Wind by the Fireside

Neverwinter Nights game boxSo as you shiver in the cold and the dark,
Look into the fire and see in its spark —
My eye
Watching over you.

As you walk in the wind’s whistling claws,
Listen past the howling of the wolf’s jaws.
My song
Comes to you.

And when you’re lost in the trackless snow,
Look up high where the eagles go.
My star
Shines for you.

In deep, dark mine or on crumbling peak,
Hear the words of love I speak.
My thoughts
Are with you.

You are not forsaken.
You are not forgotten.
The North cannot swallow you.
The snows cannot bury you.
I will come for you.
Faerun will grow warmer,
And the gods will smile
But oh, my love, guard yourself well —
All this may not happen for a long, long while.

— from Neverwinter Nights

Economics of Star Trek or What Is Good for Business?

In one episode of Star Trek: Deep Space 9 Captain Sisko describes Earth as “paradise.” It is a paradise in which there is no such thing as money, and people don’t get paid for doing things. In the same episode we see Sisko’s father’s restaurant, but the workings of his business remain mysterious. The problem is that without the price system and money serving as a unit of account it is impossible to rationally allocate resources and capital goods in particular to their most valued uses. The difficulty lies in the fact that the price system is an emergent property of the market, arising as a result of entrepreneurial competition for capital, though, of course, there is nothing magical to it: we can clearly identify the source from which that property emerges, viz., the recognition by the individual members of society of the benefits of social cooperation and division of labor, and can even trace its evolution from a tiny two or three-person market to one in which social cooperation has become worldwide. As Joseph Salerno writes,

In this competitive process, each and every type of productive service is objectively appraised in monetary terms according to its ultimate contribution to the production of the consumer goods. There thus comes into being the market’s monetary price structure, a genuinely “social” phenomenon in which every unit of exchangeable goods and services is assigned a socially significant cardinal number and which has its roots in the minds of every single member of society yet must forever transcend the contribution of the individual human mind.

In other words, the market is unified and quickened by its ever changing price system; indeed, as Ludwig von Mises points out, “The market process is coherent and indivisible. It is an indissoluble intertwinement of actions and reactions, of moves and countermoves.” (1996: 333)

Because one cannot add and subtract heterogeneous goods and for various other reasons, it becomes impossible to calculate profit and loss and therefore run any business whatsoever. Now it may be argued that the Trek replication technology has done away with the scarcity of most of the goods. Even then, however, labor, land, energy sources, the replicators themselves, which, I assume, differ in capacity and power (you can’t replicate a spaceship on the DS9 machines), and who knows what else still remain scarce. And it is a reasonable guess that in the restaurant the food is cooked rather than replicated, unless the replicators also come in different qualities, and high-quality boxes are unavailable to the average man. Further, unless his food is priced, it must be rationed, and Sisko’s old man must decide which “customer” gets what and how much, lest some guy simply walks into the kitchen with a big bag and takes everything that was prepared for the day (for without private property rights, what could stop him?). The puzzles multiply without end, e.g., what determines the size of the business? Did the owner have to petition the government for cooks and replicators and equipment, as well as for the space in the building in which the restaurant is located? How would the government know whether to honor his request, that is, whether by honoring it no even more urgent consumer wants will be unsatisfied? Then there is the incentives problem. Maybe Sisko’s dad likes to cook and make people happy. But somehow I suspect that such works of charity will be utterly exhausting if performed day in and day out. And what about his dishwasher? Does he, too, experience no disutility of labor? At any rate, charity is a consumer good — resources are channeled into charities after they have been earned. Therefore, mass production cannot be based on charity but only on self-interest. Monetary profits are a sign that you are satisfying consumer wants better than your less alert competitors:

The consumers patronize those shops in which they can buy what they want at the cheapest price. Their buying and their abstention from buying decide who should own and run the plants and the farms. They make poor people rich and rich people poor. They determine precisely what should be produced, in what quality, and in what quantities. (Mises 1996: 270)

Similarly, we never see Quark, who owns a bar on the space station, get paid for dispensing his drinks; at least, I don’t recall ever seeing that. For a guy obsessed with latinum (now there’s your sound money — latinum-standard; and in another episode we learn that gold is worthless compared to latinum) this is a problem, especially given that the Federation military employees on the station don’t receive any wages. Once again, the necessary obscurity of how Quark’s business worked (because it obviously cannot work) seems rather annoying. So the conundrum remains. And even for the Ferengi, all business and consumer transactions appear to be performed with cash, that is, actual bars of latinum. They apparently have no stock market (the litmus test for whether a society is capitalist or socialist), no electronic asset transfers, no banking system (banks have two distinct roles, often unfortunately confused under the present fiat money regime: they are (1) warehouses storing valuable property, such as gold coins, a function called deposit banking; and (2) intermediaries between lenders and borrowers, called loan banking), no insurance companies, nothing. There are no big corporations, no brand names, no advertising (on the absence of any kind of commercial mass media see below), no private retail outlets, no Internet shopping. There aren’t even latinum coins, for goodness’ sake! And if not the Ferengi, then who else?

Note that the Ferengi are, of course, the classic stereotype of the Jews, as propounded by Nazi and Soviet propaganda: ugly; crass, materialistic, and base; grasping and scheming; and treacherous. But, in the case of Quark, not entirely without redeeming qualities, particularly when he cooperates with the ruling regime on the station. That is, quite despite his perverse nature, there exists within Quark’s ignoble little soul a weak aspiration to be like the far more noble humans. What a grotesque and utterly false parody of a typical businessman (and Jews, to boot) within a system of natural liberty and free enterprise! In the unhampered market economy the “superior men,” the better-off, the elite or the society’s “natural aristocracy,” are drawn into service to the common man. Entrepreneurs become rich because the masses, the “poor,” rush to outbid each other on the products offered to them for sale. If they fail to satisfy the consumers’ wants, they will forfeit their wealth and their vocation as entrepreneurs and be demoted into the rank of laborers. Personal wealth in a free society is thus a consequence of previous success in serving consumers. Making an analogy between voting and spending money on goods and services, Mises explains:

In the political democracy only the votes cast for the majority candidate or the majority plan are effective in shaping the course of affairs. The votes polled by the minority do not directly influence policies. But on the market no vote is cast in vain. Every penny spent has the power to work upon the production processes. The publishers cater not only to the majority by publishing detective stories, but also to the minority reading lyrical poetry and philosophical tracts. The bakeries bake bread not only for healthy people, but also for the sick on special diets. The decision of a consumer is carried into effect with the full momentum he gives it through his readiness to spend a definite amount of money.

It is true, in the market the various consumers have not the same voting right. The rich cast more votes than the poorer citizens. But this inequality is itself the outcome of a previous voting process. To be rich, in a pure market economy, is the outcome of success in filling best the demands of the consumers. A wealthy man can preserve his wealth only by continuing to serve the consumers in the most efficient way.

