Transaction security is easy and without power control!

Voluntarist, Bitarch

We have already considered the topic of transaction insurance once before. This method is perfectly applicable to the issue of guaranteeing transaction security and compensating for damages in the event of a breach of agreement by one of the parties. The need to resort to violence and forceful measures of coercion is thus eliminated, meaning this concept is fully implementable in the absence of a state monopoly on law enforcement, and indeed in the absence of any police or security agencies whatsoever. Furthermore, it is compatible with the concept of reputational institutions, which creates additional scenarios for its application. Even now, it is actively used in large transactions and in the lending sector. However, doubts are sometimes expressed regarding its applicability in small, everyday transactions.

The way accident insurance currently works can help us dispel these doubts. You have surely been in a situation where, when buying a ticket for a bus, train, or plane, you were offered insurance. Insurance is also offered when renting transport via a mobile application, even if it is just a bicycle or a scooter. Usually, the cost of such insurance is only a few dozen rubles, yet the compensation in the event of an insured loss reaches tens and hundreds of thousands.

See how easy it is? For a provider of risky services, there is no difficulty in concluding a contract with an insurance company and adding the option for their customers to take out accident insurance. This is even profitable for them, as they can receive additional profit from the insurance company for implementing its services. And in the case of transport rental, this matter is simplified to the press of a single button in a mobile application. Since this type of insurance is so easily implemented, there is no problem in making transaction insurance simple as well.

The parties sign a contract, after which it is uploaded to the insurance company’s application (or perhaps concluded directly within it). Then the application calculates the insurance premium rate and the participants of the contract pay it. That’s it. If one of the parties eventually breaches the agreement and the other party provides the insurance company with evidence of the breach, they will be entitled to an insurance payout, which should be sufficient to cover the damage caused. The party that breached the agreement, of course, will not go unpunished if reputational institutions are used alongside this. They will simply be placed on blacklists until they admit guilt and cooperate.

Even in the case of the most ordinary purchases, this concept is also applicable. At a self-checkout terminal, by pressing the corresponding button, or by asking the salesperson, one could also take out insurance. If the product turns out to be unsuitable, defective, or even worse, causes harm to the buyer, and the seller denies their guilt, there would be an opportunity to compensate for the damage through this insurance (and the seller, of course, would suffer reputational punishment). To attract buyers, sellers could add the insurance function and openly publish data on which insurance companies they work with. And those sellers who are unwilling to insure their sales can simply be bypassed by buyers as unsafe agents.

Some might criticize this idea by pointing out that buyers would now have to pay more for goods, and in general, all transactions would become more expensive. However, this is exactly what is happening right now. Due to VAT, excise duties, customs duties, licenses, and the tax burden on entrepreneurs, more than half of the cost of goods already consists of contributions to the state, including for the maintenance of a giant, organizationally extremely inefficient state judicial and police system. Transaction insurance, on the other hand, is a cheaper and more effective solution. Sometimes insurance premiums, where they are currently applied, amount to less than one percent of the transaction amount or the potential insurance payout. Thus, it is a much better solution than state bureaucracy and forceful control paid for by taxes.

New video from Libertarian Band – about education

The Libertarian Band team has released another video — about private education.

The video is well-made, even a bit pedantic: featuring a historical overview, a demonstration of the state’s lack of involvement in the emergence of most educational practices, and a list of key ideas for removing the state from this sphere.

I’ll throw in a few more links regarding ideas on how to organize this very education. David Friedman on the reform of schools, universities, and on unschooling.

And tomorrow, we move from theoretical reflections on private education to practice. The readings of Adam Smith are a bit late this year, and they didn’t surprise us with anything on Guy Fawkes Day, but they will take place tomorrow after all (without Shulmann, as you might imagine!). I’m really counting on a proper broadcast on YouTube; in that case, I will likely provide prompt commentary on what’s happening on my Twitter, and then post my summary impressions to my other channels.

