Suicide as a Natural Right -Part IV (a): Social Capital

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Following Dr. Block’s supposition that a person can commodify themselves and effectively sell or alienate themselves (p.6), we must address the issue of capital destruction. The economic costs go beyond losses in productivity but also have more subtle ramifications throughout the economy. The act of suicide destroys a person’s body; however, the intangible assets lost are arguably the most detrimental. Most notably, in the form of squandered human capital and social capital. While these forms of social capital are refutably mere constructs, they still seem to possess a priceless qualitative value. In the absence of the knowledge, credentials, and necessary social networks financial success is not possible. 

Commodifying these abstract concepts applies them to John Locke’s postulations regarding wasting resources (p.12). But if the value of commodities is subjective, we have to evaluate Locke’s assumptions regarding frivolous resource consumption. Furthermore, if we accept this notion of wasteful consumption, we must apply it to other areas of resource allocation. For example, investing too in production can be considered a wasteful form of resource allocation. Under Locke’s theory, if extrapolated, we should bar entrepreneurs from making overinvestments in their firms. Not only would such a law be unenforceable, but it also suffers from the Hayekian Pretense of Knowledge. Neither the businessman nor the lawmaker has access to perfect information. How would the lawmaker even know if a business owner engaged in malinvestment until the downstream effects have come to full fruition, paralleling the flaws of proactive legal sanctions? Entrepreneurial decision-making is enveloped in uncertainty. To quote the great Frank H.Knight:

It will appear that a measurable uncertainty, or “risk” proper, as we shall use the term, is so far different from an unmeasurable one that it is not in effect an uncertainty at all. We shall accordingly restrict the term “uncertainty” to cases of the non-quantitative type. It is this “true” uncertainty, and not risk, as has been argued, which forms the basis of a valid theory of profit and accounts for the divergence between actual and theoretical competition. (p.84)

To preemptively declare a form of capital use or manipulation as “…wasteful..” is fallacious. At best, we can attempt to use market signals as a guide for appropriately deploying capital. Whether an investment was prudent or foolish will only be known once the downstream consequences are evident. In this respect suicide is just a form of managing the “… social..” capital structure through the informal destruction (p.21) of such social assets. Allowing people to dispose of capital at their own free will allows for the unfettered restructuring [1] of productive activities utilizing human and social capital. Allowing the substitution or destruction of “..social..” inputs. 

Foot Notes:

  1. A reference to the Austrian Theory of Capital

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.

Privatizing The Police Could Help The Poor

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Among the common arguments against privatizing policing services, one common repudiation is that it would leave the poor under-protected. A security and protection service based on direct billing or a subscription service would exclude individuals of meager means. Raising concerns that a two-tiered system of justice would arise (Benson,1990, p.309)[1]. Under a publicly funded criminal justice system, a “two-tiered” system already exists. Historically, poor neighborhoods have been either under policed or provide an inferior quality of policing services. After years of receiving a low-quality service, the natural consequence is that the residents of these lower-income communities will grow to distrust the police. Justifying the provision of state policing services does not stand up to closer scrutiny. If anything suffers from many of the market failures that critics theoretically attribute to a privatized system.

Many of the over warmed arguments that a for-profit system only stands to skew incentives. The assumption being that firms will desire to keep the costs of production down to increase profits. This notion conjures images of the inadequately trained, middle-aged, and overweight mall security guards making just over minimum wage(Benson, 1990, p.301) [2]. However, few people realize that in light of the growth of the private security industry over the years specialization has created a diverse continuum of security services. Even over thirty years ago there was a vast range of salaries in the field of private security. Some agents even earning $100,000 annual at managerial positions (Benson, 1990, p. 303) [3]. Different types of security would require various levels of credentials and training. Meaning that to a certain degree that a private security detail with armed guards and the security agent at the local mall provides two distinctly different services. Hence, the differential in compensation. It would also be overkill to put the highly trained and combat seasoned armed guard in the security detail for a mall. As the mall has invested in a multi-million dollar security system and cameras (Benson, 1990, p.302) [4]. Reducing the need for such high caliber human capital. If anything does not demonstrate underinvestment in security services, but a high degree of investment in technology. Having a state-of-the-art security system and an experienced arm guard would be enough more than a misallocation of resources. In other words, the firm would be wasting money. Especially when the aptitude of an armed robbery is much lower in a strip mall when compared to a bank.

