Would you buy a $29,000 a year health insurance plan?

The tiny town of Corte Madera, CA, makes up for what it lacks in size and population, roughly 4 square miles with 9,425 residents, in its exorbitant government compensation packages. City government has approximately 43 full time employees with the average compensation package coming in at over $170,000.
That means every man, woman and child in Corte Madera pays $778.41 to fund just 43 positions.
A disproportionate number of these employees are firefighters. Amazingly, it’s routine for fire chiefs in California to earn well over $275,000 in total compensation.

For instance, the fire chief in nearby San Rafael, population 57,713, earned $294,119.45 in 2012 total compensation, but it is quite surprising to see that such a small town employs three Battalion Chiefs with compensation packages around $294,000, $293,000, and $275,000. Then there’s the Director of Emergency Services who raked in over $313,000 in compensation in 2012.

This is just some of the information that is now available on TransparentCalifornia.com, a database of over 2 million public employee records that is searchable by name, job title and jurisdiction. Transparent California is provided by the California Public Policy Center as a public service and allows citizens to find out what public employees actual make, not what they or others claim they make.

Inflated compensation packages in Corte Madera don’t just come from high salaries, but from tens of thousands of dollars in benefits that are often hidden from the public eye. In Corte Madera, several city employees received health insurance policies that cost the government $20,894 a piece. This is hardly an isolated incident.

In the Contra Costa Community College School District, over 150 employees are receiving medical plans that cost over $25,000 a year. The school district’s highest priced plans top out at over $29,000 a year!
This hurts taxpayers in two ways. The first is obvious — funding for $20,000+ premiums comes in part from taxes collected from people without health care of their own. The second effect is more subtle, but well worth noting.

When you multiply sky-high premiums across by the one million-plus health insurance plans provided by California governments, the result of this systemic overpaying for health insurance is that the price of health insurance is driven higher than it would have otherwise been.

This phenomenon is similar to how increasing the demand for higher education through federal aid and student loans has precipitated a dramatic increase in tuition over the last several decades. The fundamental part of the demand for a good, any good, is the value consumers place on it; as demonstrated by the amount of money they are willing to part with for purchasing said good.

When consumers become less sensitive to the cost of a good, the natural tendency of producers will be to increase the price, as producers are in the profit-maximization business! A crude way of explaining how the price of a good is determined would be to say that producers will charge as much as the market will bear. A market consisting of actors who are funded with other people's money are, on average, going to be willing to pay more for the same good than those who are using their own money.

Given the number of government employees purchasing healthcare plans in our real world economy, it is safe to conclude that the cost of healthcare plans are going to continue to rise much higher than they would in a pure market based economy. Just as college tuition's dramatic increase in price would grind to a screeching halt if consumers had to bear the full cost (eliminating federal aid and government loans) the same principle applies in this case. The astute reader may note that the current tax structure governing employer-provided healthcare (for all employers, not just government) contributes to this effect as well - increasing the demand for a good by reducing the degree of price sensitivity demonstrated by the purchaser.

The problem is much greater than singling out the handful of agencies that are the worst offenders, however. As Dr. Thomas E. Woods documented in his book, Rollback, the artificially inflated costs of a good make us all poorer in both direct and indirect ways. Not only are we, on the margin, less likely to purchase as much health care coverage as we otherwise would have, this de-facto subsidy in the form of a government purchaser reduces the need for the producer to compete in the normal market-based ways — improving the quality of the product offered and/or lowering the price. This means that the quality of healthcare that presently exists is of a lower quality than it otherwise would have been.

What Transparent California reveals is that taxpayers pay twice — initially by paying for the public employee's compensation and again when they go out to buy their own good (in this case, health insurance) where they are met with artificially inflated higher prices.


Libertarianism taken to its logical conclusion


Professor Walter Block’s Defending the Undefendable is mandatory reading for the libertarian. It’s extremely brief, given the scope of material it covers, easy to read, straightforward, and accessible to the average layman. By using sound economic principles and applying them consistently and vigorously to the most socially stigmatized aspects, Professor Block reaches some startlingly conclusions. Conclusions that initially sound repulsive, but once the clarifying lens of economics is applied thoroughly, we see these matters in a much different light. As Hayek said in his review of this profound work, even if you find yourself disagreeing with Professor Block’s conclusions, it will do you much good to read this book anyway. Professor Block is at his finest when drawing attention to the inherent logical contradictions in so many of the arguments advanced for government intervention:

But the strongest argument against governmental regulation of advertising is not the empirical one showing its dismal record to date, strong though that may be. The strongest argument is the logical one. The reasoning employed by those who want governmental regulation contains a self-contradiction. On the one hand they assert that the American people are unalterably gullible. They must be protected because, left to their own devices, they become victims. They can be made to think, for example, that if they use a certain brand of aftershave lotion, they will end up with the girl in the ad. On the other hand, the argument assumes that the boobs are smart enough to pick political leaders capable of regulating these sirens. This is impossible.

