Socialized Medicine: The Canadian Experience

by Pierre Lemieux

Mr. Lemieux is an economist and author living in Montreal.

The Canadian public health system is often put forward as an ideal for Americans to emulate. It provides all Canadians with free basic health care: free doctors visits, free hospital ward care, free surgery, free drugs and medicine while in the hospital—plus some free dental care for children as well as free prescription drugs and other services for the over-65 and welfare recipients. You just show your plastic medicare card and you never see a medical bill.

This extensive national health system was begun in the late 1950s with a system of publicly funded hospital insurance, and completed in the late 1960s and early 1970s when comprehensive health insurance was put into place. The federal government finances about 40 percent of the costs, provided the provinces set up a system satisfying federal norms. All provincial systems thus axe very similar, and the Quebec case which we will examine is fairly typical.

One immediate problem with public health care is with the funding. Those usually attracted to such a “free” system are the poor and the sick those least able to pay. A political solution is to force everybody to enroll in the system, which amounts to redistributing income towards participants with higher health risks or lower income. This is why the Canadian system is universal and compulsory.

Even if participation is compulsory in the sense that everyone has to pay a health insurance premium (through general or specific taxes), some individuals are willing to pay a second time to purchase private insurance and obtain private care. If you want to avoid this double system, you do as in Canada: you legislate a monopoly for the public health insurance system.

This means that although complementary insurance (providing private or semi-private hospital rooms, ambulance services, etc.) is available on the market, sale of private insurance covering the basic insured services is forbidden by law. Even if a Canadian wants to purchase basic private insurance besides the public coverage, he cannot find a private company legally allowed to satisfy his demand.

In this respect, the Canadian system is more socialized than in many other countries. In the United Kingdom, for instance, one can buy private health insurance even if government insurance is compulsory.

In Canada, then, health care is basically a socialized industry. In the Province of Quebec, 79 percent of health expenditures are public. Private health expenditures go mainly for medicines, private or semi-private hospital rooms, and dental services. The question is: how does such a system perform?

The Costs of Free Care

The first thing to realize is that free public medicine isn’t really free. What the consumer doesn’t pay, the taxpayer does, and with a vengeance. Public health expenditures in Quebec amount to 29 percent of the provincial government budget. One-fifth of the revenues comes from a wage tax of 3.22 percent charged to employers and the rest comes from general taxes at the provincial and federal levels. It costs $1,200 per year in taxes for each Quebec citizen to have access to the public health system. This means that the average two-child family pays close to $5,000 per year in public health insurance. This is much more expensive than the most comprehensive private health insurance plan.

Although participating doctors may not charge more than the rates reimbursed directly to them by the government, theoretically they may opt out of the system. But because private insurance for basic medical needs isn’t available, there are few customers, and less than one percent of Quebec doctors work outside the public health system. The drafting of virtually all doctors into the public system is the twit major consequence of legally forbidding private insurers from competing with public health insurance.

The second consequence is that a real private hospital industry cannot develop. Without insurance coverage, hospital care costs too much for most people. In Quebec, there is only one private for-profit hospital (an old survivor from the time when the government would issue a permit to that kind of institution), but it has to work within the public health insurance system and with government-allocated budgets.

The monopoly of basic health insurance has led to a single, homogeneous public system of health care delivery. In such a public monopoly, bureaucratic uniformity and lack of entrepreneurship add to the costs. The system is slow to adjust to changing demands and new technologies. For instance, day clinics and home care are underdeveloped as there exist basically only two types of general hospitals: the nonprofit local hospital and the university hospital.

When Prices Are Zero

Aside from the problems inherent in all monopolies, the fact that health services are free leads to familiar economic consequences. Basic economics tells us that if a commodity is offered at zero price, demand will increase, supply will drop, and a shortage will develop.

During the first four years of hospitalization insurance in Quebec, government expenditures on this program doubled. Since the introduction of comprehensive public health insurance in 1970, public expenditures for medical services per capita have grown at an annual rate of 9.4 percent. According to one study, 60 percent of this increase represented a real increase in consumption.[1]

There has been much talk of people abusing the system, such as using hospitals as nursing homes. But then, on what basis can we talk of abusing something that carries no price?

As demand rises and expensive technology is introduced, health costs soar. But with taxes already at a breaking point, government has lit-fie recourse but to try to hold down costs. In Quebec, hospitals have been facing budget cuts both in operating expenses and in capital expenditures. Hospital equipment is often outdated, and the number of general hospital beds dropped by 21 percent from 1972 to 1980.

Since labor is the main component of health costs, incomes of health workers and professionals have been brought under tight government controls. In Quebec, professional fees and target incomes are negotiated between doctors’ associations and the Department of Health and Social Services. Although in theory most doc tors still are independent professionals, the government has put a ceiling on certain categories of income: for instance, any fees earned by a general practitioner in excess of $164,108 (Canadian) a year are reimbursed at a rate of only 25 percent.

Not surprisingly, income controls have had a negative impact on work incentives. From 1972 to 1978, for instance, general practitioners reduced by 11 percent the average time they spent with their patients. In 1977, the first year of the income ceiling, they reduced their average work year by two-and-a-half weeks.[2]

Government controls also have caused mis-allocations of resources. While doctors are in short supply in remote regions, hospital beds are scarce mainly in urban centers. The government has reacted with more controls: young doctors are penalized if they start their practice in an urban center. And the president of the Professional Corporation of Physicians has proposed drafting young medical school graduates to work in remote regions for a period of time. Nationalization of the health industry also has led to increased centralization and politicization. Work stoppages by nurses and hospital workers have occurred half a dozen times’ over the last 20 years, and this does not include a few one-day strikes by doctors. Ambulance services and dispatching have been centralized under government control. As this article was being written, ambulance drivers and paramedics were working in jeans, they had covered their vehicles with protest stickers, and they were dangerously disrupting operations. The reason: they want the government to finish nationalizing what remains under private control in their industry.

When possible, doctors and nurses have voted with their feet. A personal anecdote will illustrate this. When my youngest son was born in California in 1978, the obstetrician was from Ontario and the nurse came from Saskatchewan. The only American-born in the delivery room was the baby.

When prices are zero, demand exceeds supply, and queues form. For many Canadians, hospital emergency rooms have become their primary doctor—s is the case with Medicaid patients in the United States. Patients lie in temporary beds in emergency rooms, sometimes for days. At Sainte-Justine Hospital, a major Montreal pediatric hospital, children often wait many hours before they can see a doctor. Surgery candidates face long waiting lists—it can take six months to have a cataract removed. Heart surgeons report patients dying while on their waiting lists. But then, it’s free.

Or is it? The busy executive, housewife, or laborer has more productive things to do be-sides waiting in a hospital queue. For these people, waiting time carries a much higher cost than it does to the unemployed single person. So, if public health insurance reduces the costs of health services for some of the poor, it increases the costs for many other people, it discriminates against the productive.

The most visible consequence of socialized medicine in Canada is in the poor quality of services. Health care has become more and more impersonal. Patients often feel they are on an assembly line. Doctors and hospitals already have more patients than they can handle and no financial incentive to provide good service. Their customers are not the ones who write the checks anyway.

No wonder, then, that medicine in Quebec consumes only 9 percent of gross domestic product (7 percent if we consider only public expenditures) compared to some 11 percent in the United States. This does not indicate that health services are delivered efficiently at low cost. It reflects the fact that prices and remunerations in this industry are arbitrarily fixed, that services are rationed, and that individuals are forbidden to spend their medical~care dollars as they wish.

Is It Just?

Supporters of public health insurance reply that for all its inefficiencies, their system at least is more just. But even this isn’t true.

Their conception of justice is based on the idea that certain goods like health (and education? and food? where do you stop?) should be made available to all through coercive redistribution by the state. If, on the contrary, we define justice in terms of liberty, then justice forbids coercing some (taxpayers, doctors, and nurses) into providing health services to others. Providing voluntarily for your neighbor in need may be morally good. Forcing your neighbor to help you is morally wrong.

Even if access to health services is a desirable objective, it is by no means clear that a socialized system is the answer. Without market rationing, queues form. There are ways to jump the queue, but they are not equally available to everyone.

In Quebec, you can be relatively sure not to wait six hours with your sick child in an emergency room if you know how to talk to the hospital director, or if one of your old classmates is a doctor, or if your children attend the same exclusive private school as your pediatrician’s children. You may get good services if you deal with a medical clinic in the business district. And, of course, you will get excellent services if you fly to the Mayo Clinic in Minnesota or to some private hospital in Europe. The point is that these ways to jump the queue are pretty expensive for the typical lower-middle-class housewife, not to talk of the poor.

An Enquiry Commission on Health and Social Services submitted a thick report in December 1987, after having met for 30 months and spent many millions of dollars. It complains that “important gaps persist in matters of health and welfare among different groups.”[3] Now, isn’t this statement quite incredible after two decades of monopolistic socialized health care? Doesn’t it show that equalizing conditions is an impossible task, at least when there is some individual liberty left?

One clear effect of a socialized health system is to increase the cost of getting above-average care (while the average is dropping). Some Ix)or people, in fact, may obtain better care under socialized medicine. But many in the middle class will lose. It isn’t clear where justice is to be found in such a redistribution.

There are two ways to answer the question: “What is the proper amount of medical care in different cases?” We may let private initiative and voluntary relations provide solutions. Or we may let politics decide. Health care has to be rationed either by the market or by political and bureaucratic processes. The latter are no more just than the former. We often forget that people who have difficulty making money in the market are not necessarily better at jumping queues in a socialized system.

There is no way to supply all medical services to everybody, for the cost would be astronomical. What do you do for a six-year-old Montreal girl with a rare form of leukemia who can be cured only in a Wisconsin hospital at a cost of $350,000~a real case? Paradoxically for a socialized health system, the family had to appeal to public charity, a more and more common occurrence. In the first two months, the family received more than $100,000, including a single anonymous donation of $40,000.

This is only one instance of health services that could have been covered by private health insurance but are being denied by hard-pressed public insurance. And the trend is getting worse. Imagine what will happen as the population ages.

There are private solutions to health costs. Insurance is one. Even in 1964, when insurance mechanisms were much less developed than today, 43 percent of the Quebec population carried private health insurance, and half of them had complete coverage. Today, most Americans not covered by-Medicare or Medicaid carry some form of private health insurance. Private charity is another solution, so efficient that it has not been entirely replaced by the Canadian socialized system.

Can Trends Be Changed?

People in Quebec have grown so accustomed to socialized medicine that talks of privatization usually are limited to subcontracting hospital laundry or cafeteria services. The idea of sub-contracting hospital management as a whole is deemed radical (although it is done on a limited scale elsewhere in Canada). There have been suggestions of allowing health maintenance organizations (HMO’s) in Quebec, but the model would be that of Ontario, where HMO’s are totally financed and controlled by the public health insurance system. The government of Quebec has repeatedly come out against for-profit HMO’s.

Socialized medicine has had a telling effect on the public mind. In Quebec, 62 percent of the population now think that people should pay nothing to see a doctor; 82 percent want hospital care to remain free. People have come to believe that it is normal for the state to take care of their health.

Opponents of private health care do not necessarily quarrel with the efficiency of competition and private enterprise. They morally oppose the idea that some individuals may use money to purchase better health care. They prefer that everybody has less, provided it is equal. The Gazette, one of Montreal’s English-speaking newspapers, ran an editorial arguing that gearing the quality of health care to the ability to pay “is morally and socially unacceptable.”[4]

The idea that health care should be equally distributed is part of a wider egalitarian culture. Health is seen as one of the goods of life that need to be socialized. The Quebec Enquiry Commission on Health and Social Services was quite clear on this:

The Commission believes that the reduction of these inequalities and more generally the achievement of fairness in the fields of health and welfare must be one of the first goals of the system and direct all its interventions. It is clear that the health and social services system is not the only one concerned. This concern applies as strongly to labor, the environment, education and income security.[5]

A Few Lessons

Several lessons can be drawn from the Canadian experience with socialized medicine.

First of all, socialized medicine, although of poor quality, is very expensive. Public health expenditures consume close to 7 percent of the Canadian gross domestic product, and account for much of the difference between the levels of public expenditure in Canada (47 percent of gross domestic product) and in the U.S. (37 percent of gross domestic product). So if you do not want a large public sector, do not nationalize health.

A second lesson is the danger of political compromise. One social policy tends to lead to another. Take, for example, the introduction of publicly funded hospital insurance in Canada. It encouraged doctors to send their patients to hospitals because it was cheaper to be treated there. The political solution was to nationalize the rest of the industry. Distortions from one government intervention often lead to more intervention.

A third lesson deals with the impact of egalitarianism. Socialized medicine is both a consequence and a great contributor to the idea that economic conditions should be equalized by coercion. If proponents of public health insurance are not challenged on this ground, they will win this war and many others. Showing that human inequality is both unavoidable and, within the context of equal formal rights, desirable, is a long-run project. But then, as Saint-Exupéry wrote, “Il est vain, si l’on plante un chêne, d’espérer s’abriter bientôt sous son feuillage.”[6]


1.   Report of the Enquiry Commission on Health and Social Services, Government of Quebec, 1988, pp. 148, 339.

2.   Gérard Bé1anger, “Les dépenses de santé par rapport à l’éonomie du Québee,” Le Médecin du Québec, December 1981, p. 37.

3.   Report of the Enquiry Commission on Health and Social Services, p. 446 (our translation).

4.   “No Second Class Patients,” editorial of The Gazette, May 21, 1988.

5.   Report of the Enquiry Commission on Health and Social Services, p. 446 (our Ixanslation).

6.   “It is a vain hope, when planting an oak tree, to hope to soon take shelter under it.”

This article has been published with FEE‘s permission and has been originally published at The Freeman March 1989 • Volume: 39 • Issue: 3.

The Golden Calf of Democracy

Lawrence W. Reed is president of the Foundation for Economic Education in Irvington, New York— essay has been adapted for CEIL by the author from an essay first published in the December 2004 issue of FEE’s journal, “The Freeman.”

“Democracy,” journalist H. L. Mencken once said, “is the theory that the common people know what they want, and deserve to get it good and hard.” He also famously defined an election as “an advance auction sale of stolen goods.”

Mencken was not entirely hostile to democracy. He simply possessed a more sobering view of its limitations than today’s conventional wisdom.

Indeed, democracy may be the world’s single most oversold concept of political governance. Commonly yet erroneously romanticized, it is assumed in most circles to ensure far more than it possibly can. The Norman Rockwell portrait of engaged, informed citizens contending freely on behalf of the common good is the utopian ideal that obscures the messy details of reality.

Just how oversold democracy is came home to me recently as I listened to a group of college students debating farm subsidies. Advised that experience and economics underscore the folly of subsidies, the student consensus was nonetheless in support of “helping farmers.” Why? Because that’s apparently what the people wanted when they voted for the congressmen who gave us the handouts. To those students and a disturbing number of other citizens these days, the veneer of “democracy” somehow covers up a multitude of sins. It may even sanctify them. We need another dose of Mencken-esque reality—and that starts with a clearer view of what this thing is that enraptures so many.

Monarchy is easy to define. If you’ve got a king, you’ve got one. Military dictatorship is also stark in its manifestation. If one guy wears a uniform, has all the tanks, and tells everybody else what to do, you’ve got one of those. But what exactly is democracy?

Pure, undiluted democracy is unshackled majority rule. Everybody votes on everything, and 50 percent plus one decides every “public” issue—and inevitably, a whole lot of what ought to be private ones too. Perhaps ancient Athens for a brief time came closest to this, but no society of any size and complexity can practice this form of governance for long. For starters, it’s unwieldy and unworkable, endlessly contentious, and disrespectful of certain inalienable rights of individuals who may find themselves in the minority.

People like the sound of “democracy” because it implies that all of us have equal say in our government and that a simple majority is somehow inherently fair and smart in deciding all or virtually all issues. On closer examination it should become apparent that subjecting every decision of governance to a vote of the people is utterly impossible. Many decisions have to be made quickly; many decisions require knowledge that few people possess or have the time to become expert on; and many decisions don’t belong in the hands of any government at all. A pure democracy, even if possible, would quickly degenerate into the proverbial two wolves and a sheep voting on what to have for lunch.

Suppose someone says, “I just don’t like people with boats and jewelry. I think we should confiscate their property. Let’s have a vote on that.” A democratic purist would have to reply, “All in favor say aye.” A person interested in securing individual rights would have to say, “That’s not a proper function of government, and even if 99 percent of the citizens vote for it, it’s still wrong. There’s nothing about mob rule that makes such a decision legitimate.”

In common parlance, “democracy” has been stretched to mean little more than responsive government. Because of elections, government officials cannot behave in a vacuum. That fact is laudable, but it hardly makes a “democratic” government heavenly. In his penetrating book, Capitalism, Democracy, and Ralph’s Pretty Good Grocery, Ohio State University professor John Mueller writes that democracy “has been characterized by a great deal of unsightly and factionalized squabbling by self-interested, shortsighted people and groups, and its policy outcomes have often been the result of a notably unequal contest over who could most adroitly pressure and manipulate the system. Even more distressingly, the citizenry seems disinclined to display anything remotely resembling the deliberative qualities many theorists have been inclined to see as a central requirement for the system to work properly.”

