This is the script for a future video that I think will be one of my most important works. So I would very much appreciate any feedback. Thanks.
The State Is Not Great: How Government Poisons Everything
By Jacob Spinney
Government is not reason, it is not eloquence – it is force. The thing that differentiates the government from any other group of people is that it is a territorial monopoly with the commonly believed right to use coercion. It’s time we stop fooling ourselves into believing that the government is the entity which allows us to achieve collective goals and start recognizing it for what it really is, the entity that enables one group of people to violently aggress against another; that allows one individual to benefit at the expense of another. Taxation, that is to say coercively taking people’s property against their will, and regulation, that is to say coercively preventing or restricting individuals from engaging in voluntary activities, is enslavement by a another name. But let’s ignore the ethics and just focus on the economics.
Under voluntarism, all interactions are mutually beneficial. In other words, all trades leave all parties better off than they were before, otherwise the trades would not have happened. But under coercion, at least one of the parties will always be worse off than they were before, otherwise coercion would not be necessary. Likewise, the more someone is allowed to keep what they produce, the more incentivized they are to produce in the first place. And the more one uses coercion to take away what they produce, the less incentivized they are to produce in the first place. Because of this, coercion will lead to less prosperity and the lack of sufficient incentive and capability for the government to allocate resources wisely will bring prosperity down even further.
In a voluntary market, businesses have the incentive to offer the best good or service at the cheapest price, because if they didn’t, their customers will take their business elsewhere. But if you feel that the state is spending the money it coercively collected through taxes on something you don’t think it should be spending it on, or if you feel that the state is being wasteful in how it spends that money, then you can’t simply decline to pay your taxes. You are forced to pay them anyway. Can you imagine the outrage people would have if a business were permitted to coerce its customers into buying their products? Yet the state does this very thing and people applaud it for doing so. Because the state is allowed to use coercion to collect its revenue and to maintain a monopoly over whatever good or service it wishes, it is far more incentivized to offer a worse good or service at a more expensive price. States are also much more incentivized to go to war with each other, not only because they are able to externalize the cost onto the unfortunate soldiers and taxpayers, but also because the more countries a state is able to take over, the more tax revenue it is able to collect.
This is not to say that the state has no incentive to care about satisfying the wishes of its citizens. Surely the rulers do indeed care, but only to the point that it helps them to maintain their political seat. When a state starves a society from being able to see the amount of peace and prosperity that would otherwise be achieved if not for the states coercion, then people are no longer able to measure the quality or efficiency of the goods and services that the state is providing, because there is no voluntary institution to compare it to. And the clever rulers will even go one step further and create a corporatized market by passing rules and regulations that allow corporations to cartelize and monopolize the marketplace and defer their business risks and losses onto the taxpayers. Then the rulers will point to the obvious negative outcome of this arrangement they created and blame it on the free market that didn’t exist in the first place. The more the state is able to hide the positive effects of voluntarism and scare people into wishing for coercion, the less accountable and more exploitative the state can be.
Let’s say that there is a bunch of public grassland open for all shepherds to use to feed their sheep. Can you guess what happens? Of course, the shepherds see an opportunity to offer free food for their sheep. And so rather than their incentive being sustainability, their incentive is to get their sheep to eat as much of the grass as possible before the other guy has his sheep eat it all. The end result is consuming more grass than the grass is able to replenish itself with. Meaning that in the long run, the shepherds will run out of grass to feed their sheep, the sheep will starve, and then the shepherds themselves will starve. This problem is known as the tragedy of the commons; which, put simply, is a scenario that privatizes gains, but socializes losses.
