Who should determine the course of our lives? There is no shortage of people who aim to control others, imposing their will and restricting choice through the force of government.
Self Control or State Control? You Decide by Dr. Tom G. Palmer is the Libertarian Book Club's selection for the month of May. Below is a curated selection of our thoughts and notable quotes from the book.
Join our Facebook Group as we seek to learn more about Libertarianism.
We are a monthly book club for anyone who wants to learn more about Libertarianism. We will discuss each book's chapter/section in separate posts, so everyone will be able to read along at their own pace. We typically also focus on books which are available for free so that everyone can participate.
I highlighted a good deal in this chapter and I'm sure everyone will excuse me for the heavy quote pasting.
"Free people are not subservient, but neither are they uncontrolled. They control themselves. Taking control of your life is an act of both freedom and responsibility"
"Unsurprisingly, they consider freedom frightening. As a consequence, many have believed that order and virtue must be imposed at the expense of freedom. They equate responsibility with submission to the commands of others."
"One can never legislate or choose the outcomes directly; all legislators or rulers can do is to change the incentives that participants in social interactions face. Thus, actions may be outlawed because the legislators think they're bad"
I think this chapter does a nice job of explaining a few things:
1) My life is mine. Not anyone else's. I really enjoy endurance sports (MMA, bike touring, hiking marathons, and most recently the dreaded Barkley Marathon ("the race that eats its young"). I can not rely on government to keep me safe; it is my responsibility - and mine alone - to keep myself safe. If I'm stupid, then I reap the consequences for that, if I am smart; the benefits.
2) No victim, no crime. I hate drugs. Hate them. I don't want to be around them. I don't want to watch others do them. With that said, it is immoral for me to push this belief on to others, we must look at the proof that the law hasn't prevented drug usage (arguably, it's only gotten worse and created a violent black market around it).
There are a few other highlights I liked quite a bit:
"Self-control is never perfect, but state control is no improvement"
"A harmonious society rests on respect for the freedom of each member"
"The rules of the road facilitate the transportation of millions of people to millions of different destinations, all without a central power issuing commands to them; they're not perfect, but rather simple rules of the road help many millions of people to avoid collisions and arrive where they want to be every minute of every day"
'But without police at every street corner, why would anyone follow the law?', the statist asks.
Simple: it's in everyone's best interest to follow the rues of the road.
Clearly, the nanny state and the desire to protect us all from ourselves is counter-productive. It seems that society can - and would - flourish much more in a society that allowed individuals to make their own choices.
"The Founding Fathers believed in the unalienable human right to liberty, but they knew it depended on personal responsibility. To be freed from a tyrant's rule, men had to be able to rule themselves: that truth seemed self-evident"
"In workplaces, managers scoring high in self-control were rated more favorably by their subordinates as well as by their peers. People with good self-control seemed exceptionally good at forming and maintaining secure, satisfying attachments to other people. They were shown to be better at emphasizing with others and considering thing from other people's perspectives"
"When she tested prisoners and then tracked them for years after their release, she found that the ones with low self-control were most likely to commit more crimes and return to prison"
As will be covered more in future chapters, the welfare state brings a host of problems: namely that it keeps the poor, poor.
I really don't like anti-welfare arguments centered around the belief of "they're just lazy" (this is as old as at least the Victorian period. Check out the TV mini-series "Victorian Slum House") as there is a lot more to it than that and the negatives of the welfare state expand much more than just that "some people are too lazy to work."
As an aside, has anyone read The Human Cost of Welfare: How the System Hurts the People It's Supposed to Help"?
"We are throwing these people a life preserver to keep them afloat, but not pulling them into the boat. They are effectively creating and perpetuating a dependent class".
"One of the first things our welfare system does is make people poorer so that they may qualify for benefits. Qualifying for benefits means spending down assets and savings, and that includes vehicles, which is especially problematic".
This chapter breaks down how only Property Rights can prevent overfishing. "Fisheries using Individual Fishing Quotas (IFQs) in places ranging from Iceland to New Zealand have seen fish populations stabilize and even grow along with fishing incomes". But... but .... without fishing licenses controlled by the government, that's impossible!
Additionally, this chapter elaborates on some things Murray Rothbard wrote in New Liberty.
"Environmental problems are generally conflicting claims over resources and how they are used. Property rights help to resolve those conflicts by providing a legal institution that prioritizes particular uses—the uses that the owner prioritizes, in the time frame that the owner chooses. For some environmental problems, such as chemical pollution in a self-contained lake, individual ownership of the land that includes the lake is likely to give the owner incentives to maintain the lake’s quality, either for his/her own consumption value or because pollution would reduce the market value of the property."
My favorite chapter thus far! Contrary to a point I made about an earlier chapter, this one does seem to advocate for a stateless society, or at least nearly so:
"It is often assumed that the Catholic Church, because of its social teaching, is committed to high levels of state intervention and regulation. However, in its most authoritative document on such matters, it states:
"Another task of the state is that of overseeing and directing the exercise of human rights in the economic sector. However, primary responsibility in this area belongs not to the state but to individuals and to the various groups and associations which make up society.”"
