Organizational Structures in Market Anarchism

Peter G. Klein has written a new criticism to the "left-libertarians" on organization theory. Both Klein and the "left-libertarians" have made some errors. We will identify some problems with the arguments pointed out by both sides below.

Klein, who cited Rothbard as a source, may have performed the argument to authority. Klein used Rothbard's "critique" of agorism, to exploit Rothbard's overwhelming popularity within libertarianism, to push his point-of-view. However, Rothbard, in his critique, entirely strawmanned Konkin's agorism.

Rothbard, in the first portion of his article, misinterpreted Konkin's objections to voluntary corporations and joint stock companies. Rothbard thought that Konkin wants to aggressively forbid the development of these organizations. Rothbard misinterpreted the statement "Konkin opposes wage labor."

Walter Block, Stephan Kinsella, and Murray Rothbard use and interpret the word "oppose" to mean that they oppose actions that violates merely the non-aggression principle.

However, the Aristotelian liberals, such as Roderick Long, defines morality differently. Aristotelian liberalism, which simply denotes a brand of market anarchism that preaches virtue ethics, defines "morality" as a broader system beyond the meta-normative conception of rights. The term "morality," in this sense, can imply voluntary ethical systems that does not necessary coincide with the non-aggression principle. When an Aristotelian liberal says that he "oppose something," he might actually mean that he want to voluntarily persuade others to avoid doing that thing. Likewise, when Roderick Long says that he "morally opposes wage labor," he actually meant to voluntarily advocate alternative arrangements besides wage labor. Long made a similar claim in his libertarian feminism article. When Long said that he "morally oppose prostitution," he actually meant that he wanted to voluntarily abolish prostitution by persuading prostitutes to look for alternative occupations.^[1]

We should not use the term "corporation" due to its vagueness. Often, people conflate the term "corporation" in its legitimate sense and "corporation" in the illegitimate sense. In its illegitimate sense, the term "corporation" signifies state privilege; and "corporation" its legitimate sense signifies an orgazation with limited liability contracts with explicit consent by all parties. This terminological barrier confuses the whole debate.^[2]

In addition, a "corporation" could mean a network of independent contractors,^[3] to borrow this phrase from Peter G. Klein. One could conceptualize this by imagining independent contractors as employees. Even in the real world, we find it hard to distinguish an independent contractor from an employee in the legal sense. Some might define the two terms as the degree of boss control, but we cannot find any strict distinction between independent contractor and employee. How much boss control, specifically, would make the worker an employee instead of an independent contractor? Because we cannot indentify the essential characterists of independent contractors from employment, some would denote these two terms as synonymous.

The term "firm," like "corporation," also has a fuzzy denotation. A firm, for example, could mean a loose association of smaller firms. A firm could also man a cartel agreement among competing sub-firms, or a "business trust." Could we label a joint venture itself a firm even that it comprises of two smaller firms? If we go further with this, we could even label each "independent contractor" as a firm. One could simply imagine an independent contractor as a firm that associates with another firm that pays for its services. The arbitrariness of the term "firm" makes it hard for some to decode its meaning in certain contexts, such as the size of the firm in a free market. We cannot make a valid argument that the median firm will employ less workers in a free market, because of the vagueness of the term "firm."

However, I understand the gist of what the "left-libertarians" mean when they talk about "smaller firms" in a free market. We can rephrase this ideas to this:

Workers will have greater control over his workplace, instead of the CEOs and senior managers monopolizing control; management will be delegated to more specialized workers instead of unspecialized CEOs and senior managers; power will be distributed more evenly among the workplace; workers will have more freedom from boss commands

Obviously, I criticize the second half of Rothbard's article in defense of the reformist political process. Rothbard's critique of the U.S. Libertarian Party seems to not understand that Konkin opposes them on strategical grounds, not merely on meta-normative grounds.

Overall, Rothbard's wrote his article in an extremely legalistic tone. First, Rothbard strawmanned Konkin that he wants to illegalize corporations and wage labor. Secondly, Rothbard strawmanned agorists for their alleged belief them illegalizing the U.S. Libertarian Party and illegitimacy of voting. Even in an agoristic point-of-view, agorists do not want to illegalize either one of them. Agorists do meant "immoral" by "illegal."

When the agorists label corporations and hierarchy as "immoral," they do not mean that they want to prohibit them. They mean by a prediction that workers will find a lesser degree of hierarchy in a free market. The agorists also label "voting" as "immoral" because they consider voting as strategically counterproductive.

Rothbard, in a paragraph, uses over-systematized nonsense to defend the right for slaves to vote:

Let's put it this way: Suppose we were slaves in the Old South, and that for some reason, each plantation had a system where the slaves were allowed to choose every four years between two alternative masters. Would it be evil, and sanctioning slavery, to participate in such a choice? Suppose one master was a monster who systematically tortured all the slaves, while the other one was kindly, enforced almost no work rules, freed one slave a year, or whatever. It would seem to me not only not aggression to vote for the kinder master but idiotic if we failed to do so. Of course, there might well be circumstances — say when both masters are similar — where the slaves would be better off not voting in order to make a visible protest — but this is a tactical not a moral consideration. Voting would not be evil but, in such a case, less effective than the protest.

Rothbard therefore strawmanned the agorists. Like Rothbard, the agorists also defened the right to vote. However, the agorists oppose voting on strategic grounds. Aside from the deontological moral arguments against voting, agorists oppose voting mainly for its impracticality and its bad consequences. Some agorists even have created a moral rule against voting because of its impracticality and its bad consequences.

I see problems with the term "agorism" because of its ambiguity. An "agorist" could mean a Carsonian mutualist who opposes stick ownership of capital and land. That just does not accurately describe my positions.

Setting terminology aside, the term "agorist" has another problem. Some agorists strategically support the black markets and unions. However, I previously described black markets and unions as counterproductive:

Anarcho-capitalists who advocate political reform is functionally a classical liberal, since they do the same thing. Similarly, a market-anarchist who supports syndicalism is functionally an anarcho-syndicalist. An agorist who only sells prohibited drugs is functionally the same to all of the other non-libertarian workers in the black market. Non-straightforward ways of promoting libertarianism are thus highly inefficient.

I emphasized above that grey markets differ from black markets. Grey markets, unlike black markets, can actually work. I support grey markets for its decreased risk.

I also see problems with the term "mutualism." However, that does not imply that I consider the current system as the lesser evil than a mutualist society. Indeed, like most Rothbardian market anarchists, I would rather live in a mutualist society than in any corporatist system, if I had to choose from these two options. Furthermore, if someone opposes the term "mutualism," it does not imply that she opposes allying with the mutualists. Someone can still hold an ardent alliance with the mutualists even if she dislikes to describe herself as a "mutualist."

