Chapter: 19

Problems and Solutions

 “If something is permitted by the laws of physics, then the only thing that can prevent it from being technologically possible is not knowing how.”—David Deutsch 1

“That is impossible which would violate a law of nature.”—Andrew J. Galambos 2

SYNOPSIS

In prior chapters we have focused primarily on problems caused by the state. In this chapter we focus on the common belief that only the state can resolve disputes, provide personal security against criminal activity, defend the nation, provide a national money,  and perform many functions that cannot or will not be provided by profit-seeking private enterprise.

The premise of this book is that all services worth having can be provided adequately by private enterprise; that to the extent that the modern welfare state provides services that help some people, the cost (which is escalated by the bureaucratic inefficiency of any political organization) is far beyond the ability of the people as a whole to pay for. Furthermore, we posit that the state has proven itself incapable of preventing attacks against its territory and people; and that political states repeatedly embroil people under their control in wars that are almost always unnecessary or unjustified or both. 3 Through their coercive powers political states do many bad things that individuals and private companies could not get away with doing.

Human problems are inevitable. However, problems are solvable. Lack of knowledge is the biggest impediment to solving problems, including problems of social interaction.

THE SUPPOSEDLY INDISPENSABLE FUNCTIONS OF THE STATE

The following is a listing of a few of the examples of state activities that many people believe are indispensable to society and cannot be provided by free and private enterprise.

  • Airplane safety
  • Air traffic control
  • Airports
  • Space exploration
  • Seaport regulation
  • Protection from contaminated food
  • Import restrictions to protect the U.S. from unsafe or undesirable products from foreign countries
  • Accessible and affordable health care
  • Licensing and regulation of physicians, dentists and other health care providers
  • Safe and efficacious pharmaceuticals
  • A National Institute of Health to supervise medical research and disease control
  • Hospital cleanliness and sanitation
  • Waste and sewage disposal
  • Military establishment for national defense
  • Police
  • Criminal laws, criminal justice, and prisons
  • Dispute resolution by state and federal courts
  • Public schools and universities
  • Insurance regulation
  • Provide a national money
  • A central bank such as the Federal Reserve and other agencies  to regulate money, banking and financial services
  • Fire protection
  • Weather service.
  • Subsidies for agriculture
  • County recorders for registration of title to real estate, mortgages and tax liens
  • Social Security as a forced mechanism for workers to save for their retirement
  • Medicare as a forced mechanism for workers to save for old age health care
  • Income  taxes, estate taxes, and payroll taxes to pay for all foregoing

CTLR will address many of the foregoing in the following chapters. Preliminarily, it is submitted that every one of the services on the foregoing list can be provided satisfactorily with higher quality and lower cost by free and private enterprise. As to much of the list, a satisfactory illustration of the free market approach to providing such services will require a discussion of the concepts of

  1. Money;
  2. Credit;
  3. Justice;
  4. Insurance; and
  5. Corporations

Each of these five institutions will be the subject of a separate chapter. For now, the following is a brief summary of the operation of a free market in each.

Money

The state monopoly of money supply within its territorial jurisdiction enables the state to steal from the public through constant cheapening of money. There is no good reason for a monopoly to exist in the issuance of money. In the 21st century there are almost as many state monopoly monies in the world as there are states. International commerce has proven able to function adequately with this plethora of state-issued monies.

Money would be best supplied by competition among private issuers in a competitive marketplace.  With competition among private issuers of money, the most reliable and safest money would gain the largest number of users. Private issuers of money that compete for business would rid the world of the legalized theft known as monetary inflation and subsequent debasement of money by the state.

Credit 

Credit is vital to commerce. It would also be vital to a rational and humane system of justice. Credit is not something created by the state. Credit is created by the conduct of individuals and organizations of individuals. Those who honor their obligations have good credit. Those who dishonor their obligations have bad credit.

Human society has already seen the spontaneous development of the use of credit to provide justice. As commerce developed in the renaissance era, merchants had to know whose credit was good and whose was not. Boycott developed as the remedy for and protection from people with bad credit. In the early 21st century there is already a well-developed system and custom of limiting or denying credit in commerce to those who do not fulfill their obligations.