The government is a perfect example of the tragedy of the commons, especially democratic governments. The majority is granted the right to decide on how to spend other peoples money. Can you guess what happens? Of course, everyone votes on how they think other peoples money should be spent, because if they didn’t, someone else will. And of course, because it’s not their own money they’re spending, they are incentivized to spend a lot more of it. The same is true with representative democracies, except that the rulers, who call themselves representatives, are also incentivized to be short-sighted and offer bribes and promises to the present voters while subtly deferring those costs onto future generations. And then, once in office, they are incentivized redraw the electoral college maps so as to ensure their reelection! Do you think it’s just a coincidence that most of us are dissatisfied with the government, yet most rulers continue to get reelected? And because the majority of people are not economists, most people fall victim to common economic fallacies that seem to make sense on the surface, but have the opposite effect in practice. And since the majority of people hold to these economic fallacies, the state will as well. Not only will this system end up creating laws that destroy prosperity and slow down, or even stop, societies progress, but it is doomed for failure, because eventually it will run out of other peoples money.
Imagine, for a moment, that grocery shopping was decided by a coercive democracy. You are forced to buy whatever foods the majority tells you to. The best you can do is cast your vote for what you want to buy and hope for the best. But because of the very nature of democracy, what will most likely happen is that a one-size-fits-all solution will be imposed and everyone will end up being forced to buy many foods they do not want and be forced to not buy many foods they do want! Compare this to a voluntary system of grocery shopping, where you are allowed to buy only what you specifically want, and you can see the unnecessary waste and conflict that coercive democracy naturally brings. Rather than focusing on the voluntary means of exchange, innovation, and efficiency in order to increase prosperity for everyone, democracy incentivizes everyone to instead gripe with each other over which group of people should be allowed to exploit the other. The irony is that the distorted incentives that legalized coercion creates are what sow the seeds for the very doomsday scenarios that voluntarism is feared to bring.
But let’s just say that there is some way the state is able to overcome all of these distorted incentives that a coercive institution brings; checks and balances, a constitution etched in stone, a magic robot that executes any ruler who makes the wrong decision, what have you, and that the state is able to place an incorruptible angel in power who has nothing but the best incentives to spend our money as wisely as possible. Even then, this is economically impossible. The more of a monopoly the state grants itself over offering certain goods and services, the less voluntary exchange can occur within that sector. The less voluntary exchange that can occur, the more impossible it is to have any market-based prices of these goods and services. Meaning that it is impossible to know how much these goods and services should cost and it is impossible to know how many, in what quality, and in what form these goods and services should be provided, or even if these goods and services are the best allocation of the scarce resources needed to produce them, because it is impossible to calculate these things without market prices provided by voluntary exchanges.
Coercive institutions have had monopolies over many goods and services for so long that considering voluntary solutions seems completely foreign to us. And because humans naturally fear change, we hold impossible standards that the voluntary proposals must meet. But if you are like me, and you prefer voluntarism to coercion, then shouldn’t this burden of proof be reversed? Shouldn’t it be the coercive proposals that we should hold extreme skepticism toward?
So how would this voluntary market work? Before I answer this question, I would encourage you to stop for a moment and thoughtfully consider the points that I have made so far. We cannot begin to think about possible solutions before recognizing that there is indeed a problem. So if you still think that the state is somehow able to solve all of these incentive and calculation problems, then that is what we should talk about. But if you are like me and you have finally accepted that a coercive monopoly can never solve these problems, because it is the very cause of them, then let’s talk about a possible alternative.
The solution is simple. Society must stop granting legitimacy to coercive monopolies. This solution will end all of the incentive and calculation problems, because the goods and services being provided by a coercive monopoly, with the incentive to offer lower quality at higher prices, will instead be provided by voluntary competing organizations, who thus have the incentive to offer the highest quality at the lowest price. And because we now have voluntary exchanges, we are now able to have market prices and, consequently, we are now able to calculate how to allocate resources toward maximizing the satisfaction of consumers.
Other than offering the foundation of voluntary interaction within a competitive market, I can really only offer guesses as to how I think this society would work. Let’s say for a moment that, for as long as we can remember, the government has claimed a coercive monopoly over offering the good of apples. People like me would point to the outrageous price and poor quality of government apples and attempt to explain how apples would be better and cheaper if they were provided under the voluntary means of trade and charity. And inevitably, we would be met with hostility and textbook scare-story arguments.