I have read most of the chapters in Kevin Amos Carson's book Organization Theory. Ninety percent of its chapters deals with empirical "case studies." These "case studies" look redundant and uninteresting. I learned noting new from this book, as I already know the corporate privileges beforehard. Many market anarchists know that there exists significant principal-agent problems in all organizations, such as the oversight costs of employing workers and communication barriers. For proof, I commented about this at Francois Tremblay's blog:

I agree that employment has the principle-agent problem caused from asymmetrical information. I know the significant communication barriers and oversight costs of employing a worker. I also know that in the current system, the employer can give arbitrary orders to the worker whatever the employer feels like it. I agree that in a free society, more independent firms would function.

In a free society, more workers would create independent firms. Instead of the worker agreeing on a contract allowing the employer give arbitrary orders without any extra compensation, the worker owning his or her own firm would have more motivation to innovate instead of doing tedious work that the employer demands. Productivity and innovation would increase and the worker would actually appreciate their work.

I commented the above before Kevin Carson even released his chapter of how productivity and innovation would increase, and oversight costs will decrease under a free market. I commented this on October 7, 2008, but Kevin Carson released his chapter about this on November 2, 2008. Even Stephan Kinsella mentioned the obviousness of these agency costs in all organizations, before Kevin Carson released his chapter.

Therefore I regard Carson's book as a total waste of time. Many other anarcho-capitalists, such as Stephan Kinsella and Peter G. Klein, knew the problems of business organizations without even reading Carson's book.

Furthermore, I carefully noticed the differing definitions of "social hierarchy":

If you define a hierarchy as the criminals above-the-law who defends the state’s existence, I would oppose hierarchies. If you define a hierarchy as any middleman, such as those who transports goods throughout the society, I would support the hierarchies that function voluntarily.

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[1]

I commented about this at Polycentric Order:

The word "oppose" has multiple meanings. In an article on Libertarian Feminism, Charles W. Johnson and Roderick T. Long "opposed" prostitution. However, they still support the right for individuals to exchange sex for money. They had used "oppose" to mean that they want to voluntarily abolish prostitution, but still support the right to exchange sex for money.

Likewise, when mutualists say that they "oppose wage labor," they do not mean that they oppose the right to create employment contracts. They mean by a prediction that workers will find better ways to make money instead of following the orders of his employer.

[2]

I commented about this at Polycentric Order:

Even though I oppose "corporations" in the sense of state privilege and involuntary limited liability "contracts," I still support "corporations" in the sense of purely voluntary limited liability contracts between two explicitly consenting parties.

[3]

I had previously used the phrase assocation of independent contractors in place of network of indepent contractors at Polycentric Order

you cannot assume that worker cooperatives will have less problems than an association of independent contractors ... Comparatively, democratically-controlled worker cooperatives would have more agency problems than an association of independent contractors.

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Left-libertarians argue that in a free market, there would be "less" "vertically integrated" firms, partially got that idea from Kevin Carson, and from their logic. However, this is not true.

First, they did not agree to a definition of what a "vertically integrated firm" is. All factories are "vertically integrated firms" because they seperate the production processes to different machines. In this way, vertically integrated firms exist because they are more efficient, and do not have to pay for the cost for transportation, etc.

So, certain types of "vertically integrated firms" are more efficient. However, they also argue that because of our current monopoly of firms, there would be less because competition undermines these inefficient vertically integrated firms. They are using the words "but" in "but there would be less" without thinking about others.

There would be MORE vertically integrated firms and corporations in a free market because there are no barriers to entry to start a corporation or a vertically integrated firm in a free market. So arguing that there would be less "corporations and more private contractors" in a free market is nonsense.

Also, many libertarians argue on blatant geographical assumptions. For example, some left-libertarians argue that everything in anarchism is privatized. However, there could exist unprivatized land and atmosphere. For instance, Hans-Hermann Hoppe defend "immigration reduction" on the assumption that all land and atmosphere is privatized so many people would use them to block transportation. Another example is the belief in collectivist roads from left-libertarians, as they argue because all land is private, there should be some collective transporation to prevent the owners to charge high tolls.

Also, left-libertarians are more sympathetic to anarcho-communists. This is false. Anarcho-communism is a type of collectivist anarchism, where the workers and people collectively own all the means of production. This includes the military. Why would anarcho-communists have respect to the individual when the military is collectively controlled by the workers, just like democracy? Hence, anarcho-communism is a dictatorship by the workers.

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Limited liability can be specified by contracts, but in the current situation, some limited liability businesses has an advantage over unlimited liability businesses. Suppose a robotic truck driver runs over your property. This cannot be contractually enforced because you did not buy the truck. The owner from the truck driving company cannot get sued, because he has a state-granted limited liability privelage. Therefore, the owner can malinvest by producing more robotic truck drivers regardless of safety to get money. The business, however, is protected by the state.

If you attempt to use PDAs defend against the truck driver in a statist society, you are liable for damaging their property. But in an anarchist society, you can use private defence agencies to offer compensation from the truck company.

However, because our current situation is not a market anarchist society, the trucking business cannot be compensated by PDAs because they are protected by the state. Thus, in some situations, limited liability is a priveladge from the state.

Another thing is their limited liability from intellectual property violations. They have an advantage in making products that violate patents. This is unfair to unlimited liability businesses. But the main problem is the legality of IP laws, which should be eliminated along with the state.

Yes, do not mistake me--some limited liability can be specified by contracts--but some do not and is a priveledge of the state.

Pierre-Joseph Proudhon Advocates Worker Ownership

If you hear someone yelling the phrase "property is theft," you might intuitively label him as a communist or as an economic collectivist. However, many libertarian bloggers and blog commentators challenge this assumption.

First coined by a 19th century mutualist Pierre-Joseph Proudhon, contemporary mutualists and Rothbardian market anarchists continue to repeat this motto. Even that this aphorism sounds absurd at first, they generally claim that Proudhon did not meant "property is theft" in the literal sense; they claim that Proudhon referred it to the property stolen by the state. Therefore, they claim that merely "semantics" caused this terminological conflict. A blogger called "Brainpolice," in a post titled Remembering Proudhon at Polycentric Order, postulated this:

There is also a context in which Proudhon was very much in favor of private or individual property, viewing it as an indispensible [sic] counterweight to the state.

A lot of market anarchists therefore asserted that Pierre-Joseph Proudhon favors property, and that he used "property as theft" as a rhetoric to attract readers. Andrew's post and the commentators at this blog post unanimously cited Brainpolice's assertion without even reading the primary sources.

However, if we take a closer look at what Proudhon meant by "property is theft," Brainpolice got it all wrong. In Proudhon's treatise What is Property?, he advocates the "possession" or the "use-and-occupancy" theory of property. Proudhon, therefore, as he said, rejects sticky property (Lockean property), or the perpetual ownership of property:

So that in society the only thing which could bring back the inequality of labor would be the right of occupancy, -- the right of property. (Page 124)

Therefore, Proudhon used "property is theft" to mean that "sticky property is theft."

