Rights Are Reciprocal In Nature

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The conclusion that can be drawn from Lysander Spooner’s expositions on slavery and the injustice of the Civil War is that the rights are reciprocal.  Compulsory associate in the form of statehood is nothing more than slavery supported through the force of the U.S. Military. Kidnapping, false imprisonment, slavery, and other forms of coerced association violate the same underlying principle. All these forms of forced association restrict autonomous individuals. Who possess the implied right of unrestricted mobility. Suggesting they can travel or reside where they please as long they are not transgressing against the property rights of others. The right to self-ownership. Some may claim that this right inalienable and cannot be voluntarily transferred to another individual.  However, ownership implies that the owner can dispose of, consume, preserve, or transfer whatever they own. Even if that were to be the title to their own life. This could be feasibly transferred to another person via voluntary contracts.  The same can be said for individual rights being sold off or transferred even for temporary durations of time. When at work we are expected to abstain from making off-color or politically incorrect jokes while on the clock. In exchange for briefly and voluntarily suspending our right to free speech, we receive a conditional paycheck and continued employment.

Compulsory statehood not only violates the right to self-ownership by having the federal government assume control over the dissent citizens. It also transgresses a natural corollary of self-ownership, the right to free association.  If an individual owns themselves, they can choose who they associate with. Some may argue that you don’t choose your neighbors. Directly this observation is true. Indirectly it is false. Through purchasing a home in a specific neighborhood to consent to live near the people in the adjacent and parallel domiciles. This is quite qualitatively different then be forced to reside in a specific neighborhood by law or threat of military force. If the individuals residing in a certain geographic area all share similar sentiments and opt to become an autonomous region that is their prerogative. Yes, the Confederate South was guilty of the sin of slavery. Even considering this moral misstep, why should their right to free association be viewed as any less valid. Giving credence to the colloquialism “Two wrongs don’t make a right”. If were to examine the example of Catalonia, many Americans would be much more sympathetic to their separatist cause. In 2017, the Catalonian successionist movement presents a similar scenario.  A group of individuals self-identifying as Catalonian wanting to separate from Spain. Paralleling the Confederacy’s sense of southern identity driving them to want to become a sovereign governing body. Catalonia’s movement is easier to empathize with because it hasn’t been sullied and stained by any association with atrocities of the same magnitude as slavery.

The are other instances of the right of the free association being obscure by another issue. One of the most salient enemies of free association is political correctness. It is a lens that serves to only distort the general principle of having the right to choose whom you keep company with. Often, if you defend the right of state succession or the right not to associate with minority groups, you will be accused of bigotry. People believing that an unwavering defense of free association being tantamount to tacitly being racist demonstrates a lack of nuanced understanding. Not to mention this is nothing more than a superficial inference. It is possible to disagree with Jim Crow laws but also oppose the Civil Rights Act of 1964.  Both sets of laws infer our right to free association. Jim Crow laws are an example of forced exclusion. The state restricting who you can dine with, socialize with, and trade with through compulsory law. The Civil Rights Act of 1964 operates as a form of forced integration.  This phrase generally is utilized in the context of immigration it also applies within the context of the Civil Rights Act. Business owners are being forced by statutory law to ignore certain characteristics of job applicants in the hiring process. Even though the proprietor of the business does have legal title and liability for the enterprise he established and manages. There is even some debate as to whether private business owners have a right to discriminate against customers for nonessential goods and services. The Masterpiece Cakeshop LTD V. Colorado Civil Rights Commission case did appear to be a victory in the arena of free association. Many have erroneously labeled this situation as gay rights case.  This is incorrect. The larger principle behind this case is not whether a business is inclusive and accepts the transactions from everyone. Rather does the proprietor have the right to decline? The fact that the case involves a gay couple is unfortunate because it muddies the waters. Instead of commentators being focused on the principle of private property and individual liberty, they are all too fixated on the sexuality of the patrons who were denied service. If this had been a Neo-Nazi that had been denied service, who there has been any controversy? No. Making it reasonable to surmise that the social justice stance on discrimination is not only antithetical to our natural rights but is also hypocritical.  If we are truly committed to the principle of equality, then shouldn’t all businesses be forced to transact with every customer? Regardless if they are intoxicated and belligerent or white supremacy?  This frequently ignored question could lead someone to believe that the equality principle is one-sided.

It is utterly perplexing that most people fail to see the equivalence between various rights. For example, the right to gun ownership implies that an individual can abstain from owning a gun. The Second Amendment of the Constitution is predicated on the natural law principle of the right to defend one’s self and property.  The reciprocal nature of this right is somewhat self-evident.  This concept could easily be extrapolated to and to any of our other natural rights.  The ability to discriminate is at the very core of the principle of free association. Anytime we choose to patronize one restaurant over another we are actively engaging in a form of discrimination. The gay couple who were denied service by the Masterpiece Cakeshop could have easily utilized this principle to convey their dissatisfaction with the owners. Word of mouth can be the death knell for a small business, the couple could have easily told all their friends, family, co-workers, etc. about the incident. Urging of their close acquaintances to avoid this shop like the plague. Opting to discriminate against the shop. Is this an invalid form of protest? Not. It is equally as valid as a private company choosing to not do business with the couple.

This principle of voluntary discrimination makes state succession valid and any attempts to thwart these actions aggression. The south actively chose to discriminate between tolerating the overreach of the federal government or form their voluntary block of associated states. Through self-ownership and mutual consent among the citizens residing south of the Mason-Dixon line, this movement was valid. President Lincoln’s nationalistic initiative to force the south back into the Union was conspicuously transgressive.  


 

Spooner- Argument #25 Against The U.S. Post Office

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In his seminal pamphlet, The Unconstitutionality of the Laws of Congress, prohibiting Private Mails, Lysander Spooner provides twenty-seven brief arguments countering the veracity of the government-held monopoly on mail services. More specifically arguing from the perspective of Constitutional law. Utilizing the precepts of the U.S. Constitution, Spooner derives numerous thought-provoking arguments that challenged the government prohibition on private mail carriers. One of Spooner’s more novel arguments is presented in argument # 25 (p.12) of his pamphlet.

Spooner writes:

“25. If the exclusive right of carrying letters, has been granted to Congress, then it is unconstitutional for a person even to carry a single letter for a friend. And Congress is bound to punish such an act as an offense against the constitution.”

At first glance, this argument may seem thin or even frivolous. However, the implications of this refutation are much deeper than loose extrapolation. If we were to replace “letter” with any other legal commodity, such sanctions would be absurd. For example, the United States government has the exclusive right to sell, produce, and distribute bread. Making the production, sale, or transfer of bread by any private company Constitutionally barred. Any commentator with a market-oriented position on economic would be quick to decry this as “socialism”. The government attempting to monopolize and control the market for bread. If such a notion of government control of bread production seems inordinate, couldn’t the same be said of letter carrier services? The transaction costs of private companies delivering letters domestically are low. The government’s fixation with keeping private carriers out of the market back in the 1840s was puzzling.

Spooner carries the argument to its logical conclusion by extending it to the potential of congressional restrictions on gifts.  He states that “… then it is unconstitutional for a person even to carry a single letter for a friend. And Congress is bound to punish such an act as an offense against the constitution. “Hand delivering a letter to a friend is only a step away from giving a gift to a friend. The only difference is the intent. Hand delivering a message is intended to disseminate information. Giving a tangible item to a friend with no expectation of direct reciprocity is a gift. As soon as you are trading tangible goods it becomes a form of barter. Does transporting a letter somehow become crass or require the need for state intervention upon exchanging money for this service? Even if we are paying someone to deliver a letter to someone else, this is a form of volunteer exchange. Just as much as giving someone a gift or opting to cut the middleman out and hand-deliver a letter to a friend. If I am not stealing the envelope, ink, and paper to compose a letter.  No laws are being violated while transporting the letter, there shouldn’t be an issue. If a private company (subject to taxation) wants to provide the service of transporting that same letter for a fair price, congress should not obscure this free exchange. Especially if the company is being taxed. However, the legitimacy of taxation is a whole other stand-alone argument. If an organization pays to play and the transaction costs of such a business are low. Any functional counterargument is at best flimsy.

Outside of the Constitutional concerns of congress veering into unjustly regulating trade. Something that happens frequently in modern society as the Commerce Clause has been stretched beyond its original intent. Generating several perverse interpretations of this clause.  There is a strong natural rights perspective implied in Spooner’s twenty-fifth argument. If a person composes a letter, it is their letter. As in the own the physical paper it was written on and the envelope it is sealed in. While the letter is in their possession they can do as they like with the letter. They could burn it in their fireplace. The author of the letter could elect to frame the letter. They could throw it into the recycling bin. Even better yet they could choose to give it to another person. To convey a message to the letter’s intended recipient. Instead of wasting time, energy, and resource on driving across the country to deliver the letter, they can decide to transfer this duty to a third-party. In effect, temporarily consigning possessing of the letter to the third-party carrier. In any developed market system, it would be fair to say that the consumer shouldn’t be restricted to using one carrier. By owning the letter, the consumer should not be restricted by legal barriers when choosing a vendor. It would be one thing if there was a natural monopoly (if such a thing exists) then the only other choice the customer has is to transport the letter by their efforts. When the government skews the interpretation of the Constitution to carrier barriers to entry into the market.  Spooner highlights this point in his earlier arguments.  For instance, argument #1:

“1. The Constitution of the United States (Art. 1. Sec. 8.) declares that II the Congress shall have the power to establish post-offices and post roads.” These words contain the whole grant, and therefore express the extent of the authority granted to Congress. They define the power, and the power is limited by the definition, the power of Congress, then, is simply” to establish post-offices and post roads,” of their own not to interfere with those established by others.” (p.5).

