John Pugsley - The Anarchist

Why not hang Saddam?

It appears that Saddam Hussein is about to be hung (if he hasn’t already been hung). An editorial in today’s New York Times argues that the issue was not about his guilt, as that was well documented, but about holding him accountable in a way that set a precedent for the rule of law, thereby fostering national unity in a scarred, divided nation.

The editorial suggests, correctly in my view, that the trial and hanging will do the opposite. The trial was flawed, divisive, and politicized, and not a demonstration to inspire national unity. Some Iraqis will celebrate, others will be furious, and no national unity will emerge. But there is another issue.

Executions in the U.S. always generate protests by those who oppose the death penalty, sometimes on the grounds that often the innocent are wrongly convicted, or that the death penalty is unconstitutional, or is unfairly applied, or does not deter crime. In this case, however, I’m aware of no protests against Saddam’s execution on any principle whatsoever.

Assuming Saddam is guilty of the crimes cited in the trial (and probably many more), is there a principle that argues against hanging him?

Absolutely. It’s the principle upon which The Sovereign Society was founded: individuals should themselves be sovereign over their lives and property, and are not the property of any state. Individual liberty means freedom from being aggressed against by government. The powers usurped by government, including such things as the power of taxation, monetary monopoly, regulation, and conscription, are all examples of aggression against the property of individuals. The ultimate power usurped by any government is the power to kill.

On principle, therefore, conceding the power to kill under any circumstances is absolutely wrong.  It was wrong when Saddam killed in the name of the state. It will be wrong when the state kills him.

Capitalism's Achilles' heel

Asian markets were rattled yesterday when the Thai government decided that heavy inflows of capital from foreign speculators had made the baht too strong.

To slow the flow of foreign capital, the Thai central bank declared on Monday that foreigners effectively would be able to invest only 70% of money they transferred into the country. The other 30% was to be held in reserve by financial institutions, and any attempt to pull the money out within a year would result in a loss of 10% of the total.

To nobody’s surprise, the response was an immediate plunge in the Thai stock market, and a ripple effect in other Asian markets. Benchmark indexes in Malaysia and Singapore dropped by about 2 percent, whole those in India fell 2.5 percent and Indonesia posted an almost 3 percent decline, and the Thai market fell 15%. And yes, the government's decision had the desired effect on the baht: it dropped 2.2%

Taken aback by the immediate flight of foreign investors, the government quickly relented. Finance Minister Pridiyathorn Devakula announced today that the government is now examining ways to control investors choices. "Yesterday, after the market closed, we got together with stock market brokers and the private sector to discuss how to prevent flows from the stock market to bond market,” he told the Wall Street Journal.

Unfortunately, naïve governments that presume to outwit millions of individual investors and consumers are the rule in history. The Southeast Asian market turmoil brought back memories of the 1997 currency crisis, when Thailand’s central bank tried to stop a plunge in the baht, and prompted a profound economic setback across Asia. This time around, Thailand was trying to arrest sharp increases in its currency, a problem in which Thailand isn’t alone. Currently, governments across Asia are struggling against the falling dollar, as its decline raises the price of Asian exports for consumers in the United States and all other dollar-based economies. Meanwhile, politicians in the U.S. also work to expand the markets for their exporters.

Ah, the endless trade war, all fueled by different rates of money creation in countries around the globe. Governments and their central banks continuously manipulate the monetary and trade game, increasing or decreasing the speed of currency creation, adjusting interest rates, pressing for trade advantages by raising tariff barriers against imports, or by subsidizing exports, all the while ranting about the beggar-thy-neighbor policies of other governments. The result is the very volatility that makes currency traders salivate, and economies flounder.

In his 1997 book, The Rules of the Game: International Money and Exchange Rates, Ronald McKinnon identified generalized financial volatility as “capitalism’s Achilles’ heel.” Hypothetically, international volatility is restrained by a set of (mostly unwritten) rules, but everyone bends the rules. Unfortunately, investors and capitalism get the blame, not government printing presses.

