Cooperation and Conflict

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Staying within the structure of methodological individualism it is important to see how Smith’s Pin factory example (p.54-55) exemplifies the coordination of a group of economic agents. All working in unison towards the common goal of producing pins. All of these individual works comprise the overall assembly line. The totality of all the adjacent departments related to manufacturing makes up the internal structure of the firm. Any social institution whether it be a hobbyist club, social club, buyers club (e.g. Sam’s Club, BJ’, Costco), government, business, trade association, private governing bureau/authority (e.g. homeowners association), charitable foundation, research institute, study group, etc. are comprised of multiple individuals forming the group. It is flat-out erroneous to speak of the entire organization without any consideration for its members. The collective action of all the group members acting harmoniously to achieve the same ends is much more complex than treating these collective efforts as lumped together aggregate.

Each member of an organization has their internal objectives, thoughts, feelings, and desires. It can be said that all the active participants have their utility functions (p.25-26). Meaning that to some extent their wants, needs, and desires align with the overall group goals. For example, very few people like their jobs, but they voluntarily consent to the terms of employment because of their desire to earn money. Whether it is for the intrinsic satisfaction of possessing money or what currency can be redeemed for. Keeping within the theme of a Smithian analysis of social institutions, it is important to note that more than tangible goods are exchanged through interaction with others. We exchange ideas, culture, skills, knowledge, friendship, guidance, sympathy, morality, and moral support among other forms of desirable forms of social currency. Political activities tend to be a form of social association that is frequently marred by corruption and various forms of abuse. However, is the dynamic of politics overtly a zero-sum game? Not necessarily. As it can be viewed as a form of exchange, individual actors engage in various exchanges for mutual benefits (p.25). One example being logrolling the practice of lawmakers trading votes/favors.

The intangible exchange of social commodities cannot be understated in formulating effective working relationships. One crucial assumption of Smith’s Theory of Moral Sentiments (1759) that we seek the “approbation” of others. In other words, we seek to praise and approval from others. We are constantly seeking the acceptance of our peers. Being well-liked on the individual level wields a significant amount of social currency. If the ability to seek acceptance and cooperation is applicable on the individual level, couldn’t it also apply to the harmonious relationships between groups of people? After all the scope of social and economic interactions operates on a continuum of scale, what is applicable on a minuscule level should also work on a larger scale. The principle is a general maxim governing social interactions, therefore it should be transferrable. One of the best ways to overcome cultural barriers is through finding a form of social exchange desired by both parties. It does not mean that it must take the form of economic exchange. It possibly manifests itself in alliances and treaties among nations. Special agreements, pacts, contracts among nonpolitical social units. Most often it takes the form of economic trade between foreign nations. The necessity of unilateral trade agreements is refutable. Consumer sovereignty is the true impetus of international trade. Despite the bluster and theatrics of vociferous diplomats and other garden variety elected representatives.

Why voluntary association over other coercive means do we yield harmonious interactions? There isn’t a magic bullet answer to this question. However, some insights from Public Choice pioneer Gordon Tullock may help elucidate a potential variable that sheds some light on this occurrence. It is the ability to choose our partners in voluntary social arrangements that reduce the instance of Prisoner’s Dilemma. If our trading partner is not being cooperative, we can easily do business with someone else. Because of the mobility of free association (which is purportedly protected under the First Amendment) we do not need to be held captive by aggressive or hostile social relations. Due to this consideration, it is easy to see the original sentiment behind antitrust laws, but much like all laws, they suffer from loopholes and other issues. Even from the standpoint of the definition of a monopoly. One of the common attributes of monopolistic market behavior is assessed by is market concertation. However, this is problematic how do we determine which market is categorically correct for the assessment of market concentration? Nevertheless, we can freely choose our partners whether in trade or other forms of social situations it reduces the occurrence of the perverse incentives to be noncooperative. Sullying our reputation deprives us of the esteem that Adam Smith surmised we all crave.

Considering that trade is one of the forms of association that fosters cooperation. Even if free trade is not the key to world peace, it still makes us less apt to raise the sword to our geographic neighbors. To repudiate the previous administration’s trade policy, international trade should be encouraged. It is only natural to perceive David Ricardo’s concept of comparative advantage as an extension of Smith’s pin factory.  The premise of comparative advantage is that it can make production global and explains why we tend to import higher-order goods to produce commodities domestically. No one climate can best produce glass, grapes, and corkwood in the Cognac region of France. However, all of these components are required for assembling a commercially produced bottle of Cognac brandy. This specific region in France has some of the best grapes in the world for brandy production. The climate is wholly inappropriate for cultivating and harvesting the wood used in the stopper placed in every Cognac bottle. To avoid placing great restrictions on our ability to manufacture sophisticated goods, we need to trade with other nations. We can only truly achieve this through peaceful relations. Free trade in itself helps to facilitate peaceful relations.

Free Trade: Closing the Cultural Gap

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If the direct feedback from social interactions can help facilitate morality and positive social relations, how can this be done on a larger scale? Corporations, nations, communities, coalitions, etc. are institutions comprised of many individuals. Staying within the framework of methodological individualism, we assume that the collective action of a single institution represents the unanimous will of all the individual agents affiliated with the organization. In a sense, the collective action “speaks” for the group. How does social distance influence the interaction between various institutions, nations, collectives, etc.? Per the insights in Smith’s book The Theory of Moral Sentiments (1759), a person’s socialization and moral development are shaped by their peers. How would we go about socializing an entire culture? What factors enable us to peacefully co-exist with our neighbors? There certainly are not any clear-cut answers to these vast questions. The best we can do is hone in on the variables that help support human flourishing and social stability.

Some people assert that a common cultural identity is a cohesive glue that keeps the fibers of society together. There may be some veracity to this opinion as possessing a common culture can reduce the potential for conflict. However, there are some profound issues with holding culture as the variable that unites mankind as a whole. For one, commerce is global. Anyone in the business world cannot merely associate with people sharing the same cultural experience. In theory, you can, however, you would be severely limiting the potential reach of your business. Due to globalization and technological advancements, clinging to cultural identity has become more futile. Another consideration is that associating with people of a similar cultural background (closer social distance) is detrimental to our ongoing moral development. Demonstrating the fallacy of nationalism from both practical and moral perspectives.

If the cultural distance is inevitable what is one way we can bring people of various cultures together? Many people may suggest the use of international treaties. The parameters of such an agreement serve as nothing more than a compulsive obligation. Outside of state-sanctioned compulsory inclusion (which is not limited to treaties, but also pertains to sections of The Civil Rights Act of 1964), there is also social pressure to force the association between different cultural groups. We see this in the aggressive push for multiculturalism. The intentions of some proponents may be laudable, however, too often it is utilized as Trojan Horse for political opportunists. It should also be mentioned that does not arrive at cultural diversity through voluntary association. But rather from a form of informal social cohesion. While Smith may point out that conforming to this new norm would be an example of our peers shaping our moral development, this simply is not the case. Most of this rhetoric comes from the deepest fringes of academia. These norms are enforced through immense social pressure by a small minority of people who are out of touch with the real world. Cultural diversity is not something that can be forced by legal statutes nor by social cohesion. Rather it exists through the voluntary movement of people, which is a spontaneous phenomenon that cannot be artificially manufactured.

It is evident what fails to bridge the gulf between different cultures and societies. However, what can succeed at this seemingly insurmountable task? Here is where the themes of  The Theory of Moral Sentiments (1759) and the Wealth of Nations (1776)  converge. The social arrangement that keeps the appropriate distance for peaceful relations between strangers is commercial societies (p.13). Please keep in mind that this is not the recipe for sustained and eternal peace. No thinker has been able to formulate a tried-and-true solution for eradicating violent conflicts. Our propensity for violence may be an unfortunate proclivity of human nature that cannot be contained by reason or by institutional means. Providing validation of David Hume’s assertion that we are essential “slaves to our passions”. Voluntary trade may reduce the frequency of armed conflict between nations. In commerce, we do need to maintain a certain level of professionalism (self-command) to establish an effective working relationship (p.14).

To perceive free trade as a magic bullet would be a complete fallacy. For one, if it was the key to enduring peace, world peace would have been achieved back in 1776. Ultimately, Smith viewed trade as a potential source of tensions between nations. It has been argued that Regan/Thatcher-era proponents of Neo-Liberalism overstated the role free trade plays in facilitating peaceful relations. If the tides of economic nationalism are not stifled international trade continues to serve as a weapon against rival countries (p.4). The growth of military strength tends to coincide with an expansion of the division of labor (p.5). Economic development reduces the perceived costs of entering armed conflicts (p.2 &5). Smith contended that the root of international conflict was power imbalances among nations (p.34). The prospect of an imbalance of economic power in global trade is the core assumption behind mercantilism. Exemplified in the rhetoric surrounding trade imbalances.

Even though Smith did see trade as a potential source of tension, does that mean that free trade could not reduce the social distance between different culturally distinct nations? No. It may not be the cure for global conflict, but it can reduce the instance of it occurring. There is something of a reciprocal relationship between social stability and economic advancement. The “violence trap” of the feudal era stymied economic growth due to instability in property rights (p.41). Coping with the constant upheaval of violent conflict is destabilizing enough to inhibit economic flourishing. While the prosperity of neighboring countries may conjure the envy of less fortunate nations, Smith suggested that the better-off countries should act as a model of what to aspire to. Rather than an adversary to hold in contempt (p.31). The rise of government and free trade may not conclusively prevent war, per Smith’s treatises that balance power and foster respect among nations helps reduce the instance of armed conflicts (p.32). Such agreements help align interests among different countries. From an economic perspective, unilateral trade agreements help balance the concentration of economic power among trading partners. Loosening the barriers to international trade not only broadens the market for domestic production but also works to reduce hostilities (p.33). Providing the power gap isn’t too wide and nationalistic sentiments can be dispensed with.