Spooner fully asserts that has written, Congress has the power to establish a postal service along with the parallel infrastructure to support mail delivery. Nothing more. The power is not extended to ensure that no other entrants pursue the same line of work. Nor does it explicitly state that congress is required to distribute sanctions for market entry. Not only does congress acting against private mail carriers inhibit natural property rights, but it is an overextension of the intended duty of creating a postal service. Meaning that any action taken against Spooner’s business The American Letter Mail Company was illegitimate.  Did nothing more than preserve the jobs of bureaucrats and place artificial barriers on the natural cadence of market processes. The antithesis of preserving our natural rights and liberties.   

Privatizing Mail: Lysander Spooner V. U.S. Postal Service

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What was that power? It was, as has been shown, merely a power concurrent with that of the states and people, .. to establish post offices and post roads.” Only a concurrent power, then, having been delegated, and a like power not having been prohibited to the states or people, it necessarily follows, from the terms of the amendment itself, that a concurrent power to establish them is .. reserved” to the states respectively, or to the people-or to both.

Lysander Spooner (P.21 The Unconstitutionality of the Laws of Congress, prohibiting Private Mails. 1844)

Before the founding of private parcel carriers, such as UPS or FedEx, the United States Postal Service had a monopoly on the delivery of small packages. Until one man, Lysander Spooner decided to openly challenge the government’s industry dominance. Ultimately, the U.S. government won the battle. Spooner arguably won the war. His victory immortalized in the fact that he forced the hand of the U.S. Mail service to lower the costs of stamps through his valiant entrepreneurial efforts. Effectively driving the cost of stamps down to actual market rates. Earning the bold political philosopher the moniker “Father of the Three Cent Stamp”. Spooner observing the illegitimate manner in which the government monopolized this service, braving the risk of legal action, decided to create his private mail service. Servicing parcel and letter delivery from Boston through the mid-Atlantic. All the while undercutting the grossly inflated shipping rates set by the government.

Lysander Spooner was born on a rural farmhouse in Athol, Massachusetts on January 19th, 1809. He was one of nine children. It was speculated that Spooner’s fervently religious upbring influenced his later turn towards deism. Along with a commitment to religion, his family also were staunch supporters of the abolition movement. At the age of sixteen, he entered an agreement with his father to work on the farm until he was twenty-five. In exchange, Spooner was provided with food, room and board, and “educational advantages”. After fulfilling his obligation to his father, Spooner worked as a clerk for the Register of Deeds in Worcester, Massachusetts. In 1833, studied law under John Davis while working in his office. Spooner eventually went on to start his legal practice. Acting in defiance of the Massachusetts mandate that lawyers either have a college degree or study five years under a practicing lawyer. Spooner perceived this law as being discriminatory towards the “well-educated poor”. Drawing parallels to the artificial barriers to entry created through state occupational licensing requirements. Spooner even petitioned the Massachusetts General Court to challenge the veracity of this requirement in 1835.

In 1844, Spooner founded the American Letter Mail company. Audaciously announcing the incorporation of his enterprise to the U.S. Postmaster General. Reacting to the skyrocketing costs of postage in the 1840s. The cost of sending a letter from Maryland to Massachusetts was 18.75 cents. Approximately twenty-five percent of workers’ daily wages at the time. Two weeks after his grand announcement Spooner was delivering letters between Boston, New York, and Baltimore. Offering patrons this service for a mere 5 cents per stamp rate. A drastically more economical option than the exorbitantly priced stamps required to be delivered by the USPS. Doing something the Postal Service of the nineteenth century could not accomplish. Deliver mail quickly, efficiently, and all at a fair price. All benefits could not be achieved by the U.S. Mail due to the organization be rife with corruption and bureaucratic red tape. The U.S. Postal Service possessing a monopoly position in the market afforded the organization the ability to set prices.

Naturally, Spooner soon came under fire from the U.S. Post Office. Less than a week of being in business “… Congress introduced a resolution to investigate the establishment of private post offices..”. After only being in business for several months Spooner and a few of his employees were detained for transporting letters by train to Baltimore. After being incarcerated for nearly three months and grappling with other legal troubles Spooner was released from prison. The American public became accustomed to lower postage rates, meaning the U.S. post office had to lower the cost of their stamps. This resulted in many of the customers using private carriers returning to using USPS. This combined with the legal fees incurred through Spooner’s legal battles with the U.S. Government contributed to the bankruptcy of his business. After the failure of his business venture, Spooner went on to be an influential figure in the abolitionist movement.

Spooner was able to give the inefficient appendage of the federal government dedicated to delivering mail a run for its money. Through this market distribution despite the failure of Spooner’s business, he succeeded in lowering the price of postage in the United States. He did so through market forces. Directing the U.S Post Office to follow suit with providing comparable pricing to the public. This was achieved in the absence of legislation or other typical forms of political action. Truly living up to his reputation as an anarchist. Regulation suffers from the lethargy of political processes. Changes made to adjust to market conditions are much more instantaneous. Demonstrated how quickly postage rates dropped after Spooner started delivering letters.

In the spirit of Spooner and his contributions to anarchist political theory, it is interesting how there is a discrepancy between when the government engages in questionable conduct and when a private citizen does. Few questioned the government monopoly on mail delivery, but when a private citizen attempts to bring competition into the market he is ligated out of business. However, when private companies start to dominate specific industries at the end of the 19th century, there was then a moral imperative to break up this concentration of market power. The christening of this crusade was punctuated by the passage of the Sherman Antitrust Act in 1890. It would be fair to respond to this charge of hypocrisy, by stating that when Spooner waged war on the monopoly in letter carrier services there wasn’t any precedence for antitrust law in American jurisprudence at the time. Good point, but even in the light of the fully developed and sophisticated antitrust law we have today there are still state-dominated monopolies on the production of goods and services. The most salient example being defense. Some cling to the Samuelsonian public goods argument for keeping the government monopoly on defense. Keen scholars of political economy may even invoke Coase’s Theorem to justify state provision of defense services. For those who are skeptical of the legitimacy of state intervention, there still appears to be a double standard.

Lysander Spooner Week

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I officially declare the week of January 19th Lysander Spooner week. To commemorate the birthday of this legendary contributor to anarcho-political theory. I am proud to say I happen to share a birthday with this renowned theorist. Not to mention one that was heavily influential on the development of anarcho-capitalism (although arguably Spooner had some socialistic tendencies).  Next week, I will attempt to dedicate two essays to the life and work of Spooner. I will not allow this influential figure in Libertarian political theory to become a minuscule footnote!

A Free-Market Approach to Wolf Restoration

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Environmentalism and free-market economics have long been viewed as being adversarial. The very notion of combining these two ideas seem like nothing more than an oxymoron. This popularly perpetuated stereotype is echoed in the rhetoric of the Green New Deal. Why should conservation efforts not be guided by the signals of profit and loss mechanisms? Better yet, why should conservation efforts be insensitive to incentives and rely solely on legislative fiat and sanctions to enforce such initiatives? It is about time that environmentalism sheds its crunchy -granola image in exchange for more of a pragmatic approach. After all, conservation does entail conserving resources. Any economically conscious actor would consider the limitations on nonrenewable resources. Meaning that economic agents would strive for the more efficient use of resources of limited quantities. Efficient uses of resources tend to be rewarded in free-market economics. Ironically demonstrating how environmental conservation and free-market economics dovetails perfectly to one another.

One of the most notable leaders in market-based environmentalism has been PERC.  Founded in Bozeman, Montana back in 1980 and has been committed to devising economically sound solutions to environmental issues. All the while, respecting private property rights. This research institute flips the conventional notion of environmentalism on its head. Seeking to pursue private solutions to environmental versus automatically resorting to legislation and regulation. One of Terry Anderson’s, a senior fellow at PERC, favorite examples of this was the story of Hank Fisher. A leader in the wolf restoration effort in the 1980s.

Fisher came to an epiphany in 1984, after meeting with a group of local ranchers in a schoolhouse in St, Anthony, Idaho. Fisher assembled the ranchers to hear their concerns regarding wolf reintroduction at the Yellowstone national park.  The consensus was that the majority of the ranchers were concerned about the cost of losing livestock as a result of an increase in the wolf population. It was the response of one of the ranchers that solidified the foundation for Fisher’s market-based solution. One of the ranchers told Fisher: “It’s easy to be a wolf lover. It doesn’t cost anything. It’s the people who own livestock who end up paying for wolves.” Fisher then remembered a livestock compensation plan that was implemented previously in Minnesota. However, the ranchers were incredulous at the fact that they ever would be compensated for their losses.

