Flaws of Libertarianism, Part 1:NAP

Libertarians like to talk a lot about what they call the Non Aggression principle, which they define as prohibiting “… the initiation or threatening of violence against a person or legitimately owned property of another. “(wiki) Like most libertarian principles, this fails to account for the reality of how liberty and freedom are actually encroached upon. Taken as it stands, it will inevitably serve to defend and entrench privilege, while denying the oppressed any ‘legitimate’ recourse. Economic and social coercion can be tools of tyranny as great as any thuggish secret police, unless they are actively combated. Under a libertarian regime, however, these types of coercion are enshrined into law, and defended by the full (physical) force of the state and society at large (since private violence is acceptable under the NAP in case of threats to legally owned property).

Economic coercion takes many forms, but one of the most blatant is the company town, which I will use as a salutary example. Keep in mind that the company town is not a thought experiment; it is a phenomenon which exists today where not prohibited by force of law. In the company town, the company owns every scrap of land within the town. The town is centered on a factory or extractive operation, which is the town’s primary source of employment. Other potential employment is found in support occupations: a general store, a bar, sometimes a brothel depending on local mores, possibly a school and a clinic. These are also run by the company. Housing is provided as an employment benefit, or is rented to workers at exorbitant rates. The company store’s prices are likewise high, and wages at the factory are low, ensuring that money never lasts until the next pay check and the workers are forced to buy necessities on credit. In this situation, the workers cannot fight the company in any respect: anyone who tries to buck the system will be fired, and their spouse, if any, as well. They will then be evicted, either because they and their families are no longer entitled to employment benefits. And/or are in debt of the rent. They have no money to leave town, because they’re in debt to the company store. Anyone who offers them shelter or assistance is subject to the same treatment. This means that, practically speaking, the company threatens their lives if they disobey; they will be thrown out to freeze or starve, and there is no recourse for them. Libertarians insist that this is different from a gun to the head, but are unable to explain how, except that they declare it so.
A more diffuse but equally real example of economic aggression is redlining. Once again, this is a real practice, and one which continues to a degree today. Redlining consists of financial institutions simply refusing services to certain areas, which are largely inhabited by black people.
Banks drew red lines on city maps around the black neighborhoods, and deny mortgages, home improvement loans, and business loans to people who lived there. Insurance companies likewise would not insure homes or businesses owned by people within those boundaries. Denied even the possibility of acquiring capital, the inhabitants of those neighborhoods are at the mercy of rent-seeking landlords and whatever low wage employment may be offered to them (see social coercion, below). They have no opportunity to start a business, own a home, or even acquire significant savings, since they are forced into low wage employment, and the price of rent and groceries is elevated by the need for an absentee owner to gouge out a share. Such money as comes into the neighborhood rapidly flees again, into the pockets of the absentee owners, and the residents are trapped in a permanent cycle of poverty.

Social coercion also takes many forms, from which I will select sexism, simply because I happen to have seen a great deal of discussion of it lately and it’s fresh in my mind. In America today (and also other places, to a greater or lesser extent; I use the U.S. due to personal familiarity), to be a woman means to be denied choices in many ways. There are certain fields that are designated as ‘women’s fields’ in society, while other professions are assumed to be ‘men’s professions.’ When a woman seeks to enter any field that is not designated as appropriate, she will face a large number of obstacles, which will in many case prove insurmountable. To begin with, female students in ‘inappropriate;’ fields are routinely excluded from class discussions by professors, graded more harshly than male counterparts, and often subject to continued ridicule from professors and classmates alike. As a brief digression, before anyone starts up with the ‘toughen up, words will never hurt me’ bullshit, just stop right there. Harassment and ridicule do take a psychological toll, and ongoing psychological stress can and does create medical problems of both psychiatric and non psychiatric types (e.g. ulcers). Suffering from that type of stress also degrades actual performance relative to those who are not under such stresses. Those who persevere will find that they are hired less often, let go sooner, promoted more rarely and paid less than men with the same qualifications. They will also typically continue to suffer harassment, often of a sexual nature, and ongoing ridicule in the course of doing their jobs. They will be assigned to demeaning and subservient tasks and put in positions which ignore their training and credentials. Once again, this constitutes coercion of women into certain areas of life, denying them the free agency men take as their due.

