Friday, July 18, 2008

The central problem with government

I am supposed to be using this blog to think through why I object to government and why I am an anarchist. I think that all the problems with government can be crystallized down to one, incompressible bit of error: government is an organization granted the power to make decisions and export the costs of those decisions onto others.

"Government is an organization"

People often ask questions like, "What is the will of society?" or make statements like, "This is what the people want." It is a fallacy, however, to speak of uncoordinated groups in terms of telic purpose. When a group of soldiers is routed and begin a panicked retreat, fleeing for their lives, is this a reflection that it was "the will of the soldiers" to retreat? To say it was "the will of the soldiers to retreat" would imply some kind of consensus, or organization, but in the case of a panicked retreat, this clearly cannot be the case.

Let's say 80% of Americans want to go to war with country X. If you ask 10 random Americans why they want to go to war with country X, you are liable to receive 10 different answers. Sure, they may all be motivated by a common national tragedy as in the case of 9-11, but their reasons for wanting to go to war will vary widely. How can 10 people spread over a country millions of square miles in size be said to have a common, telic purpose of any kind, even if they happen to agree by super-majority that the US government should take a certain action, like go to war with country X? To illustrate the absurdity, does the fact that David Cook won American Idol reflect that it was the will of Americans that he win? Such a statement is unintelligible and absurd.

So, what kinds of things can exhibit telic purpose? Well, certainly, individuals can exhibit purpose. You can make choices that reveal your preferences and express your will. Organizations can also exhibit telic purpose. Corporations exhibit the purpose to earn a profit and their actions, as a rule, consistently reveal this purpose. Societies, associations, bureaucracies, and assemblies can all exhibit purpose.

Cultures may exhibit patterns of behavior but I think it is not appropriate to describe these patterns of behavior as purposeful. I think the dividing line is in the nature of how cultures vs. organizations are structured. Organizations invariably exhibit top-down, hierarchical control. Their stated goals are rarely conflicting and they exhibit the ability to plan into the future. Cultures, on the other hand, usually do not have hierarchical control or even a single, charismatic leader. Cultures, as a rule, seem to be driven by population dynamics more than any kind of central planning or hierarchical control. Nations are an arbitrary political grouping of people that do not even coincide with cultural groups. To speak of a nation as having a will or purpose is a pernicious fallacy perpetrated daily by news media, academics and regular folks.

Why does this matter to the central problem of government? Well, the myth of democracy is that government is "of the people, by the people, for the people." This is a quaint bit of propaganda that implies a synonymy between the people and the government. But this cannot be the case because the government exhibits telic purpose whereas the people do not. That is, the government is distinctly organized with the three branches of government at the top (and the Executive, arguably, first among equals) and all the bureaucracies below. The Federal government even has a ranking system, the notorious G1, G2 and so on. The people do not have a will. Each individual has a will. Organizations exhibit purpose. But "society" or "the public" are just arbitrary groupings of largely unassociated individuals.

"... granted the power..."

The government has never had power that has not been granted to it by its host society. The government, by virtue of the fact that it is parasitic, is a minority. As a consequence, it is intrinsically less powerful than its host society - the weapons which make government seem more powerful are only effective so long as the majority of people obey the rules. Once mayhem breaks out, the weapons lose their effectiveness and the tiny minority who parasitically controls society becomes powerless. There are numerous examples of this throughout history, such as the French revolution.

Government only has power because it is granted power by society. This doesn't mean that governments can easily be changed or overthrown by their host populations but whenever it comes right down to widespread chaos and rioting, government loses because most of the weapons it uses to maintain its parasitic control over society rely on the majority of people remaining compliant. (Revolutions are still very rare because of the "Who's going to step up first?"-problem, but that's a different topic.)

"... to make decisions and export the costs of those decisions onto others."

This is the central problem with government.

Imagine a credit card such that when you spend money on the credit card, there are 1 million other people who are legally required to each pay 1 millionth of the balance you rack up. If you spent a million dollars, you would only be incurring a $1 burden on the folks required to pay your credit card balance. How much money would you spend? Well, you'd spend as much money as:

- Your conscience limited you to
- The people could pay
- You could tolerate the haranguing of the folks required to pay your balance

We see each of these throughout the history of human governance. In some very rare cases, rulers have exhibited self-restraint and have not spent as much of society's money as they might otherwise have spent. In other cases, we have seen government literally spend all the money in society. In most cases, however, government spending has been limited by the potential for political unrest. The government usually spends as much money as it feels will not trigger riots and social unrest, when fears of external threats are minimal*.

