What You Don't Know Is Killing Your Neighbours

What You Don't Know Is Killing Your Neighbours
by Jim Davidson on Thursday, May 19, 2011 at 3:43am

Economists know about a problem that you cannot solve. It is called “the calculation problem.” The reason you cannot solve this problem, calculating the market clearing price of every good in the world on every market, is because you do not have the necessary information. The nature of the calculation problem is that you *cannot* have the information, because it isn’t available. Market clearing prices are discovered by buyers and sellers in free, unregulated markets, all the time, by the choices of those in the market.

As is often the case with these sorts of things, it is actually worse, in reality, than you might imagine. My friend from Colorado Springs, Keith Hamburger, writes, "The calculation problem is almost certainly even more intractable than presented by Ludwig von Mises. He wasn't aware of the modern mathematics of recursive feedback systems known as chaos/complexity theory when he did the majority of his writing, as it hadn't been developed yet. With every individual having an infinite number of things they can value, and each of those things being infinitely variable and only ordinally measurable, and their values changing moment by moment, and every action or bit of knowledge of billions of individuals influencing the values of each and every other individual, it is absolutely impossible to predict what is the 'correct answer.' There are not enough atoms in the universe to build a computer that is capable of modeling economics."

You may imagine that you are smarter than me, and I’m quite willing to grant it for purposes of discussion. You may believe you are smarter than everyone else, and I grant that, too. But the smartest woman in the world cannot know the needs and wants and temporary emergencies of seven billion people. You cannot know what you need to know to solve the calculation problem.

Yet you demand that we all turn to the government to force our neighbours not to buy things you don’t want them to buy and not to sell things you don’t want them to sell. You demand regulations and prohibitions, you demand price controls, you demand quality controls, and you shriek and gnash your teeth.

It is tiresome. Did prohibiting abortion work? No, it failed. It failed to prevent abortion. It also prevented women from getting abortions in clean clinics, and put them in back alleys being butchered by amateurs.

Did prohibiting alcohol work? No. It failed. It failed to prevent alcohol consumption. Carrie Nation’s dream of a country where women were not beaten senseless by drunk husbands never came to be. Prohibition made bathtub gin contaminated with lead (because it is cheaper to make a still with lead pipes) widely available. It made organised crime much bigger. It justified the existence of the Federal Bureau of Investigation and other national police and espionage forces. But it failed.

Does prohibiting marijuana work? No. It fails. It is currently in the process of once again failing in Montana where dim-witted legislators have hit upon the idea of making criminals out of at least 28,000 of the roughly 30,000 marijuana prescription card holders they demanded be registered in a previous law, after the people of Montana voted 62% in favour (in 2004) of a legalisation scheme. Will they prevent weirdness, as one legislator at a Republican party "Reagan-Lincoln" event recently schemed? No. They will prevent orderly trade and commerce, they will drive the production and use of marijuana underground, they will turn over to federal authorities all the names and addresses they so cruelly demanded, they will gleefully build taxpayer-funded cages to put their neighbours in and gleefully distribute federal block grants to the states to fight the "war on drugs" and with greed all over their chins eagerly accept their cut of civil asset forfeiture money from robbing their neighbours at gunpoint.

And you never learn. You never learn that the government is not real, it is only a fiction. You never learn that the men and women who work for the government are simply men and women. They aren’t superhuman. They have no magic wands. They cannot know enough information to solve the calculation problem.

You demand that we all pay more for everything because you insist on regulations. Well, each American household pays about $15,000 more per year due to regulations, a recent study says. (Cite: http://www.ncpa.org/sub/dpd/index.php?Article_ID=19869 ) On top of that, each American household pays roughly a third of their income in income taxes and payroll taxes, plus another ten percent in other federal taxes, plus another ten percent or more in state and local taxes. Every American would be two to three times wealthier with much less government, and the cost of everything in the market would be reduced with less regulatory and tax burden.

But you don’t care. You don’t care because you demand that the government solve all your problems. You don’t care because you are smarter than everyone, and you know better than your neighbours. You don't care because what you do care about is *important* and what I care about, free people having freedom, doesn't matter to you.

So your government puts 2 million Americans in cages every year for non-violent non-crimes. Your government incarcerates more individuals in total than any other nation in the world and a higher percentage of its population than every other country in the world. Your government tortures people to death. Your government detains people without charges. Your government searches private homes without warrants, without probable cause. Your police and federal agents plant evidence, lie, cheat, steal, rape, murder, and you don't care. Your president has authorised the execution of American citizens without trial. Your president has declared, as commander in chief, at least one soldier (Bradley Manning) guilty without benefit of a trial.

You don’t like the free market because you are a hateful, violent state supremacist. You don’t want free neighbours to express differences of opinion, you want to force them into line.

People are orderly when it pleases them to be orderly. But they aren’t always orderly.

The question is: are you willing to wait for the spontaneity of order by choice, or do you insist upon the calamity of order by force?

And if you force everyone into line, then you get to answer two more questions: Who does your state kill? Why?

The above essay was first written as a comment to a socialistic state supremacist environmentalist on some blog somewhere. Personally, I blame Kent McManigal for putting me on that track. I have above acknowledged Keith Hamburger for the chaos theory comment. While making acknowledgements, I should like to thank Jennifer Lewis for her work researching the $15,000 per household article. If you people were on Facebook, instead of reading this Web 1.0 Libertarian Enterprise, you might like to join our group there.

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Historical Comparison

One of these things is not like the other.

Historical Perspective.

Wikipedia

Turd's Bottom

Turd Ferguson and I are both calling a bottom, so it's gotta be, right?