What could solve the problem of international economic volatility? History suggests only one thing: a return to the gold standard. For evidence, consider McKinnon’s tally of volatility in long-term interest rates in Great Britain and the U.S. under the gold standard from 1879 to 1913 (Britain, 0.03: U.S., 0.03), the dollar standard, when the dollar was considered as good as gold from 1950 to 1970 (Britain, 0.09: U.S., 0.08), and floating rates from 1973 to 1994 (Britain, 0.34: U.S., 0.26). Under the regime of fiat, floating currencies, a ten-fold increase in volatility in interest rates compared to the gold standard.

The bottom line? Handing the power of money creation to governments and central banks is akin to handing car keys and alcohol to teenagers. It’s a guarantee of endless volatility and economic crashes.

What’s the message to sovereign individuals? Stop dreaming that the central bankers will ever succeed in stabilizing the world economy. They are the cause of volatility, not the cure. For your own safety, put your trust in a gold standard. Create your own. Always keep a significant portion of your wealth in gold. It’s the ultimate defense against capitalism’s Achilles’ heel.

In defense of anarchy

I read today that Iraq is threatening to fall into anarchy, and also that if Mussharef is assassinated that Pakistan could succumb to anarchy. It was suggested last week that Even the Church of England faces anarchy.

This would great news, if only the true concept of anarchy were what was meant by those using the term.

The term ‘anarchist’ has been plagued by centuries of bad press. Back in the early 19th century, a few bomb-throwing revolutionaries usurped this wonderful word. Now, not a week goes by that George Bush or some other politician doesn’t accuse terrorists of being anarchists. Wrong. Terrorists aren’t anarchists--they’re not demanding freedom from government—they want to become the government. Terrorists are micro-governments that want to become macro-governments.

Calling a terrorist an anarchist is a slur on anarchists. The correct definition and history of the word can be found in The Encyclopedia of Philosophy:

“ANARCHISM, a social philosophy that rejects authoritarian government and maintains that voluntary institutions are best suited to express man’s natural social tendencies. Historically, the word “anarchist” derives from the Greek an archos, meaning “no government.”…Pierre Joseph Proudhon (What is Property?, Paris, 1840) described himself as an anarchist because he believed that political organization based on authority should be replaced by social and economic organization based on voluntary contractual agreement [emphasis added].

“[T]here is no necessary connection between anarchism, which is a social philosophy, and terrorism, which is a political means occasionally used by…actionists belonging to a wide variety of movements that have nothing in common with anarchism.”

Anarchism is a philosophy of freedom. True anarchists believe that authoritarian government the problem, and that voluntary cooperation is the answer. The Encyclopedia of Philosophy agrees:

“Anarchism in general rejects the state. It denies the value of democratic procedures because they are based on majority rule and on the delegation of the responsibility that the individual should retain.

“The main difference between the anarchists and the socialists, including the Marxists, lies in the fact that while the socialists maintain that the state must be taken over as the first step toward its dissolution, the anarchists argue that, since power corrupts, any seizure of the existing structure of authority can only lead to its perpetuation.”

Power corrupts, and that explains what’s going on in Gaza, the decades of genocide in Darfur, the millions slaughtered by warlords in the Congo, in Rwanda, in China under Mao, and in Cambodia under Pol Pot. These places didn't suffer from  anarchy, they suffered from the opposite: government.

Perhaps some of the confusion stems from the concept of government. What is a government? The word is derived from the Greek kybernan, which means “to steer.” You and I can be governed by someone else, or we can govern ourselves. There can be an external ‘sovereign,’ or we can be sovereign individuals. Those who would control us and our property by force (including every petty thief, terrorist, and political party) are simply different manifestations of government... the complete antithesis to anarchism.

What a tragedy that “anarchism,” a word that concisely describes individual sovereignty, has been co-opted by authoritarian governments to mean just the opposite. In the correct sense of the word, I’m an anarchist and proud of it. I don’t want to govern you, nor do I want you to govern me. If you believe that you should have the sovereign authority over your own life and assets, and ‘steer’ your own future…then, surprise! You’re an anarchist, too.

Price inflation vs. money inflation

The monthly CPI was released this morning, announcing that U.S. consumer prices were unchanged in November. A flat CPI raised a few eyebrows among economists, who, according to the median of 75 forecasts in a Bloomberg News survey,  expected at least a 0.2% rise.