Irrespective of presidential candidates’ singing interminable paeans to “our democracy,” America is thankfully not one and never has been. Our Founders established a republic, and a republican form of government modifies pure democracy considerably. It provides a mechanism by which almost anyone can have some say in some matters of government. We can run for office. We can support candidates and causes of our choosing. We can speak out in public forums. And, indeed, a few matters are actually decided by majority vote. But a constitutional republic founded on principles that are more important than voting—like individual rights—will put strong limits on all this. In its Bill of Rights, our Constitution clearly states, “Congress shall make no law. . . .” It does not say, “Congress can pass anything it wants so long as 50 percent plus one support it.”

Those democratic elements of our republic should be given their due. Elections are a political safety valve for dissident views, because ballots not bullets resolve disputes. But the saving grace of democracy is not that it ensures either good or limited government; it is nothing more than that the system allows for political change without violence—whether the change a majority favors is right or wrong, good or evil.

We should be thankful that we don’t have an absolute monarchy or a theocratic dictatorship or other truly objectionable forms of governance, but we should have no illusions about the harm that even a responsive government, whatever you want to call it, can still do.             Even the best and most responsive of governments, we should never forget, still rests on the legal use of force—an inescapable fact that requires not blind and fawning reverence but brave and determined vigilance. That calls for sober people who understand the nature of government and the importance of liberty.

Employer of Last Resort

By Hans Sennholz

Dr. Hans Sennholz heads the Department of Economics at Grove City College in Pennsylvania. He is a noted writer and lecturer on economic, political and monetary affairs.

During the 1984-85 school year American high school debaters have been weighing an important resolution:

Resolved: That the federal government should provide employment for all employable United States citizens living in poverty.

On the affirmative side students are expected to argue that the federal government shall strive to abolish poverty and, if necessary, act as employer of last resort; on the negative side they are likely to oppose the use of government for such ends.

High school students at last are catching up with the political debate that has animated their elders since the first New Deal. In 1935, President Franklin D. Roosevelt proposed to make the federal government the employer of last resort, proclaiming that “one third” of the American people were “underfed, under-clothed, and underhoused.” Thirty years later, President Lyndon B. Johnson declared his “war on poverty,” which was to liberate some twenty percent of the population. President Jimmy Carter, during his term of office, waged his special war on poverty. All three made the poverty of some 40 million Americans the central issue of their public pol icies. Indeed, all presidents have echoed a deep concern for the poor.

And yet, the poor are still with us. Their faces have changed, but their numbers hardly ever vary. Armed with poverty statistics, their spokesmen suggest that past government efforts were half-hearted and indecisive. The war, they argue, must be carried on with unrelenting vigor and dedication until victory is won. They would make government the employer of last resort.

Poverty in America

Other observers may draw entirely different conclusions. They may object that the poverty data itself may be erroneous and misleading. When compared with living conditions throughout the world there may be no poverty at all in the U.S. Most Americans have never seen the true face of poverty, which is visible in many other countries. It reveals hunger, disease and early death. In the U.S. even the least productive members of society live in relative abundance and comfort when compared with their counterparts abroad. Among his foreign peers the American pauper is an object of envy and the U.S. the target of pauper immigration.

American poverty statistics are built on levels of income. Families earning less than a stated dollar amount are defined as poor or poverty-stricken; families earning more are believed to be above the poverty line. A brief observation of the living conditions of the American poor, however, may suggest a different conclusion. It may reveal that forty percent of poor families own their own homes; eighty-six percent of these “very poor” homeowners have no mortgage debt. Some fifty percent have liquid savings of $500 or more. In Harlan County, Kentucky, the heartland of depressed areas, it was found that eighty-eight percent of the poor families have washing machines, sixty-seven percent have TV sets, forty-two percent have telephones, and fifty-nine percent own cars. (Newsweek,February 17, 1964, p. 20)

Most Americans now designated as poor and indigent would resent the label if they actually knew that the poverty warriors are talking about them. As a graduate student at New York University and a part-time accounting clerk, I never earned more than $1,500 a year, which sufficed to pay $35 tuition per credit and put me through school. Even as a young college instructor, the poverty definition included me. With all my heart I resent this supercilious and derogatory description of those important years of my life. It is obvious that the poverty politicians who are accustomed to spending billions of other people’s money have lost touch with economic reality and the meaning of life.

In every society some people are more prosperous than others, some are poorer than others. In the eyes of a critical observer, anyone who earns less than he does, may be poor. To a millionaire anyone with less than a million may be a pauper. To a poverty warrior anyone who belongs to the last 10 percent, 20 percent or 30 percent of income earners may be poverty-stricken. In fact, the concept of inequality of income and wealth always comprises the poor.

Government, Cause or Cure

Lengthy unemployment may impoverish a person and put him in a poverty bracket. More than seven million Americans are mostly unemployed, suffering declining incomes and living conditions. Alarmed at such statistics, the poverty warriors managed to pass the Humphrey- Hawkins Full Employment and Balanced Growth Plan Act of 1978. And yet, unemployment continued to rise. Defining “full” employment as no more than 3 percent adult (4 percent overall) unemployment, the warriors are now proposing to reach that level by using government as employer of last resort.

Most government programs seeking to alleviate poverty are treating the effects of unemployment; they never touch the causes. In fact, they completely reverse the cause and effect relationship by depicting the federal government as a source of employment rather than a primary cause of unemployment. They blame commerce and industry for the unemployment and call on government to correct the evil. They propose to grant more power to politicians, officials and bureaucrats and call for extensive government intervention. And yet, by confusing cause and effect they fail to accomplish their stated objectives and even make matters worse. During years of radical government intervention unemployment actually rises and levels of living usually fall.

The champions of government power and intervention are sadly unaware that government is the primary cause of unemployment. They do not understand that employment is a price and cost phenomenon, and that mass unemployment is the inevitable effect of any government measure that directly or indirectly raises labor costs. A law or regulation that boosts Social Security taxes, unemployment compensation taxes, workman’s compensation taxes, or in any way raises the cost of labor, reduces the demand for labor and creates unemployment. Boom and bust policies conducted by the Federal Reserve System may generate cyclical unemployment. Minimum wage legislation may deny employment to the least productive workers. Labor legislation that grants restrictive powers to labor unions may bring stagnation and unemployment to unionized industries.

Minimum wage legislation bars millions of young people from the labor market. Although they have limited training and experience, the federal government may issue an order that they be paid a minimum rate of $3.35 per hour. Moreover, it forces employers to pay a number of fringe benefits, from Social Security to national holidays, which may boost the worker’s employment costs to $5 or $6 per hour. If a person does not add this amount to production, if he fails to cover his employment costs, he is a candidate for unemployment.

Before the days of minimum wage legislation high school and college students were always welcomed by commerce and industry. From the first day of vacation to the last, young people used to work in offices and stores, workshops and factories, working their way through school or supplementing family income. Unfortunately, these ways of the past have given way to minimum wage legislation, which condemns young people either to remain in school, to join the armed forces, or be unemployed. At $5 or $6 an hour there may be no economic demand for their services.

Minimum wage legislation is the evil product of a political system that bestows favors and benefits on some classes of people at the expense of others. It favors the employment of skilled workers who are earning more than the minimum by denying employment to unskilled workers earning less. This is why labor unions representing skilled workers are fervent champions of minimum wage legislation.

Business Provides Employment

Poverty warriors like to depict business as the culprit behind poverty and unemployment. In reality, business is the only genuine source of production, employment, and income. It is bidding for labor in order to serve its customers. It eagerly employs labor as long as it is “productive,” that is, its net addition to output is positive. In other words, as long as it does not cost more than it is producing, labor is in great demand. When it costs more than it is adding to the production process, when it takes income from investors and entrepreneurs, when it becomes “destructive” to employers, it is discharged. In this case production is more productive without it.

Governments and unions are forever raising labor costs and thereby causing unemployment. Business is adjusting continually in order to prevent the unemployment. When the federal government raises its Social Security exactions and state governments boost unemployment compensation taxes, which may significantly raise the cost of labor and thus the rate of unemployment, business is straining to prevent the unemployment through cost adjustments. It may seek to offset the mandated costs with other cost reductions. In particular, it may reduce fringe benefits, delay inflation adjustments, elicit greater effort and draw out more efficient production. Whenever and wherever business is successful in offsetting the boost in labor cost it succeeds in preventing threatening unemployment. If laws, regulations and work rules prohibit the cost adjustment, business has no choice but to lay off loss-inflicting workers. Production is more productive with out them.

It is no coincidence that the strongholds of unions are also the centers of unemployment. In the steel and auto industries the union rates are more than double the market rates of industrial wages paid for similar labor throughout the American labor market. Union rules generally deny efficient use of labor and prevent cost adjustment. Ugly strikes by angry workers further increase labor cost. It cannot be surprising, therefore, that unionized industries are barely managing to stay afloat in an ocean of unemployment.

Job Programs Destroy Jobs

The unemployment generated by governments and unions is as severe and persistent as the force that is causing it. It is holding millions of Americans in its sinister grip and reducing them to poverty. To make government their employer of last resort is to put the culprit in charge and urge him to continue his transgressions. He will create more unemployment than he will provide jobs through a variety of make-work schemes. Facing mass unemployment, government may launch leaf-raking and snow-shoveling programs, build highways and public buildings, embark upon slum removal and urban renewal, or engage in any other economic activity. It may ostentatiously hire thousands of idle workers and become their employer of last resort. Unfortunately, the politicians who launch the programs and the poverty warriors who advocate them, are blissfully unaware of the consequences of their policies. They completely overlook two inevitable effects that tend to destroy more jobs than government can create:

1. When government appears on the labor market and engages idle labor it tends to support or even raise the labor costs that are causing the unemployment. It is removing the pressures for readjustment. By placing purchase orders for steel, automobiles, trucks and tanks it gives employment to idle steel and auto workers. But it also sustains their wage demands that exceed market rates, and thereby reinforces the cause of unemployment. Government tends to prolong and intensify the suffering of idle workers by encouraging them to cling to unproductive labor costs.

2. Government has no source of income and wealth of its own. Every penny spent is taken from someone. It may be exacted from taxpayers, borrowed from lenders, or snatched from inflation victims. If it takes $50,000 to give employment to one idle worker, taxpayers, lenders or inflation victims must be reduced by that amount. Their reduction consumes business capital, which in turn lowers labor productivity. Falling productivity, together with rigid labor cost, render more labor “unproductive” and cause it to be unemployed. And even if it were to consume no business capital, and labor productivity were to remain unchanged, the losses suffered by taxpayers and inflation victims would force them to curtail their consumption and the employment they would otherwise provide. While government may create one $50,000 job, which under bureaucratic conditions and circumstances would be a low-cost job, it probably destroys the jobs of two or three workers serving taxpayers and inflation victims.

Federal Assistance Reduces Levels of Living

Government reports are quick to point out that government assistance is sustaining those truly in need. According to one study, without any kind of assistance forty-one million people, or 18.8 percent of the population, would live below the poverty level. Cash assistance alone allegedly cut this number in hall If in-kind transfers are included, 13.5 million Americans are left in poverty. If medical care is included in the calculation, the poverty level includes only nine million people, or 4.1 percent of the population. (Press Release, Executive Office of the President, Office of Management and Budget, March 12, 1982)

In 1983 Federal cash programs supported 24.5 million elderly people living in retirement, 4.3 million disabled workers and their dependents, and 8.9 million survivors. They provided Medicaid and Medicare assistance to 47 million aged, disabled and needy Americans, ap proximately 20 percent of the total population and 99 percent of those over 65. They granted housing assistance to 3.4 million American households, and subsidized approximately 95 million meals per day, or 14 percent of all meals served in the country. They made available 6.9 million post-secondary awards and loans to students and their parents, and provided training for almost one million low-income disadvantaged people. They paid supplemental allowances to more than 7 million people, unemployment compensation to more than eight million, and granted food stamp assistance to 18.6 million individuals. Government sustained 3.5 million men and women on active military duty and their dependents, and some 27 million civilian employees and their dependents. Altogether, some 80 to 90 million Americans are dependent on tax dollars.

The Burden of Dependents

Whatever their numbers, the dependents weigh heavily on the economic well-being of their supporters, the taxpayers, lenders and inflation victims. Their inactivity and absence from economic production keeps society poorer than it otherwise would be. It visibly reduces the levels of living of the providers, discourages their productive efforts, and deprives them of the funds needed for productive investments. Surely, there cannot be any doubt that 80 to 90 million dependent Americans constitute a heavy burden on productive Americans.

Poverty warriors are encouraged by these transfer statistics. If 80 to 90 million Americans already are enjoying full support, another 7 to 10 million may not upset the transfer system. The warriors may be right. But they, too, must admit that there are limits to the burden the remaining producers can carry. All transfer systems have limits beyond which economic production is bound to decline and poverty is certain to multiply.

This article has been published with FEE‘s permission and has been originally published at The Freeman January 1985 • Volume: 35 • Issue: 1.

Prophets of Property

Lawrence W. Reed is president of the Foundation for Economic Education in Irvington, New York— essay has been adapted for CEIL by the author from an essay first published in the July 2007 issue of FEE’s journal, “The Freeman.”

In 1800, fewer than 1 million people lived in London; a century later, well over 6 million. As the 20th century dawned, London had already been the most populous city on the planet for seven decades. Britain’s population as a whole soared from 8 million in 1800 to 40 million in 1900. In the previous 2,000 years, even a fraction of such population growth anywhere in Europe was usually nipped in the bud by famine, disease, falling incomes, and population retrenchment.

But Britain in the 19th century was a special place, the legendary “workshop of the world.” London had become the capital of capital, with private investment in agriculture and manufacturing burgeoning at a record-breaking pace in the latter half of the century. The year Victoria ascended to the throne, 1837, saw fewer than 300 patent applications for new inventions, but by the end of the century the number exceeded 25,000 annually. Per capita income on the eve of World War I was three times what it was a century before and life expectancy had risen by 25 percent. There were many more mouths to feed and bodies to clothe, but British entrepreneurship was feeding and clothing them better than the world had ever experienced. It was the greatest flowering of problem-solving creativity, ingenuity, and innovation in history.

Colin Pullinger, a carpenter’s son from Selsea, typified the 19th century British entrepreneur. He designed a “perpetual mousetrap” that could humanely catch a couple dozen mice per trap in a single night, and then sold 2 million of them. Perhaps Emerson had Pullinger in mind when he famously wrote, “If a man write a better book, preach a better sermon, or make a better mousetrap than his neighbour, tho’ he build his house in the woods, the world will make a beaten path to his door.”

As the 1800s drew to a close, the framework that made possible these extraordinary achievements — capitalism — fell under assault. As poverty declined massively for the first time, the very presence of the poverty that remained prompted impatient calls for forcible redistribution of wealth. Around the world, Marxists painted capitalists as exploiters and monopolists. In Britain, Charles Kingsley argued that Christianity demanded a socialist order, and the Fabian Society was formed to help bring it about. Many unscrupulous businessmen turned to the state for favors and protections unavailable to them in competitive markets. Would anyone come to the defense of capitalism with as much vigor and passion as those who opposed it?

At least one group did: the Liberty and Property Defence League. Though its work has been largely forgotten, what the world learned about socialism in the following century surely vindicates its message. Its name derived from the members’ belief that liberty and property were inseparable and that unless successfully defended, both could be swept away by the beguiling temptations of a coercive state.

The founder of the League in 1882 was a pugnacious Scot by the name of Lord Elcho, later the 10th earl of Wemyss as a member of the House of Lords and thereafter known simply as “Wemyss.” Originally elected to parliament in 1841 as a protectionist Tory, he eventually embraced free trade and repeal of the Corn Laws by 1846. He later evolved into a full-throated advocate for what we today would call “classical liberal” ideas. At the organization’s third annual meeting in 1885, he expressed his hope that its efforts to educate the public would “cause such a flood as will sweep away, in the course of time, all attempts at state interference in the business transactions of life in the case of every Briton of every class . . . . No nation can prosper with undue state interference, and unless its people are allowed to manage their own affairs in their own way . . . .”

Wemyss and his friends rounded up spokespersons and financial support. They enlisted writers and public speakers. They published and circulated essays and leaflets. The organization operated as an activist think tank with a lobbying arm. The League attempted to mobilize public opinion against specific bills, functioning as a “day-to-day legislative watchdog” in the view of historian Edward Bristow. It even arranged testimony before parliamentary hearings. One League pamphlet attacked the introduction of “grandmotherly legislation” as a transgression against the freedom of contract. Armed with arguments provided by League members and sympathizers, Wemyss’ allies in Parliament killed hundreds of interventionist bills in the 1880s and 1890s.

Opponents often accused the League of being motivated by its members’ bottom line drive for profits, but in actuality its philosophical ideals were paramount. Among its members were some of the brightest intellects of the era, Herbert Spencer being perhaps the most notable. Author of the libertarian classic, “The Man Versus the State,” Spencer was the best-selling philosopher of his day and was nominated for a Nobel in literature.

Spencer saw liberty as the absence of coercion and as the most indispensable prerequisite for human progress. The ownership of property was an individual right that could not be morally infringed unless an individual first threatened the property of another. Spencer has been demonized as an apostle of a heartless “survival of the fittest” Darwinism by those who choose to ignore or distort his central message, namely that individual self-improvement can accomplish more progress than political action. One creates wealth, the other merely takes and reapportions it.

