Re: Down With Democracy?

From: Charlie Stross (
Date: Wed Oct 03 2001 - 04:48:30 MDT

On Tue, Oct 02, 2001 at 11:10:39PM +0200, Jacques Du Pasquier wrote:
> Charlie,
> I think I could use some devastating arguments of yours on this article,
> if you don't mind going through such obvious stuff.
> On a first reading, I found that the alternative advocated was not
> stated very clearly, but that the arguments weren't bad.

Okay, here it is again, along with my comments. Note that this is just
the bits I snipped out -- I'm in the grip of a bad dose of RSI right now
so I am _not_ going to do a detailed rebuttal to the entire article.

> Down With Democracy by Hans-Hermann Hoppe
> from
> One-man-one-vote combined with 'free entry' into government - democracy -
> implies that every person and his personal property comes within reach of -
> and is up for grabs by - everyone else. ...

This assumes that democracy comes with no system of checks and balances.
As it happens, all the participants in a democracy have a personal
incentive for preserving their own property rights -- their own. This
is maximized in societies where social mobility -- upwards, as well
as downwards -- is maximized; the greater Joe Average's prospects for
maximizing their personal wealth, the greater the incentive Joe Average
has for not over-taxing the very rich.

He's also neatly side-stepped the issue of constitutional or basic laws
that prevent a democracy from making fundamental changes without achieving
near-unanimous, as opposed to majority, support. Bring in such provisions
and his whole argument falls through.

> .... The rich are characteristically
> bright and industrious, and the poor typically dull, lazy, or both.

He missed out "sickly" or "unlucky".

I have a friend who has a medical degree. She's damn near bankruptcy. Not
through high living, but because she didn't get on with the medical
establishment, and so went into practice as a homeopath -- then had a run
of really bad luck (buying a home in a neighbourhood where property values
were going downhill, moving out and leasing it to an asshole who defaulted
on the rent and skipped out of the country, that sort of thing).

Hoppe is advancing an argument based on social determinism, not realism: in
his universe, everybody gets what they deserve. We, as extropians, are
supposed to believe in self-improvement. A corollary of this is that it's
possible for *other* people to improve ... including those who we might
currently see as social basket-cases. Whereas Hoppe is espousing the
position "once a peasant, always a peasant".

> ... The recognition of democracy as a machinery of popular wealth and income
> redistribution,

And insurance.

Something we tend to forget is that the modern welfare state, with the
concepts of a state pension, a retirement age, unemployment insurance
and health cover, was invented by that notorious pinko liberal commie
Prince Otto von Bismarck.

Bismarck didn't turn Kaiserine Germany into a welfare state because
he figured Marx was right; he did so because he saw it as a sensible
safety net that would allow him to follow disruptive policies (rapid
industrialisation of a hitherto not-very-industrialised country) without
causing social unrest. His calculation was that if the workers knew they
wouldn't die of starvation, they'd be less inclined to revolt.

Our modern social systems tend to act as insurance -- insurance against
disease, insurance against unemployment, insurance against old age. And
I maintain that in principle a government-run or government-mandated
central insurance system can be cheaper and more efficient than any
private-sector profit-making insurance agency. For one thing, it doesn't
have to cream off profits to stuff into the shareholder's pockets. For
another thing, it can _prevent_ the tragedy of the commons within its
remit by legislative fiat, by ensuring that contributions (and benefits)
are universally applied. Of course, you have the question of efficiency:
but the US government is notorious for its inability to run a bureaucracy
efficiently. From where I'm standing (the UK), national-scale insurance
schemes make more sense than private enterprise schemes.

We therefore have an area in which income redistribution makes general
sense (insurance) and it looks like professor Hoppe has completely
forgotten about this.

(It is of no benefit to a nobleman to pay no taxes or heed to the
peasantry if he falls ill and his medical bills gobble up his entire

> .... provides the key to an
> understanding of the present age.

That's bollocks. (My personal opinion.)

> ... By forcing businessmen, through
> 'affirmative action' ('non-discrimination') programs, to employ more women,
> homosexuals, blacks, or other 'minorities' than they would like to, there
> will be more employed minorities, and fewer employers and fewer male,
> heterosexual, and white employment.

He tends to forget that, oddly, homosexuals, blacks, and other minorities
need to work to live, as do white heterosexual christian males. (This is
the "fewer jobs to go round" falacy that used to be trotted out by the
neo-fascist right in the UK in the 1970's, until even their half-witted
followers saw through it.) In reality, what he's objecting to is the idea
that discrimination is bad.

> Most importantly, by compelling private property owners and/or market income
> earners (producers) to subsidize 'politicians', 'political parties', and
> 'civil servants' (politicians and government employees do not pay taxes but
> are paid out of taxes), there will be less wealth formation, fewer producers
> and less productivity, and ever more waste, 'parasites' and parasitism.

He forgets that civil servants spend money. That money goes into providing
jobs in the general economy. Abolish the US government overnight and you'd
probably cause Boeing, Lockheed, and a host of other huge corporations
to go bankrupt -- and trigger a full-on depression -- because you'd be
reducing the velocity of money.

The point to note is that most people in our post-industrial society are
*not* primary producers (farmers or builders or engineers). We've gotten so
efficient at those tasks that we need barely 5%-10% of our population to
do that. So the trick we need to master is to keep the money circulating
and to find use for otherwise-idle (and starving) hands.

A classic case of this fallacy occured in the UK in 1979-81. Margaret
Thatcher looked at the British government's nationalised (state-owned)
industries and saw that several of them were making large net losses. She
cut them off at the ankles and they shut down -- we lost 70% of the steel
industry in about six months, for example.

The effect on the economy was drastic. About a million people ended up
on the dole. Prior to this, they'd been earning an average of 10K each,
paying maybe 2K in taxes, and receiving a subsidy (to their industry)
of about 1K per head. Afterwards, they were drawing 2K a head in
unemployment benefits. The net effect on government revenues was to DOUBLE
outgoings, while the net effect on the economy was to shrink it by several
percentage points; they went from a net contribution of 9K each to a
deficit of 2K each.

(Thatcher expected them all to get jobs doing something else productive.
As it happens, large numbers of them are now nearning retirement age ...
with no new jobs in sight. You can't easily re-train steelworkers into
stockbrokers or computer programmers; some will make the change, but
many can't.)

The point is, money spent on government services may or may not be
productive but *it's part of the economy*. Money spent on government
employee wages ends up coming back in taxes *and in spending in the
private sector*. Maybe we'd be better off in a minarchist utopia,
but the road we'd have to walk to get there would be incredibly painful.

Meanwhile, Hoppe is trying to blame everything on misplaced egalitarianism
and the values that surfaced during the Enlightenment. His vision of the
human world is one where everybody has an assigned place, nobody should
move from it, and if you're poor you're doomed to stay that way.

Extropian it ain't; mediaeval, maybe.

-- Charlie

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