Americanly Yours

I recently read Peter and Andrew Schiff’s new book, .”  I am a big fan of Peter Schiff and was excited about reading this book.  Peter Schiff is an economist who is famous for predicting the financial meltdown in advance.  Here is a great video of him making predictions in advance of the meltdown.  He is even laughed at by the other commentators on CNBC and FOX for implying that there was a housing bubble only months before the market crashed.  Well known economists including Ben Stein and Arthur Laffer were among those mocking Schiff.  Interestingly enough, the people laughing at him selected Washington Mutual, Bear Stearns, and Merrill Lynch as great stock picks (all of those companies are now out of business).

This book is a simply written, illustrated allegory which details how economies grow and what can cause economic collapse.  The book begins with three men who are stranded on an isolated island.  The men spend all day fishing just to catch enough fish to barely survive.  After a time, one of the men underconsumes and is able to use his savings to increase the number of fish that he catches.  From this action, an island economy is born.

The story continues for generations and generations (immigrants eventually come to the island) as the island’s economy continues to develop.  I will refrain from giving specific details about the economic expansion so as not to ruin this book.

The chapters contain “Reality Checks” which simply relate the material in the chapter to real life by defining the concepts which are outlined.  In these short sections, the Schiffs explain things like underconsumption, productivity, savings, risk, and so on.  The “Reality Checks” help readers who may have little or no understanding of economics understand basic economics principles.

At the end of each section is a much more detailed (but still simple and easy to understand) section called “Takeaway.”  These sections elaborate on the lessons from the chapter and give further explanation of the underlying economic principles.  They greatly enhance the book by providing the reader with a nice overview as well as a great segue to the next chapter.  The “Reality Check” and “Takeaway” sections both help move the story along and are features which would be great in other books on economics.

The first 5 chapters of this book are absolutely amazing.  The Schiffs do an excellent job of using humor to make reading about economics fun and easy to follow.  They explain the causes of a growing economy (and the effects of a growing economy on society) in a manner that is easy for anyone to understand, regardless of their economic background.

In chapter 6, however, things took a slight turn for the worst.  In this chapter, the Schiffs explain the foundation of a banking system.  I have heard Peter Schiff give speeches on this in the past–his speeches are great and include detailed information on the historical evolution of banking.  It is always interesting to hear Schiff speak about this and I wish that he had included more of this information in his book.  For some reason or another, the Schiffs do not tell the full story of the evolution of the banking system.  This is somewhat perplexing, as he wrote about this quite nicely in his bestselling (and highly recommended by me) book, Crash Proof.  I have also seen him give numerous speeches on this subject, all of which were great speeches which gave this full history.  The failure to include this can certainly be excused, as the Schiffs’ book was surely intended to be a brief, simple overview of how an economy works.

The “Takeaway” section of chapter 6 was also somewhat perplexing.  There was a disconnect between the material in the chapter and the “Takeaway” section which is likely to confuse some readers.  In this section, the Schiffs launch an attack on the Federal Reserve system without explaining to the reader exactly how this ties in with the information in the early part of the chapter.  While I fully agree with the Schiffs on the Federal Reserve, an uninformed reader might have a little trouble understanding the Schiffs’ early critiques of the Federal Reserve System.  To their credit, however, the Schiffs do properly explain this later.

I do want to point out to my reader that this chapter is my only real criticism of the book and that while it is worth pointing out, it does not take much away from what is truly an excellent book.

Following this section, the Schiffs continue to brilliantly explain the evolution of a developing economy into a major economic player.  While the time line is a little off (something that the Schiffs warn the readers of in the introduction), the Schiffs paint a largely accurate picture of the history of the American economy and the growth of the American government (especially with regards to its intervention in the economy).

I wont give away the ending, but the economy in the book suffers a fate similar to that of the American economy during the current economic crisis–the title promises to explain how an economy crashes, so I dont think that Im giving anything away.  However, the Schiffs looks into the future and offers a glimpse of what the future of the American economy might look like if we do not quickly enact sound monetary policies.  Given Peter Schiff’s history of correctly predicting the course of the economy, his prediction is certainly worth taking into account.