Brainpolice probably got this idea from Brad Spangler's post on Proudhon, which Spangler in turn got it from this web page. If Brainpolice took that idea from Spangler, then he certainly did popularize Spangler's claim to misrepresent Proudhon. Brainpolice claimed that Proudhon merely opposes state privileges on property, but advocates sticky property just like how the Rothbardian market anarchists do.

Also, in contrast to the popular opinion, Proudhon actually rejected "the fruits of our labor" as a justification for property. He repeats this position in Chapter 3 of What is Property. Proudhon only justified property by "possession" or use-and-occupancy.

Furthermore, Proudhon used "property is impossible" to mean his theory of primitive accumulation. Proudhon argued that in a society ruled by sticky property, over time, a few hands will eventually concentrate nearly all property. He argued that these proprietors will then rent out their property to serfs. Therefore Proudhon actually used "property is impossible" to mean that "sticky property will lead to feudalism, with the poor propertyless (i.e. impossible for the poor to own property)." Proudhon demonstrated this in Chapter 4 in What is Property:

Every possessor of lands, houses, furniture, machinery, tools, money, &c., who lends a thing for a price exceeding the cost of repairs (the repairs being charged to the lender, and representing products which he exchanges for other products), is guilty of swindling and extortion. In short, all rent received (nominally as damages, but really as payment for a loan) is an act of property, -- a robbery. (Page 167)

Many market anarchists blindly follow Brainpolice's authority for his claims. In the past, Brainpolice, in a comment on his website, dogmatically claimed that Mikhail Bakunin actually uses the phrase "collectivist anarchism"; and that Lysander Spooner and Benjamin R. Tucker actually use the phrase "individualist anarchism" to describe themselves. We have also refuted this. We have dispelled these misconceptions.

Against Information Privacy

I dislike to describe my beliefs with one-word, two-word, or three-word labels. Such labels, which include "libertarian," "anarcho-capitalist," and "agorist," describe belief systems inaccurately and imprecisely. Also, I dislike to describe myself with words that I consider as glittering generalities, such as "individualist." I will therefore describe myself below in a precise and concrete dialect.

To label my belief system more precisely, I believe in total informational freedom and oppose all forms of censorship, informational privacy "rights," and publicity "rights." Such informational privacy "rights" only protect criminals (which includes the state), enhance groupthink, discourage group cohesiveness, encourages dishonesty and free riders, violates the freedom of thought, and contradicts with ethical individualism. And most arguments for informational privacy "rights" rest on the flawed argument that employers would "discriminate" employees. To achieve total informational freedom, I support the re-legalization of defamation, slander, libel, hate speech, blackmail, voyeurism, audio and video recording, eavesdropping, and the banned privacy-destroying technologies.

I posted this because many market anarchists, and self-described "individualists," support some types of censorship.

Flaws of GDP, Factors of Inflation, and Velocity of Money

What the GDP measures

GDP (Gross Domestic Production) measures the total money used to purchase newly produced, finished goods during a year. The GDP, however, does not measure the money used to purchase used-goods.

A commonly cited refutation of GDP involves the breaking window fallacy. Breaking and repairing windows increase expenditure, which increase GDP, even it harms individual. Breaking windows forces an individual's money to spend repairing instead of using the opportunity costs things that the individual actually desire.

GDP, additionally, does not measure economic distribution. Some individuals may have a poor standard of living or also unemployed, even if the aggregate GDP compares greater than other nations. This seems true for highly corporate-capitalist economies, in which the CEOs of the corporations steals almost all of the income from others.

GDP, also does not measure the underground economy.

A more important refutation deals with the GDP measure on production without any consumption. However, production and consumption overlap, so the GDP has to judge whether production or consumption occured in its fuzzy circumstances. Volunteer work, increases both production and consumption, because the individual find it psychically pleasing to do this work. Some individuals may enjoy producing open source software, so they consider producing open source software as also consumption. For instance, individuals may use open source software as consumption since he learns how to code software better by programming open source software, but open source software has a side-effect of production. In order to measure production, the state has to arbitrarily define which products constitute production, and which products do not. But as some activities fits in between production and consumption and does not have a distinction, the state can have the power to manipulate measurement to artificially increase GDP by defining a wider variety of products as productive processes.

Taxation, may even increase GDP, since individuals must work harder to pay these taxes. If we subtract government spending from the GDPs of the Nordic states, these GDPs will literally halve.

The mainstream media commonly speaks propaganda that deals with ``growth rate" as fast or slow. We cannot judge whether an economy grows fast or slow only by its ``growth rate." Underdeveloped economies have a potentially much higher growth rate than more developed economies. As the amount of technology stays the same level in all economies, the underdeveloped economy grow faster by accumulating technology. The underdeveloped economy would grow fast not because its economy ``grows," but its economy catching-up from previous state inhibition of growth.

The growth rate of the underdeveloped economy would eventually decrease as its economy catches up with the developed economy, due to diminishing returns.

Cultural influences to GDP

Differences in culture, knowlege, and preferences of individuals may have a greater impact on GDP level. Individual ignorance, religion, and other cultural preferences like the birth rate may have a greater impact on GDP than economic.

On health care issues, the Western individual may eat much processed food, which may increase the prevelance of certain diseases. These, however, raises health care spending, which, in turn, increases overall GDP. Should individuals eat healthy, the overall GDP would decrease, as the level of health care expenditure decreases.

The pharmeceutical and psychiatry industries may increase the GDP by a lot. These industries defraud its consumers to take expensive medication, which have no beneficial use to them. As many individuals spend a great deal of money on medication, the GDP may increase by much.

Cultural traditions may also impact GDP. Holiday tranditions such as Christmas, may have a larger impact on individual spending, and may also increase GDP. Spending time in churches may increase GDP due to greater spending. If the population does not believe in religion, the GDP would decrease due to lesser consumption.

We should use birth rate as another factor. The greater the birth rate increase, the lower the per capital GDP, even if the aggregate GDP did not change. As the state records the children born to mothers in a census, the higher the birth rate, the greater the population, which would make the per capita GDP decrease.

Other factors of price increases

An increase in the price of oil, in fact, may increase the culminative prices of all goods, even in the case in which the total money supply stays constant.

The oil price increases the opportunity costs of oil consumption, which produces a net deficit of oil utilization, and also the the underutilization higher-order machinery, such as cars, that consumes oil. This underutilization of goods and services that uses oil, due to increased costs, would result in a net decrease in gross production. Since the proportion of gross production compared to money supply decreases (or the velocity of money), the overpricing of oil would result in apparent price increases through all goods and services in the economy.

We should take caution not to interpret the above paragraph as the Keynesian idea of ``cost push inflation." Their theory sets the false assumption that even if gross production stays constant, the culminative prices will increase. Our theory, however, depends on the decreases in the gross production relating to oil.

