Posted on 02/20/2006 6:24:40 AM PST by Shalom Israel
In a recent article, Carl Milsted uses Rothbard to argue it would be permissible to use force to make people pay for a service of which their benefit is at least double its cost. His conclusion is that it is reasonable, and even preferable, to establish a minimalist state if it is to people's advantage.
As has already been argued by N. Stephan Kinsella, he totally misses Rothbard's point. Furthermore, he fails to show why people would not choose to voluntarily pay for services which would benefit them double, as has been pointed out by Bob Kaercher.
Even so, I wish to offer another analysis of Milsted's reasoning. His article is a good example of why statists always seem to get it wrong — and why they always fail to understand what we're talking about. The bottom line is that they fail to realize the costs of force due to their unwillingness to see the state for what it is. I will therefore use Milsted's own example to shed light on his fundamental mistake.
Milsted takes the case of national defense, which is commonly considered an institution that would face the free rider problem if supplied on the market. Argues Milsted: "suppose the majority assesses a tax on everyone to spread the burden of supporting the new defense system. This is theft of the minority. However, suppose that the economies of scale are such that this tax is less than half of what people would have had to pay for defense on their own."
That's the argument, plain and simple. If it is morally permissible to steal when the victim is compensated double, the equation seems to fit. Well, let's look into this in more detail and see if it really does.
First, consider a situation where everybody benefits, say, $10,000 on a yearly basis from being protected by a national defense. That would mean, if the premise is correct, that it would be morally permissible to force costs of no more than $5,000 on everybody.
Were it a company supplying a service worth $10,000 to each of its customers paying only $5,000 for it, this would be easy. Anyone willing to pay the $5,000 would get the service, and the costs associated with administration and so forth would have to be covered by the $5,000 paid. But Milsted argues the $5,000 should be taxed, and that makes it much more difficult.
First of all, we know state-run businesses and authorities (especially if they are monopolies) tend to be much less efficient than private enterprises. That means people in Milstedistan would get less than they would in a free market society. But even so, there is still the cost of coercion totally neglected by Milsted in his article.
Forcing people to pay for a service means there will always be someone who tries to avoid paying or even refuses to pay. So "we" (i.e., the state) need to invest in collection services to get the money. Now, let's say Murray, who is one of the people we're trying to coerce, goes out to buy a rifle and then declares that he's "anti-government, so get the hell off my property." Perhaps he even threatens to kill the collection agents. Dealing with him would take a whole lot more out of the budget, meaning there is even less to provide for the defense (which is the reason we're in business in the first place).
But that's not all. Let's say Murray won't give us the money no matter how much we ask or threaten him. We will simply have to take it by force, so we need to invest in the necessary tools and we go out to hire a dozen brutes to do the forcing. (More money down the drain … ) It is already pretty obvious we're in a very expensive business; there will not be much defense left if there are a lot of Murrays in our society.
Now imagine our hired brutes go down the street to Murray's house and knock on his door. He sticks his rifle out the window and shouts something about having the right to his property and that he will shoot to kill. Anyway, the brutes try to open his door only to find it is locked and barred. They will have to break in to finally get their hands on Murray's cash.
Our small army goes back to their van to get their tools, then returns to break down Murray's door. Going inside, they manage to avoid all the bullets Murray is firing and they tie him up and put him in the closet. They eventually find that he does not have any valuables and that he keeps his cash in a locked safe. So they have to break it to get the money.
Now we have a problem. To make this operation morally permissible, the benefit to Murray, which we know is $10,000, must be at least double the cost forced on him. The cost is now a whole lot more than the cost of the national defense; it includes administration and collection costs, hiring the brutes and their tools, as well as the broken door and safe, and the time and suffering (and perhaps medical expenses) Murray has lost while we were stealing from him. How much do you think is left from the original $5,000 to invest in a national defense? Not much.
What if Murray suffers from paranoia and therefore had invested $1,500 in an advanced special security door and $2,000 in an extra security safe? Then the total cost of simply getting into Murray's safe would probably exceed the $5,000 we are "allowed" to steal. What then? Should we break in anyway since it is a mandatory tax, only to give him a check to cover what's above the $5,000 mark? That doesn't sound right.
