Americanly Yours

Despite overall disapproval with President Obama’s health care law, many of its provisions remain popular.  Perhaps the most popular provision in the law is one that prevents insurance companies from discriminating against customers based on “preexisting conditions.”  The logic is relatively simple at first glance: people with debilitating conditions will not be able to get coverage at affordable prices unless Congress mandates that insurance companies cannot discriminate against those with a preexisting condition.

We all know someone with a preexisting medical condition, be it cancer, diabetes, or pregnancy.  The fact that we all know someone who currently has or previously has had a preexisting condition is one reason why this provision is so popular.  After all, it is difficult to argue with someone who uses the emotional appeal of an aunt with cancer or a single pregnant woman who is uninsured.  Emotional appeals can be used to “justify” any side of any issue but they cannot prove anything.  Preexisting conditions can be tragically sad and are often not the fault of anyone, be it the victim or society as a whole.

There is a very important question that we must ask before we decide whether or not such a provision is a good idea: is it appropriate to punish someone who has done nothing wrong?

This is a very serious question.  If we decide that it is appropriate to punish someone who has committed no wrong, then we must not only answer why it is appropriate to punish the innocent, but who should punish the innocent and how severely they should be punished for their non-wrongs.

I do not see how any rational person who has thought about this question can decide that it is morally acceptable to punish a person who has done nothing wrong.

Therefore, if it is not appropriate to punish someone who has done nothing wrong, then we must absolutely reject the idea of Congress mandating that insurance companies not discriminate against those with preexisting conditions.  The reason for this is simple: forcing insurance companies to provide “affordable” coverage for those with preexisting conditions must result in increased costs for those of us without preexisting conditions.

Insurance is a vehicle which prices and protects against risk.  This is usually done by assigning people with similar characteristics to “risk pools” and charging them similar premiums.  In a free market for health insurance, 35 year old male smokers residing in the Chicago area who are overweight and have type 2 diabetes are likely to be placed in the same pool and will be charged the same or a similar monthly premium.  Under a system where insurance companies are prevented from discriminating against those with preexisting conditions, the previous group is merged with the group of 35 year old male smokers residing in the Chicago area who are overweight but do not have type 2 diabetes.  While this will result in lower premiums for those with type 2 diabetes, it will result in higher fees for those without the disease.

In other words, while preventing insurance companies from discriminating against those with preexisting conditions sounds like a noble idea, it ends up punishing those who have done no wrong.

I am sorry if you have a preexisting medical condition, I truly am, but unless you can conclude that your preexisting condition is my fault, you have absolutely no moral right to punish me for your condition.

The premature loss of any human life is tragic. I do not know whether Trayvon Martin death was or was not racially motivated. I do not know whether George Zimmerman killed Trayvon Martin in cold blood or in self defense. In the final analysis Mr. Zimmerman is the only living person who knows exactly what happened that night.

I have my suspicions and I would be willing to share them with you later, but the purpose of this article is not to solve the mystery of what was going through Mr. Zimmerman’s head the night of Mr. Martin’s death; the purpose here is to refute claims that Mr. Martin’s death was somehow caused or enabled by anti-government sentiments. His death is not an example of renegade free market law run wild and this unfortunate incident should not be used as evidence of need for more government restriction on individual liberty.

Rutgers law professor David Troutt recently wrote an editorial in Politico in which he placed the ultimate responsibility for Mr. Martin’s death on “the invisible intersection of racial hatred and hating government,” as well as on “the extremes of privatization.” He further claimed that “hating government allows this to happen. It helps pass laws that put too much power in private hands while penalizing government for performing traditional duties like crime investigation.“

Mr. Troutt is absolutely wrong to condemn privatization and the market for causing the death of Mr. Martin.

First of all, there is not a free market system of private law which dominates in America. The American system, including that in use in Florida is a centralized bureaucratic system of law which is generated through the political system. Law is created by legislators, interpreted by judges, and enforced by an executive branch which includes police officers, justice departments, attorneys general, and so on. Jurors are conscripted from the general public and forced to participate in the legal process. In any given area, one local police department has monopoly jurisdiction over the handling of crimes committed in that area. Competitive policing agencies are non-existent: victims have no say which police department handles their case. The constituent parts of government justice systems are monopolies in which competition is not allowed and the price system cannot properly function. If a person is unhappy with the police or courts in their area, there is nothing that they can do about it short of moving to a different jurisdiction and hoping for better results.