Traders busily started buying Treasury notes and stocks, speculating that Fed Chairman Ben S. Bernanke would “keep interest rates steady or cut them” in the first half of next year. (The continual statement that the Fed sets interest rates shows popular ignorance of the monetary machine…the Fed doesn’t set major rates, it simply expands or contracts bank reserves, which influences market rates.)

Bernanke is being applauded for astute management of the dollar printing presses. “The Federal Reserve has done a good job of managing this period in the economy, of slowing the economy just enough to allow inflation to come back down to desired ranges without causing too much of a slowdown in the overall economy,'' according Russell Price, senior economist at H&R Block Financial Advisors in Southfield, Michigan.

Mickey Levy, chief economist at Bank of America in New York, says "There is moderate economic growth and inflation is in the process of peaking.'' Jim O'Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut, tells us that "Inflation is still above the Fed's perceived comfort zone, but not by a lot and it's headed in the right direction."

Price inflation may appear to be dormant in the short term, but monetary inflation isn’t. The government continues to pour coal into the inflation boiler. It’s interesting that a hundred years ago ‘inflation’ referred to expansion of the money supply, but in the 20^th century people gradually began to use it to mean price inflation.

Today, I’d be shocked if one percent of the population realized that price inflation is caused by monetary inflation, or that monetary inflation is rooted in federal deficits. This is too sad. Because if it became general knowledge that deficits are the fuel that feed the flames of rising prices, perhaps the politicians couldn’t get away with borrow and spend, borrow and spend. Consider the growth of federal debt in the past 30 years:

    Year   Gross Fed Debt
    1975       $542  Billion
    1980       $909  Billion
    1985     $1,800 Billion
    1990     $3,200 Billion
    1995     $4,900 Billion
    2000     $5,600 Billion
    2005     $7,900 Billion

Ask yourself how long a deadbeat government can continue to get away with it.

The CPI may seem quiescent, but eventually the deluge of irredeemable Treasury IOUs will ultimately be converted to higher prices. The question is when?

 

What should we do now?

The congressionally-mandated Iraq Study Group finally published it’s long-awaited recommendations last week. The ideas ranged from broader regional diplomatic efforts to more training for Iraqi security forces. Then, a withdrawal of US support if progress isn’t made by the Iraqi government in key areas of reconciliation and governability.

it's clear, Iraq has become a deadly quagmire for the U.S. In total, 2,934 members of the U.S. military have died since the war started in March 2003. Three years and nine months after the U.S.-led Coalition invaded Iraq, American military casualties have now exceeded 25,000.

As the Iraq controversy fills the news, a close friend and publisher asked for my input. “What do you think we should do NOW?”

I view all conflicts through the lens of individual liberty and property rights. To see the war in Iraq through this lens, however, one must understand the principles of human nature on which liberty rests.

Human nature evolves from a winnowing process in which natural selection acting over hundreds of thousands of generations has engineered into our behavior what author Robert Ardrey called a “territorial imperative.” That is, an instinct to acquire, protect, and control property. Like fish, birds, and dogs that aggressively defend their physical territory, as well as their food supply and offspring, each of our brains is hard-wired to feel resentment and anger when our ‘property’ is threatened. As a child cries “that’s my toy!”, we get emotional whenever something we believe is ours is touched or taken without our permission.

Property is central to all conflicts. Murray Rothbard in his trenchant series of essays, “Egalitarianism as a Revolt Against Nature” wrote,

“The social path dictated by the requirements of man's nature, therefore, is the path of "property rights" and the "free market" of gift or exchange of such rights. Through this path, men have learned how to avoid the "jungle" methods of fighting over scarce resources so that A can only acquire them at the expense of B and, instead, to multiply those resources enormously in peaceful and harmonious production and exchange.”

The issue in Iraq, as in all conflicts, is property. The question, “what should the US do now in Iraq?” is answered by asking “whose property is involved.” Is Iraq, its land, its buildings, its people your property? Is it mine? Does it belong to “the American people”? If not, isn't anyone who interferes with any element of it an aggressor?

Well, yes. If you take a gun, fly to some other place, and shoot someone you don’t know, are you an aggressor? Absolutely, by definition.

What should “we” do now about Iraq? Pack up and leave. Get the hell out, ASAP. Stop aggressing.

