Let’s imagine that the state has gone out of business. Without the state you might ask how there could be fire protection, police protection, national defense, health care for all, mail service, streets, roads and highways, mass urban transit, schools and education, money, courts to resolve private disputes, etc. All of those services and functions are either being provided already by free, private enterprise, or could be provided by means of social arrangements already in existence.
In 1736, Benjamin Franklin organized the Union Fire Company in Philadelphia. To pay for the fire protection, he also created the first fire insurance company in 1751.
More recently, we highlight Rural/Metro Corporation of Scottsdale, Arizona which has been providing fire protection services since 1948. Fire insurance rates for Rural/Metro’s Scottsdale customers were one-fourth the national average for cities of similar size. To find out why, continue onto the full chapter at the end of this overview.
Police are supposed to protect citizens from crime. However, nowhere in America is there any assurance that the police can apprehend and convict criminals, much less prevent crime. Over half of violent crimes and over 80% of property crimes are not solved by the police. The photograph to the left shows the scene of a murder in Chicago’s south side.
In the most crime-ridden neighborhoods of America, people describe how fear, and the conviction that serious crimes are not solved, makes them reluctant to confront homicide, unwilling to cooperate with authorities or act as witnesses, and disinclined to place their faith in the police.
The state’s “war on drugs” has created a profitable and lucrative activity for drug gangs in both America and Mexico, just as prohibition of alcoholic beverages created a profitable business for organized crime in America in the 1920s and early 1930s. The graph to the right illustrates the homicide rate in the United States from 1900 to 1998. Note that each of the most violent episodes in the 20th century coincide with the prohibition on alcohol and the escalation of the modern-day war on drugs.
The job of police is law enforcement. It is not their job to protect people and property, although that may occur incidentally during law enforcement.
Private security has become a large and growing industry in the U.S. because private security does what public police generally have not done, namely making regular checks on buildings and property for residents or businesses, and watching to prevent crime.
According to a report in the San Francisco Chronicle of August 8, 2010, three out of four people working to protect persons and property in the U.S. are in private employment, including over two million security officers and security guards, compared to the nearly 700,000 sworn law enforcement officers in the U.S.
In the 1840s, Lysander Spooner established a private, profit-seeking company, The American Letter Mail Company, to deliver mail. His rates were lower and his delivery service better than the post office. It wasn’t long before the US government took note of the successful operation. The United States Postal Service soon got Congress to pass laws that effectively put Spooner’s company out of business, protecting its monopoly.
Above is a stamp from Lysander’s American Letter Mail Company from the year 1844.
In 1979 the Postal Service authorized the delivery of extremely urgent letters outside the USPS; this has given rise to letter delivery service by companies such as Federal Express (FedEx) and United Parcel Service (UPS). These letters must cost at least the greater of $3 or twice what First Class (or Priority) mail service would cost.
The rise of technology – from faxes to email to e-commerce – and the success of UPS, FedEx and other competitors provide alternatives to the USPS.
The USPS is a huge operation; its annual revenues of more than $65 billion would rank it number 11 among the Fortune 500 companies if it were a private company. It is the USPS’s monopoly status that gives it a significant advantage over its private market competition.
Political states have tried for over 2,000 years to assert a monopoly on the issuance of money because control of money gives a state power over the wealth of citizens that is as great as the power of taxation. Through seigniorage and inflation states have confiscated the wealth of citizens stealthily.
The graph below shows that if a shopper were magically transported from the year 1900 to 2010, the $100 bill that he or she had in his wallet in 1900 would now be worth only $3.48!
The political state need not be the sole issuer of money, and at times in history has not even been the principal issuer of money in a number of countries, especially in the case of a weak political state. In China from the 7th century and in Europe from the 14th century, private banks issued paper money in the form of bank notes as a receipt for precious metals or valuable goods and commodities on deposit with the bank.
People, especially residents of very large countries such as the United States, are so used to their own country’s state issued paper money that most think that such money is “the” money and there is no other. That is not true. Residents of a number of small countries are used to the idea that they can store their wealth in foreign currencies and precious metals. Today, through the mechanism of the stock market Americans and residents of other countries can store wealth in a variety of monies and money substitutes including any of the leading currencies of the world and in valuable commodities such as precious metals and petroleum.
Proprietary Local Government
Walt Disney was struck by the contrast between the clean and attractive environment within the Disneyland Park in Anaheim, California and the disorderliness, congestion, pollution, crime and grime of even so modern and prosperous an urban area as greater Los Angeles.
Mr. Disney bought land in Northern Florida and began a project he called, “The Experimental Prototype Community of Tomorrow (EPCOT).”
He envisioned a perfect city with dependable public transportation and an environment enriched in education and expanding technology. “EPCOT . . . will take its cue from the new ideas and new technologies that are now emerging from the creative centers of American industry,” he said. “It will be a community of tomorrow that will never be completed, but will always be introducing and testing and demonstrating new materials and systems. And EPCOT will always be a showcase to the world for the ingenuity and imagination of American free enterprise.” Walt Disney World comprises 47 square miles, twice the size of Manhattan and about the same area in size as the city of San Francisco.
Within EPCOT Center the Walt Disney Company provides all services typically provided elsewhere by political “government,” such as streets and highways, mass transit via monorail, waste disposal, security and public safety.
We are now approaching the time for true self-government by people, through organizations of their own design and choosing, organizations that arise out of consent of all concerned rather than by imposition of authority from above, governmental organizations that can be replaced without violence or struggle, just as one would choose freely to patronize or to cease patronizing any other form of service.
The work of Andrew J. Galambos, which inspires this essay, points the way to using the intellectual model and principles of science to create a new science which can enable human society to abandon coercion as the model for human interaction, and to embrace a model of cooperation and voluntary self government.
To see how private enterprise can replace the political state in the areas of proprietary justice, national defense, healthcare, education and more, simply proceed to the full text version of this chapter.