Auberon Herbert was a Spencer acolyte whose championship of voluntarism found fertile soil among fellow League members. His now century-old warning about the danger of state intervention is positively prophetic: “No amount of state education will make a really intelligent nation; no amount of Poor Laws will place a nation above want; no amount of Factory Acts will make us better parents . . . . To have our wants supplied from without by a huge state machinery, to be regulated and inspected by great armies of officials, who are themselves slaves to the system which they administer, will in the long run teach us nothing, (and) will profit us nothing.”

In a 1975 essay in The Historical Journal from Cambridge University Press, historian Bristow contended that the Liberty and Property Defence League changed the language in one important, lasting way. Prior to the 1880s, “individualism” was a term of opprobrium in most quarters, referring to “the atomism and selfishness of liberal society.” The League appropriated the word and elevated its general meaning to one of respect for the rights and uniqueness of each person.

But was the League successful in its mission to thwart the socialist impulse? In the short run, lamentably, no. By 1914, socialists had convinced large numbers of Britons that they could (and should) vote themselves a share of other people’s property. Two world wars and a depression in between seemed to cement the socialists’ claim that their vision for society was inevitable.

Good ideas, however, have a way of resisting attempts to quash them. Bad ideas sooner or later fail and teach a valuable lesson or two in the process. Britain and most of the world gave socialism in all its varieties one hell of a run in the 20th century. The disastrous results now widely acknowledged underscore the warnings of those who said that we could depart from liberty and property only at our peril.

The warriors of the Liberty and Property Defence League may have lost the battle in their lifetimes, but a hundred years later they offer prophetic wisdom to those who will listen.

Freedom Basics – transcript

Professor Paul Cwik spoke to students attending Freedom University in Irvington, NY during the summer of 2009. This is the transcript of the lecture (without the Q&A at the end).

(These guys get turned off, right? Turn them off.

You know it’s going to ring. And then you will be embarrassed and I will make fun of you. And I will. That’s why we have name tags. We write down your names… OK.)

I have been asked to give the first lecture on Freedom Basics. A lot of stuff has been written on freedom. Freedom is a word that has been argued over, fought over for centuries, and I have been asked to cover the basics in less than an hour. So I think that I might have to skip a point or two. Maybe.

When somebody says freedom, they could mean it in a couple of different ways. “The freedom to” and “the freedom from.” So think about this. Freedom to worship God in your own way, or not at all. Freedom to write what you want in your newspaper column or blog. Freedom to pick your own friends, to gather with them as you please.

Now contrast this with the freedom from want. The freedom from hunger. The freedom from illness.

There is a fundamental difference between these concepts. But the word “freedom” is used by both sides. Both sides of the debate. And that tends to make the debate rather confusing because both sides say: “We want freedom!” As a result many on our side, the good guys, right, they sometimes use the word liberty instead. Of course you can say without losing the meaning “the liberty to worship, the liberty to write, the liberty to assemble,” but it is rather awkward to say “the liberty from want, the liberty from hunger, the liberty from illness,” it’s a clunky phrase. It really doesn’t fly. So, language is important. I don’t want to loose another word to the collectivists. We have already lost the word “liberal” to them. That’s enough. They don’t get any more words. We’re keeping liberty.

The concept of liberty or “freedom to” is rather new idea. It’s a radical departure from earlier thinking. In fact, it’s a very radical idea. Ludwig von Mises, whom you might hear a little bit about this week. He argues that the idea of liberty is distinctively western. And that it came up in the western culture.

The idea that there are rights that belong to individuals and that they come before the creation of government is the opposite of the medieval law. It’s the opposite, the reverse of the medieval law.

The concept of liberty and freedom says that each individual is unique. And therefore there is worth and value in each and every individual.

F. A. Harper in his book Liberty: A Path to its Recovery

I have props. It looks like this. I stole it off the bookshelf and I will dutifully file it on the white table and not inserting it on the shelf.

Harper states it this way: “This concept of liberty rests on the supreme dignity of the individual.”  That’s fairly important distinction. It’s a radical thing. It says people matter. And if we look back the last 5 000 years of recorded human history, who are the serfs, the peasants, the peons – the nobodies?  They were the nobodies.  They were those that were sacrificed to the means, as means to some greater end at the whim of some king or emperor.

This line of thought has evolved – changed – and we can trace it through the works of John Locke, Montesquieu, Thomas Jefferson, Frederic Bastiat and Lord Acton.

What these guys argue is that government is created by individuals for the protection of individual rights.  That’s why we have government. The common element and the key to their reasoning is what we call, “Methodological Individualism.”

Here’s your first big college word.  Because it’s university…it’s freedom university…so we need college-type words here.

Methodological Individualism.

I’m going to talk a bit more about this in the lecture after the dinner. But I want to just touch on it now—what it means. We are looking methodology here. Any time we see the word “-ology” or “-ological” – it means the science of.

So, the methd-ology or methodology is the science of… and our science – scientific method – is basing it on its most elemental parts. And that’s the individual. We cannot break it down any further than that.

Today we suffer from the use of collective nouns and we personify them. It’s just the way that we communicate with each other. So, someone might say today General Motors filed for bankruptcy.

Well, General Motors is not a real person. General Motors is not a real general.

General Motors does not have a brain or a heart or a soul or anything like that. What is it?

It’s a collection of people, group of individuals working together that produce cars – that produce these other things financing and such.

So, we use these sort of collective nouns. EPA regulates… the United States has invaded… General Motors filed… but there really isn’t such a thing. These are only collective nouns. We have to be careful about these.

But methodological individualism says that we have to focus on the basic unit and that’s the individual.  And we will use that much more in the next lecture on the “Praxeology: Supply and Demand”. But back to freedom…

The path from individualism to rights and a theory of a free and prosperous society has taken many forms and many shapes from many authors. So, I have identified four different approaches.

And, are these categories the best categories? No, these are just sort of categories that came to me.

The first one is the “The Natural Rights approach.” Some authors that typify it are people like Frédéric Bastiat and Murray Rothbard.

And, basically what they say is that life is given to us by God. At least Bastiat does in “The Law”. Other prop… I will use that prop again….

From this position that life is given to us by God – from this position combined with the fact that there is scarcity in the world in other words we can’t have all the stuff that we want. We don’t have enough time to do all the things that we want.

And with the fact that we do not live in isolation, we can deduce the natural rights of life, liberty and property.

Some of you might say that supposed to be “the pursuit of happiness.”

Well, where do we find that actually: “Life, liberty and the pursuit of happiness”? –Declaration of Independence. Who wrote that?

Well, it was a committee. It was a committee. Jefferson was the primary author and he originally had “life, liberty and property”.  Took it right out of John Locke’s “Second Treatise on Government”.

They said: “People are going to pick up guns and fight the biggest war machine ever known on this planet – at that point in time … For life, liberty and property… we have to flower this up—get people’s passions going. So, they put in “the pursuit of happiness.” That’s what happened.

More on the natural law rights theory in just a little bit.

“The Utilitarian Approach”.

The utilitarian approach is basically following the idea of utility (and we talk a bit more about that in the next lecture). But it’s a level of happiness. It’s weighting plusses versus minuses and the more utility you have the happier you are.

So, the utilitarian idea says that freedom is better because we are rich; we are more wealthy; we are more prosperous; we have a higher standard of living; our utility is higher. This approach can be typified by the writings of Jeremy Bentham.

There is a lot of danger with this approach – at least I think there is – because if anyone supposes that another way, say communism, can produce more wealth, then freedom and liberty can be just tossed overboard.

So, I’m not a big fan of that. But I do think that freedom leads to higher levels of prosperity. Look at North and South Korea. Look at Hong Kong vs. Mainland China before they opened themselves up to trade. East and West-Germany…Example after example after example we see that freedom works.

The next approach is “the Objectivist approach”.

And this is characterized by the writings of Ayn Rand.

Now, what she does – she begins with the individual, methodological individualism, because only individuals have minds, again no collective nouns.

Since each individual is solely united with his own mind, there is no separation or divorcing of one’s own mind with his person.  Each person thus has full ownership over themselves.

The implication is that all individuals are on the same plane as, or on the same level as, or on par with each other in their own self-ownership. So, you own yourself, I own me, we all own ourselves.

As such, no one person for any reason can make any claim over another for any reason.

The concept of rights flows from this idea of self-ownership and follows closely with the Natural Rights approach.  It does so without the reference to God.  She was an atheist.

And, the last approach that I just put up here is “The Societal approach”.

We see this in the writings of William Graham Sumner: “What Social Classes Owe To Each Other” and the “The Forgotten Man” as two principal works he wrote.

Sorry, no props for this.  I have no book.

What Sumner said in his book “What Social Classes Owe To Each Other” blends a bit of the utilitarian and empirical with the notion of prior rights to show that there are rules for society that work and other rules that just don’t.  He was a pioneer in the field of sociology.  He argues that a society based on contract is the strongest form of society.

Here’s an example what Sumner has to say.

Sumner says: “In our modern state, and in the United States more than anywhere else, the social structure is based upon contract, and status is of” – and status like who are your parents… are you royalty or anything like that is of  – “the least importance. Contract, however, is rational—even rationalistic.  It is also realistic, cold, and matter-of-fact.  A contract relation is based on a sufficient reason, not on custom or prescription…A society based on contract is a society of free and independent men, who form ties without favor or obligation, and cooperate without cringing or intrigue.”

I mean people will gladly become garbage men or work on a cleaning staff if you pay them enough.

Sumner continues: “A society based on contract, therefore, gives the utmost room and chance for individual development, and for all the self-reliance and dignity of a free man. That a society of free men, cooperating under contract, is by far the strongest society which has ever yet existed; that no such society has ever yet developed the full measure of strength of which it is capable; and that the only social improvements which are now conceivable lie in the direction of more complete realization of a society of free men united by contract, are points which cannot be controverted.”

So, Sumner is saying, “Look, you’re born in this position. You’re king, you’re Lord of the Manor – you’re born in that position. So, therefore you must serve.”

That’s a weak relationship, because people are not happy having to serve.
The rulers take it for granted. They don’t have the society of the realms best interest at heart.

But if you compare – contrast – that with a contractual relationship where you have to offer someone enough to make it worth their while to become the member of the cleaning staff or garbage man or mine coal under the ground, they will do this quite happily.

And you see the difference in those types of societies: some rules are just better than others for societies.

So, what’s the analysis so far?

Well, The analysis so far is this:

  1. We are individuals and as such we have worth.
  2. This value cannot be sacrificed by others (non-owners) for their ends.
  3. The first right is Life…

..but when we say that we mean the right not to be hit, murdered, raped or anything like that. It is not a right to a standard of living or even the right to violate others’ rights to maintain your own life.  In other words, you cannot steal bread even if you are hungry and will die without that bread.

Ok. You can’t just steal someone else’s bread.

Now, the corollary to this is that with freedom comes responsibility.  If no one else is responsible for you, you have to take care of yourself.

And that’s a pretty scary thing. You have to be responsible for yourself – I know!

Coming from that right you can see where this leads then, since we are talking about responsibility, is that of liberty.

Each of us has faculties and talents that we can use to preserve, develop and perfect our lives.

It is the freedom to think as we think, to perceive the world as we perceive it, and to express ourselves as we wish. These are what constitute the right of Liberty.

A hermit does not care about the right of Liberty.  Why is that?  There is no one to impose any limitations on him.

It is because we live in society that we need to make distinctions between who can do what with which items.  This leads us to the development of the third right—Property.

Property rights are at the core of Freedom – of a free society.  They protect and allow for cooperation.  Their source stems from individual action.

And, Harper – this guy, actually here’s a picture of him. They call him baldy. There’s a bit of hair. I think it’s kind of unfair. – But in this book here he says this: “The only method consistent with liberty is the one that distinguishes between mine and thine according to the rule that the producer shall have the right to the product of his own labor. This foundation of economic liberty is important above all other considerations. By this concept, the right of ownership arises simultaneously with the production of anything; and ownership resides there until the producer-owner chooses to consume the product or transfer its ownership to another person through exchange, gift or inheritance.  The right to produce a thing thereby becomes the right to own it.”

So, if you have the right to make it then you have the right to own it. Those are inseparable.

“…and to deny one right is, in effect, to deny both.  This concept specifies that no part of production shall properly belong to a thief, or to a slave master or to a ruler by whatever title.”

If I make it, it’s mine. I don’t care what the majority of people voted for.  It’s mine; I made it.

Murray Rothbard in his book “The Ethics of Liberty” essentially says the same thing.

These rights are intertwined with each other and the loss of one – life, liberty, property – means that we lose all of them.

Back to Bastiat. OK. If I have the Greats I’m going to use the Greats. I like these guys.

So, Bastiat says: “Each of us has a natural right—from God—to defend his person, his liberty, and his property. These are the three basic requirements of life, and the preservation of any one of them is completely dependent upon the preservation of the other two. For what are our faculties but the extension of our individuality? And what is property but an extension of our faculties?”

What is it that makes us, us?

If we are to be able to constantly protect each of these rights constantly/continuously, then we can group together to constantly protect these rights.

Again Bastiat: “If every person has the right to defend—even by force—his person, his liberty, and his property, then it follows that a group of men have the right to organize and support a common force to protect these rights constantly. Thus the principle of collective right—its reason for existing, its lawfulness—is based on individual right. And the common force that protects this collective right cannot logically have any other purpose or any other mission than that for which it acts as a substitute. Thus, since an individual cannot lawfully use force against the person, liberty, or property of another individual, then the common force—for the same reason—cannot lawfully be used to destroy the person, liberty, or property of individuals or groups.”

If I can’t steal from someone, then the collective also does not have that right. Why is that? Because rights precede government and rights precede statutes.  They come before.

Our individual rights do not come from government, they are not granted us by a constitution or a Declaration of Rights.

Recall the Declaration of Independence, it says this (and you have the copy of this in your books): “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed.”

Now pay special attention to the next part: “That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government.”

So the rights come first. When government separates us or violates our rights – separates us from our property, violates our rights – then the government is behaving unlawfully.

But what if they pass a law then it is legal, right? Yes, it’s legal. But it is still plunder. (Get to that in a moment.)

Back to the Declaration of Independence. Later on it says, “But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.”

The Declaration of Independence is absolutely radical. This perspective overturns thousands of years of human thinking. Many revolutions have since used this language to justify their fight for freedom.

So what then is freedom? [We’re so many minutes into our talk…] What’s freedom? We haven’t even defined it yet.

Mises point out that “Freedom always means: freedom from arbitrary action on the part of the police power.”  Liberty is NOT the freedom to do anything like rob and kill, riot and loot.  Start swinging in your arms so that you punch someone in the nose.  It can only exist when it is circumscribed by the rights described above.

Many wish to extend these rights and convert them into “the freedom froms” that I talked about at the beginning. Freedom from want, freedom from hunger, freedom from illness.

The concept of Legal Plunder is very useful for refuting these false freedoms.  Since no individual can violate rights and since the government derived from individuals’ rights then it cannot have any extra powers – doesn’t have any extra rights or superior rights.

So, I got these rights: life, liberty property. That means what? It means that I cannot take a gun, come up to Jay (How do I know he is Jay?  He’s got a name tag, that’s why we have to wear name tags) – and say: “Give all you money!” Why? That’s stealing.

Now, if I take all you money and I go out and buy a pad of paper, charcoal pencil and I give it to Jonathan over here – it’s still stealing!

Even if you call it the National Endowment for the Arts – it’s still stealing!

I can’t do that. So, the government which is the collection of us also does not have that power. Where would it get that power from if it derives all its power from us?

If I should not steal, then neither should the government.  When government passes a law making its actions “legal” – oh, we passed a law, it’s legal; We can do it – it is still violating rights, it is still plundering.  So Bastiat uses the phrase “Legal Plunder.”

He says this: “But how is this legal plunder to be identified? Quite simply. See if the law takes from some persons what belongs to them, and gives it to other persons to whom it does not belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime.”
This is why I use the Greats, because it is so clear. Could you take it from her? Yeah. It’s stealing, but we voted on it. Still stealing.

Bastiat says: “Now, legal plunder can be committed in an infinite number of ways. Thus we have an infinite number of plans for organizing it” – such as, I like this list – “ tariffs, protection, benefits, subsidies, encouragements, progressive taxation, public schools, guaranteed jobs, guaranteed profits, minimum wages, a right to relief, a right to the tools of labor, free credit, and so on, and so on.”


“All these plans as a whole—with their common aim of legal plunder—constitute socialism.”

Now, let’s take a step back. I can take a step back. You can still sit.

The law is force.  Government is force.  It is coercion. At its root – that’s what it is. It is to threaten to violently reduce people’s options. You don’t want to do that? Well, you’re going to jail. We are violently reducing your options when you’re in jail.

If you don’t believe me try not paying your taxes.

Before government can do anything, it must first take.  And so the goal of the law should not be to promote justice or to cause justice to reign. “It ought to be stated that the purpose of the law is to prevent injustice from reigning.” (Bastiat) Notice the slight distinction. Instead of trying to reach an impossible ideal of perfect justice, what we should be trying to do is reduce the amount of injustice.

And, both the right and the left agree on this. They say yes, we want to reduce injustices.  However, we cannot violate rights to promote justice.  In order for government to stop the injustice of starving people – people are starving; that’s injustice; we want to prevent this – government would first have to take from others, which in itself is a violation of rights and an injustice.  We cannot move any closer to justice by creating injustices.

Do you see, what is going on here? Curing one injustice by creating another injustice.