“But food is a necessity! We can’t live without it! Are you really willing to take the risk of starving to death?! What about the poor who no doubt would never be able to afford apples in your ‘free market?’ And charity?! Ha! If you don’t like government apples, you can move to a deserted island and grow all the apples you want! If we let the naive laissez faire ideologues be in charge of providing apples, then THEY’LL be ones overcharging! One time the government gave one guy the exclusive right to sell apples and he charged even more than the government did! The free market at work! Can you point to anywhere in the real world where your fantasy land actually exists?! The fact that you can’t proves that this is just a pie-in-the-sky fairy tale that will fall apart into Mad Max chaos! Now if the world was filled with angels who weren’t looking to take advantage of us whenever they could, then maybe we can give this voluntary thing a try. But until then, apples are far too important to be taken over by GREED. We need to entrust them to the wise and caring hands of our state rulers. But ok., Mr Economics, I’ll give you a chance. Who would supply the apples? How many apples would be available in each city? Exactly how would they produce the apples? How would the apple producers be able to get enough capital in order to produce enough apples? How many different competing apple producers would there be? What would be the price of these ‘free market apples?’ Who would ensure the safety of these apples? How many apple inspectors would there be? Who would fund these apple inspectors? Why would the apple producers take the risk of letting the apple inspectors inspect their apples? What’s to stop the apple producers from cartelizing and charging monopoly prices? What’s to stop the apple cartel from colluding with the apple inspectors and paying them under the table for AAA ratings so that they don’t need to worry about the safety of their apples?”
And so on. And so on. And so on. Now I cannot possibly answer all of these questions, because the very point of instituting a free market to solve these problems is because it is impossible to predict the best solutions. If I were able to predict exactly how everything would work, then there would be no need for a free market and it would be an argument for making me the supreme dictator of the world. But we are human beings. We do not have infinite knowledge. Because of this, we have to rely on the next best thing, which is the wisdom of crowds. That is to say the fact that the average of everyones guesses is much more likely to be the correct answer than the vast majority of the individual guesses themselves; even the guesses from the experts. For example, on the TV show, “Who Wants To Be A Millionaire,” there are three possible lifelines the contestant can take to assist themselves if they are stumped on a question. They can have two of the four multiple choice questions removed, they can call an expert, and they can poll the studio audience. Counterintuitively enough, experts are able to get the question right 65 percent of the time, but the studio audience is able to get the question right 91 percent of the time. The free market is a perfect illustration of the wisdom of crowds. Just like the biological evolutionary process of random mutation and natural selection, the voluntary market is the economic process of calculated risk and consumer selection. Entrepreneurs under a voluntary market are incentivized to constantly find new ways to offer better, faster, and cheaper goods and services. Those who are the best at actually doing this are rewarded with profits. Those who are not so good at doing this are punished with losses. Thus, you have a natural weeding out process that puts capital in the hands of those who are the best at allocating it correctly. Unlike the rulers in the state, I’m not going to lie to you and act like I know how apples should be provided, but I do know that a voluntary market is the best way for finding out.
That being said, I do have a few guesses about how I think this voluntary market would work. Let’s start with the fundamental axiom of property. Ethically, in a voluntary society, you would own yourself, the property that you have acquired through trade, and the property that you have acquired by mixing your labor with previously unclaimed resources. Practically, who owns what and by what legitimate means do they acquire it would be decided by property claims organizations who would in turn make those decisions based on what that particular community believes about property rights. The more wide sweeping and ridiculous the property claim, the more likely no property claims organization would recognize it, because if it did, then all of that organizations claims would no longer be recognized by any of the other property claims organizations. Because these organizations want their claims to be recognized by everyone else, they have the incentive to cooperate and recognize each others claims, and only make reasonable claims themselves. But of course, this doesn’t mean that there will never be conflict. Just because we’ve gotten rid of legitimized coercion does not mean that the murderers, rapists, and thieves will magically stop murdering, raping, or stealing. Because of this, there would be a very high market demand for protection. Now, obviously, the cheapest method of preventing violent crime is for society to arm itself. The more armed a society is, the more criminals will think twice about committing any crimes. It is also quite likely that businesses will provide security on their property so as to incentivize people to do business with them. Aside from that, I believe that the best way this demand for protection will be met is by Homeowners’ Associations and protection insurance companies.
