The Separation of Commerce and State

The principle of the Separation of Church and State has done wonders for religious freedom, and has brought impressive levels of interpersonal harmony and general prosperity. Why? Because this principle removes the mechanism of violence from religion, making the proposal in explicitly harmonious terms.

Unfortunately, a new kind of violent, crusading morality has taken its place, in the form of economic progressivism. Progressives believe that certain kinds of economic transactions between people, though completely voluntary on all sides, are immoral, and thus must be violently suppressed. This has created, on economic matters, the same kind of heated partisan discord that once divided British Catholics and Protestants. In the less civilized corners of the world, the economic crusaders have employed corruption and military strength to gain a permanent advantage over their opponents, establishing socialist dictatorships.

To restore harmony on economic matters, and ensure that violence is never used for the sake of overly-intrusive, moralistic crusading, what we need is a principle of Separation of Commerce and State.

I believe this principle would function the way the Separation of Church and State has, becoming shorthand for the plea to maintain civility through the enforcement of “live and let live” on economic matters. In other words, you may not agree with the contracts that I agree to, but I am free to make my own choices according to my own economic beliefs, and so are you. Certainly, the progressives will object to such a principle, arguing that the people are too stupid to know what’s best for themselves, just as religious crusaders have continued to do, centuries after the introduction of the Separation of Church and state. Yet, I think the formalization of this concept in parallel to the language that protects religious freedom will take a giant leap forward in protecting economic freedom, with far more success than general pleas for liberty (which are often difficult for the uninitiated to understand).

So, have I made my case? Are you ready to start framing the debate over economic liberty in terms of “Separation of Commerce and State”?

What Causes Wealth Inequality?

This discussion is adapted from a forum debate.

There are many causes of wealth inequality, but several major factors come to mind:

  • High effective income tax rates and costs of living. When the government takes larger percentages of income, it becomes harder and harder to accumulate wealth, but existing wealth is untouched. Hence, those trying to climb the economic ladder find it much more difficult to get to the top than it is for the wealthy to stay at the top. You’ll notice that most blue states have high taxes and high costs of living due to redistributive welfare policies, regulations, bans, licensing laws, etc.
  • High inflation. Inflation that is driven by the government printing money is effectively a flat-rate tax on income and wealth. This is even more harmful than the income tax for those trying to climb the economic ladder, because those are the people who tend to have their assets purely in the form of cash. The wealthy have enough wealth that they can afford to (knowledgeably) put most of it into stocks, bonds, securities, and business investments. So, they are hardly touched by inflation, while poorer people who have all their cash in the bank will see their effective purchasing power dwindle over the years.
  • Regulation and licensing laws. Regulations make it harder to run a business. They also make the learning curve and required initial investment to start a business MUCH steeper. The people who are already at the top can afford legal experts to parse through all the regulations for them, and can afford to comply with all the licensing laws. But people who are just trying to get started and make something of themselves are hopeless unless they can get free outside assistance to help them navigate the regulatory pitfalls and compliance requirements. Unless you’re very sociable and know the right people, free help is pretty hard to come by. Big businesses actively lobby for strict licensing laws (e.g. medical licensing, food service licensing, distillery licensing, “official” taxi licensing, etc.) because they know it keeps potential small competitors with great ideas out of the game completely. A powerful example of this effect can be seen in the beer market. After prohibition ended, all forms of alcohol production were kept under strict licensing laws, and only 2 or 3 breweries and 1 distillery dominated the entire market for decades. Then, in the 1970’s, brewery licensing laws were repealed (while distillery licensing laws were kept in place) and the craft brewery movement immediately got started. The quality and variety of available beer skyrocket so much that, within a decade, the beer market started to even outcompete the wine market on their own turf (i.e. customers interested in “classy” alcoholic beverages). This is why today, we have tens of thousands of choices in beer whereas in 1970, you had to pick Coors, Miller, or Budweiser. Though, distilleries still suffer under (some of) the old licensing laws, keeping just a few big companies in control of the whole market.
  • Government grants. Government grants sound like a good idea for helping causes you like (e.g. business, science, etc.), but it gives government enormous power to play favorites. The wealthiest districts in the country are those where people are most skilled at winning government grants. If you’re trying to run a business, and you have the best product on the market, but your competitor has a government grant, your competitor will win. And it’s much easier to get a government grant if you’re already wealthy, so the politicians have already heard of you. This process entrenches an economic elite that does little of value, but speaks the language that makes political hearts flutter with excitement. In graduate school PhD programs, they don’t even teach young scientists how to raise private money from willing contributors anymore. They just teach us how to apply for- and win -government grants. Getting government grants is also a lot easier if you live in a state that votes Democrat, simply because Democrats populate most of the government’s executive offices that distribute these grants. Based on what I’ve seen in my own field, you could have a university in Texas that generates more high-quality research than a university in California, both competing for the same grants, and the California university would get >80% of the grant money.