The advent of electronic, digital computers has brought about an expansion of the credit mechanism. Now more than ever, buyers and sellers can make informed decisions about whether to deal with each other based on user and vendor ratings. From eBay to Amazon, and Uber to Yelp, an increasing array of online platforms are based on this concept of “trust capital” or “microcredit,” and have enabled buyers and sellers and lenders and borrowers the world over to connect and do business safely. 4

Justice

The concept of credit is capable of expanding to what is now handled by criminal law. A restitution-based system of justice would require offenders to pay for the damage they caused other people or be cut off from all credit. Given the present and continuing development of digital communication, someone’s failure to make restitution for wrongdoing could result in such a person being cut off from all commercial and most social dealings with other people. This would be far more humane than imprisonment as a way of dealing with wrongdoing. Restitution as justice, rather than incarceration and punishment, already exists in societies that many would consider primitive in comparison with more advanced societies.

The chapter on justice will address the problem of dealing with people who are  unwilling to make restitution for attacks on the persons and property of others, who are habitual criminals, or who are a continuing physical menace to others.

Insurance

Insurance developed spontaneously in human society as a way of sharing the risk of unlikely but potentially catastrophic losses. The state in 21st century society undertakes to insure many things. The United States of America is operating as the world’s largest insurance company, and doing a bad job of it, as demonstrated in Chapter 11, entitled Political Democracy in America. 5

Insurance is only as good as the ability of the insurer to pay for the losses the insurer contracted to reimburse. The U.S. federal state has made explicit and implicit promises to provide what is called “social insurance,” for the sustenance and health care of its citizens in old age. The U.S. federal state has promised far more in old age security and benefits than it can deliver.

For the U.S. to try to keep its promises means certain bankruptcy not only of the state but of American society as a whole. The state has no assets other than what it takes from residents of its territory by taxation. As the state runs out of the funds to honor its commitments, it will most likely try to increase direct and indirect taxes to fund its required payments. To raise taxes enough to fund all unfunded future obligations of the U.S. will require Americans to give up to the state virtually all of their assets. Going through such a process of ever higher taxes and ever devalued benefits is certain to cause tremendous social upheaval.

A proper concept of insurance requires the insurer to maintain the ability to keep its promises.

The mechanism of credit will identify which insurers are soundly financed, i.e. always capable of honoring their commitments.

Corporations

The word “corporation” is distasteful, if not abhorrent, to many people because it is identified with large, profit-seeking companies that take advantage of people and that ally themselves with the state to obtain special favors and privileges, including financial bailouts from the state when they fail.

That is an extremely limited concept of the corporation. The corporation is an institution established and maintained to provide continuity of existence beyond the lives of the people who established it. The characteristics of corporate existence are:

  1. Centralization of management
  2. Continuity of existence that may become perpetual existence, extending beyond the lives of an organization’s founders and successor managers
  3. Limited liability, in that people acting on behalf of the corporation or who are investors in the corporation are not liable for the obligations of the corporation per se, other than liability for personal acts beyond and outside the course and scope of the organization’s purpose.
  4. Free transferability of ownership interests in companies organized for profit.

It is not only businesses that operate in corporate form but many other social institutions such as the following entities and organizations which are corporate because they are intended to operate indefinitely.

  • The United States of America is, in effect, the world’s largest corporation, since it possesses the first three corporate characteristics mentioned above.
  • The City of London is the world’s longest-lived corporation, tracing its origin to the 11th century C.E. 6
  • The City of Los Angeles and every other city in America is a municipal corporation.
  • Every organized religion that has been established for more than a few years is corporate in form if it has a hierarchy and centralized management. For example, the Roman Catholic Church is a corporation as are other religious organizations of any size and longevity.
  • Hospitals of any size are organized in corporate form.
  • Colleges and universities operate as corporations, for example, Harvard, Yale, and most others.
  • Even political parties, such as the Democratic and Republican parties in the United States, are corporate in operation in that they are organized and operated to continue in existence indefinitely beyond the lifetimes of their founders and the generations of successors to the founders.

Corporations in and of themselves are neither evil nor beneficent. The corporate form of organization is a remarkable human innovation that allows perpetual existence of organizations and activities that our species has found useful.

WHY DO PEOPLE BELIEVE THE STATE IS INDISPENSABLE?

The idea that the state is indispensable is inculcated in people by indoctrination in school, from kindergarten through the universities. CTLR will examine school indoctrination in a subsequent chapter entitled “Education.” Most people do not trouble themselves with thinking about whether the state is a necessity; they are busy enough with their daily lives. The only concession that most thinking people will make to the idea that the state is defective is endorsing the statement of Winston Churchill that democracy is the worst form of government except all the others.