In order to demonstrate more fully why decreases in gross production would cause price increases, let us set a clearer example: If it suddenly costs several times more to produce all kinds of goods, such as food, clothing, and services, the gross production of the economy decreases. If the money supply stays constant, the ratio of goods over the supply of money would decrease, hence would result in culminative price increases.

Our former example sets an increase in the price of oil as the factor of raising the costs of production of several goods in the economy. An increase in oil would increase transportation costs, which would, in turn, raise the costs of food redistribution, and also many other goods transported throughout the economy.

This idea elaborated in the above paragraph does not contrast Austrian economics. In fact, Austrian economists well know that a decrease in GDP, while the supply of money stays constant, will raise the prices throughout the economy. We just modified this idea with the assumption that an increase in oil price results in a decrease in GDP.

But the reverse can happen too---an increase in oil prices can also increase GDP. If the demand of oil does not change much according to the prices of oil, also known as the idea of ``low elasticity of demand," then it may result in an increase in GDP, and hence decreases in prices throughout the economy.

The velocity of money

The strength of the currency, in addition to gross production, also depends on its velocity. We define the velocity of money as the total flow of money divided by its population size in a specified period of time. Different definitions exist for the velocity of money, and we should not use other statistics for the velocity of money. Other sources define the ``velocity of money" differently from us, such as the GDP divided by money supply.

We should not, however, equate the velocity of money as the gross production divided by money supply. These two unrelated units do not correlate with each other. The velocity of money may increase without any increase in GDP. For example, the velocity of money increases if individuals sell more used goods, which the GDP does not take account. An increase in the velocity of money would cause price decreases in the economy, since the demand of money increase relative to the demand of goods. A fortiori, selling more used goods, would result in a net decrease of prices in the economy, since it would increase the velocity of money while the GDP stays constant.

The velocity of money, may influence the general price level. Assume that all of the economic production halted. This causes the GDP to equal zero. But individuals would still use money to exchange used goods. This encourages the demand of money, which make the currency have a ``value" caused by a demand of used goods.

The velocity of money, however, may have no effect on the general price level. Suppose two people, Alice and Bob, prepare to deal with transactions. Alice possesses 10 ounces of gold. Bob possesses a tractor also worth 10 ounces of gold. Imagine that Alice wanted to purchase Bob's tractor for 10 ounces of gold. However, after Alice purchased it, Bob wants to reclaim his tractor by purchasing his tractor back from Alice. Now, as Alice has her 10 ounces of gold and Bob has his tractor back, this situation remains the same as the original case. However, the velocity of money has just increased by 20 ounces of gold, since Alice and Bob transferred gold twice. If Bob sold his tractor and repurchased it again, for the second time, the velocity of money would increase by 40 ounces of gold, even if both Alice and Bob now possess the same stuff as in the beginning. New imagine that Alice and Bob did the same transaction for the third, fourth, and up to an infinite number of times. They would both still, would have the same possessions, but the velocity of money has just increased tremendously. This shows that, even if the velocity of money increased multiple times, it may still have no influence other prices. Therefore, we should not consider that the velocity of money only influences the general price level.

So as we have shown above, in certain cases, the velocity do have an effect on the general price level, but in other cases, it does not have any effect at all. So, specifically, what influences the general price level besides inflation and GDP?

Answer: The proportion of money used for used-goods compared to the proportion of money used in new goods. We will show two examples of how the proportion of money used in used-goods would cause a change in the general price level (or the strength of the currency) without any change in GDP or money supply. We will show that ``recessions" and taxation can also cause an impact on the strength of the currency.

During a ``recession," the prices in the economy may decrease depite the fact that the money supply simutaneously increases. We explain this by citing the massive amounts of business liquidations during a ``recession." As liquidations involve selling business assets and thus increase the velocity of money, an increased amount of liquidation would make the currency appear stronger during a ``recession."

Many factors that influences GDP also influence the strength of the currency. High taxes, may also strenghten the currency since the GDP includes government spending as a component. An increase in savings may strengthen the currency since savings lowers the velocity of money.

The growing parasite

According to various Internet statistics, these suggest that the rate of monetary expansion in the United States exceed over 15% per year. Many observers, however, see the rate of monetary expansion as much lower.

Many countries measure its GDP according to the international dollar. International organizations set the current international dollar as equivalent to one Federal Reserve note. As the rate of monetary expansion exceeds over 15% per year, the international dollar, equivalently, loses its strength about 87% per year. Because many countries measure their GDP using the international dollar that expands 15% per year, their nominal GDPs should also increase by 15% per year, to retain a constant real GDP.

However, as we see it, the nominal GDPs in most countries do not, however, increase by 15% per year. This signifies that their GDP has decreased over the years.

To give a summary to which nations have a increasing or decreasing GDP, we test it by using this: every nation that has a nominal GDP ``growth" rate less than 15% has a decreasing GDP.

The parasite has gained tremendous momentum of leeching off an increasing 15% of income from working man annually, thus demonstrates the impossibility of reversing that trend by working within the system.

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A Primer on GDP

As Kevin Carson argued, GDP includes the cost of repairing the windows.

GDP is the measure of the output of a country. The equation for GDP is: C + I + G + (X-M)

The "C" in the equation also includes the costs of repairing a broken window. In order to have the money to pay, individuals have to work harder.

The "I" also includes malinvestment from expansion.

GDP includes the cost of government theft: taxation. GDP is the income of individuals before tax. To exclude the theft that increases the GDP, the "G" in the equation must be removed. The government spending should be substracted because individuals work harder to compensate the theft by government.

GDP increases if exports increase, and decrease if imports increase. This should be reversed. Individuals would have greater purchasing power to buy the imports if imports exceed exports. So (X-M) should be turned to (M-X).

FSK uses the median household income to estimate the GDP. He should have left out the government spending portion of the GDP and reverse the exports and imports. Besides his fallacy of using the inaccurate GDP to measure the economy, his use of "median annual income" is flawed because it is actually the median household income.

The "median household income" is inaccurate because the average number of individuals per household has became smaller.

For example, there were 108,209 households in 2006 and 94,312 households in 1900. This is an increase of 15%.

However, the population has increased from 248,709,873 to 281,421,906, which is 13.1%.

Environmentalism Leads to Starvation

The environmentalists, conservationists, and population controllers all have irrational policies of attempting to make society a better place. These three ideologies relate closely to one another, and those who believe in one of these three would probably also care about the other two. Many of them opposes technology and opposes change.

The environmentalists, conservationists, and population controllers all presume the existence of the state, heavily regulated against environmental ``exploitation" while advocating the same type of exploitation by itself. They set policies that appears to reduce pollution and poverty, while these only work as minor cookie-cutter fixes while ignoring the origin of these problems: the state.

The state works by exploiting the individuals by taxes, regulations, interventions, and slavery. The state steals from the individuals, while forcing individuals to work inefficiently, unproductively and wastefully. Without the massive waste that the state has caused, poverty will exist much less than it exists today.