My rating:

Strongly recommend:  9/10

Americanly Yours,

Phred Barnet

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Even most children know that taking things without permission is known as stealing.

There are three methods of acquiring property: homesteading, voluntary exchange, and theft.   The first two methods are just, while theft is inherently unjust.  Taxation involves taking things without permission and must be classified as theft.

However, before deciding on whether or not taxation should be considered theft, the term “taxation” must be defined. I will define taxation as “a government mandated extraction of resources from individuals and/or groups, paid to support the aims of the government.”

The phrase, “mandatory extraction” is the key to understanding why taxation is theft. A mandatory extraction, by nature, is taken through the use of force or coercion, and not paid voluntarily.

Theft is always theft, regardless of who does the theft, how the theft occurs, and what excuses the thief makes to “justify” the theft.  The ONLY exception to this statement is when things are taken as restitution for a prior wrong (for example, if you stole $100 from a person, a court would be justified in taking $100 from you without your permission to repay the victim).

Before I go on, I must address a question that I will surely be asked by many readers: arent taxes special because they are taken by the government in order to provide people with their basic needs?

The answer to this question is a flat NO!

People have certain inalienable rights which should never be violated. It would be wrong of me to kill you, rob you, or physically harm you. Governments are made up of people, and are often created by people to secure their rights. Because governments are made up only of people, governments cannot have any rights that people themselves do not have. It simply does not make sense for this to be untrue. Rights are rights, people are people. Any claims that the government has more rights than anyone else is arguing that some people (the populace) should be considered inferior and subordinate to others (the government).

Taxation involves taking property from people without their consent; taxation is theft.

To quote myself: “If a man with a gun were to demand that unless you pay him 1/3 of your income he would lock you in a cage, he would be guilty of initiating the use of force with the intent of committing theft. It would not matter if the man promised to use this money to pay for a school for your children, for a new highway, or for a missile defense program. Taking things from a person without their permission is, by definition, theft.  Silver-tongued rhetoric may be employed to obscure this fact, but it cannot change it.

Taking something from another person without their permission is always theft and should be condemned as theft. It does not matter what the “reason” or “justification” for this action is.  It does not matter who committed this theft, what was stolen, or how many people told the aggressor to act.”

Examples of taxation as theft

Some of the taxes described below are not traditionally thought of as taxes, but they are taxes—they all meet the above definition of being a government mandated extractions for the purposess of supporting the aims of the government.

A government imposed minimum wage law prevents a person (a sovereign owner of him or herself) from selling their labor to a potential buyer at a mutually agreed upon price. This is theft of a laborer’s future earnings.

A government imposed ban on the sale of alcohol on Sunday prevents a person from selling their justly acquired resources to an individual willing to purchase them. This is theft of profits.

A government imposed business regulation prevents a business from using its justly acquired resources in the manner that it sees fit.  This is theft as well.

A mandatory income tax, imposed under penalty of imprisonment, enforced by men with guns is theft of the fruits of one’s labor. Stealing one’s labor is called slavery. A mandatory income tax makes the government a middle man in all labor transactions, and allows them to claim ownership of property that they did not justly acquire.

A mandatory property tax, imposed under penalty of imprisonment, enforced by men with guns is, by definition, a violation of property rights, and therefore is theft—no explanation should be necessary to prove this. But… property taxes are fees on products that have already been paid for. They are levied on the owner of a property. A mandatory fee on residents for the continued use of their own house is no different than the government charging a person rent to stay on their own property. Remember, a person who justly acquires property becomes the owner of that property, but if a person has to pay the government rent to occupy their own property, who is the real owner of the property, the homeowner, or the government?

A mandatory sales tax, imposed under penalty of imprisonment, enforced by men with guns is theft as well. A mandatory sales tax makes the government a middle man in all retail transactions, and allows them to claim ownership of property that they did not justly acquire. Sure, they can argue that sales taxes are imposed in order to pay for police, but this does not change the fact that this money was acquired through theft, and not through voluntary means. The mafia also forces businesses to pay a protection fee.

