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Against the IFP

Centralizing control over a currency’s infrastructure is a seemingly obvious mistake.

One would think any Austro-libertarian worth their salt would be able to see thru such a charade. Yet here we are, again. Face to face with economic illiteracy. Not garden variety lefist economic illiteracy, but one far more stinging and painful - one which comes from within our own community, rather than from without. 

First, Bitcoiners faced the economic illiteracy of maximalism and small blockers. Attempts to masquerade money’s primary function as value storage (Ammous) or rejecting Menger’s Regression Theorem altogether (Szabo) are luckily demonstrably false. Nevertheless, the shock of our fellow Bitcoiners illiteracy was like an unexpected slap in the face. Suddenly, we were forced to confront the fact that the ignorance of our allies in the fight for sound money, had led them astray. Yet, thru BCH we were thankfully able to keep Satoshi’s dream of peer to peer cash intact. 
Well, crypto anarch…

The Role of Government: A Critique

There is a wide range of arguments for the necessity of government, an entity literally defined by the initiation and attempted monopolization of violence. Some can be plainly dismissed: the government has divine rights or that it is an inherent moral authority. In his book, "Capitalism and Freedom," Milton Friedman rejects these arguments and instead develops one based on economic reasoning. This is not to say it is flawless, though. Friedman and others argue that government is necessary to define rights, enforce those rights, provide a monetary system, solve technical monopolies and externalities, and protect children and mentally handicapped. However, upon examination, these justifications fail to achieve their goal. The government as an inevitability, but distinctly not as a necessity, may be a fine conclusion; however, moral or economic justification of the monopoly on violence falls far short.

I wish to note here that I have the highest of respect for Friedman and his writings. “Capitalism and Freedom” is a phenomenal writing both in economics and political philosophy—after reading it I have added it to my shelf of favorites books. I suggest the book, and the consideration of its arguments, to all readers.

Many people today look towards government as the sole authority on rights. The American Founding Fathers, with all their shortcoming, did make a great leap forward towards true liberty when they recognized that rights are “unalienable.” They realized that the property rights to life, liberty, and happiness are not granted by the government, but rather only recognized. It is a wonder then why many modern men look to the government to define these rights. If they are truly unalienable, then their true definition and limits exist independently from compulsory courts. If these true definitions exist independent of the government, then it cannot be said that government is necessary to define them.

Friedman says that, “we need an umpire” (25). Of course we do! His mistake is that this must be a compulsory force. Let us extend his analogy. Were the rules of baseball achieved through Takis—control from the top-down—or Cosmos—order derived from hundreds or thousands of human interactions? Did they develop over time, being originated by the necessity of individuals determining rules that best achieve their goals in a peaceful and consenting way? Or did some king arbitrarily imagine that after three strikes and you’re out, and then use his armies to compel his subjects to play the game?

We as a species have already overcome great issues of property rights. In the mid-1800s we were still debating if a man can be owned by another. Who objected to slavery and declared that every man, regardless of race, has a right to his own body? It was private philosophers such as Fredrick Douglas and John Brown. Only afterwards did the government recognize this truth.

This is not to say that man has reached perfection in his understanding of property. One glaring issue is intellectual property; is it even a truthful claim? Can one justly use violent self-defense to protect one’s inventions or ideas? I am not here to claim I know the answer, just simply that we will eventually come to a sufficient conclusion. Another issue is property ownership in space; in their book, "Space Capitalism," Peter Nelson and Walter Block point out some of these future questions such as the homesteading of orbits and trajectories (52-55). Whether government is abolished before or after we solve this quandary, it is true that the answer will almost certainly come from a philosopher and not a politician.

A particularly emotive call for the necessity of government is to define when and if children, the mentally disabled, or the mentally ill have the same negative rights as neurologically-normative adults. It seems obvious that these three groups have the same negative rights from harm and coercion, the controversy is whether or not they can consent to certain harmful or mature actions. Any rational person would agree that certain restrictions are appropriate, but to what level, and what qualifies someone to be in these groups? Friedman refers to this quandary as the “paternalistic grounds” for government; yet, by his own admission, “There is no formula that can tell us where to stop. We must rely on our fallible judgment… We must put our faith in a consensus reached by imperfect and biased men through free discussion and trial and error” (33-34) (emphasis added). If it is true that trial and error is required, then is not the market the more efficient and more ethical force to achieve this? The market will be more reactive because of competition and more cautious because of the threat of lawsuits — which the government is largely immune from because of Rex Non Potest Peccare—than any coercive force. These dilemmas will likely be solved by science and philosophy as we learn more about the human brain, an organ that was even more mysterious during the time of Friedman’s writing of “Capitalism and Freedom.”