This is a far stretch from a private legal system which is advocated by many libertarians. Under a private legal system, law would be created by competing agencies and would be adhered to voluntarily by individuals who sought protection from the various agencies. In a private legal system, law is not created through “legislation” (at least not in the current usage of the word), law is created contractually, or through the ruling of common law courts and arbitration societies. If an agency creates laws which coercively restrict the freedom of their clients, they will likely lose profits when their clients switch to a competing agency. It is likely that the providers of free-market law would resemble insurance companies, with their global networks, reinsurance contracts, teams of actuaries and underwriters, contracts and peaceful business dealings with competing insurance firms, etc.

It is clear that no such system operates in the United States of America. Mr. Troutt is simply taking the route most preferred by modern academics: blame “capitalism,” the market, deregulation, and radical privatization for all of society’s problems without either defining any of these terms or recognizing that capitalism is not a feature of the American economy.

Mr. Troutt also makes the claim that “laws that abdicate government responsibility in favor of personal ideas of justice often lead to unintended consequences.”

The author’s rhetorical trick has the effect of making the argument that only these types of laws have unintended consequences, while laws which increase government power are magically exempt from the possibility of creating unintended consequences. Furthermore, by making this comment, the author ignores the fact that all government legislation necessarily entails the abdication of individual liberty in favor of increased government power, and that this guarantees unintended consequences as well.

Yes, George Zimmerman was a member of the neighborhood watch program, but that hardly means that the market itself is responsible for his actions. Police officers kill unarmed civilians all the time—and no this fact does not in any way make what happened to Mr. Martin OK–but I suspect that Mr. Troutt has never argued that laws which protect police officers from immediate arrest are examples of bad legislation.

Mr. Zimmerman’s neighborhood watch duties were in the context of a governmental legal system. It was the government, not the market which passed the Stand Your Ground law which Mr. Troutt opposes. It was the government, not the market which released Mr. Zimmerman without charging him with a crime or holding him for questioning.

Troutt argues that “The Sanford police evidently conducted little investigation — relying instead on Zimmerman’s account.” Notice that the failure was not a market failure, but rather a government failure: it was the Sanford Police Department who allegedly botched the investigation, not the Acme Protective Services Corporation or any other privately run firm.

Mr. Troutt has issues with the “Stand Your Ground Law” which grants legal protection to those using deadly force to defend themselves against what they perceive to be a threat on their lives.

The author is correct to oppose laws which grant special protection to some people (ie, Stand Your Ground gives special protection to those who claim self defense), but he is wrong to argue that Stand Your Ground is a market reform. Stand Your Ground is a government intervention which, as pointed out about, inevitably leads to unintended consequences. Ludwig von Mises noted that statists tend to ignore the root cause of these consequences (the intervention itself) and call for further interventions. The process repeats itself as each new wave of interventions leads to worse and worse consequences and further interventions to combat these consequences.

Mr. Troutt’s article is offensive to defenders of freedom because of its implications; an unarmed teen was killed by a member of a neighborhood watch group and Mr. Troutt’s first reaction is to propose restricting freedom. Whether Mr. Zimmerman sought to murder Mr. Martin or whether this was an honest mistake, we do not know whether Mr. Zimmerman had even heard of the Stand Your Ground law before he shot Mr. Martin. We also do not know whether he would have acted any differently had no such law been in place. This makes it highly unlikely that Mr. Martin is dead because of the existence of that law or that repealing that law a few months ago would have saved Mr. Martin’s life.

If Mr. Zimmerman was a cold blooded killer on the prowl, he would have shot Mr. Martin regardless of whether or not Stand Your Ground was in effect. Killers kill people with disregard to the law. Hence the existence of murder even though it remains unlawful.

Conversely, if Mr. Zimmerman shot Mr. Martin in self defense as he claimed, he would have done that regardless of the existence of Stand Your Ground. When people feel that their live is being threatened, they tend to take whatever action the deem to be necessary to save themselves. They certainly do not tend to think about whether an action is legal or illegal before they act to save their own lives.

