making the sacrifice process more efficient – instead of sacrificing productive agricultural goods, he will burn thorns and cow dung. The resulting fire and smoke will be just as impressive, and Cain will be able to preserve useful resources. Everyone will be better off.

Abel gets angry and says that God will not be pleased. That was obviously a coded threat to go tell their father Adam (the government) and to get Cain in trouble. If Cain hadn’t done something, his goods would soon have been confiscated for the sacrifice by governmental authority, i.e. coercion. Cain was forced to take action to protect his property.

ANDREW: So you see Cain as as the first strong defender of private property?

CNC: And as the original inventor of the concept of a Pareto improvement. But he paid a heavy price for his integrity – instead of recognizing that Cain had acted justly, his family kicked him out, destroyed his reputation, and forced him to live life as a trader, moving from place to place.

Maybe you can see now why I am proud to take “Cain” as my code name.

In part 5 of this interview, Code Name Cain argues that libertarians who favor a minimal government are deluded. CNC then goes on to explain how the inherent flaws of government compel honorable men to make what are sometimes difficult choices.

Notes:

Whatever arises from a just situation by just steps is also just.  Robert Nozick, Anarchy, State and Utopia, p. 151.

A Planter in the West Indies… John Locke, Two Treatises on Government, First Treatise, section 130.

Suppose that I find the only oasis in the desert and claim it as mine. This example is due to the libertarian Israel Kirzner, ‘Entrepreneurship, Entitlement, and Economic Justice,’ pp. 405-406 (cited by Widerquist, ibid.).

The Benefite Mankind receives from [an acre of land in England]… John Locke, Second Treatise, section 43.

According to extra-biblical sources… e.g., the Cornish “Creation of the World” by William Jordan, known from a 1611 manuscript.  cf. also the Middle English Chester cycle, II, 537-540:  “Hit weare pittye… those fayre eares for to brenne… thou of hit gett ought.”

 

Part V – Dark Realities

This is the fifth installment of a six-part interview. Red indicates exact quotes from Hans-Hermann Hoppe’s 2001 book “Democracy: The God That Failed.”

ANDREW: In the last interview, you told us how GLOs in the Middle Ages were noblemen, publicly recognized as being a cut above the ordinary person. Have the rich people and corporate leaders of today also risen to the top by being natural leaders?

CODE NAME CAIN: No. Rich men still exist today, but more frequently than not they owe their fortune… directly or indirectly to the state. Hence they are often more dependent on the state’s continued favors than people of far lesser wealth… Their conduct is not marked by special virtue, dignity, or taste but is a reflection of the… proletarian mass culture of present-orientedness, opportunism, and hedonism. [73-74]

ANDREW: How did this happen?

CNC: Unfortunately, democracy has succeeded… in the ultimate destruction of the natural elites. The fortunes of great families have dissipated, and their tradition of culture and economic independence, intellectual farsightedness, and moral and spiritual leadership has been forgotten. [73]

ANDREW: It’s the fault of democracy? The noble families themselves bear no responsibility for their decadence?

CNC: Maybe the noble families should have tried harder to resist democracy, but yes – Hans-Hermann Hoppe proves in his book that democratic government always leads to welfare state socialism. The United States of today is a case in point.

ANDREW: Libertarians are in general very critical of modern democracies. Still, many think that a legitimate government could exist, provided that it is very small and only does things that libertarians think are good.

CNC: Ayn Rand, Robert Nozick, Milton Friedman, and even the sellouts at the Cato Institute have all worked hard to defend the rights of producers. However, they naïvely imagine that democratic government can be tamed: transformed into a reliable machine that will safeguard property and contracts without getting other ideas about its proper role in society.

ANDREW: Are you sure that they are wrong?

CNC: Completely sure. As I just told you, the destructive nature of government is a theorem, proven by applying the rules of elementary logic.

ANDREW: Can you explain the theorem to us?

CNC: The proof is best explained using the concept of “time preference” from Austrian economics. Draw a downward-sloping time preference curve for a given individual in the beginning of humanity…

ANDREW: Even though you might find a technical approach more elegant, you will reach a bigger audience if you explain the idea in ordinary language.

