People have the unfortunate tendency of favoring reasoning that is favorable to their preferences. Once an individual encounters the same logic applied to a position they disagree with, the application is assumed to be invalid. The abortion debate is no different in this respect. Pro-Choice advocates basing their stance on the logic of bodily integrity must be willing to extrapolate this same principle to other situations. Anything else would merely be convenient cherry-picking.
For example, advocating for choice regarding bodily integrity also applies to several other controversial topics. Such subject areas include drug use, the right to commit suicide, and objections to vaccine mandates, to name a few. Despite any Pro-Choice advocate’s misgivings about permitting the listed rights above to be consistent, they must begrudgingly accept that these are rights that cannot be prohibited by law. Any counterargument or suggestion to criminalize the above positions is a deviation from the logic of bodily integrity. Permitting an activity does not mean you believe it is moral. Moreover, this argument is predicated on an externalities argument; in a rash attempt to weigh the societal costs.
However, many Pro-Choice proponents may then surmise that individuals defending the decision to use drugs, commit suicide, and decline immunizations must accept abortion as a permissible procedure. Reverse application is not quite so linear and has several complications. Indeed, abortion presents a predicament for exponents of a Lockean conception of self-ownership. In one sense, abortion violates the Lockean notion of self-ownership. As Locke asserts that we cannot “… nobody can transfer to another more power than he has in himself, and nobody has an absolute arbitrary power over himself, or over any other… or take away the life or property of another..”(p.43).
If we define the fetus as a living being, there is a conflict between the mother and the unborn child. Drug abuse, refusing immunization, and suicide confines direct bodily harm to the individual making the decision, thereby comporting with the tenants of the Non-Aggression Principle. Although, even in a legal sense, living children do not have rights as they are under the guardianship of their parents. Also, if we truly own ourselves, can’t we choose which procedures we can have performed on our bodies? There is no easy solution to this complex and taxing quandary.
1.) I omitted the portion of the quote regarding self-destruction. This portion of the doctrine is wholly illegitimate. If we own bodies, we have a right to dispose of ourselves; if God exists, he transferred our spirit to our corporal bodies. Through this transfer, God relinquishes ownership of our essence extending to us full possession of our bodies. Meaning we can maintain our physical bodies how we see fit, including but not limited to drug use and suicide.
The headlines in the news have been animated by the controversial Texas law, SB 8; colloquially known as the Heartbeat Bill. The legislation boasts several stringent limitations on abortions that operate analogously to a de facto ban. However, the most shocking aspect of the bill is that it allows private citizens to sue facilities that have performed abortions for $10,000 or more per procedure. This feature of the law indirectly deputizes the residents of Texas and has the potential to lead to some unforeseen consequences. At its core, the Heartbeat Bill is a legal manifestation of the partisan tug-of-war in the abortion debate. While Pro-Life advocates may believe they have won this round, little do they realize Texas now has a Prisoner’s Dilemma on its hands. The blowback from this contentious  the legislation will impose economic costs on the state of Texas.
It is worth noting that only a minuscule number of the citizenry in Texas has had an abortion. Per the Guttmacher Institute, in 2017, only 55,440 Texas residents had abortions performed. This figure is meager when compared to the total of all adult female Texans. Also, most voters are conservative. How could this move be detrimental to the entire state of Texas? The state only has a few liberal oases (West Texas & Austin); the overall impact of citizens moving to more progressive jurisdictions would only have a marginal effect on tax revenue. Perversely, this might have a disparate effect, leaving left-leaning municipalities such as Austin with a significant loss in local tax revenue.
Texas having lower taxes and an affordable cost of living has resulted in population growth in recent years. Population growth and economic growth are correlated. Most of the Texas transplants are not coming from conservative-leaning states, but liberal high tax states such as California and New York. Arizona is another state currently experiencing a large diaspora of Americans migrating from high-tax states. Epitomized in the slogan “.. Don’t California, My Arizona..”. What happens when the conservative values of a low tax state become too off-putting for prospective residents? Not only hampers the economy through decreased tax revenue, but it hampers economic development in other ways. Left-leaning Tech Companies may enjoy the corporate tax rate of Texas. What happens when companies start choosing to avoid setting up offices in Texas for ethical reasons? More companies may opt to establish a campus in Phoenix instead of Austin. Causing an unfortunate ripple effect through the entire state economy. The Pro-Life camp is not doing themselves any favors by not striking a political middle ground. Progressives are only shooting themselves in the foot by avoiding Texas because of the Heartbeat Bill.
1.) This brief essay is in no way a commentary on the morality of abortion. Any such normative arguments would only detract from a game-theoretical assessment of the situation described.
Published by The Casa Grande Dispatch (Pinal Central): Click here
Editor, Casa Grande Dispatch:
There has been a lot of debate over vaccine mandates in the wake of the COVID-19 pandemic. Most arguments revolve around the science of vaccines or the ethical concerns of state-sanctioned requirements. However, are such policy prescriptions even legal? Much of the justification based in past case law depends upon which level of government is issuing the mandate. Several Supreme Court rulings from the early half of the 20th century validate the legality of state and local (Jacobson v. Massachusetts and Zucht v. King) immunization requirements. What about at the federal level? The Biden administration’s proposal seeks to implement a nationwide vaccine mandate. Arizona and 23 other states are rightfully challenging this encroachment upon states’ rights.
Past case law does not justify top-down mandates from the federal government. Limiting the defense of a national vaccine requirement to using circuitous channels, President Biden directed OSHA to establish a vaccination requirement for employers with 100 or more employees. The president relies on the authority conferred to the agency, under Section 6 of the OSH Act, endowing OSHA with the ability to promulgate occupational regulations. Judging by the amount of opposition to this emergency measure by state governments, the president initiated a bureaucratic cold war, fought in the courts. COVID-19 has been devastating to the entire county, but ultimately measures to combat the virus should be left to the states — a statement validated by past case precedence; a maxim guiding the core legal arguments of the litigating states.
The process of implicit logrolling (p.101) is a form of indirect vote-trading that heavily relies on the bundling of wedge issues. By way of tying specific groupings of policies and candidates to attract target demographics of voters. Per Buchanan and Tullock (1962), such arrangements encompassing political platforms can be manipulated by “…political entrepreneurs…”. Simultaneously considering the zealous nature of many single-issue voters, it is easy to see why implicit logrolling is such an effective mechanism in shaping the American political landscape. If the American voters continue to support controversial political positions, implicit logrolling will be effective.
Most analysts ignore how voters reconcile selecting programs and political candidates that hold logically inconsistent views. For example, an individual that defends abortion rights on the grounds of a bodily integrity argument concurrently favoring vaccine mandates. Whatever happened to “my body, my choice”? Although, if this individual held both positions on the grounds of an externalities argument, perhaps there might not be any logical discrepancies. However, few voters delve that deep into the logic of their political philosophies. Here lies the Paradox of Implicit Logrolling; political platforms drive voters to support policies they would not otherwise choose. We have most saliently observed this phenomenon in the demographic shifts within the Republican Party. The GOP was once favoring free trade, now advocates for tariffs.
The Lockean conception of shelf-ownership does not work if we cannot alienate self-hood. In the context of involuntary slavery, our absolute right (p.10) to self-possession is relinquished through coercive force . The notion of natural rights almost always implies that the individual owns. For instance, the right of free speech codified under the First Amendment of the Constitution implies self-ownership. Individuals embroiled in political debate must utilize the very bodies they own and utilize scarce resources (p.2)to engage in the passionate exchange. There is one glaring flaw that most ethical theorists get dead wrong about natural rights. Our negative rights that are part-and-parcel with our personhood may be self-evident, but they are certainly not inalienable. The American Declaration of Independence echoes this sentiment and forever cements it in the public consciousness:
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.