I would love to hear your comments on this article, but please dont post a comment or send me an email that says “taxes are necessary because without them, the government could not provide services.” I have addressed this above: taking money from someone without their persmission and then using that money to buy they something that they may or may not want is still taking something without permission [theft].

Please do not send me a message or post a comment telling me that taxation is “voluntary” and not theft because if I disagree with the taxes, I can move somewhere else. When it comes to taxes, we have three choices: paying a tax, or refusing to pay the tax and being arrested by men with guns and then locked in a cage, or leaving one’s family, friends, and property behind to search for a society that does not employ mandatory taxation. This fact should make it clear that taxation is not voluntary. A person who uses coercion to force another person to give up some of their property under threat of violence is guilty of extortion. Governments can have no rights that people do not have, and are therefore just as guilty of extortion as would be a person who acted in this manner.

Furthermore, the argument that if a person does not want to pay taxes, they can renounce their citizenship and leave the US to avoid taxes is false.  The US government does levy a tax on people who give up citizenship:

“Expatriation on or after June 17, 2008, may cause an expatriate to be subject to IRC § 877A, which was enacted as part of the Heroes Earnings Assistance and Relief Tax Act (HEART) Act of 2008. Generally, IRC § 877A imposes income tax on the net unrealized gain on property held by certain U.S. citizens or green card holders who terminate their US residency as if their worldwide property had been sold for its fair market value on the day before the expatriation or residency termination (mark-to-market tax). The Treasury Department and IRS have authority to issue regulations under IRC § 877A so further guidance is expected soon, though it has not been released yet.”

Finally, please do not send me a message or post a comment asking how things like schools, roads, or even national defense could be paid for without mandatory taxation. There exists a long history of voluntary provision of all these goods and services (check out this book for more information).

Furthermore, these items could be provided for through taxation in a purely voluntary manner if people were allowed to exercise their natural right to free association and choose their own government. Under voluntary government, taxation could no longer be considered theft, as those who did not wish to pay a tax could simply drop out of one government and sign a contract with another government.

Economist Walter Block argues that under voluntary government, one would have “the right to stay put, on one’s own property, and either to shift alliance to another political entity, or to set up shop as a sovereign on one’s own account.”

Governmental services can be provided on the free market as can any other service; a government would agree to provide certain services (possibly protection, roads, health care, or whatever) in exchange for a fee from a citizen. Thus, the citizen would be paying a purely voluntary tax.

In contrast to voluntary, contractual government, our government does not allow citizens to withdraw their support from the State.  It levies taxes on people without their consent.  These non-consensual taxes must be recognized and exposed for what they are: THEFT.

Americanly Yours,

Phred Barnet

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Libertarians speak often of private property, but to people not educated in libertarian philosophy, this notion can be confusing and seemingly subjective.  In fact, the opposite is true: the concept of private property is objective and quite simple to understand.

Self Ownership

Before understanding man’s ability to own other objects, one must understand man’s ownership of himself (or herself).

Each human being is the sovereign owner of him or herself.  While this conclusion seems fairly obvious, we can arrive at it several ways. I will focus on the method used by Murray Rothbard and others below because I think that it is the easiest method for the common person to understand. For a more detailed and completely different approach, take a look at Ludwig von Mises’ “action axiom,” and Hans-Hermann-Hoppe’s “theory of argumentation.”  This piece by Gennady Stolyarov II also summarizes the point as well.

One way to prove self-ownership is by assessing three possibilities of who owns a person: that everyone in the world owns fractions of everyone else in the world, that some group of elites own everyone else, or that every person owns him or herself.