Thus the owners of the material factors of production and the entrepreneurs are virtually mandataries or trustees of the consumers, revocably appointed by an election daily repeated. (1996: 271)

In another episode Nog needs to acquire a part for the Defiant (apparently, that, either, could not be replicated), and, rather than simply buying the part with non-existent money on the non-existent market from a non-existent private supplier working in the spacecraft industry (picture “Spacezone” or “Toyota Spaceships, Inc.”), engages in a ridiculous series of barter trades. No matter how well-concealed the Star Trek economy is from the viewers, sometimes the silliness of the setup shines through. In the movie Star Trek: First Contact Picard finally confesses that there is no money in the Federation economy, if such there be. “We work to better ourselves and the course of humanity,” he says. Of course, entrepreneurs are the chief benefactors of humanity, up there with inventors and scientists. We have already mentioned the insurmountable problems of the lack of a unit of account. Yet even this is normally considered only the second function of money. The first function is, of course, medium of exchange. The dual problem of the double coincidence of wants and of indivisibility of goods makes barter economy impossible beyond a very primitive level. Lastly, the third function of money is “store of value.” Instead of keeping “stuff” for production and consumption that you speculate you might need in the future, all you need to keep is the highly liquid money. I can imagine poor Starfleet bureaucrats trying to store up socks and umbrellas and force field generators in some giant space warehouse.

In the Soviet Union there was a class of crimes called “economic”; in particular, “profiteering,” “speculation,” and “sabotage.” It was not realized that seeking psychic profit is a corollary of the axiom of human action, namely that people act to satisfy their wants, that they act for the sake of future expected utility. Monetary profits are just an instance of that primordial and universal drive on the part of humans to seek happiness (or satisfaction or contentment or peace). Profit-seeking is a characteristic not of capitalism but of human nature. The Federation’s contempt for the Ferengi therefore makes little sense; in fact, we are scarcely capable of imagining beings possessing intelligence and will who fail to act in their own self-interest. As for speculation, this “crime” reflects the equally universal fact of the uncertainty of the future. Everyone is a speculator, trying to foresee the future and adjust his behavior in accordance with what he believes it to be. The more correct your forecast is, the greater your chance of success in whatever you are doing. The uncertainty of the future means that people don’t always profit; and thus the other side of the possibility of profit is the possibility of loss. The economic meaning of speculation is entrepreneurship; that is, seeking underpriced factors of production, which, upon being combined into a final good, will, in the estimation of the entrepreneur, yield a future profit and thereby create a state of affairs in which the consumers, generally speaking, are satisfied to a greater degree than they were before. Surely, this is as innocuous as apple pie. Finally, sabotage means failure to use resources according to the central plan. It means, basically, privatizing government property. As such, it is most laudable conduct in a socialist country and not a crime at all by any standard of decency. Yet I have no doubt that such actions are punished severely in Star Trek.

Now it is obvious that the variety of goods and services available on DS9 is extremely limited. The personnel seem to be, as one, ascetic workaholics. I’ve never seen any character go shopping. I suppose that these guys are supplied with government-made standard-issue everything. This can’t be a lot of fun, don’t you think? Also, don’t misunderstand me, I love classical music, but is that all that the Federation citizens are allowed to listen to (I am referring to ST: The Next Generation, in particular)? In other words, instead of a highly developed commercial culture expected of a sophisticated multi-planet division of labor, we get almost complete conformity and uniformity. To put it another way, the characters “have no life”; they are totally devoted to the welfare of the “collective,” the collective being, of course, their superior officers. I could never understand why the Federation was so contrasted with the Borg. The Borg are very much like the Federation, only perhaps with slightly less individual freedom. (Maybe the difference is that, unlike the Borg captives, the Federation serfs love the Big Brother.)

It is also peculiar, and telling, in a science fiction show, that we never see any non-government scientists. All space-related and medical scientific work is apparently done within Starfleet. Not once do we see a private person owning a “runabout” or a starship. Every means of transportation is owned by the state monopoly. All starships look the same both from the outside and from the inside, and what do you expect when the spaceship industry is socialized — there is only a single brand of ship, and if you don’t like it, complain to your local… who? (There is Federation presidency but seemingly no legislative or judicial body.) The only exception to this rule may be Sisko’s girlfriend Kasidy Yates who operated a merchant ship. But then DS9 was the most interesting and fun of all the Star Trek shows and by the end seemed to relax its totalitarian moorings. Further, when we see Earth, we observe no spaceships around it. Compare this arguably pitiful situation to the three Star Wars prequels or to Firefly or to Fifth Element: in them the skies around major civilization centers are teeming with ships, flying cars, and what have you.

Two more pieces of evidence: first, there appears to be no interspecies division of labor or trade. The humans, the Cardassians, the Romulans are isolated from each other economically. Free trade, of course, eliminates most economic pretexts for war — if you destroy your trading partners or the economy of the country you are attacking, you only harm yourself; no wonder there is endless conflict in the Trek universe! Second, monolithic world governments and empires that rule vast expanses of space are standard. Suppose that the Bajorans entered the Federation. Would they want to be told what to do by some Federation bureaucrat a thousand light years away? It might at first glance seem that the “Prime Directive” will prevent interference, but (1) the directive itself is absurd, because it outlaws free association, and (2) it says nothing about the political system of the Federation. (The Prime Directive states that no contact or “interference with the natural development of any primitive society,” where “primitive” means “pre-warp,” could be made by anyone within the Federation. Aside from the arbitrariness of “natural” development (what is natural?), if I want to go make contact with or live among the primitive tribes of South America or the Australian aborigines, I don’t have to ask anyone’s permission. I just pack my gear and go. And if I tell them about my culture, give them Coca-Cola and jeans, and invite them to visit Buenos Aires or Melbourne, no one will arrest me. Not in Star Trek. Here no one is allowed to touch these alien cultures. And why not? I understand not giving people highly advanced weaponry when they are not “ready” for it, that is, when they have not yet developed the means to control those who would use them for destructive ends. But other than that, it should be a free for all.) Similarly, would a Bajoran farmer want to be told what to plant and what not to plant by the Bajoran state even a thousand miles away? I understand that the show needs to simplify things to stay compelling. The Klingons are warriors (but if every Klingon is a bloodlusted maniac, how is their economic and technological progress achieved?), the Cardassians are cruel militarists, etc. But this at the expense of a believable society.

Sometimes we see one character showing to another a bottle of wine or some such commodity made on another planet and pointing out how lucky he was to have gotten it, how rare the bottle is, etc. Go to West Point Market in Akron, Ohio (only one among numerous such stores in the US) and enjoy the sight of what seem like many hundreds of different alcoholic beverages from all over the world. That’s just one small manifestation of the glory of (more-or-less) free international trade. And don’t even get me started on synthehol! “Synthetic scotch, synthetic commanders.”

In Star Trek people communicate across vast distances by “subspace relays,” another government-owned enterprise. There are no private competitors. Nor are there private TV or radio stations or what would be their 24th century equivalents. There is no Internet. (I concede, however, that the Holodeck does put the modern computer games to shame.) Encrypted messages are permitted for the Starfleet brass only; whenever a private person uses encryption, it is always for some “evil” / “selfish” purpose. Don’t you try to escape the constant surveillance.

Starfleet is the military arm of the Federation. Yet the distinction between the two is blurred. The Federation elite is composed of the starship captains and admirals. I would go as far as say that no private citizen can hope for status or recognition unless he works for the state. The politically correct casts on DS9 and Voyager, for example, seem at first glance to reflect the shows’ purported egalitarianism. But, just as in the USSR, some, such as Sisko and Janeway, are more equal than others. They are the main protagonists, and most of the action revolves around them. They expect obedience from their staff, and it is granted to them. And they are the socialist “consciences” of the shows — staying far above the Ferengi’s selfishness, the Klingons’ bizarre obsession with what they imagine to be “honor,” the Cardassians’s ruthlessness, and even their own crew’s petty concerns.