“By opening a more extensive market for whatever part of the produce of their labor may exceed the home consumption, it encourages them to improve its productive powers, and to augment its annual produce to the utmost, and thereby to increase1 the real revenue and wealth of the society. These great and important services foreign trade is continually occupied in performing, to all the different countries between which it is carried on. They all derive great benefit from it, though that in which the merchant resides generally derives the greatest, as he is generally more employed in supplying the wants, and carrying out the superfluities of his own, than of any other particular country. To import the gold and silver which may be wanted, into the countries which have no mines, is, no doubt, a part of the business of foreign commerce. It is, however, a most insignificant part of it. A country which carried on foreign trade merely upon this account could scarce have occasion to freight a ship in a century. (Wealth of Nations, p.358-359)”.

While voluntary exchange may not bring about world peace, it does help close the gap between different nations. Resources that could theoretically be dedicated to warfare are reallocated to production for the global consumer market. Providing a practical example of Frédéric Bastiat’s Broken Window Fallacy.  War does not generate wealth, but rather rearranges the disposal of resources. Wealth may be correlated with the advancement of military technology. The development of military technology does not necessarily generate wealth. Beyond free trade re-directing resources from armed conflict to the consumer market, there are also other intangible effects. When we engage in trade with foreign countries we are also exchanging culture and ideas. Attending a business meeting in Japan, American executives may consume food that they are not accustomed to. May even learn some of the subtleties of Japanese business etiquette. Through their Japanese counterparts providing the social ques imperative in business transactions in Japan. Talk about challenging a person’s impartial spectator. The American businessmen walk away with more than a new business partner. They are also exporting cultural traditions, new business practices, and even new types of food when they arrive back home. When we have more familiarity with another culture we are less apt to fear them. In turn meaning, we are less apt to bomb them. Closing the cultural gap requires not only a certain degree of openness but also an effective working relationship.

Calibrating Our Impartial Spectator is An Ongoing Process

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In my previous blog post, I address the role of social distance in moral development. Per Paganelli’s interpretation of Smith’s TMS (1759), we reduced our self-command when we are around people we are emotionally attached to (p.12-13). Much of our moral development arise from socialization. Making our self-restraint a combination of learned behavior and social conformity. The schoolyard may be the proper environment for individuals to fine-tune their social awareness. Does our moral development stop once are no longer school age? I would suggest not. If anything it a continual and lifelong process that is always in progress. If anything as we grow older, the expectation of others and social norms become much more intricate. Some of the basic principles learned on the playground are social conventions that are applicable in any social dynamic. The etiquette learned in the schoolyard is too rudimentary to comprehensively cover all the social nuisances of professional situations.

For instance, what is the proper attire for a job interview? How do I politely reject my boss’s dinner invitation? These are just a few examples of social scenarios of greater complexity that cannot be learned even in High School (arguably even in college). The reserved awkwardness of new hires fresh out of college exemplifies this deficit in workplace social skills. Outside of there being a likely age gap between the new employee and the rest of their co-workers, they are afraid of making a faux-pas. They are deathly afraid of being the person who takes the last of the breakroom coffee without making more (this individual is universally hated). They do not want to be disliked by their new pool of peers. To not look like a self-absorbed young person, it going to take time. The new employee will go through an acclimation process. The primary drive of this adjustment is going to be the feedback of their co-workers.

I would go so far as to even suggest that each new social environment requires some duration of social learning. The phrase “.. reading the room..” comes to mind. For example, even if an individual has worked as a salesperson for twenty years, as soon as they take a job at another company they now become the “new guy”. A new job entails new co-workers, a new boss, new corporate policies, new corporate culture. Despite this individual’s extensive experience they still need to go through an adjustment period. This seasoned salesperson now has to learn to adapt to the personalities, culture, and rules in their new work environment. Even in social situations where we are familiar with the location and the people, various factors lead us to constantly adjust to the feedback from others. If you were attending a dinner party at your brother’s house (only family members were in attendance) you would still have to mold yourself to the social conditions of the moment. You will taper your behavior to the dispositions of the other dinner guests. Social settings are dynamic and even the slightest change to one variable can profoundly alter the course of events. To a certain extent, we are always fine-tuning our Impartial Spectator to maintain social harmony. Social situations much like all complex systems have a loose structure with a set of informal rules. Although there is a resolute structure the one altered variable can drastically change the trajectory of the interaction. As the expression goes “high school never ends”, actually we never leave the playground.

Social Distance: The Foundation of Our Morality

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Adam Smith is arguably one of the most misunderstood thinkers in all of philosophy. The public reduces the corpus of his work to a one-dimensional caricature of The Wealth of Nations (1776). Such characterizations of Smith’s work are carelessly painting with a broad brush. It can be suggested that when to draw new insights from Smith’s work we should be even more cautious. So much has been written on the body of his work, as Donald Boudreaux keenly points out, it is difficult to formulate any new meaningful insights (p.487). This issue is only compounded by the fact that new interpretations of Smith’s work run the risk of misrepresenting his brand of moral philosophy. Which is equally as shameful as representing a shallow representation of his insights.

One development springing from modern interpretations of Smith’s philosophical ideas comes from professor Maria Pia Paganelli. Back in 2010, she wrote a paper entitled The Moralizing Distance in Adam Smith: The Theory of Moral Sentiments as Possible Praise of Commerce. In her paper, professor Paganelli analyzes smith’s emphasis on the impact of relational distance and moral development. As Smith points out in The Theory of Moral Sentiments because we are subject to “self-deception” due to our immense self-love (Paganelli [TMS III.4.2–6], 2010, p.6). Due to human nature, who wants to view their conduct in a negative light? In many regards, the moral tuning of our impartial spectator occurs due to social influences (Coase, 1976, p.5-7) It exceedingly difficult to admit when we are wrong. Never mind disclosing an outrageous oversight or a profound moment of weakness. Both are humiliating and are the kind gaffs we attempt to bury. The true interest insight from Paganelli is the fact that Smith contended that if our relationship is too close to a person, we do a poor job of shaping their moral development.

Surely, this does not apply to parents? After all, aren’t parents one of the greatest impetuses of moral development of children? Per Paganel’s research Smith’s TMS does emphasize that socialization is a byproduct of the impressions of others (p.7). It is unquestionably true that our emotional attachment to an individual has the potential of skewing our impartiality. The more emotionally attached we are to a person there is greater the aptitude we will perceive the course of events from a similar perspective (p.8). Paganel points out that Smith believed that parents were too “partial and indulgent” of their children to be the prime mover in facilitating their moral maturity (p.9). There is some qualitative validity to this observation. Anecdotally we have all heard a parent proclaim “… not my child..” in regards to the potential of their son or daughter engaging in unruly behavior. Most parents want to hold their children in high regard and implicitly view them as a genetic extension of themselves. To acknowledge the unpleasant truth little Johnnie is capable of stealing Mr. Johnson’s car is excruciatingly painful on two accounts. First, there is the discomfort of acquiescing your child’s capacity to engaging in morally abject behavior (despite years of the parents’ efforts to socialize their child). The second and more damaging pressure point is a sense of having failed as a parent. This extension of yourself is presenting you with challenges that could easily be interpreted as a sign of personal failure.

The emotional distance to aid children in developing moral precepts also cannot be too far. Helicopter parents fail to help their children erect a strong moral foundation. Smith also observed the same being true of children that are sent away to boarding schools. A parent being too aloof can have the same effect as being too indulgent, a child with a lack of respect (p.9). This phenomenon parallels what happens in foreign countries with opposing interests. If there is too much social distance between the two nations, factions will form (p.10). Creating a self-congratulatory echo chamber where there is not any room for negotiations or compromise. Rather the ire is driven by unconstrainted passions shouting the valiant chants and battle cries of nationalism. Too often nationalist fervor results in actual battle cries. Firmly illustrating how social distance has an impact on both the micro and macro scale of social interaction. Achieving the precarious balance of the correct social distance between various groups and individuals is key in achieving stable relations.

According to Smith what is precisely the correct amount of social distance? It is too herculean of a task to determine this balance at the level of nations. If this could have been achieved in a philosophic treatise back in 1759, wars would become a relic of the eighteenth century. Smith does suggest that the best platform for moral development is a child’s peers. Through a child adjusting themselves to the expectation of their fellow playmates, they gain a sense of self-command (p.11). Above all, we tend to have better deportment around strangers than we do our own family (p.12). This goes right back to the concept of social distance. When we are closer to someone on an emotional level we exhibit less self-command. One example would be a small business that attempts to foster a family-like dynamic. Most observers’ prima facie impression would be that such an ethos would create a “hospitable work environment”. Even though the idea of a workplace that creates a culture of close-knit comfort may sound endearing, it possesses a lot of pitfalls. For example, if an employee makes an error the business owner may take it personally. Since the business proprietor is not constrained by the formality of a corporate environment, they are free to curse and scold the offending employee. Like how a parent censures a misbehaving child. Demonstrating how the voice of the impartial spectator becomes more salient when others are in the room. A CEO of a company has their conduct limited to the expected deportment that the employees and board of directors find to be acceptable. Behavior outside of these norms will result in disapproval.