Under any system of law, there will always be people who commit murders, rapes, and other crimes. This is true of a free market system as well as of a totalitarian system. Those who use events like Mr. Martin’s death to advocate against individual liberty and for greater government control should think hard about what they are doing. Centralized governments have a horrendous track record with regards to human rights including murdering. In the last century alone, well over 100 million people were killed by governments, while the number killed by individuals is a tiny fraction of this number.

It is important to remember that a child is dead. This tragedy was not caused by advocates of the free market or by efforts at privatization. The goal of law is to achieve justice, to the maximum extent humanly possible. The Stand Your Ground law which led to Mr. Zimmerman’s release was a government intervention designed to grant special privileges to those claiming self-defense. If anything, this tragedy was not caused by the free market, but by the lack thereof.

You might wonder exactly why it is that janitors earn much less money than CEO’s. After all, in most circumstances, janitors engage in much more physical labor than do CEO’s, executives and managers, and even the average “white collar” worker.

Are the working class laborers being systematically exploited by managers and white collar workers? Is it the case that white collar workers are making money at the expense of blue collar workers, or is there a better explanation?

Value Does Not Come From Labor

If labor created value, then society (and all of its members) could get rich by having everyone use their bare hands to dig large holes in the desert and then fill them back up. After all, this would be extremely hard work of a very physical nature. However, this would create no wealth for society—in fact, it would represent a destruction of wealth (imagine what the laborers could have actually produced if they were not hired to complete this task).  Generally, this destruction of wealth takes place in the form of an absence of economic activity which would have otherwise occurred.

The value of a product does not come solely from the labor of the workers. The value of a product is measured subjectively; a product is essentially worth what people are willing to pay for it.

A laborer in turn receives payment for his services based on the value that his work adds to the product or service. A janitor in a shoe factory adds relatively little value to the shoes that are being created. There is likely more value being added by the designer who designs the shoes, by the worker who sews the shoes together, and by the person who manages the distribution network which allows for the shoes to be sold in thousands of stores around the world. These workers add more value to the product, despite the fact that the janitor undoubtedly exerts more physical effort to do his job.

Scarcity

While value added by workers is an important reason for the existence of disparities in income, scarcity tells much more of the story.

As Thomas Sowell put it, economics is the allocation of scarce resources which have alternative uses. With the exception of air, just about all resources are scarce. Similarly, nearly all resources have alternative uses (should this rubber be used to make tires or shoes?, should this glass be used to make a window or a beer bottle?, should my time be spent watching a movie or cleaning the house?).

Scarcity doesnt just mean that there isnt a lot of a certain good. Scarcity means that the good is limited. Even in America, bread is a scarce resource.

Diamonds and Water

Think of diamonds and water. Which of the two resources is absolutely essential to life, and which could we live without? Water is infinitely important: without water we will all die very quickly. Diamonds are nice and sparkly and women love them, but they are hardly essential to our lives. However, water is very cheap and diamonds are very expensive. This phenomenon is known as the “diamond/water” paradox. The reason for the differences in the costs of these goods is scarcity; water is abundant, while diamonds are scarce.

For example, I live in unincorporated DeKalb County [in Georgia] where my water is provided by a government monopoly (and hence is likely more expensive than would be the case under a free market system). Yet, the monthly bill for my 3 bedroom house has averaged $61.17 per month since April of 2007. In other words, over the past 4 years, it has cost about two dollars per day to provide the 2-3 people living in my house at various times with the most important resource that we need for survival. In fact, water is so cheap that I can do more than just use it for survival needs—I use it for showering, cooking, watering my plants, and even brewing beer.

What does this have to do with janitors and CEO’s?

Well, the same principles which lead to the diamond/water paradox also apply to compensation for labor. Please keep in mind that my intent is not to belittle the work that janitors do. I know that this type of work is physically demanding and dirty work. However, there is little skill involved and little intelligence required. The fact of the matter is that nearly every able-bodied person above the age of 13 or so is probably qualified to be a janitor. In contrast, there are only a very limited number of people who have the intelligence, experience, and ability necessary to be a successful CEO of Coca-Cola. Janitors are replaceable and easily trained. High-level executives are not. In other words, the pool of available janitors is relatively unscarce when compared to the pool of available CEO’s of Fortune 100 companies.