In a two-part episode Sisko, Dax, and Bashir are accidentally transported into the past at the time of “Bell Riots” on Earth in the year 2024. According to the synopsis of the episode, this was a “pivotal moment in history, which led to sweeping social reforms.” It appears there was no one at the time standing athwart history yelling “Stop!” In his book Double Lives: Spies and Writers in the Secret Soviet War of Ideas against the West Stephen Koch writes that one of the purposes of Soviet subversion in the US was to Stalinize its entertainment industry and glamour culture. If this were the 1930s or the time at which the New Deal was being implemented, I’d have thought that maybe the commies picked Star Trek as their main target, glamour culture though it hardly is.

Finally, all traces of religion in the Trek universe, with one exception, are absent, most likely because of the perfectly crude view that “science” wars with “religion” and that by the 24th century, surely, science will have progressed so much as to destroy religion completely. The exception, the Bajorans’ “prophets,” too, was in DS9, a half-hearted attempt to make a sterile world more complex. (Even here, the Bajorans were less developed and therefore less “rational” than the Federation bureaucrats, so faith was Ok for them.) When the show did venture into theology, the results were not encouraging. Q, for instance, is nothing at all like God. God does not toy with people for amusement. In one Voyager episode it was shown that Q’s race was bored to death, and therefore one Q commits suicide. (This is similar to the plot of Scott Adams’s God’s Debris, in which the only thing an omniscient God does not know and wants to find out is whether he can put himself back together after blowing himself up into the universe.) The idea here is that God, being omniscient, is bored to death. Is this true? Of course not! God is perfect and infinite. He loves His perfection and He comprehends it (Himself) fully. His “time” or, rather, atemporal eternity is thereby spent in contemplation and enjoyment of His own perfection. He is not bored; He is perfectly fulfilled and happy in Himself as the Father, the Son, and the Holy Spirit. It is indeed true that no human can give or add anything to God. It is God who wants to communicate his goodness to creatures. Remember that God’s actions are not necessitated. They are not voluntary. The methodologies of physics and praxeology are useless in theological reasoning. Rather, they are animated by overflowing love. God acts due to His self-giving, so that the cause of goodness — which is God Himself — may be served through and in us creatures. Goodness diffuses itself; in other words, it is the nature of love to give itself away. And it is because of His overflowing goodness that God created the world. Nor is Q infinite, one, necessary, loving, etc. Seven of Nine’s idea of perfection is some kind of molecule — crazy! (She wants perfection? How about a cube? It’s nice and symmetrical; just try to find any flaw in that.) Neelix’s “Great Forest” of his concept of the afterlife turns out to be non-existent. Not even natural happiness after death is tolerated in Voyager. (Contrast with how well this was exploited in the movie Gladiator.) The beliefs about the next life of the Vhnori people are shown to be equally unfounded. These despite that it is, of course, impossible today to use personal non-accounts as evidence against the immortality of the soul, given all the research into near-death experiences. And in the movie Star Trek: Generations the happiness of the Nexus turns out to be the happiness of playing a computer game: an illusion. Some “heaven” that is.

It seems beyond doubt that the economic system of the Trek Federation is socialism of the most extreme variant, in which there is not even a market in consumer goods, which, oddly enough, has resulted not in social suicide but in unprecedented, if not clearly shown to the viewers, prosperity. Maybe the creators still feel that socialism is “inevitable,” that you “can’t turn back the clock,” but that its emergence may have to, unfortunately, be postponed until the 24th century. Superstitious nonsense, all of it. History is made by human actions and choices which emanate from humans themselves, not by any external “forces” acting on human beings that cleverly and ineluctably guide them toward a predestined outcome. And even if there were such forces (God’s providence, perhaps?), they sure wouldn’t lead us to communism. Look, when we are in heaven, united with God within the communion of saints, contemplating His essence as spirits, then we won’t need private property or the stock market, though we will still “own ourselves.” Until that happens, we are bound to this world and its economic realities.

Another, unrelated, oddity of the Trek universe, is personal relations, I hesitate to call them sexual or romantic or marital, because this sort of thing was absurdly awkward on the show anyway, possibly because of the Stakhanovite and repressed nature of the Trek socialist men and women, between the members of different races. I mean, Commander Data and what’s-her-name? Come on, is this hunk of junk an orgasmotron of some kind? Odo and a human girl? The guy is a blob of goo! I am sure that he, being an intellectual creature, can love, but a “passionate night”? Wouldn’t he lack the physical organs and the psychic prerequisites to engage in sex? And don’t tell me Odo could shapeshift. The guy couldn’t even get his face right. Making the highly complex external and internal organs would be far beyond his capabilities. Who do these writers think we are? (Nerds?)

OK, enough of the fun. Again, in the newer Star Trek the race of Ferengi (of whom Quark is one) represents the despicable and unreconstructed businessmen and entrepreneurs, as contrasted with the vague and seemingly unchanging Federation utopia. I now bring your attention to their comical “rules of acquisition” which include #34: “War is good for business.” and #35: “Peace is good for business.”

These properly understood maxims should alert us right away that big corporations and Wall Street magnates are not as a class interested in the preservation of peace and free competition. It is extremely rare to see any prominent businessman take a principled position in favor of liberty, although, of course, many have contributed to the cause financially. It can happen that economic liberalization will benefit a company. It can also happen that an imposition of suffocating regulations or taxes will benefit a company, especially if its costs of dealing with them are smaller than they are for its competitors. It can easily happen that a monopoly privilege will benefit a company. The Ford corporation, for example, would much rather sell 10,000 cars for $1,000,000 each than 1,000,000 cars for $10,000 each. If it could gain from the state a legal monopoly on car-making, it would be overjoyed. In short, businessmen are not in business of reforming the world. They are out, correctly, to make a buck (and, hopefully, to enjoy their work). And most of them deal with state policies as a given. As Mises writes,

The rich, the owners of the already operating plants, have no particular class interest in the maintenance of free competition. They are opposed to confiscation and expropriation of their fortunes, but their vested interests are rather in favor of measures preventing newcomers from challenging their position. Those fighting for free enterprise and free competition do not defend the interests of those rich today. They want a free hand left to unknown men who will be the entrepreneurs of tomorrow and whose ingenuity will make the life of coming generations more agreeable. They want the way left open to further economic improvements. (1996, 83)

If there is peace, businesses that cater to the buying public, producing houses and dresses and mangoes and books and millions of other things that make us happy, will enjoy an advantage. But if there is war, businesses that serve the government, such as the arms industry, will benefit in the same way. (More precisely, businesses that will correctly anticipate a war will profit.) At the same time I strongly suspect that the influence on policy of the “merchants of death” is highly overrated. The federal government spends hundreds of billions of dollars on the military not because it wants to please the contractors who manufacture weapons. It does so in order to have the means to channel its influence over the rest of the world, and it is supported in this endeavor by hordes of “conservatives” who exalt destructive power. Change the ideology, and the government-connected arms dealers will swiftly go out of business.

It is true, of course, that examples of companies using the government to cartelize their industry, to drive competitors out of business, or to raise the costs of entry of new entrepreneurs or professionals are not unheard of. Conspiracies do happen, as do honest mistakes. But companies should not be blamed if they follow through on their incentives to use big government to their advantage. The problem is not the company; in fact, our moral intuitions are often powerless here, because the harm done is unseen and diffused and legally authorized. The problem is the big government.