In the summer of 1987, Fisher was able to test out the concept of a livestock compensation program in Montana. As wolves returned to northwestern Montana, local ranchers lost thousands of dollars’ worth of livestock. Killed by the wolves migrating back to their natural habitat. The indignation of the ranchers was reflected in the flurry of headlines in the local papers. Fisher quickly sent out a fundraising newsletter out to” ..Defenders of Wildlife members in Montana…”. He was able to raise the necessary funds to compensate the ranchers for their losses within 48 hours.  After seeing the success of his first initiative, Fisher decided to continue to implement and maintain rancher compensation programs.  He collaborated with local artist Monte Dolack creating posters depicting what Yellowstone would look like with a restored wolf population. Selling posters to the public for $30.00 apiece.  Since 1987 (reference article was published in 2001), the program has raised $175,000.00 in rancher compensation. The scope of the program has been extended to ranchers in Idaho, Wyoming, Arizona, and New Mexico. Defenders of Wildlife also implemented a program in 1997, compensating for grizzly bear damages. Raising $60,000.00 by 2001.

The story of the environmental efforts of Hank Fisher is an illuminating one. Challenging the conventional wisdom that we need to dispense with free-market economics when pursuing environmental restoration efforts. Both are perfectly compatible with one another. With a little bit of ingenuity and understanding of market incentives, other aspiring pioneers could follow in his footsteps. By doing so create a win-win scenario versus the zero-sum policies that are favored in government-sanctioned penalties and inflexible regulations.   

Bryan Caplan on Time Preference

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In a 2005 blog entry from economist and George Mason professor, Bryan Caplan disputes the veracity of time preference proving why interest rates tend to be positive. Time preference asserts that people prefer present consumption over future consumption. Providing some insight into why people would be willing to receive money now and later pay it back with interest. From the standpoint of an individual’s assessment of value, $1000.00 today is worth more than $1000.00 three months from now. Dr. Caplan launches a two-pronged attack against the assumption that time preference explains why interest rates are positive. Caplan suggests that dimmishing marginal utlity, not time preference demonstrates the proclivity of interest rates being positive.

Professor Caplan’s first point regarding the failure of time preference to adequately explain positive interest rates relates to the allocation of nonmonetary resources. He details a scenario where an individual is marooned on a desert island with only two bananas. Per a loose application of time preference, in theory, the person stuck on the island would eat both bananas today. Since we prefer present consumption to future consumption. A “perfectly patient” person would be willing to eat only one banana a day to more effectively curb their hunger. This is because we disvalue hunger today equally as much as we do tomorrow. Making dividing consumption between the two days a more effective use of resources.

Caplan goes further elucidates this point by demonstrating the fact that often in barter interest rates are negative. Per the blog entry:

“Suppose we knew the price of food would double next year. Then a pound of food now trades for half a pound of food one year from now. Translation: a negative 50% interest rate!

If this seems crazy to you, suppose the food was the only commodity, and you expect a famine next year. Wouldn’t you happily trade 2 pounds of current food in exchange for a promissory note good for 1 pound of food next year?”

This example explicates depending on the context we may forgo present consumption for future consumption. Even when we are expected to take a loss on the value of that commodity. This foils the main tenants of time preference. If we were to delay current consumption for future consumption we tend to do so for future gain. To quote the Austrian economist Roger Garrison “ We save up for something”. We hang on to stocks, gold, annuities, bonds, or cash holdings with the anticipation they will increase in value. It is important to note that inflation does take its toll on cash holdings. In the mind of the average person, it is more about amassing large quantities of money than an expected increase in value. Per time preference, if we did anticipate no gain from delaying consumption, we would be more apt to consume now than take the loss. However, in the situation presented by Dr. Caplan, it may be reasonable that a logical person may do the opposite. The rationale why loans for money tend to be positive is the fact that money does not spoil and is of little cost to store.

The second prong of Professor Caplan’s argument is the most compelling. In modern society, people have the ex-ante perception that they will be richer in the future. Anticipating being wealthier at a later date will drive a person’s demand for consumption up for the present. As the individual exhausts their desire to consume, the hope is that they have more money to pay back the sum that was loaned with interest.  That is certainly a point that the Austrian perspective on interest rates ignores. Is it possible that if we excepted to get a raise in our compensation next year, we are more apt to spend more now and around the time we start to experience the disutility of consumption we experience a bump in pay?   This is a very likely scenario.  Presents arguably the biggest blind spot in the theory of time preference.

However, there is one looming question that Dr. Caplan does sidestep in his arguments. Few sane economists would ever argue that the law of diminishing marginal utility doesn’t apply to consumer behavior. But are we truly measuring the utility of the same commodities if we delay present consumption?  Our Christmas decorations three weeks before December 25th the same commodity as these same decorations on the clearance rack the first week of January?  It could be reasonable to argue no. While diminishing marginal utility could explain this decrease in demand, but it fails to consider the full scope of the customer’s subjective evaluation of the goods. The marginal utility can only explain the assessment of the value of a commodity. It cannot explain if the customer perceives the good as being categorically different. The variable of time could very well influence whether Christmas decorations now or a month ago are truly the same product. Applying this reasoning to interest rates, this point becomes quite clear. Is $1000.00 today plus avoiding a late payment on a credit card the same as $1,000.00 next week? Especially when we consider late fees, damage to our credit score, etc. On top of it, you still owe the credit card company $1,000.00.  It is difficult to quantify the intrinsic value of having a clear credit score. $1,000.00 plus interest may be worth more to the individual than taking a hit on their credit score.

The 2020 Coin Shortage Explained

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One of the biggest mysteries of 2020 was the change shortage. Why were so many retailers requesting that patrons either use a card or have exact change? Many of us were puzzled by these signs that have become a common fixture of many checkout lines across the nation. What is the explanation for such a monetary phenomenon?  Within my nearly thirty-two years on this planet, I have never been requested by a brick-and-mortar vendor to have exact change. However, in the era of COVID-19, there are many strange things are happening. Never mind the change shortage, a few months back the United States was grappling with a toilet paper shortage. One commodity nearly everyone has taken for granted.

As one could predict, the national coin shortage is related to the COVID-19 pandemic. This calamity of a coin shortage can be linked back to the precautions taken to limit the spread of the virus. The shelter-in-place orders resulted in the shutdown of many stores and restaurants. Resulting in an overall lull in economic activity.  In other words, the cash registers of many retail outlets were not be replenished by circulating cash (include metal coins). Some may surmise that due to the uncertainty of pandemic many people may opt to hold cash balances. Coins generally are circulated throughout the economy through bank deposits and are recirculated back to banking customers through the change provided by retail stores and restaurants. Per the U.S. mint, 83 % of the coin supply is recirculated through stores and third-party coin processors.

The downturn in economic activity during the shutdown left only meager coin reserves in the cash registers of American stores. Meaning that once stores reopened, they would quickly exhaust their coin supplies. This was only compounded by the fact that the banks could not fulfill the retail demand for coins due to fewer customers depositing them. The mint falling behind on coin production left retailers had no other option but to request that customers either pay by a card or exact change.

The Paradox of Coupons

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Do coupons help us save money? This very question may seem counterintuitive, but it is one worth entertaining. Coupons certainly help us save money if they are for purchases that were planned expenses. Such as regularly purchased necessities, for example, a coupon for broccoli at the local grocery store. A nutritious food item that is frequently purchased by Mr. Jones. In this instance, it would be awfully difficult to argue against the fact that Mr. Jones is saving money through using a coupon. The same could also be applicable for luxury items that are planned expenses. Let’s say Mr. Jones takes his wife out to dinner every third Thursday of the month. Mr. Jones and his wife dine regularly at the same chain-restaurant every month. Mr. Jones finds a coupon in the local paper for 25% off his next meal for this very same eatery. Even though dining in a restaurant is not a necessity Jones is still saving money because this luxury was a planned expense. He is not going out of his way to obtain a product or service he hasn’t budgeted for.

So when does use a coupon or taking advantage of a sale not result in the patron saving money? It should be stated that there is a lot of subtlety and nuance in addressing this question. From a prima facie standpoint, using a coupon always results in savings. Why? Because the customer is receiving a discounted price on the specified product or service. This superficial assumption only analyzes one single transaction. If we are assessing Mr. Jones’s total finances on the hyper-microlevel, then yes, he has saved money by using a coupon. However,  the thin line distinguishing between a budgeted purchase and an impulsive one is where the difference truly lies. The discount provided by a coupon saves money on a single purchase. If the customer goes out of their way to purchase an impulse item that was not planned for they are not genuinely saving any money. Perhaps they are on a single transaction. The allure of saving money with no consideration given to whether they want or need the product or service is not conducive to the overall conservation of money. The individual who is a spendthrift is still spending money recklessly even if they are saving a few dollars on a single transaction. The real metric that measures true savings is the comparison of typical spending to average income. If an individual can retain more of their income and curtail their previous consumption habits, they are truly saving money. The intentions behind clipping coupons are thwarted if it leads to an increase in overall consumption.

