Vera Verba

I wrote this piece for Digital Gold Currency Magazine. A comment to one of our blog entries inspires me to repost it here. This article was adapted from material I am assembling into a new book, entitled The 21st Century: What Will Happen And Why Hopefully I’ll have it ready some time in 2009.

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Government never furthered any enterprise but by the alacrity with which it got out of its way.
– Henry David Thoreau

The battle between government and commerce has been raging since the beginning of the agricultural revolution. It is a marathon struggle of Politics versus Market. Some happy day the market will win, but that day, alas, may be a long way off.

It in is the crossfire of this battle that the digital gold business finds itself. If we succeed, the market gains important territory from the state.

No, most of us didn’t particularly choose to be in this battle, we were merely trying to improve our lives. But, by reason of being at the forefront of commerce, we find ourselves at the forefront of this battle. God help us.

UNDERSTANDING THE BATTLE

The most basic reason for commerce-state animosity, of course, is that Politics and Market have completely different operating principles. Markets operate on the principle of choice: People are convinced to trade. States operate by coercion: People are forced to pay and to obey.

Of course, there are traders who bring coercion into the marketplace, and there are politicians who wish to minimize it. It is quite possible to have an individual market player who loves coercion or a politician who hates it. Nonetheless, there is no real argument to be made regarding the basic operating principles – they are what they are. And they are most definitely at odds.

The more interesting question is this: What goes on in the minds of individuals, to make them sanctify either market or state?

Politicians are programmed by both psychology and experience to believe in the need for control. Even when they privatize and deregulate, politicians want to be sure that the ability to “reign it back in” remains.

Small business people are just the opposite. They have learned to believe in spontaneous order. It works. It has always worked… and it always scares the hell out of control-biased people.

But try, for a moment, to see it the politician’s way: Statist types see commerce as an essentially amoral activity, and they see politics as a Heaven-ordained forge of morality. To them, markets are purely a trading center for quasi-thieves; necessary, perhaps, but morally inferior. Politics is, to them, the temple of higher morality; where Chosen Ones make decisions based upon the principles of righteousness: Equality, Sacrifice, and Unity.

Realize that we in the digital gold arena are the few who believe in the morality of the marketplace. For reasons too long to explain in this article, the virtuous image of commerce died in the popular mind a hundred years ago, and was replaced by statist images.

Never forget that the popular mind – currently committed to finding “the good” in politics – is a powerful enforcer. You’ve doubtless noticed this when discussing the digital gold business. The price of agreement – leaving the majority – is too high for people who seek comfort in normalcy. This precludes them from considering your arguments. They may nod their head and ask questions, but they’ve already decided that they will not agree with you.

COMMERCE VERSUS WAR

War is the health of the State.

– Randolph Bourne

The quote above is widely known, but is commonly taken to mean that evil government bosses purposefully stir up wars in order to have more power. This is true far less often than people suppose.

Most political leaders are no less confused than other people. They struggle to attain a place at the forefront of the masses, but once there, they soon realize that the office does not come with any magic wisdom. They look out upon a supremely complicated world and know that it is beyond their understanding. Why do you think so many of them act aloof? It’s a defense mechanism. And why else would so many of them run to fortune-tellers of various sorts? They know they are out of their depth. Politicians are overrun by great events far more often than willing them into existence.

So, what should Bourne’s statement mean? It means this: War is the health of the state because it makes the state necessary.

(I know that the above statement is not absolutely true: mankind could defend itself effectively without states. But, until men develop the courage to take responsibility for their own safety, the statement more or less stands.)

In times of peace, the state is commonly resented; after all, they do forcibly remove money from the people in their control, and that does engender bad feelings. In time of war, however, people are willing to forget about such matters: It is better to be a serf than to be a corpse.

In times of war, or of serious threat, the state will gain on commerce, often dramatically. But, even here, things have improved somewhat. Modern states have learned not to intrude too deeply upon commerce, since war materiel must be produced in abundance, and the state alone fails miserably in such attempts.

War economies are strange, mixed-up things, with twisted moralities. Commerce is challenged and abused at such times, but it is never extinguished.

RECENT MARKET SUCCESSES

As I’ve noted previously, the past few decades have been a wonderful time for economic education. Even ex-commies are buying in to the free-market philosophy! Keynes is dead and Hayek rules the roost… at least for now. Here are a few good signs (and this will be US-centric):

It used to be that offshore drugs were strictly forbidden by US law. I’m not sure if jail time was ever imposed, but it could easily have been. With the Internet as a catalyst, however, Americans began to see that the same drugs were available in Canada at a much reduced price.

A critical feature in this was that Canada is not a scary place. Less expensive drugs were also available from places like India, but Joe American was afraid of those places. Canada, on the other hand, is held to be almost the same as the US.

People without an understanding of markets can certainly understand cheaper prices, but they are also easy to intimidate. This time, contrary to what would have happened twenty or thirty years earlier, those who understood economics gave a boost of confidence to the others, and the market trumped the FDA.

A second good sign has been the lack of regulation for new utilities. The older utilities, such as electricity and gas, are all government-protected and government-regulated monopolies. Regulatory bodies are the size of small armies and require similar budgets.

The next utility to come along was cable TV, which is partly regulated. Cable TV monopolies are small, and are being broken by satellite television and Internet delivery anyway.

The newest utility, Internet access, is definitely not monopolistic and is lightly regulated, and as an after-thought at that.

WHERE TO NOW?

War and threats are now on the march and the gains of commerce are under threat. GW Bush and other Western leaders are endeavoring to build a Protector-State in response. “We’ll see everything and protect you from everything.” This may not long endure, but how much damage will be done along the way is anyone’s guess.

The next major battle between commerce and state could be currency. It’s still a bit early to tell, but with many fiat currencies headed toward what may be a terminus, it is a distinct possibility.