For Homeowners’ Associations, the model is pretty simple to understand. The real estate developer will go into the middle of nowhere and homestead some land or he will buy it from the person who already homesteaded the land. Then he will create a neighborhood of houses that he will rent out under the condition of agreeing to a one-year HOA contract which could entail a monthly fee of X amount of dollars to be specifically spent on offering communal services such as neighborhood security, a justice court, medical center, fire department, plumbing, electricity, road maintenance, and so on and so forth. Because of the the fact that it’s easy for renters to simply up and leave right down the road to another HOA if the renewal to their contract is not to their liking, all of the HOA’s have the incentive to offer the best communal services at the cheapest prices. But what’s the difference between a Homeowners’ Association and a government? It is the difference between voluntarism and coercion. The government acquires land by simply claiming it and threatening to kill or imprison anyone who disagrees, even if there’s someone already living on that land before the government claimed it and even if it is a ridiculously huge section of land that the government has made no use out of whatsoever. Whereas the real estate developer can only claim land by buying it from the previous homesteader, or by homesteading previously unclaimed land himself. The government grants itself the right to violently impose costs, goods, services, and rules upon you against your will. But an HOA is not allowed to impose anything upon you without your express written consent. People often say, “If you don’t like the government, you can leave!” Well let me ask you a question. Let’s suppose that I come up to your door and I say, “Hey, how’s it going? I’m just here to inform you that the majority of your neighbors have voted that I now own your house, and by deciding to live here, you have implicitly agreed to the social contract, even though you never signed any such thing, and the social contract says that it’s OK for your neighbors to vote to give me your house. But you know what, I’m a nice guy. I won’t kick you out. You just have to start paying me however much rent I decide to charge you for living in my house. If you refuse, then I will regrettably be forced to have you arrested and imprisoned. But hey, if you don’t like it, you can move!” Does this sound like a legitimate justification for my actions?
But what’s to stop the HOA’s, or anyone else, from violating their contracts with you? Simple. Within the contract itself, you would have a clause in which both of you agree to a certain impartial third-party arbitrator to solve any potential disputes, as well as what amount of authority the both of you agree to give the arbitrator in order to enforce his decision. Perhaps both of you would each pay half of the arbitration fee at the time of signing the contract. Or perhaps the arbitrator will collect his fee from the losing party in the event that a dispute arises. There could also be the possibility of taking on contract insurance so that even if the person in the wrong is unable to pay the full restitution, your contract insurance will be able to cover the rest of what you are owed. These contract insurance agencies would thus be incentivized to find ways to minimize the amount of contractual breaches that take place. Such as offering contract scores, much like how banks offer credit scores, so that if someone is found guilty of breaching their contract, then he will be given a very low contract score which will disincentivize anyone from entering into any future contracts with him. Under this scenario, there would be a high market demand for impartial arbitration agencies. Because people would have a very legitimate concern of the arbitrator being paid off to rule in favor of the other guy, arbitration agencies would have the incentive to not only enact preventative measures and severe punishments for any of their arbitrators accepting bribes, but competing arbitration agencies would also have the incentive to look over their competitors cases with a fine tooth comb and publicize any suspicious rulings they find, so as to get more customers to switch to their arbitration agency. Surely, there could still be the possibility for accepting bribes in cases that could go either way, but this is much less likely to happen in a voluntary market than in government courts. Because if one of the arbitrators in an arbitration agency is caught accepting a bribe, the arbitration agency will lose its customers. Whereas under the coercive monopoly of government, if a judge is caught accepting a bribe, then the judge is fired, sometimes, and replaced by another judge employed by the very same coercive monopoly.