The claim that these rights are unalienable does not connote ownership of these rights in any meaningful sense. By the inseparable nature of self-ownership and natural rights, we do not truly have unfettered possession of ourselves. The ability to alienate something is that can only be the consequence of ownership. True ownership implies that an individual can transfer, maintain, sell, deface, lease, destroy, etc. the article in question as they see fit. One of the strongest arguments for this radical interpretation of ownership comes from economist and Libertarian theorist Walter Block. Dr. Block writing “..No law should be enacted prohibiting or even limiting in any way people’s rights to alienate those things they own. This is “full monte” alienability, or commodification…” (p. 6) . Block surmises that an unlimited condition of ownership naturally extends to the person, meaning that if an individual chooses to sell themselves into slavery this is legitimate. Unlike the trans-Atlantic slave trade, the individual being sold is consenting to the arrangement .
However, most, and moral theorists would suggest that natural rights, especially selfhood cannot be alienated or dispensed with. As our mind and body are typically inseparable; neither can be reallocated nor disposed of. This supposition suffers from an unfortunate fallacy because a person can voluntarily absolve their will and sentience. In the most extreme case, a person could give themselves a lobotomy effectively alienating their will and severing their mind from their corporal body (p.8) .
There are less extreme examples of people abstractly selling off natural rights in exchange for material gain. One only needs to look to employment contracts to see a ubiquitous example of this selective selling of rights. It is common for employers to include social media policies as a condition of employment. Effectively acting as a voluntarily acknowledged limit on free expression; a right codified under the First Amendment. Regardless of whether this restriction is a temporary sale of this right or permanent alienation it is a legitimate exchange. From the standpoint of Rothbardian contract law, this arrangement fulfills the criteria for an enforceable contract. Under this theory of contract law, the property must be exchanged for the contract to be binding, any other agreement is a mere promise (p.133-135). At the core of an employment contract or conditions of employment, the property is being exchanged. The employer is transferring compensation (monetary and additional benefits) to the employee. This exchange is contingent upon the employee following the company’s internal policies. Indirectly operating as a form of selling or “renting” natural rights in exchange for employment.
Selling property is merely one means of alienating property. Other more drastic measures can achieve this same outcome. The concept that an individual can condemn their property, mirroring the same privilege current held by various tiers of the U.S. government. The only difference is that when the state does it, they do so without the consent of the owner. Even when eminent domain is practiced within the parameters of the takings clause, however, the property owner generally does not have the right to refuse to surrender their property. Regardless of whether they are justly compensated for the relinquishment of their business, land, or home this arrangement is still inherently coercive. In stark contrast, if a property owner dedicates to transfer or otherwise condemn the land they own, this is legitimate. Effectively, suicide is an example of a person opting to condemn themselves. A person choosing to forever dispose of themselves permanently disables their ability to contribute to society; mimicking how governing institutions can decree that land or a build is no longer fit for occupation or commercial use. The state typically initiates such a directive in the context of habitation or use of the property would pose a “safety hazard”. However, a person contemplating “condemning” themselves does not need to fabricate such vague excuses. If they truly own their own body and mind, they do not have to provide any justification for performing such action. Unlike eminent domain, the individual can consent to the decision they have made.
Most people might argue that allowing others to commit suicide with no mandated intervention would squander human lives . Further supporting this statement by repeating tired platitudes about how it is a permanent solution to a temporary problem. No doubt, suicide does come with a wide array of societal costs. The individual can never be replaced nor can their human capital because no two people have the same experiences. If we set aside the externalities of the act, there’s a deeper conflict at play. There’s a long tradition of property owners having the right to destroy what they own. The right to destroy one’s property has its roots in the doctrines of Roman and English Common law (p.8). Moreover, there is a long-standing tradition that arguably supersedes the concerns of modern environmentalists or other public interest initiatives. The concern for wasting resources was even voiced by John Locke back in the seventeenth century:
The same law of nature, which does by this means give us property, does also bound that property. God has given us all things richly, 1 Tim. vi. 12. is the voice of reason confirmed by inspiration. But how far has he given it to us? To enjoy. As much as anyone can make use of to any advantage of life before it spoils, so much he may by his Tabour fix a property in whatever is beyond this, is more than his share, and belongs to others. Nothing was made by God for man to spoil or destroy. (p.12).
While Locke provides us with prudent advice regarding resource management, it is nevertheless, a suggestion. A just legal system would defend the property owners’ right to dispose of their property how they choose, even if it is considered wasteful. A legal system that has penalties or restrictions impeding the right to destroy one’s property, provides a perverted form of justice. Much like anything else a person owns, they should be able to “destroy” themselves. In a sense, we legally permit other more protracted forms of incremental suicide. For instance, currently, no laws are prohibiting the sale or consumption of sugar-saturated and chemical ladened soft drinks. Although cigarettes are highly taxed and regulated, we still live in a society where smoking is still legally tolerated. Both soda and cigarettes slowly kill the person ingesting either product; despite this fact, these products should remain legal. Following this same logic, if the person should be able to choose what they put into their body, they can choose to also ultimately dispose of their body.
. The account of Slavery in Locke’s Second Treatise of Government (1690).
. The idea of wasting human life can be applied in an economic sense. The decreasing fertility rates in the Western world present challenges to the labor force and the tax pool. Especially, after all the Baby-boomers die.
The act of suicide is a serious matter that has a litany of inseparable moral, physiological, psychological, and societal considerations. Unanimously, the institutional consensus is that intervention is imperative in addressing the issue of suicide. Although little consideration is given to whether intervening in every alleged suicide attempt is ethical. In most cases, intervention entails involuntary commitment orders placed upon “suicidal” individuals. There is often a wide degree of digression allotted to mental health professionals in determining who is a danger to themselves. The nuances within these laws vary state by state. It should be noted the majority of states have involuntary commitment laws. As noted in a recent Supreme Court decision has indicated that the reasonableness for involuntary commitment under due process has already been established. Citing Addington v. Texas , O’Connor v. Donaldson, and Foucha v. Louisiana. Do the despondent nature and impending bodily harm of a suicidal person warrant them being held against their will? Despite any ethical counterarguments, the law of the land indicates that such measures are justified.
All because a specific policy is codified in statutory law or is validated in case laws does not make it moral. Our law ought to reflect a sense of justice, however, this normative ideal is seldom achieved. Often many laws appear to be a capricious byproduct of overextended digression. If the Lockean proviso people do own themselves, at the very least involuntary commitment laws present a conflict between the legal statute and our natural right of self-ownership. From a Libertarian perspective, this is a right that should not be infringed upon. The Scottish Enlightenment philosopher David Hume wrote:
A man who retires from life does not harm society: he only ceases to do good, which, if it is an injury, is of the lowest kind. All our obligations to do good to society seem to imply something reciprocal. I receive the benefits of society, and therefore ought to promote its interests; but when I withdraw myself altogether from society, can I be bound any longer? But allowing that our obligations to do good were perpetual, they have certainly some bounds. I am not obliged to do a small well to society at the expense of great harm to myself. Why then should I prolong a miserable existence because of some frivolous advantage which the public may perhaps receive from me?
This short excerpt from the large corpus of Hume’s work encapsulates the issue with mandatory commitment laws; suicide presents little harm to society. In contrast, hold a man against his will for committing no crime would be quite damaging. It also should be noted that “suicide” across the board is not universally condemned, but is permissible based upon a qualifying context. For instance, some argue that elderly people suffering from chronic illness(es) have the right to end their own lives. Predicted upon the basis that they no longer owe anything else to society and are no longer a stakeholder. If membership to a community is voluntary, then withdrawal through either suicide or self-isolation should also be voluntary, making anything else coercion. The preference towards the norms of suicide towards the elderly and sick are also reflected in our laws. As of 2019, eight states allow for physician-assisted suicide this privilege is only permitted for those suffering from a terminal illness. There are two interrelated flaws with the logic behind only allowing the terminally ill to have legal permission to end their own lives. The first concern is that this undermines the severity of mental illness. Through sanctioning such procedures to those suffering from physical illness, a double standard has been created. For years we have heard that mental illness is also an illness, however, mental health professions do not even vindicate their own words. These individuals are actively allowing for physical illness to hold a privileged legal status over mental illness. The second fallacy is that one of the prevalent arguments for intervention in suicide attempts is that the person’s thinking is impaired by psychological distress or intoxication. To allow the chronically ill to do the same is hypocritical under this very same line of logic. Those who are terminally are generally on psychoactive pain killers or are in intense pain. Couldn’t their capacity for reasoning be questionable at best under such debilitating conditions? If mental illness is an illness couldn’t it be terminal in its own right? These are two discrepancies that few pundits in civil society would have the courage to address honesty.