Soft Infrastructure 1: Health Care

Healthcare is an expense which occurs unpredictably, but is
universal and unavoidable; everyone will need healthcare at some point
in their lives, of some variety. The unpredictable nature of healthcare
costs militates for an insurance-like mechanism for managing payments.
Additionally, ill-health incurs harm to humans, often without human
agency, and thus falls into the same category of events as natural
disasters, and is a threat to others, like an out of control fire.
Furthermore, ill-health has social costs beyond the individual, as they
will be unable to do some or all of their normal tasks, adding the
burden of those tasks or the consequences of their going unfilled to
the load that others carry.

The present system of healthcare in the U.S. is a complete shambles,
which leaves over 1 person in 6 with no health coverage at all1,
left to suffer or die from any illness they cannot pay out of pocket
for. This will commonly have knock-on economic effects, as money going
to these expenses will not be spent elsewhere, and the costs will be
higher as people wait until the need for care is acute. This is the
cause of almost half of the personal bankruptcies in the U.S.2
, bankruptcies which disrupt the housing and financial markets in
addition to those whose lives are broken by them.

Those who do have some coverage get it through their employers,
which has a number of deletorious effects. It reduces job mobility and
impairs the ability of smaller firms to compete due to the costs of
providing such insurance. This coverage is provided by a network of
private insurers, which add to the cost in a number of ways. First off,
there is the requirement that care providers such has hospitals and
clinics, must maintain staff who have no medical duties, but spend all
of their time sorting through the billing processes of dozens of
insurers and meeting their arcane requirements. This adds to the costs
of operating such a program. Duke Medical Center, for instance, has 900
billing clerks on staff, for a 900-bed hospital 3.
Secondly, the private insurers are primarily for-profit entities, and
seek to rake off a percentage for executives and shareholders. This
profit accounts for approximately 15% of insurance company income3
(Employers which cover their own insurance have 6-7% overhead,
for-profit insurance companies have around 20%). Even leaving the
profits aside, overhead in the private system is high compared to the
public sector: Medicare overhead is about 2% of expenditures.4.
Finally, there is the intrinsic inefficiency of subdividing the
population into relatively small risk pools. The nature of insurance is
such that larger risk pools means lower costs, and the largest feasible
risk pool is everyone in the country.

Recently, the U.S. Congress passed the Affordable Care Act,
ostensibly in an effort to improve the healthcare system in the U.S.
While it did do so to a certain extent by outlawing certain
particularly egregious practice by insurers (such as refusing to insure
those with ‘pre-existing conditions’ and dropping customers as soon as
they made claims), it also increased their customer pool by mandating a
tax reduction for those who purchased health insurance. This has many
problems, not least of which is that the recent Supreme Court decision
allowed states to opt out of the expanded Medicaid coverage originally
mandated and the fact that the tax breaks involved are small compared
to the cost of useful health insurance. Unlike the systems of France
and Switzerland, which achieve universal health service with required
purchases of private insurance, the ‘Affordable’ Care Act places no
upper limit on the cost of a basic insurance plan, and the recent
Supreme Court decision allowed states to opt out of the medicaid
expansion which was touted as the equivalent of the subsidies offered
to the poorest citizens of France and Switzerland. Even if we had
entirely modeled our system on one of those countries, it would still
be suboptimal compared to a single-payer system, however. France spends
11.6% of its GDP on health care, while Sweden, for example, spends only
9.6% of their GDP on their single payer system. Of course, either
system would be better then the one we have now, in which we spend
17.6% of our GDP on health care, and still haven’t got universal
coverage5.
1)U.S.
Census

2)N.I.H.
3)PHNP
4)Kaiser Foundation
5)OECD

Introduction

clint eastwood
“Deserve’s got nothing to do with it.”
William Munny, Unforgiven

Moralists, especially authoritarian types, tend to go on a lot about what people deserve. Criminals deserve punishment, only some poor people deserve help, the hard working deserve a reward, etc. However, in an empirically based system, deserve’s got nothing to do with it.