So, all we can do then is remove injustices such as government’s wealth redistribution plans, etc.  It is by the negation of these injustices that we move closer to Justice. So if I am negating these takings – these stealings – then we move closer to Justice. But, we cannot actively pursue Justice. We have to sort of think of it as a negative concept.

Unfortunately, the way in which society perceives itself has changed – changed over the last hundred years. Specifically the argument has historically stemmed from the perspective that we are fallen beings.  We need limits because of our flawed nature – original sin.  But how does the idea of liberty change when we view ourselves as risen apes? We are not flawed but have conquered – we are better than every other species. We have the power to pull ourselves out of the primordial ooze, and so why shouldn’t we also have the power to plan a society? Such hubris is what Friedrich Hayek called the “Fatal Conceit.”

This idea that we have all the smarts, all this knowledge, that we can use to plan a society. (And we will be talking later on this week about what knowledge is actually out there that might be inarticulate knowledge or tacit knowledge that cannot be communicated or observed directly – cannot be collected directly by a central planning board.)

So, what we seen is that if people believe that we can shape society as an artist can shape clay. Whereas Adam Smith said we move pieces on a chess board. We think we can then shape and change society to the better because we studied this, we are sociologists and we know now.

But when we do this – now we start looking at the basic things – and we see that people ask… they don’t even ask the question anymore. Do we have a “right” to education?  Sheldon Richman later this week is going to talk about an education system that is not run by the government.

Do we have a “right” to water? (Or Mountain Dew…hmm…yummy and delicious. I will use this as a prop for the next lecture.) Because without water how can I have life? Without education, how can I have liberty or property?

What about right to healthcare?  Think about this. A right to healthcare. So, if I was standing on a street corner and there was a MD (medical doctor) standing next to me and we are chatting… la, la, la… Actually, that would be singing. Chatting blah, blah, blah. And I was so engrossed in that I wasn’t paying any attention, and I stepped into the street and bam, get hit by a car. There I am, laying on the street, bleeding, dying, not all happy… Do I have a right to healthcare?

Now, what does it mean to have a right to healthcare? That means that I can turn to my friend and go: “Give me healthcare!” …probably gurgling with blood and… but “Give me healthcare!”

I right to healthcare means that he must use his property, his talents, his time to help me out. Think about his relationship that we have. Who’s commanding who? Are we equals?

No. If I have a right to his time, his skills, his property, his labor. That makes me master, superior. It puts me on a higher plane. It makes him subordinate. You say, but you are dying. You need help. Otherwise you will die. That’s true! Absolutely true!

But should he help? That’s a different question. Should he help? Does he have a moral obligation? That’s a different question of whether or not I have a right. Because when I claim a right to his labor. I’m enslaving him to my purposes – to that degree.

If he has a moral obligation where does that come from? What is it? That’s compassion. Where does compassion come from? Comes from the human heart.

But remember, if I am forcing him, if I have a right, that means the government will force him to help me. That’s all government is, coercion. Here’s a gun. Help him! Well, help me.

If someone is pointing a gun in your heard are you being terrible? Is the doctor being compassionate?  Is he being charitable if someone points a gun into him and says: “Fix this person up!”?

No. Does he even have the opportunity to be compassionate and charitable? His ability to decide to be charitable has been taken away from him, because the decision has been forced upon him. Now he is no longer acting morally.

If I see someone who wants food or clothing or something, and I give him some money. It comes from my heart. I’m being compassionate – being charitable. But you are not being compassionate or charitable when you are paying taxes. When you go up to the Pearly Gates and you see Saint Peter and he says: “Have you served your fellow man, have you been compassionate and acted charitably to your fellow man. And you say: “Look at my 1040-form!”

He is not going to take that, is he? He’s like – no, you did not get signature on that. No!

So, the law cannot force compassion. And the Law is not being charitable. Government is not being charitable. But, we have to bail out General Motors. Why? Because all these people will lose their jobs. That’s sad. That’s sad. But don’t chalk it up as charity that we are trying to keep this people in jobs. Absolutely not – it’s anything but.

I and the rest of you have been forceably made co-owners, what ever that means.

So back to Bastiat, one last time, “It is not true that the function of law is to regulate our consciences, our ideas, our wills, our education, our opinions, our work, our trade, our talents, or our pleasures. The function of law is to protect the free exercise of these rights – life, liberty and property, and to prevent any person from interfering with the free exercise of these same rights by any other person.

“Since law necessarily requires the support of force, its lawful domain is only in the areas where the use of force is necessary. This is justice.

“Every individual has the right to use force for lawful self-defense. It is for this reason that the collective force—which is only the organized combination of the individual forces—may lawfully be used for the same purpose;” – right, it is only for self-defense –  “and it cannot be used legitimately for any other purpose.”

You can use it for other things, clearly. Look at the society we are living. When you define inside as standing under a little awning or something…

So is all that government does some type of plunder?  Should we even have a government?

When we go down that road and I have several friends who are down that road they call themselves anarcho-capitalists. Anarchy, but not like the bad anarchy, this is capitalist anarchy.

Harper – one last time, this guy; good book; I’m very pleased with this book  –addresses the anarcho-capitalism question in this way, he says: “Based on all that has been said, one might easily conclude that government is an entirely negative force so far as liberty is concerned. He might conclude that anarchy…would be the ideal society, and that liberty would be complete under anarchy.  That would be true if all persons were perfect.  But they are not.”

And this comes back to the question how do we perceive ourselves. Are fallen beings or are we risen apes?

“With human frailties as they are, anarchy affords the opportunity for certain powerful and tyrannical individuals to enslave their fellow men, to the extent of their power to gain and keep control over others. So some degree of governmental function…is necessary if liberty is to be at a maximum; violators of liberty must be restrained so that the rights of liberty will be protected for those who respect them and play the game of society according to the rules of liberalism.”

The good liberalism – the classical liberalism.

“Thus at one extreme the absence of government allows anarchy to rob the people of their liberty, whereas at the other extreme the government itself becomes the robber of liberty. The task in a liberal society, therefore, is to find that point where all the people will enjoy the greatest possible degree of liberty.”

Personally, I am really close to anarcho-capitalism. I buy a lot of their arguments. I see a whole bunch of them.  I think that we should all strive to reduce plunder and expand liberty as much as we can.  And when we get to that little Minarchist state – that last little tiny state– maybe then I can decide whether we should abolish the last little bit of government or so.

But that’s not really the debate that we need. Because we are so far from that

point right now. It’s sort of like how many angles are dancing on the top of the Mountain Dew bottle?  It’s kind of pointless. What we need to do is pull in one direction and pull hard, not fight with each other.

My thoughts on what the right size of government is right now is… Imagine your own personal worst enemy. You know who that is.  And they can be placed in charge of the government and you would be okay with it.

Because right now if my own worst personal enemy was placed in position of power and they control the courts, IRS and other taxing, regulatory authorities then my life would be miserable.

But if we can reduce the government to the size where you can take your own personal worst enemy and put them in charge of all the things that the government does and you are okay with it. That’s a pretty good size government.

I have asked many questions. I have raised many questions that each of us is attempting to answer.

There are some answers: communism – bad. But the task set before us is to find that “greatest possible degree of liberty” for society.  This week is “Freedom University.”  What we should do is explore what exactly that means through good discussion and deep thinking.

So, I’m really excited about this week.

The Stateless Society: An Examination of Alternatives

by Stefan Molyneux

Stefan Molyneux is the host of ‘Freedomain Radio‘, the largest and most popular philosophy show on the Web.

If the Twentieth Century proved anything, it is that the single greatest danger to human life are the thugs of the centralized political State, who extinguished more than 170 million souls during the bloodiest rampage in recorded history. By any rational standard, modern States are the last and greatest remaining predators – and that the danger has not abated with the demise of communism and fascism. All Western democracies currently face vast and accelerating escalations of State power and centralized control over economic and civic life. In almost all Western democracies, the State chooses:

  • where children go to school, and how they will be educated
  • the interest rate citizens can borrow at
  • the value of currency
  • how employees can be hired and fired
  • how more than 50% of their citizens’ time and money are disposed of
  • who a citizen’s doctor is
  • what kinds of medical procedures can be received – and when
  • when to go to war
  • who can live in the country
  • …just to touch on a few.

Most of these amazing intrusions into personal liberty have occurred over the past 90 years, since the introduction of the income tax. They have been accepted by a population helpless to challenge the endless expansions of State power – and yet, even though most citizens have received endless pro-State propaganda in government schools, a growing rebellion is brewing. State predations are now so intrusive that they have effectively arrested the forward momentum of society, which now hangs before a fall. Children are poorly educated, young people are unable to get ahead, couples with children fall ever-further into debt, and the elderly are finding State medical systems collapsing under the weight of their growing needs – and State debts continue to grow.

Thus, these early years of the twenty-first century are the end of an era, a collapse of mythology comparable to the fall of fascism, communism, monarchy, or political Christianity. The idea that the State is capable of solving social problems is now viewed with great skepticism – which foretells a coming change. As soon as skepticism is applied to the State, the State falls, since it fails at everything except increasing its power, and so can only survive on propaganda, which relies on unquestioning faith.

Yet while most people are comfortable with the idea of reducing the size and power of the State, they become distinctly uncomfortable with the idea of getting rid of it completely. To use a medical metaphor, if the State is a cancer, they prefer medicating it into an unstable remission, rather than eliminating it completely.

This can never work. A central lesson of history is that States are parasites which always expand until they destroy their host population. Because the State uses violence to achieve its ends – and there is no rational end to the expansion of violence – States grow until they destroy civilized interaction through the corruption of money, contracts, honesty, family, and self-reliance. As such, the cancerous metaphor is not misplaced. People who believe that the State can somehow be contained have not accepted the fact that no State in history has ever been contained.

Even the rare reductions are merely temporary. The United States was founded on the principle of limited government; it took little more than a century for the State to break the bonds of the Constitution, implement the income tax, take control of the money supply and the educational system, and begin its catastrophic expansion. There is no example in history of a State being permanently reduced in size. All that happens during a tax or civil revolt is that the State retrenches, figures out what it did wrong, and plans its expansion again. Or provokes a war, which silences all but fringe dissenters.

Given these well-known historical facts, why do still people believe that such a deadly predator can be tamed? Surely it can only be because they consider a slow strangulation in the grip of an expanding State somehow better than the quick death of a society bereft of a State.

Why, then, do most people believe that a society will crumble without a coercive and monopolistic social agency at its core? There are a number of answers to this question, but generally they tend to revolve around three central points:

  • dispute resolution;
  • collective services; and,
  • pollution.

Dispute Resolution

The fact that people still cling to the belief that the State is requires to resolve disputes is amazing, since modern courts are out of the reach of all but the most wealthy and patient, and are primarily used to shield the powerful from competition or criticism. In this writer’s experience, to take a dispute with a stockbroker to the court system would have cost more than a quarter of a million dollars and taken from five to ten years – however, a private mediator settled the matter within a few months for very little money. In the realm of marital dissolution, private mediators are commonplace. Unions use grievance processes, and a plethora of other specialists in dispute resolution have sprung up to fill in the void left by a ridiculously lengthy, expensive and incompetent State court system.

Thus the belief that the State is required for dispute resolution is obviously false, since the court apparatus is unavailable to the vast majority of the population, who resolve their disputes either privately or through agreed-upon mediators.

How can the free market deal with the problem of dispute resolution? Outside the realm of organized crime, very few people are comfortable with armed confrontations, and so generally prefer to delegate that task to others. Let’s assume that people’s need for such representatives produces Dispute Resolution Organizations (DROs), which promise to resolve disputes on their behalf.

Thus, if Stan is hired by Bob, they both sign a document specifying which DRO they both accept as an authority in dispute resolution. If they disagree about something, and are unable to resolve it between themselves, they submit their case to the DRO, and agree to abide by that DRO’s decision.

So far so good. However, what if Stan decides he doesn’t want to abide by the DRO’s decision? Well, several options arise.

First of all, when Stan signed the DRO agreement, it is likely that he would have agreed to property confiscation if he did not abide by the DRO’s decision.[1] Thus the DRO would be entirely within its right to go and remove property from Stan – by force if necessary – to pay for his side of the dispute.

It is at this point that people generally throw up their arms and dismiss the idea of DROs by claiming that society would descend into civil war within a few days.

Everyone, of course, realizes that civil war is a rather bad situation, and so it seems likely that the DROs would consider alternatives to armed combat.

What other options could be pursued? To take a current example, small debts which are not worth pursuing legally are still regularly paid off – and why? Because a group of companies produce credit ratings on individuals, and the inconvenience of a lowered credit rating is usually greater than the inconvenience of paying off a small debt. Thus, in the absence of any recourse to force, small debts are usually settled. This is one example of how desired behaviour can be elicited without pulling out a gun or kicking in a door.

Picture for a moment the infinite complexity of modern economic life. Most individuals bind themselves to dozens of contracts, from car loans and mortgages to cell phone contracts, gym membership, condo agreements and so on. To flourish in a free market, a man must honour his contracts. A reputation for honest dealing is the foundation of a successful economic life. Now, few DROs will want to represent a man who regularly breaks contracts, or associates with difficult and litigious people.[2] (For instance, this writer once refrained from entering into a business partnership because the potential partner revealed that he had sued two previous partners.)

Thus if Stan refuses to abide by his DRO’s ruling, the DRO has to barely lift a finger to punish him. All the DRO has to do is report Stan’s non-compliance to the local contract rating company, who will enter his name into a database of contract violators. Stan’s DRO will also probably drop him, or raise his rates considerably.

And so, from an economic standpoint, Stan has just shot himself in the foot. He is now universally known as a man who rejects legitimate DRO rulings that he agreed to accept in advance. What happens when he goes for his next job? What if he decides to eschew employment and start his own company, what happens when he applies for his first lease? Or tries to hire his first employee? Or rent a car, or buy an airline ticket? Or enter into a contract with his first customer? No, in almost every situation, Stan would be far better off to abide by the decision of the DRO. Whatever he has to pay, it is far cheaper than facing the barriers of existing without access to a DRO, or with a record of rejecting a legitimate ruling.

But let’s push the theory to the max, to see if it holds. To examine a worst-case scenario, imagine that Stan’s employer is an evil man who bribes the DRO to rule in his favour, and the DRO imposes an unconscionable fine – say, one million dollars – on Stan.

First of all, this is such an obvious problem that DROs, to get any business at all, would have to deal with this danger up front. An appeal process to a different DRO would have to be part of the contract. DROs would also rigorously vet their own employees for any unexplained income. And, of course, any DRO mediator who corrupted the process would receive perhaps the lowest contract rating on the planet, lose his job, and be liable for damages. He would lose everything, and be an economic pariah.

However, to go to the extreme, perhaps the worst has occurred and Stan has been unjustly fined a million dollars due to DRO corruption. Well, he has three alternatives. He can choose not to pay the fine, drop off the DRO map, and work for cash without contracts. Become part of the grey market, in other words. A perfectly respectable choice, if he has been treated unjustly.

However, if Stan is an intelligent and even vaguely entrepreneurial man, he will see the corruption of the DRO as a prime opportunity to start his own, competing DRO, and will write into its base contract clauses to ensure that what happened to him will never happen to anyone who signs on with his new DRO.[3]

Stan’s third option is to appeal to the contract rating agency. Contract rating agencies need to be as accurate as possible, since they are attempting to assess real risk. If they believe that the DRO ruled unjustly against Stan, they will lower that DRO’s contract rating and restore Stan’s.

Thus it is inconceivable that violence would be required to enforce all but the most extreme contract violations, since all parties gain the most long-term value by acting honestly. This resolves the problem of instant descent into civil war.

Two other problems exist, however, which must be resolved before the DRO theory starts to becomes truly tenable.

The first is the challenge of reciprocity, or geography. If Bob has a contract with Jeff, and Jeff moves to a new location not covered by their mutual DRO, what happens? Again, this is such an obvious problem that it would be solved by any competent DRO. People who travel prefer cell phones with the greatest geographical coverage, and so cell phone companies have developed reciprocal agreements for charging competitors. Just as a person’s credit rating is available anywhere in the world, so their contract rating will also be available, and so there will be no place to hide from a broken contract save by going ‘off the grid’ completely, which would be economically crippling.

The second problem is the fear that a particular DRO will grow in size and stature to the point where it takes on all the features and properties of a new State.

This is a superstitious fear, because there is no historical example of a private company replacing a political State. While it is true that companies regularly use State coercion to enforce trading restrictions, high tariffs, cartels and other mercantilist tricks, surely this reinforces the danger of the State, not the inevitability of companies growing into States. All States destroy societies. No company has ever destroyed a society without the aid of the State. Thus the fear that a private company can somehow grow into a State is utterly unfounded in fact, experience, logic and history.

If society becomes frightened of a particular DRO, then it can simply stop doing business with it, which will cause it to collapse. If that DRO, as it collapses, somehow transforms itself from a group of secretaries, statisticians, accountants and contract lawyers into a ruthless domestic militia and successfully takes over society – and how unlikely is that! – then such a State will then be imposed on the general population. However, there are two problems even with this most unlikely scare scenario. First of all, if any DRO can take over society and impose itself as a new State, why only a DRO? Why not the Rotary Club? Why not a union? Why not the Mafia? The YMCA? The SPCA? Is society to then ban all groups with more than a hundred members? Clearly that is not a feasible solution, and so society must live with the risk of a brutal coup by ninja accountants as much as from any other group.