But on the other hand, if we just let him be, more people would do the same as Murray only to get off, and we would have a huge problem on our hands. This is a typical state dilemma: it costs too much to force money from some people, but it would probably be much more "expensive" in the long run not to. It's a lose-lose situation.
Now, what if Murray is very poor and doesn't have the $5,000? Then we would have to take whatever he's got and make him work off the rest. We need to get the $5,000 to cover our expenses of the national defense, and we have the right to take that amount from him. It could, of course, be argued he couldn't possibly benefit $10,000 from a national defense if he has no money and no property. If we trust Austrian economics, that might very well be correct; the benefit of national defense would, like any other product or service, be valued subjectively and thus the benefit would be different for each and every individual.
If this is true, it means we have an even greater problem: the state can rightfully levy costs of a maximum of half the subjective benefit enjoyed. Well, that's a task that would keep an army of Nobel Prize winners busy for a while. If possible, I wonder how much that would cost in the end.
This is the problem statists face on an everyday basis when discussing philosophy and politics. It is easy to make nice equations and formulas, and theorize on great systems and cheap solutions neatly enforced by the state. But when consistently failing to realize the costs of coercion it makes their reasoning fundamentally flawed. Just scratching the surface reveals they really have no clue whatsoever.
Per Bylund works as a business consultant in Sweden, in preparation for PhD studies. He is the founder of Anarchism.net. Send him mail. Visit his website. Comment on the blog.
What's your point???
America has become just peachy & remains fully inline with founding principles?? What about all the laws made during the 44/48 yrs from 1932-80 the Dems ruled BOTH houses 92% of the time - all that's just fine with you, like socialist security with it's sub-2% return for boomers and getting worse? Even a sloth could get himself better returns AND they would have been compounding.
If so - you are a lost cause to me, iow, don't bother cuz I won't. The status quo is NOT OK with me in the least!
"Actually, the article is typical libertarian rubish. National defense cannot be contracted out."
The Vatican is doing it right now, as is Monaco, as are many other states which employ mercenary services, all over the world. Have you seen any private security guards in the Capitol, or anyone contracting for airline security, recently? What would you call what those people are doing? Or were you all in favor of TSA nationalizing baggage handlers and federalizing all port and airport security jobs?
I'm not necessarily against a national defense program. But for the same reason I fear big government, I fear a big standing army in the U.S. The Founders had the same fear, and it's too bad conservatives like you don't understand why.
I wanted to see your argument on this because I had hoped you would catch it, but DD's analogy re: contractors for each position on a football team is particularly humorous--since on pro football teams, that is EXACTLY what happens today. Every player is a contractor. The general manager is a contractor. The head coach is a contractor. Each private actor does his best to achieve for himself and for the good of the team, where he perceives each of those positives to accrue to his interest.
Viewed that way, how does Doug's analogy demonstrate defense cannot function outside of a central authority utilizing force to compel that defense to act in a unified manner? One might ask the Steelers, I suppose, but the short answer is that it doesn't.
"How would you get a foreign client to pick, let alone trust, one of many private court systems?"
There are international mediators who do just that for a living, since international rule-making bodies often do not have the power to enforce their laws, while contracts with a mediation clause are easy to follow and likely to be enforced by most courts if only to avoid work. See http://www.jamsadr.com/rules/international_rules.asp
“You're one of the few people on this thread making cogent arguments for the state.”
Understand that I might say that “In its largest sense a ‘state’ is a body politic or a society of men” or that a state is “The organization of social life which exercises sovereign power in behalf of the people.”
When I make arguments for the state, I am making arguments for our society’s representative form of government at its best, which was established to secure rights, and which is supposed to be majority rule without infringing the rights of the minority beyond the limit on rights necessitated by forming a society.
Of course, “our society’s representative form of government at its best” appears to be a rare occurrence. But the state or the government should not be blamed for being misused any more than guns should be blamed for killing people. The problem is the people who misuse the state, government or guns and the people who allow those people to do so.