In the following sections, we will discuss that we do not need a state to solve all the environmental and overpopulation problems. Though we deny that global warming and overpopulation present a problem to society, we will nevertheless present solutions of reducing of these in a free society. We will do these, just to convince those radical environmentalists to a libertarian-compatible position. (It is hard to enforce morality, unless you present consequentialist arguments defending the deontology.)

The primitivists

The philosophy of primitivism, also advocates these three policies---environmentalism, conservationism, and population control---as the three tenets of their philosophy. The primitivists advocate population reduction, to apparently reduce the supposedly ``high" demand for natural resources and food, and opposes technology as they see it as damaging to the environment. The primitivists lacks the obvious flaw that technology actually helps the environment, since it reduces waste and increases the efficiency of production.

An important policy advocate by most of the proponents of the environmentalists alike, resolves in the tariff policy. Although they have a moral stance of opposing the so-called ``free trade agreements," they also want to raise tariffs afterwards. They say that tariffs reduce pollution and the exploitation of natural resources, and almost all of the governments and organizations believe in just that. All of the organizations practicing environmentalism, including the Green Parties, actively wants to raise tariffs attempting to reduce pollution, but they just do the reverse. They say that raising tariffs would reduce the transportation of products, which would reduce gasoline and reduce carbon dioxide emissions.

However, their policy of raising tariffs does the reverse, and much greater harm to the environment than it minusculely fixes. Raising any tariff, would reduce the efficient allocation of production, which might mean that machines might even increase amount of gasoline consumption due to inefficiency.

The overpopulation solution

Raising tariffs also cause another important inefficiency: inefficiency in food production. Whenever states like China and India produces food, the state actively enforces the inefficient production of food. If one wants to see the inefficiency of food production in these states, one would see the primitive tools that they use. The high tariffs prohibit the importation of advanced farming equipment. The missing advanced farming machinery, which might even use less energy the primitive tools, has outweighed by far the presumed gasoline savings from tariffs. This sets another example of how the environmentalists harm, rather than help, the environment.

Farmers in China and India use ridiculously simple tools for farming, probably even hundreds of time as inefficient than the currently available technology would do. If the state does not exist, then tariffs forbidding the importation of machinery will ease, and the agricultural output would increase by multiple times. Food prices will lower, and much more individuals would feed themselves.

In the current world, farmers only use a small fraction of the total arable land. If farmers used all of the currently existing arable land, then food production would multiple. Non-arable land can also turn into arable land by irrigation, so increased production may form from more land for farming, in addition to the unused arable land and importation of advanced machinery.

Furthermore, the increase in technology would let farming productivity rise. Innovations in farming equipment, biotechnology and genetic engineering would increase food productivity at a rate higher than population growth.

These changes, available from current technology, would occur when the state collapses. Food productivity may increase by hundreds of times by these changes, so population a hundred times larger the current population seems not a problem.

According to the laws of economics, food prices will automatically rise when the demand of food increases. Accordingly, individuals will have less children if the population gets unsustainable, due to expensive resource costs from high demand. The population would adjust itself.

Even before the population has multiplied hundreds of times, we will probably colonize space by then.

The demographic paradox

We should even suggest that if the population grows in the first place. In fact, the population declines in the most developed nations. Birth rates falls below replacement level, meaning that the population would eventually shrink. Many economists called this phenomenon as the demographic paradox.

You may wonder the reason behind the population decline in the most developed nations. In developed nations, parents have more incentive to invest their children in education. The rate of return gained from investing additional education compares far greater than the rate of return gained from having more children. Thus, individuals see that having one highly educated child as a more economical investment than having many uneducated children.

In undeveloped nations, by contrast, parents like to have as many children as possible to help them with subsistence farming. As in the last section, the lack of farming equipment causes an inefficient proportion of human labor instead of machinery, parents in the undeveloped nations like to have as much labor as possible by having lots of children.

Unless the farmers in the undeveloped nations import advanced farming equipment, they will have many children instead of using machinery to help them farm. As productivity might increase by hundreds of times as described in the last section, individuals in the undeveloped nations would have less children when the state collapses.

As farming productivity increases in the undeveloped nations, less individuals would work as farmers. But currently, the individuals in the undeveloped nations do not have enough resources to educate their children, due to state taxes and regulations. When the state collapses, however, these individuals would instead invest their children in education instead of farming.

The reverse demographic paradox

In the last section, we have analyzed how education decreases birth rate. Parents find having less, but better educated children as a better investment than lots of children. But other factors might even increase the number of children when the state collapses. Examples includes the increased wealth when the state does not confiscate or regulate, the lack of child labor laws which motivates parents to have children work instead of consume, and the lack of compulsory education laws.

A good example of more children involves increasing wealth. Since the state taxes and regulates individuals, when the state collapses, the wealth of each individual may increase by five times. Richer individuals will have more children, as they can afford to buy resources for their children to consume.

Another side-effect of increased wealth includes less time that individuals work. Due to increased productivity in a free society, individuals do not have to work as long every day, and have more time to spend on their children. It becomes increasingly more common for only one parent in the family to work, in addition to the shorter time and longer weekends that he or she would work every day.

The lack of child labor laws would also increase wealth. The money earned by a child may outweigh the money spent on taking care of the child. Thus, some individuals might have children just to increase wealth.

Population growth benefits the economy

In a free society, the economic quality will depend solely on the current technology levels. The state will not meddle with the economy anymore and would not produce fake growth by manipulating growth statistics. In the absence of the state, the economy will only grow by increased innovation.

A larger population benefits the economy. A larger population implies that more individuals would spend their time to innovate, thus helping the economy to grow further. The increased leisure time from increased productivity will magnify the amount of time individuals would spend on innovation, instead of sustenance.

Ultimately, we should not see population growth as a vice, but a virtue.

The environmental solution

Many libertarians advocate a private rights approach for environmental pollution. The protection of property rights would give individuals an incentive to not dump waste on someone else's property. Individuals may also own portions of water, as it may reduce overfishing---a solution to conservation.

But the property rights approach to environmentalism has a fault. It suggests no solution to global warming, caused by carbon dioxide emissions. Since releasing a moderate amount of carbon dioxide does no apparent harm to neighbors, courts would not likely sue the the polluters. Under current technology, it seems difficult to measure the amount of carbon dioxide released. This also makes individuals difficult to estimate the amount of global warming, and thus impossible to reclaim monetary compensation proportional to the amount of carbon dioxide released.

The global warming solution

Proponents of a state suggest that it would solve global warming caused from carbon dioxide emissions. They suggest that without a state, individuals would still pollute since an individual derives no benefit by reducing emissions. Only in the case that most of the population in the world reduced pollution, everyone would benefit. But the some individuals would free ride, or ``cheat" by letting others reduce emissions while refraining from reducing this themselves. So they conclude that only a state can prevent the free rider problem by forcing every individual to reduce emissions.