One wonders why in this quote "sole" could not replace "primary?"
"The reaction to the financial crash of 2007–2008 provides an indication of how state regulatory institutions are created and operate. In the wake of the crash, tens of thousands of pages of regulations were written and promulgated. It was estimated that the Dodd–Frank Act in the United States, with its associated regulations, would come to thirty thousand pages.
In 2011, some 14,200 new financial regulations were created worldwide. That trend was underway well before the financial crash. It is often asserted that there was a period of deregulation before the financial crash and that the crash was a consequence of deregulation. That is not so, certainly not in the United Kingdom."
Not just in the US either.
The evidence is quite strong that systems of state regulation have not been successful. Not only did the comprehensive systems of financial regulation that developed in the United Kingdom from 1986 and in the United States from the 1930s not prevent the financial crash, but in many ways they were contributory causes that exacerbated and spread the crisis globally. Many forms of mistaken and reckless behavior that led to the failures of banks and other financial institutions in 2007–2008 were encouraged by regulation."
Boy, you can say that again.
The dominant historical narrative suggests that, before the twentieth century, urban development was chaotic and that each property owner and developer could do what they wished without regard to the impact of their actions on anyone else. The result, supposedly, was terrible slums, and ugly unplanned development. (A visit to such places as Bath and Bloomsbury might raise doubts about that narrative, of course.)"
I was in Bath about a year and a half ago and can confirm.
I also love the point made on pages 89-90 how urban sprawl was caused by "muh roads" being taken over by government from private turnpike trusts.
"Interestingly, the same people who advance that account also often complain about “suburban sprawl” in the United States without stopping to reflect that such “sprawl” is associated with and largely caused by governmental regulatory regimes. Complaints about the ugliness and poor quality of public and private buildings produced under the pre-1948 regime in Britain are also puzzling when one considers the poor quality of so many buildings that have been produced since that time."
"A free person makes her own choices and manages her own life; an unfree person's life is managed by someone else"
"We are free persons, rather than mere material objects, because we can be held accountable for our acts. We are distinguished as individuals by what we do - the very things for which we are responsible. Responsibility for our actions and the freedom to choose for ourselves foster social cooperation, coordination, and harmony, and when our freedom and responsibility are overridden, social order is disrupted and conflict replaces harmony."
"...welfare states tax to provide (frequently monopolistically) through political means what could be provided and chosen voluntarily - from retirement income, to medical care, to housing, to education - and in the process induce people to reduce their savings, engage in riskier behavior, abandon voluntary mutual aid organizations, and pay less attention to securing their own well-being and that of their families and communities."
"Replacing self-control with state control rarely generates any of the benefits claimed by its enthusiasts and always generates other, unintended, consequences."
Self Control or State Control introduces the reader to a number of different concepts that they may not be aware of in which the State controls us and the life we wish to live for ourselves. Most of the 11 chapters are written by a different authors, but they all compliment one another well.
This book covers a range of topics, such as the welfare state (how and why it has failed), business regulations, will power, the philosophy of individualism, and others. Overall, I found the book to be an interesting read, and I really liked that each chapter contained numerous references (I'm quite the stickler for this. Without references, a book such as this isn't worth much).
I think that this is a fantastic read for those that are new to Libertarianism, and I believe that it is especially good for those that are crossing over from a previously Left-wing ideology.
4½ stars overall, since I found some parts of the chapters discussing individualism to be somewhat dry. Still a great book and a suggested read!
Purchasing your Amazon items through this search box supports libertyLOL and doesn't cost you a penny more at checkout!
Follow libertyLOL on your favorite social media sites:Facebook
Countable: Government Made Simple
Steemit blog on a blockchain (beta)
libertyLOL's Liberty Blog RSS Feed
We also run a couple twitterbots which provide great quotes and book suggestions:
Murray Rothbard Suggests
Tom Woods Suggests
Jason Stapleton Suggests
MORE FROM LIBERTYLOL:
We all want to care about others. The 'Free College for All' narrative is rooted in the idea that we take care of others. But are we taking care of others by stealing from the masses to pay for College? What happens to the price of college if our subsidies for it increase? The price of college has increased DUE TO the persistent governmental interference in the market.
Politicians like Bernie Sanders can't wait to get in front of microphones and discuss how 'moral' it is for us to provide these services. Imagine that. It's moral to steal from your neighbor to provide college for free to others. But the moral argument should be made for those that are getting stolen from and for the future generations that have to pay the price of our generation's policies.
The image below is the cliffnotes version of Bernie Sanders' "College For All" Act, basically just marketing. The full version of Bernie's plan (51 pages) takes some time to figure out how his policy proposal works.
My friend loves the idea, I responded to him that if we understand economics, then we know what we can expect to follow:
Throw 'free' money at colleges and then be amazed at why college costs increase and then throw more money at college and then be amazed so we throw more money at colleges and then costs increase so we have to throw more money...
Each time we find that it is the government that is increasing the costs of college making it MORE necessary for government to get MORE involved and making it HARDER for families to afford it... Dangerous cycle. Government begets more government and creates more problems when it tries to solve problems.