Taxes are a constant argument, particularly with glibertarians and other right-wing ‘economic conservatives.’ They will insist that taxation in general constitutes theft by force, and that the particular practice of assessing a progressive income tax is the height of unfairness, as the rich ‘deserve’ to keep their money, for which they allegedly worked very hard. The first complaint is absurd on the face of it. Taxation is necessary to pay for infrastructure, including a system of property laws and the courts to enforce same. It is an intrinsic part of any human society larger than a hunter-gatherer band, the only real questions being a) how much infrastructure is provided and b) how the taxes are collected. The amount of infrastructure possible varies with a society’s level of technology (without electricity you can’t install high speed data connections), but within those limitations, it can actually be calculated how much and what types of infrastructure should be built.

The second complaint looks superficially valid from a fairness standpoint, although the pragmatic reasons mentioned below would still override it even if so, but even on that level the argument falls flat. The more wealth you have, the more you stand to lose, and the more reliant you are on society’s infrastructure to guard and keep it. Thus, you owe more to the upkeep of that infrastructure than someone not obtaining such benefit from it. Further, it would not have been possible to attain that level of wealth at all unless that infrastructure were in place to begin with. Even the moderately wealthy in the first world today are in absolute terms richer than any king in the middle ages, while the likes of Bill Gates, Warren Buffett and the Koch and Walton families control more wealth than even contemporary absolute rulers of poorer nations.

In even more pragmatic terms, economies work better the higher the velocity of the money that passes through them. The wealthier a person is, the less of their income they spend directly, and the more of it is tied up in savings, stocks, and bonds, which do little to nothing to circulate the money they contain. Conversely, the poor tend to spend money rapidly, which results in a need for goods and services, and the people providing them to get paid, and thus the money circulates. If the government is going to move money around to spend paying people to create and maintain infrastructure, it is better to take it from a place where it isn’t moving and put it in motion than to slow it down by taking it out of the hands of someone who would spend it immediately. Furthermore, the wealthy person suffers less negative effect from the loss of that money; 25% of a million dollars a year leaves one with $750,000, which is enough still for quite an extravagant lifestyle, while taking 25% from someone making $26,000 (roughly the median income), leaves them with only $19,500, putting them now below the poverty line. Finally, it is simply more efficient to collect $250000 once from one person than to chase after the 39 median income people you’d have to get $6500 apiece out of.

Welfare operates on similar principles; a person who is not receiving wages is essentially removed from the economy both as a producer and as a stimulator of production. Forcing people in this situation to burn through all of their capital and putting them in positions that impair their ability to find paid work of some kind prolongs the period during which they will not be producing as much wealth as they might, and further reduces the amount by which they stimulate productivity, which further reduces the demand for labour in a vicious cycle. Providing financial support to them ensures that they remain stimulators of production, and reduces the likelihood that they will incur untenable emergency costs as well as the likelihood that they will begin committing criminal activity and causing further harm. Whether someone ‘deserves’ to have money according to some arbitrary standard is irrelevant; everyone benefits from ensuring that no one starves.

Hard work is another bugaboo of the moralist. They will insist that hard work inherently pays off, and everyone who is wealthy got that way through hard work, and that only people who work hard deserve any type of material property whatsoever. Leaving aside that both of these precepts are patently untrue (if necessary, I will devote another post to why this is the case), they are once again irrelevant. One alleged corollary of these precepts is that unions are evil, because they shelter lazy workers and prevent good workers from receiving higher pay than the aforementioned lazy individuals. The problem is that in the real world, in a corporate environment, individuals have effectively no power to negotiate their wages, and these wages will only be based on productivity in any way if the company calculates that they can pay less that way, and will constantly increase the amount of productivity needed to get the same pay. On the other side, if employees can be let go very easily, they can be let go easily for any reason at all, and will be. These facts played out constantly through the 18th and 19th centuries, which is what led to the formation of unions in the first place. Ensuring relatively high wages, which is empirically something which follows from a unionized workforce, is a good thing for the same reasons mentioned above: velocity of money makes the economy go round.

That’s all for now