Re: Private vs. government views of property

From: Technotranscendence (
Date: Sun Oct 28 2001 - 19:26:32 MST

On Sunday, October 28, 2001 10:38 AM Robert J. Bradbury
>> The private individual, secure in his property and in his capital
>> resource, can take the long view, for he wants to maintain the
>> capital value of his resource. It is the government official who
>> must take and run, who must plunder the property while he is
>> still in command.
> Hmmmm.... Up until recently, more than half of all Americans were
> not wealthy enough (or educated enough) to invest in the stock
> market. Taking the "long view" presumably requires that one
> balance ones resources between real estate, cash, precious metals
> *and* stocks (because stocks over the long run have provided the
> greatest return on capital).

Not at all. Taking the long view is always relative to one's circumstances.
A person who does not have a lot of money might, e.g., just have a savings
account -- as I have since college. A person who has a little more might
invest in other things, such as CDs, money market funds, IRAs, and buying
other goods (a house, long lasting clothes, etc.) or services (staying in
good health, education, etc.). (As in these examples, "property" and
"capital" should not be collapsed to "land" and "equities.")

(People in other times and other societies, too, have a different range of
choices. For the farmer in the Third World, the long range could mean just
plowing the fields for next year and keeping a reserve of seed and food
against a rainy. This does not make her or him any less a long range
planner than someone in the First World saving up a cash reserve in the
event of being unemployed with the current fad of lay offs.)

> Without various levels of government
> with various resources (armies to police forces) whose job it is
> to protect the "private individual" *how* can one feel "secure"
> so that one can take the long view?

Rothbard's point is that government on the whole is not better at managing
property and capital than individuals on their own. Now, as for protection,
Rothbard, of course, (and Hoppe) is (are) an anarchocapitalist(s). So, his
solution is quite clear.

However, in the case of a government, do you need more than mere recognition
and protection of private property to allow individuals to flourish and act
long range? Or do you need all the trappings of a welfare state? My view
is that the latter clearly acts against human flourishing AND makes people
think more short range. Why? Well, if at any moment some of your property
can be taken or regulated in new ways, this is a disincentive for you to
create more property (wealth, capital, what have you) and to plan long

Also, given that you might be the recipient of other people's property -- as
when someone else is taxed to benefit you -- you have less incentive, again,
to create and more to become such a recipient. In other words, taking
property becomes more profitable than making it under such a system. The
more extensive the welfare state, the more profitable the former (taking),
the less profitable the latter (making).

> If I'm spending all of my
> time trying to evaluate how much to pay for support of a
> "private" security force and reading the reports evaluating
> whether or not they can effectively protect my property, then
> I'm *not* going to have the time to read SEC filings by corporations
> so I can reasonably allocate capital resources.

How did anyone do it before the SEC then? The SEC does not have some
special knowledge. The SEC does not get information from a crystal ball.
In fact, the SEC has often been wrong -- else there would be no corruption.
Even now, the SEC does not evaluate things like offshore hedge funds, whose
members typically can evaluate that themselves. (Notably, there is no cry
from hedge fund investors for the SEC to step in and regulate them, though
some bureaucrats and brokers want this -- most likely to keep people from
fleeing from their areas of control.)

I think most people will not have to do extensive analysis. I also think
under a free market in security -- just like a free market in PCs or DVD
players -- there will be an incentive for protection agencies to give easy
to analyze, third party verified information on their business. Surely, the
less reputable firms won't, but, in the long run, that means they'll be less
profitable. That's how the market works. (That's why people would rather
put their money in the bank, then, say, give it to Louis down on the corner
to manage.:)

> As I pointed out offlist to Alex, it is a question of delegation
> and trust. If I have to evaluate and manage my own protection
> then I have to pay someone else to manage my capital allocation.
> Or I can manage my capital allocation and pay someone else to
> evaluate and manage my protection.

It depends on how large your capital and protection needs are. I can see
some middle class people hiring people to do both. I can imagine a lot of
others managing both on their own -- well or badly -- because they can't
afford to hire someone right now or don't want to. I can also conceive some
choosing a mixed strategy or changing strategies as they accumulate or lose
property. (A dotcom millionare who winds up bankrupt probably isn't going
to worry about huge security concerns. His condo in the hills might be sold
to pay his debt, so he'll no longer need to have it policed.)

> Why do people implicitly
> assume that governments are "plundering" and "running". Yes,
> there have been individuals that have done that but it seems
> to be the case that more and more they are being brought to
> justice for such crimes.

The point is this. Institution settings set up incentives and control how
information flows. Government itself, regardless of who is running it,
basically has a set of incentives to plunder. This is so from basic
principles of sociology and economics. (Government being a monopoly of
coercion with the ability to tax. It has the incentive to use coercion to
benefit itself (or who is in power at the moment) and to tax more. In other
words, to increase power and revenues.) It also, since it lacks competitive
pressure, has no means of determining its true costs and whether it's using
the right level of security. (A market would allow people to decide this
because measuring costs versus benefits. Such is not possible when there's
no freedom of entry into the business of security.)

For more on the private production of security, see "Privatize the Police"
by Rob Moody at:

and also download Hans-Hermann Hoppe's "The Private Production of Defense"

(This essay is also in Hoppe's recent book _Democracy -- The God that
Failed: The Economics and Politics of Monarchy, Democracy, and Natural


Daniel Ust

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