Any short-term change will be good for business if it is foreseen and acted on and bad for business if its significance is missed. So if a businessman, in his capacity as a citizen, wants to advocate free markets, then glory and honor be to him. But the business class as such is far from such concerns and, I think, rightly so. It is only a correct, commonly accepted ideology exalting peace, private property, and freedom that can ensure that self-interested actions of entrepreneurs will be directed into socially beneficial projects. Otherwise, even war can be good for business for some, though it may impoverish the nation or the world as a whole.

We see now how poorly the Star Trek writers understand economics. The characters live impoverished lives, yet it does not make them virtuous like some saintly monks but boring. If the shows were not produced by private enterprise and were not, in addition, hugely popular, I would argue that they are a complete waste of scarce resources. Fortunately, Star Trek does not practice what it preaches.

References

Koch, Stephen. Double Lives: Spies and Writers in the Secret Soviet War of Ideas against the West. New York, NY: Free Press, 1993.

Mises, Ludwig von. Human Action. 4th ed. San Francisco, CA: Fox & Wilkes, 1996.

Salerno, Joseph T. (1990). “Postscript: Why a Socialist Economy is ‘Impossible’.”

Past Tense, Part I,” Star Trek: DS9.

Past Tense, Part II,” Star Trek: DS9.

Re: Timothy Sandefur on Civil War and All That

I. Thomas Jefferson.

Contra Timothy, decentralization is a pivotal Jeffersonian principle, particularly, “the support of the State governments in all their rights, as the most competent administrators for our domestic concerns and the surest bulwarks against antirepublican tendencies.”

Jefferson supported free market and free trade, as Lincoln did not:

Having always observed that public works are much less advantageously managed than the same are by private hands, I have thought it better for the public to go to market for whatever it wants which is to be found there; for there competition brings it down to the minimum of value. (Letter to William B. Bibb, July 28, 1808)

In A Summary View of the Rights of British America Jefferson complains that

the exercise of a free trade with all parts of the world, possessed by the American colonists, as of natural right, and which no law of their own had takes away or abridged, was next the object of unjust encroachment [by the British government]. (Thomas Jefferson: Writings, 108)

He protests against the duties on the American articles of export and import, prohibitions against trade with certain countries, protectionism of all sorts, e.g.,

By an act passed in the 5th Year of the reign of his late majesty king George the second, an American subject is forbidden to make a hat for himself of the fur which he has taken perhaps on his own soil; an instance of despotism to which no parallel can be produced in the most arbitrary ages of British history, (109)

and arbitrary privileges granted to certain businesses. Lincoln’s war, on the other hand, was practically all about protection and tariffs.

It’s true that Jefferson wrote:

When any one State in the American Union refuses obedience to the Confederation by which they have bound themselves, the rest have a natural right to compel them to obedience.

But, of course, Jefferson meant: either abide by the terms of the Articles of Confederation or secede! You either do as agreed or go your separate way. It is a complete failure to grasp Jefferson’s entire political worldview to interpret him as a proto-Lincoln.

Furthermore, Timothy fails to quote the rest of the very same letter he uses:

It has been said, too, that our governments, both federal and particular; want energy; that it is difficult to restrain both individuals and States from committing wrong. This is true; and it is an inconvenience.

On the other hand, that energy which absolute governments derive from an armed force, which is the effect of the bayonet constantly held at the breast of every citizen, and which resembles very much the stillness of the grave, must be admitted also to have its inconveniences. We weigh the two together; and like best to submit to the former.

Compare the number of wrongs committed with impunity by citizens among us with those committed by the sovereign in other countries, and the last will be found most numerous, most oppressive on the mind, and most degrading of the dignity of man.

He might’ve been writing about the War Between the States which helped to create a unitary state, “one and indivisible,” by blood and iron and which helped to usher in the 20th century, during which governments killed almost two hundred million people.

II. States’ Rights.

Now Timothy quotes Rufus King to the effect that states

could not make war, nor peace, nor alliances, nor treaties. Considering them as political beings, they were dumb, for they could not speak to any foreign sovereign whatever. They were deaf, for they could not hear any propositions from such sovereign. They had not even the organs or faculties of defense or offense, for they could not of themselves raise troops, or equip vessels, for war…

If the states, therefore, retained some portion of their sovereignty [after declaring independence], they had certainly divested themselves of essential portions of it.

But the point is not whether a state within the Confederation could devise its own foreign policy. Perhaps it couldn’t. Perhaps it was a good thing that it couldn’t. The point, rather, is (1) whether before joining the Confederation a territory could have chosen to become a sovereign state, and (2) whether after joining the Confederation a state could secede from said Confederation and become a separate nation. Furthermore, even given that states “divested themselves of essential portions of” sovereignty, they did so voluntarily and could regain their sovereignty at the simple will of the legislature.

Yes, the states seceded from Great Britain together and all at once. But that scarcely indicated that the union was proclaimed and forever established by the Declaration of Independence. It is profoundly obvious that that was a temporary military alliance, not a permanent political one.

In a act that could only suggest Timothy is living in a Bizarro World he inverts the Misesian analysis of revolution and secession, claiming that the former is legitimate, and the latter is not.

At the same time even if the War Between the States was (in principle) an act of revolution, it was (in fact) illegal, because the South “initiated force rather than act in defense of individual rights.” Now it seems to me that an example of a revolution would be an attempt by the South to extend slavery to Northern states by force of arms or majority in the Congress. But it did no such thing. Timothy’s definition of “revolution” is highly unorthodox, because this term usually means “an overthrow of the central government,” whereas, of course, the Southern secession left the central government quite intact, even if in control of a smaller territory.

Of course, the actual secession occurred because of economic exploitation of the South by the North, not because the North was insisting that the South free the slaves. So, who initiated force first? Now Timothy argues that it is unlibertarian to “defend the right of collectives to enslave their citizens and initiate force against others so as to keep doing so.” For him everything revolves around slavery. To rid the world of it was allegedly Lincoln’s crusade or, at least, it was abolished through him. The march of History culminated at the time in this Great Man. End of discussion. I’ve already mentioned the key assumptions behind such piety: (i) Only consequences matter; (ii) the evil means were justified/outweighed by the good end; and (iii) no peaceful solution was in sight. I would content with all three of them. Would Timothy? Anyway, would he also have the US todayinvade the world“? Come on, my good sir, you can’t seriously agree to have massive wars to punish bribe-taking officials wherever they may hide!

“The federal unit was an agreement between the people, not the states,” a proposition endorsed by both the “weak-” and “strong-union” doctrines, Timothy writes. Therefore, “the people of America are bound together as one people for certain purposes, and therefore a state may not unilaterally secede.” I wouldn’t press this argument in any court of law. For now we can ask: Can an individual secede or emigrate? (If he secedes, his property becomes a separate nation. But so what? A country need not be continuous. Timothy must by his own logic accept such an act as legitimate.) Mises advocated an unrestricted right to secession, stopping short only at individual secession for “technical reasons.” Would our author agree with Mises on this? But if an individual can secede, then surely, so can a group of individuals, even a group which — an odd happenstance — makes up a state. It does not follow that if a state may secede, then an individual may. But the reverse implication is completely sound.