How we are seduced by the opportunity to save money even on frivolous purchases has deeper psychological implications than being the victim of an illusion or flawed logic. For some people, they get a dopamine hit when they are hunting down a deal. Mirroring the same neurochemical reaction that a gambler experience when they allow their ex-ante perceptions to override their better judgment. As they dispense with probability as they continue to feed quarters into the slot machine. Making these deal hunters as much of a slave to the reward centers of the human brain as a junkie or gambling addict.

There is another explanation providing some insights into why we are often overvaluing the benefit of coupons. That would be the theory of Time Preference. Per the Austrian School of Economics,  Time Preference is the immutable fact that people value present consumption over future consumption. The  Austrian economist Eugen von Böhm-Bawerk applied this concept of valuing present consumption over future consumption to interest rates. Bohm-Barwerk postulated that people are willing to pay interest to obtain access to present goods for two reasons. For one, they anticipate having more income in the future.  Also, the perceived value of a good tends to diminish over time. Through considering these two variables Bohm-Barwerk added a temporal element to the economic theory of interest.  When time plays a factor in how people assess the value of goods and services it is fair to assume if you need to pay your mortgage tomorrow and happen to be $500.00 short you would be willing to pay more than the sum borrowed to have the money today. Meaning receiving that $500.00 today is worth more than the total sum loaned. It could be speculated that this is due to two factors. The fact that the individual receives the value of the money loaned plus the value of receiving itexpediently. The other factor isthat the individual receiving the loan enjoys the value of the $500.00 and the benefit of avoiding the penalties for making a late mortgage payment.

If the theory of time preference provides us with the precepts for understanding interest rates, how does this pertain to coupons? Time preference relates to coupons in the sense that sales, discounts, promotional codes, and coupons all influence our evaluation of goods. A coupon operates as a purported signal of a price reduction to the customer. If the customer perceives the value of the good or service to be higher than the discounted price, they will purchase it. Lowering the price of a commodity below market value makes the prospect of purchasing it more appealing to the customer. It could be argued that coupons can subjectively serve as a means of increasing an individual’s time preference. In other words, making them less apt to delay consumption and purchase the item that is on sale. Through lowering the price of a good it realigns the incentives of purchasing the item by providing a quantified value below the customer’s perception of expected value. Signaling to the customer that maybe that 12-pack of Guinness is worth pick-up from the grocery store. While $7.99 is an absolute steal. It is still $7.99 more than you had originally intended to spend. 

Privatization of Defense- Central Government. The Transaction Costs Reducer.

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Hat Tip to the Marginal Revolution Blog and the Prior Probability blog for referring me to the referenced article.

The privatization of defense services could hypothetically reduce the occurrence of military conflicts. This is achieved by realigning the incentives to engage in warfare by making the costs more evident to the taxpayer. The direct costs of war are generally obscured due to a lack of clarity of how tax dollars are allocated. Operating as a form of indirect fiscal illusion. Either by design or by the context of the broad and imprecise nature of public expenditures. If a would-be taxpayer could not transfer or distribute the costs of war to the collective contributions of the tax base, frivolous objectives such as “spreading” democracy would be off the table. Military action would shift from being offensive or even preemptive to being purely defensive. Whether defense services should be provided by the local neighborhood watch or a private corporation is another matter.

There is some historical evidence suggesting that eliminating a mechanism for distributing the costs of violent conflicts makes them less apt to transpire. Per a recent paper written by Rosolino  Candela, and Vincent Geloso the French settlers of the  Bay of Fundy had virtually no violent conflicts with the Mi’kmaq tribe. Why?  The European settlers of the 18th century known as, Acaridans, had to directly bare the costs of violent conflicts. Since they received little institutional or financial support from the mother country. Having adopted informal decision-making procedures, living along aside the Mi’kmaq, they lived in a state of near-anarchy (Candelaa & Geloso, 2020, p.3-4). Providing some credence to the inference that a strong central government operates as a mechanism for reducing the transaction costs of armed conflicts. Skewing the incentives of constituents to be more lackadaisical towards the costs of unnecessary military campaigns. Often reducing transaction costs is viewed as being a positive economic development in this case it is not. The evolution of the robust warfare state in the U.S. has amounted to profligate spending, a treacherously hazardous foreign policy, the growth of government, and ample opportunities for rent-seeking.

The Acadians received virtually no support from the homeland. Outside of a “symbolic” tax that was only sporadically collected by officials, they were primarily left to their own devices (Candelaa & Geloso, 2020, p.3). Leaving the settlers able to only rely on local militias to provide the defense of the colony. Leaving the “…costs of using violence would be concentrated on the beneficiaries themselves and could not be passed on to wider groups..” (Candelaa & Geloso, 2020, p.10). Through the colonists and the natives having to fully bare the costs of violent conflict, this was one of several factors that prevented the development of interest groups (Candelaa & Geloso, 2020, p.16). Stifling the potential for wartime profiteering by removing the incentives to fabricate needless conflicts for the sake of drumming up business.

While there may be contextual characteristics that do not apply to modern times. It should be noted that a highly centralized government does have an impact on the frequency of war. Through disbursing the costs across a large number of taxpayers, the true costs of military intervention are obscured. Hence why for the Acadians, the lack of financial and military support from the motherland shifted incentives away from violent forms of conflict resolution. Making it plausible to surmise that having a centralized government is what makes war so easy to initiate. It acts as the middle-man connecting constituents with service providers (the military). Alone, a centralized government reduces the costs of coordinating complex military campaigns.  Never mind the fact that it collectively distributes the costs of the capital required for military conflicts. To truly demonstrate this point, consider the highly extravagant cost of a private citizen purchasing a tank or a submarine. Individually most people could not afford to purchase the instruments of sophisticated warfare. Combing the fact that a central government obscures the direct costs of war and provides the institutions that make the coordination efforts of armed conflict more efficient, it shouldn’t be a mystery why the size and scope of military conflicts have now become global. Providing some firm insights as to why the Acadians preferred the bargaining table to the sword in resolving conflicts with the Mi’kmaq.

Native Americans Did Believe in Property Rights- Part III: Recognition of Property Rights

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Part I

Part II

It is well established at this point that the notion of Native American tribes not observing property rights is a misconception on the part of European settlers. Various tribes throughout continental North America have recognized individual property rights in several diverse ways. Historically, American Tribes have acknowledged an informal version of Tort Law. Signifying that native tribal societies held property in high regard. If a culture did not value personal property, there would not be any (whether centralized or decentralized) institutions requiring restitution for damaged property or bodily harm. That alone dispels the conventional wisdom that all tribes rejected the prospect of material ownership. Reducing this enduring fallacy to nothing more than an erroneous interpretation of Native American History.

Depending on the tribal nation, some subsets of natives had surprisingly sophisticated laws protecting individual property rights. Ranging from mutually acknowledged hunting rights to even intellectual property. None of these protected rights would exist in societies that subscribed to the norms of all ownership being communal. Reinforcing the fact that the common perception that rights such as individual landownership being European invention is nothing more than a myth. A one-dimensional caricature of the true reality of the history and culture of the ingenious tribes of the United States.

Intellectual Property

Some of the tribes residing in the Pacific Northwest and California possessed ownership of intellectual property. This was generally observed among shamans practicing within the northwestern region of the United States. Intangible commodities such as “… songs, dances, stories, legends, and curing ritual…” were owned by individual shamans. Unless these trademarked forms of verbal communication were passed down to an apprentice they typically were no longer used once the shaman had passed away (Bobroff, 2001, P.1590)[9]. The preservation of a right to exclusive use of songs, stories, and performances minors of modern-day entertainers Not to trivialize the religious rites of the native peoples of the Pacific Northwest, but the copyright laws protecting songwriters and authors are probably the closets modern analog. One only needs to look back a few decades to the whole Napster controversy to see the parallels [10]. There have also been more recent intellectual property disputes, few as ubiquitous in the mind of the lay public than as the peer-to-peer file sharing fiasco of the late-1990s. Demonstrating precisely how advanced the nature of ownership in the tribes of the pacific northwest. These were societies that not only valued protecting the right to own physical property but also the right to own intangible property.

The intellectual property extended beyond communication-related to religious rights. Individual families possessed ownership of “… carvings, paintings, and crests..” related to their lineage (Bobroff, 2001, P.1590)[9]. Transgressing against these acknowledged property rights resulted in server consequences. Violating the “copyright” ownership of a family symbol was perceived as being equal to engaging in a violent act (Bobroff, 2001, P.1590)[9]. Making it unquestionably evident that preserving intellectual property was of high priority.

Hunting Rights/ Land Tenure

Another form of informal property rights that have been historically acknowledged by native tribes have been hunting rights. In some instances, private hunting grounds. Similar rules were formulated regarding fishing rights. The aim of these “customary rules” was oriented towards preventing resource depletion (Yandle, 1998, p.44) [11]. Decentralized arrangements to manage CPRs are compatible with traditions of strong property rights. However, instances of customs that support exclusive use of hunting grounds provide more substantial evidence of a robust system of property rights. Informal resource management can still be done under a quasi-communalistic basis.