However, solutions to this free rider problem does exist even without the state. A method to solve global warming involves the boycott. The individuals who reduced emissions can agree with each other to boycott those who not practice that themselves. To enforce the treaty, the members agreeing with the reduced emissions agreement, would also agree to refrain from trading with the non-members. This would encourage the non-members (the free riders) to agree reducing their emissions, to freely trade with everyone else.

Conclusion

We have shown that the society does not need the state to solve all three problems: global warming, conservation, overpopulation, and poverty. Most importantly, we have appeared to solve the problem that even most libertarians find it as impossible: global warming.

The primitivists has turned onto the wrong direction, hurting individuals from their policies that supposed to help.

Common Errors in Austrian Economics

National debt problem

Paying the national debt would cause deflation, since 40% of the debt goes to central banks as interest payments. Paying the national debt, per se, would not lower average income if each individual proportionally pays his or her income to pay back the debt, since the "value" of money goes up from deflation while paying the debt.

Also, "we" owe no money to pay the debt owed to foreigners. Paying this debt equals collective punishment.

"Adjustment" occurs during a recession

Malinvestment and underinvestment already exist, since the state enforces regulations and taxes that undermine the economy. More generally, if the state exists, then distortion and malinvestment must exist. During a bust, many Misesians view that as "adjustment." "Adjustment" just shifts some malinvestment in one sector to another sector, within the already distorted system. So, in a statist society, one should call the "boom" phase of the business cycle as increased malinvestment, not just malinvestment, since the state always causes malinvestment.

Businesses misled during the "boom" phase

Malinvestment, per se, does not originate from poor business decisions. During the "boom" phase, businesses make sound decisions to invest. Contrary to the Misesian understanding of the business cycle, businesses actually overinvest in long-term assets during the boom phase because it actually profits them.

Inflation causes malinvestment.

Inflation, per se, does not cause increased malinvestment. The lower real interest rates than the "equilibrium" rate causes malinvestment. The lower real interest rates encourage firms to invest in long-term assets at the expense of short-term assets, distorting the "optimal" ratio of long-term assets and short-term assets. Thus, this un-"optimal" equilibrium would result in more opportunity costs for individuals.

Only in the "boom" phase of the cycle, malinvestment occurs. In the "bust" phase, the "adjustment" occurs. The ratio of long-term assets to short-term assets approaches the "optimal" level during the bust. Therefore, the bust phase makes consumers wealthier! Then why do some consumers get poorer in the "bust" phase? The individuals who has a loan during a monetary contraction would not have enough money to pay back to the banks.

So-called: Boom, bust, growth, and recession

The Misesians misnamed the terms such as "boom" and "bust," and "growth" and "recession." Actually the only variables that define the boom and bust phases include violently lowering and increasing interest rates, respectively. Monetary expansion has nothing to do with "booms" and "busts." We should define "boom" and "growth" as lowering interest rates, and define "bust" and "recession" as raising interest rates.

Malinvestment causes loan crises

Note that during a bust phase, one should not view the two concepts: malinvestment and unpayable loans, as related or correlated with one another. In a "bust," malinvestment may occur without a loan crises, and vice versa.

Monetary contraction causes unpayable loans. Monetary expansion, per se, does not cause increased malinvestment. Lower than "optimal" interest rates actually causes malinvestment.

Without monetary expansion, malinvestment may still occur by lowering real interest rates. Conversely, without lower interest rates, loan defaults may still occur due to not enough money to pay the loan from monetary contraction.

Artificially low interest rates

One should also note that in a free society, interest rates will probably decrease, since a free society does not have lending restrictions and taxes that increases interest rates.

Central banks cause depressions

The common Misesian folk thinks that central banks caused the Great Depression. Labor union regulations actually caused the Great Depression. The "closed shop" regulation in labor unions violently forces each individual to join the labor union, even if he or she does not want to. Also, as labor union regulations guarantee a "minimum wage," it would cause unemployment. During a monetary contraction, the real "minimum wages" guaranteed by labor unions increase above the market rate. The forced real wage increases during a monetary contraction makes the employer to fire many, thus causing massive unemployment. Thus, central banks did not cause the Great Depression, labor union regulations did.

Only abolishing minimum wages would abolish unemployment

The common paleolibertarian, especially those at the Ludwig von Mises and the LewRockwell.com institutes, thinks that only minimum wages cause unemployment. Others would refute that by citing high unemployment rates in states that do not have an official minimum wage law, such as Hong Kong. Hong Kong's strong labor union regulations caused their high unemployment rates, even they do not have any official "minimum wage." For a more obvious example, labor unions caused massive unemployment during the Great Depression, even when the official minimum wage did not "exist" at that time.

The trade deficit

Various paleolibertarians in the Mises and LewRockwell institutes, such as Bob Murphy and Peter Schiff, view the trade deficit as a harm. First of all, an actual trade deficit might not "exist". Since the state estimates the imports and exports, we should not see it as accurate. Second, trade deficits do not cause offshoring and unemployment, and vice versa.

Increased taxation forces corporations to raise the nominal prices of their products to cover their costs

Wrong. If the money supply stays constant during a corporate income tax hike, prices will stay constant. It would only decrease the nominal wages to the employees, since the money supply stays constant. Constant money supply during almost any tax hike would not cause corporations to raise their prices since the supply of money does not increase.

Also, since most corporations have tax loopholes, it would have a very small effect on the wages of the employees.

The variations of interest rates have a larger influence on employee wages than corporate taxation. If the central bank lowers interest rates, corporations would borrow more to invest in more long-term assets. This would lower the real wages of the employees since the un-optimal long-term/short-term asset ratios caused from lower interest rates does not reflect consumer preferences.

Most of the self-identified left-libertarians view anarcho-communism as compatible

Even some so-called left-libertarians deny anarcho-communism as compatible with anarchism.

Left-libertarians hate corporations

Even though that some libertarians oppose corporations as they define corporations as charters from the state, some left-libertarians defend the existence of corporations.

Not all left-libertarians hate corporations. Lee McCracken defended the existence of corporations at anti-state.com, and Kevin Carson defended the existence of corporations.

Foreign nations as economically free

Various individuals who have read Peter Schiff's book, Crash Proof: How to Profit from the Coming Economic Collapse, have brainwashed his into incorrect China-bashing views.

Many individuals who read his book, especially those Ron Paul advocates, seem to hold a belief about Peter Schiff's cult that China has more economic freedom than the United States. Schiff, the neo-mercantilist, mentioned in his book that China possesses more economic freedom because, empirically, it appears to have a larger manufacturing sector than the United States. Schiff's neo-mercantilist beliefs include that if the U.S. falls into an economic depression, China will prosper because it would not export "useless" goods but instead produce goods for their own consumption. Peter Schiff holds an idea of self-sufficiency that nations which have a large manufacturing base would supposably increase wealth. I view that as protectionism.