Can Adam Smith Help Us Recover From COVID-19?

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Over the past year, the COVID-19 pandemic has completely turned society upside down. Plagued by uncertainty the entire planet was alarmed in went into full panic mode. Leading us to the immediate question of how do we contain a novel virus when its origins are shrouded in mystery? Many of these reactionary policies may have modestly slowed down the spread of COVID-19, however, most of the state-sanctioned restrictions ended up causing unforeseen problems. The shelter-in-place orders resulted in the highest recorded rate of job loss since The Great Depression. The economic ramifications of various lockdown measures go beyond the immediate consequences. There was a November 2020 study conducted by USC projecting an overall GDP loss of $3-4 Trillion over the next two years.

Lengthy book treatments could be composed to fully detail all of the intricacies of the economic carnage of COVID-19. Unfortunately, the fall-out of the pandemic reaches well beyond the economic repercussions. Our overall health has been impacted. Not necessarily by the direct symptoms of COVID-19, but by a result of the lockdown orders. People have been less active leading to weight gain, which may lower an individual resistance to the virus. While physical health may be most salient to us because it can be observed by the naked eye, what about mental health? It is well documented that social isolation is a contributing factor to depression. A multitude of stories has been published describing the psychological struggles of Americans during the pandemic. The hardnosed statistician may be quick to dismiss these narratives as being purely anecdotal. However, many of the risk factors for suicide have been magnified since the beginning of the pandemic. There has been a notable increase in the suicide rate from 2019 to 2020.

The pandemic has also fractured relations between us and our fellow citizens. Clinging to our inner circles to avoid spreading COVID-19, we begin to become more tribal. The trust we once held for our neighbors has become eroded over the past year. Anytime someone sneezes we give them the side-eye. Fostering a climate of distrust and paranoia. This distrust has manifested itself in actual hate crimes and discrimination. Some reports estimate that hate crimes against Asian-Americans increased by 150 percent in 2020. What does this have to do with COVID-19? Quite a bit. It is speculated that the outbreak originated in the Wuhan province of China (p.2). Leading some to erroneously blame people of Asian ancestry for the spread of the virus. Creating friction between various communities across the country and only serving to make an already tumultuous situation worse. Asian Americans much like all other Americans have been grappling with the stresses of the pandemic. Adding racial tensions to the mix only serves to create more division and distrust. We need trust to have a stable society. 

Could a voice from the past help us navigate these difficult times? Provide us direction in helping us heal from the carnage caused by a global pandemic? I would argue yes. That voice of reason comes from no other than The Enlightenment-era moral philosopher Adam Smith Many readers are probably thinking to themselves “… isn’t this the guy that told us to follow our self-interest. In other words, to be selfish?”. In a sense, yes. However, limiting the body of Smith’s work to the following passage is nothing more than a caricature of his overall contributions to economics, never mind moral philosophy.

“It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their interest. We address ourselves, not to their humanity but their self-love, and never talk to them of our necessities but their advantages. (The Wealth Of Nations, Book IV, Chapter II, p. 456, para. 9)”

The above paragraph may be the most famous one ever written by Smith, but it does not wholly define his breadth of work. Smith believes that markets and morality were inseparable, and you could not have one without the other. At the crux of voluntary trade is interaction. If we treat each other poorly and do not foster a good-working relationship trade cannot take place. To foster strong relationships, we as a society need a firm moral backbone. Morality provides us with the precepts to facilitate just and fair interactions despite conventional wisdom, this is crucial to success in business. If you are not running your enterprise justly your client will eventually find out and choose to do patronize another vendor. 

Business ethics and social morality are intimately interconnected, one cannot exist without the other. That is why the two great works of Smith were meant to be read in tandem. The Theory of Moral Sentiments (1759) addresses social morality and The Wealth of Nations (1776) details the inner mechanics of economic exchange (catallactics). Both books dovetail together so well, reading one leaves you with a missing piece of the puzzle. COVID-19 has unquestionably harmed society economically and socially and both books contain the wisdom to help us get back on the right track. I am a great admirer of economist Don Boudreaux, but I do have to take issue with his recent assessment of Smith’s possible perception of the impact of social isolation resulting from COVID-19. Dr. Boudreaux states that Smith could certainly empathize with and rationally understand the distress caused by social isolation. I do not disagree with his inference, but I would surmise that Smith would want us to draw lessons from his work. To apply the concepts in both books to help us as a society overcome the hardships imposed by COVID-19. His work was not intended to be confined to the postulations of lofty ivory tower discussions, but also for practical application. What good is moral philosophy if it is never put to practical use? Why not look to the works of Adam Smith for guidance and solutions to help us navigate the uncertainty that is the COVID-19 pandemic?

The Law of Diminishing Returns and Human Capital

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Most of us that have a rudimentary understanding of economics, are familiar with the concept of the Law of Diminishing Returns. It is quite evident that this premise is unquestionably applicable to physical goods. Does this enduring economic law also apply to intangible commodities? It is salient once a person has exhausted the optimal quantity of solid objects. This is conspicuous in the disutility of engaging in hoarding behavior. While the optimum number of chairs a person should furnish their home with is debatable and depend on several factors, it is obvious once a person has amassed too many. Once an individual has so many chairs that it makes restricts accessibility to certain rooms in the house, becomes a fire hazard, or the homeowner can no longer contain all of the objects they own within the confines of the physical structure of their house- then it is problematic. Then rightward shift from the equilibrium point is universally expressed. There is no foreseeable value in obtaining more or maintaining your current collection of chairs. The assessment of whether you have too many chairs is no longer a matter of aesthetic preferences, but a matter of physical limitations. It is easy to determine once we obtained too many physical goods. 

The saturation point is much more difficult to answer when about intangible goods (human capital, intellectual property, etc.). However, it could be argued that the Law of Diminishing does apply to human capital. The ultimate marketplace for human capital is the job market. Often we hear the term “saturation” be used to describe the labor market. Several factors can contribute to the overabundance of human capital available to employers. Periods of high unemployment leave firms with the ability to hire, a large pool of applicants to choose from. The saturation could be referring to a glut of similar skill sets or credentials. If history majors are a dime a dozen, but math majors are hard to come by, who is going to stand out in the job market? If everyone has basic Microsoft office skills, but there is one candidate in the resume heap that has an advanced certificate in Excel, needless to say, this will catch the eye of any hiring manager or human resources representative. 

Degrees and certificates are not so much human capital as documentation of skills and formal education. Couldn’t the soaking point of specific forms of human capital also be relevant to soft skills? Well, why not? If can be applied to credential and soft skills then it must apply to more innate qualities. Such as personality types. Pre-employment personality tests not only qualify if a candidate is a good match for a specific job role but also help to bring more balance to team dynamics. 

Going beyond even the job market or potential job prospects, human capital is integral in determining an individual’s overall trajectory in life. While other factors such as opportunity, motivation, and timing have a lot to do with success. Without the proper skills, most people will not rise above a certain point of attainment. One of the most coveted, but arguably overrated attributes in the panoply of human capital is general intelligence. General intelligence can only get a person so far. There is no one single factor that leads a person to success, but rather a multitude of different variables. The sum of the parts is greater than the whole certain applies. Providing some validation of  Scott Adams’s postulations regarding complementary skills. No one needs to a virtuoso, but it is better to be reasonably good at many related skills than to fully master one. General intelligence is the archetypal example of being a master of one domain. We all have heard the platitude “… jack of all trades, master of none…” so frequently that it is deeply ingrained in our subconscious. However, this old saying has little applicability to the real world. It isn’t the smartest or the most diligent among us that succeed. Then again, the village idiot and the local ne’er-do-well burnout aren’t the ones rising to the top either.

Malcolm Gladwell’s book Outliers (2008) presents an intriguing example of why general intelligence alone will not ensure success. Gladwell details the near-tragic trials and tribulations of Christopher Langan. A man who is a bona fide genius. Despite his expansive and impressive intellect he never had the opportunity to thrive as a universally praised academic. Langan boosted an IQ of 195 shadowing the IQ of Albert Einstein forty-five points (p.70). As impressive as it sounds to have an IQ of 195, there is one important point to remember. A veteran scientist with an IQ of 130 is equally as likely as a colleague with an IQ of 180 to win a Nobel Prize (p.80). Meaning that Lagan’s intelligence while awe-inspiring could even be viewed as being superfluous. If a person with an IQ thirty points lower than Langan can be a Nobel laureate what value does the extra IQ points effectively bring to the table? 

Despite Langan’s intimidating intellect he failed to even obtain an undergraduate degree. This was due to a string of unfortunate shifts in his vicissitudes. One notable incident transpired when he was enrolled at Montana State, he had car troubles and could not make his morning classes. He had a neighbor who offered to give him rides in the afternoon to school. Regardless of how much cajoled and begged the dean he was not allowed to change his class schedule and was forced to withdraw from his program (p.94-95). Langan’s foil must be Robert Oppenheimer who worked on the development of the atomic bomb during World War II (p.97). Here was a man who as a student attempted to murder his tutored (p.98). Not only did he get away with it, but later on after he completed his graduate program he managed to get on the prestigious Manhattan Project. It is evident his past transgressions did not dampen his career in any way. What truly separates both these men from one another? Both men were exceptionally bright, but one man couldn’t even convince his dean to do something as innocuous as changing his class schedule. Another got away with attempted murder. The difference was that Oppenheimer had a greater degree of practical intelligence (p.101).