The powers of taxation, inflation and public debt are all forms of the public credit card above. The government may make whatever decisions suit its purposes and export the costs of those decisions onto the public. This is an ancient and barbarous practice that is nothing short of criminal.

So, if it is true that government only has the powers which society grants it, and government's powers to tax, inflate and incur public debt are harmful to society, then why does society grant government these powers? I think there are several reasons:

1) Most people do not understand the basic economic principle that there are no free lunches - everything has a cost. Without understanding this, it is not clear that every action the government takes imposes a cost on society.

2) Most people assume that an organization with the power to export the costs of its decisions is the only organization which can provide many services, especially military defense, security services, adjudication and conflict resolution. "Government isn't perfect, but it's a necessary evil."

3) Most people don't believe the government is just another organization. They assign all kinds of mystical and magical powers to the government but there is only one power the government has which no other organization has in its territory: the gun. The gun is both the excuse for and the means by which the government maintains its hold on the instruments of power: taxation, inflation and public debt.

4) Most people today do not understand that the market naturally imposes costs on socially undesirable behaviors (theft, fraud, etc.) by forcing individuals to bear the costs of their own decisions. When we empower government to export the costs of its decisions, we are actually removing the natural limitation of the market on undesirable behaviors. This is why governments have always been and still are the biggest traffickers in all forms of crime (I will spell this out in future posts on the consequences of the central problem with government.)

Because of this, people do not see the causal connection between the bad decision-making of government and the removal of costs on bad decisions by the public.

5) Psychological studies show that people prefer a small chance for a large prize to a better chance of a smaller prize, even when probability theory says the two are mathematically identical. Would you prefer a 1 in a million chance to win $1 million or a 1 in 100 chance to win $100? Mathematically, both choices have the same expected payout. Psychologically, people prefer the million dollar jackpot.

What does this have to do with government? Well, in the competitive free market, you can make a good living, but you will have to work hard. The market leaves very few leisurely, yet profitable, occupations since leisure is not an efficient use of time. The political economy, with the government's unlimited public checkbook, provides many opportunities for a leisurely, profitable occupation. By virtue of this fact, there are many people trying to claw their way to the top to reap the really big rewards, which reduces the odds of actually hitting the jackpot. But psychologically, it should not be surprising that people prefer a long shot at easy money (through the political economy) to the essentially sure thing (the market economy) which, even if it is more monetarily rewarding, entails significantly more effort.

6) Even many libertarians assume that defense must be provided by an organization with the power to export the costs of its decisions because even if a society tried to live freely without a publicly-funded government, its neighboring countries who still tolerate the existence of an organization with the power to export the costs of its decisions would be able to invade and militarily defeat the helpless free society.

It may or may not be true that neighboring countries would try to invade but there is no reason to believe that an organization without the efficiency constraints of bearing the costs of its own decisions can militarily defeat organizations with such constraints, especially in the age of technology. Scale doesn't decide wars, efficiency does.

I think the best way to understand this is relative to the history of how free countries have defended themselves against expansionist military socialist countries. Nazi Germany had inevitably to collapse because of its centrally controlled economy. Soviet Russia and Maoist China attempted to awe the West by dedicating an incredible proportion of their economy to production of military weapons. But the massive misallocation of resources only led to impoverishment and, in the case of Russia, total collapse.

Let us say that Region A secedes from all sovereign states and becomes an absolutely free territory. Country B - perhaps the country from which Region A seceded - attempts to invade Region A. While this invasion will impose costs on Region A, by virtue of the fact that people in Region A do not rely for their defense on organizations with the power to export the costs of their decisions, Region A - when considered in aggregate - suffers far less economic loss in defending itself than Country B must expend in its irrational aggression against Region A. In the long run, Country B will exhaust itself.

*This is the opposite conclusion you might expect - when external threats are very large, government must decrease spending to ensure sufficient internal productivity to be able to afford to protect itself. The "total war" of the 19th and 20th century simply illustrates that invasion of a nation is not necessarily a threat to the core organization of government which may relocate itself in exile with other allied nations. Governments which can relocate themselves out of harm's way are free to waste a nation's productive resources even in the face of imminent external attack.

No comments: