John Pugsley - The Anarchist

The Hong Kong market plunge

Hong Kong’s Hang Seng index grew from 15,000 to nearly 21,000 in the past year, but has now abruptly plunged almost 10%, back to 18,800.

Analysts attribute the Hong Kong decline to a 9% drop on the Shanghai stock market, that market’s biggest fall in a decade. The Shanghai collapse appears to have triggered sell-offs in markets worldwide. Wall Street lost more than 500 points, the FTSE fell more than 300 points and Japan's Nikkei surrendered all the gains it had made since the turn of the year, falling back below 17,000 today.

It is widely believed that the global market collapse resulted from a plunge in the relatively small Shanghai market, yet it should have been an insignificant event as Shanghai is a tiny, illiquid market, accounting for a mere 2% of global markets. Why did a sell-off in Shanghai set off a global sell-off?

In fact, the sell-off could have been triggered by a drop in any market almost anywhere in the world. The world’s speculators, leveraged at 20 or even 50 times their capital, must liquidate fast to avoid even a small retrenchment in asset prices in other markets. And what gives speculators such power to leverage? The deluge of fiat money flowing from central banks everywhere. Printing-press money begets wild speculation. It begets gambling.

I did a bit of recreational gambling myself in Hong Kong a quarter century ago. I spent a pleasant day at Hong Kong’s beautifully-tended Sha Tin race course with a Chinese friend, daughter of a Hong Kong billionaire. At that time Hong Kong was still a Crown colony of Great Britain, and wasn’t destined to be turned over to communist China for another 15 years. Profoundly affluent, Hong Kong was a beehive of entrepreneurial activity and freedom, boasting more Rolls Royce’s per capita than any other country in the world.

What a contrast it was to mainland China at the time. Traveling to contiguous Guangdong by train, we passed through a 20-foot tall electrified, floodlighted fence separating the two nations. It was clear that China’s problem was keeping its population from escaping. For thousands of miles in every direction, China was destitute, imprisoned in the jaws of the communist dragon. Canton (now Guangzhou) was a vast drab city devoid of private vehicles, flooded with identical black and white bicycles, and a colorless population dressed in Mao jackets. The lands outside the city were still being ploughed with water-buffalo power. Inside cities, construction, from roads to buildings, was done with mechanization…all was hand labor.

Dire predictions were made about the fate of Hong Kong once China reclaimed it, and a large number of rich Hong Kong residents took their wealth and fled before the 1997

Few of us foresaw that instead of China turning Hong Kong into a replica of communistic poverty, it would be China that turned around and began to emulate Hong Kong. The resurrection of China in little more than two decades is a testimony to the latent power of human initiative if given even a modicum of freedom.

 

Danger ahead: money growth soars

U.S. consumer prices and core inflation, as tracked and calculated by the government’s Bureau of Labor Statistics, both took an unnerving jump in January. The CPI rose 0.2%, down from December`s 0.4% rise but double Wall Street`s expected 0.1% increase. Meanwhile, “core” inflation, which excludes food and energy prices (because they tend to fluctuate wildly), increased 0.3%, an amount equal to the total rise over the past three months.

No doubt these revelations will initiate a flurry of activity on Wall Street, as economists expected a 0.2% rise in core inflation. (You remember what economists are, right? Those are the people, who, if laid end to end, would point in different directions). The yield on the benchmark 10-year note rose 4 basis points to 4.71% at 9:20 a.m. this morning in New York. And, thanks to the belief that inflation will force the Federal Reserve to engineer even higher interest rates, thereby enticing bond holders to prefer US bonds over other currencies, the dollar advanced against the euro and extended a rally versus the yen.

Federal Reserve Chairman Ben S. Bernanke has been telling us that inflation remains the central bank's primary concern. "If inflation becomes higher for some reason, then the Federal Reserve would have to respond to it,'' he said in response to questions from House Financial Services Committee Chairman Barney Frank. But for now, all is rosy, he said. Last week he told lawmakers that next year he expects lower prices for oil, commodities and rent to push down the inflation gauge to within his comfort zone. The gauge has been at or above Bernanke's "comfort'' zone of 1%-2% for almost three years.

The promises that price inflation will abate in the future are the stock-in-trade of Fed chairmen, since they must not frighten people. The only thing that holds up the value of the currency is public confidence that it will have value in the future, so damage that confidence and instantaneous collapse occurs. Bernanke may temporarily instill confidence by his soothing remarks, but what is the underlying cause of price inflation?

Simple. Price inflation is caused by monetary inflation. When money is created faster than real goods are produced, money falls in value. Period. Considering the current rate of money growth, that truth should cause panic on Wall Street, for sure, as revealed by the astounding Federal Reserve figures released last Thursday. Here are the rates of growth in the M2 money supply over the past 3 months, 6 months and 12 months:

 3 Months from Oct. 2006 TO Jan. 2007-----8.4%

 6 Months from July 2006 TO Jan. 2007-----7.2%

 12 Months from Jan. 2006 TO Jan. 2007----5.5%

Bernanke is pretending to be concerned about a 0.3% increase in consumer prices, even as the Fed shovels paper money into the furnace, causing a blaze that must inevitably result in a dramatic drop in the value of the US dollar.