The first such possibility is that everybody has an equal claim to ownership over everyone else.  Murray Rothbard (page 36) explained that this scenario

“holds that every man should have the right to own his equal quotal share of everyone else. If there are two billion people in the world, then everyone has the right to own one two-billionth of every other person. In the first place, we can state that this ideal rests on an absurdity: proclaiming that every man is entitled to own a part of everyone
else, yet is not entitled to own himself. Secondly, we can picture the viability of such a world: a world in which no man is free to take any action whatever without prior approval or indeed command by everyone else in society. It should be clear that in that sort of. . .  world, no one would be able to do anything, and the human race would quickly perish.”

Thus, we are able to reject any notion that people can be co-owners of each other. Seeing that it is impossible for humans to all own equal shares in each other, we must now examine the notion that one group of people owns all of the rest of the people (page 28).

“a certain class of people, A, have the right to own another class, B…. Th[is] alternative implies that while Class A deserves the rights of being human, Class B is in reality subhuman and therefore deserves no such rights. But since they are indeed human beings, th[is] alternative contradicts itself in denying natural human rights to one set of humans. Moreover, as we shall see, allowing Class A to own Class B means that the former is allowed to exploit, and therefore to live parasitically, at the expense of the latter. But this parasitism itself violates the basic economic requirement for life: production and exchange.”

Thus, we are left with our third option, that every human is the sovereign owner of him or herself.

Acquiring Property

Property can be acquired in three different ways–two of the methods are just, while the third is unjust.

Homesteading

The concept of acquiring property through homesteading has a long philosophical tradition.  In 1690, John Locke famously wrote (page 71):

“Though the earth and all inferior creatures be common to all men, yet every man has a “property” in his own “person.” This nobody has any right to but himself. The “labour” of his body and the “work” of his hands, we may say, are properly his. Whatsoever, then, he removes out of the state that Nature hath provided and left it in, he hath mixed his labour with it, and joined to it something that is his own, and thereby makes it his property.  It being by him removed from the common state nature has placed it in, it has by his labor something added to it that excludes the common right of other men. For this labor being the unquestionable property of the laborer, no man but he can have a right to what that is once joined to…”

Under homesteading, a person who improves or makes use of a natural resource becomes the owner of that resource.  For example, if a person landed on an uninhabited island, and picked an apple off of a tree would become the obvious owner of that apple.  No one else could rightfully claim ownership to the apple.  Similarly, if this man were to cut down several trees on the island and use the lumber to build a home, this home and the land surrounding it would become his property.

Homesteading has its limits–one must improve or change the resource to be considered a just owner of that property.  For example, if a man were to simple build a large fence around an area the size of Texas, he could not seriously claim to be the owner of all land inside of the fence.  Similarly, if I were to claim ownership of the planet Saturn, I would be ridiculed, and when the time came that humans visited Saturn, my descendants could not expect to collect rent from these astronauts.

Murray Rothbard explains this concept (page 170):

“If Columbus lands on a new continent, is it legitimate for him to proclaim all the new continent his own, or even that sector ‘as far as his eye can see’? Clearly, this would not be the case in the free society that we are postulating. Columbus or Crusoe would have to use the land, to ‘cultivate’ it in some way, before he could be asserted to own it…. If there is more land than can be used by a limited labor supply, then the unused land must simply remain unowned until a first user arrives on the scene. Any attempt to claim a new resource that someone does not use would have to be considered invasive of the property right of whoever the first user will turn out to be.”

Voluntary Exchange

Under voluntary exchange, a person can trade any of their justly acquired resources with another person in exchange for some of that person’s justly acquired resources.  For example, the man above who took an apple off of an unowned apple tree could trade his apple with another person for a product of that person’s, as long as the trade was voluntary.

This right also derives from the right of self-ownership.  I own myself and I may sell my labor to another person for a wage or a product (I could sell 8 hours per day of my time to an employer for a fixed rate of $10 per hour).  At the end of the day, I now own the $80 (meaning that the employer no longer has any claim to this money), which I am able to trade with a different merchant for some of his products.

Thus, any resources which are acquired justly can be traded for any other resources that are acquired justly.  In completing such a transaction, original owners must completely give up their right to the property that they have sold.

Theft

Theft is taking things by force (including fraud or threat of violence).  Theft is immoral and unjust, and one who acquires resources by theft should not be considered to be the legitimate owner of that resource.