One of the most important consequences of Professor Block’s (successful) defense of the pimp, the prostitute, the litterer, and so on, is that the things we revile about these types of characters, namely the violence, abuse, and other forms of harm associated with them, are revealed to be a consequence of the conditions in which government interventions has created for them. That is to say, the violence that comes to mind between the pimp and prostitute is exacerbated, if not completely caused by, the government prohibition of this voluntary activity. Professor Block’s defense of the litterbug is a perfect illustration of revealing the true villain is not the litterbug, but once again, the conditions created by government intervention:

In the medical practice, on the other hand, littering cannot be tolerated. Operating, consulting, or treatment rooms must be sanitary, well-scrubbed and free of debris. Failure to adopt a strong anti-litter campaign here would involve the administrator of the hospital in financial failure, as it became known that his institution was unsanitary.

In the case of consumption, most restaurants, for example, do not pursue anti-litter campaigns. There are no signs on restaurant walls forbidding the dropping of forks, napkins, or bread crumbs. A restaurant could prohibit litter, but it would lose its customers to other establishments.

What these seemingly disparate examples have in common is to illustrate that in the market, the decision of whether and how much litter to allow is based ultimately on the wishes and desires of the consumers! The question is not treated simplistically and there is no general outcry to “get rid of litterbugs.” There is rather, a careful weighing of the costs and benefits of allowing waste materials to accumulate.

After some hypothesizing about what private ownership of all public land would look like, Block concludes:

In the light of the inflexibility of the government, and its apparent lack of interest in accommodating public tastes, how is the litterbug to be viewed? The litterbug treats public property in much the same way he would treat private property if he were but free to. Namely, he leaves garbage around on it. It has been demonstrated that there is nothing intrinsically evil about this activity, and that but for governmental calcification, it would be as widely accepted in the public arena as it is in the private. It is an activity which should be regulated by people’s needs, not by government fiat.

You know when you are getting gushing praise from both F.A. Hayek and Murray Rothbard you have done something pretty spectacular. Any libertarian who wishes to pursue that system to its logical conclusion owe it to themselves to grapple with the arguments put forth in this libertarian masterpiece.

Reviewing God of the Machine by Isabel Paterson



God of the Machine is a book I struggled with. There can be no doubt that Isabel Paterson is a deep thinker and contributes much in the way of political theory. However, I found the prevailing theme of this work – comparing society to a machine, paying specific attention to whether the flow of energy powering the machine was moving in a beneficial or harmful direction – to be a bit overwhelming. It’s not that I have any problem with the metaphor per se, it just feels like Ms. Paterson is almost acting as if it isn’t a metaphor at all, but an explanation of historical events and society in general. I’m not sure I agree with her assumptions, but the biggest problem I had was the consistent and repeated attention given to that theme. It wasn’t particularly enjoyable from this reader’s perspective and after reading the first 8 chapters I had enough. At that point I decided to skip ahead to the most highly cited and praised chapters, Chapter 20, "The Humanitarian with the Guillotine” and Chapter 21, “Our Japanized Educational System.” Both are brilliant on their own merits, and coincidentally pay much less attention to the machine metaphor than any other part of the book. Here’s one gem to give you an idea:

The government is thus supposed to be empowered to give “security” to the needy. It cannot. What it does is to seize the provision made by private persons for their own security, thus depriving everyone of every hope or chance of security. It can do nothing else, if it acts at all. Those who do not understand the nature of the action are like savages who might cut down a tree to get the fruit; they do not think over time and space, as civilized men must think.

Reinvigorated by how much I enjoyed these two chapters I read Chapters 22 and 19 only to find myself struggling with the same issues that I found in the first half of the book.

I think the most important point to take away from my reading is that if you read any of the more popular quotes, like the one above, that almost exclusively come from Chapters 20 and 21, be prepared that those chapters are not representative of what the rest of the book is like. That’s not to say that the book isn’t good or that some people won’t enjoy it very much. I didn’t. I found it to be a bit boring, with many pages devoting to discussing historical events in a way that struck me as scattered and not very interesting. One of my biggest issues was the machine metaphor theme that I felt was overall misguided, extremely distracting, and treated too literally at times. For instance, “Private property, money, freedom, engineering, and industry are all one system; they are the components of the high potential long circuit of energy.” or when discussing the fall of Rome:

The structure of the republic was vertical and its source of energy internal. It collapsed from the horizontal drive of an overwhelming current of energy from without. The mechanism of the empire operated horizontally, by a centripetal intake of energy. Given the existent factors, it was capable of wide extension; but its continuance called for positive resistance to the agencies of government from the peripheral parts. It was really maintained by the residual separatist tendency of the component nations.

So be prepared for a tremendous amount of the above in this book, and if you find that style of prose compelling, you will most certainly enjoy God of The Machine. I did not, but the chapters on humanitarianism and education contain amazing passages that are rightfully cited in many other libertarian works that address the respective issues.


You should be a subscriber of The Independent Review

For so many reasons. Their latest issue is chock full of brilliant work, as usual, and I feel compelled to share with you this except from Daniel Klein’s The Improprieties of the Pretense of Knowledge:

To omit interpretation and judgment from our sense of knowledge, however, is
to presuppose that interpretation is singular and fixed. It is to presuppose symmetric
interpretation. And if interpretation is singular and fixed, then there is no concern
with judging among interpretations. Judgment matters only if interpretations
are multiple.
The flattening of knowledge down to information, which I call “flat-talk,” gives
the false sense that the theorist has or can have a composite master interpretation that
subsumes the interpretations of those in the system he studies. When economists
practice flat-talk, they make it seem that more and better knowledge is merely an
informational problem.
An interpretation is “right” only in the sense that it is better than the relevant
alternative interpretation. It is not “right” in the sense of being final or definitive. But
once the government starts to act on an interpretation, that interpretation tends to
become ossified. Even if the government seizes on a fairly good interpretation of what
is going on “now,” it is likely to cling to that interpretation long after such a view
should have been superseded. Governmentalization of interpretation tends to regiment
social affairs and to repress the evolution of interpretation.