It seems that the digital gold market has absorbed the most serious blows of the Bush Protector-State. There has been pain aplenty and serious damage, but the market yet stands. Now that the G7’s currency and debt schemes are unraveling, it is likely that control types will have better things to do than harass us. That may give our industry some space to mature and grow in something that resembles a natural, healthy manner.

And, frighteningly enough, it is at times like these that the proud predators of the world see opportunities to grab territory here and there. The other nations being busy with internal troubles much reduces the chance of violent response to a quick, contained aggression.

The next few years look scary, but the more legitimate threats appear, the less attention is likely to be directed at us. (At our small size, however, we do remain vulnerable.)

So, the worst may be over for the digital gold marketplace. However, it will never really be over until we win the memetic war: We must make the case that honest money is both morally and practically superior to fiat, and we must make it widely and benevolently.

© Copyright 2008 by Paul A. Rosenberg

A lot of the people that I tend to socialize with are libertarian types with strong feelings about freedom and privacy. I have always been very pro-freedom, but am skeptical about the need for privacy.

Although please note that I am talking about only physical privacy here - that is, privacy concerning ones actual physical actions - as distinguished from communications. In the book God Wants You Dead, that Paul and I wrote, we discussed the fact that privacy can be broken up into physical and communications spheres, and that physical privacy is disappearing as cameras become smaller and cheaper. However, we also noted that because communications devices are likewise becoming smaller and cheaper, that communications privacy might be able to survive the death of physical privacy, and that there are some very good reasons to try to keep communications privacy alive.

Anyway, what got me onto this particular rant today was my wife mentioning that a friend of ours did not believe in having her children vaccinated. This seems to becoming a more and more common attitude for new parents to have, with claims of links between vaccination and autism or other problems. It may also be tied in with the strengthening of environmentalist ideology or other religious belief - certain medical practices being thought of as unnatural or unholy by some true believers - which is another topic we discuss in GWYD.

Now I have no particular knowledge concerning the risks of vaccination, but I believe that even doctors who do not believe any of the stronger health risk claims will still admit that vaccination poses some risk to a child. At the very least you are poking them with a needle, and any breach of the skin can become infected - there is always the risk that a vaccines could be contaminated in some way - and in some cases, there exists a risk that the vaccination can actually give a child the disease it was intended to protect against.

As someone who believes strongly in individual freedom, I must respect each persons individual wishes on the subject of vaccination. It is up to each person to asses the risks of the world around them and act accordingly.

So what then, you ask, is the problem?

The problem is that vaccinations are a useful tool for providing us a better world to live in. Before inoculation was common, many horrible diseases ravaged the human population - children and adults alike. The practice of vaccinating children against many diseases has given us all much better health.

There is little doubt that, on the whole, the practice of vaccination has been a net positive - no matter how risky you believe it to be for each child.

However, any individual evaluating the risk of vaccinating their own child may well decide that it is safer not to get the vaccination. The reason for this is that if a large portion of the population is vaccinated, those few that choose not to receive inoculations are protected by the risk taken by others. With very few susceptible hosts, epidemics do not occur, and those who choose not to inoculate are given a free ride by those who do.

And it is not like a parent making this decision has ever seen an outbreak of the horrible childhood diseases that killed so many just a couple of generations ago - these things would seem to be artifacts of the past. Much the same way that those who complain about the unnatural chlorine and fluoride in there drinking water have never seen a cholera epidemic, those who fear the risks of vaccination have no first hand experience of a world without them. So it is quite understandable that many parents do not want to expose their own children to ANY risk that vaccination might hold - however slight.

This is a classic economic/game theory problem such as the tragedy of the commons or the prisoners dilemma. In problems of this nature, the rational course of best self interest, when taken by all (or some large portion) of the existing population, produces a worse overall average result than when people choose a personally sub optimal course of action that increases overall good.

Many such situations exist where some small sacrifice by all (or most) produces a greater gain for all. So then the question becomes - how do we make people do the right thing for the common good when it is not necessarily in their immediate best interest to do so?

If you believe in personal liberty, then you can not advocate the most common solution of having the government force people to do the right thing (and you are probably also skeptical that a government given the power to force people to do the right thing will magically always know what the right thing to do is, or that it will confine itself to just using such power for collective benefit.)

So what is the other option?

Well, it turns out that if everyone has perfect information, the market takes care of such problems all by itself. If everyone knows who has received vaccination and who has not, they are free to exact economic penalties against those they perceive as free riders. If your children are not vaccinated, some parents may not want their children to play with or go to school with your kids. They are free to (without using any physical force) react in any number of ways that will cost you and your children certain opportunities to profitably exchange value with them.

Shunning people who do not exhibit what you believe to be proper behavior is a powerful market tool for producing good solutions to such problems without the need for any use of force.

In a world with perfect information, you are free to defect from courses of behavior that produce greater overall benefit, but you will pay a fair market price for doing so - you will never be getting a free ride at the expense of others. If you believe that vaccinations are riskier than the average person believes them to be, then you may be willing to pay the additional price for not vaccinating your children - otherwise you will go ahead and take the small risk.

A properly informed market will do the best job of finding the right level of cooperation or defection concerning any rules of behavior that people would like to impose upon each other. But all of this only works at the expense of privacy. Unless everyone can know the truth of each other’s actions, they can not impose the proper penalties and bonuses for the specific actions they believe to be worthy of punishment or reward.

So it’s either freedom or privacy. If you want an efficient solution to these types of problems, you are forced to either diminish freedom by using force or to sacrifice privacy for greater shared information.

Because the solutions produced by a free market with the best possible information are likely to be better than those imposed by any central authority, I feel morally compelled to choose freedom over privacy.