If I were to take $10 from a person without their permission, it is obvious that I have stolen from them.  If this person is paid $10 per hour by their employer for their labor, I have effectively stolen an hour of this person’s life.

Similarly, if a food merchant were to market a meal as “non fat,” knowing that the meal contained 10 grams of fat, he would have acquired the money from that trade through fraud. Thus, the person who purchased the meal would have a strong claim against the merchant and should be entitled to receive a refund or some form of compensation.

Additionally, if a man with a gun were to demand that unless you pay him 1/3 of your income he would lock you in a cage, he would be guilty of initiating the use of force with the intent of committing theft. It would not matter if the man promised to use this money to pay for a school for your children, for a new highway, or for a missile defense program. Taking things from a person without their permission is, by definition, theft.  Silver-tongued rhetoric may be employed to obscure this fact, but it cannot change it.

Taking something from another person without their permission is always theft and should be condemned as theft. It does not matter what the “reason” or “justification” for this action is.  It does not matter who committed this theft, what was stolen, or how many people told the aggressor to act.

People often use majority support as a justification for  increases in taxes, large new social programs, war, and government debt because “the people overwhelmingly support them.”

Rothbard (Pages 57-58) shoots this idea down as well.

“even if 90% of the people decided to murder or enslave the, other 10%, this would still be murder and slavery, and would not be voluntary suicide or enslavement on the part of the oppressed minority. Crime is crime, aggression against rights is aggression, no matter how many citizens agree to the oppression.  There is nothing sacrosanct about the majority; the lynch mob, too, is the majority in its own domain.”

Unfortunately, our current system does not always respect private property rights.   Remember, that property rights are inviolable, and that action taken against a person’s property without their permission is aggression.  It is a sad fact that property rights (often including the right to self ownership) are regularly discarded by the very government which was instituted to protect our liberties.

Also, check out this video for a great explanation of private property.

Americanly Yours,

Phred Barnet

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My friend Ben sent me an article about this story.

The article is about a new rule for an Ottawa youth soccer league which stipulates that if a team leads by five goals, they automatically lose!  The league previously had a “mercy rule” which sought to prevent humiliation by calling the game when a team led by 5 and awarding that team with the victory.  There is at least some sense in this type of rule–there is definitely an argument against making kids feeling bad about themselves by allowing a team to lose by 10, 20, or 30 goals.

When I played baseball, there was a sort of mercy rule: no team could score more than 10 runs in an inning.  But even so, scoring a lot of runs didnt cause a team to lose–it didnt even cause the game to be called (I remember beating the Spartans 28-3).

But, this new rule is just plain wrong.  It uses perverse incentives to send children the wrong message, punishing good teams and rewarding bad teams.

Under this rule, a team that is winning 4-0 is in the lead, but if they score one more goal, they are losers.  But, what about that poor child who excitedly charges down the field and scores the fifth goal for the team.  By doing what he has been taught by his coach, he has just cost his team their victory.  Surely, his friends will give him hell after the game and make him feel bad for scoring.

Even worse: under this rule, a team that was down by 4 goals could easily kick the ball into their OWN goal–AND GIVE THEIR TEAM AN EASY WIN!

This isnt what youth sports are about.  Youth sports are about teaching children to work with others, as a team towards a common goal. What kind of message does it send to children to award the team with the fewest points the victory and turn the team with the most points into losers?

We can compare sports to economics in one important regard.  Wins and losses are little different from profits and losses.  Just as a profit is a signal to a company that it is succeeding and doing things right, a win is a signal to a team that it is succeeding and doing things right.  The opposite is true for losses.  People take actions that tend to offer them the most rewards; a profitable company will repeat the actions that brought it these profits, and similarly, a victorious team will repeat the actions that made it victorious.  I repeat:  What kind of message does it send to children to award the team with the fewest points the victory and turn the team with the most points into losers?