And, in the final analysis, if society is so terrified of a single group seizing a monopoly of political power, what does that say about the existing States? They have a monopoly of political power. If a DRO should never achieve this kind of control, why should existing States continue to wield theirs?

Collective Services

Roads, sewage, water and electricity and so on are also cited as reasons why a State must exist. How roads could be privately paid for remains such an impenetrable mystery that most people are willing to support the State – and so ensure the eventual and utter destruction of civil society – rather than cede that this problem just might be solvable. There are many ways to pay for roads, such as electronic or cash tolls, GPS charges, roads maintained by the businesses they lead to, communal organizations and so on. And if none of those work? Why, then personal flying machines will hit the market!

The problem that a water company might build plumbing to a community, and then charge exorbitant fees for supplying it, is equally easy to counter. A truck could deliver bottled water, or the community could invest in a water tower, a competing company could built alternate pipes and so on. None of these problems touch the central rationale for a State. They are ex post facto justifications made to avoid the need for critical examination or, heaven forbid, political action. The argument that voluntary free-market monopolies are bad – and that the only way to combat them is to impose compulsory monopolies – is obviously foolish. If voluntary monopolies are bad, then how can coercive monopolies be better?

Due to countless examples of free market solutions to the problem of ‘carrier costs’, this argument no longer holds the kind of water it used to, so it must be elsewhere that people must turn to justify the continued existence of the State.


This is perhaps the greatest problem faced by free-market theorists. It’s worth spending a little time on outlining the worst possible scenario, and see how a voluntary system could solve it. However, it’s important to first dispel the notion that the State currently deals effectively with pollution. Firstly, the most polluted resources on the planet are State-owned, because State personnel do not personally profit from retaining the value of State property (witness the destruction of the Canadian cod industry through blatant vote-buying). Secondly, the distribution of mineral, lumber and drilling rights is directly skewed towards bribery and corruption, because States rarely sell the land, but rather just the resource rights. A lumber company cannot buy woodlands from the State, just the right to harvest trees. Thus the State gets a renewable source of income, and can further coerce lumber companies by enforcing re-seeding. This, of course, tends to promote bribery, corruption and the creation of ‘fly-by-night’ lumber companies which strip the land bare, but vanish when it comes time to re-seed. Auctioning State land to a private market easily solves this problem, because a company which re-seeded would reap the greatest long-term profits from woodland, and so would be able to bid the most for the land.

Also, it should be remembered that, in the realm of air pollution, governments created the problem in the first place. In 19th century England, when industrial smokestacks began belching fumes into the orchards of apple farmers, the farmers took the factory-owners to court, citing the common-law tradition of restitution for property damage. Naturally, the capitalists had gotten to the State courts first, and had more money to bribe with, employed more voting workers, and contributed more tax revenue than the farmers – and so the farmers’ cases were thrown out of court. The judge argued that the ‘common good’ of the factories took precedence over the ‘private need’ of the farmers. The free market did not fail to solve the problem of air pollution – it was forcibly prevented from doing so through State corruption.

The State, then, is no friend of the environment – but how would the free market handle it? One egregious example often cited is a group of houses downwind from a new factory which works day and night to coat them in soot.

When a man buys a new house, isn’t it important to him to ensure that it won’t be subjected with someone else’s pollution? People’s desire for a clean and safe environment is so strong that it’s a clear invitation for enterprising capitalists to sweat bullets figuring out how to provide it.

Fortunately, since we have already talked about DROs and their role in a free market, the problem of air pollution can be solved quite easily.

If the aforementioned group of homeowners is afraid of pollution, the first thing they will do is buy pollution insurance, which is a natural response to a situation where costs cannot be predicted but consequences are dire. Let’s say that a homeowner named Achmed buys pollution insurance which pays him two million dollars if the air around or in his house becomes polluted in some predefined manner.[4] In other words, as long as Achmed’s air remains clean, the insurance company makes money.

One day, a plot of land upwind of Achmed’s house comes up for sale. Naturally, his insurance company would be very interested in this, and would monitor the sale. If the purchaser is some private school, all is well (assuming Achmed has not bought an excess of noise pollution insurance!). If, however, the insurance company discovers that Sally’s House of Polluting Paint Production is interested in purchasing the plot of land, then it will likely spring into action, taking one of the following actions:

  • buying the land itself, then selling it to a non-polluting buyer;
  • getting assurances from Sally that her company will not pollute;
  • paying Sally to enter into a non-polluting contract.

If, however, someone at the insurance company is asleep at the wheel, and Sally buys the land and puts up her polluting factory, what happens then?

Well, then the insurance company is on the hook for $2M to Achmed (assuming for the moment that only Achmed bought pollution insurance). Thus, it can afford to pay Sally up to $2M to reduce her pollution and still be cash-positive. This payment could take many forms, from the installation of pollution-control equipment to a buy-out to a subsidy for under-production and so on.

If the $2M is not enough to solve the problem, then the insurance company pays Achmed the $2M and he goes and buys a new house in an unpolluted neighbourhood. However, this scenario is highly unlikely, since the insurance company would be unlikely to insure only one single person in a neighbourhood against air pollution – and a single person probably could not afford it!

So, that is the view from Achmed’s air-pollution insurance company. What about the view from Sally’s House of Polluting Paint Production? She, also, must be covered by a DRO in order to buy land, borrow money and hire employees. How does that DRO view her tendency to pollute?

Pollution brings damage claims against Sally, because pollution is by definition damage to persons or property. Thus Sally’s DRO would take a dim view of her polluting activities, since it would be on the hook for any property damage her factory causes. In fact, it would be most unlikely that Sally’s DRO would insure her against damages unless she were able to prove that she would be able to operate her factory without harming the property of those around her. And without access to a DRO, of course, she would be hard-pressed to start her factory, borrow money, hire employees etc.

It’s important to remember that DROs, much like cell phone companies and Internet providers, only prosper if they cooperate. Sally’s DRO only makes money if Sally does not pollute. Achmed’s insurer also only makes money if Sally does not pollute. Thus the two companies share a common goal, which fosters cooperation.

Finally, even if Achmed is not insured against air pollution, he can use his and/or Sally’s DRO to gain restitution for the damage her pollution is causing to his property. Both Sally and Achmed’s DROs would have reciprocity agreements, since Achmed wants to be protected against Sally’s actions, and Sally wants to be protected against Achmed’s actions. Because of this desire for mutual protection, they would choose DROs which had the widest reciprocity agreements.

Thus, in a truly free market, there are many levels and agencies actively working against pollution. Achmed’s insurer will be actively scanning the surroundings looking for polluters it can forestall. Sally will be unable to build her paint factory without proving that she will not pollute. Mutual or independent DROs will resolve any disputes regarding property damage caused by Sally’s pollution.

There are other benefits as well, which are almost unsolvable in the current system. Imagine that Sally’s smokestacks are so high that her air pollution sails over Achmed’s house and lands on Reginald’s house, a hundred miles away. Reginald then complains to his DRO that his property is being damaged. His DRO will examine the air contents and wind currents, then trace the pollution back to its source and resolve the dispute with Sally’s DRO. If the air pollution is particularly complicated, then Reginald’s DRO will place non-volatile compounds into Sally’s smokestacks and follow them to where they land. This can be used in a situation where a number of different factories may be contributing pollutants.

The problem of inter-country air pollution may seem to be a sticky one, but it’s easily solvable. Obviously, a Canadian living along the Canada/US border, for instance, will not choose a DRO which refuses to cover air pollution emanating from the US[5]. Thus the DRO will have to have reciprocity agreements with the DROs across the border. If the US DROs refuse to have reciprocity agreements with the Canadian DROs – inconceivable, since the pollution can go both ways – then the Canadian DRO will simply start a US branch and compete.

The difference is that international DROs actually profit from cooperation, in a way that governments do not. For instance, a State government on the Canada/US border has little motivation to impose pollution costs on local factories, as long as the pollution generally goes north. For DROs, quite the opposite would be true.

Finally, one other advantage to DRO’s can be termed the ‘Scrabble-Challenge Benefit’. In Scrabble, an accuser loses his turn if he challenges another player’s word and the challenge fails. Given the costs of resolving disputes, DROs would be very careful to ensure that those bringing false accusations would be punished through their own premiums, their contract ratings and by also assuming the entire cost of the dispute. This would greatly reduce the number of frivolous lawsuits, to the great benefit of all.

The idea that society can only survive in the absence of a centralized State is the greatest lesson that the grisly years of the Twentieth Century can teach us. Our choice is not between the free market and the State, but between life and death. Whatever the risks involved in dissolving the central State, they are far less than the certain destruction which will result from its inevitable escalation. Like a cancer patient facing certain demise, we must open our minds and reach for whatever medicine shows the most promise, and not wait until it is too late.

[1] For the sake of simplicity, the assumption is that there is no appeal process, which is admittedly highly unlikely.
[2] More accurately, DRO’s will be happy to deal with such people – just as car insurance companies will insure even terrible drivers – but the cost of representation will be very high.
[3] This is also why existing DRO’s will be so vigilant in rooting out corruption. Faster than any other single factor, corruption will breed competition.
[4] Naturally, the insurance company would have to deal with the problem that it is cheaper for Achmed’s neighbour to let Achmed buy the insurance, which could be dealt with by descending group rates and so on.
[5] Of course, the idea of ‘countries’ may be somewhat anachronistic by this time…

This article has been published with the author’s permission.

Liberty and the Power of Ideas

Lawrence W. Reed is president of the Foundation for Economic Education in Irvington, New York— essay has been adapted for CEIL by the author author from an essay first published in the February 1979 issue of FEE’s journal, “The Freeman.”

A belief which I stressed again and again in my classes when I taught economics at Northwood University in Michigan was the belief that we are at war—not a physical, shooting war but nonetheless a war which is fully capable of becoming just as destructive and just as costly.

The battle for the preservation and advancement of liberty is a battle not against personalities but against opposing ideas. The French author Victor Hugo declared that “More powerful than armies is an idea whose time has come.” Armies conquer bodies, but ideas capture minds. The English philosopher Carlyle put it this way many decades ago: “But the thing a man does practically believe (and this is often enough without asserting it to himself, much less to others): the thing a man does practically lay to heart, and know for certain, concerning his vital relations to this mysterious Universe, and his duty and destiny there, that is in all cases the primary thing for him, and creatively determines all the rest.”

In the past, ideas have had earthshaking consequences. They have determined the course of history. For good or ill, they bring down governments and raise other ones up.

The system of feudalism existed for a thousand years in large part because scholars, teachers, intellectuals, educators, clergymen and politicians propagated feudalistic ideas. The notion of “once a serf, always a serf’ kept millions of people from ever questioning their station in life. Under the mercantilism practiced from the 16th through the 18th Centuries, the widely-accepted concept that the world’s wealth was fixed prompted men to take what they wanted from others in a long series of bloody wars.

The publication of Adam Smith’s The Wealth of Nations in 1776 is a landmark in the history of the power of ideas. As Smith’s message of free trade spread, political barriers to peaceful cooperation collapsed and virtually the whole world decided to try freedom for a change.

In arguing against freedom of the press in 1924, Lenin made the famous statement that “ideas are much more fatal than guns.” To this day, ideas by themselves can get you a prison sentence in a lot of places around the world.

Marx and the Marxists would have us believe that socialism is inevitable, that it will embrace the world as surely as the sun will rise in the east tomorrow. As long as men have free will (the power to choose right from wrong) however, nothing that involves this human volition can ever be inevitable! Men do things because they are of the mind to do them; they are not robots programmed to carry out some preordained dictum.

Winston Churchill once said that “Socialism is the philosophy of failure, the creed of ignorance, and the gospel of envy. Its inherent trait is the equal sharing of misery.” Socialism is an age-old failure, yet the socialist idea constitutes the chief threat to liberty today. So it is that believers in liberty, to be effective, must first identify and isolate the socialist notions which have taken their toll on liberty. In doing that, and then refraining from advancing those ideas, we can at the same time advance liberty. As I see it, socialism can be broken down into five ideas.

The Pass a Law Syndrome. Passing laws has become a national pastime in most Western countries. When a problem in society is cited, the most frequent response seems to be, “Pass a law!” Business in trouble? Pass a law to give it public subsidies or restrict its freedom of action. Poverty? Pass a law to abolish it. Perhaps we need a law against passing more laws.

In 1977 the American Congress enacted 223 new laws. It repealed hardly any. During that same year, the Washington bureaucracy wrote 7,568 new regulations, all having the force of law. (Thirty-three years later, the situation is even worse. Now, few in Congress even read the bills they vote for, some of which are in the thousands of pages).

James Madison in 1795 identified this syndrome as “the old trick of turning every difficulty into a reason for accumulating more force in government.” His observation leads one to ask, “Just what happens when a new law goes on the books?” Almost invariably, a new law means: a) more taxes to finance its administration; b) additional government officials to regulate some heretofore unregulated aspect of life; and c) new penalties for violating the law. In brief, more laws mean more regimentation, more coercion. Let there be no doubt about what the word “coercion” means: force, plunder, compulsion, restraint. Synonyms for the verb form of the word are even more instructive: impel, exact, subject, conscript, extort, wring, pry, twist, dragoon, bludgeon, and squeeze!

When government begins to intervene in the free economy, bureaucrats and politicians spend most of their time undoing their own handiwork. To repair the damage of Provision A, they pass Provision B. Then they find that to repair Provision B, they need Provision C and to undo C, they need D, and so on until the alphabet and our freedoms are exhausted.

The Pass a Law Syndrome is evidence of a misplaced faith in the political process, a reliance on force which is anathema to a free society. It’s also a sign that people have abandoned confidence in themselves and would prefer dependence upon politicians and largely unaccountable bureaucrats who usually are among the least capable in society to run the lives of others.

The Get Something From Government Fantasy. Government by definition has nothing to distribute except what it first takes from people. Taxes are not donations!

In the welfare state, this basic fact gets lost in the rush for special favors and giveaways. People speak of “government money” as if it were truly “free.” It may not be an exaggeration to say that perhaps the welfare state is so named because the politicians get well and the rest of us pay the fare.

One who is thinking of accepting something from government which he could not acquire voluntarily should ask, “From whose pocket is it coming? Am I being robbed to pay for this benefit or is government robbing someone else on my behalf?” Frequently, the answer will be both. The end result of this “fantasy” is that everyone in society has his hands in someone else’s pockets.

The Pass the Buck Psychosis. Recently a welfare recipient wrote her welfare office and demanded, “This is my sixth child. What are you going to do about it?”

An individual is victim to the Pass the Buck Psychosis when he abandons himself as the solver of his problems. He might say, “My problems are really not mine at all. They are society’s, and if society doesn’t solve them and solve them quickly, there’s going to be trouble!”

Socialism thrives on the shirking of responsibility. When men lose their spirit of independence and initiative, their confidence in themselves, they become clay in the hands of tyrants and despots. I might add: The only thing socialism has ever really done for poor people is to give them lots of company.

The Know-It-All Affliction. Leonard Read, in The Free Market and Its Enemy, identified “know-it-allness” as a central feature of the socialist idea. The know-it-all is a meddler in the affairs of others. His attitude can be expressed in this way: “I know what’s best for you, but I’m not content to merely convince you of my rightness; I’d rather force you to adopt my ways.” The know-it-all evinces arrogance and a lack of tolerance for the great diversity among people.

In government, the know-it-all refrain sounds like this: “If I didn’t think of it, then it can’t be done, and since it can’t be done, we must prevent anyone from trying.”

A group of West Coast businessmen ran into this snag recently when their request to operate a barge service between the Pacific Northwest and Southern California was denied by the Interstate Commerce Commission because the agency felt the group could not operate such a service profitably!

The miracle of the market is that when men and women are free to try, they can and do accomplish great things. Leonard Read’s well-known admonition that there should be “no man-concocted restraints against the release of creative energy” is a powerful rejection of the Know-It-All Affliction. (Leonard Read was the founder of the Foundation for Economic Education and you can read more about him here:

The Envy Obsession. Coveting the wealth and income of others has given rise to a sizable chunk of today’s socialist legislation. Envy is the fuel that runs the engine of redistribution. Surely, the many soak the-rich schemes are rooted in envy and covetousness.

What happens when people are obsessed with envy? They blame those who are better off than themselves for their troubles. Society is fractured into classes and faction preys upon faction. Civilizations have been known to crumble under the weight of envy and the disrespect for property which it entails.

A common thread runs through these five socialist ideas. They all appeal to the darker side of man: the primitive, noncreative, slothful, dependent, demoralizing, unproductive, and destructive side of human nature. No society can long endure if its people practice such suicidal notions!

Consider the freedom philosophy. What a contrast! It is an uplifting, regenerative, motivating, creative, exciting philosophy! It appeals to and relies upon the higher qualities of human nature such as self-reliance, personal responsibility, individual initiative, respect for property, and voluntary cooperation.

Nobel laureate economist F. A. Hayek (author of the seminal 1944 book, “The Road to Serfdom”) called attention to the power of ideas in preserving liberty: “Unless we can make the philosophic foundations of a free society once more a living intellectual issue, and its implementation a task which challenges the ingenuity and imagination of our liveliest minds, the prospects of freedom are indeed dark.”

The verdict in the struggle between freedom and serfdom depends entirely upon what percolates in the hearts and minds of men. At the present time, in every nation of the world, the jury is still deliberating.

Government Investment

by John Semmens

John Semmens is an economist with the Laissez Faire Institute in Chandler, Arizona.