Private hunting rights were best exemplified by the practices of the northern Algonquian tribe. These rights were held for individual families and were generally delineated by salient geographic landmarks. Such as specific thickets of woodlands or bodies of water (Bobroff, 2001, p.1575) [9]. The exclusivity of these territories was transferred by inheritance. Rules were promulgated to enforce punishment for trespassing or collection of furs by “non-owners” water (Bobroff, 2001, p.1575) [9]. Per anthropological research, tribal members would even transfer ownership of land as a gift (Bobroff, 2001, p.1576) [9]. For the coast Algonquian tribe members, their systems of land ownership only became more solidified after contact with European settlers. Due to the circumstances of the flourishing fur trade (Bobroff, 2001, p.1577) [9]. The existence of private hunting grounds gives us a perspective on the Algonquian tribe’s perspective on land tenure. The land is passed down through familial ties isn’t a foreign concept in European law. Paralleling the commonly held tradition in Europe of inheritance serving as a mechanism for transferring property.  

Adjudication of Property Rights

The Yurok tribe of California held property rights in high esteem. Even associated property ownership with social prestige (Benson, 1991, p.50) [7]. It can only be expected that the centers for decision-making within the tribe would strive to protect the property right of its tribal members. The tribe had a system of compensation for damaged property. Paralleling the English Common Law tradition of Tort law. For instance, if an individual used another person’s canoe and damaged it they would be held liable for compensating the owner for the damages (Benson, 1991, p.50) [7]. If a service provider fails to provide a promised service to a patron they were required to pay the customer restitution(Benson, 1991, p.50) [7]. The Yurok people did not settle property disputes with a centralized government but rather with a set of “sweathouses”. Groups of tribal members were tasked with settling disputes. Proceeding against the offender was arranged by the sweathouse and the victim. (Benson, 1991, p.52) [7].The victim did not have the right to seek extrajudicial forms of restitution outside of the group’s judgment. (Benson, 1991, p.52) [7]. The defendant would have the ability to obtain representation against the accuser in the cross-judgment (Benson, 199, p.52) [7].

If damages were due to the plaintiff the defendant was expected to pay back the sum indicated verdict of the proceedings. If the accused could not, they became the “wage-slave” of the accuser (Benson, 199, p.53) [7]. Per the economist Bruce L. Benson the Yurok  “model” for private-law held the below six characteristics:

“… These features are: (1) rules of conduct which emphasized a predominant concern for individual rights and private property; (2) the responsibility of law enforcement falling to the victim backed by reciprocal arrangements for protection and support when evolved to the level described above, but this homogeneity had to develop in conjunction with an evolving process of interaction and reciprocity facilitated by customary law. 15~egalsystems all over the world have, at one time or another, been characterizable in the same way that the Indian systems discussed above were characterized. Some anthropologists and legal scholars distinguish between “stages” of legal development, for instance, and would put such customary systems in one or more of the stages occurring before centralization of political power and formal institutions of government arise (e.g., Malinowski 1926; Diamond 1950). Also see note 14 above in this regard, as well as Benson (1988; 1989a). 56 The Review of Austrian Economics, Vol. 5, No. 1 a dispute arose; (3) standard adjudicative procedures established to avoid violent forms of dispute resolution; (4) offenses treated as torts punishable by economic payments in restitution; (5)strong incentives to yield to prescribed punishment when guilty of an offense due to the reciprocally established threat of social ostracism which led to physical retribution; and (6) legal change arising through an evolutionary process of developing customs and norms…”( Benson, 1991, p.54-55) [7].

Citations

  1. GALBRAITH, CRAIG S., RODRIGUEZ, CARLOS L., STILES, CURT H. EDITED BY ANDERSON, TERRY L., BENSON, BRUCE L.,  FLANAGAN, THOMAS G. Self-Determination THE OTHER PATH FOR NATIVE AMERICANS (2006). STANFORD UNIVERSITY PRESS. Page 19.
  2. CARPENTER, KRISTEN A. & RILEY, ANGELA R.  Privatizing the Reservation? (2019). The UNIVERSITY OF COLORADO. Pages 13-16, 21.
  3. https://www.cato.org/publications/commentary/mystery-capitalRetrieved November 17th, 2020.
  4. CANBY JR., WILLIAM C. American Indian Law: In a Nutshell 2nd edition. (1989). WEST GROUP PUBLISHING. Pages 19-21.
  5. FERNANDES, EDESIO. The Influence of de Soto’s The Mystery of Capital. (2002). LINCOLN INSTITUTE OF LAND POLICY. Page 6.

6.  Anderson, Terry L. Conservation—Native American Style. PERC Policy Series Issue Number PS-6. (1996). PERC. P. 1-2.

7. Benson, Bruce L. An Evolutionary Contractarian View of Primitive Law: The Institutions and Incentives Arising Under Customary Indian Law. The Review of Austrian Economics. Vol. 5. No.1. (1991). Ludwig Von Mises Institute.

8. http://fee.org/article/our-first-thanksgiving/  retrieved 11/23/2020.

9. Bobroff, Kenneth H. Retelling Allotment: Indian Property Rights and the Myth of Common Ownership. Vanderbilt Law Review.         Vol 54. Issue 4. (2001).

10. https://www.wired.com/2009/12/1207riaa-sues-napster/. Retrieved 12/21/2020.

11. Yandle, Bruce. Antitrust and the Commons Cooperation or Collusion? The Independent Review. Independent Institute. (1998).

Workplace Subsidies

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One form of rent-seeking that is prevalent in the political sphere is interest groups lobbying for subsidies. A subsidy is a sum of money or a  tax-deduction provided to a specific industry as a form of financial support. The agricultural sector is well known for having subsidies to incentive the production of specific varieties of produce. One common example is subsidies to corn producers.

One form of rent-seeking that everyone has witnessed is workplace rent-seeking. This is where an employee attempts to avoid work or embellish their value to the company. On a team meeting yesterday, it dawned on me the subsidy phenomenon happens at work as well.  I overheard a co-work with ten-years’ worth of experience complaining about their workload. This individual effectively reduced their workload through this publicly kvetching about how they were overwhelmed.

It came to me as clear as day, the Workplace Subsidy, the newest edition to the theory of workplace rent-seeking. It can be best defined as an employee seeking unjustified bonuses or unjustified relief from their workload.

Privatizing Defense- Reconnecting the Link Between War and War Time Spending

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The costs and externalities of engaging in military intervention are high. These costs are not limited to merely monetary expenditures. The price is also borne in the loss of life, productivity, civil liberties, economic freedoms, and so on. Historically, countries have long justified war efforts through comprehensive political campaigns. Demonizing the opposing regime and stressing the moral imperative of defeating the adversary. Propaganda campaigns can work wonders, persuading the masses that the armed conflict is a “just” war, but it is not the only variable at play. If the costs of going to war were more direct and salient to the public, constituents would be less apt to approve of military intervention abroad. In the decades since World War II, most of these campaigns have been more about nation-building than actually defending the United States and its allies. If the connection between the cost of war was more linear it would be reasonable to surmise American citizens would be screaming with indignation about the prospect of their tax dollars being used to “spread” democracy.

The question is how do we make the connection between the cost of war and military efforts more conspicuous to the taxpayer? A radical suggestion would be to privatize defense. To some extent, there is a lot of merit to this argument. There are also a lot of well-formulated objections. Any conventional application of Coase’s Theorem would like to view defense as a public service that cannot be provided by private firms. Due to ambiguity regarding property rights and the high transaction costs of providing defense services. The issue of unclear property rights is by far one of the strongest arguments against privatizing the production of defense services. Even as economist Chris Coyne points out in a recent paper, those free-rider problems are inevitable. In Coyne’s example, if missile defense services are provided to a city, one house that has opted out cannot be excluded from protection (Coyne & Goodman, 2019, p. 6). It was maybe inordinate to organize defense efforts on a national scale versus a regional threat. Example being when Russia annexed the Crimean Peninsula. This threat was confined to a specific region of Ukraine versus Russia posing threat to the whole country (Coyne & Goodman, 2019, p.2).

Another flaw in the free-rider argument is even when defense is provided by the government there are still people who receive service without contributing. American citizens who evade taxes still receive the benefits of state-provided defense. The homeless and unemployed who also do not contribute to the tax pool also enjoy the benefits of defense provided by the United States. The problem becomes that free-riders exist regardless if defense is provided by the government or private firm.

All the counterarguments aside, if people could see on a monthly or quarterly basis how much they were spending on foreign wars, they would be less apt to be ambivalent about these military campaigns. This is a fact that is displayed in the ubiquitous Public Choice maxim of dispersed costs and concentrated benefits. No service provided by the government is “free”. This merely an illusion created by the distribution of the cost of government programs and services across many taxpayers. Typically, there is quite a bit of mystery surrounding how tax dollars are allocated. Unlike a private-sector invoice that is itemized, how much, and how it will be specifically used.  Epitomizing the phenomenon of fiscal illusion. Severing the link between government spending and taxation creates confusion. By keeping the taxpayers’ ignorant, various government departments have more fungibility with how tax dollars can be used. Side-stepping any potential for accountability. This applies to all government spending, even defense and military expenditures. By reestablishing this link between war and taxation, every-day citizens would be more apt to question the efficacy of sending the military to a third-world dictatorship to reinvent them as a liberal democracy.