It is a perpetual irony of the political economy that every major problem faced by the lower-class and middle-class is created or worsened by the same people who claim to want to help them. Nobel Laureate Friedrich von Hayek observed this phenomenon in the 1930’s, and published a book in 1944 called The Road to Serfdom, in which he describes how totalitarians successfully subjugate a voting population through a vicious cycle of Observe a Societal Problem -> Implement Government Authority to Fix It -> The Authority Causes More Problems -> Repeat. Voters fall for it every time.

What’s the Point of Insurance if it’s Not Socialism?

This post is derived from a conversation I had on Facebook with a middle-aged Californian.

Q: What’s the point of insurance if you can’t force people to cover treatments they’ll never use (e.g. charging men for women’s birth control pills)?

A: Are you saying that you do not understand the difference between managing risk and redistribution of known costs? I can explain this to you.

Think about how your car insurance works. It insures you against collisions and the associated liability- a situation that has a low chance of occurring, but is associated with high costs. When you pay your premiums, you are buying the mitigation of risk. If you have a 5% chance of incurring $20,000 in damages each year, then your customer group is costing the insurance company an average of $1000/year. So they charge you $1170/year, spending 15% on bureaucratic overhead, and walking away with a 2% profit margin for the service of converting your individual risk into a certain, statistically-weighted charge.

But in situations where the chance of a cost being incurred are either 0% or 100%, it makes no sense to buy insurance. If the chance is 0% (e.g. the chance of a man needing an abortion, or the chance of a woman needing Viagra), then your risk is zero, and the insurance company has nothing to offer you on that plan. If the chance is 100% (or you have control over the event’s occurrence), such as with birth control pills that you know you want, or that vasectomy that a guy chooses to get at a particular time in his life, then the premium cost associated with the service will be the cost of buying it without insurance, plus 15-30% bureaucratic overhead, plus 2-5% profit. In these cases, you already have complete control over the costs, yet you’re paying the insurance company extra to manage no additional risk. Financially, this is not a smart decision.

However, you seem to want people who have zero risk to share your known (100% chance) costs. This is not insurance. This is known as “social ownership” of costs. Social ownership is always advantageous to those who spend more and contribute less, and disadvantageous to those who are more responsible with their cost-management. There are only 3 cases I can think of where this sort of arrangement happens voluntarily for a long term: marriages, corporate ownership, and socialist communes. These arrangements only survive if they are very selective about who is allowed to participate, and have established mechanisms for removing (divorcing) members who take advantage of the contract without contributing much in return. Otherwise, the best members will always leave first, collapsing the arrangement.

When you use government force to mandate social ownership of costs throughout an entire society, that is known as “socialism.” In this case, there is no check on the behavior or character of participants. There is no mechanism for removing bad actors from the arrangement. It’s like being stuck in 300 million bad marriages all at once…unless you’re the one being a bad partner. This system violates the human right of free association, incurs unnecessary bureaucratic overhead costs, reduces productivity, reduces innovation, and ultimately reduces prosperity for everyone involved.

So if you’re seeking social ownership, insurance companies are not the institution you’re looking for. Let insurance companies sell insurance, and get your desire for social ownership fulfilled through family, communes, or (if you think your desired organizational structure is more efficient than existing companies) start a corporation. Don’t try to force insurance companies to be something they’re not, and don’t try to force us all to participate in a social ownership plan that some of us really don’t want to be a part of. Involuntary association of that nature will only make us all poorer.