I offered to read the entirety of Sanders' bill if he would read Economics in one lesson, a quick read.
I am quite familiar with the Mises Institute and Hazlitt's One Lesson. However, I'm cautious of lessons from the 1940s! You and I just don't agree on what's important or of value.
"What's important or valuable" isn't free college and free health care. It's the kind of world and indebted nation you're leaving to your children. They own this debt that we're ignoring because we aren't mature enough to live within our means. But we can't do that because politicians use 'emotions' to keep themselves in power, at our expense.
Our politicians are like children who keep passing the buck off on others because they won't be in office when it fails and promising 'free' stuff gets votes.
Economics is Timeless
If we were in the stone age, Economics in One Lesson would still apply. Hazlitt doesn't talk about the results of what happened in the 1940s, he talks about the things we are doing today.
Chapter 1: The Lesson: The art of economics consists in looking not merely at the immediate hut
at the longer effects of any act or policy; it consists in tracing the consequences of that
policy not merely for one group but for all groups.
Chapter 2: The Broken Window fallacy (economy runs on consumption), basically the reason The Fed is drowning us in free money and zero% interest rates.
Chapter 3:The Blessings of Destruction fallacy explains why economies boom during wartime and why the US is at perpetual war because peace isn't profitable. (Let me know if this seems relevant today)
Chapter 4 Public Works mean Taxes- talks about the ills of an economy when taxation is used for public works compared to the free markets ability to do the same without taxation. Not applicable? 40% of the US GDP today is money spent by the US Government.
Chapter 5: Taxes Discourage Production - Read this chapter with the understanding that EVERYTHING today is taxed. And before it's taxed, the money you've gotten through labor (income) is taxed. The stuff you made is taxed from many ingredients that were taxed and the people who bought it from you were taxed when buying it. Rewritten today, this chapter is it's own book.
Chapter 6: Credit Diverts Production-
"Actually, you know what," I tell my friend, "feel free not to read it because it's written in the 40's. But that's a cop-out".
He's got children, it's his and my job to make the world better for them. If we can't read one book and challenge me to read something that might challenge my worldview and then follow on with an adult conversation, then we both can't continue this virtue-signaling where we think we're being moral and 'looking out for folks'.
Government growth and deficit-spending hurts those that can't voice an opinion against it - Our Children
His response will likely be that I don't value Free Education or Free Healthcare or Free unlimited safety nets for everyone. He'd think I was immoral for not supporting it. Quite the opposite. The moral argument is to remove government obstacles to the free market and charity to support these causes.
Prices are high where government interferes and over-regulates the most. Why do our health care costs rise while Breast Implants and Lasik eye procedure costs plummet (while the quality increases)? One is highly regulated by the government, the other is not. The Free Market is competing for people's dollars so costs go down and quality goes up.
How Government Regulations Made Healthcare So Expensive
Third-Payer Problem, AKA "If I go to a restaurant and my tab is picked up by someone else (Insurance Company), then I'm ordering the steak".
PRICE CEILINGS AND PRICE FLOORS, a CENGAGE lesson in microeconomics.
Rent-seeking - Wikipedia
Great article from a list I subscribe to over at Norada. Biggest failure I see in my clients is that they have no desire to better themselves or build Human Capital and expand their skillset. READ! Bottom line is that in 5-10 years, you will be the same person you are today with the exception of the books you read and the new people you meet. Try to be better 5-10 years from now. Keep growing. Read.
Research shows that 88% of wealthy people devote at least 30 minutes a day to reading. If it works for them, it could work for you.
Below, we’ve rounded up 12 of our favorite books, from personal finance classics to new releases. Here’s to a prosperous year!
1. “Think and Grow Rich” by Napoleon Hill
Journalist Napoleon Hill researched more than 500 self-made millionaires, including Andrew Carnegie, Henry Ford, and Charles M. Schwab, before releasing this 1937 best-seller.
Hill’s timeless personal fiance classic will help you understand that getting rich is more about mentality above anything else. In fact, he barely mentions the words “money,” “wealth,” or “finances.” Rather, he explains the psychological barriers that hold many people back from building fortunes — and teaches you how to start thinking your way to success.
2. “Business Adventures” by John Brooks
Rich people tend to believe starting a business is the fastest way to make money. This read, endorsed by self-made billionaires Bill Gates and Warren Buffett, will teach you just how to do that … but not the way a conventional business book does.
“Unlike a lot of today’s business writers, Brooks didn’t boil his work down into pat how-to lessons or simplistic explanations for success (How many times have you read that some company is taking off because they give their employees free lunch?)” Gates explains. “You won’t find any listicles in his work. Brooks wrote long articles that frame an issue, explore it in depth, introduce a few compelling characters, and show how things went for them.”
Don’t let the 1969 publication date throw you off. While a lot has changed in the business world since the 1960’s, the fundamentals of building a strong business have not, Gates writes, adding, “Brooks’s deeper insights about business are just as relevant today as they were back then.”
3. “The Little Book of Common Sense Investing” by John C. Bogle
One of the most effective ways to build wealth is to invest. At least, if you do it correctly.