People who think less deeply accept the word of influential opinion makers that the state is a necessity. As Andrew Galambos observed, this idea amounts to a belief that somebody has to make the rules. This book counters that idea. We posit that there is only one necessary rule: respect for persons and property of others, an idea that has been a part of virtually all major religions since the era of the biblical Golden Rule.  Jay Snelson, who presented the V-50 lectures from 1965 to 1978, in his book Taming the Violence of Faith (2011) traced the history of the Golden Rule back to writings of seven major religions from 600 B.C.E. to 1300 C.E. 7

COMMON PERCEPTIONS ABOUT THE NEED FOR A POLITICAL STATE

Without a coercive state how can people be prevented from polluting the environment and destroying or degrading the scenic wonders of nature such as the Grand Canyon, the Redwood Forests of Northern California, Yosemite, and other national and state parks?

What about allocating use of the spectrum of electromagnetic radiation for radio and television, keeping food and drugs clean and safe, keeping air transport efficient instead of chaotic? These are just a few of the functions most people think only the state can provide. More are listed above.

We began a rudimentary description of these issues in the introductory chapter entitled “Free Enterprise Government.” A more detailed analysis is presented in the chapters that follow.

The premise of CTLR is that satisfactory human governance without political coercion is not only possible, but is a necessity for human progress, prosperity, and even survival as a species. The propensity of the political state for war-making and political persecution is a grave danger to human survival; witness the wars and political persecutions of the 20th century.

The enormous cost of the state drains assets that could be used for private enterprise and innovation. In the U.S., regulatory law has become a nearly impenetrable web of detailed prohibitions and specifications that stifle innovation and enterprise. 8

Natural disasters and catastrophes could endanger human survival. Examples include a new ice age, a large asteroid striking the earth, or the eruption of a dormant but enormous volcano such as the one in North America beneath Yellowstone National Park in the U.S. state of Wyoming. Politics and the state cannot protect humanity from natural disasters and catastrophes, but human ingenuity could. For example, scientists have been studying ways to steer an asteroid out of its orbit so that it would pass by planet earth harmlessly.

CONCLUSION: HOW NON-COERCIVE SOLUTIONS WILL EVOLVE FOR THE PROBLEMS OF HUMANITY

Utopian and unrealistic are words that have been used to describe Galambos’ vision of a stateless society in which the absence of coercion and a choice of service providers is the hallmark of government services. Galambos responded that it was coercive social structures that were utopian and unrealistic in that they have always disintegrated with great harm to the members of society and by their very nature destroy themselves.

Celebrated author George Bernard Shaw said: “The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.”

Professor Galambos was such a man. He was an astrophysicist who deplored the use of science for building destructive weapons of war. He wanted astrophysicists to be able to create the means for our species to travel beyond planet earth and beyond even the solar system or the galaxy of some billions of stars of which our Sun is just one.

Andrew Galambos held that exploring and colonizing other parts of the universe was necessary for the long-term survival of the human species. Galambos thought on an extremely long-term basis. His worldview included the following:

  • The species time scale, which is the time our species has existed and could continue to exist;
  • The geologic time scale, namely the one billion or so years remaining before increased luminosity from the sun makes the earth inhospitable to the existence of human life; 9 and
  • The cosmic time scale, which is the potential duration of the universe that seems infinite as far as science can inform us in the present state of scientific knowledge.

As of the second decade of the 21st century, Galambos is not alone in such thinking. Similar thinking exists among scientists at the California Institute of Technology (Cal Tech) in Pasadena, California and its affiliate, Jet Propulsion Laboratories (JPL), in private corporations already in existence in America, and undoubtedly among scientists in other countries.

As of the early 21st century there are several privately owned companies engaged in developing rocket-propelled vehicles for space exploration. 10 As the federal state continues to allocate an ever-expanding share of its tax revenues to social welfare programs it is possible that NASA will be defunded gradually and that for space exploration to flourish it must be done by private enterprise. JPL is part of the U.S. National Aeronautics and Space Agency (NASA), but is operated by Cal Tech under contract from NASA.