UPDATE: She responded that I was “mansplaining” to her, and argued that because birth control “is a basic part of health care,” insurance must cover it, completely ignoring my argument. Logic and reason doesn’t get through to these socialist idiots. They only understand the fear of having their own smears turned back against them. So I called her a bigot for trying to use my gender to demagogue me into silence through that misandrist term. That’s when she “lost interest” in the conversation…meaning she no longer had any way to maintain dignity while making her argument. This is just about the best outcome that can be hoped for with people like this- they’ll never admit they’ve lost the debate, but they’ll be too embarrassed to make those arguments in public again.

5 Very Stupid Beliefs About the Hobby Lobby Ruling

1. The Supreme Court doesn’t understand science/economics/women’s needs!

  • NO. That is stupid, and you are stupid for thinking it. The Supreme Court’s job is to interpret law, not write it or make policy. All they have said is that the contraception mandate is not legal because it contradicts the Religious Freedom Restoration Act (RFRA), passed (nearly unanimously) by Congress and signed into law by Bill Clinton. It would be illegal for the Supreme Court to change the law from their bench.

2. Hobby Lobby is denying women birth control!

  • NO. That is stupid, and you are still stupid for thinking these things. All Hobby Lobby has done is stated that they will not pay for 4 kinds of contraception (while happily offering to pay for 16 others). Nobody is stopping you from going to the store and buying that contraception yourself.

3. I have A RIGHT to make others pay for my contraception!

  • NO YOU DON’T. That is stupid, and you are a horrible person for believing that. You don’t have a right to make anyone else pay for ANYTHING for you. Well, unless you’re an infant and you’re asking your parents to take care of you. Are you an infant, and you need breast milk from your Hobby Lobby Mommy? The foundation of civilization is voluntary interactions and transactions. Can you imagine a society where I could come up to you and demand that you buy me a new car, and claim you’re violating my rights if you don’t? Yeah, that’s what you’re doing here. Stop being a greedy asshole trying to take things from others and learn to take care of yourself and interact with others on a voluntary and respectful basis.

4. Hobby Lobby is FORCING their religion on me!

  • NO THEY AREN’T. YOU are in fact trying to force YOUR beliefs on them by FORCING them to buy birth control that violates their religion, and then FORCING them to give it to you. How would you feel if they were forcing you to buy rosary beads and communion wafers and Pope hats and cross-shaped wall-hangings to give to them? Then you would see this for what it is. Don’t you DARE try to tell me “It’s DIFFERENT” when you’re on the other side, you hypocritical weasel.

5. Hobby Lobby still covers Viagra and vasectomies, so they’re DISCRIMINATING!

  • NO THEY AREN’T. I don’t know if there’s a female analogy for Viagra, but the comparable analogy to vasectomies is getting your tubes tied, which Hobby Lobby covers. In fact, Hobby Lobby covers far more contraception options for women than for men. I don’t see them handing out free condoms and spermicide to all the men. HEY OBAMA, WHERE’S MY CONDOM MANDATE!?

8 Ways to Obtain Contraception Without Violating Everyone Else’s Liberty

Here is a non-exhaustive list of the ways contraception can be obtained without violating the rights or liberties of others:

  • Pay for it out of pocket.
  • Split the costs with your significant other.
  • Buy a health insurance policy that voluntarily covers it.
  • If your employee health plan does not cover it, negotiate with your employer for contraception coverage.
  • If your employee health plan does not cover it, negotiate with your employer to be paid in cash, rather than medical benefits, and then use that cash to buy the medical benefits of your choice.
  • If your employer refuses to pay you in cash, campaign to remove the government regulations requiring your employer to pay you in benefits instead of cash.
  • If your employer refuses to pay you in cash, campaign to remove the tax benefits your employer receives for paying you in benefits instead of cash.
  • If your employer continues to refuse to pay you in cash after all government incentives against it have been removed, search for a different employer who respects your personal choice a little more.

And here is a list of the ways to obtain contraception by violating the rights and liberties of everyone else:

  • Campaign to use the force of government with the threat of taxes, prison, or violence, to mandate others to buy you contraception.
  • Steal it, or the money to buy it, with your own hand.

Yes, ladies, this same logic applies to Viagra as well.

Does I.Q. Predict Success?