State-funded policing services are insensitive to the profit-loss mechanism, misaligning the incentives of operations away from efficiency. From a public choice standpoint, the institutional incentives for policing services have been profoundly perverted. Government-funded departments are constantly in competition with other adjacent bureaus for budgetary allocations. Creating the need to demonstrate a demand for the services provided by the agency (Benson, 1990, p. 94-95) [5]. Those in law enforcement keep the demand for their services high through advocating and influencing policy (Benson, 1990, p.109) [6]. Police unions operate as muscular lobbying organizations. For example, police unions funding anti-marijuana campaigns to thwart legalization attempts. Why? Because keeping the sale and consumption of cannabis criminalized (one of the most commonly used illegal drugs) will help solidify job security. Budgets are determined based on need. The publicly funded police respond to crime on a first-come first-service basis leaving many incidences of crime unaddressed until it is too late (Benson, 1990, p.137) [7]. This method while not wholly intentional does help facilitate larger budgets towards various local policing bureaus. A more reactive approach towards crime versus a preventive approach tends to reward the local agency. This is because budgets are predicated on crime statistics (Benson. 1990) [8]. All of these concerns make it kind of ironic that there is so much distrust of private enterprise in handling policing. The claims that private firms will cut corners and “fabricate” offenses to increase profits (Benson, 1990, p.303) [9], when much of this behavior seems to model what is done by state police agencies.

The postulation that a for-profit policing system would benefit the rich, does not take into account that the poor take on most of the costs of the current system. It goes beyond just the misaligned incentives of the public police agencies. A woman living below the poverty line is significantly more likely to be raped (Benson, 1990, p.310) [10]. While this fact may not prove causation is qualitatively indicative of a lack of protection under the current system. Due to higher tax rates in affluent neighborhoods, there are more resources for patrols and crime investigations (Benson, 1990, p.309) [11]. Demonstrating a disparity between the quality of service between poor citizens and rich ones. In a private arrangement, the state would not hold a monopoly on the production and policing services. Allowing less affluent citizens the ability to form their firms and organizations to provide policing for their community (Benson, 1990, p.308-309) [12]. If firms do not provide affordable services the economically disadvantaged can form their institutions. Something that would not be an option for government-provided policing due to political opposition. A prime example of this was measures taken against the Black Panthers’ neighborhood patrols back in the 1960s.

Many pundits could respond by mentioning the difficulty for disaffected communities lacks the organization to form their institutions. However, if we truly treat policing and law enforcement services as a purchasable commodity this collective action problem may soon dissipate. Charitable foundations can be formed to provide communities or individuals with free private security and protection services. Security services can also be gifted on an individual basis through gift cards for private security services. The idea of transferring security services to another person either as a gift or through charity was influenced by an adjacent concept practice in medieval Iceland. In this medieval society like most during the “dark ages” there was no central government. Most adjudication took place within the context of customary law. Meaning that most infractions were resolved through restitution, mimicking modern-day Tort law. If a poor man could not afford to pay his restitution for an offense, a wealthy member of the community could pay it on his behalf. Treating this obligation as a transferrable right (Benson, 1990, p.307) [13]. If historically, the obligation to pay restitution can be transferrable, why cannot policing services also be transferrable? Beyond being able to give such services charitably or as a gift, couldn’t individuals also sell, less, or otherwise transfer unused services? We could even set up private voucher programs for poor communities to receive funds to patronize any security firm of their choosing. All of these possibilities from a prima facie standpoint, appear to be better than the present system.

Public Trust Doctrine: Part I

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The Public Trust Doctrine is a legal concept that has its basis in ancient Roman law and English Common Law. Being a legal construct, it has been subject to interpretation causing it to evolve over the centuries. Arguably some of the most radical shifts in its judicial application have occurred in the nineteenth and twentieth-century American courts. Shapeshifting from a doctrine used to prevent monopolization of public waterways to a blunt instrument wielded by the interests of the environmentalism movement. Subordinating water usage rights and other forms of private property to loosen conditions that public trust law has been applied. Some scholars such as Joseph Sax perceiving a contextual application of the concept as being too narrow. Believing that having more malleability with the application of the doctrine will help sustains its core function (p.4). This function being putting common resources to the best use for society. Rather than allow these resources to be sold off and alienated by private interests.