CNC: Some precision will of course be lost, but I can try… The idea is simple, yet profound. Begin by assuming that a government official is rational, and therefore acts in order to use the government apparatus to his personal advantage… [Since] he does not own [the government]… [h]e cannot sell government resources and privately pocket the receipts from such sales, nor can he pass government possessions to his personal heir… [Consequently, a] president… will use up as much of the government resources as quickly as possible, for what he does not consume now, he may never be able to consume. [24]

ANDREW: Past presidents like George W. Bush and Bill Clinton are millionaires. If your theory was correct, they would have plundered so much of the country’s resources that they would be richer – more like billionaires.

CNC: Ahh… That’s what I thought when I first read Hans-Hermann Hoppe’s book. But you see, Dr. Hoppe thinks at the level of abstract theory. You have to understand how to apply his categories to the real world.

Although Dr. Hoppe uses “president” as an example of a government official, there are many government officials, and they are all trying to plunder the government. What is more, there are official government officials, and there are also unofficial government officials, like lobbyists and campaign contributors and the presidents of too-big-to-fail (i.e. government-sponsored) banks. The plunder tally is too small if you don’t count the booty of both official and unofficial government officials.

ANDREW: Is this just your interpretation, or is it Dr. Hoppe’s, too?

CNC: Well, he could maybe have been a little clearer. But he definitely understands. For instance, he points out that it is not likely that dullards, even if they make up the majority, will systematically outsmart and enrich themselves at the expense of a minority of bright and energetic individuals… frequently it will actually be the better-off who succeed in being subsidized by the worse-off. [97] In other words, he agrees that welfare states mainly end up subsidizing “unofficial government officials.”

ANDREW: I see. Anyway, you were explaining why you think other libertarians are chasing a mirage when they strive for a government that is as small as possible…

CNC: Right. As I was saying, Dr. Hoppe’s theory is strikingly accurate. Even professors from the mainstream like Tom Ferguson and Simon Johnson admit that Dr. Hoppe is right and that U.S. government decisions are, in reality, made by lobbyists and large campaign contributors. There is also broad agreement that any given unofficial government official is not sure when “the party” will be over for the interests he represents, and so he tries to plunder as much as possible now, with no thought for the future.

Now let’s take those pro-government libertarians I just mentioned. They know that the masses are not intelligent, they know that democracy is just a theater where the unofficial government officials use coercion to steal from productive people – and then they forget it all and mindlessly accept and repeat nonsense such as that democracy is self-rule and government is of, by, and for the people [92]. They foolishly think that they can use the democratic process to redirect the unofficial government officials! Or that they can persuade the unofficial government officials to give up the benefits of lobbying and move toward a free society!!

ANDREW: So you’re saying that lobbyists run the government, the corporations they represent don’t want a libertarian-style small government – so it won’t happen.

CNC: Exactly.

ANDREW: I’d like to prove a theorem, too. Can I try?

CNC: Sure – but keep in mind that it takes a lot of practice to reason correctly about economic affairs.

ANDREW: I’ll never learn unless I try… Begin by assuming that CEOs are rational, and therefore act in order to use the corporate apparatus for their personal advantage. Since they don’t own the corporation, their incentive is to use up the corporation’s resources as quickly as possible – what they don’t consume now, they might never be able to consume.

CNC: Your amateurism is showing. The behavior you describe is impossible, since stockholders only allow a CEO to run a corporation if they are confident that the CEO will act in their best interests.

ANDREW: I thought there was lots of evidence that CEOs have been extracting much larger payments from their corporations than in the past. Are you sure you aren’t mindlessly accepting the myth that corporate governance is of, by, and for the stockholders?

CNC: Sophistry.

ANDREW: But think of how well your theory generalizes from democratic governments to GLOs! For example, bank traders at European banks like UBS deliberately bought lots of risky securities so that they could manipulate their own accounting rules and get paid large bonuses. We could call the traders “unofficial corporate officials” who cooperated with the official corporate officials in consuming the banks’ resources.

CNC: If this was really happening, then stockholders would have stopped investing in the bank in question. Unless, of course, there was government interference. That’s why it’s so important to concentrate on the flaws of democratic government.