Another possibility is protection insurance companies. People would take on insurance policies against being assaulted or stolen from. The protection insurance company might also include crime investigation and legal representation. And the insurance companies, wanting to minimize their risk of payouts, would offer lower premiums to customers with alarm systems and firearms so that they can better protect themselves. They would also be incentivized to pay for a security agency that would be on call and offer patrols around the neighborhoods of their customers. And out of public demand for a base level of universal security, as well as the wish to not have to confirm that you are indeed a customer before getting any help, these security agencies would also be incentivized to offer help to anyone they see in need. I imagine the same methodology would have fire insurance companies funding fire departments and health insurance companies funding medical centers. The fact that people can freely choose their own insurance company and switch services at the click of a button incentivizes these insurance companies to continually strive to offer the best quality at the cheapest price. Now since this would be a voluntary society, most people would consider violence to be the absolute last resort. Under this framework, security agents would only be permitted to use physical force and arrest an individual when they see for themselves that the individual is in the very act of violating someone’s person or property. Aside from this circumstance being met, security agents would only be allowed to use nonviolent means to get cooperation. Namely, the very underrated, but extremely effective, voluntary method of blacklisting. That is to say that individuals have every right to dissociate themselves from you and ban you from their property for whatever reason they wish. Casinos cooperating with each other to blacklist cheaters and drunk people is a pretty good example. If you are blacklisted, then no one in this society, or any other society it’s networked with, would offer you food, water, electricity, or protection against anyone who wishes to do you harm. Perhaps, just like credit and contract ratings, there would also be reputation ratings, and the more of a jerk you are, the lower and lower your reputation rating until the point that you are blacklisted. And so society can lay out under what circumstances security agents would be allowed to reduce your reputation rating in order to encourage cooperation.
So let’s say that person A is murdered. Person A’s protection insurance company now investigates the crime and reasonably suspects that person B was the murderer. And so the insurance company charges person B with murder in front of a very well respected impartial third-party court. Person B is invited, but not forced mind you, he is still innocent until proven guilty, to come to the trial and defend himself. If he refuses, then the court will try him in abstentia. If he is found not guilty, then obviously nothing happens. If he is found innocent, then perhaps the insurance company would have to offer restitution for accusing him. And if he is found guilty, then he would have to offer restitution to person A’s estate and submit himself to whatever the court decides is just; whether that be therapy, job training, or whatever else they believe will stop this individual from committing any future crimes. And, just like contract and reputation ratings, there might also be crime ratings. If he refuses to submit to the courts decision, then his property would be forfeited to person A’s estate and he would be blacklisted from society until such a time that he does decide to submit to the courts decision. But what if person B had his own protection insurance company who rejects the finding of the court? Then protection insurance companies A and B would agree on which court to hold the trial. If person B’s insurance company refuses to hold the trial in any reputable court and instead will only agree to hold the trial in a kangaroo court, then the kangaroo court and person B’s insurance company would be blacklisted and person B would have to submit to the ruling of the original court or face having his property forfeited and being blacklisted as well.
But wouldn’t people be able to free ride on the security, fire, and medical services offered by protection, fire, and health insurance companies? Sure. But they would not be able to free ride off of the insurance itself, as well as crime investigation and legal representation in the case of protection insurance for example. Even though you can free ride off of some services, the fact that you are not able to free ride on many of the essential services incentivizes you to continue paying for coverage. The more severe a free rider problem might become, the more incentivized society is to use voluntary measures to counteract it. Such as insurance companies offering discounts to customers who are more conglomerated with each other so that their service coverage can be more zoned in, or stores offering discounts to insurance holders, or even individual stores deciding to ban any free riders, or even society itself deciding to blacklist or reduce the reputation ratings of any and all free riders who can pay, but just choose not to. Or perhaps society would just lean more toward the HOA method of organization which is completely immune from this free rider problem. These voluntary methods of encouraging cooperation could also be used to solve such problems as persuading a holdout to sell their property in the extremely rare case that a road builder cannot possibly find any alternate route to building his road. These methods could also be used to gather enough funding for defense agencies who would offer military power to defend the voluntary society against potential foreign invaders.