If we own ourselves, we have the implicit right to kill ourselves without any interference. That does not necessarily provide a moral justification for a suicide attempt but is moral condemnation obstruct this right. Analogous to how soliciting a prostitute may not necessarily be moral, but to utilize legal institutions to disrupt this exchange is unquestionably immoral. If under Arizona statute ARS 13-1304 sustains that holding a person against their will is illegal, then the same can be said about involuntary commitment. The difference is due to a pedantic technicality than a justifiable ethical argument.
Submitted to the Foundation for Economic Education
What is Inflation?
The concept of inflation (the depreciation of purchasing power of a specific currency) applies to other goods besides money. Inflation is related to the Law of Supply and Demand. As the supply of a commodity increases, the value decreases. Conversely, as the good becomes more scarce, the value of the commodity increases. This same concept is also applicable to tangible items such as vintage baseball cards and rare art. These are rare commodities that cannot be authentically replicated and command a high value on the market. On the other hand, mass-produced rookie cards and replications of Monet’s work are plentiful. Yield little value on the market.
Inflation and the opposite principle of deflation can also apply to intangible goods. When looking at the job market, this becomes quite evident. Jobs that require skills that are rare or exceptional tend to pay higher wages. There is a notable caveat to this observation, which is compensating differentials. Such a form of compensation accounts for the risky or unattractive nature of undesirable jobs. The higher wages are due to a lack of workers willing to accept the position rather than possessing skills that are in demand.
The Signaling Function of College Degrees.
Over the past couple of decades, credentialing of intangible employment value has become more prevalent. Credentials can range from college degrees to professional certifications. One of the most common forms of credentialing has become a 4-year college degree. This category of human capital documentation has evolved to take on an alternate function. Outside of a few notable exceptions, a bachelor’s degree serves a signaling function. George Mason economics professor, Bryan Caplan, argues that this function of a college degree is a signal to potential employers that a job applicant has desirable characteristics. Earning a college degree is more of a validation process than skill-building. Employers desire workers that are not only intelligent but also compliant and punctual. The premise of the signaling model is valid because many graduates are not using their degrees. In 2013, that only 27 % of graduates had a job related to their major.
Due to the signaling function of a bachelor’s degree over the year, there have substantial increases in the number of job seekers possessing a 4-year degree. Retention rates for 4-year institutions reached an all-time high of 81 percent in 2017. In 1900 only 27,410 students earned a bachelor’s degree. This number ballooned to 4.2 million by 1940. That number has increased to 99.5 million. These numbers demonstrate the sharp increase in the number of Americans earning college degrees. Today, nearly 40 % of all Americans hold a 4-year degree. Considering the vast increase in college attendance and completion, it fair to question if a college degree retains its “purchasing power” on the job market? Much of the evidence seems to suggest that it has not.
What is Credential Inflation?
The signaling function of college degrees may have distorted by the phenomenon known as credential inflation. Credential inflation is nothing more than “… an increase in the education credentials required for a job..”. Many jobs that previously required no more than a high school diploma now are only accepting applicants with bachelor’s degrees. This shift in credential preferences among employers has now made the 4-year degree the unofficial minimum standard for educational requirements. This fact is embodied in gov the high rates of underemployment among college graduates. Approximately 41% of all recent graduates are working jobs that do not require a college degree. It is shocking when you consider that 17 % of hotel clerks and 23.5 % of amusement park attendants hold 4-year degrees. None of these jobs have traditionally required a college degree. Due to a competitive job market where most applicants have degrees, many recent graduates have no means of distinguishing themselves from other potential employees. Many recent graduates have no other option but to accept low-paying jobs.
The Two-Pronged Debasement.
The value of the college degree has decreased in value in two ways. First, its value has depreciated due to the vast increase in workers possessing degrees. This form of debasement mimics the effect of printing more money. Following the Law of Supply and Demand, the greater the quantity of a commodity, the lesser the value. The hordes of guidance counselors and parents urging kids to attend college certainly have helped this matter. However, public policy has served to amplify this issue. Various kinds of loan programs, government scholarships, and other programs incentivized more students to pursue college degrees. These policies that make college more accessible are what are devaluing college degrees. The current proposal for “free college” would be more expansive than our current policies. More people attending college makes degrees even more common and further depreciated.
The second form of credential debasement is a qualitative form of depreciation. Proving that the quality of a college education has decreased over the years is difficult to validate. Similar to how the Ancient Romans debased their currency by diluting the silver content of their coins, we have done the same to the college curriculum. College students are rarely studying but are attaining higher GPAs than previous generations. The average full-time student spends less than 30 hours a week focusing on coursework. Amounting to approximately 900 hours a year (average full-time worker devotes 1,800-2,000 annual to their job). Yet, the average GPA has climbed from 2.5 in 1940 to 3.1. A potential sign that college is not as academically rigorous as it once was.
It is not to say that brilliant students with aspirations of a career in STEM fields should avoid college. For the average student, it may be a malinvestment in their future. Incurring large amounts of debt to work for minimum wage is not a wise decision. When faced with policies and social pressure that have made college the norm, the signaling function of a degree becomes distorted. If students focused more on obtaining skills than credentials, they might find a way to stand out in a job market flooded with degrees.
Here is a hypothetical situation that presents us with a challenging conundrum that would drive most legal scholars and moral philosophers mad. There is as a person in a vegetive state who is hooked up to a variety of life-sustaining medical equipment (feeding-tube, ventilator etc.). Let’s say that the individual is married, and their spouse has been their legal guardian since they have become clinically brain dead. Does the parents of the incapacitated person have a say over the end-of-life decision making for their child? Should this heavy burden be left to the spouse and rightful guardian? It should be noted that the moral analysis must be separated from the determination of legality. All because something is legal does not necessarily make it moral. For instance, abortion in the United States is sanctioned around quasi-arbitrary timeframes with little consideration for situational context or biological development of the fetus. The decree of legislative fiat does not automatically make a policy moral. There are many legal protections within American statutory law that prevent individuals from facing criminal penalty or ligation. If crimes against persons and property cannot be subjected to restorative justice then there is no point in calling a legal system just. In other words, we will be reviewing this situation from a philosophical standpoint, specifically from the perspective of individual property rights.
The above scenario is not quite so hypothetical but is a concise description of the Terri Schiavo case. However, one striking difference between the scenario presented above and the Schiavo case is that :
Terri Schiavo breathes on her own. She is not on a ventilator or respirator. Although she swallows, she is sustained through a gastric feeding tube. She is not in distress or imminent danger of death.(P.5).
Despite Schiavo’s lack of cognitive functionality for the most part she was able to “live” in the most basic sense of the term. It should also be note that prior to her cognitive impairment she made no will directing her “wishes” for medical treatment. Also including end-of-life decisions. Therefore, leaving the variable of individual consent obscured by Schiavo’s incapacitated state. There was a rift between Schiavo’s husband/ guardian wanted to remove her feeding tube while her parents staunchly disagreed with this decision. Ultimately, the courts sided with the husband and Terri ended up dying after having her feeding tube removed. This may have been the legally permitted course of events, but was it moral from the paradigm of individual property rights?