Bogle, founder of the Vanguard Group and creator of the world’s first index fund, details the simplest and most efficient investment strategy: Investing in low-cost index funds.
Legendary investor Warren Buffett also says that every investor, large and small, should pick up a copy.
4. “The Essays of Warren Buffett” by Warren Buffett
If a blurb by Buffett doesn’t entice you, get directly inside the billionaire’s head with this collection of letters and notes written by the “Oracle of Omaha.”
The 700+ page book offers a clearer picture of Buffett’s philosophies on business, investing, and life.
5. “Tools of Titans” by Tim Ferriss What does it take to be a billionaire? Best-selling author Tim Ferriss’ latest book explores the daily routines and habits of celebrities, professional athletes, hedge fund managers and others.
Ferriss went straight to the sources and interviewed more than 200 world-class performers.
For a sneak peak, check out one, peculiar habit that the wealthiest, most successful people share.
6. “The Richest Man in Babylon” by George S. Clason
Nearly a century ago, Clason revealed the “secret” to getting rich in his 1926 personal finance classic.
It turns out that the “secret” isn’t much of one. All it takes to get rich is mastering a few simple concepts, such as paying yourself first and living within your means, which Clason preaches via a collection of entertaining parables.
7. “Rich Dad Poor Dad” by Robert Kiyosaki
Kiyosaki shatters the myth that you need to earn a lot of money to get rich in this best-seller. By telling the story of two dads — his own, and the father of his best friend — he explains how to build wealth even with a small salary.
Additionally, Kiyosaki challenges the popular belief that your house is an asset, details the differences between how rich people and average people choose to get paid, and emphasizes the critical difference between an asset and a liability.
8. “The Automatic Millionaire” by David Bach
Self-made millionaire and financial advisor David Bach exposes a handful of money misconceptions in his easy-to-read best-seller.
You don’t need a budget, you don’t need to make a lot of money, and you don’t even need willpower to accumulate a fortune, he writes.
Research shows that 88% of wealthy people devote at least 30 minutes a day to reading. If it works for them, it could work for you.
Below, we’ve rounded up 12 of our favorite books, from personal finance classic to new releases, to work your way through over the next 12 months. Here’s to a prosperous 2017!
9. “How Rich People Think” by Steve Siebold
When Steve Siebold started interviewing hundreds of millionaires and billionaires, he was “completely broke and searching for answers about success I wasn’t finding in the classroom,” he writes.
“What I discovered was, to get rich, I had to learn to think like a rich person. … Once I changed my thinking, the money started to flow.”
Anyone has the opportunity to build wealth, he stresses in “How Rich People Think,” and it all starts with changing your mindset. For a sneak peak, check out the number one way rich people view the world differently than the average person.
10. “Be Obsessed or Be Average” by Grant Cardone
As Siebold says, to get rich, you have to learn from those who have already done it. Self-made millionaire Grant Cardone knows a thing or two about managing money: The entrepreneur has built five companies and a multi-million dollar fortune.
In the best-selling author’s latest book, he emphasizes that if you want real success, you have to be hungry, hyper-focused, even obsessed.
While Cardone offers some contrarian advice — he discourages investing in a 401(k) plan and buying a home — his wealth-building strategies helped him go from broke at 25 to earning his first million by age 30.
11. “The Power of Broke” by Daymond John
“Shark Tank” investor and entrepreneur Daymond John turned $40 worth of fabric into a $6 billion brand, FUBU. Along the way, he’s been rejected a lot and has lost a lot.
Being broke, however, offers at least one major advantage: It sparks creativity and out-of-the-box solutions, he explains in “The Power of Broke.”
Don’t write off your chances of wealth and success if your bank account is low, he suggests. Use it to your advantage.
12. “You Can Negotiate Anything” by Herb Cohen
If you want to earn more in 2017, a simple yet often overlooked strategy is to negotiate your salary.
If you’re nervous about approaching your boss to ask for a raise, try Cohen’s best-seller. It will help you get what you want, and what you deserve.
For more great suggestions follow me on Twitter at Jason Stapleton Suggests and Tom Woods Suggests.
You can also get two FREE Audiobooks by signing up with Audible on the link below:
You're looking at a guy who just got an audience at Yale -- Yale! -- to vote in favor of the right of state secession, by a margin of 2 to 1.
Yes, I had some supporters in the audience. But an organizer said that even correcting for that, the outcome was still very surprising.
Events at the Yale Political Union begin with a 20-30 minute statement by the speaker, and conclude by giving the speaker an opportunity to respond to the various speeches, pro and con, that students have given over the course of the night regarding the resolution at issue.
My responses were the most enjoyable part of the night.
Let's be blunt about this: while keeping the audience laughing, I pummeled my opponents into dust.
"Man, that Woods sure has a high opinion of himself," you say.
I'm just telling you what happened.
I've got video coming.
My favorite part involved the poor soul who was outraged that we hadn't discussed slavery, which "everybody knows" was at the root of battles between the states and the federal government.
I then reviewed the history of that struggle, and rhetorically removed his kneecaps.