But the farce crescendos in our highest political superstitions. Flat-talk also
flatters the ordinary person as someone fit to know what policies to favor and whom
to vote for. Thus, flat-talk tends to go with social-democratic sensibilities, as when
Donald Wittman (1995) argues that democracy is efficient.
Adam Smith, however, spoke of the ordinary fellow as “being unfit to judge
even though he was fully informed” ([1776] 1981, 266). We might ask Smith: But if
the fellow is fully informed, how can he be unfit to judge? Smith’s answer is that “his
education and habits” leave him unfit to judge—that is, his portfolio of interpretations
and his judgment preclude him from judging well. The chief problem, then, is
not a lack of information. By flattening knowledge down to information, Wittman
made the systematic failings of democracy seem to have disappeared.
Flat-talk plays to deep-seated yearnings for a sense of common knowledge and
common experience, a universal human weakness. Hayek (1979, 1988) wrote of a
concurrence between the intellectuals’ pretense of knowledge and certain primordial,
Upper Paleolithic instincts possessed by humans in general. The concurrence between
intellectual hubris and rude instinct makes a tacit alliance against the enlightened
sensibilities of liberal civilization.

Now imagine this comes from an article that contains a Sherlock Holmes sketch, an explanation of why Larry David and Seinfeld are so funny, and somehow manages to come in at under 10 pages. Ya, color me impressed.


Book Review: The Conscience of an Anarchist

This book has me quite excited. It could easily be the Economics in One Lesson for traditionally leftist issues such as social justice and welfare. What I mean by that is it where Economics in One Lesson radically changed the way people viewed the role of the state in economic matters, The Conscience of an Anarchist has the potential for awakening those who care deeply about poverty, social justice, equality before the law, etc. to recognize that these most worthwhile goals are more likely to be realized under a stateless society, than via their traditionally preferred vehicle of implementation, the State. And more profoundly, the State actually creates or exacerbates the very problems that it is supposed to be solving.

The author of The Conscience of an Anarchist is Law Professor Gary Chartier. I don’t know too much about him, but just by reading the book you get a sense he was originally a leftist who cared so deeply about leftist issues, and why they never seemed to improve no matter how much government was thrown at the problem, he started questioning the State itself, and ultimately found himself as an anarchist. Or to be honest, maybe that’s just what happened to me and I’m projecting a bit, but it sure feels that way!

The book is brilliantly constructed, and opens with a most appropriate reminder of what anarchy is, and perhaps even more importantly, what anarchy is not. Chartier defines the idea of anarchy as, “the conviction that people can and should cooperate peacefully and voluntarily.”
From here Chartier proceeds with the 6 chapters that comprise the book, each dedicated to a separate reason as to why he is an anarchist. The first one:
I’m an anarchist because I believe there’s no natural right to rule. I believe people are equal in essential dignity and worth, which means, in turn, that they have equal moral standing. That makes it hard to justify giving some people— those who rule the state and those who enforce rulers’ decisions— rights that others don’t have.
Chartier goes on to elucidate this concept further, and to most libertarians, it is the bedrock of their opposition to the State. I certainly agree with everything he has to say on the matter, but it is, sadly, unlikely to convince most people unless they are already predisposed to liberty. Which doesn’t seem to be nearly as large a percentage of the general public as I would have thought or hoped. Much more effective is a demonstration of how the State harms, followed by examples of viable alternatives that would arise in its place – virtually all of which would be superior than the existing State programs. Thankfully, this process starts in the very next chapter!

Chapter 2 focuses on a brief attempt at making the case that the State isn’t the only method to provide the various services it is tasked with – defense, infrastructure, courts/law, and so on – and offers some rebuttals against common objections to a stateless society. On defense:
One common response is that, without the state, volunteer or professional peace-keepers could end up at each other’s throats. Thus, statists say, an overarching structure is essential to prevent violent encounters between armed factions. On its face, this claim doesn’t seem entirely plausible. After all, there’s no world-state overseeing the behavior of individual countries. But most aren’t at war most of the time. In view of the costs of violence, and because people are more likely than not to adhere to norms mandating peacefulness, an overarching authority with a monopoly of violence doesn’t seem obviously necessary to keep aggressive acts from happening.
A really critical part of this chapter is a listing and brief description of the various historical examples of a free market solution to traditional State functions. He cites medieval Iceland and Ireland, merchant based law in the Middle Ages and Renaissance, as well as more recent examples such as Shasta County, California, the Internet, and the fact that hundreds of different nation-states interact with one another despite the lack of a single, all powerful arbitrator of disputes or set of laws governing them.
Chapter 3 is where the book really starts to demonstrate its potential to convince Leftists of the benefits of a stateless society. A very topical theme in America at the moment is of class warfare, and the Left, specifically, is extremely skeptical and concerned about the power of big business exploiting the consumer. All these concerns are justified and quite valid. Chartier takes a clear look at what allows for big business privilege and finds a common denominator in all scenarios – the State. It is the State that makes elites, that empowers big businesses with special privileges, that grants bailouts, and in a wide array of examples enacts policies that specifically hurt those worse off.