III. The Federalists and Anti-Federalists.

Now let’s do some comparing and contrasting. According to Jay,

… even if the governing party in a State should be disposed to resist such temptations, yet as such temptations may, and commonly do, result from circumstances peculiar to the State, and may affect a great number of the inhabitants, the governing party may not always be able, if willing, to prevent the injustice meditated, or to punish the aggressors.

But the national government, not being affected by those local circumstances, will neither be induced to commit the wrong themselves, nor want power or inclination to prevent or punish its commission by others. (F #3)

The idea is clearly that the national government will be far less subject to passions that normally animate state politics. The fear is that without a federal government the States will

be gradually entangled in all the pernicious labyrinths of European politics and wars; and by the destructive contentions of the parts into which she was divided, would be likely to become a prey to the artifices and machinations of powers equally the enemies of them all.” (F #7)

The anti-federalists argue that, on the contrary, because of the diversity of the country, the national legislature

composed of interests opposite and dissimilar in their nature, will in its exercise, emphatically be like a house divided against itself.

… In large republics, the public good is sacrificed to a thousand views…

Where, from the vast extent of your territory, and the complication of interests, the science of government will become intricate and perplexed, and too mysterious for you to understand and observe; and by which you are to be conducted into a monarchy, either limited or despotic. (AF #14)

Again, the federalist argument here is that the federal government is not like state governments in that it is far more rational. Surely, on that level everyone will be naturally concerned with the common good, while if the States are left unsupervised, their self-interest will be a cause of all sorts of evils, including internecine feuds. The anti-federalists reply that this is a delusion, because the federal government will not be any freer than State governments from the sway of passions and self-interest. In other words, the federalist argument does not work. Perhaps the danger that absent the feds, the states will war with each other, will exist, but so will the danger of “legal” exploitation of one state or group of states by another under the federalist system, as, indeed, undoubtedly was the case prior to the War Between the States.

The federalists make the point that “the causes of hostility among nations are innumerable,” and the union will be able to check many of them. One anti-federalist counter-argument they consider is that “Commercial republics, like ours, will never be disposed to waste themselves in ruinous contentions with each other. They will be governed by mutual interest, and will cultivate a spirit of mutual amity and concord.” (F #6) There is something to be said for this view; e.g., as Ludwig con Mises writes: “Wars, foreign and domestic (revolutions, civil wars), are more likely to be avoided the closer the division of labor binds men.” (A Critique of Interventionism, 115) The federalists’ reply that wars often have an economic motive, for while in the free market system there prevails a long-term harmony of interests, in the short run a country may find the advantages of theft preferable to honest toil. Hamilton writes that “NEIGHBORING NATIONS… are naturally enemies of each other unless their common weakness forces them to league in a CONFEDERATE REPUBLIC, and their constitution prevents the differences that neighborhood occasions, extinguishing that secret jealousy which disposes all states to aggrandize themselves at the expense of their neighbors.” Still, he does not seem to realize that if the entire US is a commercial republic, then the same arguments apply to it in relations with other states as well. What becomes of these arguments today when any nation in any part of the world is within easy reach of the US troops? And is there no hope for peaceful cooperation between states not arranged in a formal union? The reductio of this view seems to be a world government. Suppose that the US, Canada, and Mexico were one country, and Canada wanted to secede. Imagine the storm and the arguments in every paper fearful of an inevitable war. The federalist arguments have no greater merit than our imagined argument against the secession of Canada.

The case against the Constitution based on the consequence of the diminution of the powers of the member states is made as follows:

This [new] government is to possess absolute and uncontrollable powers, legislative, executive and judicial, with respect to every object to which it extends.

… a little attention to the powers vested in the general government, will convince every candid man, that if it is capable of being executed, all that is reserved for the individual States must very soon be annihilated, except so far as they are barely necessary to the organization of the general government.

… it is a truth confirmed by the unerring experience of ages, that every man, and every body of men, invested with power, are ever disposed to increase it, and to acquire a superiority over everything that stands in their way. This disposition, which is implanted in human nature, will operate in the Federal legislature to lessen and ultimately to subvert the State authority, and having such advantages, will most certainly succeed. (AF #17)

This is obviously very polemical, but hasn’t this prediction come true? Is not secession an impossibility now? Does not national politics overshadow state and local politics? Does not the federal government blackmail the states into doing its bidding by withholding funding? Has there not been a proliferation of federal laws overriding state laws? Are not state and local taxes trivial compared to federal taxes? And, foreshadowing the modern regulation state:

From this contrast it appears that the general government, will arrogate to itself the right of interfering in the most minute objects of internal police, and the most trifling domestic concerns of every state, by possessing a power of passing laws “to provide for the general welfare of the United States,” which may affect life, liberty and property in every modification they may think expedient, unchecked by cautionary reservations, and unrestrained by a declaration of any of those rights which the wisdom and prudence of America in the year 1776 held ought to be at all events protected from violation. (AF #45)

The federalists counter that

the proposed Constitution, so far from implying an abolition of the State governments, makes them constituent parts of the national sovereignty, by allowing them a direct representation in the Senate, and leaves in their possession certain exclusive and very important portions of sovereign power. (F #9)

Including, I want to assert, the power to secede. However,

the great and radical vice in the construction of the existing Confederation is in the principle of LEGISLATION for STATES or GOVERNMENTS, in their CORPORATE or COLLECTIVE CAPACITIES, and as contradistinguished from the INDIVIDUALS of which they consist.

… The consequence of this is, that though in theory their resolutions concerning those objects are laws, constitutionally binding on the members of the Union, yet in practice they are mere recommendations which the States observe or disregard at their option. (F #15)

This raises a problem: a breach of a federal law by a state would require a military intervention to compel obedience and hence a war between the state and the federal government.

Even in those confederacies which have been composed of members smaller than many of our counties, the principle of legislation for sovereign States, supported by military coercion, has never been found effectual. (F #16)

In short,

The important truth, which it unequivocally pronounces in the present case, is that a sovereignty over sovereigns, a government over governments, a legislation for communities, as contradistinguished from individuals, as it is a solecism in theory, —

so in practice it is subversive of the order and ends of civil polity, by substituting VIOLENCE in place of LAW, or the destructive COERCION of the SWORD in place of the mild and salutary COERCION of the MAGISTRACY. (F #20)

This, of course, begs the question. The problem apparently is that while the federal government can overpower any individual, it may not be able to overpower a state just as easily. Exactly! And all to the good, because why should the feds be able easily to do whatever they please over such an enormous territory? The federal government protects the states from each other, while the states act as protectors of the citizens against the federal government. It’s the whole purpose of states. Absent genuine rights of states, the “laboratories of democracy” will be non-functioning. The same “one size fits all” laws will be imposed everywhere. Recall that most of the federalist arguments I have presented above appealed only to the need for collective security. Yes, the federal government is useful for that. And instead of empowering the feds to “regulate commerce” (“regulate” should always have been interpreted as “make regular, promote” not “interfere with commerce however we feel like”), the Constitution could have been much more clear in its intent that the federal government enforce free trade among the states by striking down any internal trade barriers. But that’s about all. So, there is a difference between the feds’ being able quickly to raise an army to pacify an aggressive state which has attacked or blockaded or is about to attack another and federal laws’ being “mere recommendations which the States observe or disregard at their option,” according to the doctrine of nullification. This is because no state can nullify its pledge to be at peace with everyone (that is, its foreign policy), but in making domestic policy it is fully sovereign or should be, as per the 10th Amendment. Yet look at our federal Leviathan now, grown so fat that Jefferson would not have recognized it, due in part precisely to the War Between the States.