Foreigners have more economic freedom

Specifically, many racists believe that non-whites possess less intelligence than white people. Why does "developing" economies apparantly grow "faster" than "us" when they have less intelligent than white people? They realize that this why does the "developing" nations grow "faster" than the United States when the foreigners possess less intelligence. Finally, they concluded that the supposed superior economic "freedom" of the developing nations made their economy grow faster.

Also, the racists often possess an inferiority complex that non-white nations have more economic and political freedoms than white nations. Even though the supposably "developing" nations have massive economic regulations, high tariffs, much more corrupt, and monetary expansion much higher than the United States, the racists still concluded that the "developing" nations have more economic freedom than the United States.

This inferiority complex additionally reinforces the confirmation bias that foreign nations have more economic freedom than the United States.

Additionally, the domestic bailouts in the U.S. reinforced their confirmation bias that foreign nations have greater economic freedom than we possess.

One should view economic "freedom" as subjective. At least the foreign nations have a large counter-economy.

Definitional...aggression, coercion and violence as interchangeable

One should not confuse nonviolence, non-aggression and non-coercion. Non-aggressive violence exists: retaliation from self-defense. Murray Rothbard even defined self-defense as a violent act, even though it does not contradict non-aggression. Non-aggressive coercion exists: Threatening a criminal.

Extensions of the State

An inverted index of List of Fully Parasitic Sectors, ordered by level of state fusion. When the state fully expands itself, it would be considered level 1. Levels increase by less state fusion.

level 1 (red market)

Extensions of the state. Contains government-granted sectors. This also includes state subsidized sectors, directly and indirectly funded. Because the state subsidizes or buys services from these sectors, firms cannot control price and quality.

The state must specify the criteria required by these services to subsidize them, to prevent misuse of funding to firms that do not validate to the criteria. For example, the state must specify the curricula for voucher-funded schools, otherwise the voucher-funded schools would misuse their funds to teach something unrelated to education. The state also must regulate the curricula to the schools that they give student loans to.

democracy

Self-explanatory.

military-industrial complex

Private contractors lobby the state for wars. It funds war propaganda for the state to fund war.

security-industrial complex

Unneeded, free market security firms would provide them.

prison-industrial complex

These lobby victimless 'crimes' such as drug laws to get more prisoners to profit.

university-industrial complex

The state funds universities to spread propaganda. An article

Internet sector

Net "neutrality" regulations prohibit competitors.

roads

The energy companies fund roads specifically designed for cars so cars would use energy. Claim hundreds of deaths and injuries.

education vouchers

Purely extensions of the government. Restricts these curricula to prevent abuse of funding that they do not approve.

state granted organizations

Public universities, etc.

student loans

central bank

banking sector

The central bank funds these.

law

They lawyers make laws more complicated so they would benefit because they make the laws. The lawyers indoctrinate individuals to be agents to report every violation to the police. The low supply of lawyers limits the number of firms that employ them. And creates artificial economies of scale for firms that employ them due to high prices due to high demand. If everybody is an independent contractor or if there are many small businesses, the number of lawyers too small and little.

accountancy

Similar to the lawyers limits the number of firms and creates artificial efficiencies.

tax preparation

Tax preparation companies legislate complicated tax regulations so they would profit. They own many "tax patents" so they retain a monopoly in efficient tax preparation.

trade agreements

labor unions

Labor unions control pricing and hence controls quality of the jobs

urban planning

The urban planning sector restricts business development in residential areas. This would make workers consume more energy to drive to their business everyday. The energy companies lobby the urban planning sector to profit from selling energy to workers everyday when they drive to work.

patented sector - drugs, machinery, electronics, equipment, business methods, etc.

Bureaucrats working to legislate government regulations would hold stocks of a corporation, then legislate a monopoly on the corporation so they would profit from the stocks that they hold in a corporation.

Federal employees own stocks of many companies and then make regulations to benefit the company so he would profit.
Patent examiners would own stocks of a company and then grant that company patents so he would profit.

subsidized housing

Examples include Fannie Mae and Freddie Mac. Bailouts to inflate.

level 2 (pink market)

The state goes through a highly restricted approval process, but does not fund or buy these services. The approval process and regulations restrict the supply of firms, which results in high prices, but firms still have the ability to compete for prices. Ergo firms have some degree of control of price, but not quality. Price and quality may still be thousands of times worse - same as level 1.

medical-industrial complex

The whole medical sector is parasitic. Physicians are licensed to prescribe drugs for the pharmaceutical companies. The licenses are written by big-pharmacy. The damage done from high prices from licensing that restrict the supply of doctors is very little compared to the damage done from physicians who diagnose false. When the physicians diagnose false, it results in drug addiction which causes side-effects. In order to correct the side-effects, more drugs are addicted.

civil engineering

The government subsidies these industries, and due to huge corruption and bureaucratic inefficiency, it parasitically robs a large fraction economy to the civil engineers.

construction

Due to building codes, it suppresses smaller businesses to compete.

psychiatry

Psychiatrists that study non-existent disorders such as autism, ADHD, bipolar disorder, schizophrenia and others legislate regulations so psychiatrists would diagnose them. Psychiatry is pseudoscience. They conflate correlation with causation.

dentistry

The strict certification process.

non-subsidized "private" education

The state strictly controls the curricula taught in these schools.

The "free trade agreements" contain corporate privileges, quotas, duties, licensing and regulatory requirements. This industry lobbies favorable tariffs that raises the price of imports and exports by hundreds of times.

Telecommunication

Net neutrality regulations raises costs of lines and inhibits innovation.

Electricity

The state regulates electricity companies

Water supply

Agriculture

Highly subsidized, confiscation of money

level 3 (white market)

The general white market, moderate state regulation distorts and creates inefficiencies. Firms have a relatively large degree of freedom to behave similarly as they would in a free market, with the oligopolies and artificial economies of scale. Frequently lobbying the state, these actions considered as parasitic.

non-profit firms

The state arbitrarily exempt taxes on some activities but not others (basically limits the activities)

corporations

The state exempt taxes on "capital goods," Government arbitrarily determines if a good's category fits in "capital goods," basically distorts goods and services

financial industry

Though the current financial industry likes to steal money, such as parasitically lobby government to inflate, the financial industry, intrinsically, does a useful job in the free market. The speculators know internal information about the interest rates. They has grown too large, and embezzeles the majority of the wealth.

regulatory capture

food industry

limits some non-FDA approved foods

level 4 (black market)

The black market, state does not control these, but due to risks to state takeover, these firms operate less than their maximum efficiency.

unlicensed businesses

high prices due to risk of state

immigrant transport industry

too risky

illegal drugs

high prices & monopoly

prostitution

high prices & monopoly

level 5 (free market)

Market anarchism, no threat of state, optimal efficiency.

Religion--although religious individuals advertise this fraud, the existence does not depend on the existence of the state. Less intelligent individuals do not realize the obvious contradiction in religion.

Pandemics, such as AIDS--This does not depend on the state.

Authoritarian parenting--This does not depend on the state.