It’s time to batten your financial hatches. Before your dollars lose even more purchasing power, hedge by taking positions in real goods. Gold, silver, industrial commodities, energy products, and the companies that produce them. Money is wildly overvalued. Now’s the time to convert it into tangible wealth. If you aren't a member already, join the Sovereign Society today. We'll show you the path to safety and profits.

 

Our universal sense of right and wrong

As the 2008 presidential campaign warms, it’s a testimony to the power instinct that anyone would want the job of heading an modern nation, let alone the 900-pound gorilla of nations, the United States.

Bush’s war in Iraq has entangled the U.S. and allies in a grinding trap, Iran races ahead with its nuclear program, Israel faces an array of hatred from surrounding Arab countries, bombings in India, Pakistan, Indonesia rattle hopes for peaceful reconciliation of disputes, and an unnerving arms control dispute, the most serious of the post-cold war era, emerged yesterday when Poland and the Czech Republic indicated an interest in hosting facilities for the Pentagon's missile defense shield. If they follow through, Russia threatened to target the central Europeans, prompting Germany denounced the US moves as potentially destabilizing.

Nor are these the only conflicts of the world’s “tribes”. Africa, South America, China, and Southeast Asia, are likewise teeming with external and internal disputes over territory, resources, religious ideologies, and political power. The current world strife is not new. The problem has been with us since civilization began. It would seem that we are no closer to a solution, but much closer to a disastrous conclusion.

The problem? Absent from the contentious polemics of the day is any reference to a set of moral principles that could unravel the Gordian knot of human conflict. While most would like to think of themselves as acting morally (certainly Bush anoints himself with moral rectitude), what is “moral” action? Is killing moral? Is theft moral? Is lying moral? If you say, no, then is a politician acting morally when he sends troops to kill Iraqi insurgents, knowing innocents and his own troops will be killed as well? Is the tax collector moral when he forces you at gunpoint to hand over your earnings so that he can protect you from his announced enemies abroad and even from your own self at home? Is Bush or any politician moral when he or she lies in order to get public support for actions?

When is an action moral? The answer, of course, depends on the definition of ‘moral’. Morality is usually thought to have its roots in religion, however Marc Hauser, Professor of Psychology, Organismic and Evolutionary Biology, and Biological Anthropology at Harvard, and author of Moral Minds: How Nature Designed our Universal Sense of Right and Wrong, argues that the source of morality is in our genes. Pursuing the emerging science of evolutionary biology, he and other leading researchers in the field are piecing together the building blocks of human nature, and the result holds answers that may save the species.

Hauser, as well as others including Oxford evolutionary biologist Richard Dawkins, argue that morality is a byproduct of natural selection, and appears in one form or another in other mammals. “As with grammar, flying beneath the radar of our awareness…is a universal moral grammar…evolved over million of years to include a set of principles for building a range of moral systems.”

While for centuries scholars presumed that moral judgments of what is right and what is wrong can be derived from  experience and education, Hauser argues that humans have a moral instinct “unconsciously propelling us to deliver judgments of right and wrong, independent of gender, education, and religion.”

To test how deeply a sense of morality is instinctive, Hauser and others have confronted research subjects with ‘moral dilemmas’, studies that tend to confirm the evolutionary roots of right and wrong. In one such moral dilemma originally proposed by philosopher Phillipa Foot, we imagine a runaway train bearing down on a group of people trapped in a stalled car on the tracks. They will certainly be killed if the train hits them. An individual standing beside the track sees the train coming, and has the power to throw a lever and divert the train onto a siding. Unfortunately, there is a man on the siding who will be killed if the lever is thrown. Is it immoral to throw the lever and kill the single individual, or not throw it and let the five die?

Instinctively, most research subjects queried felt that the moral act is to save five lives at the cost of one. But, what if the individual on the siding had no lever to divert the train, but could stop it by physically pushing another car carrying one innocent individual onto the tracks. Would that be moral, or murder, or moral murder? Most subjects surveyed considered it moral to throw the switch, but immoral to physically push the individual onto the tracks.

Now Hauser presents a more difficult moral dilemma. Five patients in a hospital are dying, each with a different organ failing, and each could be saved with a transplant of that organ. In the waiting room is a healthy patient with those five organs. Is it moral to grab him, kill him, take his organs, and save the five patients? Most consider it clearly immoral to take his life to save the five patients. But what is the difference between that and pushing the car with a lone innocent onto the railroad track? The difference is our innate feeling that aggression against an innocent individual is wrong.