It's nice to be able to walk into one of the most prestigious universities in the world and feel completely confident arguing a highly controversial position.
You can have that nice feeling, too.
No more thinking to yourself: I know I'm right, yet my co-workers left me stammering for a response.
I've distilled the knowledge it's taken me decades to acquire into on-the-go courses you can listen to in your car.
Today is the five-year anniversary of my Liberty Classroom, where my (trustworthy and awesome) colleagues and I teach the history and economics they kept from you.
In honor of that anniversary, I'm taking 200 smackers off the Master, lifetime membership to the site. That's all 18 courses (that you can watch or listen to whenever you want), Q&A forums, live events, and more, plus every single course we ever create.
This ain't never happening again, period.
As a bonus, you get all the courses I created for the Ron Paul Curriculum (that's 400+ videos, also available in audio format).
My course on government distills 20 years of learning into a one-semester course.
Savings: 19 1/2 years.
Plus, again today only, I'm also throwing in signed, personalized copies of FOUR of my books: The Politically Incorrect Guide to American History (aNew York Times bestseller), Who Killed the Constitution?, Real Dissent, and 33 Questions About American History You're Not Supposed to Ask.
Could there be a better treat for yourself, or for that student in your life?
The clock is ticking....
"Get the equivalent of a Ph.D. in libertarian thought and free-market economics online for just 24 cents a day."
Tom Woods has been tremendous in advocating for the teaching and spreading of libertarian ideas and principles. He has even pushed others to start their own blogs to keep the press on these ideas.
The list below is a collection of blogs, podcasts, publications and websites that he is owed direct credit (or blame) for their launch. You'll find a lot of similar blogs that support the same principles we write about here at libertyLOL.com.
You'll also find some that represent the author's other passions outside of the Liberty message. Feel free to peruse and support these sites however you can!
On my Twitter feed the other day, someone posted a photo of a page in a textbook he was forced to use in college.
"If you are a libertarian or an anarchist who believes states are a threat to freedom, you should consider moving to Somalia." That's the first sentence on the page.
(The offending book, if you're curious, is The Good Society: An Introduction to Comparative Politics, by Alan Draper and Ansil Ramsay.)
Here we have an academic textbook literally urging libertarians to move to Somalia if they hate states so much -- in other words, it's written at the level of "You like carrots? Why don't you marry one" from third grade. Seriously, this is exactly the same dumb-guy argument I might encounter on Twitter.
"Without a state," we read, Somalia under statelessness descended into a Hobbesian "state of nature where life is nasty, brutish, and short."
Then, after two whole paragraphs on the situation in Somalia, we get study questions. If you look really, really closely, you may detect a very slight bias in these questions.
VERY SLIGHT, I tell you.
"1. Which is preferable, bad government or no government?"
"2. Why hasn't Somalia without a state become the paradise that libertarians anticipate?"
Now for one thing, was there ever a libertarian who predicted that a stateless Somalia -- or a stateless anywhere else -- would be a "paradise"?
More importantly, if we're going to get a picture that's worth anything of life in Somalia without the state, the correct comparison to make is not between Somalia and the United States (the comparison most writers like this are implicitly making), but between Somalia and comparable African countries.
And on that front, Somalia during its stateless period comes out pretty darn well. In most metrics of living standards it held steady or improved.
In the Journal of Economic Behavior & Organization in 2008, Professor Benjamin Powell and his colleagues wrote:
"This paper’s main contribution to the literature has been to compare Somalia’s living standards to those of 41 other sub-Saharan African countries both before and after the collapse of the national government. We find that Somalia’s living standards have generally improved and that they compare relatively favorably with many existing African states. Importantly, we find that Somali living standards have often improved, not just in absolute terms, but also relative to other African countries since the collapse of the Somali central government."
Economist Peter Leeson, in Anarchy Unbound (Cambridge University Press), reports similar findings -- yes, Somalia ranked low in some categories during the stateless period, but that's where it ranked before statelessness, too, and if anything it made progress in those categories (life expectancy is up, for instance, and infant mortality is down).
Does our textbook cite any of this? The question answers itself. The only person quoted in the book is a New York Times reporter.
I think I'll take Ben Powell and Pete Leeson.
Of course, smashing p.c. textbook propaganda is what we specialize in at my Liberty Classroom.
Prepare yourself for some truth bombs:
"Get the equivalent of a Ph.D. in libertarian thought and free-market economics online for just 24 cents a day."
Henry Hazlitt’s 1946 book Economics in One Lesson is regarded as a classic introduction to free market economics. Nobel prize winning economist Milton Friedman said of the book: “[Hazlitt’s] explanation of how a price system works is a true classic: timeless, correct, painlessly instructive.” The book’s titular lesson argues:
The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.
The entire premise of the book is found in this one sentence, and the chapters that follow are filled with examples of what happens when economic central planners focus on policy effects to one group while ignoring the secondary effects of their policies on all other groups. Hazlitt goes on to explain, in Chapter 17, the effects of governmental price fixing:
Let us first see what happens when the government tries to keep the price of a single commodity, or a small group of commodities, below the price that would be set in a free competitive market.
