I haven’t found a detailed libertarian analysis of the origin of the 2008 crisis. The answer that state regulation is to blame for everything is clear, but insufficient.

Anonymous question

I will use this question to reflect on something abstract.

Humans have a natural abyss of empathy. Not surprisingly, since we are social animals. Thus, a person usually enjoys doing what they consider to be good, especially if others also agree that it is good. But it is usually sporadic acts of kindness that are pleasant. Out of generosity, a person performs a one-time good deed and departs, pleased with themselves—after all, it is wonderful when it costs you absolutely nothing to make someone else feel good. If the recipient expresses gratitude, it may increase their chances of receiving another good deed in the future, but one should not rely on this too heavily. Once good deeds become a routine, they begin to be perceived as work. And for work, one wants payment.

So, we pulled a person out of a destitute anarcho-commune and were quite satisfied with how wonderfully we organized the expedition. But then it turned out that the person is completely lacking in independence, very capricious, doesn’t know how to work, and dreams only of living on a generous social benefit. We fell into a trap, because we have no desire to continue carrying this burden, yet we can’t exactly throw them out onto the street. They live like a pet, yearning and whining. It’s unpleasant.

Now let’s imagine that we have a large external source of funding for charity. In this case, of course, it would be no problem for us to rent an apartment for the person that satisfies their demanding tastes, give them an undemanding job that they can actually perform—and if they can’t, who cares—or simply provide them with an annuity, and let them live for their own pleasure; why not? And why should we personally bother? We’ll hire a separate social worker to sit on a salary and wipe their nose, while we will only rejoice in how kind we are and how much benefit we have brought. It’s pleasant.

That is how the social state works: you take money from the budget and do good at someone else’s expense, because you are a kind person. And taxpayers are kind people, so why would they refuse to pay social taxes, since they go toward good deeds! And if taxpayers’ money is not enough for all our ambitious social programs, it’s no problem—we can issue government debt bonds, or simply print new money; this is far more humane toward taxpayers than taking more from them than they are used to paying.

Kind government men desperately wanted even a poor person to be able to afford a good home. Therefore, special organizations were created to finance these expenses. And banks were ordered to generously issue mortgage loans to poor people so they could afford a house. The trouble with the social state, however, is that someone else’s money eventually runs out.

How did it happen that the mortgage crisis turned into a global financial one? What can you do, humans are social animals. Papers that were considered ultra-reliable turned out to be junk, and everyone collectively began to look suspiciously at their own portfolios of securities, wondering if it was time to dump the junk before others did it first. The global financial market deflated significantly, meaning those who lost their capital outnumbered those who profited from the crisis.

But who is even interested in that ancient crisis when we are living in the heat of a new one? And this one, too, was caused by kind people who terribly did not want miserable people to die right on the streets from the terrible coronavirus. People were put under house arrest, forcibly stuffed with experimental medicines, had tests shoved in every orifice, streets were sprayed with chemicals, beautiful fluffy minks were destroyed—what wouldn’t one do out of love for humanity at someone else’s expense!

This does not mean that covid does not exist. Poverty also exists. And homeless people exist. But when you try to solve other people’s problems by paying for it out of your own pocket rather than someone else’s, you will have much more balanced priorities regarding how much to spend and on what exactly. And that means that your kindness, at least, will not cause global crises.

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