Even if we can establish clear and well-defined rights, surely the government is necessary to enforce these rules. What other force can compel men to behave ethically? Friedman argues that, protection of individuals is an “indivisible matter,” which is to say that it is a matter “to which effective proportional representation is impossible” (23). In what manners might an individual need to be protected? We can recognize two categories: protection of his negative rights (i.e. the enforcement of physical or intellectual claims to homesteading or purchase) and protection of his positive rights (i.e. the enforcement of voluntary contracts). In both matters, individuals must have some way to protect themselves from the malevolence of others. This is truly one of the strongest cases for government, though a look at economics shows that the government’s role as a protector may soon become irrelevant.

Let us apply the law of lowering cost and increasing quality to the market of personal safety, of which the government is currently the largest supplier. It is worth a note that the government fails to be a dutiful supplier of this good as evident by the thousands of cases of police brutality; but it still remains the largest supplier because it is expected to be by the market. What, currently, is the opportunity cost of not buying safety from a centralized government? The consumer will supposedly loose many benefits: most notably the army and the police. However, this opportunity cost is constantly being lower by market forces as inputs to personal safety lower in cost and raise in quality. While one protection of one’s self required mining and forging a sword or gathering wood and rope to make a bow using ancient techniques, now we are on the verge of printing automatic firearms. We were using much more scarce materials to produce less effective weapons—and as such government was viewed as necessary to provide protection to the masses. Now the masses can produce incredibly effective weapons for much cheaper, all thanks to the market.

One of the more questionable claims for government is the need to generate a monetary framework. Friedman discusses in depth his proposal for an efficient government-involved system. His proposal is elegant and obviously preferable to our current arrangement. However, the justification for his proposal is based on this implied syllogism: money is necessary; money is also most efficient in conformity and best served in the form of a monopoly; the government is efficient at forcing conformity and running necessarily monopolized niches; therefore government is necessary to provide money. It is likely that Friedman would disagree with the first premise that money is necessary. However, this is the only logical premise to reach such a conclusion as he does. How can “X”, which is not necessary, be used as a justification for the necessity of “Y”? As such, it is relevant to also point out the falsity of the premise in question. Money is simply not a necessity, only an efficiency. A barter system is much, much less efficient than one based on currency, but a barter system does not violate the rights of man. If a currency system inherently must violate man’s rights—as Friedman suggest—then we should opt for the barter system out of moral necessity. Though, the claim that a sufficient currency system must be run by the government is also up for debate with the emergence of crypto-currencies. Friedman cannot be faulted for not taking this into account, though, as this new technology developed almost half a century after his publishing.

Crypto-currency’s emergence and attack on the government’s former monopoly on currency is an example of one of Friedman’s own points: that technical monopolies generally fall to market-based technological advancement (29). He gives an example of how railroads were best served through an oligophy but were replaced with smaller firms of trucking. He also correctly predicts that the public monopoly of the Post Office would be replaced with more efficient private firms (30). This predication would be almost prophetic if not for its unspecific nature. Friedman does not point to one particular line of technology that might make the Post Office irrelevant, but instead simply predicts that, if given freedom, man would advance technology to produce an efficient market. And that we have; the emergence of computers has largely replaced letter shipping with emails and package shipping with unprecedented, globally efficient private firms such as UPS, Amazon, and FedEx.

Still, Friedman argues that, “for general access to roads, involving many points of entry and exit, the costs of collection would be extremely high... Hence, it is hardly feasible to have private enterprises provide the service and collect the charge without establishing extensive private monopoly” (30). Yet again, technological advancement has even made this claim inaccurate. It is reasonable to say, because of the historical context, that Friedman is imagining private roads would require a building structure with a worker at each points of entry and exit.” However, with advancements in camera and computerization technology, it is now very possible to abolish these types of tolls entirely and replace them with a simple structure that overhangs the points. These structures have cameras attached to track who enters the road and uses it, and then automatically sends a bill to the address of the user. Even some government tolls are operated in this way. It’s worth noting that the only cases I know of that use this advanced technology involve private-public partnerships. Perhaps many firms will take up competition for desirable spots to enter and exit a road, and the road around each point would be maintained by the company of closest physical association. Or perhaps some other system would emerge. Whatever be the case, there is no longer a claim that government is necessary to run the operation of roads.

Friedman developed one of the most elegant arguments for the necessity of government. However, in light of certain economic laws, logical tests, and modern technological advances, even his argument falls short. The points he puts forth are commonly understood as the basic function of government and are currently widely accepted as appropriate for that violent and coercive enterprise. As we as a species advance in our philosophical understanding of property rights, as well as their application to children and mentally disabled or ill individuals, and in our technological advancements in self-defense, money, and other industries, it seems plainly obvious that our tendency to look towards government as a just entity will eventually cease all together.

Derrell M., @BenjaminDMyles1


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