Immanuel Kant, one of history’s most influential philosophers, would agree. He reasoned that in principle, it would be immoral for one person or group to use a non-consenting individual as a means to their own ends, no matter how it benefited them. He argued that moral requirements are based on a standard of rationality he dubbed the “Categorical Imperative”. Other philosophers, such as Locke and Hobbes, agreed. But what these 18^th and 19^th century philosophers could not perceive before Darwinian natural selection arrived, was the evolutionary underpinnings of the “reason and experience” that led them to their conclusions.

That feeling you and I get when we instinctively perceive an action to be right or wrong is the whispering of our ancestral genes telling us that some action will help or hinder our survival or our procreative chances. As the subtitle to Hauser’s book states, nature designed our universal sense of right and wrong. It was designed by natural selection as a survival tool.

This leads back to the choices that politicians are forcing on the world. In a thousand ways, they violate the principles of natural morality.

What does this evolutionary-rooted morality suggest relative your own actions? It suggests that Kant was touching on a truth about human nature when he reasoned that it is immoral for one person or group to force a non-consenting individual to serve their own ends, no matter how it benefited that individual or group. To us as individuals, it confirms that we are instinctively outraged when our property is stolen from us under the guise that others need it more. When innocents are attacked or killed under the argument that its for the good of the group, it’s no different that taking the patient from the waiting room and harvesting his organs for the benefit of the other patients.

Ultimately, and if the species is lucky enough to survive, the moral dilemma that has confounded mankind for thousands of generations will be solved through an abandoment of the failed nation-state conflicts, and an abandoment of group power over the individuals in the group.  Political power, under the guise of defending individuals, will be replaced by individual methods of self defense that do not require the sacrifice of the lives and property of innocent bystanders.

The Sovereign Society was founded on the principle that each individual is sovereign, and justly owns his life and property, and also is  responsible for his or her own self defense. You can't demand that the state agress against others in order to defend yourself. Any individual acts immorally if any other non-consenting individual is aggressed against. Because of the innate moral sense built into the average human, a society of sovereign individuals, each following an instinctive sense of right and wrong, would be the most peaceful and productive that ever existed on earth.

The trade deficit is really a freedom deficit

The news is awash with wailings over the latest Commerce Department report that the U.S. trade deficit in December rose a larger-than-expected 5.3 percent to $61.2 billion. Last year, 2006, marked the fifth consecutive year that the trade deficit hit a new high. It seems that Americans are continuing to buy too many goods from China, too much oil from around the world, and more and more vehicles from Japan.

Bush administration officials blame the wider deficits on faster growth in the United States. Bush has pledged to keep pursuing free-trade policies, while Democrats, now in control of Congress, demand a change in course.

As usual, lobbyists line up outside the politicians' offices, making the age-old case that U.S. labor and manufacturers are suffering from unfair competition. They push for tariff barriers as well as sanctions to make China revalue the yuan. American consumers, meanwhile, scour the malls and the internet for the best prices, scooping up low-cost imports, pretty much unaware of the political pressure being brought to bear. The few that do care can’t match the funding of the special interests, and barely mount a whisper in political corridors.

The trade deficit bogeyman has been around for centuries. However, as is the case in so many political debates, the root of the problem is not American’s buying too much, or the apparent trade deficit, but the underlying political trickery that makes a trade ‘deficit’ keep appearing.

Those of us sovereign individuals, that is, we who believe we should have the right to do as we please with our own property, look at the question of free trade and the purported trade deficit through the lens of common sense.

Consider what happens when individuals barter with each other. A baker trades a loaf of bread with the farmer for a dozen eggs. A tailor trades a suit of clothes for a cow. A migrant worker trades an afternoon’s labor for a meal and a place to sleep. Is a ‘trade deficit’ possible in any of these cases? Could there be a deficit if, say, a shirt maker in China trades 1,000 shirts for 100 barrels of oil from, say, some producer in Texas?

Obviously, no. A gives something to B in exchange for something else and both get what they bargained for. No deficit is possible.

So how is it that when the farmer, or the migrant worker, or the Chinese shirt maker trade their goods and services for money, that suddenly the deficit problem pops up?

Because when individuals trade real goods, the exchange is complete. But when one half of an exchange is for money, the government enters the picture. Individuals create real goods and services with labor and capital, while governments create the money by “fiat” (i.e., by law), simply pushing computer keys and running printing presses. The newly created money, which cost next to zero to print, buys up real goods and services. And as the money percolates through the economy, it leaves a swath of destructive imbalances, including such things as inflation and trade deficits. Governments then step in with more laws and restrictions that purport to solve the economic problems that their fiat money policies spawned.

Money creation it’s a form of theft (and, as my friend Richard Maybury once said, theft is just a nice word for taxation), albeit so subtle that the public never seems to catch on. In a world of where individuals and not governments were sovereign, the marketplace couldn’t have trade deficits or inflation, as the marketplace has feedback mechanisms to deal with anyone who creates irredeemable money. But when governments usurp the freedom of individuals by passing laws defining legal money as the money printed by the government, all manner of economic evils follow.