As a well read libertarian I can say that almost this entire book wasn’t necessarily new material for me. By far its biggest appeal was the style and framing of the various arguments. However, when Chartier attacks hierarchies and the corporate form itself, as an exploitive State-created, organizations, this was all new to me. He makes some very interesting points about how the State increases the difficulty and cost of running your own business, while grants enormous advantages to large corporations.
The end result, in Chartier’s view, is the creation of larger, more inefficient hierarchies that would otherwise be unable to sustain their size. You can feel the personal resentment towards the corporate structure and the people forced to work there, as you continue on. There is no denying the validity of Chartier’s conclusions as he follows the effects of the State all the way towards their logical conclusions. Justly addressing the many indirect and often overlooked ways State action impoverishes the ordinary person, at the expense of the elites:
And, without the state’s interference, as I suggest in the next section, the cost of living for ordinary people would be lower, just like the costs of starting a new firm to replace a failed one, so the risks associated with being out of work would be lower, too. Without building codes and zoning regulations, housing would be cheaper and out-of-home worksites could be located closer to people’s residences. Without tariffs and “intellectual property,” consumer goods would be less expensive. Without corporatist regulations and subsidies, resources would be spent more efficiently and prices would be lower. Without taxes, people would have more disposable income. In short, without the state, people would find it easier to start businesses. And with lower living costs, it would be easier to save for rainy days and easier to pick up the pieces if things didn’t go well, so assuming the risks associated with starting a business could be less stressful. And it’s hard not to think that this would put indirect pressure on hierarchical behemoths to change the way they operated.
Chapter 3 closes with the observation of the fact that contrary to popular belief, the State does not help the poor, and, in fact, harms the poor while enriching the elites. Chartier emphasizes what I believe to be one of the most profound and irrefutable critiques of the theory of government:
The fact that the state serves the interests of the elite while frequently disregarding or undermining the well-being of workers and the poor is not an accident. As long as there is a state, it will be vulnerable to lobbying and manipulation, and the wealthy will be best equipped to lobby and manipulate.
I have yet to seen this simple, yet devastating, insight refuted. It would appear to totally demolish the argument for government on the belief that it both helps the poor, and prevents elites from gaining power and exploiting the ordinary worker. Both theory and an abundance of empirical data have demonstrated the exact opposite is true.

Chapter 4 turns the spotlight on war and empire building. We are presented with the stark reality that States enable mass murder on a scale that would otherwise be impossible. Wars expand the role of government and allow for the destruction of rights and civil liberties. Wars break up families. And on and on. Chartier dutifully notes all the various aspects of war and empire building that destroys free societies and engages in immoral behavior the likes of which non-state actors seem incapable of. In a weird sense, I see this as the least effective chapter of the book, mainly because of people’s ability to totally shut off their morals and reason when discussing the concept of war. I think Dr. Robert Higgs treatment of this topic is the best I’ve seen at awakening people who are in such a slumber, to the absurdity of defending such an institution, and the true nature of why wars are fought and who benefits from them.
One of the more intriguing insights in this chapter is the recognition of the effect militarization has on society as a whole, specifically when police are becoming more and more militarized. Both in the institutional sense – military weaponry, tactics, approach etc – as well as the officers themselves, some of which are actually ex-military. Chartier notes:
A further problem: many people who leave the military become police officers…it’s too easy for cops to treat ordinary people like enemies, and some kinds of military experiences can reinforce this tendency. Military organizations and high-pressure combat-linked environments can encourage the dehumanization of perceived enemies. And people can bring their histories with them into civilian life.
Chapter 4 closes with a reminder that anarchy is not utopia, undoubtedly there would still be violent acts of all kinds. There just couldn’t be so much of it, on such a massive scale, without the State.

Chapter 5 is my personal favorite of the book. I think this is where Chartier really shines in driving home how the core social justice type values are assaulted by the State, whereas they would be infinitely better served in a stateless society. Criminal law under the State is an abortion. It is an archaic throwback to the time when crimes were defined as affronts against the King, as opposed to only legitimate concept of crime – when one party directly harms another. When there is no victim, there can be no crime. Unless, of course, you find yourself with the grave misfortunate of leaving in a society that criminalizes behavior the Divine Ruler deems unacceptable:
The justifications often offered for the criminal law often feel like after-the-fact rationalizations for practices in which the state intends to engage whether they’re justified or not. Practices inherited from the era in which criminal law was unequivocally concerned with offenses against the king have continued long after the end of absolute monarchy and the discrediting of the notion of the divine right of kings. But the state does trot out justifications for these practices.
These after-the-fact justifications are retribution and deterrence. The concept of retribution is an ill-conceived justification for a moral system of law as it is based on a desire for revenge. It is restitution – the act of making whole – that is the bedrock of justice. Chartier notes the absurdity of basing a system of justice on retribution when he writes, “retributive punishment doesn’t benefit victims; harm to one person does not as such constitute a genuine benefit to someone else in any way. No matter how much you’ve hurt me, I’m not objectively better off because you’ve been harmed, by me or by the state.” For those interested, Bruce Benson’s The Enterprise of Law is an indispensable primer on this subject.