Government officials cannot be trusted to help facilitate the process of reconnecting direct costs of war with the corresponding military campaign. Few congressmen would go along with this policy. On the off-chance, taxpayers did start receiving itemized expenditure reports, who is to say that they will not be falsified. The only viable option would be allowing private firms to provide military-grade defense services to civilians. Effectively allowing for private competition in the provision of defense services. That could include private defense clubs, neighborhood militias, HOA funded auxiliary defense agents, or even larger corporate firms providing similar services. Whether you are picking up a rifle to participate in the neighborhood militia or you are paying a monthly bill for a corporate defense firm, you have skin in the game. Either you are paying with your safety and time or you are paying monetarily. Both contingencies align incentives towards avoiding frivolous conflicts. No one wants to pay exorbitant rates to receive defense services that do not even directly benefit their safety. Nor does anyone want to risk their life over minor conflicts. Objectives such as nation-building or ideological indoctrination would be off the table. Due to the high costs of such endeavors, most people would be much more cautious about engaging in such conflict. Confining most uses of military force for self-defense rather than offensive objectives.

Bootleggers and Baptists: XIV: Massachusetts Bans Menthol Cigarettes

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Introduction:

Legislators in Massachusetts recently passed a law prohibiting the sale of menthol cigarettes. The rationale behind this bold move, banning the sale of all flavored tobacco and vaping products. Presumably, to make tobacco products seem less alluring to children. The specific targeting of menthol cigarettes is slightly puzzling. This variety of cigarettes due have subtle flavoring of mint, it does not have the same degree of overt flavoring as a strawberry cigarette. In 2009, the FDA banned all flavored cigarettes excluding menthols. This prohibition was enforced under the Family Smoking Prevention and Control Act (FSPTCA). This act extended the ban to Kretek (colloquially know as clove) cigarettes.  It is difficult to determine if methanol cigarettes were excluded from the 2009 legislation as a result of regulatory capture. Brands such as Kool, Salem, Newport, and so on have enjoyed immunity from the national ban.

All because the sale of menthol cigarettes is legal at the national level, does not mean that these products cannot be restricted at the state and local level. Case and point Massachusetts implementing a ban that included methanol cigarettes. Did the lawmakers in Massachusetts fully contemplate the consequences of this policy? Massachusetts is a relatively small state and borders several other states that still permit the sale of menthol cigarettes. Naturally, if a Massachusetts resident wants to buy a pack of Newports they just need to take a short drive to a neighboring state.  All because the Bay State’s government restricts the in-state sales through legislative fiat does not mean that smokers will not find alternatives.

Displaying the puritanical hubris of the Massachusetts state legislators. The state’s culture has long been a victim of its history. Outlawing the sale of Newports will not prevent people from smoking them. States such as New Hampshire and Rhode Island still selling menthol cigarettes will only serve to divert tax revenue away from the Bay State. Invariably, the state ended up shooting itself in the foot.  If the objective was to fill the coffers, Massachusetts provides every incentive to purchase cigarettes out-of-state. The state aggressively applies onerous taxes to tobacco products. Then takes it one step further and bars the sale of a tobacco product that is legal in every other state. Making it easy to suspect that these policies are not designed to generate state revenue. Rather operate as a confiscatory function.  A means of attempting to influence behavior through regulation and taxation. When it comes to victimless “crimes” these measures always fall short of the expected outcome.

The Baptists:

If we adhere to Bruce Yandle’s research on regulation, the Bootleggers and Baptists dynamic apply to this situation. The supposedly noble intentions of this law have created some passive beneficiaries. This benefit is obscured by the strong moral argument of banning menthol cigarettes to make smoking less appealing to kids. Regulation is never neutral or linear in its consequence. Health advocates, lawmakers, and the governor of Massachusetts are the Baptists. They obtusely champion this moral defense of this interdiction with no consideration of external consequences. Kids are not going to stop smoking cigarettes just because menthols are off the table. Only 36 percent of all brands of cigarettes are mentholated. It is highly unlikely that all underage smokers are reaching for menthols. This legislation places a burden on adults who actively choose to smoke mentholated brands. Adults are old enough to weigh the risks of smoking and should not be limited by legal restrictions. The Baptists in this scenario would claim that this is a small sacrifice for the greater good. However, shouldn’t it be the responsibility of the parents to thwart their teenager’s attempts to engage in the rebellious behavior of tobacco consumption?

The moral imperative of reducing teen smoking at all costs has a major blind spot.  If a child’s parents are willing to drive out-of-state to purchase mentholated cigarettes, couldn’t they just steal them from their mother or father?  The legal barrier of age restriction should pose enough of a bulwark to accessing tobacco products. If a minor opts to steal cigarettes or coax an adult to buy them a pack, what can you do? Any further action is either futile or unjustly punishes adults who possess the right to smoke. Adults also have the right to smoke whatever kind of cigarettes they desire, including flavored cigarettes. Investing tax dollars to enforce such an initiative is downright wasteful. Serves to penalize smokers and nonsmokers alike through a misallocation of their taxed income. The Baptist may be sincere in their efforts to curb youth smoking. Unfortunately, kids are still going to continue to smoke. Believing that this restriction is going to have any measurable impact is laughable. Everyone else pays the price for a policy that will not remedy the issue of youth smoking.

The Bootleggers:

There are two categories of bootleggers in this policy dynamic. On the microlevel, you have the state-line convenience stores that will see an influx in business. Even the grasp of the legislative body of Massachusetts cannot stifle the Invisible Hand! This operates on a similar principle as tribal smoke-shops. Since many do not apply state taxes to cigarettes, many non-Indians flock to the reservation to buy cheap-smokes. If Massachusetts bans, Newports, people will simple patronize establishments in New Hampshire and Rhode Island. Lawmakers such be all too aware of this phenomenon.  Considering  Rhode Islanders come in droves to Massachusetts towns on the state board to purchase alcohol. For the unacquainted among us,  Massachusetts does not have a sales tax on liquor.

I would never be one to advocate for taxation. However, if you are going to tax something you might as well do so in a manner that will generate some revenue. The true parties that benefit from this ill-advised law are the state governments of New Hampshire and Rhode Island.  In 2019, Massachusetts collected  $553 million in tax revenue from cigarette sales. That number is down by 9.7 percent as of the fiscal year 2020. The Department of Revenue projects that tax revenue will be down by  $93 Million in “FY 2021”. This large sum of money is filling the coffers of neighboring states.

Image courtesy of Tax Foundation

Should We Invest In Gold During A Biden Presidency?

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The prospect of a Biden presidency is bringing some pessimism regarding the U.S. Dollar. The investment website, Motley Fool, is suggesting that investments in gold and related stocks could be a wise move during the Biden administration. The article recommends Kirkland Lake Gold as being an excellent stock option. Kirkland is one of the premier gold mining companies with locations in Canada and Australia. Why would an investment website suggest to invest in gold due to Biden winning the presidency? The answer is quite simple. The article pointed to the potential of Biden having a “dovish” monetary policy. As president being more inclined to implement rounds of stimulus spending. Often, stimulus spending is funded by printing more money. Actively debasing the U.S. Dollar, making alternatives such as gold and silver look more attractive.

President Trump was hardly a bastion of fiscal responsibility. It is difficult to recall a president gracing the Oval office over the past three decades that has been. While Biden is centrist at heart, he will succumb to the partisan pressures of the Democratic party. Biden would then implement wide-reaching initiatives that will amount to nothing more than unchecked profligacy. The mounting despondency from the financial sector poses some valuable insights. Nothing in this world is “free” costs dispersed amongst the tax-payers. The prima facie assumption of government services being “free” is false. Even if there is not a direct tax funding a program, that does not mean that the citizens are not indirectly taxed. The government chooses to pay for safety-net programs by printing money. Inflation only serves to diminish the purchasing power of the Dollar. The average-Joe voter then has to contend with higher nominal prices.

We should all hope that the doom and gloom plaguing the current economic landscape is hyperbole. Unfortunately, fiscal conservatism is no longer a focal point of conservativism. Never mind liberals or centrists. Economic policies never operate in isolation. There is always a cascading array of various consequences resulting from a single action. Increased spending tends to lead to inflation. Inflation has an innumerous number of repercussions through the economy. If John Locke was correct about the neutral nature of the quantity of money, investors would be more optimistic regarding the Dollar. Generous benefits programs may sound great on paper. However, what will the long-term consequences entail?

The Folly of The Pilgrims

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I would sincerely encourage all of my regular visitors to read this classic essay published by the Foundation for Economic Education.  It was originally published back in 1959. It details the socialistic tendencies of the inhabitants of the Massachusetts Bay Colony. The essay explains how once the puritans did away with their collective system for allocating resources conditions began to improve.