The economist and Libertarian Philosopher Walter Block provides a remedy to this quandary squarely from the standpoint of Lockean property rights. A grown adult who has lost their cognitive faculties is analogous to a child and exist in purgatorial grey area when it comes to the prospect of Lockean ownership (p.5).Block takes the Rothbardian approach to addressing a parents required commitment to child rearing, which in fact allows parents to relinquish this right (p. 6). Much like how Lockean homesteading does not preclude an economic agent from taking ownership of an abandoned patch of land, this analogy can be applied to raising children. If an adult within the community is willing to devout the resources to raising a child discarded in dumpster, this should count as a transfer of guardianship (p.7). Based upon the premise of Lockean homesteading the Supreme Court of Florida was morally wrong in assigning the right to end Terri Schiavo’s life to her husband. Through wanting to end her life with no prior record or request of her wanting such measures taken, he effectively relinquished his guardianship. Clearly he did not do so in the modern legal sense, but he did so within the context of Lockean property rights. If her parents were willing to assume guardianship of their daughter then the court’s decision is nothing more than perverse.
And if they are, then whoever is at first control of her must maintain her; if he refuses, her guardianship reverts to the second closest party, her parents. If they will not homestead her, then perhaps her siblings. If not them, then anyone who wishes to take up this burden. Based on the number of protests at the callous way she is being treated ( Block, 2011, p.7)
The COVID-19 Pandemic impacted almost every facet of daily life. The emergence of this unknown pathogen has generated an enormous amount of panic; acting as a pretext for laws and regulation. It is easy to see how the insights of political economist Robert Higgs have been validated by the number of laws and relief bills that have proliferated in the name of the pandemic. Government action hardly ever has a neutral effect on the incentive structures of constituents, business interests, bureaucrats, and politicians. There is always a beneficiary of any implemented policy that exists within every decision-making structure. Even in the context of an apolitical governing institution such as a Home-Owners Association
The most common form of COVID-related laws have been mask mandates, like another policy, there are disparate effects. Since benefits can be conferred through mask mandates they apply to Bootlegger and Baptist’s (1983) coalition building. In almost any scenario the scientists would be our proverbial “Baptists” due to their vocal concern for public safety. This statement does not validate whether masks are effective at curtailing the spread of COVID-19. It most likely connotes a sincere concern for public welfare making it a normative position, therefore a moral argument for mask mandates.
Once we start to address who benefits from mask mandates the conversation starts to get interesting. Similar to the COVID engendered microchip shortage the beneficiaries of mask requirements have changed over time. The most notable “Bootlegger” of the nascent period of the pandemic were Mask producers. Specifically, mask manufactures are based out of China. It would be a mistake to interpret this observation as a tacit critique of free trade, this fact is self-evident. The increase in mask sales does not require any further explanation beyond mask mandates and fear of the virus spreading. The question of why this was more fruitful for Chinese producers than other mask manufactures does need to be elucidated. That was largely a byproduct of the recommendations of the FDA. Per the Brown Political Review:
“…A lack of knowledge and trust in these companies has led hospitals to severely ration their workers’ N95s rather than purchase additional supplies. The private market is no better: Facebook, Amazon, and Google are largely blocking domestic N95 manufacturers from advertising and selling their products. At the same time, most consumers feel obliged to use less-protective cloth or surgical masks due to continuing CDC guidance to reserve N95s for hospitals that will not even accept them. The CDC defends this policy by pointing to the relative efficacy of cloth masks and citing “reasons supported by science, comfort, costs, and practicality,” though these reasons seem increasingly outdated. So, the pandemic continues, millions of Americans live in fear of getting sick, and all the while tens of millions of life-saving products are sitting unused in storage facilities. The N95 shortage is an illusion, and as the virus and its variants continue to spread, more must be done to disseminate the essential products throughout the population…”
Even though domestic producers invested millions into expanding their production capacity, foreign masks were still preferred. It is estimated that “… between March and September 2020…” the shipping containers containing N95 masks imported into the U.S. increased from 6 to 3,000. While “…National Institute for Occupational Safety and Health (NIOSH) approved 19 domestic manufacturers to begin to produce N95s..” the agency neglected to promote the masks and clearly articulate the distribution plan. Even outside of China’s relative comparative advantage for manufacturing other factors funneled production demand in their direction. Several domestic policies made the sale and distribution of domestically produced masks more onerous. Clearing the U.S. market for Chinese producers.
China’s domination of the mask production market has advantages that extend beyond economic benefits. China also garnered some soft political power through possessing a surplus of N95 masks. The Chinese government utilized the distribution of masks as a tool of diplomacy. Whether this decision was a moral one is a firm subject for debate. It is undeniable that China appropriates some “political purchasing power” from their superior efficiency in manufacturing masks. This is true even in the absence of some of the more obtuse regulatory policies implemented by the United States. The Chinese government capitalized on this opportunity to exercise the nation’s political and economic strength. Many of the countries that received the most generously mask donations were nations that had the friendliest relations with China. Fully recognizing the potential for gaining social currency through these “benevolent” humanitarian gestures turned this venture in foreign aid into a publicity campaign.
The Chinese government seized the opportunity to “tell China’s story well” (Jacob 2020) and started donating medical equipment to other countries. While China sought discretion from donors such as the EU (when foreign medical supplies were sent to Hubei province in January 2020), the Chinese state media were quick to portray China’s donations as acts of benevolence (Popescu 2020). Many leaders of recipient countries duly praised China in return. For example, Serbia’s president welcomed a team of Chinese doctors in March 2020 by kissing the flag of the People’s Republic (CGTN 2020).
Many Americans may view the pandemic global aid initiative as a cynical ploy on China’s part. Such evaluations may be relatively inconsequential at least China was willing to help someone. In contrast, China could have opted to just horde all the N95 masks and callously sell what they could share from their domestic demand. However, it would also be naïve to completely ignore the political optics of the situation.
As time has passed and the pandemic continues, we have seen a shift in the beneficiaries of domestic mask mandates. Irrespective of the U.S. mask supply, the mask shortages of the early pandemic period have fallen out of public consciousness. Now the debate over mask mandates has devolved from a civil liberties debate to a diametrical shouting match. This uncivil discourse leaves little to no room for any grey area. Either you are either pro-mask or anti-mask with the underlying implication being that you either favor the mandates or oppose them. Few, if any pundits enrapture in this schoolyard squabble, would ever dare to oppose the mandates, but actively choose to wear a mask in public. Despite the fact, such a position is perfectly rational. Once again, we do live in an age of hyper-political polarization. In a similar manner to how the vaccines would later become politicized, any precautionary measure against COVID has morphed into the rhetorical argument. Where both sides of the debate completely dispense with facts and reason, leading to the assumption that both factions are more concerned with winning the debate than generating effective policy.
From the pro-mask campaign, an insidious and morally objectionable practice has emerged. That is the public shaming of mask and vaccine skeptics that have died of COVID. It is reasonable to argue that these media campaigns from the predominately left-wing media are more morally depraved than China’s mask allocation policies. The media has been joyously publishing headlines highlighting how COVID-skeptical public figures ranging from politicians to radio talk show hosts have succumbed to the virus. This public ridicule goes far deeper than utilizing these narratives as evidence that COVID is truly dangerous. There is a deeply ingrained derisive cruelty implied in it this public displace. In all honesty, is tantamount to dancing on the graves of these vocal opponents of mask mandates. The pro-mask camp unscrupulously benefits through utilizing these individuals as examples of why masks are necessary. In the same breath derive callous amusement out of mocking their “stupidity” with no regard or respect for the person that died.
However, even if the value of the dollar continues to plummet wouldn’t this pattern be more predictable than the oscillations of a gold-pegged dollar? As mentioned previously, the Federal Reserve does not resolutely adhere to its own monetary rules. These deviations tend to be justified if they are done in the name of maintaining lofty “macroeconomic” targets, such as full employment. Thereby creating distortions that can hamper future investment plans and even anticipated returns on savings. The fact that the cadence in the price level has become more sporadic rather than more predictable (p.7) is a firm indictment of the Federal Reserve’s institutional failure. The common myth that the Great Depression was caused by gold rather than the malfeasance of the Fed is a fallacy that needs to be debunked. The common narrative has been the freely fluctuating value of gold drove the United States into one of the darkest eras of our economic history. To directly indicate that the Great Depression was the byproduct of mistakes (p.4) made our central bank is telling. Unfortunately, the economic calamity of the 1930s was brought on by “… Fed ..not constrained in using those reserves to expand base money, and thus the broader money supply..” (p.5). Once again validating the point that it was an issue in exercising fiscal restraint; the Fed capitulating to the impulse to use money as an instrument of political convenience. It is well noted that raising taxes and cutting welfare programs can be highly unpopular among voters. However, utilizing inflation as a circuitous form of taxation disperses the true costs of government spending, effectively hiding these expenditures from the average voter. It may be the rules of the game that have created past economic turmoil that has been erroneously attributed to gold. In all honesty, making the concept of a rules-based approach to monetary policy questionable at best. In most cases, we cannot trust those tasked with the duties to create and enforce the rules to act in the best interest of the economy.