But what’s to stop the defense agencies from monopolizing and forming their own state? The simple fact that society would not want them to! As long as most people within this voluntary society wanted to maintain its existence, then they would enact measures to ensure against this very possibility. Perhaps society would, under threat of blacklisting, induce any would-be defense agencies into contractually agreeing to open itself up to random audits, inspections, and interviews. Perhaps they would also have to agree to have all of their funds, including those funds that go toward buying weapons, ammunition, and paying the salaries of their soldiers, to be held in bank accounts that could be instantly frozen the very second that society even suspects them of intending to become a state. Perhaps they would also have to have a large sum of money in an escrow account that would be used to place bounties on their own heads if they decided to try to use coercion of any kind. As well as getting them to contractually agree to team up with all of the other defense agencies to take out any individual defense agency that has gone rogue. Society might also decide to place a limit on the market share that any individual defense agency can have to the point of any collusion being practically impossible. But even if we assume that it is a inevitable that this voluntary stateless society would, under all circumstances, eventually form into a state. Even then, that is a not a reason to simply give up and let the state have its way with us. It does not logically follow that we should all kill ourselves, just because eventually we’re all going to die anyway.
Now I could be completely wrong in every single one of these guesses I’ve made about how this voluntary market would organize itself. But even if I am, that does not mean that a coercive monopoly is the solution. It just means that we need a voluntary market in order to figure out what the solution is.
So, have there been any historical examples of this voluntary society? So far, there have only been glimmers in history of this kind of voluntary market being tried. But there have indeed been plenty of cases in history of societies working perfectly fine without having to have any coercive monopolies rule over them whatsoever.
The merchant law that took place in medieval Europe is a perfect example of a completely stateless and voluntary legal system whose rulings were abided by even though they were only enforceable through the voluntary means of boycott and ostracism.
Another very interesting case is Celtic Ireland, which for many centuries was the most advanced and civilized country in all of Western Europe. Individuals would become members of a Tuath (too-ah), which can be thought of as offering the communal services of insurance companies and, just like insurance companies, you were able to decide whatever tuath you wanted to be a member of. Disputes and crimes were resolved by professional arbitrators who were referred to as brehons (breh-hens). And you could decide upon whatever school of brehons you wanted to arbitrate your case. The law was centered on restitution rather than punishment. And if someone was found guilty and refused to pay this restitution, then they would be blacklisted from society. (http://mises.org/journals/jls/1_2/1_2_1.pdf) Rather than this stateless society falling apart into chaos or forming into a state from within, it existed for over a millennium and it required the outside superior military might of the British Empire to finally overthrow it.
The claim that we need a coercive monopoly in order to maintain law and order is logically and empirically false. The fact that this voluntary market society has yet to be truly tried in the real world is evidence of only that. Not that it could not possibly work.
Statism seems to be predicated on the belief that we are all too stupid to run our own lives and find voluntary solutions to our problems, but that somehow the state is able to have people rule over us who are not stupid like we are. People who are incorruptible, wise, and selfless enough to overcome all of the distorted incentives their coercive position lures them into. People with supernatural knowledge so that they can allocate resources better than the wisdom of crowds in a voluntary market. People who don’t need a state to rule over them like we do. In order for statism to work, we have to believe not only that gods exist, but that they are running our government; which isn’t too far from how states started in the first place. The state has been promising for tens of thousands of years that allowing them to use coercion against us is the solution to our problems and over and over again they eventually collapse and impoverish and kill countless numbers of people along the way. Maybe it’s time we choose to stop buying this snake oil and finally begin to think about how to organize society in a more peaceful, sustainable, prosperous, and voluntary way.