Who Would Protect Us?

If there were no government police, protection services would be provided like any other. Yesterday, Tom Woods posted this video on the LRC blog. Decades of corruption and ineptitude in the Detroit Police Department, along with the failures endemic to a government-monopolized service, meant residents were desperate for protection services. So in 1995 Dale Brown founded the Threat Management Center.

Some of the highlights from the video are:

• They emphasize non-violent dispute resolution when called to a scene. To this end they rarely hire veterans, who have been trained to respond with violence. Contrast this with your local police department, who’s members frequently employ excessive force. That government police agencies routinely hire returning veterans partly explains this.
• Brown boasts that in the firm’s 18-year history not a single client has died at the hands of one of his agents. Again, contrast this with the record of most government police agencies. All too often, calling the police can be a deadly experience, even for those meant to be protected by the call.
• The company serves approximately one thousand clients from affluent Detroit suburbs, along with nearly five hundred from within the city’s impoverished neighborhoods. Brown explains that he’s able to provide his service free of charge to those who cannot afford to pay him because he earns enough from those who can.

This last point is particularly insightful because it may be applied to so many other issues. Consider health care services, private highways, or any other function now co-opted by the State. Issues of cost, particularly among progressives, are one reason many are skeptical that society could function without a coercive government. But as Brown has shown, cost isn’t really a factor, given the right environment.

Certainly altruism on his part would explain how this is possible, but other forces are at play here. Even someone less inclined to philanthropy would benefit from a similar business model. One of the first things that comes to mind is the marketing strategy involved. Offering free services is a great way of advertising, and word of mouth is great advertising.

But more importantly, perhaps, is the fact that most people don’t spend their entire lives in poverty. Even in this tightly regulated, centrally planned economy people manage to move through the various social strata. It’s entirely likely that many of those now enjoying complimentary service will one day be able to pay. Having already established a relationship with TMC, it’s difficult to imagine these people will suddenly abandon their services in search of a competing firm, assuming that Brown and his company are still able to maintain superior service at an affordable price.

Again, this same approach may just as easily be applied to the health care industry. Those wealthy enough would pay, while those who could not would still enjoy the same, or at least some, care. It’s also safe to assume that in an environment where more economic freedom is available, fewer people will find it difficult to pay for such essential services.

A Ticket to Ride

This is why we need the government to help with mental health services.

Without the state providing care to psychiatric patients, hospitals would just give 1,500 patients one-way bus tickets and wash their hands of it. Oh. Wait. This is a government hospital….

New Vs. Old Media

Listening to the radio on my morning commute the other day, I heard two interesting stories.

The first one was about Gerald Conti, a former teacher who resigned his position in protest, after discovering that his profession “no longer exists.” The second story was on the MSNBC commentary in which Melissa Harris-Perry suggested that “we need to break through the private idea that kids belong to their parents [...] and recognize that kids belong to whole communities.”

Of course this is further evidence that the state is a wholesale destroyer of human creativity, and that it claims a collective ownership of human beings. Both are disgusting. But what I found interesting about the radio coverage is that it was at least a week late. Both of those stories had been out for days, and the hosts mentioned both had already gone viral on the Internet.

So just like the television news repeats what the newspapers printed that morning, the radio repeats what the Internet reports, only days later. It’s yet more evidence of the changing nature of news media, and an indicator of how powerful the digital age is becoming.

Defining Terms

The long-awaited debate between the economic views of Stephan Kinsella and Robert Wenzel regarding so-called intellectual property (IP) took place over the weekend. If you can call this a debate. Running nearly two and a half hours, the podcast consists mostly of Kinsella trying to explain his position while Wenzel does his best to “crush” his guest. If you have time to kill, go ahead and listen.

Here are a few points that would greatly help the pro-IP crowd better understand the argument against IP. For a more in-depth explanation, see my Mises Daily on the subject.

Wenzel and some of his readers are misunderstanding the importance of economic scarcity inn determining what can be owned. The definition that he seems to be operating under and which he only offered four days after the debate, is the common definition. This morning he posted this:

“The dictionary definition of scarcity is:

1. inadequate  supply, dearth, paucity
2. rarity or infrequent occurrence (sic)

Certainly, my example of the ‘Drudge formula’ meets these common definitions of scarcity.”