The comparison between these two men illustrates that not only is there a ceiling in the benefits of having high general intelligence. There are also limitations if the only skills you have are related to general intelligence. Without practical knowledge, a robust IQ is tantamount to be a weight. We all need the precepts requisite to tactfully navigate the world. In the absence of this scaffolding, our intelligence is of little use and only serves to weigh us down.

Suicide As A Property Rights Issue- Part II

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PART I

The moral argument for a right to suicide is firmly grounded in property rights. To many readers the very notion that suicide and ownership of tangible objects are interconnected is farfetched. Upon a superficial assessment of the premise, it is easy to jump to this conclusion. Once we get to the philosophical taproot of the concept of ownership the overlap between the two concepts becomes much more apparent. Fastened to the pillar of natural rights, the right of ownership is crucial in establishing all other rights. The ability to retain, transfer, and exclude others from one’s property lays down the framework for all other negative rights we cherish. For example, if a dinner guest offends us with an off-color joke at our house, we have the right to ask them to leave. The right of excludability. If the dinner guest is aware, we are offended by specific kinds of jokes, they fully consent to the conditions of the dinner party by opting to attend. Due to this variety of informal rule creation, there is no need to implement laws prohibiting offensive speech. Individual property owners can decide what types of jokes or language will be tolerated in their household.

The basis for ownership of tangible items goes back to an even deeper principle of self-ownership. If we do not own ourselves how can we possibly possess physical property? Either in the title or tangible form. The philosopher who bridges the gap between self-ownership and ownership of objects, locations, and intellectual property is no other than the great John Locke. At the most rudimentary level, we must own ourselves before we can possess any additional property. The extent to which this self-ownership is applicable is debatable. We can legally own ourselves. We have autonomy over (in most cases) our corporeal vessel that holds our inner organs. An individual can also exert control over their mind. Where does the right of an individual to own one’s self arise from?  This merely the abstract pontification of an out-of-touch philosopher? Most who have read Locke would staunchly disagree with the prior inference. Locke developed a concise explanation linking self-ownership to an unwavering natural right.

In Locke’s Second Treatise of Government (1689) he further expounds upon the natural basis for self-ownership. Arguably laying down the nascent substrate for the ethical arguments against slavery later on in the 19th century. The right to self-ownership is the result of divine providence. In Locke’s view, God gives us life and we are born free. For those who have more of a secular view of the world, it could state we are born free by our humanity. There is no grand authority that we must oblige by involuntarily transferring self-possession to as a result of cohesion.  

“…Though the earth, and all inferior creatures, be common to all men, yet every man has a property in his person: this nobody has any right to but himself. The labour of his body, and the work of his hands, we may say, are properly his. (p.11)..”

Locke establishes that no one person has the right to own another human being. The implications of the above quote go beyond the abstract conceptualization of self-ownership. Due to a person owning themselves they also possess the fruits of their labor. If you work and toil to harvest lobsters in the icy waters off the coast of Maine, whatever you catch is rightfully yours. Providing you are not capturing so many lobsters that you are preventing others from having a chance to obtain the seafood delicacy. Nor are you procuring so many they will go to waste (p.12-15). Through self-possession and possession of our labor and the results of our labor, the natural rights argument for property ownership is pithily conveyed.

John Locke was correct about all people being born free and having possession of overall commodities, lands, and intellectual property that they have rightfully obtained through their labor. Where he went astray was asserting that natural rights are inalienable. Regardless of whether we procure these rights from god or as a result of our personhood, you can alienate these rights. Whether or not it is ethically justifiable is completely contingent on the consent of the individual. We have a natural right to free speech for example. While at work we temporarily or indefinitely suspend (for the duration of our employment) our right to unfettered speech as a condition of employment. There is nothing illegitimate about this arrangement because it expresses a form of tacit consent.  If you truly disagreed with the rules of the company you otherwise would not accept the job offer. Agreeing to conditions of employment can operate as a form of selling our natural rights. If we truly own ourselves and possess all of the natural rights we are guaranteed in the Constitution, why couldn’t we sell the title to our rights to other people? That is effectively what we do when after signing an employment agreement. Our natural rights cannot be transferred or relinquished unless we willingly agree to conditions or arrangements that nullify these rights.

One particularly controversial example of this concept was formulated by the Austrian economist and political theorist Walter Block. Dr. Block postulates that voluntary slavery is not incompatible with individual freedom. Such a position sounds antithetical to liberty, however, understanding the context is key. There is a difference between being forced at gunpoint into slavery and choosing to be a slave. Why would anyone choose to be a slave? They or a family member may owe an astronomical amount of money to a private individual and the only means of making restitution on their debts would be a lifetime of unpaid servitude.  It highly unlikely that anyone in modern times would consent to such an arrangement. Being able to sell one’s self to another person demonstrates an unfettered view of self-ownership. The laws prohibiting voluntary slavery are essentially are equally as unjust as keeping involuntary slavery legal. We can’t say that we truly own ourselves if we cannot do as we please with our bodies. That includes opting to sell ourselves into slavery.

The question becomes how does the argument for voluntary slavery apply to suicide? Logically it is predicated on the very same principle of self-ownership. If you truly own yourself and no one else has possession of your body and mind, then you have a right to kill yourself.  As jarring as this statement maybe it is nevertheless true. If we truly possess an object or an idea we can do as we please with it. We can sell the item or bit of intellectual property, or we can dispose of it. Nothing is stopping us from purchasing the latest iPhone at full retail price and then upon receiving the device, abruptly throwing it into a trashcan. While by the assessment of convention sensibilities such an action would irrational or foolish, no one has a right to prevent this behavior from occurring. Regardless of the perception of others, the notion of ownership prevents others from intervening. Some may criticize this example because it is comparing a replaceable item with the irreplaceable essence of human life. This critique is a fair one, however, that does not make this a false analogy.  The operative condition is the concept of ownership not what the individual is choosing to dispose of.  Regardless of the origin of where we obtain our natural rights from we do own ourselves. Much like anything else we own we have a right to dispose of ourselves. This is not making a moral judgment about the act of suicide in-of -itself. Nor is this a tacit endorsement of suicide. However, legality is no measure of morality. Nor is pressure to conform to societal norms.  If we legalized heroin use and prostitution tomorrow, these activities would not necessarily be moral.  But they would be legal. While these activities may be immoral, inferring an individual’s right to poison their body or engage in infidelity is also immoral. Immoral on a grander scale. When victimless crimes have codified sanctions, they are generally backed by the threat of incarnation, fines, or state violence.  

The decision to commit suicide is a deeply personal decision that should not be felt in the hands of doctors, psychologists, and especially nor legislators.  Attempts to intervene in suicide attempts are naturally transgressive against the individual’s property rights.  If indeed, we truly possess self-ownership.

Suicide As A Property Rights Issue- Part I

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The act of suicide is an action unconscionable to most people. Committing suicide violates one of the most basic tenants of human biology, the innate drive for self-preservation. Human beings are wired to avoid death at all costs. This proclivity towards instinctively evading peril is physiologically manifested in our internal fight-or-flight response. If our biologically ingrained will-to-live isn’t compelling enough to make the prospect of suicide perplexing, there are also normative reasons for finding the practice baffling. Some of these cultural norms have developed out of divine prescriptions. In the Abrahamic religions, for example, there are textual prohibitions against suicide. This divine restriction is even extended to instances of medically assisted suicide for the terminally ill. However, the philosophic obligation to live is not limited to a purely religious context. There are philosophical; traditions that shun suicide as an abdication of duty. One of the most salient examples of this is presented in the corpus of Immanuel Kant’s work. It can be argued that we have a duty to our family, friends, co-workers, and community to not kill ourselves. Some people love us deeply and count on us. How could we be so egotistical to not consider the radius of the fallout from such an act? The externalities of one person committing suicide stretch well beyond the victim.

Then again, this reason could be easily inverted. Who has the authority to mandate that suicide is a selfish act? God? Perhaps. Does divine prescription or other moral conventions give us a moral duty to intervene in suicide attempts? A resounding majority of people would unequivocally say, “yes”. Many would go so far as to advocate for codifying measures in formal statutes and ordinances to safeguard those with suicidal inclinations from harming themselves. This is substantiated by the fact that most states have laws that require mandatory involuntary hospitalization for suicide attempts. However, much of the conventional wisdom that surrounds the subject of suicide is quite perverse. Beyond the stigma that is attached to it, societally we have the wrong perspective on it. If people can subjectively determine the value of goods that they choose to buy daily, why can’t they do the same with their quality of life? Couldn’t we also extrapolate the same concept of marginalism to an assessment of individual wellbeing? Even the parameters set in place in jurisdictions where medically assisted euthanasia is permitted are too restrictive. The doctor tasked with ascertaining whether a terminal cancer patient should be able to end their own life is draconian. Involuntarily transferring this right to an authority figure by a matter of jurisdictional law. Who would be a better judge of the patient’s quality of life, than the patient? The judgment of the physician at best a partial informed inference. Lacking the all if qualitative sensations of anguish characterizing most terminal illnesses. 