The failure of our banking institutions to establish monetary stability is epitomized in the duration of economic downturns and the frequency of banking panics. Yes, economic downturns were more frequent before the Federal Reserve, however, they were shorter in duration. On average approximately seven months long and were “..no more severe..” (p.21). Based upon these facts it is reasonable to infer that the intervention of central banks may only prolong economic depressions. The introduction of the Federal Reserve did little to reduce the frequency of banking panics between 1914-1930 (p.24). The greatest irony being that between 1830-1914 Canada had relatively few bank failures and no reported bank runs (p.27). Not only did Canadian banks hold gold-backed currency this period also overlapped with Canada’s free-banking period. During the 19th century, Canada did not have a central bank (established in 1935) and banking was relatively free of any regulation. Despite this period of Canadian banking history committing the Cardinal sins of having a gold standard and no central bank, the nation enjoyed relative economic stability. This example only further erodes the critiques of the gold standard and claims that central banks are an absolute necessity.
Even most fiat currency advocates understand this point and attempt to utilize various monetary rules to create some sense of expected steady depreciation of the dollar. The pretense of “stability” is merely an illusion engendered by the rigidity of a rule that limited the amount of inflation allotted per year. The rules-bound approach in the United States permits 2% inflation per year to allow for economic growth. In an attempt to achieve the aims of “full employment” and monetary stability. Few question the fidelity to which the Federal Reserve has adhered to this 2 % annual inflation target. For instance, in 2007 during the nascent period of the economic crisis, the inflation rate was a staggering 4.08%.More than double what is conventionally allotted by the Federal Reserve. Demonstrating that these monetary rules that are meant to maintain the integrity of our money supply are sensitive to exigencies of purported economic calamity. It is well documented that the subprime housing crisis that emerged in 2007 was caused by our governing institutions using the money supply to manipulate interest rates. The prospect of the U.S central bank maintaining the value of our money is marred by the fact they do not consistently abide by these rules. Unfortunately, when it is politically convenient to loosen these parameters of these rules, the Fed does so. Generally, they could not anticipate the emergence of an emergency requiring accommodations in their money management constraints. If the Federal Reserve did unwaveringly adhere to the 2% rule this still is not necessarily the type of stability that should be welcomed. Irrespective of the annual rate of economic growth, this is still at the expense of the purchasing power of the dollar. While the rate of inflation may be predictable, it is a signal that the value of our money will only continue to decrease. The goal of holding any commodity is for the value to increase or remain constant not to wither away to oblivion.
The instability caused by the Federal Reserve failing to rigidity follow its own monetary rules has consequences that reverberate throughout the economy. Prices function as a source of information to consumers and producers, that even includes those that produce and hold various forms of money. If the Federal Reserve has been augmenting the money supply to lower interest rates this distorts the loans markets for lenders and borrowers. The argument that the short-run instability of gold makes it necessary for state intervention in the money markets, does not hold water. As lenders and borrows can enter into contractual agreements setting interest requirements; even adjust for immediate price-level variances (p.32). Any attempt to manipulate the money supply to encourage consumption does nothing more than to manipulate the integrity of the money supply Only serving to encourage economic actors to engage in malinvestment, arguably creating moral hazard. Not only does lowering interest rates alter the money supply, but it also encourages the individual who could not otherwise afford to borrow money to do so. Despite the fact, the natural interest rate of the loan is unproportionate to their income and necessary expenses. Unfortunately leading may make borrowers inclined to take uncalculated risks created by an illusory interest rate. That invariably is unsustainable and eventually will be forced back to natural rates, regardless of any distortions the market will self-correct.
If the Federal Reserve’s management rules are effective at warding off volatility, we would expect there to be wild variances in the value of gold-backed money in the pre-central banking era. After being confronted with the number it becomes quite evident that the facts do not comport with popular opinion. One only needs to review the dramatic increase in the rate of inflation in the post-gold economy to see the full effect. From the period of the period between 1790 and 1913 a $100 basket of consumer goods only experienced an $8 variance ($108 in 1913) (p.5-6). However, that same basket of goods had reached the cost of $2,422 by 2008(p5-6), demonstrating the hasten pace of dollar depreciation. It is calculated that the overall rate of inflation between 1879 and 1913 was a meager 0.01 % on a classical gold standard. It should be noted that similar numbers are reflected in the 93 years Great Britain retained a freely fluctuating gold standard (p.3). How skeptics can deride the notion of gold-backed money without address the long-run stability is perplexing. The political and economic establishment has effectively become short-sighted through praising immediate stability over enduring integrity. There is a deeper underlying question regarding this disjointed preference, what does it say about our society? Has our propensity for instant gratification become so entrenched in our culture that it has bled into our governing institutions? If our purported “experts” exalt the virtues of instantaneous band-aid measures over long-run functionality, then the answer to this question is self-evident.
The third and final argument of this series for reinstating gold is monetary stability. The notion that pegging money to the value of gold helping ensure its stability to most economists and commentators is laughable at best. Among the intelligentsia, the consensus is that value of gold is highly volatile, and having the dollars tied to such a freely fluctuating asset would be disastrous to the economy. Most notable is how gold fails to achieve short-run price level stability; although, it is generally accepted that it does have a high degree of long-run stability(p.2). Unquestionably there is a tradeoff between long-term and short-term stability when choosing between a monetary regime boasting a fixed-gold standard or a rules-based fiat currency. Upon closer examination, it becomes apparent that fiat currency lacks long-term stability in its value. It only is assumed that there are two core fallacies implicit in the arguments against the stability of gold-back money. One, critics are overestimating the ability of government institutions to artificially sustain price stability. The second and most pervasive assumption is the flawed conception of “stability”. A common concern in any field of study is the question of are we measuring what we profess to be measuring? How we operationally define the fortitude of currency is going to impact how we measure stability. After reviewing the longitudinal variation of the gold standard in comparison to the current fiat standard it is clear that gold has the upper hand when it comes to long-term stability. It is reasonable then to question if we as a society are choosing to favor short-run success over sustained value retention.
However, one nagging issue that needs to be addressed is whether money is naturally fluctuating or if the value remains fixed. Money in itself is a commodity regardless of what is the currency is backed by. After all, we do have a market for trading foreign currency in the post-Brentwood world; why not consider money as a commodity. The perception of the money goes deeper than the fact that we hold foreign currencies (like a future or security) with the hopes of making a profit. I look back to the insights of the founder of the Austrian School, Carl Menger, money often had a prior use as an object with practical utility. As detailed in his book Principles of Economics (1871):
The local money character of many other goods, on the other hand, can be traced back to their great and general use-value locally and their resultant marketability. Examples are the money character of dates in the oasis of Siwa, of tea bricks in central Asia and Siberia, of glass beads in Nubia and Sennar, and of ghussub, a kind of millet, in the country of Ahir (Africa). An example in which both factors have been responsible for the money-character of good is provided by cowrieshells, which have, at the same time, been both a commonly desired ornament and an export commodity. (p.271).
Menger’s concept of money having a prior use function was later encapsulated in Ludwig von Mises’s Regression Theorem.
When individuals began to acquire objects, not for consumption, but to be used as media of exchange, they valued them according to the objective exchange-value with which the market already credited them because of their ‘industrial’ usefulness, and only as an additional consideration on account of the possibility of using them as media of exchange. (p.109-110).