Wenzel uses a hypothetical scenario in which he discovers a special formula to get on Drudge. His argument that if only he and one other person, B in this case, know the formula then it’s scarce. This comes from not understanding that economic scarcity is about more than just quantity. It’s related to whether a good is rivalrous or not.

Kinsella tried to explain this part about rivalrousness but Wenzel talked over him and then conflated rivalrous with competition. Apparently he assumes that economic rivalry is just a synonym for competition. The Wikipedia entry for “rivalrousness” explains it thusly:

In economics, rivalry is a characteristic of a good. A good can be placed along a continuum ranging from rivalrous (rival) to non-rival. The same characteristic is sometimes referred to as subtractable or non-subtractable.^[1] A rival (subtractable) good is a good whose consumption by one consumer prevents simultaneous consumption by other consumers.

Son in the case of the Drudge formula, while only a few people have access to it, it’s still not economically scarce. This is so because all who know it can use the formula simultaneously without preventing one of the others from doing so. This seems to be one of the most difficult parts of the debate to understand.

There are certainly other problems with Wenzel’s and others’ position, namely, why is a third party bound to the terms of a contract he is not party to? Or, how does one enforce the property rights in non-physical things without encroaching on the rights of someone else to physical property? Any concept of IP that ignores these questions is intellectually bankrupt.

The ultimate cause of this confusion comes from not defining terms, or committing the logical fallacy of equivocation, both of which Wenzel and many of his followers are guilty of.

Separate the State from the Banks

As a rule, progressives place little trust in market institutions and are always the champions of government intervention in the economy. This they argue is the only way to protect consumers, ensure competition, and protect the little guy from the greed and excesses of capitalism. Among the favorite targets are banks and the financial services sector in general. Without strict regulation from the state, they say, there would be no limit to the corruption and fraud committed by Wall Street against the folks on Main Street.

The fact that the financial services sector is the most heavily regulated industry in the world seems to make difference. If such government regulation worked as we’re told it’s supposed to, banks and other financial institutions should be the most consumer-friendly and beloved of all businesses. And yet they’re not.

This should come as no surprise, however. Given how tightly controlled the market is, there is little room for firms to adapt to consumer preferences, and the larger institutions have virtual control over the political and bureaucratic processes that direct the industry. Furthermore, the banking system, through fractional reserves, makes establishing business along the lines of a more transparent nature next to impossible. As a result of the state’s intervention, banking has become less about providing a valuable service, as Jeffrey Tucker explains:

There was a time when banks operated like normal businesses, performing a service in exchange for payment, while clearly delineating what part of people’s deposits were at risk (and, therefore, paid a premium) and what part were security (and, therefore, a service to be paid for). But central banking and fiat paper money have confused the issue to the advantage of the financial system, but to the disadvantage of depositors….

This backwards, bankrupt system is what allows the expropriation of Cypriot depositors (or at least the rationale for such a thing) and those of other nations whose governments are so entrenched in the financial system, and so desperate to remain attached to their hosts. In order to truly bring the sort of outcomes progressives claim to want — consumer protection, honesty, and fairness — they should divest themselves of the notion that the state is the only means to achieve such ends.

Again, if intervention could bring about these outcomes, we ought to see the banking industry as the most popular of all. Instead, we find that the most unregulated (at least as far as the state is concerned) markets are the most friendly to consumers, and the most responsive to their needs. This is because the market does regulate itself, to an extent far beyond any government planner can.

Finally, something that always seems to emerge in discussions about the role and legitimacy of government is a rather awkward claim: we’ve never had a truly free market (usually expressed as “that’s never been tried”) along with a warning of how terrible life would be like in a free market. This dissonance is patently absurd, especially coming from individuals who are driven almost entirely by empirical evidence. It’s high time to divorce the marriage between the state and the banks, and give the market an opportunity to do what the state can never do: serve humanity.