What can a sovereign individual do? Forget futile efforts to influence the politicians, and assume everything they do to ‘solve’ the trade deficit will reduce your freedoms even more. Go to the root of the problem, which is fiat money. Historically, gold and silver have been the free-market’s choice for trade, and the ultimate refuge from fiat monies. You can regain some sovereignty in the monetary arena by holding and dealing in real money whenever possible. Gold and silver, whether held as assets to defend against depreciating currencies, or as mechanisms for trade through free-market exchanges like GoldMoney.com, or LibertyDollar.org, are real money. Hold and use real, free-market money whenever you can.

Casualties of war

The daily barrage of news about casualties in the Iraq war creates great political opportunities as Democrats and Republicans posture in pro-war or anti-war rhetoric. For most Americans, the daily news distressing, but life and the Super Bowl go on. For a few, those who have personal friends or loved ones on the ground in Iraq or Afghanistan, the tension is palpable, and day-in, day-out they fear that knock on the door or phone call.

The call came for our family last week.

I have a beautiful granddaughter, Chelsea, who just turned 22. Last year she fell in love with Timmy, a handsome young marine from New Mexico. He had already served two tours in Iraq, and was scheduled for one more tour before his term is up in June. Chelsea and Timmy got married and in December we had a family dinner to wish Timmy a safe journey to Iraq for his final tour.

Last week the call came. Timmy’s gunnery sergeant called Chelsea and broke the news that Timmy’s squad had been hit by a suicide bomber. The captain had ordered the squad to assemble for a re-enlistment talk, a Iraqi man ran up to the group, threw up his arms, and exploded. Four members were killed, and Timmy was seriously wounded.

Shrapnel had blown multiple holes right through his legs and arms, some fragments lodged in the bladder and stomach, both femurs were broken, his arm and shoulder were broken, his left hand nearly severed. He was flown to a military hospital in Germany, where he underwent multiple surgeries, and on Sunday arrived at the National Naval Medical Center in Bethesda, Maryland. Chelsea and his parents were there waiting when he arrived. The surgeries continue.

It appears that Timmy will survive. He's fully awake now, and he remembers vividly what happened. The doctors anticipate that in a month or so he’ll be able stand and begin walking. Hopefully, over time, he’ll regain limited use of the left hand, although it’s too early to tell. As for the psychological damage, it irreparable.

We could say that Timmy is luckier than many. Four of his squad are dead, and two others are in the same hospital, one in better condition, and the other much worse. Or maybe he could have been as unlucky as the marine in the room down the hall. Chelsea found that young man’s mother weeping in the hall. A small boy had thrown a grenade at him and it had blown off the young marine's face.

Of course, the government works hard to suppress the gruesome details such tragedies, as all governments do. The news will report “four marines were killed today,” but no mention or pictures of the agonies of the wounded, or of the pain of their families. If news shows did a weekly tour through the U.S. military hospitals that are handling the river of shattered young soldiers, there might be a backlash that could bring Mr. Bush’s current war to an end.

I’m not so naïve as to think that wars will end when people are exposed to the suffering war causes. Would it were so simple. The evidence of the suffering has always been there for anyone who cared to look. War goes on, decade after decade, century after century, and wars will continue. Your family’s experience is probably similar to mine. My grandfather served in the army in the First World War. My father served in the Army Air Corps in World War II. I was drafted just as the Korean War ended. My son was just a bit too young for Vietnam, but my grandchildren are now fully exposed to this greatest of human follies. There is a war for every generation...sometimes two. Unless society finally grasps the cause of war, I’m certain all of our great grandchildren will get their turn.

I hope that you are not so naïve as to think that simply changing politicians or political parties is the answer to war. All of the elections and coups d’etats of history have yet to end war. No, war is not caused by putting the wrong people in government, it is caused by handing a monopoly on power to any group of people. It is the very existence of the state that makes war possible. As Randolph Bourne so aptly put it, “War is the health of the state.” Wendy McElroy noted in her essay, “War’s Other Casualty”:

In times of peace, people are largely defined by their society and they interact with Government, giving little thought to the State. In times of war, the hierarchy and the power of these concepts is inverted. The Government virtually becomes the State, and society is subordinated to both.

In a just and rational world, which we hope will evolve before war annihilates us all, states and government would not be accepted as necessary, and war would not be needed to keep those states healthy. In a world in which individuals retain sovereignty over themselves, individuals would not be subordinated to the whims of politicians, and young men like Timmy would no longer be sacrificed for the health of the state.

“Steal This Book”?

Abbie Hoffman’s 1996 best-seller, Steal This Book, was meant as a practical guide for aspiring hippies, filled with ideas for getting something for nothing. It became a cult classic with over 200,000 copies sold. Now they won’t have to take the risk and steal copies. Google will do it for them.

Last Saturday (Jan 20) the Unbound conference at the New York Public Library, Google and the publishing world faced off over Google Book Search, the search-engine giant’s project to digitize and make available online the entire contents of the world’s great libraries. Google would like make it available to the world free, for the good of all mankind. Publishers aren’t enthusiastic.