Commodities such as bales of tea or bundles of tobacco demonstrate a self-proclaimed intrinsic value. It is evident people like to consume tobacco and tea as luxury goods, otherwise, these products would not sell. Naturally, making them very saleable commodities on the barter market. But because the double coincidence of wantstrade and barter is self-limiting since you may have a commodity that no one else desires, making it necessary for a society to have a uniform medium of exchange. Even fiat currency could arguably have its legitimacy traced back to the days of 100 percent reserve gold warehousing (p.40), a system buried in the sands of history once the United States established a central banking system. The monetized debate we call the U.S. dollar is a distant ancestor to banking receipts for gold redemption.
If money irrespective of its heritage is considered a commodity, then why do we expect the price to not fluctuate? It is understood that economic models are implied to be unwavering and solely for demonstration. When applied, these models are extrapolated rather than assumed to be a direct reflection of economic activity. In theory, if money is a commodity we cannot assume that it will remain stagnantly fixed at the current price level; as with any other commodity, the value of money varies based upon the supply of the good in question. The very concept of a consistently “stable” currency with no variation in the value is flawed at conception. Invariably such an exception of resolute ceteris paribus is nothing more than a fiction.
Below are the blog entries 10-20 of the Bootleggers and Baptists series. Going forward collective volumes of the series will be published for every ten blog posts composing a volume. These volumes include supplemental essays and addendums written within the timeframe of the corresponding blog posts.
Bootlegger and Baptist (1983) coalitions are dynamic alliances that form a juncture between the overlapping interests of two unlikely factions. Whether these oddball partnerships are implicit or explicit, there cannot be enough emphasis placed on the fact they are dynamic. In most scenarios, these normally divergent interest groups tend to part ways once the initiative has been resolved. The aptitude of Conservative Christians and Feminists finding common ground after shared advocacy for legislation regulating pornography is improbable at best. Once the bill is defeated or passed these odd bedfellows part ways until a corresponding initiative is revived due.
Aside from the temporary resolution of a public policy issue, other factors can shake up Bootlegger and Baptist dynamics. A shift in vicissitudes can severely alter the incentives structure of one of the adjoining parties operating within the alliance. Arguably the current microchip shortage afflicting the technology industry best exemplifies this concept. The news regarding the microchip shortage started to break back in early 2021. The supply shortage was mainly spurred by an influx in the demand for consumer electronics during the 2020 pandemic. It was originally speculated that companies involved in the distribution and sale of electronics and technology would be the “Bootleggers” of the microchip shortage. The investment publication Barron’s suggesting that the shortage would be lucrative for IT distributor Avnet. However, such suggestions were somewhat premature, since the microchip shortage has cost the automobile industry billions in revenue. Similar ripple effects are likely to impact other sectors of the economy heavily reliant on microchip components.
Now the role of “Bootlegger” could potentially be assigned to microchip producers in Taiwan and the Taiwanese government. Several democratic mid-western senators came together to write to Taiwan’s Bi-Khim Hsiao for help with navigating the components ravaging the American auto industry. Taiwan has long held a comparative advantage when it comes to microchip production. The Biden administration has also sent over “… 2.5 million COVID-19 vaccine doses..” which is significantly more than what was originally allocated to Taiwan. Some commentators may call this an equitable trade, microchips for vaccines. However, this exchange isn’t quite so linear. The United States is really at the mercy of Taiwan since the product constraints are profoundly stymieing automobile production. The old saying goes “Beggars can’t be choosers”, which encapsulates this situation in a nutshell. The United States simply lacks bargaining power in these negotiations conferring all the leverage to Taiwan. In contrast, Taiwan has one of the world’s superpowers at their backdoor step pleading for help. This does not depict a deal brokered between equals, but rather emergency assistance from one nation to another.
The mid-western senators reaching out to Taiwan are our “Baptists” as they act as our moralizing agents. These individuals fulfill this role by stressing the economic calamity, carnage, and overall harm that the microchip shortage could have inflicted upon the U.S. economy. The Taiwanese government and producers are the clear “Bootleggers”. Since they enjoy the position of being one of the most robust and efficient microchip producers in the world they have an asymmetrical advantage over the United States. Not only from a production standpoint but also in terms of negotiation power. The United States is coming to Taiwan in desperation rather than a firm bargaining vantage point. Frightened by the prospect of the already ailing auto industry taking any more shocks, these senators are looking for a quick solution, with little consideration for optics or downstream consequences. Not to mention the additional vaccine dosages are merely the cherry on top.
USB (Universal Serial Bus) connections and ports have become a ubiquitous item in our daily lives. Whether it temporarily storing documents on USB flash drives and other peripherals (e.g. hardwired keyboards), we all use USB connections in some capacity. The matter of USB connections would hardly be a topic that could be conceivably politicized. However, the European Union has succeeded in turning the USB ports on electronic devices into a public policy debate. Next month the European Commission intends on presenting a “draft law” that would require all electronics producers to have a “common charging interface”. This would effectively prohibit the Lightning connections utilized by iPhones. If passed all other formats other than a USB-C connection would be banned in the European Union.
The question becomes what is a USB-C connection and why is the European Union so adamant about making it the compliance standard for the continent? USB connections and ports have been in existence since 1996. One of the latest innovations in USB connections came in the form of the USB-C (software version 3.1) in 2014. The USB-C connection boasts several technological advantages USB 2.0 and USN 3.0. Some of the benefits include thinner cables, greater capacity for transmitting data, and backward compatibility. Although these are most likely not the reasons why the EU is pushing for all electronics to have the USB-C standard for charging ports. The campaign for the USB-C mandate is arguably not directed towards consumer protection. Rather is more oriented towards environmentalism. One outstanding advantage of the USB-C format is that is more durable, meaning that it will not wear out as quickly as previous models of electronic port connections. The goal of mandating USB-C connections would be to reduce the amount of E-Waste a plank in the platform of the EU’s New Circular Economy Action Plan.
This initiative brought forth by the European Commission cannot escape the potential of a Bootleggers and Baptist (1983) coalition from forming. The moralizing agent in this situation would be the European Union. Yes, there are some political gains for advocating for environmental causes. For instance, you look “progressive” and you earn the right to virtue signal. Above all, you win over the progressive vote, which is presumably sizable in Europe. The EU may be a potential Dual-Role Actor, but for the sake of clarity, let’s assign the role of “Baptist” to the EU. Who are the Bootleggers in this scenario? It is highly unlikely that no one would benefit from the EU placing such compliance requirements on the charging ports for electronic devices. Regardless of whether the regulation is purported to target consumer safety or environmentalism disparate effects are inevitable. This was an observation implicit in Yandle’s theory since the nascent period of its development. Hence why in Yandle’s seminal paper he suggests there is a “demand” for regulation among corporations. The implementation of regulations operates as a backdoor way of reducing competition without violating antitrust laws. Granted, antitrust laws in the EU are different than those in the United States; however, this is still circuitous means of subverting the legal constraints of anti-competitive market behavior among firms.
Most electronics producers are on board and have already adopted all of the purposed EU requirements; except for Apple. While other Apple products have been reformed to include USB-C ports, the iPhone still uses a Lightning connection. Apple has even openly stated that such a requirement would hinder innovation. Yet, the other giants such as Samsung have remained silent on the matter; expressing tacit agreement with the purposed EU measure. It should be noted that Apple is a major competitor in the Smartphone market. The iPhone has approximately a 50% market share of the Smartphone market in the U.S. However, the global market share is primarily held by Samsung and other competitors. Nevertheless, Apple is still a serious competitor for companies such as Samsung in the global market. The silence of other producers most likely is due to rational business interests rather than the normative virtues of environmentalism. Therefore, Apple’s competitors in the Smartphone market are the “Bootleggers” of the EU’s USB-C mandate.