ANDREW: Hmm… If you and Dr. Hoppe think that the problem with democracy is that government decisions are bought and sold with money, why don’t you try to fix the democracy so that it is less about money and lobbyists?

CNC: Try to stop productive people from influencing elections using their money? That’s a terrible idea – it means stifling individuals and organizations with large sums of money. It means suppressing their views about politics.

ANDREW: Is it that you want everyone to be able to express their views about politics, or is it particularly important for some people to do so?

CNC: The latter, of course. [I]magine that… the right to vote were expanded to seven year olds. [The resulting government’s] policies would most definitely reflect the “legitimate concerns” of children to have “adequate” and “equal” access to “free” french fries, lemonade, and videos. [95] Similarly, if we had democratic decision-making on a global scale, the government would probably find that the so-called Western world had far too much wealth… With these “thought experiments” in mind, there can be no doubt about [95] the negative consequences of “one-person, one-vote.”

ANDREW: So the problem is that the wrong people will end up voting. But what if only the right people vote? Would you support turning the U.S. into a dictatorship ruled by the Chamber of Commerce? Or if you prefer, you could put Grover Norquist and Americans for Tax Reform in the top spot.

CNC: The result would certainly be more farsighted, future-oriented decisions than we have today… However, you have forgotten that libertarians do not make compromises when defending liberty. My principles would compel me to oppose a government of the sort you describe, no matter how economically sensible its policies might be.

And to set the record straight, I am confident that Grover shares my idealism.

ANDREW: Since you think the role of money in democracy should not change, that must mean that you accept lobbying as a necessary evil linked to the existence of a government.

CNC: There are certain dark realities that we have to deal with while living in an unfree society.

ANDREW: Do you lobby governments?

CNC: Personally, I wish only to work, produce, and enjoy the fruits of [my] labor. However, if politics… is permitted, even [people like me are]… affected. In order to defend themselves against attacks on their liberty and property by those who have fewer moral scruples, even… honest, hardworking people must become become “political animals” and spend more and more time and energy developing their political skills. [275-276]

ANDREW: You are sometimes forced to engage in lobbying.

CNC: Yes. For example, the current meme in the investment community is that the combination of climate change and population growth will make it almost impossible to have enough food for the world by the year 2050. Farmland is soaring in price.

My hedge fund discovered uncultivated land in the African country of ***. The land did not belong to anyone, and so we tried to buy it from the relevant government. Outrageously, certain officials from *** insisted on…

ANDREW: Bribes?

CNC: … arrangements before they would agree to sell the land at a fair price.

ANDREW: Was this farmland unoccupied?

CNC: No one owned the land before we bought it.

ANDREW: But was someone living there?

CNC: There were some local tribesmen who claimed that they had a vague traditional “right” to the land. Decisive action was necessary before they stopped squatting on our land.

ANDREW: Involving trucks of men carrying machine guns…. Has it ever occurred to you that this success for your hedge fund was achieved at the cost a lot of real coercion of real people?

CNC: It has occurred to me – an unruly band of people aggressively trespassed on my land. My rights were violated and I was forced to make a substantial financial sacrifice in order to defend myself from coercion.

ANDREW: It must have been terrible… One thing that I have been wondering about – it sounds like you do not have much respect for many GLOs of today. You believe that few of them are led by productive geniuses – instead, many business leaders are instead disreputable people who lobby governments and owe their fortunes to the State.

CNC: I criticize immoral behavior whether the perpetrators are government officials or businessmen. If CEOs spend their time lobbying and being political entrepreneurs, that is bad. You need to remember that …competition is not always good. Competition in the production of goods is good, but competition in the production of bads is not. [275] As a result of “open political competition” the entire character structure of society [becomes] distorted, and more and more bad characters [rise] to the top. [275]

ANDREW: But then why are you trying to help these people dominate the world of the future?

CNC: You ask an interesting question. It’s true that a lot of current GLOs are actually looters and moochers. But trying to sort out which GLOs are legitimate and which are illegitimate would be complicated and ultimately impossible – and so why not create a society in which at least some of the GLOs in charge will be people who have earned their wealth by engaging in productive activities?

