Nice piece David. This type of idiocy goes on unabated everywhere. Its nice to see a super critical eye make the effort that must be absolutely time and patience consuming . . . think Allodial title.
First, thank you for paying your compliments, they are appreciated. I had been drafting a post on the subject of allodial title for quite some time, without really knowing in which direction I wanted to take it. Your comment resulted in the completion of Why Can’t You Buy Allodial Title?
FSK suggests that I made an error in Why Can’t You Buy Allodial Title?
Assume your land is worth 100 ounces of gold, and the price remains unchanged over time. Suppose property tax rates are 1%. In that case, your property tax bill is 1 ounce of gold per year *FOREVER*. What is the present value? It’s 1+1+1+1+1+1+1+…! In other words, the “present value of future property taxes” is *INFINITE*.
Since Government is always able to raise taxes or steal money through some other means, it need not concern itself with time preference. What I did not make clear is that the present value of future property taxes at the present, is infinite because Government doesn’t have a discount rate.
Time preference suggests that money now is worth more than the same sum of money in the future. If you have a discount rate of 5%, and I owe you $100 in one year’s time, I ought to be able to satisfy my obligation by giving you about $95 today. But Governments don’t have time preference. If Governments had a discount rate, d, the NPV of expected future taxes would not be n(1) to infinity, but rather the geometric sum of: 1+(1/(1+d)^1)+(1/(1+d)^2)+…+(1/(1+d)^n-1)+(1/(1+d)^n). This geometric sum has a limit determined by d. If d = 5%, the present value of $1, say, 80 years hence, is about two cents and after about 300 years, Excel tells me that the series sums to $21. That is, $21 today at 5% is equivalent to receiving a perpetual annuity in the amount of $1.
I might not have done it correctly, but I checked my math here .
With fiat debt-based money, it’s irrelevant to talk about “time preference”. If you are prudent and “save money” in a money market account, you’re *GUARANTEED* to be ripped off by inflation.
You don’t necessarily need to “save” money in a market account, per se in order to exercise time preference. But you do need to live within reasonable expectations of your future economic means. If you’d like to eat some cake tomorrow, you can’t eat it all today. If you’d like to enjoy some luxuries tomorrow, don’t spend all your money, today. That’s what I mean by time preference. A lot of people got themselves into financial trouble because they wanted to have their cake and eat it, too.
Of course, the case could be made that the government can rob you as much in the future as now, but I think people should still avoid over-leveraging themselves as much as possible in order to best weather whatever the future brings.
David — do some reading on Seattle’s mayor, and our general city council — you’ll get the picture of political correctness and “properness” taken to new extremes. After all, we’re the supposedly “liberal” city that banned lap dances.
This makes me so freakin’ angry. With all the homelessness everywhere, we can’t even see fit to leave a guy alone who’s managed to make his own way in the world, without being a burden on anyone, and we’re going to turn him into a shelter victim?
Among other things, Olly! Seattle’s brand of “liberalism” would make Mises roll in his grave. Seattle’s “liberalism” succeeded in banning malt liquor in certain neighborhoods, and according to the sheriff, resulted in some people being “run out of town.”
Regarding The Benevolent Invader, FSK says that I make
[A]n argument that seems sort of silly. Suppose you are invaded by a dictator who offers SLIGHTLY BETTER TERMS than the current government? Technically, you should not resist the invasion. That’s thinking in the wrong direction.
Technically, what I said was that your current government should not resist the invasion, if it is in-fact interested in your freedom. “The Benevolent Invader” was set up to demonstrate that States don’t protect your freedom. If State B says to State A, “Relinquish power over your citizens to us, we promise that they will have a better life and that they can leave whenever they want,” State A will not permit this. The fact that State A will not permit its citizens to choose between Dictators is proof that the State is not interested in protecting their freedom.
“The Benevolent Invader” began as a precursor to the subsequent How is a Government Established?, in which I make an argument for self-governance. I felt that both posts were stronger standing alone.
[L]et’s not overreach. “There is no upside to this sort of prohibition”? Really? Never ever?”
Contract rights can indeed supercede property rights. But like all contracts, the terms should be clear and the parties should be entering into it voluntarily and fully informed.”
As I commented on his post:
I have no qualms with the point you make with regards to contracts. But I don’t see “copyright” and “contract” being synonymous terms. In fact, I don’t think that “copyright” as we know it is a valid “contract” at all.
Of course contracts could be written in such a manner to aim at securing something similar to “copyright”, but I don’t think it’s likely that anything approaching copyright as we know it could be sustained by a free market. In fact, I conclude that the likelihood that a free market could (or would) concern itself with copyright infringement is near zero.
I don’t think that “contract” and “copyright” are synonymous, or even near-substitutes, because the environment under which copyright exists is the brutality of government. “Copyright” is no more freely consented to than taxes. We can’t pretend that copyright is a contract to which parties freely consent; the very system of “copyright” is created and enforced by governments.
In Comments #12, Tony inquires about my opposition to fractional reserve banking:
As you understand it, how much of the problem with fractional reserve banking is the concept and how much is the people who practice it? How, if at all, is your objection tied in with fiat currency?
Is that clear? It’s open-ended, I know. I’m just trying to get an understanding of an anarchist approach to the topic. Thanks.
Tony, I’m working on a well-thought out response to this inquiry which will be a stand-alone post. Right now, it is a work in progress.
Peter Boettke asks:
Right now the economics profession has not had a clear intellectual leader step forward to challenge the emerging statist hegemony…
How do we find [the next Ludwig von Mises, F.A. Hayek, or Milton Friedman] and how do we cultivate them? And without them can we survive the statist onslaught on our economic freedom?
It is hard to cultivate free-market thinkers in a system that is controlled by the Statist elite. Most education and academic research is publicly funded and directed. In “The Free Banking Alternative,” Lawrence H. White notes that:
[C]entral banks subsidize monetary policy research. The Federal Reserve System employs over 400 research economists on its staff, and subsidizes hundreds of academic economists each year as visiting scholars and consultants. Tariffs employ many fewer economists and have many fewer defenders.
This is still a battle of ideas and ideals, but I don’t think it will be won in the classroom. There are many people who espouse the same principles, and perhaps many more who might be inclined to do so, and I suppose its our job to find them and educate them a bit less formally. Not to discount the work done by those in Academia, but a thousand people believing and practicing and communicating these principles will be more effective in winning the battle than the next magnum opus like Human Action, which most professional economists have probably never read.
Tony says that Barack Obama is a threat to your freedom of speech. “Senator Obama likes the outside role until he’s an insider. Just like every other politician.”
Apparently, Obama is for free speech, you see. As long as you express your freedom as a Republican or a Democrat. A third party might “overwhelm the system.”