While medical-assisted suicide may be legalized in some regions for those at the end stages of palliative care, it remains taboo to permit suicide for those suffering from psychological distress. This discrepancy in logic is quite puzzling. In recent years there has been a plethora of campaigns to have mental illness be publicly recognized as an illness. Generally done so in a top-down and highly pedological manner (naturally the experts curing the ignorance of the commoners). Generating a myriad of various pithy slogans so succinct they could fit on a bumper sticker. There is some glaring hypocrisy in these initiatives. While yes, I agree that mental illness is an illness. In most cases, there is even a biochemical basis for the mental illness. For example, serotonin deficiencies resulting in depression. If there can be a terminal stage of physical illness, why wouldn’t there be a terminal stage of mental illness? Who would determine this arbitrary line in the sand? This unpleasant and inconvenient fact is conspicuously absent from the mental illness is an illness movement. That is unfortunate because the tendency of sugarcoating serious issues does little to solve significant problems. Trivializing this mental health movement to caricature of what it could be. Reducing it to a mere humanistic feel-good movement. Nevertheless, if as a society we aim to treat mental illness on an even field with physical illness, it is only reasonable we allow those with mental illness to commit suicide if they see it fit. This may sound callous or even cruel. The same could be said for forcing someone to live who does not want to. 

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: Slavery and The Civil War= Morally Equal

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The concept of state secession has been viewed as being connected to support for slavery since the American Civil War. It seemed even in the modern era that if you advocate for the right of state secession you tacitly support slavery. Opportunistic pundits will not shay away from inferring that among many other contrived racists or Neo-Confederate proclivities. If we oppose slavery due to it being forced into involuntary servitude. A natural rights argument against slavery was first posited by John Locke in his work Second Treatise of Government. Suggesting that by a human being owning themselves due to their unalienable god-given rights slavery is illegitimate. Even though voluntary relinquishment, a man cannot transfer his title to self-ownership to another.

The extent to which this right to self-ownership is inalienable has come under question over the centuries. If we truly own ourselves, shouldn’t we be able to sell our freedom to pay a debt effectively transferring our title to self-ownership? In the past contractual arrangements have been made in the form of indentured servitude. Where the contracted party consents to work for no monetary compensation in exchange for other terms of payment. Operating as a form of barter. Generally, the terms of indentured servitude were temporary distinguishing it from slavery. Some economists even assert that voluntary slave arrangements are valid on the grounds of contractual consent. If compulsory slavery is invalid on grounds of self-ownership would not compulsory statehood also be illegitimate? The association of the original colonies was composed of an aggregate collective of individuals tired of being under the thumb of a distant mother country. In other words, this revolutionary coalition was formed under the conditions of voluntary association. If rights are reciprocal, for example, freedom of religion implies the right to abstain from religious observance, then various states have the right to withdraw consent and leave the union. Making Lincoln’s use of military force to thwart attempts of the south to secede be an abuse of power.

One unlikely defender of the right to state secession was the abolitionist and anarcho-political theorist Lysander Spooner. Spooner departed from his peers in the abolitionist movement by arguing that preventing the southern states from leaving the union was on par with the institution of slavery. Spooner in his essay No Treason #1 thoroughly expresses the illegitimate manner the Constitution was utilized to defend slavery:

“On the part of the North, the war was carried on, not to liberate the slaves, but by a government that had always perverted and violated the Constitution, to keep the slaves in bondage; and was still willing to do so, if the slaveholders could be thereby induced to stay in the Union.” (P.3).

Needless to say, Spooner was not a supporter of slavery. However, does this justify the aggressive actions on the part of the United States government? After all, is it not our duty to eradicate any form of injustice such as the vile institution of slavery by any means necessary? Even if that requires bloodshed? Even if it forces a large minority of people into a central government they do not desire to be a part of? Beyond the arguments of coercive force being used against the south, Lincoln’s motives were suspect. Per Thomas DiLorenzo’s book, The Real Lincoln, it is mentioned that Lincoln showed open disdain for the abolition movement. That he was even personally prejudiced against African-Americans. Lincoln enthusiastically advocating for sending all blacks out of the country to form a colony in Liberia.  As much as this development sounds like a conspiracy theory or the fabrication of a bored pulp fiction writer, it has been validated by several sources. Leading the inquisitive observe to wonder if the Civil War was more about consolidating power than anything else.

Spooner is quick to point out how it is perplexing that men who simply wish to no longer associate with the federal government soon become traitors:

“That men may rightfully be compelled to submit to, and support, a government that they do not want; and that resistance, on their part, makes them traitors and criminals.”

This brings into question how does not desire to be a part of the constitute treason? Spooner reasons that if the Constitution was founded on the principle of freedom, then statehood would be rested solely on consent. Invalidating any attempts to use military might to keep the loose confederation of states together. The implications of preserving the union for the sake of freedom exposes deeper hypocrisy than merely a disingenuous effort to free all those subjected to involuntary servitude in the tobacco plantations of the south.

“…. power of the government, is (as she thinks) forever expunged from the minds of the people. In short, the North exults beyond measure in the proof she has given, that a government, professedly resting on consent, will expend more life and treasure in crushing dissent, than any government, openly founded on force, has ever done. And she claims that she has done all this on behalf of liberty! On behalf of the free government! On behalf of the principle that government should rest on consent!..” (P.5-6).

Essentially the northeastern establishment undermined the principles of the founding to keep the south under the egis of the federal government. If the country was founded on the principle of voluntary association, such efforts directly violate this principle. The rhetoric of fighting the south to preserve a unified and free America is a falsehood. Nothing more than the empty and halfhearted lips service that we have grown to expect in modern politics. It does not matter if the actions of the state reflect an honest reverence towards the right of volunteer association. Some scholars surmise that this right is implicit in the First Amendment, others argue that this interpretation is a little murky. From a purely natural rights standpoint, it is a clear violation to force people to join clubs and other varieties of political and social affiliation.  To blithely not only violate this right but to claim that it was done so to preserve liberty is a grotesque fallacy. Parallels the empty sentiment behind the modern phenomenon of national building. The falsehoods behind and bloviating are used to justify a nearly two-decade war(s?) in the Middle East. The United States has become the exalted missionary of liberal democracy. Nearly two centuries prior the United States adorned the false mask of the exalted liberator of slaves. Even though most of the Europeans had already abolished slavery peacefully. Like our contrived moral imperatives for engaging in our middle eastern campaigns, the Civil War was commerce under similar fallacies. To suggest the Civil War was executed the preserving the freedom of the average citizen is a slap in the face. One only needs to look at his overextension of power during the conflict to truly understand his mentality. For example, his suspension of the Writ of Habeas Corpusalone demonstrates he was a far cry from a civil libertarian.

Spooner also presents several arguments that the majority ruling over the minority was outside of the original context of the constitution.  Forcing the southern states to remain part of the United States fully exemplifies the concept of the tyranny of the majority. The Constitution stating “… we the people..” does not only include the majority, but also the minority (p.7). He also claims that if the founders intended for the majority to rule over the minority Americans would have never become an independent nation (p.8). The American revolutionaries were the minority during the revolution. When compared to the size and scope of the British Empire. Spooner also mentions that the intentions of majorities are no better or worse than those of minority groups. Both having similar wants, needs, and being predisposed to the same faults as humans make demonizing the opposition illogical (p.8). Certainly, this wisdom of not demonizing the opposition has been lost in the contemporary political climate. The majority opinion in society isn’t necessarily wise. Conventional wisdom is rife with ignorance, superstitions, and prejudice  (p. 8). It is irrational to claim a policy position, or another idea is valid due to it being popular. Such a justification can be reduced to nothing more than an example of the  Argumentum ad populum fallacy. Popularity does not automatically make an idea or an action correct.

Spooner goes on to mention how the tyranny of the majority creates a cost struggle between slave and master. Who the slave is and who the slave is varied depending upon which party is in power. Generating a competition for usurping control away from the opposing party.

The principle that the majority have a right to rule the minority, practically resolves all government into a mere contest between two bodies of men, as to which of them shall be masters, and which of them slaves; a contest, that-however bloody – can, as things, never be finally closed, so long as man refuses to be a slave …” (p.9).

The Civil War perfectly encapsulates the power struggle between various political factions. Echoing the concerns voiced by James Madison around the time of America’s founding. Vying political factions striving to achieve their objectives. The north’s desire to keep centralize and expand the power of the federal government. Leading to the use of military force. Preventing the south from separating from the United States. Effectively forcing the south to remain part of the country for political reasons. Parallels slavery. Slavery, kidnapping, false imprisonment, and forced association all violate our natural rights. The fact that the commonalities between forcing the south to remain part of the Union and slavery are awe-inspiring.

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!

Arjuna’s Dilemma

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Arjuna the protagonist of the Indian epic, the Mahabharata, encounters a significant moral quandary during the story. During a civil insurrection, Arjuna the prince of Pandavas was valiantly leading his army to victory when he is faced with a tough decision. In the middle of battle, he recognizes some of the faces of the soldiers in the opposing army. Former teachers, friends, and even family members. Naturally, Arjuna was conflicted about having to fight his loved ones and friends in battle. How could anyone of us turn the sword on one of a member of our own family? Choosing between defending one’s honor and family is an impossible decision to make. The tug-of-war is an existential struggle between duty and the desire for his family to be safe. Does duty weigh heavier on the obligations of an aspiring young ruler than blood? This scenario of conflicting interests leaving Arjuna in an ethical stalemate has become known as Arjuna’s Dilemma.  

