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Sunday, November 4, 2007

Reader Mail #10 - Efficiency and State Subsidies are Different

I haven't had any reader comments lately. However, I've found a bunch of interesting points on other blogs and forums.

I should start mentioning my favorite posts in other blogs. I found this post on Breaking the Rules to be interesting; this blog is now on my "hitlist". I made a list of my favorite blogs and blogs I recently discovered; it's only visible if you go directly to my blog. You can't see it via the RSS feed that some people use.

On the Ron Paul Forum, someone said:

Unregulated markets lead naturally to monopolistic centralization and abuses in corporate governance and finance.

Again, isn't history replete with examples of such... ?

There is only one such example of a free market leading to the creation of a state: the formation of the first State.

After the first State was created, the free market was gone.

If you want an example of a State-less society, you have to go back before recorded history. Once one State forms, its superior organization and technology allows it to invade and conquer and enslave people without a State or a weaker State.

A modern stateless society could, hopefully, resist the creation of a new State. The evil power of the State increased gradually over time. In the present, people are technologically sophisticated enough to have a viable Stateless society. That is the hope of the agorist.

It's kind of silly to say that government is needed to prevent the undue concentration of wealth and power. The government is *RESPONSIBLE* for the concentration of wealth and power in the hands of a few people. These people use State power to increase their wealth and preserve their influence, at the expense of everyone else.

On the Ron Paul Forum, someone asks:

Will there even be an election in 2008? How do we know that the USA won't slide into total dictatorship by then?

There has to be an election in 2008. Otherwise, it would be obvious to everyone what has happened.

As long as there is strict control of the media in a corporate oligopoly, who can carefully control the candidates presented for election, elections are harmless. It isn't possible to achieve meaningful reforms by voting.

The current political system is already the functional equivalent of a dictatorship. Why would The Supreme Leader of Humanity rock the boat by halting something as trivial as elections?

On Bored Zhwazi's blog, someone asked:

Does agorism recognize economies of scale?

Economies of scale in the current economic system are false economies.

In the current economic system, businesses that thrive off State subsidies are confused with businesses that are genuinely efficient.

For example, does it really pay to manufacture air conditioners in a centralized factory? Or, would local workers doing just-in-time customized manufacturing be more efficient. Of course, the workers could share designs and have a common stamp of quality. (In a truly free market, there's no such thing as intellectual property. A monopolistic State is needed to enforce intellectual property, and intellectual property is unenforcable without a State. If you think about it carefully, there's no way to create enforceable intellectual property solely via contracts; how do you enforce the intellectual property with someone who didn't sign the contract?)

For example, suppose I bought an air conditioner from a large corporation and it breaks in 5 years. I have no practical option but to buy a new one; repairs may cost more than a new replacement. This is the "planned obsolescence scam". If I bought it from the local air conditioner manufacturer's guild, they may repair it for a reasonable price. In a truly free market, the manufacturer would have to stand by the quality and reputation of his product. With a market that's a monopoly or oligopoly, there's no incentive for quality.

In the present, a centralized factory has its transportation costs subsidized by the state. Trucks damage roads a lot more than cars, but roads are paid by taxes. People who drive cars pay more than their fair share of road repair costs, and people who drive trucks pay far less than their fair share of road repair costs. It's Distributed Costs and Concentrated Benefits again! That means that people who ship via trucks don't pay their true costs for the amount they damage roads. This is a subsidy for large corporations, who don't pay the true shipping costs from their centralized factories to local markets.

Also, large corporations can borrow at a slight premium to the Fed Funds Rate of 4.5%. Individuals must borrow at 8% or more. The monetary system itself is, in effect, a huge subsidy to large corporations.

There are so many government and regulatory subsidies to large corporations over small businesses or individual workers. Large corporations experience economies of scale because the cost of compliance with State regulations is typically fixed. Large corporations are more efficient at lobbying and extracting favors from the State. That is not genuine efficiency.

Summarizing: Don't confuse genuine efficiency with efficiency in the context of a State. You can't really measure efficiency in a communist dictatorship like the USA. In the context of a monopolistic, coercive State, large corporations dominate industry, because they're most efficient at extracting perks from the State. A large corporation is encouraged by the State to do inefficient things. When you're a member of an oligopoly, all you have to do is stay close with your competitors. You can mimic everything they do, including their mistakes, and still collect your economic rent backed by State violence. State violence protects large corporations from genuine competition.

Imagine how efficient a truly free market would be!

On the Ron Paul Freedom Forum, SeekLiberty mentions:

Why is democracy bad?

Voting cannot establish the legitimacy of a government, whether it's a republic or a democracy.

Do you have the right to steal from me? If you don't have the right to steal from me, you cannot delegate that right to a government by voting. It's irrelevant whether it's a republic or a democracy. If you don't have the right to steal from me, you can't authorize other people to steal from me on your behalf via forced taxation.