Democracy and liberalism will not limit a stationary bandit in violence

When discussing the issue of state violence and the restriction of freedom, one sometimes encounters the argument that this is not such a big problem, since in the modern world of democracies and liberalism, most states are limited in their ability to use force and violate the freedom of their citizens, and in this, they cannot cross a certain line. But in reality, no institutional factors prevent even the most democratic and liberal states from turning into brutal dictatorships. As long as they are stationary bandits and can “legitimately” use the instrument of violence, as long as they have agents capable of committing violent acts, and ordinary people have neither the right nor the possibility to resist violence, a tightening of social orders can be fully expected, provided there is only a pretext for it.

And recently, such a pretext appeared – the coronavirus pandemic. Of course, the pandemic must be fought, but the primary method chosen for this by many states was precisely violence and the forced restriction of freedoms. Moreover, there was no sense in such harsh measures, based on research on the effectiveness of different measures in the fight against the pandemic; also, using the example of Sweden, which has already returned to pre-COVID life, I showed how informing and encouraging less risky behavior ultimately yield better results than strict control and bans. Forceful coercion is a less effective tool in implementing any measures, unless coercion and the restriction of freedom is the goal in itself.

Before continuing the topic of COVID measures, I would like to recall one example of how states effectively destroyed the freedom of movement around the world by introducing passport and visa control. The pretext for this was the First and Second World Wars, during which states needed to control the movement of people. Was the control lifted after the wars ended, i.e., after the pretext for it disappeared? It was not! States took the opportunity to forever make any movement of people beyond the borders of their own “pens” strictly controlled.

During the coronavirus pandemic, borders turned out to be completely closed, but the essence of the matter is not only in that. In many countries, people were literally locked in their homes, deprived of work, and their movements were monitored, for example, using COVID apps. Now, a telling example of the implementation of such a policy is Australia, where people deprived of freedom literally have to fight with police, their movements are tracked by the state via a smartphone app, and violators of COVID norms face imprisonment and fines. Also, in many countries, police can easily beat and detain you, for example, for the lack of a mask or a vaccination passport (I am attaching a recent case from France to the post). This is also true for Russia, where police have already beaten and brutally detained people without masks many times.

Now I want to ask one question: is it possible to believe that after the pandemic ends, states will truly lift all restrictive measures and return to people the same freedom they had before? As far as I am concerned, relying on this would be great naivety. Of course, some freedoms will be returned, but at the same time, states will most likely retain some of the control. It is unlikely to be like in Sweden, where all COVID measures except for border ones have already been lifted, since this country did not rely on harsh coercive measures from the start. By the way, borders after the pandemic may also remain more controlled than before it, and it is quite likely that in this case, even Sweden will no longer be an exception. In general, one should not rely on the idea that for some miraculous reason states will not punish their citizens with police force, deprive them of freedom, and strictly control them simply because they are developed democracies. The question is not so much about political and social institutions as it is about the willingness and ability to commit violence.

QR codes

I have now distanced myself quite a bit from the current Russian agenda, which is why I hardly ever speak on this topic. However, the Global civil war between supporters of the unlimited expansion of the state and supporters of its limitation affects even little Montenegro, so it is worth dedicating at least one post to this.

Statists use a specific vulnerability of economic theory to political pressure—externalities—to attack personal freedom. Anyone can become a carrier of a virus and infect others, meaning that by their very presence, they potentially represent a significant negative externality for those around them. And while attempts to restrict human freedom under the pretext that people breathe and emit terrible carbon dioxide, which will soon boil the Earth, meet with serious misunderstanding, it turned out to be noticeably easier to frighten people with a deadly and immediate danger, rather than one decades away.

In Montenegro, society is holding its defense quite steadfastly. It is helped by serious disagreements between the president and the prime minister, which prevent truly unpopular decisions from being made. But it is hindered by pressure from the European Union, on which loans and the flow of tourists bringing money into the country depend. Therefore, the state advances very cautiously and immediately takes a step back upon encountering serious resistance. This provides the EU with the necessary image: that we tried, but these obscurantists started blocking roads, and we had to find a compromise. For example, in the autumn there was an attempt to gradually make entry to large supermarkets available only by certificate, but after a couple of weeks, all restrictions were cancelled. Closer to winter, they promised to require certificates for entry to Christmas markets, but a couple of weeks later, they conversely announced relaxations: practically all restrictions are lifted during the Christmas holidays, celebrate to your heart’s content. Naturally, society has to fight for every relaxation through street actions.