ANDREW: People like you?

CNC: Yes, like me.

In the concluding part of this interview, Code Name Cain tries to delve deep into the cognitive biases that prevent his interviewer from having a mature understanding of libertarian principles.

Note:

“bank traders at European banks like UBS deliberately bought lots of risky securities”

Yves Smith’s ECONNED, Chapter 9
 

Part VI – Certainty

This is the sixth and final installment of an interview series. Red indicates exact quotes from Hans-Hermann Hoppe’s 2001 book “Democracy: The God That Failed.”

ANDREW: You’ve explained to me how in the libertarian society of the future, everyone will be free and their rights will not be violated. However, many people will be coerced in a noncoercive way, and a lot of people will be effectively slaves in a rights-respecting manner. Some people will be effectively killed in a rights-respecting manner. Why are you dedicating your life to making this society possible?

CODE NAME CAIN: I really take issue with the way you describe things. You twist words so that “freedom” and “rights” end up sounding like they are not always good things.

ANDREW: Can you just answer the question?

CNC: If you insist – but it will be a complicated discussion. To begin, [t]he natural outcome of the voluntary transactions between… private property owners is decidedly nonegalitarian, hierarchical, and elitist [71]. After all, the “permanently” rich and the “permanently” poor are usually rich or poor for a reason. The rich are characteristically bright and industrious, and the poor typically dull, lazy, or both. [96-97]

ANDREW: You talk almost as if lower-class people were so different from productive geniuses that they form a separate subspecies.

CNC: Well, there is something to that. As Edward Banfield says in The Unheavenly City, “if [the lower-class individual] has any awareness of the future, it is of something fixed, fated, beyond his control: things happen to him, he does not make them happen. Impulse governs his behavior, either because he cannot discipline himself to sacrifice a present for a future satisfaction or because he has no sense of the future.” Thus “permanent” poverty… is caused by… a person’s present-orientedness… (which is highly correlated with low intelligence, and both of which appear to have a common genetic basis) [97].

ANDREW: Are these ideas related to your criticism of democracy?

CNC: In a democracy, a politician understands that bums and inferior people will likely support his egalitarian policies, whereas geniuses and superior people will not. [145] For [this] reason… a democratic ruler undertakes little to actively expel those people whose presence within the country constitutes a negative externality (human trash which drives individual property values down). [145]

Therefore democratic rulers tend to subsidize bums, and every subsidy always produces more of the behavior subsidized – whether good or bad. By subsidizing with tax funds (with funds taken from others) people who are poor (bad), more poverty will be created. By subsidizing people because they are unemployed (bad), more unemployment will be created. [195] As a result of subsidizing… the careless, …the drug addicts, the Aids-infected, and the physically and mentally “challenged” though insurance regulation and compulsory health insurance, there will be more… carelessness, …drug addiction, Aids infection, and physical and mental retardation. [99]

Thus we see that the welfare state promotes the proliferation of intellectually and morally inferior people, and the results would be even worse were it not for the fact that crime rates are particularly high among these people, and that they tend to eliminate each other more frequently. [185]

ANDREW: I bet you even have scientific “studies” backing up these conclusions.

CNC: Yes, research bears out my claims. Take Banfield’s The Unheavenly City, or Murray and Herrnstein’s The Bell Curve, or Seymour Itzkoff’s The Decline of Intelligence in America. Have you read them?

ANDREW: No.

CNC: Will you?

ANDREW: Maybe. The Unheavenly City at least looks entertaining, whereas The Bell Curve looks long and boring.

CNC: If you read them from an unbiased point of view and you are persuaded that many lower class people are intellectually degenerate, will you change your views on democracy?

ANDREW: No. I expect that the arguments will be full of holes, but even if I can’t find any obvious flaws in the logic, I will still treat people who live in the projects as if they are human beings in the full sense of the word.

CNC: See? This is a classic case of evading ideas that threaten your personal world view. You have a quasi-religious attachment to the idea that all human beings have some sort of metaphysical “spark” or “spirit” that gives them value, and that leads you to close your mind and refuse to take an unbiased look at unorthodox viewpoints.

ANDREW: You see yourself, instead, as understanding the world through logical deductions from objective facts and data.