Publishers of music and movies are also battling to keep their copyrighted works from being copied by Napster lookalikes. Nor is the software industry safe—software programs have been a juicy target for copying without the owners permission.

Now, why should you or I be concerned about the subtleties of copyright or patent law? Because this issue goes to the very nucleus of the human struggle. All conflict is a conflict over property. Here at The Sovereign Society, our goal is to help our members become sovereign individuals, and sovereignty means control over our own property. The goal can’t be achieved if we don’t agree on what is property and what isn’t.

Ideas are property

In a recent essay published in the Sovereign Society’s Offshore A-Letter, I argued that ideas are property when I discussed a software program created by someone called “muslix64” that allowed individuals to copy DVDs.

“Are ideas property? The core confusion in such issues is the lack of a precise definition of 'property.' The most useful, precise, and scientific definition I've come across is that created by the late Andrew Galambos. He defined property as "Man's life and all non-procreative derivatives thereof." He then went on to divide property into the sub-categories of primordial property (your body and mind), primary property (your ideas), and secondary property (the tangible things you create using your primordial and primary property). If we then agree that theft or stealing is the taking of another person's property without that person's freely-given consent, certainly muslix64 is facilitating and encouraging stealing.”

A thoughtful and knowledgeable reader, TD, responded as follows:

Dear Mr. Pugsley:

I am not a socialist but I think it fair to point out both Adam Smith and Henry George seem to have had reservations about intellectual property rights.  Patents are after all “patents of monopoly”. How often have patent holders tried to blackmail or bludgeon rivals?

In a free society, why shouldn’t A be able to copy what B has done?

After all, the US copied from Britain and Japan copied from the US when it came to their industrial revolutions.  By the way, I recall reading most inventors opposed the 1850s introduction of British industrial property laws.

To take it to a logical extreme why should we be paying IP royalties to Isaac Newton’s heirs?  And why should we be paying for IP to some editor of Mozart while Mozart (who wrote the actual music) rots in his pauper’s grave?

Intellectual property is one of modern society’s great conundrums. Should ideas be protected? And what of monopoly? Is it right or wrong? Or is it right in some cases and wrong in others? And who should be the judge?

As TD noted, brilliant philosophers have pondered the issues of intellectual property. Even the greatest philosophers may not have found the truth. Nor does the fact that it has been common in history necessarily argue for the abolition of intellectual property rights.

A major source of the confusion over the issue of property, and especially intellectual property, comes from the fact that most people instinctively look at the issue in terms of what feels “right” and “wrong”, or “moral” and “immoral.”

What is “right”? What is “wrong”? People vehemently disagree on what these terms mean. They are intertwined with religious and political ideologies, so what any individual might mean by them depends on his or her religion or political persuasion. It’s wrong to kill someone in some cases, and right in others, etc.. I think the most useful definition of "right" would have to connect it to an objective. Something would be right if it led to the goal, and wrong if it diminished the chance of achieving a goal.

Consider the general but fuzzy belief that “monopoly” is wrong. Although most go along with giving the state monopoly powr on all sorts of things, like money, the use of force, etc. The dictionary generally defines monopoly as “exclusive possession or control” of something. Is it ‘wrong’ to have exclusive use and control of your body? Of your time? Of your automobile? Most of us don't think it's wrong. Only pure communists would argue that, no, any monopoly on anything is wrong. They would contend that you should not have a monopoly on your body, your time, or the things you create. But if a more bountiful world is the goal, then communism has proven itself to be wrong.

Why does a sovereign individual disagree with the concept that monopoly is wrong? Because of what we know about human nature. All life struggles to survive, find comfort, and procreate, and these drives cause humans to act. We are willing to expend effort to work to create food, shelter, clothing, and luxuries. We work to acquire property because we are motivated by our individual self interest.

History has consistently demonstrated that individuals are happier and more prosperous when they control their property. To the extent control is taken from them by force, effort slows, discontent increases, and prosperity declines. If the desired goal is abundance, i.e., a higher standard of living for all, then it is ‘right’ that individuals have a monopoly on their bodies, as well as the things they’ve earned, created, or been gifted. In short, to achieve a higher standard of living, individuals should have a monopoly on their own property. now let's use examples to contrast different types of property.

Suppose you’ve built a house, and offer to rent the house under certain conditions, say for a fixed period of time, with the stipulation that the renter could continue to use it if they didn’t damage it, paid the rent on time, didn’t remodel it, etc.? In other words, if it is your property, should you be able to set any terms on the rental that you choose, and be able to refuse to rent it to anyone who wouldn’t agree to your terms? Or, should someone be able to come to you and agree to half your conditions, but refuse the rest, and if you didn’t agree, they could force you at gunpoint to rent it to them? Isn't this what happens under rent controls? And under those conditions, what happens to the supply of rentals?