At first glance, Sax’s assessment of the doctrine may seem fair to those who are concerned about economic equality. The keen insights of legal scholar Richard Epstein provide an interesting perspective on the Public Trust Doctrine. He essentially likens the concept to be an inverted version of Eminent Domain law (p.8). Meaning that the Public Trust Doctrine mitigates private individuals from commandeering public lands without just compensation. Implying that an individual for example buying public land should not be doing so below the market price. Mirroring how just compensation is an implied right in any takings case as depicted under the Fifth Amendment of the Constitution.  In a society where taxes have been collected this premise makes sense. As taxpayers being the primary contributors to public funds, they own all public assets. In instances, where the costs of selling a public good to a private party outweigh the benefits it can be disputed whether the asset(s) should be sold.

Epstein successfully demonstrates the reciprocal nature of both Eminent Domain and the Public Trust Doctrine. The reason why both legal concepts parallel each other is the fact they are at their core interpretations of property rights. Both provide a framework for the conditions under which property can be transferred from one party to another. One describing the contingencies under which private property can be transferred for public use. The other presenting the conditions under which public property can be alienated for the use of a private party. If we are to hold property rights in high esteem both are subject to the conditions of the Takings Clause.  Unfortunately, both concepts wavered in front of protecting property rights. Proponents of a liberated form of the Public Trust Doctrine have no problem utilizing its amorphous nature to circle property rights to achieve environmental objectives. Theorists such as Sax show little concern for this erosion of property rights. Anything even remotely of a Classical Liberal disposition can be nothing but horrified by the diminished regard for private property in the American legal system.  In terms of the property being misappropriated to satisfy environmental objectives, it is easy to point to Sax being the linchpin for this decades-long trend.

It is not fair or intellectually honest to point all of the blame on Sax, technically the unfettered application of the doctrine began back in the nineteenth century.  Formulating from the seminal case Illinois Central R. Co. v. Illinois, 146 U.S. 387 (1892) considered by many to layout the rubric for the modern American interpretation of the doctrine. However, legal scholars such as Richard J. Lazarus point out that there was a precipitous change in the interpretation of the legal doctrine in the years following the 1970s (p.3). Displaying that there was a radical shift in the jurisprudence surrounding the doctrine that happened to coincide not only with the insights of Sax but also with the nascent period of the Environmental movement. Surmising that the environmental movement hastened the development of the doctrine isn’t at all outlandish. Especially considering it has traditionally been utilized as a legal construct to manage public waterways. Shedding some light on why property rights and environmentalism have historically been at odds. Truly prudent environmentalism manifests itself in sound resource usage and allocation. This can only take place in a world where property rights are enforced. Not nullified through arbitrary and tilted interpretations of legal traditions. Particularly ones that have never even been fully fleshed out in statutory law that take on capricious attributes. Merely shift due to a change on the whim of social trends.

If good resource management aligns itself with good economic policy, why couldn’t more market-friendly approaches to environmental problems be proposed as a compromise? At the very least devise compromises that respect the ownership of private property. One such compromise could entail a theoretical statutory codification of the Public Trust Doctrine. This would mandate compensation regardless of conditions under which land is transferred by the state. While the author is not completely comfortable with the idea of formal written law, this would be a pragmatic solution for two reasons. First off, it would operate as a formal constraint against loose interpretations of the Public Trust Doctrine. Second, it would demand compensation to those who were experience damages by the transfer of a property. Through a formal revision, not only can the doctrine be constrained to its original purpose it also will serve as a safeguard against unjust takings.

The Lockean Theory of Property- Part II

 

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In Locke’s book the 2nd Treatise of Government, he provides an answer to a perplexing problem concerning property rights. What authority grants us the right to own and acquire property? Is it the whim of a benevolent monarch that provides us a right to property? Are we granted a right to property through cultural norms?  Is the right to acquire and own property the by-product of legislative fiat? Locke would suggest that none of these factors wholly justifies our right to ownership. He asserts that it is a natural right endowed upon us by our creator. Veering away from the premise that ownership is privileged granted by a ruler or government. Rather, it is the birthright of every free individual. Opposing the convention that the king has dominion over everything within the boundaries of his kingdom.