IV. Conclusion.

There was a right to secede, and in seceding the South was Constitutionally and even morally clean. And as a general rule, no country has the right to declare war on another to correct any internal abuses by that other country’s government.

Health Care Reform: Medical Profession

Introduction. This solution will argue that the most important problem in the health care industry in the US today is the numerous anti-competitive measures enacted on every level of government with the blessing of the American Medical Association. Part I describes several problems which fall under the rubric of government interventionism into the free market in medical care. Part II proposes solutions to those problems and examines the consequences of liberalization. Part III summarizes the results of my reasoning.

Part I. From its very inception the AMA, far from its stated mission as a private standards-setting organization, somewhat similar perhaps to the innocuous modern World Wide Web Consortium, has clamored for government protection of existing doctors of a particular school of medicine. The ultimate aim of the Association has been fueled by dissatisfaction with the market price of doctors’ services and consisted in a desire to attain higher wages by forming a cartel. Here is a partial list of what has been accomplished in the name of a alleged consumer protection:

1. The number of medical schools has been dramatically reduced. For example, the number of medical schools increased from 50 in 1870 to 162 in 1906. But the impact of the dubious Flexner report issued by the Carnegie foundation (which at the time invested heavily into the orthodox allopathic medicine — the only type the AMA represented) has been to lower the number of schools to 85 in 1920 and 69 by 1944. According to my information now there are 129 accredited M.D.-granting U.S. medical schools, still fewer that in 1906, when the population was only around 80 million, as compared to 300 million today. The number of students has been restricted, as well; in fact, a medical school is required, in order to obtain accreditation, to keep the number of students they enroll artificially small. Establishment medical schools (which are required to use AMA-approved curriculum) receive massive amounts of subsidies and are discouraged from becoming independent from support by governments and foundations and from becoming profitable through tuition and student fees.

2. The consumer has no say about the prices of doctors’ services. Apparently, being able to negotiate the right price is “unethical” and illegal. Practically no doctor has been seen to lower his prices and advertise this fact in decades. In fact, there are no prices as such, only “professional fees” made uniform throughout the profession. These fees are raised early, often, and in secret. Advertising prompt and on-time service, as opposed to the current practice of letting patients sit in the waiting rooms for hours, is also proscribed as an ethical violation.

3. Medical licensure is no less pernicious. Charges such as “practicing medicine without a license” or practicing “below the standard of care” are often levied against competitors if they get too conspicuous. The cartel rarely shows mercy. Non-mainstream healthcare practitioners like homeopaths, naturopaths, chiropractors, herbalists, and many others are plying their trade almost underground, marginalized or altogether outlawed. Even MDs who simply try to innovate, e.g., with Internet-assisted diagnosis and drug delivery, can get into trouble with states’ medical boards. Uniform government licensure is one-size-fits-all and even with that size, it is far too restrictive, fitting many fewer that “all.”

4. No customer can seek treatment from the pharmacist which used to be normal and common behavior. Pharmacists cannot sell drugs without asking the doctor; they can’t even refill a prescription without doctor’s approval.

5. The AMA also took part in destroying the practice of a company or fraternal organization to contract out for physicians to take care of their members. This was a very low-cost option yet still attractive to doctors, possibly because of the security it offered. For that and other reasons the mystique of the medical profession could not reach its present absurd level, as much unparalleled as it is unjustified. Thus, even lodge practice had to go.

Part II. The following is proposed to remedy the present situation:

1. Because the AMA is a private organization, it should be left alone. What should be neutralized is its enforcement arm: the federal and state governments. Licensure is the doctors’ attempt to cartelize the industry and restrict supply in order to receive above-market wages. But does it not at least weed out a few bad apples? Let us put it this way: there is crying need for diversity of the quality of training of doctors and cost of their services, as opposed to the only permitted “Cadillac standard.” Not every malady requires the best doctor in town. Minor health problem, the cures for which are most in demand, can be taken care of by people with lower qualifications.

Note that even the “standard” itself is high relative only to the AMA’s vision of what medical profession “should” be. Doctors do not want to be responsive to the actual interests of their patients, i.e., customers. The medical men seek to free themselves from consumer sovereignty, something they would certainly refuse to tolerate as consumers themselves of the rest of the economy. These politically protected individuals are perhaps the last noblemen — who treat regular people like dirt — left in the United States.

2. There is, however, a much more important reform to be pushed for. What I suggest is certainly not abolition of quality controls for doctors but their privatization. The market solutions are far superior to government ones. Indeed, one of the freest industries in the US is the computer industry, and, unsurprisingly, it also progresses and innovates faster than any other. Many computer companies, such as Microsoft, Sun, Cisco, and others offer numerous private certifications that individuals can acquire to enhance their reputation and therefore chances of being hired and their salary. We need the same kind of system in health care.

Under free market I expect that there will arise competing voluntary accreditation agencies which will certify doctors, if the latter so wish, and allow them to gain an edge on the competition. Better doctors will want to receive more stringent certificates of competence. In other words, it will pay for a doctor to apply to the most restrictive accreditation agency whose tests he is capable of surmounting. The market is expected to weed out bad certifiers and reward good ones. The Internet can allow customers easily to publish reviews of the doctors they employed through, for example, a rating system similar to one pioneered by eBay (though nothing in my solution depends in principle on high technology). In short, consumers can make discriminating medical care choices, just as they make discriminating choices in every other market. The clear perversity of even terrible doctors’ getting high incomes will thereby be addressed.

Given also a reform of the insurance industry which I consider in my second solution, prices will become publicized, competitive, and generally significantly lower; and quality will properly vary according to what each client wants and how much he can afford. Every doctor would be like a computer consultant, and every sick person, like a client choosing the best value for himself out of the pool of applicants. Just as computer consultants solve people’s information problems, so a medical consultant will solve people’s health problems. It is expected that hiring a doctor under free market will be similar to hiring any professional. I expect that a background check, reputation review, interview, etc. will all be conducted by the customer. Such discernment, while entirely normal and praiseworthy, need not be taxing on the consumer, as institutions will arise which will make finding a suitable doctor a sufficiently easy task. It is true that health is often “more important” than your computer network, but that is precisely why governments cannot be trusted to handle the former and why maintaining 100% free market in all aspects of health care is so crucial.

3. It might be argued at this point that some of the foregoing concerns are no longer valid. Allopathic medicine has progressed considerably, and doctors finally know their stuff.

First, people still die from the doctors’ incompetence.

Second, we see progress that has been made; we do not see the greater progress that would have been made had there been greater competition among physicians.

4. Finally, state medical boards should be abolished; barriers to entry into the medical schools market, lifted; and all government subsidies to medical schools, ended. It has been argued that subsidies to medical schools can be justified on grounds of efficiency, because of capital market imperfections. The problem is that lenders may not want to adequately provide loans for medical school students, because of the uncertainty of repayment in any individual case. Even though the typical graduate student can easily afford to repay the loan, they can rarely give the bank a collateral, and “one cannot repossess a human being.” The problem then is all the students who wash out. They may receive comparatively much money in loans and be unable to repay it. The result is underinvestment in medical education and too few doctors from society’s point of view.