CNC: No. The problem is that [t]he data of history are logically compatible with… rival interpretations, and historians… have no way of deciding in favor of one or the other [xv]. We may agree… that feudal Europe was poor, that monarchical Europe was wealthier, and that democratic Europe is wealthier still… Yet was Europe poor because of feudalism, and did it grow richer because of monarchy and democracy? Or did Europe grow richer in spite of monarchy and democracy? [Rockwell overview But there is a way out of this impasse.

The key is to rely upon a priori theory, i.e., propositions which assert something about reality and can be validated independent of the outcome of any future experience [xv]. Examples of such propositions include: No two lines can enclose a space. Whatever object is red all over cannot be green… all over… 4=3+1…. A priori theory trumps and corrects experience (and logic overrules observation), and not vice-versa. [xvi] This procedure is what Ludwig von Mises called praxeology.

ANDREW: This is fascinating.

CNC: What is more, praxeology includes similarly definitive propositions that are valid in the social sciences. For instance, a larger quantity of a good is preferred to a smaller amount of the same good; … an increase in the supply of paper money cannot increase total social wealth … Taxes… reduce production and/or wealth below what it otherwise would have been. [xvii, Rockwell]

ANDREW: So if someone does a study that shows that the Fed increased the money supply and the economy prospered, then…

CNC: Then since an increase in the paper money supply cannot lead to greater prosperity [Rockwell], we can be praxeologically certain that any increase in prosperity took place despite the increase in the money supply. Similarly, the improvement in living standards from the feudal period until today must have occurred in spite of democracy, not because of democracy.

ANDREW: How is praxeology viewed in the academic world?

CNC: Many reactions are dismissive. However, although mainstream economists refuse to recognize their debt to Mises, I am personally convinced that many of them are closet praxeologists.

ANDREW: Can you demonstrate for us how praxeology works? For instance, can you praxeologically prove to us that government regulation is always bad for the economy?

CNC: Of course – but you’ll have to conquer your math phobia and be willing to study a couple of graphs.

ANDREW: I guess I can make the effort, if it’s essential to the explanation.

CNC: Then let’s begin. Consider the following two time preference graphs. In both graphs, as the person gets richer, the person is more likely to be focused on the future and not just on immediate gratification.

The green curve represents a person (for example, an uncivilized man or a bum) who, even if rich, still may not care about anything but the present and the most immediate future. Like a child, he may only be interested in… minimally delayed gratification. In accordance with his high time preference, he may want to be a vagabond, a drifter, a drunkard, a junkie, a daydreamer, or simply a happy-go-lucky kind of guy who likes to work as little as possible in order to enjoy each and every day to the fullest. [5]

On the other hand, the gold curve represents a more mature person (for example, a productive genius) who, even when poor, does not merely focus on the present moment, but instead worr[ies] about his and his offspring’s future constantly [5].

Now I can explain why government regulation always reduces living standards. First of all, if a society is future-oriented (like the productive genius), then it will prosper. If it is focused on immediate gratification (like the bum), then it will stagnate. Time preference (whether someone is exclusively focused on the present moment, or whether they also consider the future) is the key factor that determines which societies succeed.

ANDREW: Being future-oriented is the only thing that matters? It doesn’t matter whether a country has honest people, or the freedom to discuss new ideas?

CNC: Respect for property rights inevitably leads to a culture of integrity, so your point is irrelevant. Returning to the subject, when you add government regulation to the picture, there are two effects. First, regulation interferes with private property rights. That effectively reduces people’s wealth. That makes people poorer. Poorer people are more needy, and so they are more focused on where their next meal is coming from. In other words, they are more focused on instant gratification.

ANDREW: How does the government telling a garbage company that it can’t dump toxic sludge in a river make the people in the country more focused on instant gratification?

CNC: Stop interrupting – you might learn something. The second way that regulation destroys prosperity is also important. When the government regulates people, they know that their property rights have been violated – and they also know that the government might violate their rights in the future – but they don’t know when those future rights violations will occur! So their uncertainty increases. They respond by associating a permanently higher risk with all future production [14] and become more focused on immediate gratification.