How does our hero break out of his moral conundrum? The young prince receives sage advice from an unlikely source. Little does Arjuna know that his charioteer is the Hindu deity Krishna and had been observing his struggling with having to kill his friends in family in combat. The wise god explains to the prince that duty supersedes everything else even familial ties. Arjuna’s duty is to his subjects. To passively allow a violent civil-war to transpire without properly defending his people, his title to rule; would be an abandonment of duty. It is important to note, that we should not be consumed by duty. The moment duty crosses the line to desire we are drifting away from wisdom and enlightenment. It could easily be surmised that duty isn’t converted into desire until duty is combined with ambition. At that point, our “pursuit” of duty is more of self-serving objective than fulfilling a moral obligation. Whether we are being motivated by material gain, vanity, or another self-centered purpose. The excessive drive to fulfill duty generally indicates our endeavor is beyond the scope of our societal obligations.

Aspects of this allegory may not apply to every time in history or every culture, it still conveys a universal message that applies to humanity. We shouldn’t allow ourselves to be consumed by work. Yes, we have a duty to ourselves and our families to be self-supporting. However, when we allow our work-life balance to become skewed towards work, we are starting to allow ourselves to be consumed by duty.  It may be the prestige of being an employee of the quarter or the dangling carrot that is the empty promise of promotion. Often these goals are beyond the reach of our immediate duty. Typically, these aspirations are outside of the realm of moral duty. Sure, we all want nice things. To own a nice house, the white picket fence, the American Dream.

There is nothing wrong with desiring to have a comfortable life from a material standpoint. However, what everyone needs to assess is what are we sacrificing to make this happen? In a circuitous manner, this what Krishna articulated to Arjuna. Adhering to your duty is a natural safeguard that prevents you from being commandeered by your desires. A normative limitation that keeps us in check. Focusing on duty, rather than wealth or esteem, keeps us grounded. Like all things in life, there is a balance. If you are working so many hours that you barely see your family. You are potentially abdicating your duty to your family. While you do need to provide financial support to them, they also require your intangible support as well. Including emotional support. Having a worldview that considers duty keeps us grounded and focused on what is important versus being led astray by distractions. When our ambitions become our focal point, we end up levitating towards the end of the duty fulfillment bell curve. Just as much as having a lack of motivation and succumbing to sloth is a failure to fulfill our duty. It is a vice that happens to be on the opposite of the distribution as excessive ambition. Nevertheless, two sides of the same coin.

Sometimes It Is Easier to Be Ignorant

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Arguably one of the most famous quotes attributed to Socrates is “The unexamined life is not worth living”. It is the type of quote we have grown to expect from such as deep and contemplative thinker. Is this truly the best advice for the average person? Not that I would ever veer into the territory of philistinism, but is every aspect of life worth examining? Better yet, are such intellectual endeavors even productive for the average person?  I would argue no. Not because I seek to celebrate ignorance, nor do I lack faith in the intellectual capacity of my friends and neighbors. Sometimes knowledge is more trouble than it is worth. Everyone is familiar with the colloquialism “curiosity killed the cat”. As simplistic and folksy as that old saying might be. It does contain a grain of truth. In the pursuit of knowledge, we risk becoming jaded and overwhelmed by some of the more unpleasant aspects of reality.

Do you remember the disappointment you felt we discovered Santa Clause wasn’t real? Even worse, your parents’ marriage was nothing more than a sham? These examples may seem trivial but applied to grander questions they can make someone very skeptical. Skeptical to such an extent it brings them to the brink of an existential crisis. If you have devoted your life to political activism and you come across a few Public Choice articles regarding voting, you will grapple with your sense of identity. Being told that your vote carrying any weight is nothing more than an illusion is difficult to pill to swallow. Especially much of your sense of self and principles are derived from believing you have sway over political issues. Therefore, it isn’t necessarily prudent to want to dissect all of the mysteries of the universe. Even if it is a lie, sometimes that one lie is what helps people cope with the difficulties of life.

Looking too deeply into an issue is generally counterproductive at most jobs. The ability to extrapolated basic logic is generally rewarded. To overthink an issue, will cost your employer and customer time and money. Utilizing reason to more efficiently perform a task is conducive to being a “good employee”. Pondering the large philosophical questions at work eats into productivity. Also, getting so philosophical that you question the entire veracity of the enterprise of your employer’s goals or metrics will not win you any friends. Overtly questioning your superior’s decisions in Socratic prose will award you with some unfortunate adversaries. Speaking of friends, you will not be making very many. Most of your co-workers will think you are weird for not accepting the prima facie assumptions of our world. In most cases, avoid you like the plague. For all the philosophy majors currently working retail, at call centers, offices, etc. I feel for you. Your love of wisdom and truth can effectively alienates you from your peers.

Outside of the pursuit of knowledge destroying your coveted illusions and making you something of a misfit, is another issue, you can never put the genie back in the bottle. Once you have seen the truth, it might be enlightening, but you never look at the world the same way again. I do not personally subscribe to the new-age movement, but many who do talking about opening their third-eye. In most instances, these individuals will tell you don’t open your third-eye if you like your life the way it is. Why?  Once you have become enlightened, it is a point of no return. You can’t unlearn the secrets of the universe. You will never enjoy the pleasures of binge-watching reality television after a bad day at work if you have learned it is nothing more than a farce. Speaking of your job, the stable nine to five, you might want to quit your job because you figure out it is pointless. Decided to take on the risk of becoming an entrepreneur in an attempt to find a meaningful vocation. This is a lot of disruption for one person, especially if they are more than content with keeping the status quo intact.

I have never attempted to open my third-eye. However, I love to study philosophy and political economy. Once you have opened Pandora’s box of uncommon knowledge you will begin to crave it. Much like tapping into a deeper sense of consciousness, you can never see the world the same way again. Leading to some conflicts. I find it more and more difficult to care about my day job. I am a proponent of capitalism and all, however, I know there are better ways to make a living. I will never have the same work ethic I had before my independent study of the large questions. It was much easier to keep my nose down and get my job done back when I was ignorant. Demonstrating that it can be maladaptive for some people to reflect upon vast questions such as the quiddity of existence.

The process of seeking wisdom is never easy. Whether the actual pursuit is what makes a man weary or it’s the consequence of not being able to cherry-pick the pleasant truths from the unpleasant ones. This is why it can sometimes be a lonely path. For those who are inclined to take up the challenge, it is the only path. Despite the downsides of pursuing truth, knowledge, and wisdom in an imprudent world, for some, this is their only true calling. They are the ones who seek daylight when everyone else opts to remain in the cave. It is important to remember that pursuing truth does have its pitfall beyond misconstruing it. One excerpt from Plato’s Republic that encapsulates this point beautifully. It was about Socrates’ telling of the Allegory of the Cave in the book:  

            Therefore, even if a person should compel him to look to the light

            Itself, would he not have the pain in his eyes and shun it, and then,

            turning what he really could behold, reckon these as really more clear

            than what had been previously pointed out? (p.235).

That is it. The truth can be inconvenient. The truth could even unravel the very fabric of our being. Especially if it is predicated upon a false sense of identity or a flimsy house of cards built upon numerous lies. Much like almost all of the other cave dwellers in Socratic allegory chose to ignore the truth. Most of society elects to do the same. Similar to the discomfort experienced when our eyes adjust to direct sunlight, it can also be uncomfortable to be confronted with the unadulterated truth.

Romeo and Juliet – A Story About Wanting What We Can’t Have

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After watching the documentary I Love You, Now Die: The Commonwealth V. Michelle Carter I came to a fairly superficial conclusion. I initially chose to watch this HBO mini-series for potential legal analysis. I plan to address those concerns in a later blog entry. Oddly, from a legal standpoint, this case is quite interesting. There wasn’t any previous case precedence in Massachusetts state history. Making this case one that explores uncharted waters.  However, my observations are not about the legal facts of the case.

Conrad Roy III and Michelle Carter were two Massachusetts teens who had a highly toxic and co-dependent relationship. Both suffering from various forms of mental illness. Carter lived in a quasi-fantasyland. Blurring the line between romantic comedies and dramas with her relationship with Roy. Drawing parallels between their relationship and the ebbs-and-flows of numerous works of fiction. Even drifting down the perverse road of suicidal ideation. Hence, here aggressive attempts to coax Roy into killing himself. Carter almost took glee in the concept of the attention she would receive in the climatic event that Roy or Roy and herself had committed suicide. Her vision of being showered in attention was almost like a linear plot twist in play. The act of Roy killing himself was the divine Deus ex Machina to free him from the deepest depth of depression. Having the potential to satisfy the psychological pathology of both teens.

In one text message string, Carter details the romanticized depiction of the climatic end of Shakespeare’s Rome and Juliet. As we all, know both of the star-crossed teens end up dying in the end. Lying dead, right next to one another in the ultimate display of catharsis. Demonstrating to the quarreling families how petty their disputes truly were. It would be quite likely Carter saw some highly embellished similarities between the protagonists of the play and her relationship. Upon the documentary reviewing this string of text messages, my mind began to wander. I started to realize that the story of Romeo and Juliet if we strip all the emotional entrapment of romance is nothing more than an extended narrative detailing the Forbidden Fruit Effect. This phenomenon is also known as the Paradox of Temptation. Essentially, we desire what we cannot have.

