Why Statists Always Get it Wrong

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.

An analogy is not a rational argument. It can be a helpful tool for hypothesis formation, so it might be "rational" in the sense of being "sane", but you'll never convince me that taxation is just on the grounds that "life is like a box of chocolates." But we're simply arguing nomenclature at this point. I give.

That's wrong too. Very often I make a choice after careful consideration of the consequences...

True, but even a monkey knows not to take the alpha-male's banana because he doesn't like being savagely bitten. Ultimately, every choice boils down to a purely subjective preference concerning expected outcomes. You think A will make you happier than B, so you choose A.

The choice itself is non-rational. "A" might be, "do a rain dance," and you might indeed have reasoned to yourself that a rain dance will bring rain, which will bring crops, which will bring wealth, which will bring women flocking round--so in your mind, "do a rain dance" is equivalent to "get lots of women." But however you might rationalize the significance of "A", you pick it because you want to.

Since it is both rational and a choice what else should one call it but a rational choice?

Thinking was in there somewhere, but not in the act of choosing itself. This is in fact important, because everyone who speaks of "rational choices" invariably commits the same fallacy. Namely, they proceed to equivocate between "logical" and "sane" as meanings of "rational," and characterize people as insane whose choices they don't like. This in turn becomes the justification for focibly overriding their choices.

Indeed, that's the argument you're trying to build. You want to say we need government to protect people from their irrational choices, where the plausibility of the argument comes from reading "irrational" to mean "insane". Throw in a pinch of elitism, and we'll readily swallow the implication that everyone in the world (except me) is insane, and needs a government keeper. Bake at 250, and voila! Statist soufflé!

If you try to give an example of the "irrational" choices that justify forcible government intervention, you'll see that I've anticipated your argument precisely.

My reply is not to claim that the man who freely chooses suicide, or self-mutilation, or what have you, is "sane". Rather, my reply is to deny that the man who chooses to wear a suit and go to work is any more "sane"; you just think so, because he's acting so much like you. But ultimately he's just doing what he wishes to do.

If I recall correctly my previous example of a rebuttal to one of your "smashes" was actually to something you intended to be humorous, so this is in response to your post 408:

Remember that to rebut your “smash” I don’t have to prove that what you tried to smash was correct. All I have to do is demonstrate your “smash” was incorrect.

KrisKrinkle wrote as one definition of Social contract: an actual or hypothetical contract providing the legitimate basis of sovereignty and civil society and of the rights and duties constituting the role of citizen. The contract can be agreed between people and a proposed sovereign or among the people themselves.

Shalom Israel wrote that KrisKrinkle wrote:

Smash these: an actual or hypothetical contract providing the legitimate basis of sovereignty and civil society and of the rights and duties constituting the role of citizen...

Shalom Israel then wrote:

OK, this definition explicitly says a social contract is a contract. A contract, in turn, is "An agreement formed by an exchange of promises in which the promise of one party is consideration supporting the promise of the other party." This is contradictory, because the citizen does not in fact exchange any promises.

The definition is also faulty on the grounds that there's no such thing as a "hypothetical" agreement. How do two people "hypothetically" agree?

Kriskrinkle responds:

"OK, this definition explicitly says a social contract is a contract. "

True but not a “smash.”

"A contract, in turn, is 'An agreement formed by an exchange of promises in which the promise of one party is consideration supporting the promise of the other party.'"

That’s one definition of a contract, in particular a bilateral contract , but I'd venture it is a definition you chose because you thought it would be easy to “smash” (see Notes below).

"This is contradictory, because the citizen does not in fact exchange any promises."

That's part of your “smash” based on your pick of a definition of a contract you could easily “smash”.

Note also that your reference to what I wrote is significantly incomplete (as references sometimes are).