Dubbs Galt commented to me about this issue: “Today, the message from the youth sports egalitarians is that winning and losing is everything – only that any drive for winning should be replaced with a feeling of shame for making someone else lose. These bastardizers of morals want everyone to feel the benefits of an unearned effect while completely dismissing its relationship to any real cause.

As a both a former player and coach of youth baseball, I can promise that a day later kids don’t remember that they lost 11-5. But, the lessons you learn from preparing for competition, laying it on the line during the game, and even the lessons you learn from losing badly…..these lessons last a lifetime.”

This rule sends the wrong message.  It turns losers into winners and makes winners into losers.

Imagine if a similar rule was used in other sports.  A similar rule in baseball might cause a child to get booed by his own teammates after he hit a grand slam (which cost the team the game).  A similar rule in basketball could cause a child who mistakenly stepped behind the 3 point to cost his team the game.  This is insanity.

I am glad to report that the entire world hasnt gone completely stupid, however.  When I spoke with former New Mexico State QB, Carl Scaffidi about this rule, he told me “if I was a coach, I would strive to go 0-20 with 100 goals.”

Americanly Yours,

Phred Barnet

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A equals A.  Existence exists.  Things are as they are.  Truths are true.  We have the ability to determine the truth or falsehood of our judgments in relation to the facts of reality.

If the above sentences seem so obviously true, ask yourself why we have found ourselves in this mess.  Ask yourself why politicians (Republican as well as Democratic, liberal as well as conservative) continue to push for programs that fly in the face of logic, reason, and ultimately reality.

We fight “wars for peace,” heavily regulate the economy in an effort to increase economic activity, often both heavily subsidize and heavily tax the same product (ie, tobacco), redistribute wealth to promote “economic efficiency,” and so on.  Clearly, our leaders have failed to grasp the simple truths contained in the first line of this article.

If our “leaders” have failed, however, it is because We the People have failed by selecting illogical people to act as our overseers.

If we want to see real change in our lifetimes–a change in the right direction, towards individual Liberty and a respect for logic, reason, and ethics, we must make the change in ourselves first.

There are many ways to accomplish this goal in our society, including grassroots political activism, developing workable alternatives to the present system, and education.

Economic activity depends on a division of labor–when people specialize in areas in which they are proficient, society can take on more tasks and advance faster than it could if everyone tried to do everything themselves.  Similarly, all of the above methods of achieving Liberty must be employed by those best suited to these tasks.

While all of these methods are important, it is my opinion that education is the most important.  Education is the cornerstone of good policy.  Education is also “the gift that keeps on giving.”  If I educate someone about the fundamentals of economics, he or she can then turn around and use their abilities and new knowledge to educate people they know.

It is simply impossible to achieve a society based on natural law, the principles of self ownership, and respect for private property if people are not educated about these concepts.

Although I dabble in philosophy, my website focuses mainly on economics.  But just as we must specialize our labor if we want economic growth and we must specialize in our methods of promoting Liberty if we wish to achieve this goal, we must specialize in educating and informing people about the ideas of Liberty if we wish for our educational efforts to be successful.

If all websites promoting Liberty were written and constructed in the same manner and focused on the same topics, we would only reach the same few people.  Therefore, it is important and even vital for this movement that different types of educational and informational resources are developed.

With the above in mind, I am pleased to present yall with an exciting new resource.  My friend, Dubbs Galt has spent a considerable amount of time developing a great new website.

A=A is a new, comprehensive resource designed to educate people about logic, reason, philosophy, economics, and natural law.

This site has a ton of resources, including information about how we got into this economic crisis, a detailed and comprehensive section on philosophy, a section on the importance of the study of sound economics (based on the study of human action), and a great section full of resources which will allow you to educate yourself.  Dubbs is a very talented writer who has the unique ability to break issues down to their core principles, investigate these principles, and then reconstruct the issues themselves.

There is much more to this site than what little I have described and I urge you to check it out.  In the coming weeks and months, Dubbs plans to further develop his already excellent site, so I urge you to continue to follow A=A as it develops.

Americanly Yours,

Phred Barnet

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