The argument for holding down the price of these goods will run something like this: If we leave beef (let us say) to the mercies of the free market, the price will be pushed up by competitive bidding so that only the rich will get it. People will get beef not in proportion to their need, but only in proportion to their purchasing power. If we keep the price down, everyone will get his fair share.
The first thing to be noticed about this argument is that if it is valid the policy adopted is inconsistent and timorous. For if purchasing power rather than need determines the distribution of beef at a market price of $2.25 cents a pound, it would also determine it, though perhaps to a slightly smaller degree, at, say, a legal “ceiling” price of $1.50 cents a pound. The purchasing-power-rather-than-need argument, in fact, holds as long as we charge anything for beef whatever. It would cease to apply only if beef were given away.
A similar situation exists in Bitcoin where the independent development team known as Bitcoin Core is artificially suppressing the cost of full-node operation — in effect, impeding free market forces. “This is for the benefit of the consumers,” they say, ignoring the effects of this policy on the >99.9% of Bitcoin users who do not run a full node. As Hazlitt notes, this line of thinking is inconsistent because, regardless of the price at which something is fixed, there will always be people who cannot afford it. The only sound logical conclusions to be drawn from this line of thinking are to either set the price at zero or to allow the price to be dictated by the free market. More tenuous still is the supposition that current full node users will be “priced out” by a block size increase.
Not your typical full node users.
But schemes for maximum price-fixing usually begin as efforts to “keep the cost of living from rising.” And so their sponsors unconsciously assume that there is something peculiarly “normal” or sacrosanct about the market price at the moment from which their control starts. That starting or previous price is regarded as “reasonable,” and any price above that as “unreasonable,” regardless of changes in the conditions of production or demand since that starting price was first established.
Bitcoin Core’s central planning inherently declares the cost of node operation today to be reasonable, but this is done without providing any hard data about which users are running a node, much less what their needs are, which costs they can bear, and so on.
In discussing this subject, there is no point in assuming a price control that would fix prices exactly where a free market would place them in any case. That would be the same as having no price control at all. We must assume that the purchasing power in the hands of the public is greater than the supply of goods available, and that prices are being held down by the government below the levels to which a free market would put them.
Now we cannot hold the price of any commodity below its market level without in time bringing about two consequences. The first is to increase the demand for that commodity. Because the commodity is cheaper, people are both tempted to buy, and can afford to buy, more of it. The second consequence is to reduce the supply of that commodity. Because people buy more, the accumulated supply is more quickly taken from the shelves of merchants. But in addition to this, production of that commodity is discouraged. Profit margins are reduced or wiped out. The marginal producers are driven out of business. Even the most efficient producers may be called upon to turn out their product at a loss. This happened in World War II when slaughterhouses were required by the Office of Price Administration to slaughter and process meat for less than the cost to them of cattle on the hoof and the labor of slaughter and processing.
In Bitcoin, block space is the commodity supply being artificially restricted. The producers of this commodity are the miners (although they do not produce a physical good, the analogy holds). Restricting the availability of the block space commodity indeed discourages the further production of such. New entrants into the Bitcoin mining business are thereby disincentivized: if the cost of producing a bitcoin has already reached its marginal level, then the profits available to new market entrants are not great enough to incentivize the risk-taking required of new mining operations. By dictating such policies and not allowing goods to be subject to the free-market-at-work, Core discourages new competitors and directly contributes to the centralization of mining!
If we did nothing else, therefore, the consequence of fixing a maximum price for a particular commodity would be to bring about a shortage of that commodity. But this is precisely the opposite of what the government regulators originally wanted to do. For it is the very commodities selected for maximum price-fixing that the regulators most want to keep in abundant supply. But when they limit the wages and the profits of those who make these commodities, without also limiting the wages and profits of those who make luxuries or semiluxuries, they discourage the production of the price-controlled necessities while they relatively stimulate the production of less essential goods.
The regulators wish to keep the ability of consumers to perform Bitcoin transactions in abundant supply, while simultaneously restricting the available supply of on-chain Bitcoin transactions. Thus the production of “luxuries” or less essential goods is stimulated: Lightning networks, sidechains, centralized clearinghouses, and altcoins. More foolish than the governmental central planners in Hazlitt’s example, many of the goods that Core assumes will pick up the slack for scarcity of on-chain transactions do not even exist yet.
Some of these consequences in time become apparent to the regulators, who then adopt various other devices and controls in an attempt to avert them. Among these devices are rationing, cost-control, subsidies, and universal price-fixing.
The cost of making a normal Bitcoin transaction becomes too high, so the cost of a segwit transaction shall then be fixed at one-fourth the cost of a regular Bitcoin transaction, Core has decided. Problem solved? Hazlitt explains,
When it becomes obvious that a shortage of some commodity is developing as a result of a price fixed below the market, rich consumers are accused of taking “more than their fair share;” or, if it is a raw material that enters into manufacture, individual firms are accused of “hoarding” it. The government then adopts a set of rules concerning who shall have priority in buying that commodity, or to whom and in what quantities it shall be allocated, or how it shall be rationed. If a rationing system is adopted, it means that each consumer can have only a certain maximum supply, no matter how much he is willing to pay for more.