All forms of taxation are theft. All governments rely on forced taxation to fund their activities. Therefore, all governments are illegitimate.

Legally, the USA is in a grey area inbetween republic and democracy. In practice, the USA is a communist dictatorship.

On the Ron Paul Freedom Forum, SeekLiberty asks:

However, my concern with that is about police powers and the protection of our Rights. Who would have the power to grant police powers?

Anyone who wants to start their own police force and has customers can do so. The right to organize police is an intrinsic right that everyone has. State brainwashing has made everyone think that only a State can fairly provide police protection, by having an absolutely unaccountable monopoly.

Who grants me the right to have my own blog? I could host my own website, or use someone else's hosting services. Google can provide me with free blog hosting because the cost to them is practically zero for hosting my blog. If Google got to be obnoxious, I'd move to another provider or host it myself. I use Google for the API, free hosting, simple user interface, and anonymity. If my blog becomes popular, I may add Google Adwords, which benefits Google.

In other words, the free market grants me the right to have my own blog. Google has decided that the Blogger service is in their best interests. I am happen with their UI and will use it until the UI gets worse. If Google starts censoring me, I will leave.

Who prevents me from starting my own police force? The State! There is no free market in police services. Without a government, anyone could start their own police force. Market forces would guarantee that the police were fair. For example, in a poor neighborhood where people are regularly abused by the police, they should form their own police force! This sort of happens already with gangs, but it could be done as a serious business.

On the Ron Paul Forum, someone asked:

Land ownership vs. the government. What's the deal with that?

Nobody in the USA owns land, because of property taxes. If you don't pay property taxes, men with guns will eventually show up and kick you off your land.

You don't "own" your land. You have a perpetual transferable lease from the government. The lease rate (i.e. property tax rate) is determined by the whims of elected officials.

To "own" something means you don't have to pay anything for the privilege of continuing ownership. By that standard, nobody in the USA owns any land. All land is owned by the government, and people have a perpetual transferable lease for what they believe is their "property".

That's the justification of "eminent domain". When the red market exercises its eminent domain rights, the government is terminating your lease. If you think of all land as being actually owned by the government, eminent domain makes perfect sense.

Outright owning your land, without any tax obligation or other restrictions, is called "allodial title". Nobody in the USA has full allodial title to their land. Red market workers claim the right to collect property taxes, the right to impose zoning restrictions, the right to impose environmental restrictions, and the right to seize property via eminent domain. That's one of many reasons why the USA is a nation of slaves.

On the Tranarchist blog, the blogger says:

War ... What is it good for?

Why is war so important to the ruling class?

"War is the health of the State." This quote appears to be originally attributed to Randolph Bourne. Like most articles that are 100 years old, it is a tough read.

Essentially, war is an excuse for the red market to grab more power. Most notable is the "War on Terror", which will most likely last until the final collapse of the red market. The "War on Terror" encourages red market terror. The "War on Drugs" ensures that drug dealers who evade the State are well paid. The "War on Poverty" creates poverty.

War is an excuse to silence people opposed to the red market's policies. War is an excuse for self-censorship of newspapers. You don't even need government-imposed censorship; the handful of people who control the media know their agenda.

War is an excuse to raise taxes. Of course, those taxes are left in place after the war is over. For example, the W-2 payroll withholding tax was instituted as a "temporary" emergency measure during WWII. Of course, "temporary" becomes permanent after the war is over; people are used to the encroachment of their rights and don't object. Further, income taxes were originally only a few percent; who's going to object to a tax of 5%? That rapidly deteriorated to a direct 40% Federal tax of wages. (25% is the usual marginal bracket, plus 15% Social Security and Medicare)

War is an excuse for budget deficits and inflation. After the war is over, taxes must be kept high to pay the interest on the debt.

War is an excuse for increased red market surveillance of ordinary citizens.

War allows a lot of money to be funneled to private military contractors, all of whom are politically well-connected. The most commonly known example is Blackwater, but that is just the tip of the iceberg. Quite a few military contractors have made a fortune off the Iraq war, most of whom you'll never hear about.

Most people, when told there is a war, have the knee-jerk reaction "We must support the red market, due to this powerful common enemy." Of course, the opposing red market is telling its slaves the same story!

In summary, war brings out corruption, taxes, censorship, brainwashing, and population control at its most effective.

1 comment:

Aahz said...

Another excellent "Reader" mailbag! You did, however, make one pretty glaring error when you stated that there is no such thing as a stateless society today. Somalia has been stateless for over 15 years now and they're economy and standard of living has been skyrocketing as a result.

This Blog Has Moved!

My blog has moved. Check out my new blog at realfreemarket.org.