Chartier’s comments on the inhuman nature of deterrence and how it treats people like objects are particularly brilliant and eye-opening:
Deterrence also seems morally troubling for other reasons. For instance, if deterring serious harms really were an independent justification for using force, it might be acceptable to impose horrible penalties for minor harms if doing so seemed likely to prevent their repetition. Similarly, it might be acceptable to frame and even execute people known to be innocent in order to prevent future harms. If we believe doing these sorts of things is unreasonable, we have good reason to reject deterrence as an independent source of justification for using force, since, if it were such a source of justification, these kinds of choices would be acceptable.
If that doesn’t make one recognize the inherently unjust nature of the so-called criminal justice system of the state, I don’t know what will. Chartier highlights another consequence of a criminal justice system that is built around criminalizing behavior the State disapproves of, rather than providing justice as properly understood. And this is the wake-up call I believe (hope) will resonate loudly with so many of those who claim to be concerned with equality, social justice, and the like:
Punishing conduct because it violates the law, rather than because it’s demonstrably harmful in any particular case, makes it easy for the state to impose penalties for behavior that someone else—someone who’s not directly affected—happens not to like. The criminal law provides another context in which the state can subsidize. Decent communities in stateless societies doubtless wouldn’t have much time for the moralizers. But, in a community in which people really did want to harass others of whose lifestyles they didn’t approve, the would-be harassers would have to bear the cost of harassment themselves. By contrast, being a moralizer is cheap if the state’s on your side…
You can indulge your taste for seeing other people harassed in virtue of their religious practices, their sexual habits, the substances they consume, or anything else you happen to find distasteful, simply by persuading the state to do your harassing for you. You can vote for or lobby in support of measures that the state pays for by dunning everyone who pays taxes. You don’t have to worry about the cost of harassing others if those costs are unwillingly shared by everyone from whom the state can exact tribute.
Yes! Thank you. Say it again, louder. The state amplifies injustice. That’s all it is, all it has ever been. A mighty weapon of force. I do not know how love, peace, tolerance, and equality can be brought about through force and violence. But I can imagine how oppression, discrimination, incarceration, and so on can be inflicted on a mass scale that way. And this is exactly what we see. At its best, democracy is nothing more than tyranny of the majority. Sure there will always be people and behaviors that are undesirable. And while I don’t doubt the intentions of those who advocate for the State to end racism, discrimination, poverty, etc. It simply cannot do any of those things. And at some point, we need to acknowledge the results of our actions, not merely the intentions. And the historical record is perfectly clear on this, the state oppresses. Even in the instance of slavery in the United States, the State actively resisted the sociological changes attempting to end slavery as evidence by the Fugitive Slave Act – which punished anyone found to be aiding runaway slaves. The state has always been a lagging force on social issues. See, for instance, gay marriage and medical marijuana. Eventually these things will finally be legalized, but when they are all it will be is another example of State created and enforced injustices, finally, mercifully brought to an end thanks to an overwhelming shift in public opinion. To praise the State for this is misguided, to say the least.

Chartier turns his lenses towards policing services and, unsurprisingly, finds a host of systemic problems. After documenting the devastating harms of prohibition, the countless instance of police abuse, and the more recent institutionalized resistance against citizens filming police, he concludes:
These recent stories of out-of-control violence are not stories about “bad apples.” That’s the way apologists for the state and for its police forces like to frame things. But the basic problems are systemic. They result from giving police officers relatively unfettered power to use force and from the culture of violence that pervades many police departments. Suppose you’re driving somewhere, and notice a police cruiser in your mirror. Suppose it stays behind you as make multiple turns. Are you likely to feel relieved that you’re the beneficiary of special protection from the heroes responsible for keeping us safe? Or do your stomach muscles tighten as you look nervously— while trying not to call attention to yourself— for a way to escape?
He also briefly touches on the subject of the inherent problems with tasking a monopoly firm with policing itself. As this book is more of a call to action than a thorough exploration of all the topics discussed, I again strongly recommend anyone who is interested in exploring more substantial critiques of government provision of courts, law, and police to check out The Enterprise of Law. I don’t think you need to be an anti-govt radical to recognize the validity of the question, “Who Will Watch the Watchmen?” and be concerned about a system that employs one monopoly agency that has the power to tax, to be responsible for policing its own conduct.

Chapter 6 concludes the book with a call to action. Explore the theory of liberty more deeply. Educate yourself and those around you. Try to live in a way that is as independent of the State as possible. Chartier declares that, “Anarchy is ours to create.” Indeed, it is. So what are you waiting for? Get started by reading this book today!


Book Review: Delusions of Power by Robert Higgs

The Independent Institute has released a new volume, Delusions of Power, by Dr. Robert Higgs which critically examines the state, war, and the economy. The volume is a sweeping indictment against the State on all fronts, beginning with the theoretical justification (or lack thereof) for a state, to a penetrating analysis of the success or failure the State has achieved in providing its alleged services of "protecting rights, life, and property” of its citizens, to its economic impact, the effect of war, and much more.