What I wrote states the contract can be agreed between people and a proposed sovereign or among the people themselves, not using the term "citizen" in the in that regard. That it is possible for people to exchange promises with a sovereign or among themselves should be obvious (although you will probably deny it). That leaves the question of whether or not they actually do so. In answer:

Feudalism
A series of contractual relationships between the upper classes, designed to maintain control over land.
Feudalism flourished between the tenth and thirteenth centuries in western Europe. At its core, it was an agreement between a lord and a vassal. A person became a vassal by pledging political allegiance and providing military, political, and financial service to a lord. A lord possessed complete sovereignty over land, or acted in the service of another sovereign, usually a king. If a lord acted in the service of a king, the lord was considered a vassal of the king.
As part of the feudal agreement, the lord promised to protect the vassal and provided the vassal with a plot of land. This land could be passed on to the vassal's heirs, giving the vassal tenure over the land. The vassal was also vested with the power to lease the land to others for profit, a practice known as subinfeudation. The entire agreement was called a fief, and a lord's collection of fiefs was called a fiefdom.
The feudal bond was thus a combination of two key elements: fealty, or an oath of allegiance and pledge of service to the lord, and homage, or an acknowledgment by the lord of the vassal's tenure. The arrangement was not forced on the vassal; it was profitable for the vassal and made on mutual consent, and it fostered the allegiance necessary for royal control of distant lands.
The bond between a lord and a vassal was made in a ceremony that served to solemnize the fief.
(Excerpted From: Legal Encyclopedia, Thomson Gale)

So, people actually have exchanged such promises. Your “smash” so far is rebutted.

You further your “smash” with: "The definition is also faulty on the grounds that there's no such thing as a "hypothetical" agreement."

Kriskrinkle actually wrote "an actual or hypothetical contract" nevertheless:

Hypothetical means of, relating to, or based on a hypothesis: a hypothetical situation. A hypothesis is:

1. A tentative explanation for an observation, phenomenon, or scientific problem that can be tested by further investigation.
2. Something .
3. The antecedent of a conditional statement.

So the words "an actual or hypothetical contract" are a shortened version of "an actual contract or a contract that is a tentative explanation for an observation that can be tested by further investigation or a contract taken to be true for the purpose of argument or investigation; an assumption.

In other words there can be a hypothetical contract or agreement. Your “smash” so far is still rebutted..

"How do two people "hypothetically" agree?"

A misconstruction on your part given the explanation preceding your question.

Notes:

Bilateral Contract

An agreement formed by an exchange of promises in which the promise of one party is consideration supporting the promise of the other party. (Excerpted From: Legal Encyclopedia, Thomson Gale)

Excerpted from the same source:

Contracts

Agreements between two or more persons that create an obligation to do, or refrain from doing, a particular thing.
The binding force of a contract is based on the fact that it evinces a meeting of minds of two parties in good faith. A contract, once formed, does not contemplate a right of a party to reject it.

(Remember these are excerpts. There is a lot of other stuff there, but most of it is legal stuff that probably wouldn't exist under Shalom Israel rules.)

A more appropriate definition of contract than the one Shalom Israel used would be:

A contract is an agreement between two or more persons that creates an obligation to do, or refrain from doing a particular thing.

Now, Shalom Israel, I don't know for certain, but I could likely rebut all your "smashes" the same as I've done here. However, I have no intention of making the effort. (It's not that it's hard but it's tedious.) I'm pretty well done and I'm outta here.

May you live long enough to learn.

Was busy so it took me a while to get to that link, but when I read that whole article it sounds like three independent failures of anarchy. Not exactly what I'd consider evidence for the idea that anarchy can be a stable social form. Maybe someday when human nature is different, but not yet.

Since these experiments failed so quickly, I don't think it's reasonable of you to claim them as evidence that people will be better off with anarchy than some government.

In fact, int the Pennsylvania case, I think one of two things are likely. Either most folks willingly joined in accepting the government or a minority insisted and the majority could not organize to resist. Both argue against your case.

Now, back to another of your points. You said

You doubt it, but it happens to be precisely true. Observe that monkeys have hierarchy. It's hardly a human invention. A non-sentient being needs a herd instinct to survive, because cooperation is indeed necessary for survival.