The essay is entitled Our First Thanks Giving and it provides a unique history lesson regarding the holiday that has become in the modern-era a fest centered around football, food, beer, light conversation, etc. However, it is important to never forget the struggles of the Pilgrims. The same system of resource distribution that failed them in the nascent years of the Massachusetts Colony is being proposed today. These policies are merely being presented in a different package. Our puritan forefathers believed they could bring the kingdom of heaven down to Earth, utopia. It is imperative to note that they had failed. The European settlers underestimated human nature and the basic tenants of resource management. Let’s hope we never regress to the back to the lofty ideals of the 1620s!

Yakus V. United States: Price Controls and Wartime Socialism

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Introduction:

Conventional wisdom holds that many of our economic freedoms come second to the interests of the nation in times of national crisis. During World War II, there was unprecedented growth of government intervention in the national economy. Inflationary monetary policy to fund the war effort without revealing the true costs through direct taxation. Price controls to camouflage the nominal rise in prices spurred by inflation. Rationing and quota systems utilized to divert goods from the consumer markets to U.S. Military. The federal government even seized factories primarily used for the production of consumer goods for wartime production. The American people saw similar measures during World War I. However, not to the same scale nor with the same level of Universal acceptance by American citizens. 

From the standpoint of the popular interpretation of history, all these socialistic policies were justified. After all, World War II was an all-out-war. The moral imperative of defeating the Third-Reich required dispensing with individual freedoms and free-market policies. It is debatable whether these policy prescriptions aided the United States in their victory in World War II. One thing that is for certain that these policies led to the further erosion of individual liberty and property rights. Due to most academics and laypeople believing that these were minor sacrifices when compared to the result of defeating a bloodthirsty fascist dictator. The true irony is how much the United States mimicked the economic policies of the fascist or socialistic regime. Per a cursory definition of socialism, it is an economic system in which the state controls the means of production. Displayed in the actions of pricing-fixing, consumption limits, and even re-directing production towards military equipment under threat of legal sanctions. This may have stifled the maniacal aspirations of a madman, this was all done at the expense of free-market enterprise and has to lead the way to the continuous growth in the size of government.

War Time Socialism:

In his classical book, Crisis and Leviathan, Robert Higgs equates the historical wartime policies of to Higgs refers to such a state of total war as being either “wartime socialism” or “wartime fascism” (about price and wage controls during World War II). Depending on one’s “linguistic tastes” (p.211). To a certain extent, Dr. Higgs has a point. Fascism is nothing more than right-wing socialism. The brand of socialism practiced by the Soviet Union was nothing more than left-wing socialism.  In Ludwig von Mises’s magnum opus Human Action, the thin line between fascism and Marxism is divided by the variety of polylogism an individual subscribes to. Polylogism is the phenomenon where it is assumed “…logical structure of mind is different with…” groups of people. How these delineations are made depends on whether a person operates on class-based or racial/national polylogism (p.75-76). Marxism asserts that the intentions of all tycoons, entrepreneurs, and investors are inherently exploitative making it a superb example of a class-based polylogism. Fascists such as Nazis believe in the supremacy of their own race and nation-state. Assume that all other ethnicities and nationalities are inferior. Utilizing the state principles to guide the governance and economic activity of the state.

The unfortunate truth is that many of these invasive and destructive policies were nearly unanimously supported by the supreme court during the Second World War. The supreme court ill-fatedly acted as a mechanism of institutional validation for economic overreach of the government.  As detailed in Crisis and Leviathan:

“ The justices,  almost without exception, had formed themselves as cheering section for expansive legislative and executive actions of the bellicose times. None of the government’s exceptional exercises of power, not even one, was disapproved by the Supreme Court.” (Higgs, 1987,p.220)

One of the most prominent checks on executive authority did little to curb the aspirations of FDR’s administration.  In the context of the dire stakes of matching to victory in the European and Asian theaters of combat, social pressure made it difficult to articulate dissent. The ideological sway of “defeating fascism” with economic policies that mirrored some of the decrees of nationalistic dictatorships (Higgs, 1987, P.241). The Supreme Court haplessly codified this collectivist ideology by disregarding the principles of free enterprise and individual liberty. The United States won the war and even saw a few decades of prosperity after the 1940s. One can only be in awe of what was dispensed with to make it happen. These command-and-control measured were passed and validated with greater ease than those the legislation passed to remedy World War I and the Great Depression. This longstanding legacy of extension of war powers has permanently weakened the restraints against executive overreach.

Yakus V. United States – Background

One area that did receive a significant review from the Supreme Court during this era was price control laws. Most of these cases focused on whether the implementation and enforcement were procedurally constitutional (Higgs, 1987, p.221). The defining case was Yakus V. United States. The case was decided on March 27, 1944.  The Emergency Price Control Act of 1942 was implemented to prevent nominal prices from being impacted by wartime inflation. Two defendants were convicted by the district court for violating this law by selling beef at wholesale prices. The district court also invalidated any concerns of whether the Fifth Amendment rights (Due process) had been transgressed by the act. The defendants then decided to bring their case up to the U.S. Supreme Court.

Concerns of Constitutionality:

Per Oyez, there were two main points of concern regarding the Constitutionality of the Emergency Price Control Act. The first concern was regarding how congress transferred legislative authority. Making it reasonable to question the legality of conferring vast decision-making powers to the administrator of the act.  The second concern was whether the defendants had their Fifth Amendment rights under the Due Process clause breached by enforcement of this legislation.

The Decision:

The majority opinion held that the terms of the law were legally sound from a Constitutional standard. The court found that the way congress bestowed the administrator of the act decision-making authority was done so sparingly. Done so to achieve important objectives. That the Constitution enables Congress to perform its legislative function with some degree of flexibility. Regarding the concerns of whether the legislation respects Due process, again the court did not find the law to be transgressive. Citing that the standards are precise enough to guarantee that it is fulfilling its Constitutional intend, therefore it is constitutional ( operating as a narrow tautology, circuitously stating it is Constitutional because it is Constitutional).  

That doesn’t mean there wasn’t any dissent from the Justices on this case. For instance, Justice Roberts cited that providing such digressional authority to a bureaucratic administrator makes it impossible for Congress to have proper oversight. Also, pointed out that the act relied too heavily on the assumption that the administrator would be impartial. Justice Rutledge also chimed in with his criticisms of this case. Reasoning that the court should not enforce laws without allowing the court to consider their Constitutional validity. Per Higgs, Rutledge referred to enforcement of the law as “asymmetrical” from a criminal prosecution and defense standpoint. This is since a defendant could be tried in federal and state courts, but could not challenge in these same courts. The defendant was required to petition the Emergency Court of Appeals within 60 days of the prospective concern (Higgs, 1987, p. 222).

Conclusion:

Few people are willing to challenge legal and economic decisions made during World War II. Most people would assume that these “temporary” violations of our liberties were for the greater good. Most of these invasive policies have served as the scaffolding to greater contraventions of our civil liberties and economic freedom.  We certainly want to avoid falling prey to the slippery slope fallacy. However, the historical evidence is overwhelming that it has been a steady progression of various policies that have worked slowly eroded our freedoms. Credulously acquiescing these laws and prescriptions as being for the greater good, is nothing more than a fallacy. It is well documented that price controls are awful economic policies. They distort one of the few mechanisms that both consumers and vendors have for bridging the gap between the information asymmetries of commerce. The way this atrocious policy was enforced through the Emergency Price Control Act endowed a bureaucratic apparatus with far too much authority.  The true tragedy being then the Supreme Court then proceeded to validated this horrendous policy. A tragedy indeed!

Native Americans Did Believe in Property Rights- Part II: Origins of The Myth

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PART I

The Origins of the Myth

We as humans have the unfortunate propensity for interpreting evidence that in a manner that is congenial to comport with our own beliefs. This problem is particularly rampant in the soft sciences.  In the absence of disciplined restraint and sound methodology, qualitative research is subject to be sullied by our own biases. This serving only to hamper the whole enterprise of conducting an impartial observational analysis. The fields of anthropology and history have not remained immune from the reach of the researcher’s flawed perception. Upon this realization, it becomes woefully evident that our historical perception of Native American culture is inaccurate. Our misconceptions held together with gross misinterpretations of traditional stances on private property and law held by various indigenous tribes.

Often our ideological motives and philosophical ethos skews our understanding of the historical truths of American tribal cultures. One corollary of the erroneous assumption of Native American collectivism has been designating tribal peoples as the “original conservationists” (Anderson, 1996,p. 1) [6]. Typically for political reasons, the pragmatic rationale for many of these historical conservation measures has been understated. Researcher Terry L. Anderson points out the underlying how our skewed image of Native Americans has become politicized. Citation the example of a famous speech given by the Chief of Seattle. In which he stated, “All things are connected like the blood which unites one family”. The speech was not written by the Seattle Chief, but by a script written named Ted Perry. Displaying much of the romanticized imagery that environmentalists wanted to hear (Anderson, 1996, p. 2) [6]. From Anderson’s view, such presentations of Native American culture only served to trivialize “… their rich institutional heritage which encouraged resource conservation..” (Anderson, 1996, p.1) [6].

