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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…

Positive Counter Economic Theory: Laffer Curve Applied to Agorism

Agorist thought has long been a normative theory, one that says what we ought to do. It is defined as a method to a libertarian-anarchist society. Perhaps, though, it would be helpful to think of it as more of a positivist theory, one without value judgments or calls to action. To examine this, we will start with a well-established economic model: the Laffer Curve.

Compliance/Intensity Graph

The Laffer Curve is used in macroeconomics to predict tax revenue as it relates to tax rates. Rates are on the x-axis with revenue on the y-axis. It argues that, at a certain rate (Point L), the overall revenue collected will decrease because people will stop producing. On the left side of the maximized point, the state collects less revenue than they could; on the right side, the state also collects less revenue.

However, one factor that is often overlooked is that the right side's decrease could caused in part, and perhaps a large part, by people switching from the white market to the grey market.

Let us extrapolate this to other kinds of law. Our new curve will put the intensity of a law on the x-axis and compliance to a law on the y-axis (See Figure 1). This, like the Laffer curve, argues that government can only affect human action (such as revenue and compliance) indirectly by changing variables in their control (tax rates, speed limits, visas)/ Essentially the State cannot wish revenue or compliance into existence. We will need to define intensity. In simple scenarios, this is just the numerical rates of government laws: the number of visas or the miles per hour of speed laws. More complex is unquantifiable laws such as banning pistols and rifles or cocaine and marijuana. The y-axis is the compliance rate. This is the percentage of the total population acting or not acting because of a law, in either a positivism or deterrence fashion.

Importantly, law here does not mean natural law, since that is not a changeable variable, or enforcement of the law (that will come later). This definition is a bit more complex. First, the variable is a percentage so that it can be used across States. 250 million compliant people in America and the same amount in China are very different statistics. Samuel Edward Konkin III said that agorism will accelerate greatly as a higher percentage of the population comes into the market. Secondly, the definition can measure either action or inaction as it relates to the law; it can judge the rate of people who comply with the Affordable Care Act's individual mandate or the number of the rate of people who do not go over 70 miles per hour on the interstate. Third, compliance has to be because of the law. People who do not do heroin because of the health risk or who do not own a tank because of its cost do not count as compliant persons. Fourth, the definition makes no distinction between people who follow the law because it is the law (legal positivism) and the people who are deterred by state violence.

Figure 1

A few examples will demonstrate this phenomenon. Let's start with speed limit laws on the highway (See Figure 2). 

At a speed limit of 1 million miles-per-hour, no one is complying by our definition. People might not be breaking the law, but their actions are not determined by the law. At this low of intensity, the government becomes like a random, unarmed stranger telling you to do something that no one was going to do anyway. This, though, introduces a data collection problem where we do not know if people are just happening to follow the law or are being deterred/coerced because of it. However, at 5 miles-per-hour limit, a high-intensity law, there is the opposite yet equal effect. People are just simply not going to go five miles an hour, no matter how many fines are threatened. However, at 55 miles per hour, there will be a maximum of compliance. People will want to go faster (perhaps 60, 80, or 100), but will be deterred by the threat of being pulled over. 

Notably, some people will still not comply. For some, a couple hundred dollar fine that is usually not enforced is simply not enough of a consideration to influence their action. This is why rates are a superior measure to plain sums. These non-compliers are the true agorist, they disobey the State because they do not fear it or give it legitimacy. However, those who disobey out of pure self-interest, when the curve falls to the right, are still practicing counter-economics. The difference is purpose. An agorist disobeys the state for moral, positivist reasons while a right-side non-complier does so for normative, economic reasons.

Figure 2

Another example is immigration visas (Figure 3). This, like speed limits, is a quantifiable law. For our purposes, we will assume there is just one type of visas at no cost. Let's say that there is a cap of 8 billion visas for immigration into Country X. Of course, with a rate this high and a law this low in intensity, few are going to go through the trouble of getting a visa because it is so meaningless. If everyone on earth is allowed entry, there is little compliance because most people do not want to immigrate to Country X anyways. At the maximum, people find the risk of disobeying the State to be high and thus either comply or do not immigrate. However, some people will still not get visas to avoid being documented or to make a moral statement. On the right side the maximum, people begin to disobey the law because it is too intense. 

Part of this exponential downward trend is the fixed rate of enforcement. As more and more people disobey the law, State resources such as border patrol agents and physical barriers become more and more overwhelmed and the price per person enforcement is raised. This is all assuming that enforcement intensity--which is different from the intensity of the law--is not raised. This will be discussed later.

Figure 3

It is worth noting here that population refers not to the domestic population of Country X, but to the rest of the world who are potential immigrants. Compliance rates must be used to judge the group of persons the law is being imposed on. For example, in the US, there is a 7% cap on the visa limits of any given country. This has drastic differences for different populations. For Swedes (See Figure 4), this means that 7% is well within the left-side of the curve. ICE does not go out and look for Swedes to arrest; these people can come into the US much easier than other countries, bringing the compliance point to S at a 7% visa rate. 