In the political process, many coalitions are symbiotic relationships that require the resources from both groups to successfully achieve results. The classic Bootleggers and Baptist (1983) model best exemplify this very fact. However, there has always been the implication that this political relationship has always been one-sided. The Baptists do all the heavy lifting from a public relations standpoint, meanwhile, the Bootleggers lurk in the shadows as silent beneficiaries. Superficially it almost seems as if the Bootleggers are free riders how to prosper at the expense of those who risk their reputation for controversial positions. But typically in the political landscape of the United States morality isn’t enough. In the absence of adequate funding, a political campaign ends up being dead on arrival. Because money is required for advertising, organizing outreach events, and other means of communicating the campaign’s message. Often for what the Baptists lack in finances, the Bootleggers tend to contribute to the initiative. This is due to the Bootleggers frequently being involved in business and having a serious monetary stake in the issue. It would be a mistake to interpret this previous statement as a value judgment since anyone of us would do what we could to defend our paychecks.
One excellent example of this dynamic was detailed in the Spring 2021 issue of Regulation magazine (Vol 44, No. 1), published by the Cato Institute. Presented in the article Not So Unlikely Coalitions (p.12-15) written by economics professor Jeremy Horpedahl. The article focused on the legalization of alcohol in various counties throughout the state of Arkansas. Since the repeal of prohibition, the re-legalization of alcohol sales has been done incrementally at the county level. By state law, the legal status of alcoholic beverages can be altered by being voted on as a referendum. Similar to how the Marijuana relegalization issue is being handled now, except at lower level governance. For the initiative to appear on the ballot a petition must be signed by 38 % of the “.. jurisdiction’s voters..”. The author also notes that regionally voter turn is approximately less than 50 %, meaning that last-minute campaigns to halt the legalization process tend to be ineffective (p.14).
In Arkansas, the alliance between religious leaders and liquors stores in adjacent “wet counties” in Missouri have been proven to be effective. Both sides of the coalition found that it is better to direct campaigning efforts towards keeping the referendum on the ballot rather than beating it at the ballot box. Generally, once an initiative to re-legalize alcohol reaches the voters in Arkansas it tends to pass. During the 2010s, Craighead, Crawford, Faulkner, Independence, Johnson, Randolph, and Yell counties all successfully prevented alcohol legalization from appearing on the ballot. Bootlegger interest groups easily raising over $100,000 to fund various PACs to defeat the bill before it even reaches the ballot box. Funds are being allotted to press interviews with local religious leaders and various media campaigns (p.14). It should be noted that areas that are landlocked between other dry counties lack any liquor stores to act as the Bootlegger interest group leaving the Baptists on their own for obtaining funds (p.15). However, per Horpedahl there has been a new entrance to the political interest game operating as Bootlegger for the legalization side, Walmart. The titan of retail raised over $700,000.00 in 2014 to support the legalization effort in Saline county dwarfing the contributions of the opposing set of Bootleggers ($157,500.00) (p.15).
It is easy to perceive the role of the Bootlegger as being almost parasitic. The Bootlegger interests idly standby while the Baptist do all the leg work of persuading the public. Upon reviewing Professor Horpedahl’s s article it becomes quite clear that the Bootleggers do assist in supporting political advocacy, they just happen to do so in the shadows. These business interests are forced to conceal their direct involvement in public policy due to the stigma of the intermarrying of business and politics. Demonstrated by the fact terms such as “dark money” have now entered the public consciousness. Leading most to express skepticism of the purported intentions of corporations when they tip their toes into the pool of political advocacy.
One concern regarding fiat currency that is appurtenant to inflation is the occurrence of Cantillon Effects. What are Cantillon Effects? The observation is that introducing new money into the economy has “… distributional consequences that operate through the price system…”. Essentially this means that inflation does not occur all at once and does not evenly flow throughout the market. Individuals that receive the money first avoid experiencing price inflation, validating the previous point. Therefore, dispelling the misconception held by the English philosopher John Locke that the nature of money is neutral. Locke suggesting that introducing more money into the economy merely has a numerical impact on prices. The suggestion being that printing more money has little influence on economic behavior. A 17th-century precursor to the contemporary notion of “inflation doesn’t matter”. From a praxeological standpoint, this assumption is wholly false. If it were true, people would not adjust their behavior to account for the inflationary depreciation of their national currency. People would not be investing in gold, silver, or Cryptocurrencies as an alternative to hedge against government money.
This phenomenon was first observed by Irish-French Political Economist Richard Cantillon, providing its namesake. Cantillon expounds upon the mechanics of such inflationary effects on money through the example of gold mining in his book An Essay on Economic Theory. Cantillon asserts that the point of injection of new currency and the velocity of circulation play a role in its impact. As described below:
If the increase of hard money comes from gold and silver mines within the state, the owner of these mines, the entrepreneurs, the smelters, refiners, and all the other workers will increase their expenses in proportion to their profits. Their households will consume more meat, wine, or beer than before. They will become accustomed to wearing better clothes, having finer linens, and having more ornate houses and other desirable goods. Consequently, they will give employment to several artisans who did not have that much work before and who, for the same reason, will increase their expenditures. All these increased expenditures on meat, wine, wool, etc., 0necessarily reduces the share of the other inhabitants in the state who do not participate at first in the wealth of the mines in question. The bargaining process of the market, with the demand for meat, wine, wool, etc., being stronger than usual, will not fail to increase their prices. These high prices will encourage farmers to employ more land to produce the following year, and these same farmers will profit from the increased prices and will increase their expenditure on their families like the others. Those who will suffer from these higher prices and increased consumption will be, first, the property owners, during the term of their leases, then their domestic servants, and all the workmen or fixed-wage earners who support their families on a salary. They all must diminish their expenditures in proportion to the new consumption, which will compel many of them to emigrate and to seek a living elsewhere. The property owners will dismiss many of them, and the rest will demand a wage increase to live as before. It is in this manner that a considerable increase of money from mines increases consumption and, by diminishing the number of inhabitants, greater expenditures result from those who remain (p.148-149).
It is important to note that Cantillon Effects occur with currencies with a fixed supply. In Cantillon’s example above, he uses the mining of gold ore to describe the disparate impact of inflation on prices. A similar consequence is also observable as a byproduct of Bitcoin mining. However, these examples of Cantillon effects are far less pronounced than those resulting from creating more fiat currency. These disturbances are temporary (p.28) and are not indicative of permanent debasement of either commodity. A continual depreciation of money with no longitudinal guarantee of appreciation makes a currency a poor store of value. Gold, cryptocurrencies, and silver have the possibility of increasing in value. Therefore, neutralizing the short-run inflation generated by a new gold discovery. Fiat currency collective continues to depreciate across time, thereby displaying the validity of the Humean Price-Specie-Flow Mechanism model. Essentially disturbances in the gold supply would naturally adjust and levitate back to equilibrium with no further intervention. Above all demonstrating, that any disparities would be temporary under fixed-money supply standards such as gold. Effectively weakening the validity of the objections that gold is an ineffective policy tool for combating the harmful effects of inflation. Including Cantillon Effects.
The above passage from Cantillon demonstrates how individuals with close geographic or institutional proximity to the point of monetary injection enjoy the benefits. The modern-day equivalent would be working in the financial district of New York City. Financiers on Wall Street may even have connections with staff working at the New York Federal Reserve. Well-connected social networks in the financial sector are advantageous when it comes to acquiring access to money. Even beyond the social networks of well-connected financiers, the privileged position of those benefitting from Cantillon Effects starts with the Central Banks. Upon wielding newly printed money, they possess a profound amount of “.. unearned purchasing power..” (cannot find source) analogous to a counterfeiting operation. The currency flows from the Federal Reserve to the Medium and Large-sized banking institutions that “maintain reserve accounts” at various Fed locations throughout the United States. Smaller banks (e.g. local credit unions) obtain their money supplies from correspondent banks that have accounts with the Federal Reserve. These larger banks supply smaller banks charge the smaller banks a service fee for distributing their allocation of currency. This distribution dynamic illustrates how patrons of neighbor banks are at a clear disadvantage. From a temporal standpoint, the large corporate banks are among the first institutions to receive the newly printed money. Providing access to the new currency to the employees and patrons of these larger well-connected banks. Individuals living in rural regions of the united states are either unbanked or needing travel great distances for banking services. The disparate effect of this geographical allocation of new money is made worse by the higher poverty rates experienced by rural areas of the U.S. The individuals afflicted the most by poverty are the ones who suffer the most from price inflation. Serving to substantiate the consequences of Cantillon Effects as a form of regressive taxation. By the time the rate of inflation has caught up to consumer goods, the government has already funded the programs the politicians wanted to implement. Those with institutional ties closer to point of entry have already invested or spent the money before inflation is reflected in higher nominal costs of consumer goods.