In Part I, Dr. Higgs exposes the various narratives used to commonly justify the State as mere propaganda, unable to withstand the harsh light of critical scrutiny. In Chapter 1 he demonstrates that the argument of man’s fallibility as a justification for the state is nonsensical and self-contradictory as any legitimate failing of man’s character, knowledge, and so on, is only magnified when he is vested with the power of the State. Chapter 2 asks if the rationale for government is similar (or identical) to the rationale used for slavery, providing specific historical arguments used to defend the existence of slavery, and contrasting them to the arguments we hear today when someone acknowledges the failings of the State, but is resistant to any proposals of a stateless society.

Chapter 3, Democracy and Faits Accomplis, Dr. Higgs exposes democracy not as a system designed to be responsive to the wishes of the people, but rather, one that lacks any effective means to remove or prevent policies that the people disapprove of:

The great problem is that, by that time, it may be impossible to reverse the outcomes the rulers have brought about. Wilson was not elected in 1916 to plunge the nation into the Great War. Roosevelt was not elected in 1932 to impose the New Deal on the country. Nor was he elected in 1940 to maneuver the United States into the greatest war of all time. Yet, in each case, the president did the opposite of what he had promised to do, and the people were left with no recourse. The world of 1919, the United States of 1936, and the world of 1945 — each was so massively, so irrevocably altered from the preceding status quo that any genuine restoration of the previous conditions was unimaginable. Like it or not, people were to a great extent simply stuck with what the deceitful politicians had done.

Chapters 6 and 7 work in tandem to demonstrate how an economic (or any other type) of crisis, either real or perceived, virtually always results in an increase in government’s size and scope, that never returns to its pre-crisis size. Chapter 6 presents and then abruptly demolishes 12 commonly trotted out justifications for the increased government action during the period of crisis. Chapter 7 looks at the historical record and presents an overview of the “ratchet effect”, which demonstrates how government expands during a time of crisis, and how the subsequent retraction of these newly created crisis powers is always incomplete, leaving the government much larger than before the crisis hit. Higgs notes, “Attempts to eliminate or diminish emergency programs run up against a fundamental principle of political action: people will fight harder to retain an established benefit than they will to obtain an identical one in the first place.”

Higgs uses the term, “iron triangles”, to describe the alliance of government bureaucrats, congressional oversees, and private sector beneficiaries that benefit from the newly created crisis-time powers, and it appears to be an apt metaphor:

These arrangements are called "iron" because they are so difficult to break. Their beneficiaries have great incentive to fight for the retention and even for the expansion of the triangle's activities, whereas the general public rarely has much incentive to fight against them, even when it is aware of them, because the public burden per capita is normally too small to justify anyone's expenditure of much time or effort in the requisite politicking.

Part 1 concludes with Chapter 8, “War is Horrible, But…”, an appropriate attack demolishing 14 morally repugnant, yet disturbingly commonplace, justifications for war.

Part II Closer Look at Key Actors and Events, is where Dr. Higgs shines as a historian. There is a tremendous amount of exciting, fascinating, and rich historical analysis of key events that serve to illuminate just how the US government grew so far beyond its original formation and the confines of the Constitution. There are chapters exploring virtually unknown key political actors who via corruption, subterfuge, and all the other various unsavory aspects of the political process alter the course of US government in unimaginable ways. If you ever suspected that Democracy was nothing more than a cover for an extremely small group of political elites to rule, the historical evidence put forth in this section will validate that suspicion in a way you may not have ever dared to imagine.

One of the most profoundly relevant and timely chapters in this part is “Chapter 11: Truncating the Antecedents: How Americans have been misled about WWII.” Not only does Dr. Higgs take you behind the smokescreen of propaganda and biased historical revisionism to reveal the truth of WWII and the US involvement, but it serves as a perfect parallel to how Americans are being misled today about foreign occupations in the Middle East such as Iraq, Iran, Afghanistan, and more. There is an undeniable pattern of ignoring the preceding events and only focusing on the seemingly “out of nowhere” attacks in response, in an effort to blind Americans to their government’s role in provoking these attacks, and ensure they remain fiercely supportive of any warmongering ambitions the State is currently pursuing. In short, the world is not as cut and dry as bad guys vs. good guys. If you have the courage to accept that your government isn’t an angelic entity that only acts on the most noble intentions, this book will open your eyes to a reality that must be embraced if one wishes to create a more just, peaceful, and prosperous world.

Part III Economic Analysis, War, and Politicoeconomic Interactions will leave you feeling like you just went 12 rounds in a championship prize fight. The vigorous, relentless exposition of the havoc the State wreaks on an economic scale is simply staggering. I can’t help but to confess I found myself questioning if anything could stop a Leviathan this bloodthirsty. Chapter 19, Military Economic Fascism, makes the irrefutable case that corruption is an inherent feature of the state, not merely an unfortunate byproduct. For instance, the Pentagon’s spending is not even documented in a coherent enough way that it could be audited, this has prompted the Defense Department’s acting inspector general to remark, “financial management problems are long standing, pervasive, and deeply rooted in all operations.” What’s so breathtaking about this is the regularity and routine nature of it all. Every year the Pentagon is required by law to provide an account of its spending for audit. Every year it fails to do so. Nothing changes. As Higgs aptly concludes:

In Iraq since the US invasion in 2003, billions of dollars have simply disappeared without leaving a trace. Surely they did not all evaporate in the hot desert sun. The accounts at Homeland Security are in equally horrible condition.