This argument fails, first, because banks give out risky loans all the time. They just charge a higher interest rate to the people they deem less creditworthy. They could do the same to medical students, e.g., by looking at their performance at school. Their parents could be co-signers on the loans. There could be private scholarships for poor gifted students. These are just some of the devices that creditors could use to ensure return on their investment and society, to ensure that students succeed. Government regulations prevent private solutions from being developed or used.

But secondly, we need to ask: what if there was genuine competition among schools? Then there would be more schools and more varieties of schools. Both tuition and average lengths of study would come down to accommodate both students’ and patients’ demands. Lenders would face fewer risks, because medical students would not borrow so much. The “imperfections” would either disappear or greatly lessen, and no subsidies would be needed. Here we see how one intervention begets another.

5. In the meantime, we can grant pharmacists, as those professionals already close in average competence to MDs, all the powers to prescribe and dispense medications that doctors now have.

Doctors should be free from persecution if they try to gain competitive advantage by advertising their prices and service quality.

Finally, tax-free health saving accounts should be encouraged as a way of getting Americans used to the practice of paying for routine medical expenses themselves rather than through insurance. (A subject I take up in the second solution.)

6. While the market takes over the job previously done by governments, and the institutions privately regulating the industry are developed, we admit that there may be temporary glitches. (This prospect, however, pales in comparison with the institutionalized robbery that is the health care industry today.) But even though freedom cannot be planned, if there is a will to effect the proposed changes, then good detailed plans of transition will not be hard to find.

Part III. Government interventions into health care are numerous. Even a single intervention can not only distort the workings of the market so as to make it inefficient but also generate a case for further interventions. In other words, there is a dynamics in the system such that the initial intervention produces results contrary to the common good and to the publicly stated aims of its very supporters; people clamor for something to be done; and the result is either a repeal of the intervention and a return to the unhampered market or a passage of further interventionist legislation. All the alleged peculiarities of health care that are claimed to support interventionism are, in fact, the results of other, unmentioned interventionist measures. If only the free market existed in its full actuality, the general welfare would be served far more efficiently than it is now under a “third way” or, for that matter, under a fully socialist system of health care provision.

Health Care Reform: Insurance

Introduction. This solution will outline a theory of insurance and demonstrate that the present practice of health insurance violates almost every tenet of that theory. Part I presents the theory; Part II explains the practice; Part III summarizes.

Part I. The standard business model of insurance companies is pooling of individual risks. Within the pool of those whose health is insured there occurs a redistribution of wealth, from those who remain healthy to those who become sick. (Just as with car insurance one is supposed never to want to use his insurance policy. The winners are reluctant to win.) However, the redistribution from the healthy “losers” to the sick “winners” is random and unpredictable for anyone, including the insurance company actuaries. There is no pattern to the redistribution. If the insurance losers could pinpoint the future insurance winners, then they would refuse to share risk with them and buy lower-premium insurance to pool risk with other losers. The pool of the insured is, from the point of view of risk, homogeneous: every person looks similar to any other person.

Events that can be insured are defined by the idea of “class probability.” “We know or assume to know, with regard to the problem concerned, everything about the behavior of a whole class of events or phenomena; but about the actual singular events or phenomena we know nothing but that they are elements of this class,” writes Mises. Fortunately, even this knowledge is sufficient for an insurance company to make profits. So, winning insurance comes as a complete accident to the insured; it is an unpredictable event.

Uninsurable risks, on the other hand, are those that are affected by individual behavior. What depends upon individual initiative and responsibility cannot be insured. Hence it is impossible to insure oneself from, say, committing suicide or from taking business losses or from being unemployed, as all these are under one’s own control. For example, if you are insured against entrepreneurial errors, then you become mere manager, and the insurance company, the real owner of your company and entrepreneur risking the capital. Unfortunately, the modern health insurance does not for the most part deal with insurable risks, because the aspects of health it insures are very much dependent on the insured’s own conduct. As matters stand now, insurance encourages irresponsible behavior with regard to one’s own health and working efficiency; it helps to multiply, prolong, and worsen disease.

That’s why a distinction must be drawn between catastrophic illnesses which are mostly random and regular upkeep of health the extent of whose success or failure can often be predicted and which is to that extent nonrandom. This latter is uninsurable; moreover, insuring it generates moral hazard and is for that reason highly inefficient from society’s point of view. Routine medical care is best bought in the same way car maintenance is bought: fee for services rendered. Prices and quality will normally vary, offering something to everyone.

Part II. Interventionism in the insurance market began with forbidding insurance companies to discriminate between risks. Premiums shot up and lots of people dropped out, raising prices still further. If health insurance is now made compulsory for everyone, then there will be more freeloaders and more sickness against which insurance companies will not be allowed to discriminate and which is unlikely to be offset even by healthy people who would rather be without insurance and who are coerced into paying for it. Insurance will therefore become even more expensive. If the public demands that the government contain the costs, price controls will be imposed, and we will experience shortages of medical services. Politically correct diseases will get priority, while people with politically incorrect illnesses (such as smoking-related) will be shown the door. Professional medical “ethicists” will be working full-time deciding who “ought” to get treatment and who “ought not” to get it. It is, in my view, an uninviting prospect.

What is called private insurance in the US is actually prepaid consumption. Instead of insuring catastrophic illnesses, people are insured even for simple visits to the doctor. This is absurd. Routine health care is a commodity like any other; it should be paid for in cash.

Then there is employer-provided insurance. This is a holdover from World War II, during which price and wage controls were imposed by the government. This caused companies to compete for workers by offering non-wage tax-exempt incentives or “fringe benefits.” Health benefits were one of them. In reality, however, there is no reason why health insurance should be provided by employers, any more than shoes, butter, and movie tickets should be provided by them. It is immaterial to the business owner whether to attract workers with higher wages or “benefits.” If the practice of bundling insurance with salary were abolished, worker salaries would increase corresponding to the lower costs of doing business. Overall employee happiness would go up, as simple economic analysis demonstrates. And, of course, large companies would no longer be privileged over small businesses.

Consider also Medicare and Medicaid. These are little more than welfare payments. It would be more efficient to increase the welfare cash transfers and let the beneficiaries decide whether to spend the extra money on their health insurance or in any other way. (To be sure, the public would never allow that, all to the good.) From the beginning they also featured the perversities of cost-plus payments to hospitals, insurance premiums based on “community rating,” whereby every person in a some arbitrary geographic area regardless of age, habits, occupation, race, sex, etc. is charged the same price, and a pay-as-you-go system which causes premiums for everybody to go up in an unlucky year regardless of individual behavior. These caused costs to skyrocket and ultimately to destroy the cost-plus system. National health insurance may be the desperate though logical next step.

The blueprint for reform should now be apparent. In includes:

  1. Ending federal spending on Medicare and Medicaid.

  2. Eliminating all “anti-discrimination” regulations of the insurance industry.

  3. Encouraging tax-free Health Saving Accounts (HSA) to wean Americans from the practice of having third parties pay even for routine health maintenance. As part of that it is a good idea to repeal the requirement to have a high-deductible policy as a prerequisite to establishing an HSA. At the same time individuals should be allowed to use their HSA to make premiums payments for any high-deductible policy they choose to purchase.

  4. Providing all Americans with a (non-refundable) tax credit for 100% of health care expenses and making all medical expenses tax deductible. This will immediately make health care much cheaper for the majority of the population.