ANDREW: Suppose bank examiners go around and make sure that banks are not making dangerous or illegal loans with depositors’ money. How does this make depositors more uncertain about the future? How does this make banks more uncertain about the trustworthiness of other banks?

CNC: If you are sincerely interested in understanding the answers to those questions, you can always pick up an economics textbook. Anyway, we can elegantly sum up both of these effects of regulation in the following graph:

The first effect makes productive geniuses poorer, and so causes their time preference to rise along the gold curve, from point X to point Y. The second effect makes productive geniuses more focused on immediate gratification and so causes them to act more like bums. In other words, it leads to a rise in time preference schedules, moving from point Y on the gold curve to point Z on the green curve. The rise in time preference rates from Z to X means the society has become much more focused on instant gratification – and this rise is directly traceable to the pernicious effects of government regulation. With this rise in time-preference, the progress of civilization slows, and may even go into reverse: formerly provident providers will be turned into drunks or daydreamers, adults into children, civilized men into barbarians, and producers into criminals [15].

ANDREW: Your argument is not very convincing. It is built out of a series of assertions, and none of the assertions makes sense. The argument with the graphs is exactly the same, but with graphs.

CNC: When I argue by citing scientific evidence, you refuse to consider it. When I argue praxeologically, and produce a chain of logic that compels assent, you claim to be unable to understand the reasoning. Still, I will try one more time. If logic is difficult for you, why don’t I illustrate my point through a story?

ANDREW: Why not?

CNC: Once upon a time, there was a certain man, and he had two sons. The older son stayed at home and worked hard and did whatever his father wanted. But the younger son got bored of life at home, and asked for his portion of the inheritance. The father consented, and the younger son left. He took a journey into a far country, and there wasted his money in riotous living.

The younger son became hungry, and in order to survive, he took a job feeding hogs. But he still did not have enough food to eat, and decided to return to his father.

And he arose, and came to his father. But when he was yet a great way off, his father saw him, and had compassion, and ran, and fell on his neck, and kissed him. And the son said unto him, “Father, I have sinned against heaven, and before thee, and am no more worthy to be called thy son: make me one of thy hired servants.”

But the father said to his servants, “Bring forth the best robe, and put it on him; and put a ring on his hand, and shoes on his feet. And bring the fatted calf, and kill it; and let us eat, and be merry.”

Now the older son was in the field, and as he came and drew nigh to the house, he heard music and dancing. He called one of the servants, and soon learned what was afoot. He became angry, and refused to go inside; and so his father came out, and entreated him to join the celebration.

But the older son answered his father, and said, “I have served you all of this time, and you never killed a goat for me so that I could have a feast with my friends. But this other son of yours, who has devoured all of your money with harlots – when he came home, you killed for him the fatted calf.”

And the father said unto him. “Son, you are right. I have been a fool, and I have paid too much heed to my emotions.” And the father went inside, and took the clothes and the ring from the younger son, and cast him out from his lands. And he called the friends of his older son, and the feast continued in the honor of the son who deserved it.

ANDREW: But you changed the story! That isn’t how it ends – the father doesn’t agree with the older son. He says it is right for them to celebrate, for “thy brother was dead, and is alive again; he was lost, and is found.” And most readers assume that at that point, the older brother realizes that he has been acting like a two-year-old.

CNC: Look, I’m not like Ayn Rand or Ludwig von Mises. I don’t think that being a libertarian is incompatible with being a Christian. But since, as Mises put it, “all efforts to find support for the institution of private property… in the teachings of Christ are quite vain,” it is true that the New Testament needs to be edited a little.

ANDREW: I’m sure you have other examples in mind.

CNC: Think about how much more inspiring the Sermon on the Mount would have been if Jesus had said: “Blessed are the rich in spirit, for as they lay up for themselves treasures upon earth, so they will also lay up for themselves treasures in heaven.”

The key is to realize that since libertarianism reconstructs all of ethics… in terms of a theory of property rights [200], it is fine to believe in Christianity – provided that whenever a correct understanding of property rights conflicts with Christianity, property rights shape one’s understanding of Christianity, and not the other way around.

ANDREW: This interview has become very interesting, but I’d still like to hear your answer to my original question about freedom.