No one knows how much money or specific property is missing from the military and homeland-security departments or where the missing assets have gone. If a public corporation kept its accounts this atrociously, the Securities and Exchange Commission would shut it down overnight. Government officials, however, need not worry about obedience to the laws they make to assure their credulous subjects that everything is hunky-dory inside the walls. When they are of a mind, they simply flout those laws with impunity.

I found chapter 18, “To Fight or Not to Fight”, almost as a fresh of breath air amidst the avalanche of
data and rigorously sourced examples of government waste and corruption unlike which I could have ever imagined. In this chapter Higgs demonstrates his versatility as not merely a brilliant economist and historian, but also as a writer. The association of individual as one with his government, (for example, “We won the war” or “We should go to war to spread democracy”) is so pervasive and engrained in us all, Dr. Higgs takes an incredibly effective tactic to dislodge it. By approaching the issue in such a simple and straightforward way, as if he himself is genuinely wondering for the first time if wars initiated by leaders of government, are, in fact, for the best interest of the people at large, the absurdity of the whole thing creeps up on you slowly as you follow him along. The simplicity and eagerness in which he seeks to answer this question doesn’t allow for any opportunity for the reader to throw up his emotional barriers out of nationalistic pride and the like. By the time Higgs’ arrives at the only logical conclusion possible – that U.S. leaders make decisions of war based on their own concerns and virtually always at the expense of the people that war impacts - seemingly as if for the very first time, the reader is left feeling embarrassed that he could have ever thought anything to the contrary!

Delusions of Power concludes with a series of book reviews of all the most significant works cited earlier throughout the volume. This allows for the reader to pursue any of the specific topics more deeply, as well as appreciating the depth of research and material underpinning Higgs’ arguments.


The GOP platform calls for a ban on online poker


I suppose the slogan of “keeping the government out of your bedroom” is pretty much officially retired amongst Republican circles now. The stated justification for this horribly intrusive, un-Constitutional, un-American, nanny-state action that the most hardcore Progressive would be proud of, is that “compulsive gambling is a serious disease” blah blah blah, Why is there no call to ban all forms of poker? Or all gambling? Or what about tobacco? Or alcohol? Is alcoholism not a serious disease? What about high-fat diets? Red-meat, perhaps? Of course, this issue, like virtually all, are shaped not by adhering to the desires of your constituents, or (and try not to laugh) adhering to “Conservative Principles” or things like the Constitution, but rather, is shaped by the interests of a very small group of very wealthy and influential backers of the Republican Party. (Read: Sheldon Adelson)

The lamest defense of all of those who have been instructed that they now are to oppose online gambling because their party leaders declare it so, is that the online aspect of it makes it easier for underage children to be exposed to it. If your underage child is able to forge identity documents, steal your credit card and routinely make online gambling charges to it, and sit on the computer all day compulsively gambling, and you are either unaware or unable to stop it, well you are a horrible parent and your child will have much worse issues than gambling. What happened to being the party of family values? I can’t think of anything more dangerous to the family unit than the implications that we are too incompetent to parent our children ourselves, and thus need the heavy hand of government to outlaw any activities that may lead to undesirable behavior. I’m pretty sure children have, on occasion, gotten their hands on their parents’ firearms to disastrous result. Any plans for adding a plank to the GOP platform calling for a ban on guns in households with children? Or would “conservatives” revolt at such a notion and correctly point out that responsible parents can take measures to ensure their child does not access their firearm?

What about being the party of creating jobs for the middle-class? Yes, I know government can’t create jobs and to even pretend that slogan makes any sense whatsoever will rightfully anger my libertarian friends, but they can stop doing things that impede job growth and creation. You know what’s a really bad way to create jobs? To outlaw a profession and literally drive tens of thousands of honest, tax-paying, economy supporting citizens overseas where they can make a living without being oppressed, all the while spending their money in a foreign country as opposed to here.

The reason the Republican Party is dying and will fail to unseat a President who is presiding over the worst economic crisis in nearly 100 years, while simultaneously abandoning all of his campaign promises and disenfranchising an enormous part of his own base, is because the Republican Party no longer stands for anything. Nothing. They stand for whatever issues their wealthiest backers desire and nothing else. To be fair, the Democratic Party is obviously identical in that regard. For decades they have ridden on the coat-tails of words and beautifully crafted speeches of limited government and freedom by people like Ronald Regan. But their actual actions and policies are indistinguishable from their supposed opponents of Democrats. Bailouts anyone? National debt? Abandoning the long-held conservative principles of being a strong, humble nation, who seeks to defend our country while avoiding nation-building abroad? If you don’t believe me just ask Taft or maybe George W. is a better example:

Perhaps it is time that conservatives who believe in the principles espoused by people like Ronald Regan (for instance, “government isn’t the solution, government is the problem!” and so forth) stop blindly supporting politicians and a party that no longer even pays lip-service to these ideas, let alone actually try and implement policies that would achieve them, merely because the have the letter R next to their name and the Republican Party leadership told them to.

There is only so long you can scream insults at the other guy to distract from the reality that there is no substantive difference between what he is doing and what you would do. The online poker is probably the least significant of all the issues the above commentary is true of, but maybe that’s why its so irritating as well.