We can see this today in Bitcoin when certain transactions are accused of being “spam” or of taking unfair advantage of the limited block space commodity. Nevermind that these so-called spam transactions pay the fair market rate to be included, or that these transactions are slapped with the spam epithet on no grounds other than their frequency or their size.
The government may try to meet this difficulty through subsidies. It recognizes, for example, that when it keeps the price of milk or butter below the level of the market, or below the relative level at which it fixes other prices, a shortage may result because of lower wages or profit margins for the production of milk or butter as compared with other commodities. Therefore the government attempts to compensate for this by paying a subsidy to the milk and butter producers. Passing over the administrative difficulties involved in this, and assuming that the subsidy is just enough to assure the desired relative production of milk and butter, it is clear that, though the subsidy is paid to producers, those who are really being subsidized are the consumers. For the producers are on net balance getting no more for their milk and butter than if they had been allowed to charge the free market price in the first place; but the consumers are getting their milk and butter at a great deal below the free market price. They are being subsidized to the extent of the difference — that is, by the amount of subsidy paid ostensibly to the producers.
Again, the consumer is told that the price controls are for their own benefit: “Why are you concerned? You’ll be able to make transactions for less than you can now!” But the producers are on net balance getting no more for their block space than if they had been allowed to charge the free market price in the first place. Worse still, if all Bitcoin transaction activity switched to the segwit format overnight, the miners are now being paid the same as before while bearing four times the burden of resources required. That Core does not consider this outcome disastrous is only a testament to the trivial cost of node operation even as resource requirements are increased.
Now unless the subsidized commodity is also rationed, it is those with the most purchasing power that can buy most of it. This means that they are being subsidized more than those with less purchasing power. Who subsidizes the consumers will depend upon the incidence of taxation. But men in their role of taxpayers will be subsidizing themselves in their role of consumers. It becomes a little difficult to trace in this maze precisely who is subsidizing whom. What is forgotten is that subsidies are paid for by someone, and that no method has been discovered by which the community gets something for nothing.
Treating segregated witness as a capacity increase, as the Bitcoin Core development team does, ignores that the subsidized commodity is still kept in restricted supply. By not allowing the supply to grow in line with what the free market is capable of providing, discounting segwit transactions allows only for a bit of breathing room until those transactions also end up in short supply and begin rising in cost, as is happening with regular transactions today.
Price-fixing may often appear for a short period to be successful. It can seem to work well for a while, particularly in wartime, when it is supported by patriotism and a sense of crisis. But the longer it is in effect the more its difficulties increase. When prices are arbitrarily held down by government compulsion, demand is chronically in excess of supply. We have seen that if the government attempts to prevent a shortage of a commodity by reducing also the prices of the labor, raw materials and other factors that go into its cost of production, it creates a shortage of these in turn. But not only will the government, if it pursues this course, find it necessary to extend price control more and more downwards, or “vertically”; it will find it no less necessary to extend price control “horizontally.” If we ration one commodity, and the public cannot get enough of it, though it still has excess purchasing power, it will turn to some substitute. The rationing of each commodity as it grows scarce, in other words, must put more and more pressure on the unrationed commodities that remain. If we assume that the government is successful in its efforts to prevent black markets (or at least prevents them from developing on a sufficient scale to nullify its legal prices), continued price control must drive it to the rationing of more and more commodities. This rationing cannot stop with consumers. In World War II it did not stop with consumers. It was applied first of all, in fact, in the allocation of raw materials to producers.
Assuming that the public has a fixed or growing demand for using money transfer systems, of which Bitcoin is merely one type, then the end result of restricting the available supply of Bitcoin transactions is that more and more pressure is put on unrationed commodities. Whether those unrationed commodities are traditional payment methods or altcoins, the end result spells disaster for Bitcoin.
The natural consequence of a thoroughgoing over-all price control which seeks to perpetuate a given historic price level, in brief, must ultimately be a completely regimented economy. Wages would have to be held down as rigidly as prices. Labor would have to be rationed as ruthlessly as raw materials. The end result would be that the government would not only tell each consumer precisely how much of each commodity he could have; it would tell each manufacturer precisely what quantity of each raw material he could have and what quantity of labor. Competitive bidding for workers could no more be tolerated than competitive bidding for materials. The result would be a petrified totalitarian economy, with every business firm and every worker at the mercy of the government, and with a final abandonment of all the traditional liberties we have known.
The Bitcoin economy, unlike state economies, is thankfully one of voluntary participation. While the end result of price controls, a petrified totalitarian economy, will be the same, the consumers in the Bitcoin economy have a choice and do not need to remain participants. Packing up and moving to another cryptocurrency is far simpler than packing up and moving to a country with more favorable economic policies, and this is exactly what will happen (we are already seeing it happen with the news of Circle abandoning Bitcoin this week). Attempting to centrally plan Bitcoin’s underlying economics, as the Bitcoin Core developers do today, is guaranteed to lead Bitcoin down the path of irrelevance.