Bringing it all together

Disparities in income are hardly the result of exploitation by the white collar class against blue collar workers or the working poor. Compensation results from several factors including the value added by the worker, as well as the relative scarcity of the pool of workers available to fill that position.

There is no Federally mandated wage scale requiring certain salaries for certain types of workers. Decisions on how to pay employees—be they janitors, CEO’s, or something in between—are generally made on a company by company basis. Those in the position to hire janitors will pay them according to the value that they believe will be added to the firm. They will likely tend to pay the janitor at levels similar to that of other janitors in related fields. This is because a janitor is likely to add similar levels of value at which ever company he works. The range of compensation for CEO’s is very large, with CEO’s of smaller companies earning drastically less than do CEO’s at large multi-national firms. This is because of the differences in the amount of value that can be added by different CEO’s in different fields at different companies. The CEO of Wal-Mart is responsible for running a worldwide distribution network, ensuring that over a million employees get paid, and in a broader sense—ensuring that society is fed and clothed. In contrast, the CEO of a small but delicious pizza chain has responsibilities which are much greater than his employees, but which do not compare to that of the CEO of Wal-Mart.

Ceteris Peribus

This article does not deal with things like corporate welfare or other special privileges which are often received by corporations from the State. While special privileges will likely skew the distribution of income away from the bottom of the and towards the top, the principles at hand do not change. In a truly free society with no governmental grants of limited liability, no business licensing requirements, corporate welfare, and private control of the currency, income is likely to be somewhat more evenly distributed among the productive members of society. However, as long as there is any level of freedom of choice, there will always be disparities in income.  Income disparities are not always bad–in fact, they are very important.  Differences in income give us something to strive for.  If we all earned the same wages, no matter how hard we worked, no matter how much value we added to society, and no matter what type of work we did, no matter our ages, or no matter how much experience we had, there would be little reason for people to put much effort into their jobs.  There would be little incentive for anyone to be productive beyond the subsistence level–after all, any additional effort that they did would have to be shared equally with all of society.  If we were all the exact same, there would be no reason for trade, or even for society to exist.  It is our differences which encourage people to interact and trade with each other.  No society larger than a small tribe could survive for long if wages were distributed equally.

As long as there are people with different skills, levels of intelligence, backgrounds, lifestyles, and so on, there will be differences in income. People are different from each other, and as such, will seek out different goods and services. They will also find themselves qualified for different types of employment than their friends and neighbors. Typically, those who are employed in positions that create a lot of value and are relatively scarce will earn higher incomes than those who are employed in positions that create little value and are relatively common.

Americanly Yours,

Phred Barnet

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If you arent a libertarian, chances are that you have never heard of the non-aggression principle (also referred to as the non-aggression axiom).  Most libertarians base their views about morality and the role of government around the non-aggression principle.

The non-aggression principle is the idea that no matter how disgusting, immoral, or improper you believe an act to be, you have no right to use force to stop someone from committing that act, unless that act itself involves the initiation of force against another person (or person’s property).

The principle is simple and straight forward; it is wrong to initiate force against another person or group of people. This is by no means a passive or pacifist doctrine; it is absolutely permissible to use force in response to force, in order to protect or defend one’s person or property, to enforce a contract, or punish someone for failure to adhere to the terms of a contract.

However, it is not permissible to use force to attack your neighbor, steal another person’s property, or stop someone from using their justly acquired property in a manner that does not aggress upon another individual.

The non-aggression principle has been stated and restated from ancient times to John Locke [“Being all equal and independent, no one ought to harm another in his life, health, liberty, or possessions”] to Ben Harper [“My choice is what I choose to do, and if I’m causing no harm, it shouldnt bother you. Your choice is who you choose to be and if you’re causing no harm, then youre all right with me”].

By applying the non-aggression principle to all aspects of life, a just and coherent philosophy of non-interventionism becomes clear: if no one is being harmed besides those people voluntarily engaged in the act, leave it alone. It is that simple. You dont have to like or respect or engage in prostitution, homosexual relations, religion, or the use of drugs, alcohol, tobacco, etc, but you do not have the right to stop any adult from engaging in any of these acts.

The non-aggression principle is a very important part of the natural rights philosophy.