The myths of highly collectivist property arrangements among Native tribes predates the nascent era of the modern environmentalist movement (late-1960’s/early 1970s). These myths were first promulgated based upon the narrow observations of settlers. Which dates back to the settlers of the great-plain-states who were looking for land that was suitable for agriculture. They extrapolated from their interactions with a few nomadic tribes that all Natives had little regard for property rights due to their lack of interest in “land assets” (GALBRAITH  et al. 2006, p.20) [1]. Generating the fallacy that property rights were a European invention. Completely side-stepping the reciprocal, customary, and informal means of property rights enforcement used by pre-colonial Indians (Benson, 1991, P.45) [7].

The true irony of the mythic image of the collectivistic tribes is that this assumption ignores the communal tendencies of the European settlers in the United States. Pre-colonial American tribes had strongly developed property rights and any communal tendencies were a result of economic necessity (Galbraith et al. 2006, p. 7) [1]. The Plymouth colony of the 1620s experienced declines in productivity brought on by their communal allocation of resources. This free-rider problem was resolved once the colonists began to mimic the “property rights model” of the local natives (Galbraith et al. 2006, p 7) [1im The economic folly of the Massachusetts Bay Colony is seldomly taught in Traditional American history courses. However, this all too often glossed-over the economic reality of colonial Massachusetts was immortalized in the 1959 essay Our First Thanksgiving.

“Our first Thanksgiving should, therefore, be interpreted as an ex­pression of gratitude to God, not so much for the great harvest it­self, as for granting the grateful Pilgrims the perception to grasp and apply the great universal prin­ciple that produced that great har­vest: Each individual is entitled to the fruits of his labor. Prop­erty rights are, therefore, insepa­rable from human rights.” [8].

It is difficult to ascertain whether this obscured fact of history was the result of misinterpretation or ideological motives. It is prudent to not delve too deep into such matters. Nevertheless, it is absurd that property rights are erroneously perceived as a European invention. The utopian ideals of the Puritans did not include the enforcement of property rights. Their quixotic attempt to collectively distribute resources serves as nothing more than a failed forerunner of Communism. Had it not been for the property-oriented values of the indigenous tribes, the pilgrims would not have had much to celebrate.

The popular interpretation of history seems to flat out ignore the communal propensities of the  Massachusetts colonists. This inaccurate depiction of historical fact has provided the substrate for proliferating this fallacy. A fallacy that is deeply embedded in the conventional wisdom of the American psyche. The collectivist propensities of non-Indian settlers were not limited to the pilgrims. For instance, the Spanish Catholic missionaries occupied the southwestern region of the United States in the eighteenth century. These missions were established by the Dominican and Franciscan orders. The missions implement communal economies with an emphasis on “communal behavior and support” (GALBRAITH  et al. 2006, p.7) [1]. The system imposed by the various Catholic mission was at odds with the natives’ property and land ownership rights. The mission system eventually dissolved in the American southwest. After the governor of California decreed in 1834 secularized the mission system, distribution the former mission lands as a private property to the tribes. ” (GALBRAITH  et al. 2006, p.7) [1].

It can be partially assumed that the informal recognition of property rights and law by American tribes has contributed to the false notion of a historical lack of concern for property rights. In most cases, indigenous tribes operated on customary law. Informal law functions on reciprocity and recognition of social norms within the tribe (Benson, 1991, P.44) [7]. Centricity being placed on the focus of compensation for loss of property versus criminal sanctions. Making it more in step with the common law conception of Tort law. Many of these rules were unwritten but acknowledged by tribal members (Benson, 1991, P.45) [7]. Other tactics such as ostracism and banishment of transgressive tribal members also served as informal means of punishment (Benson, 1991, P.50) [7]. More explicitly relevant to the subject of property rights, the informal means under which tribal members historically acquired property is notable. In the absence of formal deeds and title transfer documents, homesteading. This was practiced by agrarian tribes in southern California. An individual takes claim to land through the process of developing it for habitation or production (GALBRAITH  et al. 2006, p.8).

Citations

  1. GALBRAITH, CRAIG S., RODRIGUEZ, CARLOS L., STILES, CURT H. EDITED BY ANDERSON, TERRY L., BENSON, BRUCE L.,  FLANAGAN, THOMAS G. Self-Determination THE OTHER PATH FOR NATIVE AMERICANS (2006). STANFORD UNIVERSITY PRESS. Page 19.
  2. CARPENTER, KRISTEN A. & RILEY, ANGELA R.  Privatizing the Reservation? (2019). The UNIVERSITY OF COLORADO. Pages 13-16, 21.
  3. https://www.cato.org/publications/commentary/mystery-capitalRetrieved November 17th, 2020.
  4. CANBY JR., WILLIAM C. American Indian Law: In a Nutshell 2nd edition. (1989). WEST GROUP PUBLISHING. Pages 19-21.
  5. FERNANDES, EDESIO. The Influence of de Soto’s The Mystery of Capital. (2002). LINCOLN INSTITUTE OF LAND POLICY. Page 6.

6.  Anderson, Terry L. Conservation—Native American Style. PERC Policy Series Issue Number PS-6. (1996). PERC. P. 1-2.

7. Benson, Bruce L. An Evolutionary Contractarian View of Primitive Law: The Institutions and Incentives Arising Under Customary Indian Law. The Review of Austrian Economics. Vol. 5. No.1. (1991). Ludwig Von Mises Institute.

8. http://fee.org/article/our-first-thanksgiving/  retrieved 11/23/2020.

Native Americans Did Believe in Property Rights- Part I: Introduction

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Introduction:

Native American tribes have long been perceived as being historically highly collectivistic and disinterested in the preservation of private property. Few people ever question whether these characterizations of the tribes are even accurate. These perceptions are only perpetuated when North American tribal leaders discuss economic matters at “tribal conferences and congressional hearings” (GALBRAITH et al. 2006, p.19)[1]. However, after a more rigorous assessment of the historical facts, it becomes clear that the image of the communal Indians was nothing more than a myth. Not only did many tribe members possess private property rights, but they also had an informal legal system that secured these claims. Making many of the previous claims of collectivism nothing more than a misconception.

The curious reader may question why the veracity of our understanding of the economic history of American indigenous tribes is so important? After all, the poverty that afflicts most of the reservations in the United States is a contemporary problem. How is reflecting upon the past going to be useful in solving the economic woes of the tribes? The problem becomes that many scholars and policy analysts utilize tribal tradition and customs for governing economic policy on the reservations. One particularly salient example is in the controversy surrounding the privatization of tribal lands. Per Carpenter and Riley (2019) the privatization of tribal lands ignores the historical and cultural perspective of tribal members (p.13) [2]. Following us, a policy prescription would impose an economic course of action few tribes have any interest in (p.16)[2]. Would only serve to destroy the communal tendencies that are common among American tribes (p.21) [2]. Both authors also suggest that privatization would invite the purchase of native lands by nontribal members (p.15). Only operating to exacerbate the present and past economic struggles of American Indians that resulted from the transfer of lands to non-Indians (p.14)[2]. Demonstrating that from the perspective of Carpenter and Riley a policy that deviates from historical collective arrangements will only serve to do more harm than good.

This paper seeks to dispel the myths and fallacies concerning the historical views of Native American property rights. Justifying government intervention in the economic affairs of the tribes based on faulty claims of historical collectivism hold little merit. Beyond the historical accuracy of such claims, there are also profoundly detrimental economic consequences of accepting this false economic history. If we subscribe to Hernando de Soto’s Dead Capital Theory [3] it becomes evident that the situation facing Native tribes is very similar to that of developing nations. The land in Indian country is not being utilized to its fullest capacity. The determination of the best use of such economic assets is constrained by the guardianship relationship between the tribes and the United States government. The genesis of this land trust dynamic being born out of the Dawes Act of 1887, when the federal government first intervened in the distribution of tribal lands (Canby, 1989, p.19-21) [4]. The waters of Indian land allocation has only become more muddied by subsequent amendments and legislation. Placing restrictions on assets that are already at the disposal of the tribes, creating barriers to extracting “surplus value” from what they should rightfully possess (FERNANDES, 2002, p.6) [5].

Citations

  1. GALBRAITH, CRAIG S., RODRIGUEZ, CARLOS L., STILES, CURT H. EDITED BY ANDERSON, TERRY L., BENSON, BRUCE L.,  FLANAGAN, THOMAS G. Self-Determination THE OTHER PATH FOR NATIVE AMERICANS (2006). STANFORD UNIVERSITY PRESS. Page 19.
  2. CARPENTER, KRISTEN A. & RILEY, ANGELA R.  Privatizing the Reservation? (2019). UNIVERSITY OF COLORADO. Pages 13-16, 21.
  3. https://www.cato.org/publications/commentary/mystery-capital. Retrieved November 17th, 2020.
  4. CANBY JR., WILLIAM C. American Indian Law: In a Nutshell 2nd edition. (1989). WEST GROUP PUBLISHING. Pages 19-21.
  5. FERNANDES, EDESIO. The Influence of de Soto’s The Mystery of Capital. (2002). LINCOLN INSTITUTE OF LAND POLICY. Page 6.