No War for Oil

I am currently reading, No War for Oil, by Ivan Eland of the Independent Institute. It is a masterful book, powerfully written, steeped in solid economic analysis and understanding, fantastically well researched, and provides a tour de force history lesson on the role of oil in governments worldwide, with a particular emphasis on the U.S. and the Middle East.

Of the many fascinating discoveries this work has opened my eyes to, the destruction of the myth that oil is a "strategic commodity" and that the price of oil is determined by oil cartels was the most illuminating. Additionally, Eland rebukes the myth that if certain oil-rich regions fall into the control of unfriendly regimes, this would hurt U.S. interests by driving the price of oil up.

With a profoundly Austrian economic analysis, Eland shows what a ridiculously absurd claim this is. Markets clear. A Middle East country that relies almost entirely on the production of oil for economic growth is, if anything, more damaged by their refusal to sell it than those whom they are threatening to withhold it from would be.

In addition to the economic theory analysis, Eland analyzes all the historical examples of past oil "crises" and attempts at limiting supply and/or raising the price of oil by the various oil cartels that have existed, including OPEC. In all of these instances, the ability for any oil cartel to significantly affect the supply or price of oil was miniscule, as the more effective they were at doing so, the greater the incentive for members of the cartel to cheat and sell more oil at the temporarily artificially inflated price. Thus, as the threat of a reduction in the amount of the world's oil is announced, covertly nations and firms begin increasing their drilling efforts!

Rubber is much more important and widely used than oil in war. Yet, there is no talk of rubber as a "strategic" commodity. If Eland's analysis is correct (and I believe that it is) it would appear that economic ignorance among politicians and policymakers has resulted in one of the most disastrously misguided and destructive policies ever conceived. As this policy has been going on for over 50 years, with no end in sight, the lessons contained in this brilliant work have never been of more importance.

No War For Oil is mandatory reading for the libertarian, as well as anyone who wishes to gain a greater understanding of the politicized nature of oil. Even as a well read student of Austrian Economics, I must confess I put a bit too much stock in a few of the myths used to justify oil classification as a "strategic" commodity. Do yourself (and the world) a favor and read this book today!

Update: No War For Oil was just awarded the Gold Medal from the Independent Publisher’s Book Awards (IPPY) for excellence in Current Events (Foreign Affairs/Military)!


Last Exit

Cost overruns on public road projects average at least 8.4% with a very large standard error, indicating some overruns are much greater. It appears this consistent pattern of under estimating the cost of public projects is due to strategic misrepresentation or "lying" as the authors of the study on the matter determined.

Policymakers continue to ignore improvements in technology that would increase lifespan of roads and reduce long term maintenance costs dramatically. This is because they come with high up-front costs that are politically expensive. Meaning there is little incentive for them to take the short-term heat from voters of raising spending/taxing just because it is the best decision and will be save money - as well as lives - in the long run. In other words, the inherently short run focus that is government is what is responsible for maintaining the long term health of the nation's infrastructure. I wonder what Apple's stock price would do under that type of leadership....

The traffic control system in many cities today were developed by inexperienced public officials for whom the automobile was a new mode of transportation. By refusing to use superior methods road congestion, and thus emissions, is greater. Safety is worse, unemployment increases, and data indicates the health of newborns is adversely affected.

Private highways have replaced human operated toll booths with ETC, an electronic method. This allows for easy implementation of congestion pricing, which would result in benefits in the areas mentioned above. Government regulations restricts the adoption of this method by the privately owned highways. However, the government does use ETC on a few highways of their own. Sadly, they still have not implemented congestion pricing. Instead, they charge a higher toll fee because consumers react to increases in an electronically paid fee with much greater indifference than they do towards the physically paid one.

The preceding sentence is exactly what all the "we need govt bc evil businessmen would take advantage of us otherwise" people would claim would happen by private firms in a free market. Yet, here it is. Obviously. Because that entire world view is a nonsensical, logically contradictory, fairy tale. What exactly makes greedy or bad people transform into angels upon donning the government hat?

And upon having discovered it, there are vastly fewer options a consumer can persue to protest it. As opposed to a private firm which would directly (through loss of sales) and indirectly (bad reputation) be exposed to consumer sovereignty.

I am on a cell phone with no spell check so this post will probably have tons of grammar errors. But I needed to share this info before proceeding on to the next section of this awesome book.


New books!

I just added three new books to my reading list: Last Exit: Privatization and Deregulation of the U.S. Transportation System by Clifford Winston, No War for Oil: U.S. Dependency and the Middle East by Ivan Eland, and With Liberty and Justice for Some: How the Law Is Used to Destroy Equality and Protect the Powerful by the great Glenn Greenwald!

I’m starting with Last Exit first and it opens with some great historical information on transportation and infrastructure in the U.S.

By 1860 at least 7,000 corporations had formed to operate bridges, canals, ferries, railroads and roads. Total private capital investment in those transportation facilities and services amounted to over 3 billion dollars. (Which is equivalent to approximately $10 Trillion in today’s dollars!)

By developing an initial overview of the economic case for privatizing and deregulating the transportation system, I hope to show that fundamental policy reform is essential to ridding the system of its vast and intractable efficiencies that have accumulated under decades of public sector management and control. [Emphasis mine]

I’m looking forward to reading the rest and will probably update the blog with the more interesting findings as I make my way through.