Every person is the owner of their own body and has the right to do with their body as the see fit.  People can also acquire property by using one of three different methods: homesteading, voluntary exchange, and theft.  Homesteading involves taking unowned resources and improving them, while voluntary exchange involves the unforced transfer of resources from a person (or persons) to another person (or persons).  Both of these two methods are fully consistent with the non-aggression principle–by definition, neither homesteading or voluntary exchange involves the initiation of force.

When the non-aggression principle is violated, property is acquired in the third method: theft. Physical acts of violence or threats of violence against others are violations of a person’s right to self ownership.

Even if one rejects the doctrine of natural rights in favor of a utilitarian (ie, the common good) view, the non-aggression principle is still important.

Man is a social animal. For the most part, we seek to engage in activities which promote the social benefit. Activities which violate the non-aggression principle tend to disrupt the peace by inviting violent retaliation. For example, if I kill or harm a member of your family (or attempt to do so), you are likely to respond by seeking revenge on me. These types of feuds can spiral out of control and disrupt the peaceful cooperation on which society depends. The best way to keep the peace that is essential to the existence of society, is to adhere to the non-aggression principle.

Thus, whether you subscribe to natural rights theories or whether you support some sort of utilitarian view, it is in the best interests of both individuals and society that people adhere to the non-aggression principle.

As we have seen, violations of the non-aggression principle which are committed by individuals can disrupt the peace. However, violations of the non-aggression principle committed by the government are infinitely more eggregious. This is because the government grants itself the power to do things that no individual could ever be permitted to do.

Only the government (or those under the protection of the government) can confiscate money from people without their permission and give it to other people and call it “public policy.” Government redistribution of wealth and granting of special privileges is aggression because it prevents people from using their own property in a peaceful manner of their choosing.

Only the government can commit mass murder against civilians and call it a “defensive war.” A bombing campaign in a densely populated civilian area which results in civilian deaths is murder; it doesnt matter if the bombing was done by a rogue terrorist or by an Air Force member acting under order from the President. Murder is murder. It doesnt matter who does it.

Only the government can throw human beings in cages which are kept in horrible conditions for the “crime” of recreationally smoking a plant in their own home. Smoking marijuana on your couch does not violate the non-aggression principle; raiding someone’s house and confiscating their marijuana does.

It is essentially impossible for government to act without violating the non-aggression principle. This is because mandatory taxation is coercion, theft, and extortion. All of these acts violate the non-aggression principle. Taking people’s money without their permission is theft. Any business regulation, permit requirement, governmental zoning restriction, anti-drug law, restriction of consensual acts deemed to be “immoral,” etc. are violations of the non-aggression principle because they prevent people from using their justly acquired resources in a peaceful manner of their choosing.

Every government act involves a violation of the non-aggression principle. For, even when government is acting to stop one person from aggressing against another, it is doing so using resources that have been obtained via theft. When you violate the non-aggression principle, your actions may be devastating and cause harm, but they are limited by the amount of damage that one person can cause with whatever resources that you have available to use. However, when the government violates the non-aggression principle, it does so with other people’s money subject only to how much damage it can inflict before enough people get angry enough to either withdraw support or threaten revolution. It also does so under the guise of legality. But intelligent people know that an unjust law is no law at all.

Thus, the only way for government to act without aggressing on the rights of its citizens by violating the non-aggression principle would be for the government to set the exact policies that each individual would choose on their own and rely on truly voluntary donations to do so. In other words, the government’s best option is to do nothing at all.

In the words of the French economist, Anne-Robert-Jacques Turgot:

“The policy to pursue, therefore, is to follow the course of nature, without pretending to direct it. For, in order to direct trade and commerce it would be necessary to be able to have knowledge of all of the variations of needs, interests, and human industry in such detail as is physically impossible to obtain even by the most able, active, and circumstantial government. And even if a government did possess such a multitude of detailed knowledge, the result would be to let things go precisely as they do of themselves, by the sole action of the interests of men prompted by free competition.”

This isnt just the stuff of libertarian philosophers. The rapper Lil’ Jon famously uttered the phrase “Don’t start no shit, it won’t be no shit!”

This concept is remarkably simple: do not initiate the use of force against another person. Respect their right to engage in peaceful activities on their own property in any manner that they see fit.

Americanly Yours,

Phred Barnet

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I got this interesting cartoon from Tarrin Lupo over at LCL Report a while back.  Enjoy.

Americanly Yours,
Phred Barnet

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