This first appeared at Medium.com
John Blocke writes at Medium.com.
This article was originally published on FEE.org. Read the original article.
It can be easy and tempting, especially during a presidential campaign, to listen only to opinions that mirror and fortify one's own. That’s not ideal, because it eliminates learning and makes it impossible for people to understand what they dismiss as “the other side.”
If you think that Barack Obama has been a terrific president (as the author does) and that Hillary Clinton would be an excellent successor (as he also does), then you might want to consider the following books, to help you to understand why so many of your fellow citizens disagree with you:
Having read these books, you might continue to believe that progressives are more often right than wrong, and that in general, the U.S. would be better off in the hands of Democrats than Republicans. But you’ll have a much better understanding of the counterarguments -- and on an issue or two, and maybe more, you’ll probably end up joining those on what you once saw as “the other side.”
To contact the author of this story:
Cass R Sunstein at firstname.lastname@example.org
To contact the editor responsible for this story:
Christopher Flavelle at email@example.com
Originally published at Bloomberg.com
MORE FROM LIBERTYLOL:
Liberty Maniacs is a great resource for hilarious political T-shirts, coffee mugs, hoodies, etc. They've got drinkware, stuff for kids, a "dirty jokes" section. Pretty much anything you need. Buy something for that White Elephant party you've got coming up.
Black Friday deals:
25% off all orders $75+ with code Black16.
20% off all orders $35+ with code Black2016.
10% off all orders code 10Black16.
Might I suggest the Donald Trump "We Shall Overcomb" T shirt?
What every libertarian needs to know to articulate the free-market point of view to unsympathetic audiences
Each month, for less than the price of a movie ticket, Liberty Classroom gives you access to stimulating, though-provoking lectures and discussions on the key ideas of libertarianism, capitalism, and free-market economics.
Our vast library of audio and video classes includes 30 lectures on conservatism and libertarianism … 59 lectures on the history of political thought … 31 lectures on what’s wrong with textbook economics 20 lectures on logic … and much more – hundreds in all.
Black Friday Deals:
Basic one-year membership for $62 (regular price $119!)
Basic one-year membership plus for $85 (regular price $149!)
Master LIFETIME membership for $327 (regular price $597!)
*You can aso purchase as a gift subscription– great Christmas gift for the liberty lover in your life ?
Check it out here.
There are great deals on Amazon through Cyber Monday. If you are buying anything from Amazon, please use our affiliate link: http://amzn.to/29NBa27
Click here to see Jason Stapleton's recommended book list which includes numerous books on Liberty, Politics, Economy, Markets and even some fiction!
I'm personally buying Economics in One Lesson by Henry Hazlitt for a couple family members of mine. They've even got it on AUDIOBOOK!
MORE FROM LIBERTYLOL:
How's this for a novelty: Tom Woods graduated from Harvard University and managed to keep his sanity.
It wasn't easy.
One of his professors required him to buy his books from a store called Revolution Books. The communist mass murderers of the 20th century adorned the walls.
He refused to do it.
Every night at dinner there were people selling the Workers Vanguard -- an openly communist newspaper -- outside the dining hall. Tom debated them, but as you can imagine, it was pretty hopeless.
Tom would up graduating with a degree in history with high honors. He went on to get his Ph.D. from Columbia University.
But you know what? He had to learn an awful lot on his own. There was plenty of non-p.c. history he was never going to learn in a Harvard classroom.
And this is a major reason people educate their children at home: they want them to learn the truth.
America's universities -- not to mention our high schools and junior high schools -- aren't exactly the best sources for that.
Nearly five years ago now Tom decided to fight back.
He created Liberty Classroom, where people can learn the real history and economics they won't get in traditional school.
The election has brought out the crazies, and you no doubt want to win all those debates you're getting dragged into. But do you find that although you know you're right, you just don't have the information you need at your fingertips?
Never lose another debate.
Liberty Classroom has 17 courses (and they're always adding more), plus Q&A forums where you can get all your questions answered by some of the smartest, most accomplished scholars in the liberty movement.
Become a better debater while driving your car.
Plus our Q&A forums: imagine, when you're stumped in a debate, being able to get your questions answered by Dr. Robert Murphy, one of the world's most prolific free-market economists, or Dr. Kevin Gutzman, author of The Politically Incorrect Guide to the Constitution, or by Dr. Woods himself?
For Black Friday Liberty Classroom is having its biggest sale of year but it's only Today through Cyber Monday.
The universities have become propaganda factories. Tom is fighting back.
Be a part of it:
Check out more HERE.
Random Liberty Lover spouting random Liberty goodness.
Purchasing your Amazon items through this search box supports libertyLOL and doesn't cost you a penny more at checkout!
Tom Wood's Liberty Classroom
"Get the equivalent of a Ph.D. in libertarian thought and free-market economics online for just 24 cents a day...."
Most of us learned politically correct U.S. history in school. The economics was at least as bad.
It's never too late to learn the truth.
At Liberty Classroom, you can learn real U.S. history, Western civilization, and free-market economics from professors you can trust.
Short on time? No problem. You can learn in your car.
Find out more!