“A homeowner's association is a legit enterprise precisely because it's voluntary.”
If by “State” you are referring to the organization which exercises sovereign power in behalf of the people who are Citizens of the United States, was it not voluntary in the beginning?
I’ve never been involved with a Home Owners Association so I don’t know for certain, but I imagine that if one inherited property that was subject to a Home Owners Association, membership in the Association and subjection to its rules would be mandatory not voluntary if one wanted to retain ownership of the property. In much the same way we have inherited the “State” established by our forefathers. As such our membership in the State is mandatory, except we can leave it or disestablish it. Or we can use it as the tool it is for our own purposes, modifying it as necessary. And of course we can blame it for our own misuse, like a carpenter who blames his hammer for hitting his thumb.
I do not understand your comment on “Social Contract.” Among other things, there can be more than one party to a contract. Loosely speaking, the “Social Contract” consists of the agreements made when people associate into a Society. You are partly correct in that someone else may have made the agreements. We inherited the Social Contract established by our forefathers as they inherited the one established by their forefathers. But we are not entirely bound by its terms nor were they. The Social Contract may change as new agreements are reached. And of course you can always ignore it and be an outlaw. But if you want to be an outlaw in the society of other outlaws, you will find that they have a Social Contract too.
"Any thoughts on Milsted's arguments?"
I don't see a need to use some arbitrary threshold to decide an issue like this. To me, it is far simpler. The rules, the Constitution, allow for the imposition of taxes to support certain enumerated powers. The rules allow for almost every one to participate in the selection of those who decide the tax levels and the allocation of the taxes. We are all free to debate and vote on this process. As long as the rules are followed, then the process is 'moral'.
That is an amazingly insightful thought. It is absolutely true, and never even occurred to me. Kudos to you.
Thanks, but I can't actually take credit for it.
No ... just that the founding principles weren't precisely as you've been describing them.
I do note, however, your transition to a strawman argument.
True enough, but Milsted's arguments are not about the morality of the process, but rather the basis upon which to determine the morality of the outcome.
very interesting article. thanks for posting it.
Not at all--I'm saying they'll take steps to protect their investment. Those steps will be more cost effective, and more imaginitive, than the government could take under similar circumstances, because they know the actual dollar value of their risk, and the actual dollar costs of their efforts.
By way of comparison, the Apollo program cost about $100 billion in today's dollars. In 2004, a privately-built craft achieved a suborbital spaceflight for a cost of about $25 million. What does that show? After all, my cellphone has more computing power than NASA did in the 1950s... well, that's exactly the point. The free market could have achieved spaceflight whenever it was deemed cost-effective. Today a wealthy hobbiest could--and did--bankroll the whole thing. But Kennedy decided he wanted to go to the moon then and there, and he could--and did--forcibly take about one gulf-war's worth from the American people to fund it. That the money could have been better spent is proven by the fact that the free market didn't decide to shoot for the moon on their slide-rule technology.
The application of this parable to missile defense should be obvious. The reason you think the idea so risible is that you imagine there's only one way to do it, and that the government's amazingly inefficient way is it.
Future generations will find the whole SDI thing as funny as we (should) find the Apollo program: it's impressive what was accomplished with primitive technology, but funny when you realize that inside most people's 22nd-century iPods is everything you need to disarm a 21st-century warhead.
The State doesn't create property rights--the proper role of the State is to DEFEND them. Those rights were created by God & existed long before the people themselves created the State in order to defend their God-given rights.
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You might be interested in this:
http://www.neoperspectives.com/foundingoftheunitedstates.htm
Um, that's true--in much the same way that letting Muslim women pick their own husbands has "no apparent tangible benefits over the current system" of arranged marriages. I mean, if you ignore the fact that women today are raped and beaten, it really boils down to the same thing: either way, they get married to some guy...
Lest you think I'm exaggerating, the analogy is exact. Except for the fact that people are billed for things they neither want nor need, and then jailed if they refuse to pay, both systems are the same. Your argument is exactly the one I would make to defend a NYC protection racket: the cosa nostra provides better protection than the police. There's no apparent tangible benefit from eliminating the mob.