The idea that the government should spend money as a means of stimulating the economy and boosting employment has been a formal part of U.S. policy since the Employment Act of 1946. This law was clearly rooted in Keynesian economics. The idea was that government spending would make a splash in the economic pond that would send out ripples that would impact the rest of the economy in a positive way.

The plausibility of this idea is enhanced by the very visible employment of those working on the specific projects funded by the government. For example, government subsidies to public transit are often urged as a means for achieving the dual objectives of improved urban transportation and stimulation of employment.

The buses and trains used to provide this transportation are there for everyone to see. These vehicles have drivers. The systems also employ mechanics, ticket sellers, administrators, accountants, etc. The American Public Transit Association proudly observes that over 300,000 people are employed due to public transit spending programs.

In 1992 around $20 billion was “invested” on public transit in the United States. Because this spending does “ripple” through the economy and eventually become someone else’s income, it could be said that, in all, public transit may account for the employment of 800,000 people.

This sounds very impressive and is, no doubt, part of the reasoning behind plans to boost the U.S. economy by increased spending on public transit. The flaw in this thinking, though, is its failure to account for what economists call the “opportunity cost” of using resources on transit subsidies. That is, what opportunities may have been sacrificed while funds were being spent on public transit? What gains might have resulted if the funds committed to transit “investments” had been invested in something else?

Since 1965, when the federal government began subsidizing transit, U.S. taxpayers have paid over $60 billion into this program. State and local taxpayers have paid a similar amount. In total, over $125 billion in tax dollars have been “invested” in public transit. If the transit subsidy program had not existed and this money had instead been invested in other businesses, would we now be better off in terms of employment and economic activity?

If we assume that our investment alternative produced only average results, our economy and employment options would be far more robust than they are now. Business assets would be nearly $100 billion higher than they now are. Gross domestic production would be $400 billion higher. There would be over 8 million people employed in these alternative business enterprises.

These private sector benefits would have been augmented by substantial public sector gains, as well. Current federal tax receipts could have been $80 billion per year higher than they now are. State and local government tax receipts could have been $60 billion per year higher. These gains from economic growth could have meant fewer tax increases or less government borrowing, either of which would have stimulated economic growth even more than the above estimates.

The reason for the great disparity in results is that it makes a difference whether investments make profits or losses. Since the federal government subsidies began in 1965, public transit has failed to make a profit in any year. In fact, losses have grown larger in every single year since 1965. For 1992, public transit’s financial losses amounted to around $13 billion.

Losses mean that the economy is not being stimulated by transit subsidies. Rather, it is being drained. Every year, other, more profitable business activities have been taxed to provide the funds to prop up public transit. The long-term consequences of this parasitic relationship have been very costly.

The economy is weaker. Virtually every sector, save those directly benefitting from the subsidies, has been harmed. There has been a net loss of over 7 million job opportunities. Wages are lower. Business sales are lower. Interest rates are higher. The federal government’s budget deficit crisis is worse.

These unpleasant consequences are the result of ignoring the essential role of profit in creating resources and stimulating the economy. Profit results when the value of the outputs of an economic enterprise is worth more than the cost of the inputs. Profits mean that the economic enterprise has added to the economy’s wealth. Each increment of profit on each subsequent transaction adds more to the economy’s wealth. The compounding of these increments over time is what enables us to enjoy a higher standard of living than earlier generations.

Profits accrue to those businesses that have satisfied their customers. Profits act as both a message and a means for these businesses to continue and expand. Losses send a different message. Losses indicate that the business’s output is worth less than the cost of its inputs. A business must heed this message by improving its efficiency or changing its product. Failure to heed the message will result in a loss of resources and endanger its ability to remain in business.

The lack of profit in government enterprises should not be surprising. Government’s ability to tax means its businesses are insulated from the need to earn a profit in order to stay alive. Consequently, they don’t earn profits. The absence of profits means that government businesses consume rather than create resources.

Despite consuming a huge quantity of resources over the last 25 years, public transit is still a sickly industry. Its share of the passenger travel market has declined. Most buses and trains run mostly empty most of the time. Passenger fares pay less than 35 percent of the cost of each ride. Today the total number of public transit passengers is barely above where it was before all this government “investment” started.

This pathetic record of non-achievement is all too typical for government “investments.” If we truly want to stimulate our economy we need to stop “investing” in government’s money-losing ventures.

This article has been published with FEE‘s permission and has been originally published at The Freeman April 1994 • Volume: 44 • Issue: 4.

The High Cost of Government Schooling

Lawrence W. Reed is president of the Foundation for Economic Education in Irvington, New York— essay has been adapted for CEIL by the author from an essay first published in the February 2001 issue of FEE’s journal, “The Freeman.” The author wishes the reader to know that the conditions he described in 2001 are no better a decade later and neither are the public policies that produced them.

Public (government) education in America costs a princely sum, and it isn’t getting any cheaper. But what taxpayers shell out for the government school monopoly doesn’t tell the whole story. What others in society must pay to correct the shortcomings of that failed monopoly is huge and a painful testimony to the need for a big dose of choice, competition, and private enterprise.

Because government schools perform on a par with government farms, government factories, and government stores in the typical socialized society, we have in America what is commonly called “remedial education.” The government school establishment doesn’t like the term because of its pejorative nature, so its minions have lately come up with their own: “developmental education.” I have nothing to cover up, so I’ll use the former.

Remedial education is what has to happen when students graduate from high school lacking basic skills in reading, writing, and mathematics. They have a diploma, but it doesn’t certify that they know anything; these days, the only thing you can be sure a diploma certifies is that lots of people paid through the nose for at least 12 years before the government was done with you. When employers and universities have to spend money to bring high school graduates up to speed—to do what the K-12 system did not do—that’s remedial education.

Getting a handle on the costs of this corrective work in Michigan was the purpose of a study released in 2000 by the Mackinac Center for Public Policy.

The Cost of Remedial Education: How Much Michigan Pays When Students Fail to Learn Basic Skills” by education policy scholar Jay P. Greene, captured page-one headlines all across the state and shook the very foundations of the government school establishment. It made a lot of people rethink their longstanding, rarely questioned assumptions about government schooling.

First, it’s important to understand what the study did not count. It did not include the cost of college-level work that has been “watered-down” but not labeled either “remedial” or “developmental.” Talk to most university professors these days and you’ll know what I mean.

The study accounted for the expense of instructional services, but did not count expenditures on technology to accommodate the lack of basic skills. Increasingly, businesses are investing in software and gadgets to do, in effect, an end-run around workers who lack basic skills. Many businesses these days buy cash registers that make change for customers because employees can’t be relied on to count accurately. Some fast-food chains actually provide cash registers with pictures of the food items on them so adult employees who can’t read “cheeseburger” can still use them.

And finally, the study did not count the costs incurred personally by either high school dropouts or graduates who have been short-changed by the system: the later costs of tutors and self-study, and the cost of lower incomes.

This study looked only at Michigan and only at the costs of remedial education incurred just by businesses and universities in that state. At a minimum, one-third and probably something closer to one-half of all students graduating from Michigan public high schools lack basic skills. By using five different strategies for calculating these costs, Greene arrived at $601 million as a conservative estimate of what Michigan businesses and universities spend each year to remediate high school graduates lacking basic skills. That is a considerable sum on top of the $13 billion state and local governments spend on public education each year in Michigan, and yet it’s surely too low because of all the costs that were not part of the calculation.

The government school establishment is quick to suggest that the problem isn’t entirely the fault of the schools. Parents, they say, are partly to blame when they don’t prepare kids well or see that they do their homework. While it’s true that many parents have abdicated their responsibilities in the education of their children, it’s also true that many parents who do take education seriously find that they must constantly fight the public schools on matters of proper course content and academic rigor. Many parents believe the report cards their kids bring home, not realizing that grade inflation and poor teaching render the meaning of those report cards dubious. And schools, not parents, are the outfits that issue the diplomas that once implied a mastery of at least basic skills. If a student doesn’t have those skills, it’s deception when his school graduates him as if he did.

Janet Dettloff, chair of the Math and Sciences Division at Wayne County Community College in Detroit, says the remedial problem is acute and goes beyond a simple lack of knowledge: “Most of the students who come to us not only lack math and English skills, but they lack basic academic skills too. They have no idea what is expected of them at the college level. They don’t know how to take notes. They don’t read the assigned material. And many of them don’t even come to class.”

Others from both the business and university communities told the author what education reformers have long understood: government schools are doing a poor job of imparting critical thinking skills. Logic and reason have largely been supplanted by appeals to emotion. In place of rigorous analytical processes, students are asked to tell how they feel about a particular issue. The “self-esteem” craze that has swept public education essentially produces students by the boatload who don’t really know much, don’t know that they don’t know, but feel real good about their ignorance.

Getting the public to think about the high costs of remedial education is proving to be a catalyst for advancing real reform. If you favor more choice, competition, and private enterprise in education—irrespective of your preference for vouchers or tax credits or privatization and complete separation of school and state as a means to do that—the remediation problem provides new and powerful arguments: It vividly demonstrates that there are costs to not scrapping the status quo. People who are uncomfortable with the thought of change have some startling new numbers to wrestle with.

Apologists for government schooling love to spurn the arguments of reformers with the line, “You’re not being fair because, after all, public schools have to take all comers. They can’t pick and choose as private schools can.” Well, thanks to eye-opening studies like this one on the remedial problem, we know that whether public schools take everybody or not, it’s clear that atrociously high numbers of those they take are not getting educated.

Private Property and Social Order

by Butler Shaffer

This is chapter seven from Butler Shaffer’s recent book “Boundaries of Order: Private Property as a Social Order” (pdf-version).

Every thing that tends to insulate the individual to surround him with barriers of natural respect, so that each man shall feel the world is his, and man shall treat with man as a sovereign state with a sovereign state;—tends to true union as well as greatness.

— Ralph Waldo Emerson[1]

Because life is dependent upon the use and consumption of property, it is the nature of any property system—whether private or collective in form—to generate divisions between those who will, and those who will not, be entitled to the enjoyment of various resources. It is the entropic nature of life itself, not some belief system, that dictates such harsh realities. The competition that invariably exists among all living things for negentropic resources injects an element of conflict into the life process that cannot be wholly excised. There will also be disappointments or even hard feelings over the outcomes of such contests. Nothing in the holographic model of social systems suggests that billions of people will suddenly develop a collective mindset, and agree to allocate resources in a manner that reflects a cheerful unanimity. Such illusions of group-think are what have turned the dreams of utopian thinkers into the nightmares under which others have suffered and died. Society will become more peaceful and cooperative only as individuals transform the nature of their conduct with others. Such changes will arise marginally, at the boundaries where people transact their relationships and exchanges with one another. Like the young boy at the party chaperoned by my daughter, such individual transformations in consciousness are more likely to arise in an environment in which one’s claims to ownership are respected by others. As a means of harmonizing our needs for both self-centered activity and social cooperation, a system of private ownership allows us to experience the deeper meaning of being human.

Again, what is being proposed here is not a utopian ideology, in which humanity will miraculously march off together, in lockstep cadence, to yet another visionary millennium. Utopian thinking is premised on the delusion of universally shared preferences, as well as the idea of a fixed end state. But a creative and vibrant society is a continuously changing one, comprised of people with a multitude of varied tastes, preferences, ambitions, and skills. And as history has demonstrated, creative change is not necessarily favorable to all mankind. There were many contemporaries for whom the Renaissance or the Industrial Revolution were not beneficial. The Luddite riots, for instance, were greatly influenced by the reaction of many artisans to the threats that industrialization posed to their established economic interests.

Regardless of the form of the social or political system under which we live, it is unavoidable that each of us will be entitled to use and consume particular resources to the exclusion of everyone else. This is but a fact of existence. Again, we witness the interrelatedness of apparent opposites: both individual liberty and social order depend upon a system grounded in the division that inheres in the nature of property. But lest any be inclined to treat this only as a paradoxical feature of privately owned property, it must be noted that collective ownership fosters the same divisiveness, but without a concomitant benefit to our sense of individuality, a topic to be explored more fully in chapter nine. Whether we live in the most ideologically repressive Marxist state, with its insistence upon state ownership of all productive property, or in a stateless community of cooperative, uncoerced individuals, some method will have to be arrived at for determining the answer to the question: who gets to make decisions about what resources? Whether the process involves voluntary, marketplace negotiations among competing interests, or the arbitrary determinations of bureaucratic agencies, the use of a given item of property will be enjoyed by some to the exclusion of others.

Given the nature of property, there must be some arrangements for deciding who gets to stand or sleep or work or play within a given space and period of time, and who gets to consume what resources to the exclusion of everyone else, in our efforts to sustain ourselves. One thing is clear: all five billion of us cannot sleep in one bed at the same time, or eat the same hamburger. Whether I decide—by my act of asserting a claim to and taking control of previously unowned resources, or by purchasing the claim of another—where I am to live and sleep, or whether this decision is imposed upon me by some state bureaucrat, the inescapable fact remains that I will end up someplace, if only by default, and to the exclusion of everyone else on the planet. What this means is that any method of making such decisions will always separate the “occupier” or the “consumer” from the “non-occupier” or “non-consumer,” the best intentions of the market participants or the noblest state housing commissar to the contrary notwithstanding.

Whether property is to be controlled privately by individuals, or collectively by the state, tells us much about our existential sense of being. Are human beings ends in themselves, or only means to the ends of others? Do we regard ourselves as unique individuals, or as undifferentiated parts in some giant piece of social machinery? Are our individual interests to be considered inviolate, or subject to preemption by those who enjoy power?

Private property, as a system of social order, reflects the extent to which we are willing to acknowledge one another’s autonomy and to limit the range of our own activities. Private property is the operating principle that makes real Immanuel Kant’s admonition: “Act so that you treat humanity, whether in your own person or in that of another, always as an end and never as a means only.”[2] It is a tenet that not only diffuses authority in society, but helps us reconcile our seemingly contradictory natures as self-seeking individuals who, at the same time, require some form of social organization in order to survive. Such a system of social individualism reflects the paradoxical nature of reality, in which self-interest finds expression in cooperation with others.

Respecting the inviolability of the boundaries that enclose our neighbors’ property claims accords them our respect for the autonomy that is essential to any meaningful form of individual expression. In acknowledging one another’s realms of unimpeded activity, we not only confirm our sense of their self-justifying existence but, in so doing, dissolve the barriers of distrust that separate us. Only in a condition of such mutual respect can we expect to find a reasonable basis for social harmony. Knowing that our claims to immunity from trespass are likely to be respected, and being aware of the advantages of cooperation, we are more inclined to organize ourselves in peaceful and productive ways than we are when, as now, organization tends to be grounded in fear and the violent and divisive assumptions of coercive power.

The property principle operates as a buffer, separating the realm of your decision making from mine. We need to have our will free of coercion, and the inviolability of our sense of self acknowledged, before we will feel comfortable enough to cooperate with others and feel safe within groups. Our social organizations must reflect these qualities with a sense of wholeness and integrity before we can live in harmony with our neighbors, instead of the counterfeit forms offered by the state. It is only within systems in which each of us enjoys the unrestrained autonomy to act in furtherance of our individual interests that our personal and social interests can merge. When decision-making is decentralized into a system of privately owned property, individual self-interest and cooperation coalesce to maximize personal liberty and social harmony. With authority diffused into the hands of individuals, each of us enjoys control over some portion of the world within which we can pursue our interests in our own way. What we share in common are our individual needs for a sphere of action in which we can be as autonomous, spontaneous, arbitrary, self-indulgent, and as unanswerable to others as we care to be, without being subject to any coercive preemption by others. At the same time, cooperation with others is premised upon sharing or exchanging with one another that which belongs to each of us (e.g., our personal energies or our material resources).

The decentralization of decision-making that is implicit in a system of privately-owned property provides another instance of the unity that inheres in apparent opposites. By distributing authority widely rather than narrowly, private property provides a greater flexibility allowing individuals to voluntarily join with others in concentrated communities in which they can choose to associate with others in pursuit of shared interests. The Silicon Valley, artists colonies, Detroit automobile manufacturing, Hollywood film production companies, and religious communes, are just a handful of examples of the interrelated dynamics of decentralized and concentrated activity.

Whether our relationships with others will be increasingly based upon state-driven coercion, or will find a more creative expression in agreements, depends upon our attitudes about the inviolability of property claims. When we acknowledge property boundary lines, rather than statutes or court decisions, as confining the range of our personal actions, mutual respect for one another’s boundaries integrates our individual and social needs and, as a consequence, generates liberty and order in society.

One need not rely on hypotheticals or theoretical analyses to demonstrate the social, or transactional, negotiation for property claims. There is an emerging field of study in law regarding the role played by social norms—enforced informally by interpersonal pressures rather than coercive state power—in maintaining peaceful and orderly behavior. The Amish have used such methods for decades to provide for an orderly, productive, and mutually-supportive society.[3] In Northern Ireland, a nation bloodied by political and religious divisiveness, many of those desiring to end such violence have taken to publicly shaming the participants into changing their ways.[4]

There is a well-documented history of the respect accorded to property and contract rights along the overland trails in nineteenth-century America. In a harsh and uncertain environment in which there were no courts, judges, prisons, administrative agencies, or other government law enforcement officials, emigrants freely and peacefully negotiated with one another over claims to all kinds of chattels and intangible property interests. High levels of respect were accorded the property claims of both acquaintances and total strangers, even in situations in which scarcity existed. Such negotiated rights were sometimes so sophisticated as to provide for contract terms designed to benefit future wagon trains. In one such case, a wagon train had built a raft for use in fording a river. Upon completion of its crossing, the wagon train company sold the raft to the next wagon train, with the understanding that it would later be sold to subsequent trains at a price no higher than that agreed to by the original contracting parties. When a much later wagon train tried to sell the raft to its successor at a higher price than the original one, the successor was able to successfully invoke the terms of the initial contract to which neither group had been a party.[5] Such an example attests not only to the power of social respect for property interests, but to the effectiveness of information systems, even on the undeveloped frontier, in communicating terms of agreements to unknown strangers!