Rent and Interest Will Shrink

Artificially high interest rates?

The current interest rates range from about 2%, the Fed funds rate, to 10%, the mortgage loan rate. The Austrian School economists that I encountered see this rate as artificially low. They think that the Federal Reserve, the central bank that counterfeits new money, artificially lowers interest rates which promotes malinvestment. They base their theory on the Austrian Business Cycle Theory, which suggests the artificial decrease of interest rates by the central banks. However, I see these rates as artificially high. Let me explain.

The burdensome lending regulations prohibits anyone to lend without a license. Less individuals would lend as a result, and interest rates raise in response due to low supply of loaned funds. Taxes also lower the supply of loaned funds and increases the demand of loans. The state directly confiscates about 50% of the workers' income through taxes. If one multiplies up both sides of the payroll taxes, tariffs, the federal, state and local income taxes, value added taxes, sales taxes, corporate income taxes, property taxes and the regressive excise and inflation taxes, one would get a taxation rate higher than 50%. Indirect "taxes" include the monopolized firms (we will explain this below), business regulations, and others mentioned in the index of fully parasitic industries, although workers see these "taxes" as loss of opportunity costs, not a decrease in production (as in gross domestic product, we will mention later). Including these indirect taxes would result in an 80% "tax" or, more accurately, 80% opportunity loss. Without these "taxes," individuals would lend more which lowers interest rates significantly.

The Austrian economists also avoided the uneven distribution of rates. In the current corporatist society, interest rates distribute unevenly throughout wealth and class levels. I see the privileged corporations borrow at the Federal funds rate, a nominal rate of 2% from the Federal Reserve.

Unprivileged individuals, such as the working class, borrow at a nominal interest rate higher than 6% for mortgages. I consider this unfair to the productive working class when the privileged corporations borrow at 2%.

Monetary expansion may also raise the real mortgage interest rates, to 10-30%. Monetary expansion discourages savings at the expense of increases in speculation and consumption. Suppose an individual wants to lend out money and earn interest. However, he or she cannot profitably invest by lending. The current monetary expansion rate looks closer to 10%-30% annually. The individual cannot profitably invest even if he lends out with an 8% interest rate. If the individual lends 8% when the rate of monetary expansion approximates 10%, he would lose 2%!

Besides the workers who unfairly borrow at a higher rate than the privileged corporations, the current system also treats Mom and Pop businesses unfairly. The Federal Reserve prohibits anyone other than the privileged corporations or banks to borrow at the Federal funds rate. Smaller businesses borrow at a higher rate. They could only borrow at a high interest rate of 20%, which allows the privileged corporations to crush them!

Many Austrian economists consider Hans-Hermann Hoppe as a respectable economist. He wrote an article theorizing the existence of the upper class, even in a free society, though many Austrians disgree with him. In his article, he mentioned that in the monarchical period in early modern period, the real interest rates averaged an amazingly 2.5%. Even in the feudal age, in which I consider as a highly corrupt period, interest rates averaged 5%. The state raised the interest rates since corruption begun in the 19th century.

If a free society exists today, individuals can borrow at a lower interest rate, such as 1%, much lower than the current Federal funds rate of 2%. Everybody will own a house!

Many Austrian economists assume that interest rates would rise in a "free" society. We proved that they made a mistake. They avoided about how corruption, such as regulation and taxes, raises interest rates more than the central banks would decrease. They failed to take note of the inequality of interest rates differing between the privileged corporations and the mortgage rates. We predict that interest rates will decrease.

Drug Prohibition Leads to Addiction

Prohibition of drugs actually encourages drug use.

When drugs are prohibited, the supply of drugs goes down, which creates great demand for them. Due to the high demand, the price of drugs are driven up in the prohibited state. Drug dealers thus have the incentive to buy drugs cheaply at non-prohibited states and sell them at a high price in prohibited states. They earn extremely great profit because of the high Profit margin.

Drug addiction is uncontrollable. Once a person is addicted after taking a sample of a drug, the addiction can last forever. It is virtually impossible to become non-addicted.

Rational people would not waste their money to buy drugs and many poor people do that because they are addicted. It confirms that addiction cannot be suppressed.

This creates an incentive for the drug dealers to advertise their drugs to non-drug users. They have an excellent strategy to do that. The drug dealer can first offer free samples to non-addicts. The non-addict, after taking the free sample, become addicted forever with that drug. Thus, the addict would in the future buy drugs from the drug dealer. Despite the initial loss by giving a free sample, the drug dealer would infinitely gain by selling drugs in the future to the addict.

However, there is a problem: the free rider problem. If many drug dealers compete in one single geographical area, then no drug dealer would offer free samples. Offering free samples are too expensive. Thus, the drug dealers would collude and form a single cartel over a geographical area. The drug firms would merge and share profit. Therefore, they would have the incentive to offer free samples to get non-addicts addicted, since all profit or lose the same.

And most importantly, 99% of drug addicts started their addiction when they were children.

Cartels Outcompete Themselves

Cartels cannot exist with low barriers to entry. If the barriers of entry is low, new firms can easily enter to compete with the colluded monopoly. If the colluded monopoly attempts to buy the newly created firm, the price that it pays to acquire is more expensive than creating one. The owner of the newly created firm that is sold have the incentive to rebuild another new firm to compete. Several people now build firms and the colluded cartel buy all of them. Soon, the colluded cartel runs out of money to acquire all his competitors.

But if the barriers to entry is high, then is likely that collusion would happen. Because new firms are prohibited, the cartel have a very extreme incentive to collude. Examples include all of the government regulated and licensed sectors that create artificial barriers to entry.

Why Advertising Denigrates Brainwashing

Advertising helps people learn knowledge that may save them money. For example, if there is some unadopted technology that is useful to many, entrepreneurs would advertise, and continue advertise until all potential consumers used that technology. Advertising is a division of labor. Instead of the consumer waste their time to find important knowedge, advertisers specialize in educating the consumer, which would shift the resources from the consumer to the advertiser.

But some types of knowledge cannot be profitable to the advertiser. These kinds of knowledge are not yet proven by technology or efficiency. Thus, consumers do not have the incentive to use that knowledge.

They do have the incentive to use knowledge such as technology because they would save money.

Some knowledge is inhibited by the state from advertising, such as the knowledge about water fluoridation. Entrepreneurs do not have the incentive to advertise water fluoridation because most water is publically funded. If water is allowed to be privatized, entrepreneurs are quick to provide information about the harms of water flouridation so consumers would have the incentive to buy their non-flouridated water.

Some entrepreneurs can "exploit" the ignorance of the consumer. For example, assuming global warming is false, advertisers would advertise their environment friendly products, even though they are useless.

The most visible abouse of consumers is political advertising. Politicians exploit the consumer by advertise false stuff.

The majority of humans are ignorant. They cannot even survive, without the knowledge advertised by entrepreneurs. Entrepreneurs help people buy homes and food.