Suppose you have great skills as a mechanic which you’ve developed over many years. You to offer to work for someone if they agree to certain conditions of pay, hours, etc. Would it be right or wrong for someone who needs your skills to refuse your conditions but force you at gunpoint to work for them anyway? Isn’t that the definition of slavery? How well has slavery worked over the centuries?

If ideas are property, then wouldn’t the same reasoning apply?

Suppose you have an idea for a breakthrough technology, you studied a problem for years, worked in your lab for endless nights, and conceive a great invention. It will bring great pleasure to everyone who uses it. It is in your mind, and you haven’t disclosed it. Would it be unjust for you set the terms under which you would disclose the invention? Would you be justified in telling someone who wanted it that you'll disclose it only if they agree not to disclose the plans to anyone else, and set the amount of time they can use it, and set the royalty they must pay? Should you be able to set contractual terms, or should someone be able to force you at gunpoint to disclose your idea under their terms? Wouldn’t that be slavery, as well? If the supply of anything is reduced when the producers are enslaved, what effect does slavery have on the supply of ideas?

I postulated that the question of whether something is right or wrong depends on whether it leads to the desired goal. Should you own and control your body, or is it the property of someone else…or the group…or the government? Remember, history has demonstrated that physical slavery doesn’t function as well as a free market. We produce more by being rewarded, than by being punished. Should you own your physical possessions, or should someone else…the group…or the government? History has demonstrated that common ownership doesn’t work. Why work hard if everyone owns what you produce? Should you own your thoughts and ideas, or should those be the property of someone else…the group…or the government? Ah, that's the question.

The principle of freedom is based on human nature. Individual effort is directly proportional to the reward individuals receive for their efforts. Thinking is the hardest work of all. It is intellectual creativity (the result of thinking) that is responsible for the inventions and ideas that make our lives comfortable and safe. The most important property of all is intellectual property, for it is the source of all other property. This leads to the conclusion that mankind's efforts should be directed to encouraging its growth.

TD asked, “In a free society, why shouldn’t A be able to copy what B has done?” A society in which I can take your property without your permission is not a free society.

And, he raised the important question, “why should we be paying IP royalties to Isaac Newton’s heirs?  And why should we be paying for IP to some editor of Mozart while Mozart (who wrote the actual music) rots in his pauper’s grave?”

When innovators are rewarded in proportion to the benefits humanity has received from their innovations, the riches that are generated will encourage more innovators to creativity. Profits spur competition. How much better to see our youth attracted by the dream of getting rich through innovation, rather than being awestruck by the power and wealth that they see in some other endeavor, say being a rock star, or the worst of all, becoming a politician.

If individuals are truly sovereign, that is if they have control of their property, they can do with it as they please. In truth, as their wealth increases, most will not leave it all to their children, for they won’t want to destroy their own children’s incentive to become productive. Wise individuals do not spoil their offspring. Unlike the plundering monarchs and dictators of past and current history who use their wealth to build pyramids and monuments, great innovators who have accumulated fortunes then endowed institutions, libraries, and left their fortunes in trust for the benefit of all. Most innovators truly want a better world. The recent endowments of Mr. Gates and Mr. Buffett are cases in point.

For 10,000 years, mankind has lived in semi-bondage. Civilization has been dominated by sovereign states and governments. A world of true freedom, that is, a world in which individuals are sovereign over all of their property, and particularly over their intellectual property, will be a world far richer than we can conceive.  That is the reason ideas should be  protected.

The Clock is ticking

As you’ve probably heard, yesterday, in a ceremony hosted by the British theoretical physicist Steven Hawking, the directors of the Bulletin of the Atomic Scientists, moved the minute hand of its famed “Doomsday Clock” forward by two minutes.

A group of scientists from the University of Chicago conceived the clock in 1948, three years after the U.S.introduced the world to nuclear weapons by using them on Japan. It was the scientists’ warning to the world about the destructive power of the atomic bombs they had created. Eugene Rabinowitch, one of the cofounders of the Bulletin, wrote, “The Bulletin’s Clock is not a gauge to register the ups and downs of the international power struggle; it is intended to reflect basic changes in the level of continuous danger in which mankind lives in the nuclear age, and will continue living, until society adjusts its basic attitudes and institutions.”

The clock hands are now positioned at five minutes to midnight. This is the closest it has come since the end of the Cold War. The statement released yesterday by the Board of Advisors of the Bulletin began:

We stand at the brink of a second nuclear age. Not since the first atomic bombs were dropped on Hiroshima and Nagasaki has the world faced such perilous choices.

North Korea’s recent test of a nuclear weapon, Iran’s nuclear ambitions, a renewed U.S. emphasis on the military utility of nuclear weapons, the failure to adequately secure nuclear materials, and the continued presence of some 26,000 nuclear weapons in the United States and Russia are symptomatic of a larger failure to solve the problems posed by the most destructive technology on Earth.