A more recent study involves residents of Shasta County, California and their methods for dealing with damage done to farmers’ lands by ranchers’ cattle. Some parts of this agricultural county were legally defined as “open range,” and other parts were designated “closed range” territories. In open range areas, cattlemen were lawfully free to allow their livestock to wander freely, without being legally responsible for damages that might accrue to the crops of neighboring farmers. If the farmers wanted to prevent such trespasses, they would be expected to build fences to keep out the offending cattle. In closed range areas, by contrast, the cattlemen had the legal duty to fence in their cattle, and would be liable for damages done to neighboring property owners should the fences not keep their animals in.

Those trained in purely positivist definitions of proper behavior would intuit that, if X’s cattle got off his property and wandered onto Y’s land and did damage, the question of X’s liability would depend upon which legally defined area was implicated. It did not. The residents of this county had their own understanding of the rights and obligations of property ownership totally apart from what the formal legal system dictated. It was understood, both by the cattlemen and the farmers, that if X’s cattle caused damage to Y’s property, X was obligated to compensate Y for his loss, even though, in an open range district, he would not have any legally enforceable duty to do so. Because such expectations were contrary to formal legal requirements, the residents developed their own informal, nonviolent ways of enforcing these community standards upon the occasional recalcitrant cattleman. Subtle methods of communication, informal accounting practices, and economic inducements, helped provide the social pressures to keep this system working.[6] These examples illustrate how peaceful, long-term systems of order can be voluntarily maintained, not only in the absence of state rules, but in spite of them.

Nowhere was the order produced through mutual respect for property claims more vivid than in the early gold mining camps in the western states. So prevalent was the regard for one another’s property interests that miners’ gold, bank deposits, and even gambling stakes could be freely left in the open by their absent owners without fear of loss. One early scholar observed:

The miners needed no criminal code. It is simply    and literally true that there was a short time in California, in 1848, when crime was almost absolutely unknown, when pounds and pints of gold were left unguarded in tents and cabins, or thrown down on the hillside, or handed about through a crowd for inspection. . . . Men have told me that they have known as much as a washbasinful of gold-dust to be left on the table in an open tent while the owners were at work in their claim a mile distant. . . . There was no theft, and no disorder; few troublesome disputes occurred about boundaries and water-rights.[7]

A writer from that period, Sarah Royce, stated: “I had seen with my own eyes, buckskin purses half full of gold-dust, lying on a rock near the road-side, while the owners were working some distance off. So I was not afraid of robbery.”[8] Based upon his personal experiences, an Idaho attorney from this period declared that “life was safe, property was safe” in the mining camps.[9]

Although another student suggested that widespread honesty among the miners was brought about by a respect for “the summary justice likely to be dispensed by the crowd,”[10] such presumed fears did not seem to dissuade the criminal types who swarmed into California following the discovery of new gold fields in 1849. The divergent behavior of the early miners and the plunderers was more likely due to dissimilarities in character of the two groups, as is reflected in the observation of one contemporary that the latter group “were a different kind of people; more of the brute order.”[11] Such behavior differences demonstrate, as Carl Jung and others have insisted,[12] that the quality of life in any society is the consequence of the character of the people who comprise it—that social order is a product not of the fear of punishment, but of the respect neighbors accord one another’s interests. In our dealings with the state, we do not negotiate from the position of an uncoerced free will, but are compelled by threats of violence to our interests. In contrast, our informal, social negotiations are premised upon a mutuality of respect for our individualities.

Such examples provide evidence of how individual liberty, social harmony, and responsible behavior are measured by the respect we accord to one another’s property interests. Likewise, tyranny, social disorder, and irresponsible conduct derive from property violations, which become formalized as the modus operandi of all political systems.

If we are to learn to live responsibly, we must begin by understanding that the “wrongs” others perpetrate upon us, and from which we desire protection, are nothing more than trespasses to our property interests. A peaceful social order consists, in major part, of men and women conducting their affairs without causing injury to one another, an end that requires us to focus our attention on understanding the social implications of property. Such crimes as murder, rape, assault and battery, and kidnapping, are not—despite the pronouncements of government officials—wrongs committed against an amorphous, collectively-defined “society,” but violent trespasses against the property interest the victim has in his or her person. When we declare such actions to be “crimes against the state,” we are implicitly recognizing the state’s claim to the ownership of our person.[13] Likewise, acts of burglary, theft, embezzlement, arson, forgery, and shoplifting, are not offenses against the state, even though the state brings the criminal action against the accused, but invasions of the real or personal property interests of an owner.

It is the distinction between crimes in which there are property trespasses, and those in which such trespasses do not occur, that constitutes the difference between “victimizing” and “victimless” crimes (once again, a failure to heed Pynchon’s warning about the adverse consequences of asking the wrong questions). So accustomed have we become to blurring the meaning of property in our lives that we have reduced the distinction to a vague abstraction that begs the question of what kinds of acts these are. Stated in property terms, a victimless crime (e.g., drug use, gambling, prostitution, pornography, smuggling, etc.) is one in which the state, for reasons of its own, chooses to criminalize conduct that would not otherwise amount to a property trespass against another. Criminalizing such conduct, in fact, violates the property interests of the purported criminal as well as his customers by depriving them of the legal right to exercise control over their own property.

The same analysis can be applied to other types of injuries. The tort of injuring another through the negligent operation of an automobile, for instance, amounts to a trespass to the boundaries of the victim, as well as to other interests (e.g., the victim’s car) damaged by the defendant’s act. The defendant’s wrong was not that he had been driving in a negligent or reckless manner—even though such behavior may have produced the injury—but that he had failed to control his property in such a way as to prevent a trespass upon the interests of his victim. A world organized on the principle of the inviolability of property interests is a world that reduces injuries to others. Responsible behavior is thus encouraged, as the scope of one’s liberty to act ends at his or her property boundaries.

Likewise, a breach of contract action arises out of an alleged violation of a property interest. A and B enter into an agreement by which A is to sell B her claim to the ownership of a new television set, and B agrees to pay A $500 for the set. When it comes time to perform, A delivers B a used television set. Because a contract is nothing more than an agreement to transfer ownership claims, B has not received the ownership claim for the agreed upon property.

Most of our societal problems arise from a failure to stay out of one another’s way. Schools interfere with children’s learning, not only by thwarting their wills, but in replacing intellectually significant learning with politically-based indoctrination; government agencies impede our lives by economic regulations that increase production costs which, in turn, generate higher prices and increased unemployment and, as a consequence, foster greater tendencies toward concentration that accelerate entropic processes;[14] state-licensed medical professions and the Food and Drug Administration dictate what health care services we may lawfully select, and what treatments and medications we may consume; governments hinder the free expression of ideas and lifestyles; and countless coveys of people-pushers demand legislation mandating standards of personal behavior ranging from child-rearing practices to smoking, to the kinds of food and other substances we may ingest, to our safety, to our bodily weight, to how we speak to one another, to whether we can own guns, and other practices that are regularly added. This madness has gone so far as to produce a bill in the California legislature making it a crime punishable by as much as a one-year prison sentence to spank a child.[15] Whether as parents, or in social relationships, or in efforts to make the world better, we insist on getting in one another’s way because we have not learned that most important of social graces: respecting the inviolability of one another’s boundaries. Like young puppies, most of us are not housebroken. We babble our bromides about the insignificance of property principles, because to do otherwise would limit our ambitions to control the lives of others and reveal our mutual contempt for one another’s independence.

Such attempts to micromanage the daily lives of others seem to be part of the continuing effort by adherents to the vertically-structured social model to maintain its established position. As suggested earlier, the continuing process of change that is bringing about decentralized, horizontal networks poses a threat to members of the institutional order who are disinclined to participate in the transformation. To such people, social systems that run themselves without formal direction and superintendence is not only disturbing to their ambitions for power, but represents a form of fanciful thinking. With an effort that approaches a kind of religious reaffirmation of the old order, the statists resort to a constant repetition of their centralist, coercive methods at ever more detailed levels of human behavior. Such conduct is reminiscent of the behaviors Abraham Maslow saw exhibited by brain-injured patients who, in their repetitious patterns “manage to maintain their equilibrium by avoiding everything unfamiliar and strange and by ordering their restricted world in such a neat, disciplined, orderly fashion that everything in the world can be counted upon.”[16]

Much like Maslow’s patients, statists see their world of centralized power structures being enervated by life forces over which they are losing control, and imagine that the rote repetition of familiar patterns will reconfirm its vibrancy. At an unconscious level, perhaps, it may be sensed that if the ancien regime is undergoing its decline and fall, the dying model might be revivified—or at least its vital signs made to so appear—by the proliferation of new, centrally-imposed restraints upon the lives of unfettered men and women. Such obsessive efforts seek to reconfirm the validity of an antiquated system that no longer satisfies people’s expectations. War, of course, is the most dramatic expression of politically-structured violence as well as being an undertaking that brings fearful people back into a herd mentality, which is why it has become the cornerstone of modern statist efforts to preserve power over people. Perhaps this is why expansions of the war system have been such frequent precursors to the collapse of previous civilizations.

Because the power of the state directly correlates with the extent to which it usurps control over privately-owned property, political and legal systems have little interest in generating a fundamental respect for property principles. As we have seen, alternative rationales (e.g., “health,” “safety,” “offenses against the state”) are offered as the basis for resolving wrongs or disputes that would otherwise be subject to a property analysis. When “reasonableness,” the “balancing of interests,” “fairness,” “justice,” and other amorphous vagaries become substituted for an owner’s objections to a more clearly defined trespass, it becomes quite easy for people to call upon the state to force a neighbor to cease doing what a property principle would otherwise allow him to do.

This is how the violation of property interests underlies most of our social difficulties. Conflict arises from the failure of people to effectively identify or to respect property boundaries. When we regard one another’s ownership interests as inviolable, interpersonal conflicts do not arise. But as we have seen, every act of the state involves a forcible intrusion upon the interests of property owners. Whether such governmental action takes the form of regulations that restrict an owner’s control of his or her property, or forcibly transfers ownership claims to others (e.g., eminent domain), or amounts to outright confiscation (e.g., taxation), actions by the state invariably produce conflicts between owners who seek to control their property for their own ends and non-owners who use state power to force owners to conform their behavior to their purposes. The state, whether through statutory enactments or judicial holdings, thus introduces contradiction and conflict into society. The peaceful and harmonious relations that would otherwise follow from a respect for property claims, collapse into a formal system of predation, with people organizing into groups to achieve what would otherwise have to depend upon contracts among owners.

Intellectuals, most of whom have their own preferences for political intervention into people’s lives for redistributive purposes, have not been very supportive of a system that would extend liberty into the realm where people most need it: the conduct of their daily lives. In the world of ideas, where intellectuals are most protective of the inviolability of their boundaries, most accept, as an expression of the essence of liberty, the principle erroneously attributed to Voltaire: “though I disapprove of what you say, I will defend to the death your right to say it.” But why are such sentiments so narrowly confined to intellectual matters, and rejected when applied to the more mundane actions that are central to and comprise so much more of our daily lives? How much freer would both our intellectual and material lives be if we were to modify the aforesaid proposition by telling our neighbor: “though I disapprove of how you conduct your life, as long as you do not violate the property boundaries of others, I shall defend to the death your right to act as you choose”? We might then move beyond the empty bromides by which we feign “love” for our fellow humans while, at the same time, seeking ways to force them to conform to our expectations.[17]

Social order arises not so much from learning to love our neighbor, as in learning to respect him. We do not exhibit such respect when, in order to accomplish our purposes, we insist upon violating his will regarding what is his to control. Neither do our professions of love for others mean much when we are prepared to deny others their existential individuality. There is nothing quite so destructive of social harmony as arrogant, self-righteous men and women mobilizing against the tastes and lifestyles of their neighbors.

When we insist upon the use of legalized force to address what we perceive as social problems, we not only subvert the conflict-resolving role property plays throughout much of nature, but we foreclose any alternative practices. The assumption that only coercive intervention by the state is worthy of practical consideration in such matters ignores the role of informal, interpersonal methods of resolving our differences with one another. Worse still, our resort to force sends a message of contempt to our fellow beings whose purposes we find incompatible with our own, further alienating ourselves from one another and fostering more conflict. We have too often failed to heed the warning of Emerson: “Good men must not obey the laws too well.”[18] We have also overlooked the value of our own life experiences for lessons in resolving disagreements without having to resort to formalized coercion.

As long as we live in society, we will always have a need for standards of conduct, a condition necessitated by the property question. If the inviolability of property boundaries is a civilizing standard that makes for a free, creative, and orderly society, the question arises: how is such a principle to take form in the interactions of people? Historically, we have too often turned to the state to have rules of conduct generated by fiat and enforced by coercive means. But when force is employed, property interests are at once violated. The state becomes the very problem it had, in theory, been created to prevent.

But what if rule-making and enforcement is confined to property owners themselves, beginning with the self-ownership principle? What if our respect for the inviolability of property claims began with the recognition that each person was the sole authority over their respective interests, and was obligated to no one else unless he or she had voluntarily chosen to be bound? What if we recognized that, if I wanted to enjoy some property interest of yours, I would have to enter into a contract with you to do so?

This approach raises the question: what if one party breached the contract, or intentionally or unintentionally trespassed the interests of another? How would the inviolability principle be enforced? Would it be possible to do so without the use of coercion, whether employed by the state or the offended individual? Is it possible to use boycotts, ostracism, marketplace pressures, or other social means—which do not forcibly deprive the offender of his property interests—to persuade him to rectify his wrong? Might we also resort to contracts of insurance to compensate us for our losses? Because we are so unaccustomed to thinking in such non-coercive ways, and regard rule-breaking as an invitation to resort to force, we are apt to dismiss these suggested alternatives as “impractical.”

Albert Einstein informed us that “problems . . . cannot be solved by thinking the way we thought when we created them.”[19] If our prior learning leads us to react with an angry “no” to the question of seeking alternative practices, let us remember that such prior learning is what is destroying us! If we are to resolve our problems before they consume us, we might begin by taking the responsibility that is inseparable from decision-making control over our lives. To the degree we insist upon directing our own conduct, we hasten the decline of the prevailing model of state authority. In the course of doing so, we may actually generate—rather than just think or talk about—a system of rule-making and enforcement of horizontal dimensions with no hierarchy of authority, and in which all rules arise through the peaceful means of contract, custom, and manners.

As suggested earlier, the property concept qualifies as an informal system of manners, a way of respecting the worthiness and inviolability of others and, in reflection, ourselves. The word “manners” has a common ancestry with the word “manage,” meaning “to control and direct,”[20] which has property connotations. Perhaps our more distant ancestors understood what we have chosen to ignore at the cost of the conflict and violence that permeates modern society: namely, that proper and well-mannered behavior is intrinsically related to the decision making of property owners.

Each of us experiences trespasses in our life, although mostly in de minimis ways. A neighbor’s dog makes a mess in our yard, or barks incessantly at night; a teenager annoys us with a “boom-box” turned up as loud as it will play; or we are bumped and jostled as we get onto a subway or elevator. We may feel anger at the disrespect shown to us by the other person, although an apology—which acknowledges our claim to not be trespassed—usually subdues our reaction. Once again, we see the role played by manners in giving respect to individual boundaries in situations, usually of a transient nature, in which property interests are not clearly defined. Unfortunately, in a culture in which people have internalized the idea that “property rights are not absolute,” an appeal to manners often avail us not. We tend to become more confrontational, looking upon every such trespass, no matter how trivial, as a call to more aggressive responses.

Part of learning to live as mature individuals in society consists in our willingness to absorb unintended and relatively insignificant trespasses by others, without developing a self-righteous need for retribution. Implicit in failing to do so is much of what we see in our current world: the breakdown of harmonious interconnectedness as so many treat every slight or encroachment as a cause for angry reaction if not a lawsuit. But how much of such a reflexive response is occasioned by a widespread disrespect for property interests perhaps leading one who has been subject to even a relatively minor intrusion to overreact to its significance?

Because the control of private property and the corruption of language are central to the functioning of political systems, it is not surprising to discover the property concept twisted in ways that make it increasingly difficult for people to distinguish trespasses by others from crude, ill-mannered, or offensive behavior that does not result in a trespass. Herein are found the seeds of “political correctness.” More and more of us seem prepared to regard repulsive and contemptible language and behavior as we would a physical trespass. In some instances, there is a willingness to impose harsher penalties upon vulgar or abhorrent conduct than upon physically intrusive offenses. Expressions of racial, ethnic, or gender-based hatred or other forms of bigotry; motorists’ “road rage”; or ill-chosen words that do not comport with fashionable attitudes, are often met with demands for punishment that exceed any injury-in-fact.