I came across a forum thread discussing this article, which points out that SAT scores and I.Q. tests are high-resolution, strong predictors for the probability that an individual will patent, publish, and/or earn a doctorate. The article goes on to argue that innate talent is more important than hard work for predicting career success.

I think this conclusion misses some of the selection bias inherent in the SAT. I’ve witnessed friends (who happened to be particularly open about their scores) jump several percentile points year over year by attending SAT classes. Hard work and training can, in fact, drastically change how you measure on the SAT and other I.Q. tests, making them not particularly good at directly measuring innate talent. I think it is more likely that those who have the skills and academic drive necessary for academic success are simply more likely to work hard to improve their SAT scores, since good SAT scores are a gateway to good education and high-skill jobs. In other words, those who focus more on trying to look academically successful will inevitably become more successful in academics. It’s just another way of saying that people tend to get what they strive for.

But that’s not to say that intelligence or other innate talents are irrelevant to success. SAT scores and I.Q. test a very specific skill very effectively: the ability to recognize and evaluate simple patterns very quickly. They do not test other forms of intelligence that are easily recognized as crucial components of genius. These include creative inspiration, the ability to break down complex problems into solvable ones, and the ability to flawlessly follow a long trail of logic to its inevitable conclusion.

Have you ever known someone who always thinks carefully and speaks slowly, yet everything they say is absolutely uniquely brilliant? I know several people like this. Those people would score poorly on IQ tests due to the timing of it, but can out-think even the fastest pattern-solvers if you give them the time for it. They simply devote their mental resources towards quality and reflection rather than speed. Some of these individuals even choose not to pursue academic fields, despite their capabilities, preferring instead to focus on other hobbies, like entrepreneurship, art, or developing some component of their personal lives.

All of these forms of intelligence are necessary in some degree for true genius. Even then, genius alone won’t bring you success without confidence, perseverance, and a sense of purpose. The first step to being successful is figuring out how you, in your own life, would define “success.”

What is Civilization?

What is civilization? What is it that separates humans from the animals, and more civilized humans from the less civilized ones? The artist will tell you that civilization is the capacity to produce art. The scientist will tell you that civilization is a society that can contemplate its own existence. The engineer will tell you that civilization is the ability to build newer and greater technologies that improve the human condition. The businessman will tell you that civilization is the organization of labor to generate products in efficient ways. So who is right? Are any of them actually wrong? Is civilization just a conglomeration of different skills that all happened to be developed in humans, just because we’re smart or special or whatnot?

The property of being civilized doesn’t come from these attributes. Rather, these attributes all come from a root cause- some root “specialness.” So between all of these special abilities, what is the common thread? What do we really mean when we call one person civilized and another uncivilized?

After observing ancient artifacts in the National Palace Museum in Taipei, Taiwan today, it became pretty clear that the beginnings of civilization are recognized in the ability to produce and preserve things that take a great amount of time and effort. Using a stick as a tool to harvest termites is intelligent, but it’s not necessarily civilized. But the technique of identifying specific ores or clays, skillfully shaping them into useful vessels, taking the time to decorate them with designs, and baking them in furnaces specifically designed for that purpose? Now that’s civilization. Making a profession out of cutting elaborate jade idols by rubbing stone down with nothing more than sticks and string? Now that’s civilization. Cultivating farms of wheat or rice to trade for other goods? Now that’s civilization. The common theme here is clearly the organized or systematic production of value using human ingenuity. But why did some societies develop these capacities while others remained less “civilized?” Why did humans develop these capacities while other animals did not? Is it all just chance?

If you spent hours, days, or weeks of your short, neolithic life making a decorated ceramic vessel for storing grain (instead of spending that time seeking more food), and then someone else came along and took it (or smashed it), how likely would you be to make another one? If you spent days designing and building a furnace to cast metals, and then someone else immediately decided they were going to take it over, would you bother trying again, or would you return your focus to day-to-day survival? Without the ability to protect your own creations from destruction or theft, creativity is pretty pointless. We cannot have cultural or technological innovation unless the fruits of those labors are protected for the creator’s use. In other words, property rights are a fundamental component of civilization.