Hold on, you might say. It’s necessary to liberate some Iraq citizens from the tyranny of others, that is, to spread ‘democracy’. What about the Iraqi people and there internecine fighting?

It’s truly tragic. It is incredibly sad. Tyranny everywhere and down through history has been tragic. So, don’t we have an obligation to help victims of tyranny?

Those who want to help a victim of aggression can do so, of course, and many would volunteer. That's what individuals on both sides of every conflict think they are doing, although, as has been quipped, one person’s “freedom fighter” is someone elses’ terrorist. 

Saying citizens of country A have an obligation to defend the citizens of country B against aggression, is questionable morally, as the citizens of country A’s are themselves forced to become aggressors. But should we sit by and do nothing when a tyrant subjugates his people? I'm reminded of Irish philosopher Edmund Burke’s famous quip, “All that is necessary for the triumph of evil is that good men do nothing.” He was wrong. The truth is, all that is necessary for the triumph of evil is that good men do the wrong thing.

Ending U.S. and coalition aggression in Iraq doesn't mean taking no action. But there are better solutions to aggression than to become an aggressor.   

The Myth of Anti-Trust

In a continuing war against monopolies, U.S. anti-trust regulators are zeroing in on graphics chip makers. Last week the Department of Justice issued a subpoena to Santa-Clara based Nvidia, widening a recent probe beyond an earlier target, Advanced Micro Devices.

The monopoly-busters are active in Europe, as well. In July the European Commission issued a €280 million fine against Microsoft for failing to comply with a 2004 ruling. In 2004, EC regulators imposed a €497 million on the company for monopolizing the operating system market, and demanded that Microsoft open up other of its trade secrets to competitors.

In effect, anti-trust regulators argue that market success threatens customers and rivals.

Of the panoply of laws an regulations, anti-trust laws rank among the most egregious. The only monopolies that are effective for any length of time are those government monopolies enforced at gunpoint, such as the Postal Service monopoly on delivering First-Class mail. Without a gun, monopolies don't survive the marketplace.

It’s a rare business that wouldn’t like to have a monopoly, of course. I would. But a free-market insures that competition would always arise to exploit and demolish any monopoly…provided the government didn’t step in and protect it.

The literature proving the absurdity of anti-trust laws is vast, so I won’t try to defend the position here (D. T. Armentano’s 1972 classic, The Myths of Anti-Trust is a place to start). What bothers me more than the existence of anti-trust laws is the failure of those attacked by them to stand on principle.

Microsoft is a case in point. Bill Gates, one of the richest, most successful individuals in history, could have argued against the anti-trust actions against Microsoft on principle, but instead he never raised a word in favor of a free market. Nicholas Provenzo, Chairman of the Center for the Advancement of Capitalism, did a better job than I could in articulating Gates’ failure in this regard. I quote from his trenchant essay:

Thus the silence of Microsoft’s leaders on the evils of the antitrust laws—a deliberate silence, for they must live with the choking fallout of these laws every day—is nothing less than an act of sanction. Let us not forget, the firm’s tacit support for the antitrust laws has already cost Microsoft billions of dollars in fines and settlement fees. At what point does one simply stop and say, “enough is enough”?

Many will argue that Microsoft had no choice—that the regulators have too much power and thus cannot be resisted. I hold this argument to be false, for it undersells the power of dissent. A dissenter speaking in defense of truth won’t necessarily win outright, but he can begin to change the terms of the debate. He can check excesses, and over time, he can build a movement that will win him his ultimate victory. As long as Microsoft is a market leader, the company will be a target for looters acting under the guise of antitrust. As long as regulators and Microsoft’s competitors have license to file antitrust suits, there will be no light at the end of the tunnel for the firm—or any other successful firm. Effectively defeating antitrust must be a long-term priority for Microsoft (and other firms with the sense to protect their own self-interest), for no company that is consistently denied the ability to improve its products can long last.

In defense of its virtues, in exasperation of being cut down and cut down again, Microsoft should simply declare that it seeks the abolition of antitrust, and refuse to rest until these laws are repealed—or risk fading into obscurity. If Microsoft takes this righteous stand, it will be known for both leading the PC revolution, and for leading a far greater revolution in American business.

Well said.