Swedes do not have a (relatively) high demand for coming into the US, so they do not commit immigration fraud because they are not looking to immigrate anyways. Alternatively, the 7% visa rate for Mexicans is well within the right side of the curve because there is a strong incentive to come to the US. There is strong disobedience because the demand for entry is so high, and 7% is just too intense. Thus, the compliance point is set at M. S and M are both lower than A, but for different reasons based on the population affected. I discussed illegal immigration and the right-side of the agorist curve in another article.

Figure 4 (Sweden)

Figure 5 (Mexico)

Unquantifiable examples are a bit more difficult, but an extreme will show it is still possible. Let's take a look at weapon laws (See Figure 5). Look at a low-intensity law like a ban on personal nuclear weapons. Few, if any, people are not getting nuclear bombs because of the law. First, most people have no need for a weapon that big. Second, nukes are expensive and fail to pass most cost-benefit analyses. In other words, people do not wish to own nukes, so they just happen to comply with the nuclear ban. On the other end of the spectrum, if all weapons were banned, there would be near zero compliance. How many people would give up their pistols, much less their pocket knives? A ban on machine guns, though, might create the maximum rate of compliance. Many people would like to have these weapons, but not at the risk of State violence. 

Figure 5

Methods of Liberty

With this understanding, we can move to graphing the methods of liberty. Here, we will describe three types: Political Liberty, Collapsitarianism, and Agorism. As a positivist discussion, we will seek to graph these impartially. However, the article will offer a suggestion in the most efficacious manner of agorism.

Let's begin with Political Liberty. This includes actions of the Libertarian Party and the Liberty wing of the GOP. This can also include establishment Republicans or Democrats who act in pursuit of liberty on specific issues, such as fighting to legalize marijuana. The goal (or results) of these efforts is a move from higher intensity law to lower intensity law. This is a move from Point A to Point P (See Figure 6). This, of course, has the effect of lowering compliance--and thus takes away the State's power. Though people might still act or not act in accordance with the original law (Point A), the reason for acting or not acting is not because of the law. This is a move on the graph, it does not shift the graph.

Figure 6

Alternatively, we have Collapsitarianism. This is the method by which actors work or wait for the government to make more and more intense laws. The theory is that this will cause mass noncompliance, which holds true according to the graph. Some would argue that our current levels of law will eventually cause mass noncompliance. This, though, only presents a time lag between the dependent and independent variables. This is a move from Point A to Point C (See Figure 7). Like Political Liberty, this is a move on the graph; it does not shift the graph.

Figure 7

Finally, we will graph Agorism. Agorism is the use of the market to replace the State's control. For instance, instead of paying sales taxes, one could go to a farmer's market. This action takes us from Point A to Point A3* (See Figure 8). Agorism works to shift the graph down. It changes people's compliance incentives by providing alternatives to the State; more of this will be explained in the next section. Notably, this is different than the other two methods because it is a shift in the graph. By moving the graph down and to the right, Agorism takes power away from the State at all levels of intensity. In other words, Agorism is not dependent on political processes in the way that Political Liberty and Collapsitarianism are.

*It is worth clarifying that there is no A1 or A2. A3 is a symbol of Agorism.

The most effective method of Agorism would be to attack the most fundamental parts of the State: defense and law. Next to be attacked would be industries that the State profits off of, such as mail, money, and fire insurance. These would be more difficult to shift the graph though because of the State's incentive to protect its monopoly on these industries.

Figure 8

Substitutes and Compliments

Why does this graph fall and how can the State counteract? In order to answer this, we will treat compliance like any other good (See Figure 9). Its price and quantity are subject to change from Substitute and Complimentary goods.

Figure 9

What is a substitute for compliance? Free market produced goods. Take the example of weapons. Let's say that the price of weapons decrease--say from something like 3D printed guns--and more people Supply participation in the free market, S1 to S3 (See Figure 10). With this, the opportunity cost of not getting a gun and complying with the law goes up. So, people are more incentivized to break the law, and the Supply of compliance will decrease, S1 to S2 (See Figure 11). Since people are more willing to break the law, their individual willingness to comply goes down and the aggregate effect is a downward shift of the Compliance-Intensity graph (See Figure 8). Therefore, the more agorist work to lower the price of goods, the market either prohibits (Black Market) or restricts (Grey Market). This causes more of the general public to seek the free market as an alternative to compliance. 

Figure 10

Figure 11

What is a compliment to government law? Government enforcement. This is where it is important to return to the definition of intensity. It is simply a measure of how oppressive the law is as written. It is not the enforcement of the law. Enforcement is a complimentary good to compliance. As the Supply of enforcement, S1 to S4 (See Figure 12), goes up, the opportunity cost of compliance goes down since it is riskier to use the free market. This causes the Supply of compliance to go up, S1 to S5 (See Figure 13), and the quantity of compliance to go up. Since more people are willing to comply with the law, the compliance-intensity graph shifts up (See Figure 14). The more the government enforces its laws, the more the general public will be willing to submit to them.

Figure 12

Figure 13

Figure 14

This is a developing theory. As such, the author welcomes comments/corrections/critiques through this blog and on twitter.

Derrell McIver @BenjaminDMyles1


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