Well, you completely missed the point in several ways here. First, contrary to your implication, I was doubting that people in the aggregate would continue to do something very bad for them, as you suggest government is, for many millenia. I observe that people are very smart and have been for tens of thousands of years. If anarachy were actually better for people than government, I suspect that by now anarchy would be a prevalent social form.

Second, I was specifically *not* suggesting that people *don't* have a tendency toward hierarchy. As you note, this is an evolved social trait and people have it too.

Third, since many species get along fine without them, I'd say neither hierarchy nor cooperation are obviously essential traits for survival. I suspect though that they do significantly improve fitness and also that they are socially beneficial.

Fourth, you argue against yourself somewhat. I'd say government clearly increases cooperation compared to many small hierarchies (note that I am arguing *rationally* by analogy of humans with apes and monkeys). I'd also argue that anarchy *decreases* cooperation compared to many small hierarchies. If cooperation were an essential survival trait, and supposing you agree people are better off alive than dead, doesn't govenrment clearly have a social benefit relative to anarchy?

Was busy so it took me a while to get to that link, but when I read that whole article it sounds like three independent failures of anarchy.

Yes, but exactly what sort of failure? In each case, failure was the result of individuals' scheming to get power for themselves. That's the fundamental fact of human nature we're facing: not only will G-men come after you if you defy today's government, but if government disappeared, men would promptly set about creating one--precisely because it's such a great racket for the fellows at the top.

or a minority insisted and the majority could not organize to resist. Both argue against your case. That's exactly what happened--but how does that "argue against my case"? I've said all along that lack of government is better, but that humans are such unevolved herd animals that the masses would refuse to live like that. They're to frightened, if the alpha male isn't there to tell them what to do.

First, contrary to your implication, I was doubting that people in the aggregate would continue to do something very bad for them, as you suggest government is, for many millenia.

You didn't suppor this claim of yours. I claim the opposite, and support it thus: apes evolved cooperative behavior, because cooperation provides a competitive advantage. However, in small family units, that "cooperation" is essentially socialistic. Thus humans evolved as socialistic herd animals, and they retain their herd instincts to this day. Thus they don't choose self-government because it's contrary to their genetic programming.

There are any number of examples where intellect can improve on nature, but that doesn't mean nature cooperates.

Second, I was specifically *not* suggesting that people *don't* have a tendency toward hierarchy. As you note, this is an evolved social trait and people have it too.

That's what makes anarchy essentially impossible today, as I've said before.

You're correct that I have whatever human baggage you do. However, humans can overcome instinct with reason--for example, someone afraid of heights can nevertheless motivate himself to bail out of an airplane. At the same time, most humans do not overcome their instincts.

So one way of looking at it is that humans will adopt anarchy when they evolve sufficient intelligence for the majority to leave behind animal instincts. Then again, there's no reason to believe that humans ever will evolve enough intelligence.

I'd say government clearly increases cooperation compared to many small hierarchies...

That's possible but by no means obvious. In the world we have an anarchistic system running in parallel with governments, called the "free market". That market is imperfect, because government interferes in it frequently, but it's essentially anarchistic. And whenever it goes head-to-head with government, it kick's government's @ss. After hurricane Katrina, for example, WalMart's response to the disaster put Fema's to shame.

If cooperation were an essential survival trait, and supposing you agree people are better off alive than dead, doesn't govenrment clearly have a social benefit relative to anarchy?

That's an excellent question! My suggested answer is that evolution doesn't pick the "best" solution; it picks any solution that works. "Cooperation" is a survival trait, but that doesn't mean that evolution picks the best possible form of cooperation. The tyranny of the alpha male is "better" than trying to survive all by yourself, but there are much better ways.

Anarcho-capitalism isn't about not cooperating; it's about all cooperation being voluntary.

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Why Statists Always Get it Wrong

by Per Bylund