Awesome catch! I totally missed it.
"The Vatican is doing it right now, as is Monaco,.."
I wasn't aware that the Vatican or Monaco contracted for aircraft carriers and ICBMs.
"I'm not necessarily against a national defense program. But for the same reason I fear big government, I fear a big standing army in the U.S. The Founders had the same fear, and it's too bad conservatives like you don't understand why."
I'm not fond of big government either. But I recognize that there are no practical alternatives in some cases.
I fully understand why the founders feared a standing army. I'm not at all sure they would reject the concept given the realities of todays world.
And when confronted by an aggressive state like Nazi Germany or Soviet Russia, or these days, a nuclear-armed Iran .... what, precisely will those "cost effective and imaginative" steps be? One thing is certain: it costs a hell of a lot of money to take your "imaginative steps."
Your General Re Defense Division is not going to build its missile defense from scratch in a year ... it's going to have to anticipate attacks years in advance if it wants to have any chance of countering them when the time comes. And so it'll have to shoulder a persistent military burden powerful enough and modern enough to respond to threats when they pop up. The standing army raises its ugly head once again, only this time there's no civilian oversight beyond what the Board of Directors think is good for the bottom line.
The statist viewpoint would be that if the government's resources can more efficiently find you a job than you can find it yourself then you should accept that and be willing to pay the additional taxes to support that service. There is no room for the idea that there are things people ought to have to take care of for themselves, and you aren't doing them any favors by doing it for them, efficiently or not.
Milsted's cost/benefit "economy of scale" arguments are a recipe for socialism.
Accepted. When I described your argument as "pro state", I was being literal--I wasn't trying to classify how pro-state you might be. Any fan of limited government is my brother; exactly how limited is an in-house debate between friends.
I’ve never been involved with a Home Owners Association so I don’t know for certain, but I imagine that if one inherited property that was subject to a Home Owners Association, membership in the Association and subjection to its rules would be mandatory not voluntary if one wanted to retain ownership of the property.
Awesome question! I don't know the answer to that one. I suspect you're right that the property does come so encumbered, but inheritence is a special case. I suspect the Misesian answer would be, "So you inherited a house with a covenant. It's all the same as if you inherit a trust fund: you have certain powers, such as receiving income, but not others, such as spending the principle." So I think it can still be interpreted within the rubric of property rights.
The natural comeback this suggests is that, perhaps citizenship can be interpreted in a similar light; you've inherited property encumbered with certain obligations, including property taxes. That will take more consideration, because it's not a trivial argument, and I don't have a ready answer. Once again I doff my cap to you.
I do not understand your comment on “Social Contract.” Among other things, there can be more than one party to a contract.
That's true, but all parties are concenting. There's no way in which a person can be brought under a contract against his will. The closest analogue would be a contract of adhesion, but those are viewed critically by the courts, and every presumption is made to the detriment of the adhesing party.
My observation was that the supposed "social contract" is not in fact a contract. For starters, nobody signed it, least of all me--so this is a contract that binds me against my will. A sort of shrink-wrap license that says, "By being born, you consent to the terms of this user agreement..."
Conversely, the other party to this "social contract" is presumably government. Well, I can't sue them for breach of social contract, can I? Nor can I renegotiate this contract. And if I did manage to open negotiations, guess who gets to arbitrate? Yup--the party of the second part, his very own self.
"Viewed that way, how does Doug's analogy demonstrate defense cannot function outside of a central authority utilizing force to compel that defense to act in a unified manner? One might ask the Steelers, I suppose, but the short answer is that it doesn't."
You need to go back and read my analogy. I wasn't arguing against paid athletes performing these functions. My analogy addressed how the players were selected. Do you really think the Steelers would let 11 different outside agencies independently select their starting lineup? Do you think such a selection process would produce an effective defense?
Suppose one contractor thought linebackers should emphasize speed rather than strength? Sure you can build a defensive concept aroung speedy but light linebackers by compensating at the other positions. But without a central coordinating authority, how do you ensure that these compensations are considered by the other contractors?
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