This has economized instances of prohibited commodities. This principle is not confined merely to the illicit drug trade. During the cigar boom of the late-1990s and early 2000s, the U.S. demand for Cuban cigars skyrocket. To the extent that there was a major slump in quality. The one centralized tobacco producer for Cuba had to resort to using green tobacco and inferior quality control procedures to keep up with demand. It should be noted that the United States has had a trade embargo with Cuban since 1962. It’s hard to believe that much of the mystique of Cuban cigars to Americans isn’t influenced by them is a restricted product. We have seen a similar phenomenon with the legalization of recreational marijuana. What has been referred to as the “Green Rush”. A surge of sales for a product that has been legal and demonized in America for decades, that is now finally legal. To the naïve Cannabis user, the mystery behind its pharmacologic effects is enough of a draw to purchase Marijuana-related products. Would this romanticized image exist to the same capacity if Marijuana use was as ubiquitous as drinking beer? Most likely not. Most of the buzz and hype is levitating around pot because we have treated it as an unholy and deplorable vice for so long. Has only recently become fashionable (in the mainstream sense).

The story of Romeo and Juliet is if reduced to its most base level, a story about wanting what you can’t have. Due to the fact we steeped the narrative in a cloak of riveting romanticism, we forget that this isn’t purely a love store. Would Juliet be as appealing to Romeo if she was a member of a rival family? Couldn’t the same be said for Romeo? Granted, most of these pointed questions are a mix of a priori reasoning and loose conjecture. However, considering the flaws of human nature and the unfortunate fact we are attracted to what we can’t have. Analogous to a moth witlessly fly towards a flame. This seems to be an enduring characteristic of the human condition. Doesn’t matter whether it is two lustful teenagers in the Shakespearean-era or a 1920s Flapper enjoying an illicit gin-and-tonic. We want what we can’t have. Getting beyond the compelling drama of the vibrant and rebellious love affair between two teens, what are we left with? An engaging allegory fixated on desire. The drawbacks of pursuing everything we desire to possess.

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. 

Is Fractional Reserve Banking Ethical Part V: Conclusion and Compromise

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Introduction:

The debate over whether Fractional Reserve Banking is ethical to proceed over approximately a decade (the late 1980s/ early 1990s to the early 2000s). Resulting from subsequent papers repudiating the previous claims over the researchers on the other side of the issue. It should be noted that in these series of retaliatory papers that technical arguments were presented in tandem with ethical justifications for or against this practice. For the sake of brevity, I chose to focus on the ethical considerations of the topic. However, this does not exclude a potential technical comparison of Fractional Reserve Banking in the future. 

To any reader who has never thoroughly examined nor given a second thought to Fractional Reserve Banking, I hope reading this series of essays was illuminating. Fractional Reserve Banking is arguably the most prevalent banking system globally. Yet, something that impacts our lives daily we never think to question its inner mechanics let alone whether it is ethical. The ethics of banking extend beyond whether the patrons are benefiting at the expense of someone else, either through easy access to loans or interest payment on savings. There are potential ramifications to the economy. 

Distortions in the credit market are precisely the impetus for business cycle calamities such as the cataclysmic burst of the Housing Bubble in 2007. Providing loans backed up by fiduciary media is nothing more than a house of cards waiting to fall done. Artificially manipulating factors such as prices, interests, and money supply can only facilitate the misallocation of resources. Such indicators operate as unspoken signals to consumers and entrepreneurs. Due to this fact, these distortions create an illusory image of the loan market and naturally economic agents respond accordingly (p.108). A fact that both George Selgin and Lawrence White are too quick to refute and dismiss (p.102). This carries the implications of defrauding the economy as a whole versus being isolated to the bank’s customers. Even if you are the type to limit all your transactions to precious metals or cryptocurrency, it is worthwhile to read up on this topic.

Summary of Compelling Arguments From the Austrian School:

It is difficult to say whether the Free-Bankers or the Austrians are on the right side of the debate. Both camps provided some truly convincing arguments. The Austrian opposition notes how ownership can only legitimately be taken on by one person and Fractional Reserve Bank obfuscates this immutable law of property ownership. From a contractual standpoint, that the agreements between banks and clients in such an argument are illegitimate. Since the terms are not only unclear to the typical layman but are a categorical misrepresentation. Presenting fiduciary media as actual money. The disingenuous nature of this faulty contract is only compounded by the fact that these claims for money are based upon the banknotes that are not back by currency or specie. Attempting to redeem them for actual currency is analogous to using a deed for a boat and attempt to claim ownership of a house. Also that it is a false analogy to argue that any devaluation of present money caused by the issue of fiduciary media is no different than an increase in the supply of a good due to protection or harvesting. 

This is because the increase in the supply of lumber from harvesting more oak trees is derived from legitimate market processes and in-turn does not seek to directly devalue anyone else’s property. Also, that in no way can Fractional Reserve Banking represent the Demonstrated preference of bank clients. Demonstrated preference can only be expressed with one’s property. Fractional Reserve Banking by its very nature disrupts this relationship.

Summary of Compelling Free-Banking Arguments:

The Free-Bankers also bring up some compelling moral defenses in favor of Fractional Reserve Banking. They are even bold enough to directly claim the practice is not fraudulent. Through a banking client electing to accept the terms of service regardless of their understanding, the contract is still valid. It would be one thing if these banks purported to practice 100 percent reserve banking, but function as a Fractional Reserve institution. These contracts are formulated between consenting adults, it would be antithetical to the principle of individual freedom to prohibit such arrangements. The real trouble comes from government interference. One only needs to look at the large array of protections awarded to backs through the FDCI to see the true culprit in shielding unsavory banking practices from insolvency or litigation. Also, the ignorance or the naiveté of the consumer is not a reasonable justification for banning a product or service. Even though the risk of a bank run is present, it is a relatively rare occurrence from a historical standpoint. If faced with a potential bank run the bank can issue an option clause suspending redemption, solving the issue through valid contractual recourse. Speaking of redeeming bank deposits. A customer assumes the risk of not being able to redeem money when they agree to open an FRB account. They assume the risk. In turn, for the opportunity cost of having their liquid money held and the potential risk of a bank run/ insolvency, they receive an interest payment. Overall, patrons must prefer Fractional Reserve systems to 100 percent reserve banking. There have never been any governmental decrees in modern history that all banking must be done via a Fractional Reserve System. Despite its flaws, ultimately, the people prefer being paid interest payments versus having to pay warehousing fees.

Can There Be a Compromise?

There are certain aspects of both arguments that appear to be flawed. The Free-Bankers are too lackadaisical when it comes to distortions in the credit structure enabled by Fractional Reserve Banking. The Austrians to some extent seem too rigid in their interpretation of property ownership. Under many of their arguments likening the practice to a Ponzi scheme. Yet, to be conceptually consistent would not these same economists also take issue with multi-level-marketing? Then again it could also be counter-argued that MLM schemes and Fractional Reserve Banking while present similar confusions, property rights have much greater degree clarity in MLM arraignments.

Back in 2000, the economist Jorg Guido Hulsmann wrote an article in the Independent Review refuting the Fractional Reserve practice of creating “money”. Hulsmann (see page 108) much like his anarcho-capitalist counterparts Hoppe and Block are opposed to government intervention. If FRB is morally and technically flawed how can we address the issue of it short-comings without introducing state involvement? In this twenty-year-old article, Hulsmann presents a summary of points previously made by Hoppe and Block that would alleviate some of the issues relating to the categorical confusion. It should be noted that Hulsmann in that these suggestions for informal rules and norms of banking presume no state involvement in banking. Also, the author details the intimate relationship between the FRB and the government. Going so far as to refer to it as a “handmaiden” of government (p.108). Making it easy to infer that Hulsmann believes that the intertangled marriage between Fractional Reserve Banking and government is an unbreakable bond. However, let’s take these suggested conditions as theoretical and contingent upon a banking system free of regulation. See his suggestions below:

“…Fractional reserve banks would have to use a different language than they commonly use because words such as “deposit” are deceptive. They would have to make it clear that money “deposited” with them is, in fact, a credit of unspecified duration. And the “banknotes” they issue would have to be presented not as money titles but as some sort of very liquid IOUs..”

            “..On the “FR notes,” one would have to find a promissory note of the following type:

 The FR Bank promises the holder of this note to try to redeem it out of its gold reserves. Because FR notes are not 100 percent covered by gold presently in our bank, in case we cannot redeem, the following rules apply. . . .  (p.108)”

Is Fractional Reserve Banking Ethical -Part IV: The Defense of Fractional Reserve Banking

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Part I: Click here.

Part II: Click here.

Part III: Click here.

It is quite clear at this point that followers of Austrian economics view Fractional Reserve Banking as nothing more than a Ponzi Scheme. However, proponents of the Free Banking School (arguably an outgrowth of the Austrian School) believe that this practice is legitimate providing there isn’t any government interference in banking. Even the uninitiated observer will admit that this contingency is a highly unrealistic one. In the modern era, banking continues to be a heavily regulated industry. Free Bankers may have a relatively cogent ethical argument from a theoretical standpoint. After all, it is the responsibility of a mentally competent adult to be aware of the terms of service for any product or service they choose to receive. Ignoring the fine is not an exculpatory factor. Either from a legal standpoint or from an ethical perspective. Also, to be conceptually consistent one should scrutinize multi-level marketing schemes. Such a business model mirrors similarities to Fractional Reserve Banking. Hence why opponents liken it to a Ponzi scheme or pyramid scam.