Is $39.00 The Bottom?

I have no idea.

Something is going on...

I know nothing.

Among the things I watch are the London Fix and NY Spot price of silver and the silver to gold ratio based on the same exchanges. In this chart blue in London, Orange is NY, pastel is the ratio and dark is the price.

My intuition tells me something is trying to converge on 38 or 39ish. My intuition also tells me some sort of bifurcation point is approaching.

I repeat, I know nothing.

What is a dollar?

On April 2, 1792, U. S. Secretary of the Treasury Alexander Hamilton reported to Congress the precise amount of silver found in Spanish milled dollar coins in common use in the States. As a result, the United States Dollar was defined as a unit of weight equaling 371 4/16th grains (24.057 grams) of pure silver, or 416 grains of standard silver (standard silver being defined as 1,485 parts fine silver to 179 parts alloy). It was specified that the “money of account” of the United States should be expressed in those same “dollars” or parts thereof.

Wikipedia

371.25 gr = 0.848572 oz = 24.0566 g.

On April 8th silver closed at $40.93/oz.

That means it would take 34.73 Federal Reserve Notes to buy 1 United States Dollar's worth of silver.

Freedom, Bigotry and Civil Rights "Law"

NOTE: I would be remiss if I did not acknowledge writers such as Walter Block, Butler Shaffer, Thomas Sowell, Walter Williams and Stefan Molyneux in helping me clarify my thinking. And a special thank you to Facebook user Julie Canny for prompting me to write this note.

If there are no functional differences between races or genders with respect to the ability to perform a given job and there are no state enforced barriers to entry into the market place, the employer who discriminates based on race or gender is putting himself at a competitive disadvantage by depriving himself of competent workers and risking public backlash.

If I and another entrepreneur were in the same business, producing the same goods or services and my competitor either would not hire women or racial minorities or paid them less that their white male counterparts he would be shooting himself in the foot.

All I would have to do is either hire those he wouldn't at a slightly less rate of pay than he gives his white men or hire his existing women and minority workers for more than he is currently paying them and slightly less than he is paying his white men.

I would then have lower costs and could undersell him, not to mention I would have the public's goodwill working for me and against him. It would not be very long before my business would more profitable than his and my market share would be increasing while his diminished.

At that point I would be susceptible to the same market forces that allowed me to put him out of business. Since I was more profitable than him and making more money, it would be in my interest to increase the pay of my women and minority worker to a comparable level with their white male counterparts or I would be just as vulnerable to the same tactics as I had used against my competitor.

This can only work in a free market with no barriers to entry. The reason it was not happening prior to Civil Rights Act of 1964 was that there were (and still are) high barriers to entry in the market. Licensing and regulation impose costs on businesses. Existing firms have already passed the hurdles and can afford to operate in the restrictive environment. New businesses have to overcome them, preventing easy entry by new competitors.

Similar dynamics apply to retailers and those providing "public" accommodations. Stores, motels and bus companies, for instance, do not prosper by turning away customers. Women and minority money spends just as well that of white men. If someone has a restaurant or a bus company and they refuse service to minorities all a competitor has to do is serve all comers.*

And when you think about it, forcing a racist or misogynist to serve or hire people he hates keeps the bigot in business. If people were allowed to discriminate openly the public would know who the discriminators were and would be able to shun them, putting them out of business.

I realize this runs counter to most everything people are taught, but people have been taught that free markets are bad things, so they cannot grasp how they actually operate and do not understand that freedom will always triumph over bigotry if it is given the chance to do so.

Forcing compliance does not foster virtue, it only breeds resentment and resistance.

Virtue can only arise when people are allowed to choose it.

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*I do not have any cites handy, but I understand that "whites only" restaurants and "back of the bus" were not imposed by the restaurants and bus companies--at least not all of them--but by legislation because the discriminators could not compete with those who did not discriminate. Rather than face competition, they lobbied for laws restricting it.

While I have not found any "hard" cites I have found a few "soft" ones that suggest it.

http://www.thefreemanonline.org/columns/the-reincarnation-of-jim-crow/

http://www.independent.org/blog/index.php?p=3709

Anyone who reads this and has solid references would have my gratitude if they would share them. Also grammatical or spelling correction and fact checking would be appreciated as well.

Yes, But What About...?

Question: Does Anarcho-Capitalism have a solution to [insert pet issue here]?

Answer: Yes. The aggregated expression of distributed human choice through market behavior.

If people continue to express their lack of care and foresight through their economic decisions nothing will change. Forcing compliance on uncaring and unenlightened people will accomplish nothing.

If people begin to express wisdom through that same process then nothing can prevent positive change.

In either case, no amount of coercion can prevent human choice from expressing itself. Humanity gets the world it chooses. No law can ever stop that.

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Definition of terms in the order they appear, both above and in these definitions:

1) Anarchy: Without rulers, not without rules.

2) Capitalism: A system of social organization based on free choice, voluntary exchange and respect for property.

3) Market behavior: Voluntary human interaction in a social context.

4) Economic: Of, or relating to, human choice and human action in the material world.

5) Property: The claim of exclusive control and use of resources.

6) Resources: Those things required for the continuation of life and the improvement of its quality, including, but not limited to, material, psychological, social and spiritual needs.

If you define any of those terms differently we're not talking about the same thing. I do not claim the "right" definitions, I am simply letting you know the ideas I am trying to convey when I use those words. If you want a semantic argument talk to Noam Chomsky. If you want to discuss ideas then I'm listening.

I would be remiss if I did not credit Ludwig Von Mises, Butler Shaffer and Abraham Maslow for the clarity they have brought to my thinking.