 

It could be argued that to some capacity that theorist before Locke had an understanding of property rights Even the famously illiberal  Niccolo Machiavelli stated in The Prince:

 

What makes him hated above all, as  I said, is to be a rapacious usurper of the property and women of his subjects. From there, he must abstain, and whenever one does not take away either property or honor from the generality of men….  (Machiavelli, 1532, Transl. Mansfield, 1985).

 

Machiavelli did recognize property rights based on natural law. He saw respecting the property of a ruler’s subjects as a matter of pragmatism. A ruler cannot get ward off insertions and usurpation plots if he is hated by his people. Demonstrating how the indignation of the people can potentially operate as an informal check on power. Even in illiberal principalities. However, provincial self-interest falls short of a comprehensive ethical argument for the preservation of property rights. This is why this philosophical breakthrough is attributed to Locke. Versus previous thinkers.

 

The bigger mystery at hand is how did humans end up acquiring private property? In the nascent period of human history, nomadic people did not own land. Moved from location to location searching for various resources. Upon the dawn of the Neolithic period, hunter-gather societies were on the decline. Humans started to form sedimentary communities. Before permanent settlements, all lands and resources were part of a commons.  What is known as today as a common-pool of resources. Where the availability of resources is not limited by private ownership. Once humans started to acquire land, they were effectively taking it out of the “commons”. No longer could your neighbor harvest lumber from the thicket of woodlands you now presently own without permission.

 

How land transitions from the “commons” to private ownership is where Locke’s theory comes into play. We are born free and therefore we own ourselves. Consequently, we own the fruits of our labor. Through our private effects, we effectively take the resource out of the commons by harvesting it.

 

The labour of his body, and the work of his hands, we may say, are his property. Whatsoever then he removes out of the state of nature hath, provided, and left it in, he hath mixed his labour, and joined to it something that is his own, and thereby makes it property. It being by him removed from the common state nature hath placed it in…

(Locke, 1690, P.19. Ed. Macpherson, 1980)

 

Effectively, if now one else owns the resource and you effectively harvest it or process it for use it is yours. Unfortunately, this method of claiming tangible property is much more complex in the modern era. Most land and resources are under either private or state ownership. There are exceptions. The ocean is one of the few pure tangible commons left. Where fishing rights tend to be delineated by licensing or argument. However, this same principle of ownership can be applied to intangible goods in the form of intellectual property. This explains a plethora of societal sanctions for copyright infringement, plagiarism, and a myriad of other varieties of intellectual theft.

 

Locke, in his argument, does not condone resource consumption without limits. We can continue to procure resources providing two conditions 1.) we are not letting anything spoil and 2.) we are leaving resources for others (Locke, 1690, P.21). Inferring that God didn’t bless with bountiful resources to squander them nor to be gluttonously hoarded. This demonstrates the fact that there natural limits on consumption. Providing that we stay within these limitations our consumption doesn’t transgress against the rights of our neighbor.

 

Locke also provides some interesting commentary concerning the introduction of money. Many resources that are harvested are perishable meaning we can only take as much as we intend to personally use. Limiting us to a Robinson Crusoe Economy, laboring for mere subsistence. Any further harvesting would lead to waste. What Ludwig Von Mises referred to as Autistic Exchange. Unlike harvested goods, money does not decompose.  This characteristic of money is so salient that it is one of the seven defining features of money. By the introduction of a medium of exchange vastly expands our ability to consume resources by remedying the issue of waste and depletion(Locke, 1690, P.23). Substituting currency for barter we can develop a division of labor. Instead of attempting to produce everything we need, industries emerge that are devoted to food production.  Meaning other segments of society can create other goods and services. Using the market as an allocation mechanism we can remedy the waste/ depletion conflict. Producers will tailor production to market demand, limiting the potential for waste. This also provides consumers with the opportunity to freely acquire these resources.

 

There are two caveats here. One we still see plenty of instances of hoarding in free-market economies. No system is perfect. Hoarding can still transpire with a common-resource pool in a state of nature. A market-based system helps diminish the coordination issues associated with obtaining resources. Also, keep in mind, this treatise was written before the technology that allowed for mass resource extraction. This issue could be mitigated through private harvesting collectives and contractually agreed upon extraction quotas.

 

The second being is that money helps minimize the number of resources being spoiled. However, it is not a full-proof safeguard against it. Then again, there is never a full-proof method of preventing bad consequences.