Although the world's stockpile of nuclear boms is lower than it was at its peak of 65,000 in 1986, there are still an estimated 27,000 in the world, 26,000 of which are in the hands of the United States and Russia, and another 1,000 or so are held by Britain, China, France, India, Israel, Pakistan, and North Korea.

Nor are the weapons now in existence the limit of the problem. Iran, Algeria, Egypt, Morocco, and Saudi Arabia have declared their intention to embark on nuclear power programs, and Nigeria, Poland, and Vietnam have expressed interest. Nuclear power plants, of course, generate fuel for bombs. Spent plutonium fuel from reactors is weapons-usable after reprocessing, and just 10 or 12 pounds of highly enriched uranium or slightly more than 2 pounds of plutonium is all that is needed to make a bomb.

As noted in the announcement by the Bulletin, each of the 27,000 warheads now in existence has 8 to 40 times the destructive force that of the atomic bomb dropped on Hiroshima in 1945. In that relatively small explosion, 100,000 people were killed. Just fifty of today’s nuclear weapons could kill 200 million people. Man clearly has the power to destroy all life on the planet.

Society has Armaggedon in its power, but is it possible for it to “adjust its basic attitudes and institutions”? Possible, yes. Anything is possible that does not violate a law of nature. There is no law of nature yet discovered that says intelligent life in the universe must commit suicide.

Therefore, if mankind is in danger of destroying itself, there must be deeply-ingrained attitudes and institutions in society that are wrong. If not, society would not still be in danger of self-extinction more than half a century after the danger of nuclear weapons was so gruesomely demonstrated.

I believe the erroneous belief that has kept the Doomsday Clock set so close to midnight all these years is a belief that the state is an absolute necessity for the functioning of society, and that all individuals must submit to its authority. Yet, the state itself was the mechanism that both developed the weapons of mass destruction, and keeps the world in continous danger of Armageddon. The state.

Will the clock advance to midnight? Will mankind destroy itself? Very possibly. But if, by chance or by luck, it does not, it will be because enough individuals recognized the terminal danger of empowering governments with sovereignty. In a world in which sovereign individuals controlled their own lives and fortunes, there would be no nuclear weapons, and no need for a Doomsday Clock.

Natural law vs. man-made law

In the spring of 1963, Martin Luther King was arrested in Birmingham, Alabama, for leading a series of non-violent protests against racial discrimination that was written into the laws of most southern states.

Birmingham was probably the most thoroughly segregated city in the United States with an ugly record of brutality toward blacks. Yet segregation was the law, and King was breaking those laws.

While in the Birmingham city jail, he received a letter from eight Alabama ministers who, although they agreed with his goals, believed the law had to be obeyed.

In one of American history’s most memorable defenses of breaking unjust laws, King responded with his “Letter From a Birmingham Jail”. King asked, how can one advocate breaking some laws and obeying others? The answer, he said, "is found in the fact that there are two kinds of laws: just laws . . . and unjust laws. One has not only a legal but a moral responsibility to obey just laws," King said, "but conversely, one has a moral responsibility to disobey unjust laws." He quoted Thomas Aquinas: "An unjust law is a human law not rooted in eternal or natural law."

This has a ring of passion, but what is “moral law,” or “eternal or natural law”?

These questions have plagued mankind throughout history. They were addressed by Emperor Nero who outlawed Christianity, President Lincoln who emancipated the slaves, and are now asked of our modern politicians who pass laws against a vast array of things on the basis of morality, from stem-cell research to same-sex marriage. Yet, the questions are never satisfied. Laws are passed on the basis of morality, but there is no agreement about what is “moral” and what is not.

We would ask Mr. King, “What is ‘natural law?’” He would say it is the law of God. But that is wide open to interpretation. A more useful approach would be to study and understand nature itself. As science delves deeper into the nature of life, and specifically our human nature, we find ourselves closing in on a more precise understanding of how a society’s laws can be consistent with natural law.

Here at the Sovereign Society, we believe that the freedom that Mr. King so eloquently fought for requires more than man-made laws assuring equal treatment of all. We believe that human nature, built into us all, requires each individual have control over his own life and property, and be free to dispose and trade it with whomever he pleases, as long as he doesn’t infringe on the right of anyone else to do the same.

Thus, we would support Mr. King’s vision of freedom from unequal treatment under the law, but not support any idea that individuals themselves should not have the right to use and dispose of their property, even though they might individually chose to discriminate. The absolute respect for the sovereignty of every individual is the basis of a truly free society.

Stealing ideas

A software program used to protect copyrighted material on both HD DVD and Blu-Ray movies has been circumvented. According to reports, a hacker using the name of “muslix64” released a tool called BackupHDDVD including its source code, and posted a video at Youtube showing other would-be hackers how a movie is decrypted and then played back from a hard disk drive.

