Governance without Government: Introduction

December 29, 2008

In advocating a much smaller role for the government, I have found one of the greatest points of resistance to be an inability to imagine non-government provision of certain services. Interestingly, however, in the vast majority of cases such provision has existed, at some time. Thus, as a research project for myself, and to condense this information for others, I plan to write a series of articles documenting these private provisions of allegedly public goods.

At present, I plan to address the following topics, based primarily on what I can recall having arisen in conversation; if any of my readers have suggestions for additional topics or superior classification, I would greatly appreciate them.

Protection of rights (and not rights):
Security/police protection
Judicial arbitration
Foreign aid
National defense
Civil rights/child labor
Environment

Charity:
Care for the poor
Care for Orphans
Unemployment/disability compensation
Natural disaster
Education

Infrastructure:
Public transportation
Roads
Lighthouses
Standardization

Economy:
Currency
Monopoly

I need hardly say that I do not believe such examples to be logically necessary; while it is true that without assuming the perfectibility of human nature imperfection of results of the present system does not constitute prima facie proof of the possibility of a better system, the absence of a better system in history does not constitute prima facie evidence against it. Nonetheless, I think that these articles may be of help to some who seek practical confirmation of theoretical conclusions.


The GM/Chrysler Bailout

December 16, 2008

I have thus far been avoiding writing about current events because I find them depressing. However, I have seen enough absolute nonsense about the GM/Chrysler bailout that I thought that I ought to write something on the subject, focusing on a few little-recognized truths about the situation.

Bankruptcy is healthy for the economy

In an atmosphere of measuring the strength of the economy by the stock market this may sound odd, but bankruptcy does serve a purpose. Not all economic activity is beneficial, as resources are scarce and each activity takes resources away from other activities. We measure the benefit of an activity by what people are willing to pay for its product; its cost in what its actors must pay for its inputs. If the cost of an activity exceeds its benefit, then it would be better if the activity did not happen. This is exactly what happens in the case of bankruptcy: instead of some solitary activity being unprofitable, the entire activity of a company is. While the closure of the company may seem to harm economic output, it actually increases it: we see the closure of the plant; we do not see the activities that the freeing of resources formerly occupied by the now closed company makes possible. In the end, bankruptcy increases economic output by redirecting resources to their most efficient use.

The jobs will come back

Many people seem to think that the job loss would be devastating. In the short run, yes, there would be a job loss. On the other hand, remember the general rule of supply and demand: supply can never exceed demand in equilibrium unless the government intervenes. If the government does intervene, then blame the government, not the lack of a bailout. Absent such intervention, the market will quickly restore the lost job. It must be noted, however, that the wage will fall in the short run to restore equilibrium. But, in the long run, even this disadvantage disappears. Recall what I said above, that losses are a sign that a company is using resources inefficiently. Furthermore, in a free market the wages of worker tend toward their marginal productivity. The more efficiently the capital is being used, the higher the productivity of the workers; therefore, the more efficient the use of resources, the higher the workers’ pay. This makes intuitive sense: the greater output shown above must fall to some consumer; why not the workers who produced it?

The bailout is not free

Looking at what is being written regarding the bailout, one would think that it would be free. It would not. In reality, no government action can create new resources; it can only redirect them from a previous use. By the nature of profit and loss, the profitable activity being taxed is efficient; the unprofitable activity being subsidized is inefficient. Therefore, such a bailout is, prima facie, a redirection of resources to less efficient uses. That is hardly free.

The bailout is not required by any contractual obligations of the manufacturers

Perhaps the most creative argument for the bailout which I have seen is that the companies, if they were to go bankrupt, would be unable to fulfil their contractual obligations in the form of warranties and retirement benefits. And certainly, I sympathize with those involved: I believe that no excuse suffices to¬† justify reneging on commitments. However, let us not be decieved by the absence of an agent as the question is presented. The question is not “should the obligations be fulfilled?” but “should the obligations be fulfilled by other taxpayers, who never made a commitment?”. Clearly, they should not. I never made the commitment; why should I be forced to pay? As much as I sympathize with those threatened with the breach of contract, I cannot admit a right to them of forcing those not a party to the contract to fulfill its obligations.


Value Scales

December 15, 2008

I was recently asked if we should not trade between multiple values. Everyone values freedom, but if we can greatly increase our prosperity for only small loss of freedom, should we not do so? This question, I think, betrays a misunderstanding of the fundamental nature of values, the ends people seek to achieve in their action. For clarity, we may separate values into intrinsic values, those valued for their own sake, and extrinsic values (also called pragmatic, particularly in LD), those valued for furthering another value. Some values are both, although typically we only pursue them for one reason, and thus they effectively fall into one of the previously enumerated categories.