Personally offensive behavior can generate reactions that, to the recipient, may be more upsetting than a physical trespass. One person may make vulgar comments, or walk down a public street in the nude, greatly annoying others, even though no property violation occurs. It is in such instances that manners have particular application, with non-violent social pressures— such as ostracism being a more effective means of reforming rude behavior than resort to governmental trespasses upon the offending person.

The distorted thinking that conflates trespassing and non-trespassing behavior has reduced the capacity for making critical distinctions in other areas. Thus, at least one prominent feminist has written that “intercourse”—the means by which reproduction takes place among most species—is a “violation of boundaries” of women, who are “forced” to submit to “those who dominate them.” She proceeds to analogize women, politically, to “occupied people.”[21] Likewise, school administrators have found themselves unable to distinguish between a child bringing a cough drop to school from one bringing heroin; airport security agents periodically bring ridicule upon themselves by failing to differentiate a genuine weapon from fingernail clippers or other harmless items; while the criminal justice system continues to insist that no important distinction exists between victimizing and victimless crimes. It is the essence of intelligence to be able to discriminate, i.e., to make relevant distinctions between and among various facts and principles and alternative courses of action. Not that many years ago, it was considered a compliment to tell another that he or she had a “discriminating” mind. Thanks to the politically generated corruption of language and thought, such a statement now stands as an accusation, a generic offense to human decency!

Discrimination is essential to all intelligent thinking and behavior, and depends upon one having clear boundary lines, worthy of the respect of rational minds, that define a speaker’s basis for making distinctions. It has been the failure to discriminate amongst the various standards by which people do discriminate that produces so much of our social confusion. Is a property owner discriminating—on grounds of which we disapprove—against another being allowed to enjoy access to his property, or is the state doing so when it compels an owner to act in accordance with standards it has mandated? Because the state enjoys a monopoly on the use of force, it has long been thought that its discriminatory acts ought to be kept to a minimum (e.g., criminal statutes that treat murderers, rapists, and thieves differently than non-criminals). But if an owner is the absolute authority over what he or she owns, upon what basis, other than a trespass, can another claim a forceful liberty to enter against the owner’s will? Why should a private owner be precluded from denying others the enjoyment of his or her property on any grounds whatever? The intolerance exhibited by one who refuses to associate with those of another race, religion, or lifestyle, is more than matched by others who refuse to tolerate such a bigoted person’s decisions regarding his or her own property. As suggested earlier, we pay too little attention in both thought and behavior to the importance of boundary lines. This makes it easy for some to conclude that if a given opinion or act of another is sufficiently offensive, even though not amounting to a trespass, it may be suppressed or punished by the state.

Smoking in public (e.g., in restaurants, airliners, place of employment) is another issue that can most appropriately be seen as raising not health, but trespass questions. In popular and political discussions on this topic, the issue is usually framed in terms of the smoker’s freedom to smoke and the nonsmoker’s right to be free of unhealthful substances. Rarely is the question raised as to the restaurant owner’s liberty of deciding whether to allow smoking or not. If the restaurateur has a stated policy of permitting people to smoke in his establishment, a customer who is aware of this fact would seem to have contractually agreed to the possibility of breathing unwanted smoke, thus eliminating any trespass claim. When the question is posed in such abstract ways, without any clear lines of definition and limitation, one can understand why the courts and legislative bodies respond by trying to “balance” such “competing” interests. Again, if we rephrase the question, we discover that conflict has been generated because the property principle has been abandoned. If reframed as a property trespass issue, the amorphous and uncertain nature of the invasion is eliminated. As between a smoker and nonsmoker there are no interests to be “balanced” when one person trespasses the boundaries of another.

Suppose you are having dinner in a restaurant, and a patron at the next table begins smoking a cigarette. Her smoke enters your lungs, gets embedded in your hair and clothing, and causes your eyes to water. You object to this. It should be evident that this smoker has committed a trespass upon you. Whether or not second-hand smoke constitutes a health hazard, your claim to be free from such unwanted invasions of what is yours, i.e., your body and clothing, should be a sufficient basis for your objection. For the smoker to suggest that her freedom to smoke encompasses the right to commit such trespasses is to fail to understand that liberty has a principled meaning only insofar as it is grounded in, and defined by, a mutual respect for one another’s property boundaries. If an issue of this sort should come to court—and, in our confrontational society it probably will—the only inquiry necessary for a court to make would be a factual one: did the trespass occur? There would be no room for the court to step in and start “assigning” and “balancing”— or, more accurately, confiscating and reassigning—the property rights of individuals.

The same analysis could be applied to what was, a number of years ago, one of the more controversial issues in California: the aerial spraying, with malathion, of entire cities, for the purpose of trying to prevent the spread of the Mediterranean fruit-fly. Those who objected to having their bodies, homes, cars, plants, and pets sprayed with this pesticide had to rest their arguments on presumed health problems that might arise. In so doing, the burden of proof shifted to them to show the harm that would result from such spraying, a burden they were unable to meet. Relatively few people saw this as a property trespass issue to be resolved only by a determination of whether an invasion had occurred, not the degree of physical harm suffered by the owner, or whether he or she was being “unreasonable” in making an objection. At the same time, the State of California exhibited its usual confused commitment to mixed premises: in spite of tens of thousands of people expressing strong opposition to such spraying, the state, more attuned to benefiting commercial and agricultural interests, continued to spray. In a clear demonstration of where human beings rank in the state’s hierarchy of concerns, the government halted the spraying in a region in which kangaroo rats resided.[22]

One sees, in such examples, how the elements of “boundary,” “claim,” and “control” coalesce to provide a property-based analysis of political issues. Who has the ultimate authority (“claim”) to exercise decision-making (“control”) over any given item of property (“boundary”)? How we answer that question determines whether society will be characterized by peaceful relationships or by conflict.

Politics is the mobilization of property trespasses and despoliation. All political quarrels come down to a failure to identify and/or respect property boundaries. Nowhere is this more evident than in such an emotionally charged issue as abortion. This question illustrates, as clearly as any issue, the confusion and conflict that arises from asking the wrong questions. By failing to address the issue in terms of property principles, each side has contributed to an irresolvable—and politically advantageous—conflict.

The abortion debate has pitted the “pro-choice” advocates against “pro-life” supporters, abstract concepts whose inconsistent application further clouds any clear meaning. Most “pro-choice” supporters are nonetheless disposed to deprive people of their right to make decisions in other areas (e.g., to discriminate against others on a variety of matters, or to support various governmental programs), while most “pro-life” defenders have proven themselves eager supporters of wars and capital punishment. It should not surprise us that such utter confusion has generated much heat but little light in our world.

In an effort to obscure the lethal nature of abortions, and thus make the practice less disturbing to the otherwise humane sentiments of its proponents, most people allow the state to define who is and who is not a “person.” History should remind us of the dangers inherent in conferring such authority upon political systems. The American government defined the rights of slaves and Indians out of existence, while greatly restricting those of married women; and twentieth-century tyrannies such as Nazi Germany, China, and the Soviet Union defined whole categories of people out of legal existence. Such historic experiences should inform our intelligence before we become enthusiasts for current listings of non-persons.

It is unfashionable to state, albeit undeniable, that from the moment of conception onward, an embryo is a living being with a distinct DNA of its own, a DNA that derives from, but is other than, that of either parent. Contrary to the reductionists who would debase the embryo as the functional equivalent of a wart or a cyst, it is a genetically unique individual, a fact known to even a first year biology student. Nor should one accept, without examination, the argument that an embryo is still in a “developmental” stage and is, therefore, not a “person.” Because of the negentropic nature of life, each of us is in a continuing state of development up until the time of our death. I continue to write, into my seventies, and have recently taken up painting, one way of expressing the changes that continue to occur within me throughout my life. This characterization of embryos by the pro-abortion advocates is but another manifestation of a mechanistic vision of nature.

Attributing “self-ownership” to an embryo may pose some difficulties, however, since it is unlikely that embryos have ever consciously asserted such claims. The same can be said, however, of any infant or, for that matter, most adults: who, among us, has ever made a conscious declaration to be a self-owner? Have you or I done so, if we continue to acknowledge the rightful authority of the state to regulate, tax, and conscript us into its service? When I ask my first year law students whether they own themselves—and whether they understand the implications of whatever answer they give—most sit in stunned silence at the audacity of such an existential question. Thus, if a claim of self-ownership is dependent upon an individual giving conscious voice thereto, the “right” to kill an infant or, perhaps, an adult, could be as justified as the killing of an embryo. It is more plausible, perhaps—and much safer—to presume a claim of self-ownership derived from the self-sustaining, self-controlling actions of each individual, whether embryo or octogenarian.

If we are prepared to acknowledge self-ownership for any genetically identifiable human being, an intentional abortion amounts to an invasion of the embryo’s property interest, and the mother and her doctor have trespassed upon that interest. On the other hand, the mother is also a self-owning being, and is entitled to not have her property boundaries trespassed by others (e.g., the state). The pro-abortion advocate would likely argue that the embryo is a trespasser upon the woman, but as almost all pregnancies are occasioned by a volitional act of the woman—and never as the result of a conscious entry by the embryo—such a contention would fail. But even if the embryo were the product of a rape—a non-volitional act by the woman—the embryo is not the wrongdoer but an unintended consequence of the crime. He or she would be, at worst, an unintentional trespasser, to which the question must be answered as to whether a property owner may rightfully take the life of a trespasser. From a property perspective, we are thus left with the seemingly anomalous situation that the embryo, as a self-owning person, is entitled to not be aborted, while the mother, also a self-owning person, is entitled to not have the state trespass upon her in order to restrain the exercise of her decision-making. When abortion becomes a political (i.e., divisive) issue, devoid of respect for property principles, different groups become polarized out of a failure to refine the question. For the state to intervene in the matter in order to enjoin the abortion would constitute a trespass to the mother.

If both the embryo and the mother are persons with separate but necessarily interconnected property interests, and the state’s intervention would amount to a trespass of the mother’s boundaries, does this mean that, in a society that fully respected property interests, a mother would be free to kill this other person? If the answer is “yes,” as it applies to a pregnant woman, would it also apply to the rest of us: that we are free to kill—or, as a friend of mine used to remind me, free to try to do so— another person? Precisely! We are free, not because the state, or a religion, or a constitution, or an ideology tells us that we are, but because each one of us is in control of our energies and conduct. How each of us chooses to exercise our freedom determines not only the content of our own character, but whether we will live in peace or conflict, cooperation or confrontation, with others. Here again, however, we find ourselves confronted by the fear of being responsible for our own liberty—Kaufmann’s “decidophobia”—that causes so many of us to look to constituted “authorities” to render moral decisions for us when we are faced with irresolvable conflicts. As with all property questions, who will make decisions about what?

Social order arises when the values of “peace” and “liberty” are integrated through respect for the inviolability of property boundaries. When social issues are severed into mutually-exclusive categories such as “pro-life” and “pro-choice,” the foundations of political division are set in place. Groups compete for control of the coercive machinery of the state in order to enforce their visions upon others. When our thinking is free of conflict and contradiction, however, we are able to discover that “pro-life” and “pro-choice” imply one another. Liberty, exercised within the self-limiting nature of property ownership, is the condition in which individuals are able to make the choices upon which the quality of their lives depend.

Our daily newspapers are filled with abundant empirical evidence that each of us is free to engage in all kinds of harmful actions, in spite of numerous laws to the contrary. To say that we are free to commit injuries upon others does not imply, however, that we are entitled to do so, or that such acts are justifiable. Recalling the common origins of the two words, “proper” behavior is that which a “property” owner is entitled to make, i.e., decision-making within the boundaries of what one owns. If we are to be self-owning, self-controlling beings, we must be prepared to acknowledge that our boundaries serve not only to exclude the intrusions of others, but to circumscribe the range of our actions. Without the concept of property boundaries to define the limits of our actions, our claims become, quite literally, boundless. The propriety of our behavior then becomes measured by the constantly shifting fashions of legislation, public opinion polls, cultural tastes, and prejudices formed by unconscious forces.

Perhaps it is time for us all to walk away from both the practice and the self-righteous thinking that presumes the legitimacy of the power of the state to usurp both control over and responsibility for our actions. As people become aware that their responsibility extends to the full range of their actions, and can neither be limited nor increased by the dictates of political fashion, perhaps they will discover their own way to responsible behavior. If not, no amount of political maneuvering or religious/ideological commitment seems capable of forestalling the entropic fate of our civilization.

Herein lies the challenge for all who understand the importance of human freedom: am I able to insist upon the full range of my authority over my own life and, at the same time, respect the inviolability of the boundary lines that distinguish my authority from that of my neighbors? It is the nature of political systems to be dominated by short-term thinking that pays little attention to transcendent principles having no immediate, observable consequences. Violating the will of individuals concerning what is theirs to control is the ultimate default response by the state. Such a mindset is not only incapable of sustaining a productive society but, worse, the failure to see the interconnected nature of respect for property boundaries helps to destroy civilized societies. This is what living in a condition of liberty is all about: making our own choices and accepting the responsibility for those choices, not by participating in state-induced deceptions designed to conceal the consequences of our self-indulgent actions.


[1] Ralph Waldo Emerson, “The American Scholar” (1837), in Brooks Atkinson, ed., The Selected Writings of Ralph Waldo Emerson (New York: The Modern Library, 1950), p. 62.

[2] Immanuel Kant, Critique of Practical Reason and Other Writings in Moral Philosophy, trans. and ed. by Lewis White Beck (Chicago: University of Chicago Press, 1949), p. 87.

[3] See, e.g., John A. Hostetler, Amish Society, 3rd ed. (Baltimore: The Johns Hopkins University Press, 1980); Steven M. Nolt, A History of the Amish (Intercourse, Penn.: Good Books, 1992); Donald B. Kraybill, ed., The Amish and the State (Baltimore: The Johns Hopkins University Press, 1993).

[4] See, e.g., David Barash, The Survival Game: How Game Theory Explains the Biology of Cooperation (New York: Macmillan, 2003), p. 98.

[5] John Phillip Reid, Law for the Elephant: Property and Social Behavior on the Overland Trail (San Marino, Calif.: The Huntington Library, 1980), pp. 300–01.

[6] Robert C. Ellickson, Order Without Law: How Neighbors Settle Disputes (Cambridge, Mass.: Harvard University Press, 1991).

[7] Shinn, Mining Camps, pp. 111, 112; also quoted in Vardis Fisher and Opel Laurel Holmes, Gold Rushes and Mining Camps of the Early American West (Caldwell, Idaho: The Caxton Printers, Ltd., 1968), p. 275.

[8] Fisher and Holmes, ibid.

[9] Ibid.

[10] J.D. Borthwick, Three Years in California, Joseph Gaer, ed. (Edinburgh and London: William Blackwood & Sons, 1857); quoted in Fisher and Holmes, ibid., p. 276.

[11] Daniel Knower, The Adventures of a Forty-Niner (Albany, N.Y.: Weed-Parsons Printing, 1894), quoted in Fisher and Holmes, ibid., p. 276.

[12] C.G. Jung, Psychological Reflections (Princeton, N.J.: Princeton University Press, 1970), p. 178.

[13] Lest any doubt that government regulation amounts to the state’s claiming an ownership interest in people, consider Justice Harlan’s dissenting opinion in Lochner v. New York (198 U.S. 45 (1905)), a case striking down state legislation limiting the number of hours employees could work in bakeries. In Harlan’s view, long hours “may endanger the health and shorten the lives of the workmen, thereby diminishing their physical and mental capacity to serve the state and to provide for those dependent upon them” (p. 72; emphasis added).

[14] See, Walter Adams, “The Military-Industrial Complex and the New Industrial State,” American Economic Review 58 (May, 1968): 652–65; reprinted in Ralph Andreano, ed., Superconcentration/Supercorporation (Andover, Mass.: Warner Modular Publications, 1973), R-337-2; Murray L. Weidenbaum, Government-Mandated Price Increases: A Neglected Aspect of Inflation (Washington, D.C.: American Enterprise Institute for Public Policy Research, 1975).

[15] San Francisco Chronicle, January 21, 2007, p. E-7.

[16] Abraham Maslow, “A Theory of Human Motivation,” in Psychological Review (1943): 370ff.

[17] If we were to apply such thinking to the realm of learning with as much unfocused facility as we do to economic matters, we would quickly see the absurdity of such ideas. Does knowledge come in some fixed quantity, with the more learned having garnered an “unfair” share at the expense of the unlearned? Perhaps it is the function of the government school system to “redistribute” the ignorance, to the end that all can be equally unknowledgeable and operate from a “level playing field.” Were the creative geniuses of human history—Aristotle, Copernicus, Shakespeare, Francis Bacon, Dante, Lao Tzu, Newton, Beethoven, the Curies, Leonardo da Vinci, Einstein, Blake, George Washington Carver, Edison, to name but a few—nothing more than pillagers, “robber intellects,” who stole from some common storehouse of human inventiveness and insight?

[18] Ralph Waldo Emerson, Politics, published in 1844 and included in The Selected Writings of Ralph Waldo Emerson, p. 427.

[19] Alice Calaprice, ed., The Expanded Quotable Einstein (Princeton, N.J.: Princeton University Press, 2000), p. 317.

[20] Partridge, Origins, p. 378; Webster’s Third New International Dictionary, p. 1372.

[21] Andrea Dworkin, Intercourse (London: Secker & Warburg, 1987), pp. 122–24.

[22] Los Angeles Times, May 3, 1990, Sect. B, p. 12.

This excerpt has been published with the permission of the Ludwig von Mises Institute.