CNC: Let’s see. As I’ve been trying to explain to you, due to democracy the genetic quality of the population has most certainly declined [185]. It is in the big cities… that the process of genetic pauperization is most advanced [184]. Now you asked me how I could support a future in which everyone would be free, but not everyone would be effectively free.

ANDREW: Yes.

CNC: What you have to understand is that I believe in negative liberty, not positive liberty. Everyone, even the most brutish individual, has a right to freedom, because that’s negative liberty – but effective freedom is a form of positive liberty, and so no one has a right to effective freedom. In fact, creating a right to effective freedom actually means coercing some people into doing forced labor for others.

ANDREW: I think I’m starting to see where this is going.

CNC: A member of the human race who is completely incapable of understanding the higher productivity of labor performed under a division of labor based on private property is not properly speaking a person… but falls instead into the same moral category as an animal – of either the harmless sort (to be domesticated and employed as a producer or consumer good, or to be enjoyed as a “free good”) or the wild and dangerous one (to be fought as a pest).

On the other hand, there are members of the human species who are capable of understanding the [value of the division of labor] but… who knowingly act wrongly… [B]esides having to be tamed or even physically defeated [they] must also be punished… to make them understand the nature of their wrongdoings and hopefully teach them a lesson for the future. [173]

Now yes, maybe some of these quasi-humans will be effectively slaves in a future libertarian society – but they have no right to be effectively free, nor have they done anything to earn effective freedom. In today’s America, the government expropriates more than 40% of the income of private producers, making even the economic burden imposed on slaves and serfs seem moderate by comparison [278]. In today’s America, everyone, even productive geniuses, is unfree – whereas in a libertarian society, everyone will be free, and people who deserve it will also be effectively free. Everyone will be better off.

ANDREW: Maybe I understand now. But don’t you ever wake up in the middle of the night and wonder if there isn’t as big a difference as you imagine between you and the people you see as human trash? Don’t you ever think that maybe, deep inside, they have the same dignity as you – or worry that in your future libertarian society they will be plunged into a living hell?

CNC: Look, am I my brother’s keeper?

 

Postscript

Nietzsche… has a description… of the disgust and disdain which consume him at the sight of the common people with their common faces, their common voices, and their common minds. …[T]his attitude is almost beautiful if we may regard it as pathetic… When he makes us feel that he cannot endure the innumerable faces, the incessant voices, the overpowering omnipresence which belongs to the mob, he will have the sympathy of anybody who has ever been sick on a steamer or tired in a crowded omnibus. Every man has hated mankind when he… has had humanity in his eyes like a blinding fog, humanity in his nostrils like a suffocating smell. But when Nietzsche has the incredible lack of humour and lack of imagination to ask us to believe that his aristocracy is an aristocracy of strong muscles or an aristocracy of strong wills, it is necessary to point out the truth. It is an aristocracy of weak nerves.

G. K. Chesterton, Heretics, p. 185 (published in 1905)
 

Notes:

“As Edward Banfield says in The Unheavenly City
pp. 61-62 of that book (which Hoppe cites on p. 6 and again on p. 97).

“all efforts to find support for the institution of private property… in the teachings of Christ are quite vain”
Ludwig von Mises, Socialism, Yale University Press, New Haven, 1951, p. 418.

“how much more inspiring the Sermon on the Mount would have been”
Instead, as Mises reminds us, “One thing of course is clear, and no skilful interpretation can obscure it.  Jesus’ words are full of resentment against the rich…” (Socialism, p. 419).

Long Hoppe quote that begins “A member of the human race”
Paragraph break not in original, added for the sake of readability.
 

Journey into a Libertarian Future

By Andrew Dittmer, who recently finished his PhD in mathematics at Harvard and is currently continuing work on his thesis topic. He also taught mathematics at a local elementary school. Andrew enjoys explaining the recent history of the financial sector to a popular audience.

Originally posted at http://www.nakedcapitalism.com from November 29 to December 6, 2011, and at http://distributistreview.com

Also see Connor Kilpatrick: It’s Hip! It’s Cool! It’s Libertarianism!

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www.redmoonrising.com