In Russia, everything is much worse. Society was almost completely paved over last winter; no one is surprised by imprisonments for single-person pickets, social media posts, and other arbitrariness, about which most of my readers have a much more direct understanding, so I will not dwell on it. However, it seems that the attempt, at the end of the second year of the war for public health, to introduce a permit system for movement has nonetheless encountered fairly widespread grassroots resistance.

The Libertarian Party of Russia (the one of the two that the state seemingly hasn’t completely crushed) has announced the launch of a public campaign against QR-codification. I have read the list of proposals, and they look reasonably sound. As is usual in the RF, the level of support for an initiative is determined primarily by the number of signatures on change.org, so the first thing to do is go there and sign, and then figure out how else the campaign can be helped.

And, of course, we welcome everyone who cannot bear this entire frontline atmosphere to cozy, damp, and rainy Montenegro. At least the borders are still open.

Critique of the Libertarian Movement from the Right

Instead of a regular question, I received a rather detailed discourse, apparently with a suggestion to comment on it in some way.

If you are truly a libertarian or an anarcho-capitalist, then you must abandon the progressive “Overton window,” after which anarcho-capitalism becomes feudalism, and you become a reactionary. If we truly had anarcho-capitalism, we would have the death penalty for most crimes typical of the lower class, as well as serfdom or slavery for vagrants and the able-bodied poor, the death penalty for everything, the abolition of voting, at least for the poor and the stupid, serfdom or some similar way to disable people who are not inclined to work.

Most “libertarians,” since libertarianism is close to being illegal, have abandoned libertarianism. Now it is a completely dead doctrine. The great flaw of progressive “libertarianism” is egalitarianism. People are not equal, groups are not equal, reproductive roles are not equal.

Higher people should rule lower people; otherwise, lower people will create problems for each other and for their betters. The best people need to be freer. Lower people cannot handle freedom; they need supervision, discipline, and control. Lower people should be significantly less free. In order for people to have a reason for savings and investments, those who save and invest must possess greater political power compared to those who do not. Children need fathers. For children to have fathers, fathers must have power over their families. For the economy to function, property must be secure. For property to be secure, those who have it must have political power over those who do not.

The Enemy

I would say that some of the theses in this pamphlet coincide with the theses of Moscow republicanism according to Belkovich: people are not equal, the best people should have political power, and so on. But here the position is presented even more exaggeratedly.

I cannot say that the described society is unviable. What is described here is a very ordinary urban aristocratic republic, which existed in various forms from antiquity to the modern era. Such a society is sufficiently stable and historically died, if not from external conquest, then from the degeneration of the aristocracy. What can be done; political power is a poisoned fruit—you may pluck it to preserve your property, but you quickly discover that power is perfectly suited for preventing your competitors from getting rich, and even better, for plundering those under your control. The aristocratic little world closes in on itself, and in the best case, after a few generations, it finds itself tedious to everyone and needed by no one.

Is it possible in the modern world to maintain a society culturally similar to the one described, but without political power? This seems doubtful to me. At the very least, families relying on the dominance of the father of the house are struggling to survive in a world where there are many well-paid labor vacancies for women. On the other hand, if no one has political power (that is, the right to seize someone else’s property under the pretext of implementing socially important projects), then property ends up being relatively secure, and that is exactly what you need.

And what about the numerous rabble—lazy, unable to handle responsibility, living for the day? Let them hang out. At the current level of labor productivity, they will be quite able to afford working to a minimum, without straining themselves much, and it will be enough for them to live. Why worry about these downshifters? They won’t be able to cheat anyone or overthrow anyone. Well, they’ll quietly die from an overdose at fifty—why should you care? For a person without savings, it won’t be such a bad way out.