F. A. Hayek, in his book The Fatal Conceit (1988) observed that “. . . rules of human conduct . . . gradually evolved (especially those dealing with . . . property, honesty, contract, exchange, trade, competition, gain, and privacy). These rules are handed on by tradition, teaching and imitation, rather than by instinct, and largely consist of prohibitions (‘shalt not’s’) that designate adjustable domains for individual decisions. Mankind achieved civilization by developing . . . rules . . . that often forbade him to do what his instincts demanded . . .  The traditional rules of human intercourse, after language, law, markets and money, were the fields in which evolutionary thinking originated. . .”  11

Hayek posited that “. . . an evolutionary theory of morality is . . . emerging, and that its essential insight is that our morals are neither instinctual nor a creation of reason, but constitute a separate tradition—between instinct and reason.” 12

It is the premise of all solutions to human problems described in this book, as well as any other problems not discussed herein, that the solutions be non-coercive. This approach is inspired by the biblical Golden Rule that we must not do to others that which is hateful to us. This version of the Jewish Golden Rule was formulated by Hillel the Elder (110 B.C.E.to 7  C.E.) as follows: “That which is hateful to you, do not do to your fellow. That is the whole Torah; the rest is the explanation; go and learn.” Wikipedia, Hillel the Elder, http://en.wikipedia.org/wiki/Hillel_the_Elder  The Golden Rule is at the heart of the evolution of human morality envisioned by Andrew Galambos. In the stateless society envisioned by Galambos, all  solutions to problems must respect property, namely individual life and the tangible and intangible derivatives of life including property in ideas, thoughts and actions.

CTLR need not and should not propose detailed solutions to problems of human governance. To attempt that would be to repeat the mistake of political thinking wherein, as Frédéric Bastiat observed, law makers “. . . look upon society as an artificial creation of the legislator’s genius . . .” to be shaped as a potter shapes his clay and a gardener his garden. 13

We reject politics and political solutions that always entail coercion. This work identifies a moral approach to problem-solving and trusts human society to work out specific moral solutions over time, in the manner described above by F. A. Hayek.

In approaching problems and their solutions in this way, CTLR is inspired by the humility in the following statement of the great Isaac Newton, concerning his revolutionary scientific discoveries, that:

“To explain all nature is too difficult a task for any one man or even for any one age. ‘Tis much better to do a little with certainty, and leave the rest for others that come after you, than to explain all things.”

Notes:

  1. Quoted from Professor Deutsch’s book, The Beginning of Infinity (2012), page 213
  2. Quoted from page 27 of Sic Itur Ad Astra (SIAA), the published and edited transcript of Professor Galambos’ V-50 lectures presented in Spring 1968
  3. For corroboration in the case of the U.S. see Capitalism: The Liberal Revolution (CTLR)  chapter 13, Wars of the United States of America
  4. For a discussion of microcredit see text regarding Muhammad Yunus in CTLR chapter 16, “The Paradox of Capitalism and The Paradox of Socialism” http://www.capitalismtheliberalrevolution.com/chapter/the-paradox-of-capitalism-and-the-paradox-of-socialism/
  5. See the discussion in Chapter 11 of CTLR under the heading “The World’s Largest Insurance Company.”
  6. The City of London was originally the organization established to govern a one-square mile area in which almost all residents of London, England then resided. The term City of London or the “City” has come to mean the financial district located in the heart of London, England.
  7. Snelson, Jay Taming the Violence of Faith (2011), pages 88-92).
  8. For corroboration of this statement see Howard, Philip K., The Rule of Nobody: Saving America from Dead Laws and Broken Government (2014).  
  9. See Wikipedia, Future of the Earth, http://en.wikipedia.org/wiki/Future_of_the_Earth#Climate_impact
  10. They include Space Exploration Corporation, XCOR Aerospace, and Virgin Galactic
  11. The Fatal Conceit, pages 10, 12
  12. Hayek, F. A., The Fatal Conceit, pages 9-10.
  13. Quotation and analogies from Bastiat, Frédéric (1801-1850) The Law (first published in 1850), pages 31-32, 2nd ed. 1978 re-published in PDF by The Foundation for Economic Education http://www.fee.org/library/detail/the-law-3#axzz2tyzpIhwe 

2 Responses to Problems and Solutions

  1. This is another clear and, in my opinion, brilliant portrayal of society’s problems. If read with an open mind it has the power to win understanding and conviction, which can only impart relief of the common worries experienced by people accurately observing today’ political coercive actions and their effects.

    • fgmarks says:

      Thanks for the reminder that worry is a common experience of people considering politics and political actions. One can hear in public discourse the expression of worries by those who think that government (i.e. the political state) is not doing enough to address the problems of society and the expression of worries by those who think the state is doing too much and costing too much. Politics is not a solution to such worries. It is the cause of the worries. In a political democracy everybody is dissatisfied by political action because everybody is in the minority on some subject or another.

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