With the protection of property rights, there is a major evolutionary advantage to developing skills besides those necessary for basic survival. You can create tools to make survival easier. You can create decorative objects of great value that you can trade for the means to survive. You can specialize your labor and accumulate property with the certainty that you are not leaving yourself at a disadvantage against those who simply take what they want. When the protection of property rights fails (or never existed) societies fail to develop because there is no evolutionary advantage to creating anything of value. When value is ephemeral, putting time and effort into seeking it will just leave you at a disadvantage in the animalistic struggle for survival. Hence, no species or society that fails to recognize any form of property rights will ever evolve the capacity to develop culture, technology, or infrastructure. Meanwhile, any species or society that simply develops the means to recognize and protect property rights will grow, diversify, innovate, and prosper. The better the protection of property rights, the faster that civilized development will occur.

The earliest form of property rights that humans developed was a very centralized, authoritarian version of it. The leader of the tribe, or clan, or empire decides who gets what, and resolves all property disputes through binding judgements. Rather than engaging in a pure “might makes right” formula, these early civilizations operated by the rules of, “might makes leadership, leadership assigns rights to everyone else.” This certainly wasn’t the pinnacle of civilization, but it does allow for some forms of property rights to be assigned to some classes of people, providing a slight elevation of civilization above the purely animalistic realm. The warlord unifies a large region, preventing (or at least trying to prevent) other warlords from rising up and taking whatever they want. If only one person can steal from you, your property is still safer than when anyone can steal from you. So the artisans are free to practice their crafts in relative safety, offering their products to the warlord in exchange for the means of survival.

Several societies eventually grew tired of living only in service to kings and emperors. Decentralization of control over the arts in Ming Dynasty China led to a massive diversification of styles (in literature, painting, ceramics, etc.), within a larger shift to a prosperous market-based economy. The Magna Carta in 13th century England laid the constitutional foundations for the culturally and economically prolific British Empire. Allowing people other than the central leader to have consistent rights protecting their property allowed many more people to produce creative works without fearing the loss of their labors to the whims of the ruling class. Through market capitalism, artisans could also finance their works without imperial subsidies.

Of course, this protection of property rights was not complete. It took about half a century for a conscious philosophy of individual liberty to be hashed out. Implementation of liberty was attempted through the American Revolution in the 18th century. The spread of property rights to democratic majorities again produced an economic and cultural revolution that reshaped the societal structure of the entire world. Suddenly, diverse products became available to most people, and nearly anyone could become an artisan and express their creativity in exchange for the means of survival. But the democratic system meant to produce this liberty was imperfect, still allowing elected majorities to have the power to infringe on property rights, even continuing the practice of enslaving certain classes of people for decades. The populist philosophies of communism, socialism, and fascism arose, questioning the value of property rights to the lower-skilled classes. These philosophies of majoritarian rule reverted entire countries to the uncivilized practice of predatory survival. This time, however, it was majorities preying on a small number of productive people, rather than the ancient practice of an elite minority leeching off of the labors of the masses. This has inevitably restrained the creative potential inherent to humanity by encouraging survival by dependency, while making it more difficult to navigate the regulations that still control the productive arts.

So this is where we are now. We, as a humans, have not yet progressed to the point of implementing the entirely non-predatory system that would mark a fully-civilized society. But of course, that isn’t for lack of inspiration. Libertarianism is a philosophy which extends property rights to all aspects of human endeavor, and renders them inviolable. Defined in terms that span the history of civilization, Libertarianism is a system where, if you make a bowl, you (not an emperor, not an elite class, not a majority) get to decide what to do with that bowl, but you can’t force someone to do what you want with their own bowl. Implementation of this philosophy globally would complete the transition to civilized coexistence from predatory animalism. But therein lies the challenge. The idea exists, so why has it not yet been implemented?

The entire political history of humanity can be characterized as a gradual progression towards increasing levels of civilization. We, as a species, have made remarkable progress across the millennia. Yet, this progress has been intermittent, inconsistent, and slow. But what has changed about humans that has allowed this progress to occur? From the establishment of non-family governments, to the extension of property rights beyond the ruling family took thousands of years. From the formalization of individual rights to the first explicit attempt at their implementation took hundreds of years. Will the implementation of Libertarianism only take tens of years from the moment it was first fully defined as a philosophy? To reach that level of civilization, do we need to evolve intellectually, culturally, or biologically? Is the fact that I and others are writing pieces like this a hint that we may be on the brink of that transition towards greater civilization?


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