The most fundamental set of values is that of intrinsic values. Many people with whom I have discussed this subject are of the opinion that our rankings of these intrinsic values are in the form of weights; if we value liberty highly, and prosperity less, we will be willing to sacrifice only a small quantity of liberty for prosperity, but will still be willing to make the trade on at least some terms. But how do we measure quantities of disparate items? Quantity can be compared only if the two quantities share a common unit or if there is some function receiving both as input, the output of which can be compared across different combinations of the input values. But this function is not intrinsic to the values. Thus, the equation is best thought of as a value itself, with the values it involves as contributing values.1 Thus, there is no way in which intrinsic values can be traded, whatever the ratio. Instead, one’s intrinsic values must be ranked sequentially, with one maximizing the first and only pursuing a lower value to the extent compatible with a complete maximization of the first value.

But this explanation of values is incomplete, because we do trade among what we value, albiet only among extrinsic values. Only rarely is an intrinsic value directly attainable by action, more typically requiring considerable foresight and coordination. While theoretically one could compute the proper action by brute force, considering every possibility for the future and every possible course of action, but the enormity of this calculation renders it practically impossible. Thus, people identify values that contribute to their intrinsic values, and pursue these extrinsic values, which are more proximate to action. But these extrinsic values are only valued for their furthering of intrinsic values, and if an intrinsic value were served by only one extrinsic value, it would be impossible to differentiate in action between the two values. Thus, we cannot construct a value scale of extrinsic values as we must of intrinsic values; instead, extrinsic values are subservient to the scale of intrinsic values. Here, trading among values makes sense, for we have a clear standard: maximize the function of the intrinsic value in terms of the extrinsic values. Thus, whenever someone claims to be trading among intrinsic values, these are really extrinsic values, and an intrinsic value appears behind them.

1 Actually, I have been somewhat lenient on those who speak of trading among intrinsic values. The units of values are purely ordinal, and thus to speak of a weight on a value is nonsensical. The concept of a function only makes sense itself if one remembers that function is not necessarily an equation but rather a mapping of input to output, which output may itself be ordinal. Naturally, many of the operations applicable to mathematical equations will be inapplicable to such an ordinal function.


On the Beginning of Time

December 3, 2008

Did time have a beginning? If time began, then each point in time will be reached given sufficient time. But what if time did not have a beginning, and always existed? Then, every point in time will be preceded by an infinite amount of time. Just as adding to a finite number will never reach infinity, so subtracting from an infinite number will never reach a finite number. We may take the present as a finite reference point; the passage of time, by its very nature, is finite. Thus, if time has no beginning, the amount of time preceding the present is infinite; no passage of time, necessarily finite, could possibly reach the present, a clear absurdity. Therefore, time must have had a beginning.

But we must be very careful about what it means to say that time had a beginning. It does not mean, as we mean when we say that anything else had a beginning, that there was a time when time did not exist, a clear contradiction. But if time had no beginning, something must lie beyond it; if not time, then what? We refer to this meta-time eternity, which at this point we must define by simple negation: eternity is the condition of time not existing. The defining characteristic of time is its passage; thus, in eternity, their must be no passage, no “before” and “after”. But with no before and after, then there can be no change, for change implies a before when one thing is true, and an after when it is not. Thus, eternity is, most simply, changelessnesss, without even the change of growing older.

But some created things, such as souls and angels, are immortal, and thus never cease to exist, and yet in the Apocalypse of John, we read “and time shall be no more”. Nothing created can be eternal, for being created implies change. Thus, we must designate a third status, aeviternity. Aeviternity is, as it were, a created eternity, having a beginning, but no further change.

Thus classification solves, I think, many commonly raised problems. For example, one objection raised against divine creation is that it implies that God at one point did not see fit to create the world, and then did, implying that God changes his mind. But this supposes that God lives within time and that time was not itself part of the creation; in reality, time just is, without being preceded by a different time. Thus, God simply created the earth, just as the Son simply proceeds from the Father, without the procession involving temporal change. The only difference is that that the Son exists in eternity, and thus it is appropriate to use the present tense, while the earth exists in time, and thus it is appropriate to use the past tense. All times the present with respect to God, and thus a change occurring in time implies no change in God.