It’s curious how little objection most people have to violations of copyrights. In fact, hackers like muslix64 are quick to brag to their peers about their prowess in breaking through the locks others put on their property. However, what this hacker has done is no different from inventing a better tool for stealing cars, and passing out free copies to would-be car thieves. I wonder how muslix64 would feel if his computer was hacked, the program he devised was stolen by another hacker, and that hacker claimed the idea was his own. No doubt muslix64 would feel outrage at the theft of his efforts. No doubt, he considers the idea to be his property.

Are ideas property? The core confusion in such issues is the lack of a precise definition of ‘property.’ The most useful, precise, and scientific definition I’ve come across is that created by the late Andrew Galambos. He defined property as “Man’s life and all non-procreative derivatives thereof.” He then went on to divide property into the sub-categories of primordial property (your body and mind), primary property (your ideas), and secondary property (the tangible things you create using your primordial and primary property). If we then agree that theft or stealing is the taking of another person's property without that person's freely-given consent, certainly muslix64 is facilitating and encouraging stealing.

That so many are oblivious to the principles of copyright is a sign of the lack of general understanding of the importance of the protection of property. This ignorance is understandable, given that people are culturally conditioned to believe in the sanctity of government, and in it’s current guise government operates on the premise that the need of the group justifies the theft of property from any and all individuals in the group. Politicians pass laws confiscating all forms of property without explaining why it’s all right for the state to take your property by force, while it’s not all right for individuals to do the same. Government steals your money (taxation), your ideas (it limits your exclusive right to your ideas by only limited copyrights and patents), and often enslaves your body (conscription, victimless-crime laws, etc.).

Just as the owners of the movies, music, and software are angered by the theft of their property, so every individual instinctively reacts with resentment and anger when his property is used or taken without his freely-given consent. On careful examination of history, it will be seen that all conflicts enveloping families, communities, and nations can be traced back to the real or perceived theft of property.

This brings us around to the heading for my blog, “Quest for Liberty,” and my appellation, “The Anarchist.” Galambos defined freedom as: “that condition that exists when all individuals have 100% control of their property,” while anarchy comes from the Greek, and means “no ruler,” or “no state.”

I call myself an anarchist in that I agree with H. L. Mencken who said: “I believe in only one thing and that thing is human liberty.” Members of The Sovereign Society share this belief. Theft in any form, whether by hackers or by governments, is wrong. I invite you to join The Sovereign Society, and share in the myriad of ideas that our members and our worldwide network of financial and privacy experts have developed to protect themselves, their privacy, and their financial assets. Click here to learn more.

Mr. Chavez Suffers from Acton's Disease

Venezuelan President Hugo Chávez stirred up international equities markets yesterday when he announced plans to nationalize companies in the telecommunications and electricity industries. “All that was privatized, let it be nationalized,” Chávez said of Venezuela’s largest telecommunications company, CANTV, in which American corporations have huge stakes. CANTV shares plunged 14 percent in New York trading. Venezuela’s currency, the bolívar, fell as much as 20 percent in black market trading on Monday. The announcement was the latest in a series of steps Chávez has taken to move Venezuela toward what he calls a socialist revolution.

Mr. Chavez is following in Mr. Castro’s footsteps, aiming Venezuelaon a trajectory toward a communist dictatorship. Mr. Chavez has more to bargain with than Castro, whose primary asset was the Soviet Union’s desire to have a base 90 miles off US shores. Venezuela happens to have a critical natural resource needed by the world—oil. Mr. Chávez has already said that oil projects in the Orinoco River basin should become “state property.” It will be interesting to watch how the scenario plays out in Washington, since the United States remains the largest consumer of Venezuelan oil. Investors should stay tuned.

After centuries of experiments, and with the empirical evidence invariably demonstrating the disastrous decline in output for any society that chooses public ownership of property over private ownership, how can socialism and communism still be sold to voters in countries around the world? We watch countries like Cuba, Venezuela, and Bolivia, nationalize industries, and are baffled as to why the citizens allow it. But voters in democracies like Australia, Canada, and (yes) the US also slowly accept the nationalization of industries (health care?). How can masses of individuals be led down a road so clearly marked with “dead-end” signs?

There are two aspects of human nature involved.

First, human nature suggests that short-term self interest rules. Individuals learn through experience what works and what doesn’t, and the human lifespan doesn’t seem to be long enough (yet) to make the majority of individuals understand that they shouldn’t consume their seed corn. A mob will raid the bulging granary today, without understanding the capital and effort that led to the harvest that filled the granary.

Second, Mr. Chavez, like most humans, carries the gene for Acton’s disease. Power corrupts. Power blinds, power intoxicates, and eventually, power controls. From the lowly bureaucrat to the supreme dictator, anyone who achieves sovereignty over other individuals is sucked inward by power’s magnetic pull. Mr. Chavez is now intoxicated by power, and is amassing more by appealing to the short-term interest of the voters. In the long run, the Venezuelan granary will be empty, and the citizens impoverished.

Prosperity is the consequence of sovereign individuals operating in free markets. Mr. Chavez will give the world one more demonstration of this in the months ahead.