In short, in order to recreate the society you dream of for yourselves, you no longer need to harshly pressure the mindless mass, and they won’t pressure you either. You can breathe a sigh of relief.

So why on earth do you need these guys as serfs?

Eric Mack. Libertarianism. Translation of the chapter on Loren Lomasky.

I am continuing to translate the bonus section of Eric Mack’s book Libertarianism. It contains a selection of views from relatively obscure contemporary theorists who are developing libertarian ideology in directions they find most convenient. The second bonus chapter refers to Loren Lomski’s essay People, Rights, and the Moral Community, and primarily describes exactly which rights and for exactly what reason people would find it appropriate to waive in the interests of others.

In his reasoning, Lomski introduces the curious concept of personal projects—essentially, certain strategic goals that largely define each person’s personality and that somehow connect people with one another. Everyone knows that another person also has a personal project, and this means that they can be given a small amount of respect for it, expressed at minimum as non-interference, and at best, as unburdening assistance.

I would say that these arguments are far more appealing than those of Steiner in the previous chapter, and I am glad that something useful can actually be gleaned from the book being translated, although, of course, the concentration of useful ideas is incomparable to that of Friedman in The Machinery of Freedom, it seems to me.

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The Stanford Prison Experiment – can a person become cruel if their social role requires it?

Voluntarist, Bitarch

Continuing the theme of experiments that allegedly demonstrate the violent nature of humans and their willingness to cause pain and harm to others if circumstances demand it, it is worth considering the Stanford Prison Experiment. This experiment is as well-known as the Milgram experiment we considered earlier. Its published data suggest a willingness of the majority of people to inflict pain on others on the orders of an authority figure. However, as an analysis of unpublished data showed, 56% of participants stopped as soon as they felt the victim was actually experiencing pain, and 72% of those who continued to participate did so because they did not believe in the authenticity of the experiment and the reality of the pain caused to the victim (and indeed there was no pain, only acting). But while in the case of the Milgram experiment the issue was merely about unpublished data, the Stanford Prison Experiment turned out to be completely baseless.

The participants of the experiment were divided into two categories—guards and prisoners—who lived in a simulated prison. All participants were expected to play their respective roles. But, as published data suggest, the experiment soon became truly dangerous. The guards began to cruelly abuse the prisoners, and a third of them displayed sadistic tendencies. Two prisoners were even excluded from the experiment due to the psychological trauma they suffered, and the experiment itself was stopped prematurely for ethical reasons. For nearly 50 years, many believed in the reality of these results and their corresponding conclusions. However, a series of pieces of evidence has recently been revealed that completely refutes this experiment. We will now consider some of them.

First, as the experiment’s organizer Philip Zimbardo assured, the participants were free in their actions, and those playing the role of guards received no prior training. In reality, however, the guards were aware of the expected results of the experiment; they were given clear instructions on how to act in various situations, and efforts were made to instill in them the belief that they were assistants to the experimenters in this study.

Second, and very importantly, the participants understood the requirements of the experiment in advance and corresponded to them. As Zimbardo claimed, the requirements for participation were minimal. However, almost all potential participants understood, for example, that guards were required to be despotic, hostile, and aggressive. This led to the assumption that participants, due to a clear understanding of their role, may have played it to the fullest extent in order to ensure the success of the experiment. In fact, after some time, they stated that they were only playing a role. They also always understood that they were participants in an experiment, that they were being observed, and that none of it was real.

I would like to draw attention to one more point. Such an understanding of the upcoming role could have influenced the selection of participants in favor of those with tendencies toward more cruel behavior, since that was exactly the behavior required. And can an experiment for which more cruel people may have been selected say anything about the cruelty of the average person?

There are many other facts that cast doubt on the experiment. It is worth remembering the participants who had to leave it due to psychological trauma. One of them later admitted that he only simulated a psychosis because he did not like the experiment and wanted to leave as quickly as possible. The unrealistic nature of the experimental conditions should also be understood. And finally, the researchers did not provide all the data—out of 150 hours of the experiment, only 15% were recorded (6 hours of video and 15 hours of audio). Very little personal data was collected from the participants, which could have influenced the course of the experiment.