  5. Breaking the link between employment and insurance, between the size of a business and insurance; and restoring a market for individual health insurance polices via reforms 1-4.

Part III. Once again we see how one act of interventionism begets, according to economic logic, another. Insurance companies can barely deal with high-priced group insurance; offering individual insurance for routine health care and without the ability to discriminate would now cost them a fortune, and there will be few buyers. At the same time costs of health care for uninsured are higher than ever, thanks again to the predominance of third-party payers.

Now both socialism and pure free market are self-consistent systems, though socialized industries create islands of computational disorder, such that when the number of government-run enterprises reaches critical mass, the economy is plunged into chaos. A socialist country does not have an economy; its central planners operate in the dark, unaware of how their actions affect other human beings. Interventionism, the “third way,” on the other hand, is beset with contradictions. Given everything I’ve said so far, it is clear that the correct response to it is away from socialism, not towards it; it is to restore unhampered free market in health insurance.

Politicians Are Liars (Duh)

The main job of politicians and government officials of all kinds is to deceive the public. Therefore, do not bother listening to what they are saying. What they are saying is almost always a lie.

Instead, watch what they do: what legislation they introduce, how they vote, whom they imprison and kill, whom they rip off, to whom they funnel money, whom they protect from competition and at whose expense, etc.

Republicans Conserve Only Evil

The American right defines itself entirely in opposition to the left. They have no ideas of their own except protecting the status quo and the politically powerful and, of course, war. They merely hate the left. But being against something is not a positive program. Brown’s victory is a reaction to Obama’s policies, a good one perhaps but a reaction only. Since the classical liberal tradition is now dead, the regular job of the Republicans is faithfully to preserve whatever socialist policies are enacted by the Democrats.

The reason why the Democrats seek to destroy what remains of the free market in medicine and why the Republicans in their turn did not long ago propose what should be a radical reform to free an industry hopelessly tied up in red tape now becomes clear. The Democrats believe in socialism. The Republicans do not believe in anything, whether socialism or freedom; they are cynical to the core and believe in “conserving” the rule of the present power elite and looting the country to the max. If medical socialism comes to this country, the Republicans will very soon be counted on to protect those few people who will be benefiting from this monstrous “system.” We are caught between a rock and a hard place, and the fight for liberty must involve a real ideological change, such that the Democrats are rejected as foolish, and the Republicans are rejected as evil.

Note: All posts earlier than this one were at some time years ago made private as per my decision to reboot this blog. They may reappear if I find that I could salvage anything of value in them.

Implausible Avatar

As a Johnny-come-lately to Avatar, I must say that of course I was amazed by the effects and 3D and all that. But it was interesting to think of the problem posed in the movie, namely, whether a peaceful solution to the problems of both the humans and the Na’vi could be found.

At first sight it seems not, because Pandora is obviously the Na’vi’s Garden of Eden.

In a crucial scene which makes it clear, Jake Sully says: “They’re not going to give up their home. They’re not going to make a deal. Pff for what? A light beer and blue jeans? There’s nothing that we have that they want. Everything they sent me out here to do is a waste of time. They’re never going to leave hometree.” You see? It’s their paradise, and who’d want to leave that?

And they are, unlike humans, portrayed as unfallen, uncorrupt, and incorruptible. Their bodies are powerful and beautiful and perfectly healthy. They enjoy the exhilaration of physical life and the mastery of their bodies and plants and beasts of the forest. They have the skills and prowess that a champion snowboarder would easily envy. Yet with all that primal grace and power, they are peaceful. They are blessed with direct communion with a benevolent deity and possess insight into each other’s souls. They are the paradigm of noble savages. They want nothing from the humans. In paradise, after all, there is no division of labor, social cooperation, no production or consumption, business negotiations, or all the rest of economic structures of the real world.

If they were anything like humans, they would welcome a relief from the misery of primitive existence. They’d jump at the chance to improve their well-being. They would need the humans far more than the humans would need them. That’s not to say that negotiations would always proceed smoothly, but there’d be a chance of making everyone involved better off. In particular, the spectacular technology of the humans should be presumed by 2154 surely to have advanced to such a degree that mining “unobtainium” could be accomplished without destroying the Na’vi’s property. And indeed the forest in which the Na’vi lived ought by right to be considered their natural property. The violent spoliation depicted in the movie is from the libertarian point of view outrageous. In other words, mix in a bunch of implausible difficulties, and you have yourself an irresolvable tragic conflict.

This movie has instead an odd religious theme of monsters invading paradise. The recent computer game Dragon Age: Origins has similar lore: the mages of a long-gone empire decided to invade the Golden City, the Maker’s heaven, and as punishment for their hubris they were cast out and turned into monsters. Quite frankly, I don’t know what to make of this theology; it does not seem to be an idea expressed either by the Christian or any other faith.

Update. It could be an early attempt to create a distinctively environmentalist theology. We are, after all, living in an interesting time in which we are seeing an emergence of a new “environmental” religion.

Avatar: Happy End

I wish I knew where I read this, but a long time ago there was a web page which posed to the readers a puzzle, something along the following lines. Imagine that a doctor suddenly received an apparently divine gift of healing, such that simply by touching another person, he would cure him of any illness. The author then pointed out that if this idea were to be picked up for a plot in a movie, there could be dozens of scripts written that incorporated this idea that ended tragically for all concerned. The movie would then “deliver a message” about the sort of evil the writers felt was most artful, etc.

Here are some “dramatic” scenarios:

  1. the doctor feels it is his duty to heal as many people as possible; he works 20 hours a day and dies from exhaustion;
  2. the American Medical Association poisons him in order to keep its customers;
  3. the Catholic Church accuses him of consorting with the devil and urges the mob to tear him apart;
  4. a billionaire kidnaps him to keep him for himself hoping that he could live forever;
  5. the doctor charges enormous amounts of money, catering only to the rich; he gets proud and somehow dooms himself for his “greed.”

You get the point. Then the article challenged the reader to write a story in which everyone ended up happy. The puzzle was to come up with a technological solution for every potential problem. As far as I recall, a part of a proposed solution was to have the doctor sit near a moving conveyor belt which would carry a line of people to him. It would take 5 or so seconds for the doctor to touch each person that the belt or escalator would deliver to him. Then he could work 2 hours per day, seeing 1,440 people. If he charged on average a paltry $100 per person per illness, he would make at least $144,000 per day or over $50 million per year (yes, rationing would remain a problem, but still his productivity would be enormous; no one could accuse him of not using his gift). This would be enough to build a fortified mansion and hire guards to prevent anybody from kidnapping him or what have you. He could offer to cure the Pope of whatever ailed him and say, reasonably: “Every kingdom divided against itself will be ruined, and every city or household divided against itself will not stand. If Satan drives out Satan, he is divided against himself. How then can his kingdom stand?” and “By my fruit you will recognize me. Do people pick grapes from thornbushes, or figs from thistles? Likewise every good tree bears good fruit, but a bad tree bears bad fruit.” Stuff like that.

We see that numerous technical problems admit solutions. Where storytellers give us drama and tragedy, engineers and scientists grant us stuff that works and thus harmony and mutual profit. Avatar is, again, a movie made with utter disregard of the real world. It’s a ridiculous, if beautiful looking, fantasy, and there might have been a bunch of ways in which the war in it could have been avoided under more realistic circumstances.