At the center of every social interaction is some variant of exchange. Whether it be friends trading pleasantries or vendors and clients exchanging money for goods; every social interaction is an exchange. For this very reason, it is perplexing how once money enters the picture the interaction has been ethically tainted. Surely, examples of bribery have many moral considerations to address. However, the disdain expressed for people who monetize a hobby is devoid of any justifiable logic. In a sense, even the exchange of nonmonetary goods such as ideas and goodwill can be abstractly viewed as a form of commerce. Much like bartering goods and services, the trading of ideas tends to make people better off. Why should the exchange of ideas enjoy the moral high ground while trading tangible goods for money is treated with ethical inferiority? Odds are that will be a question for another day.
It should be noted that nonmonetary interpersonal exchange extends well beyond interchanging nontangible ideas. It can also apply to displays of affection. One form of interpersonal exchange that seems to be most salient in the minds of people would be sexual intercourse. Outside of the deeply ingrained biological proclivity to crave sexual contact, such acts have been mystified by being shrouded in a mystique of societal taboo. Only serving to make anything about sex more alluring; sex being nothing more than “..forbidden fruit..”. Especially when it is outside of the contexts in which is societal prescribed is being permissible. Irrespective of the context in which sexual intercourse takes place, if it is consensual, it is a form of exchange.
Even in instances where sexual relations are consensual, such interactions among co-workers operate in a moral grey area. Most Human Resource departments frown upon such conduct, but rather ever outright condemn it or impose disciplinary action. However, once the exchange is between various tiers of management and their subordinates any appeal to the morality of such an interaction becomes more dubious. Not fixate on equalitarian concerns, but there is an institutional asymmetry of power. An individual’s boss has quite a bit of authority over them. After all, having the power to sever someone from their ability to earn an income is a lot of power to wield. An individual’s boss can also influence the trajectory of one’s career. Introducing sex into the mix spells a recipe for calamity.
An hourly employee having a sexual relationship with their boss is a prime example of a prisoner’s dilemma. Ideally, both parties or either individual would decline to engage in any sexual conduct. As we all know the world, we live in is far from ideal. Even if it were to happen, to not allow the incident to influence any aspect of their professional lives. Again, humans are emotional creatures. When David Hume described the servile relationship between people and their passions, he was correct. Unfortunately, such an incident cannot remain neutral, almost always bleeds into other the work life. Regardless of whether the exchange occurs on or off company property.
It would be in the best interest of both individuals to move on from their regrettable tryst (or chronic series of amorous activities). That would defy human nature, even if it would be the rational course of action. There is the ill-fated inclination of people to weaponize such situations for their interests. Falling into the categorical definition of a Prisoner’s Dilemma. The manager could threaten to demote their subordinate or even fire them if they tell anyone about their affair. The same penalties could also be applied if the subordinate decides that they are no longer interested in continuing the sexual relationship. Reciprocally the subordinate could also fight fire with fire. Deciding to use the sexual encounter as a point of leverage for either reprisal or career advancement. Opting to seize this opportunity and continue this unethical relationship with their boss. Even in some cases using past encounters as the focal point of an extortion or blackmail attempt. Either individual using their past rendezvouses in a manner that will harm the other is an unquestionable noncooperative strategy. The key factors of lacking trust and the institutional/moral disapproval of such engagements are conducive to defection. If you can’t rely on the other to be cooperative and work in everyone’s mutual interest, you might as well save yourself.
One of the defining arguments for justifying a gold standard is that it guards against inflation. What is inflation? Inflation is the depreciation in a currency’s purchasing power over time, increasing the nominal prices of goods and services. A gold standard combats inflation due to the limited quantity of gold. The cause of inflation is the introduction of money currency into the economy. Abiding by the immutable law of Supply and Demand, the more of a commodity we have, the lower its value will be, which also applies to money. A principle that was demonstrated in the currency crisis afflicting Weimar Germany. The massive supply of German Marks leads the country to experience hyperinflation. The German mark became virtually worthless as a medium change. At the height of this financial disaster, a loaf of bread cost $100 billion! Right before the German mark collapsed.
The astronomical prices and economic penury caused by hyperinflation is the most extreme outcome of overprinting fiat currency. There are several other less severe consequences of inflation. For instance, inflation reduces the incentives for people to save money. If your savings are withering away by the continuous erosion of inflation, there is no in leaving your money in a savings account. One way many wealthy entrepreneurs avoid the stealth tax of inflation is through investments. Real estate, business startups, bonds, stocks, and securities have the potential to increase in value. In comparison, an inflationary dollar can only decrease in value. The stock market may be a gamble, but hedging on a fiat currency is a losing strategy.
The customer suffers dearly due to the harmful effects of inflation. The most obvious consequence is inflation resulting in higher prices. Functioning as a paradox because one would expect prices to decline because of increased efficiency from technological innovation. Since inflation increases the price of all goods including input the price of consumer goods rises. A continuous increase in the money supply also results in a “cheapen” of consumer goods. Producers feeling the pinch of inflation on productions goods cannot directly transfer these costs to the consumer. However, producers elect to reduce portion sizes or reduce overall product quality. Restaurants using downgrading the grade of meats they serve, readymade food producers reducing packaging sizes, clothing manufactures using less durable fabrics. Not only are we paying more for everyday goods, but we are also paying more for inferior goods!
The inflationary monetary policy enabled by a fiat money standard impacts more than thrift and prices. Money creation being disconnected from the constrain of fixed assets backing the currency has led to several troubling practices in macroeconomics. One of the most notable examples has been the manipulation of interest rates. Typically interest rates are artificially lowered to encourage consumption during economic lulls. Achieved through expanding the money supply, with the injection of liquidity it becomes less expensive to lend money (remember the concept of supply and demand). Even exponents of this tactic acknowledge that this alteration to the interest rate is only temporary. Interest rates below the market rate are unsustainable. Influencing people to makes investments that they cannot afford at natural interest rate levels, creating economic bubbles. Those who can no longer afford the real interest rates end up defaulting on their investments. One of the most salient examples in the recent history of such disastrous collective malinvestment was the 2008 Housing Crisis. The housing market and adjacent industries were decimated by the burst bubble. Overall, resulting in over 2 million foreclosures in 2008 alone. Demonstrating the hazards of institutionally endorsed market distortions that could only be executed on a pervasive scale under a fiat currency standard!
The tight constraints of a currency pegged to a precious metal have often been expressed as a concern. Frequently, being used as an argument against a gold standard. Particularly the need for liquidity during a supply shock. It could be theoretically justifiable to have some flexibility in the money supply to fund unexpected expenditures. One example being emergency funding for implementing measures to combat COVID-19. However, the purse strings have been loose for decades. Featuring only brief periods of modest austerity measures implemented. The inexhaustible need for more government funding has developed into a deeply rooted dependency. That not only adversely impacts the character of our governing institutions but also that of the citizens. The people begin to demand more entitlement programs. Typically, with little regard for the costs of such initiatives. Arguable making inflationary monetary policy cleverly camouflaged form of fiscal illusion. The American people already have social security and several other federal entitlement programs, but this is not enough! Now universal health care and free college tuition are mainstream policy talking points. Illustrating America’s growing and insatiable appetite for publicly-funded entitlement programs. Simultaneously, displaying the hideous character flaws of thievery, profligacy, and gluttony.