Sources:

  1. Thibault Le Texier (2019). Debunking the Stanford Prison Experiment;
  2. Ben Blum (2018). The Lifespan of a Lie.

The 2008 Crisis: Now a Direct Answer to Yesterday’s Question

Yesterday, responding to a question about the libertarian interpretation of the 2008 crisis, I used the question more as an opportunity to talk about my own topic. This left some commenters bewildered, especially given that the corresponding disclaimer did not fit within the limits of the Telegram post and is only found in the full version of the post on the website.

Fortunately, in the Facebook comments, Valery Kizilov provided a link to his own article from 2008, written in the immediate aftermath of that crisis, where he explains the Austrian theory of the business cycle very clearly and concisely. He also recommends a book for a more extensive study of the topic, where everything is explained in much more detail: Jeffrey Friedman, Vladimir Kraus. Man-Made Financial Crisis: Systemic Risk and the Failure of Regulation. M., IRISEN, 2012.

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.

Harsh coercive measures have failed again

Voluntarist, Bitarch

Considering the concept of harm reduction, I have already shown why the best result is achieved not through prohibition and accusation, but through awareness and attempts to encourage a person toward less risky behavior. For example, the needle exchange program during the AIDS crisis in the 80s, which allowed drug users to take fewer risks by using fresh syringes instead of the same ones repeatedly and sharing them among several people, proved to be much more effective than strict prohibitions. Program participants began to use drugs less frequently, their health improved, and many of them eventually voluntarily sought help for addiction treatment.

Similarly, awareness and encouraging people toward less risky behavior could have been used instead of harsh coercive measures in the fight against coronavirus. Unfortunately, most governments chose the second method. However, it is good that not all of them decided to resort to force and strict prohibitions, so we can easily compare the results of these approaches. Research on the impact of strict measures, light measures, and all measures combined on the growth of infections has already long shown that both types of measures produce approximately the same effect. This means that the introduction of harsh coercive measures is unnecessary, or even harmful, given their consequences for social and economic life.

Sweden is a good example. From the very beginning of the pandemic, it refused to introduce harsh and coercive measures within its country; even the wearing of masks, which was mandatory almost worldwide, remained only recommendatory in Sweden. Initially, the number of infections and deaths greatly exceeded the corresponding figures in other countries (though in reality, this was not the case in all instances; for example, they were quite comparable to the figures in France). However, it was already clear then that compared to other countries, Sweden’s economy would suffer less and recover faster after the pandemic. And importantly, the last wave of the pandemic, which put many countries in a critical position, had almost no impact on Sweden. By the way, the inspiration for writing this post was the comparison between the situation in Israel, where people are already being given a third dose of the vaccine, where covid passports are being actively implemented, and where there were multiple lockdowns, and Sweden, where there is and was nothing of the sort. At the same time, in both countries, the vaccination level for the first and second doses is approximately the same, but the situation is fundamentally different.

Slightly stricter measures were introduced in other Scandinavian countries—Denmark and Norway. The governments of these countries, of course, called these measures extremely harsh, but if compared to measures in other countries, they also seem quite mild. It is also worth mentioning an experiment conducted in Norway. Fitness clubs were considered breeding grounds for coronavirus, so they were closed at first. Later, 5 clubs were opened, allowing half of their clients to attend classes and the other half not to. As a result, over two weeks of observation, only one case of illness was registered, although it was in the group attending fitness clubs, but the infected person had not even managed to reach the sports facility. Also, the director of the Norwegian Institute of Public Health claims that the country could have gotten by without quarantine and achieved the same results. In general, Denmark, Norway, and Sweden have already lifted all restrictive measures (except for border controls) and were the first in Europe to return to the life they had before the pandemic. Other countries are still very far from this.

Thus, we are once again convinced that awareness and encouragement of less risky behavior can achieve at least the same, if not more, than strict prohibitions, control, and force. And in general, a huge price will have to be paid for harsh measures in any case. So what is the point if, in the end, they cause more harm than good?