Argument #1: It Isn’t Fraud.

From the Free Banking perspective, Fractional Reserve Banking is not a fraud. If the banking establishment makes it clear that the services provided constitute Fractional Reserve Banking, then the arrangement is legitimate. This is because the terms of the contract were not violated (p. 87). It would be problematic to present your services as 100 percent reserve banking if it encompasses the practices of the Fractional Reserve System. Fraud would entail a misrepresentation of the bank’s services. 

Taking any measures to prohibit this system of banking is antithetical to the principle of individual freedom. Any such interference would  be obstructing an existing contract between consenting parties. Doing nothing more than disturbing the economic liberty of freedom of contract, which is a pillar of private property rights (p. 87). Individuals who oppose the practice find the freedom of contract argument to be farfetched as few patrons have a firm comprehension of what Fractional Reserve banking entails (p. 88). The naivete of the consumer does not sully the legitimacy of the arrangement. Even Murray Rothbard himself has stated that historically banks have rarely retained a 100 percent reserve system (p.88). Why? Most likely because the banks clients preferred a Fractional Reserve system. If customers prefer an interest payment on their savings versus a maintenance fee for warehousing, so be it (p.88). The market for banking services has responded accordingly.

Circling back to the issue of misrepresentation of services, even the hardline naysayers believe that such a banking system could be admissible under certain conditions. Most notably if there was the further elucidation of the specific details of fractional reserve services. A long-standing concern of economists such as Hans Hermann Hoppe and Walter Block being that such ambiguity makes the practice fraudulent. Creates categorical confusions between money and fiduciary media (p.20-28). Professor Block asserts that the redemption requirements need to be clarified to set aside the concerns of fraud (p. 89). Whereas Block’s counterpart Hoppe stresses that banking institutions should present a warning regarding the suspension of redemption. He analogizes this precautionary courtesy to an option clause. Unfortunately, this concern does not comport with the facts of history. As is evident by the Scottish period of Free-Banking in which specie payment was suspended for decades (p. 89-90).

Another argument that grapples with the question of whether FRB is fraudulent pertains to the ability of the banks to fulfill redemption obligations. Keeping low percentages of reserves on hand turns money redemption into a gamble. However, this concern is inconsequential. Historically even in the absence of government intervention few banks have failed to fulfill any redemption obligations to patrons (p.90). For one, solvent banks are not prone to bank runs. Even in the event, a solvent bank runs out of currency, they can issue an option clause to temporarily suspending redemption. Resolving the issue through contractual channels (p. 91).

Argument #2- The Concerns Over Third-Party Effects Are Not Substantial

The most salient third-party effect or “spill-over effect” confronting the practice of Fractional Reserve Banking is a decreased likelihood of successful redemption. Obviously, in a Fractional Reserve Banking system, the more money that is lent out the fewer reserves the bank will have on-hand. Resulting in adverse consequences for the individual demanding to withdraw money from their account. It should be noted that the depositor agrees to this argument upon opening a bank account. Therefore, by signing on the dotted line of the terms and services of the bank, they choose to assume the risk (p. 93). Despite the risks, bank patrons continue to bank with these institutions. Alone based upon the Rothbardian theory of Demonstrated Preference the individual bankers must benefit from this arrangement. After weighing the benefits concerning the costs (p.93). 

The spill-over effects of Fractional Reserve Banking are not solely confined to banking transactions. The practice has also been claimed to create other distortions throughout the economy. Through how loans are funded it compromises some say the credit structure is compromised. It should be noted that the risks are somewhat minimal. If anything it aides the economy by providing a larger stock of capital (p.94). The issue with this criticism is that much of the instability in the economy comes from the intervention of central banks and governments and not Fractional Reserve Banking. This form of banking is not prone to instability or “cylindrical over-expansion”(p.94). These claims underestimate the fact that the amount of “nominal money” issued offsets the “.. changes in the velocity of money..”. Fractional Reserve banking works to alleviate the disequilibrium and “ business cycle consequences”. Hoppe and the company also assert that any injection of fiduciary media will ultimately result in a business cycle. However, if the increase in fiduciary media is matched by demand a disequilibrium will not arise (p.101-103).

Argument #3: The Popularity of Fractional Reserve Banking.

The popularity of Fractional Reserve Banking is another factor to contend with. Banking customers have demonstrated their preference for FRB. Historically, few banks have remained a 100 percent reserve system. However, customers continued to do business with these institutions (p.95). Contributing to this popularity has been the incentive of banks paying interest on deposits versus requiring a warehousing fee (p.95). Banking patrons also held faith that their bank had sufficient funds to fulfill withdrawal demands. Bank runs were generally triggered by other factors signally insolvency to bank clients. Countries such as the United States with greater propensities towards bank insolvency tend to have many protective laws shielding the banks from market pressures (p.95-96). It should also be noted that back in the 1800s when banking legislation was being discussed in the press the banking system was openly described as a fractional reserve system (p.96). Not only fully informing the average constituent of the details of the Fractional Reserve system, even with this knowledge doing little to dampen its prevalence (p.96).

The use of Fractional Reserve Banking has never been compulsory. There has never been any laws or penalties compelling banking in the United States to levitate towards this specific banking system (p.97). Patrons voluntarily assume the risk of engaging in this variety of banking for the trade-off of being rewarded with an interest payment (p.97). The argument that clients are unwittingly tricked into patronizing an illusory form of banking is dismantled by the fact that banks compete for business. Nothing is stopping an enterprising individual from persuasively selling 100 percent reserve services (p.97).

Is Fractional Reserve Banking Ethical: Part III- Concluding Arguments Against Fractional Reserve Banking

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Part I. Click Here

Part II. Click Here

Fractional Reserve Banking is Fraud:

If fractional reserve banking does not represent a legitimate contractual transfer of property then it must be fraudulent. However, Selgin and White precede with their ethical justifications for this form of banking. Touching upon a previous criticism levied by Hans Hermann Hoppe regarding how in the process of creating money titles what was intended to be a transfer between two parties ends up introducing third-parties (p.28). Both of the free-banking proponents dismiss this claim on the fact that “… spillovers from the others’ actions to the value .. property is an inescapable free-market phenomenon…” (p. 29 [p. 92-93] ). When these “third-party” effects veer into devaluation of another individual’s property they cannot be so easily dismissed. In terms of the context of fractional reserve banking, the devaluation of property is not equivalent to an increase in the supply of a commodity through production or harvest. It is categorically different (p.29). The difference is that an introduction of a greater supply of a commodity through market processes does not harm anyone’s property. However, the introduction of more money titles without an increase in the money supply has a “diminution” effect on the value of all the money held in the bank (p.30). This is done at the expense of all those holding money. They are the individuals who suffer from the debasement of the purchasing power.

The Appeal to Popularity Does Not Justify the Practice:

We are all familiar with the appeal to popularity fallacy. Unfortunately, Selgin and White deploy this faulty argument in favor of fractional reserve banking. Maintaining the stance that would not be commonly used if it wasn’t beneficial (p.30). All because a system is commonly used doesn’t automatically make it ethical or beneficial (p.30). If one is to utilize Rothbardian arguments to justify the methods of banking institutions we must evaluate this within the lens of his theory of demonstrated preference.  Which is best defined as “…actual choice reveals, or demonstrates, … his preferences are deducible from what he has chosen in action” (p.2). Selgin and White attempt to adapt this concept to an ethical defense of fractional reserve banking. This always the case? What about instances where the government monopolizes services such as defense and surveillance services? Hoppe et al. make this distinction in their repudiation of Selgin and White’s attempt to apply to demonstrate presence theory to an ethical defense of fractional reserve banking. After all, institutions shielded from market competition by government forces do not reflect individual preferences. Rather is the byproduct of a “territorial monopoly” (p.31). The theory of demonstrated preference only truly applies in instances where no coercion by the state is present. All because most countries have standing armies does not mean that this is the preferred method of allocating defense services.

Beyond demonstrated preference requiring conditions free of the monopolistic forces of the state, it must also be demonstrated with the rightfully obtained property. This because the theory “… presupposes…” legitimate “… property rights…”. These preferences of how to uses, retain, depose, etc. can only be demonstrated with one’s property. Anything else does not have a positive contribution to the general welfare of society (p.31). When we acquire property  due to the fact we are the one sole owner we obtain total jurisdiction over this property (p.32). Enabling us to truly demonstrate our preference. For example, If I wish to purchase a propane tank and use it for target practice on my ranch in the middle of the Sonoran Desert, it is my right to do so. As I (in theory) exclusively own the land, the propane tank, and the gun due to the rightful transfer of the lands and objects through several purchases. Through using my rightfully procured property in such a manner displays my true preferred use of these items. The practice of creating money titles in a fractional reserve banking does not demonstrate people’s preference for this system. Due to the ambiguity of rightful ownership of the currency in the vault. Rather demonstrates the demand for counterfeit money. As these money claims that are treated as being equal to currency are not being made in proportion to the notes on hand (p.33). Selgin and White hold that despite these considerations, fractional reserve banking is still ethical. Instead, it’s the government that presents a problem in the banking sector (p.34). This argument underscores the fact that in most instances this variety of banking systems were set up and supported by governments (p.34). This is only solidified by the point that legal institutions such as the courts and legislators will act by benefiting this system of banking. Most government institutions count on fractional reserve money creation for income (p.35).