Тег: Government

Why is the Indonesian state company Temasek so successful if state management is inefficient?

анонимный вопрос

As far as I can tell, this most likely refers to the Singaporean company Temasek Holdings. As we all know from the blockbuster about Putin’s palace, the funds for its construction were initially accumulated from kickbacks on the supply of medical equipment to budget institutions under the pretext of creating a sovereign wealth fund. Given that during Putin’s first term, the concept of authoritarian modernization and, specifically, Singapore, was constantly looming in public discourse, it can be assumed that there was a desire to create something like Temasek.

Essentially, we are dealing with an interesting way of increasing a country’s investment attractiveness: instead of maintaining high taxes, state corporations are formed, whose official task is to bring profit to the budget. The more profit from state corporations, the less the need for taxes. As a result, a country like Saudi Arabia, thanks to revenues from the state oil industry, could allow its few citizens to live in practically a tax-free state.

State corporations can also be used to develop infrastructure or, for example, for geopolitical goals. This is also a powerful tool, but as soon as other considerations begin to prevail over economic ones, the income from such corporations naturally declines. The infrastructure being built may turn out to be unwanted, and geopolitical efforts can just as easily end in failure. So, adopting some Chinese experience is a dangerous game for a state.

But, as far as I can tell, in Singapore, the state holding simply invests in attractive assets around the world; that is, the state consciously imposed self-restrictions, allocated a package of state ownership for use strictly for commercial purposes, and has consistently adhered to this tactic.

Of course, the greatest danger for the citizens of a state who expect to be the beneficiaries of a state corporation is that the company’s managers have their own opinion on “benefit,” and they start plundering the company. That is why Lee Kuan Yew first very harshly suppressed corruption, then spent several more years diligently weeding that garden, and only then created the investment company in 1974.

I took a look at the company’s financial indicators. Over the last ten years, the company’s portfolio has grown by 70%. Thus, it can be stated that if you do not set unnatural goals for an investment company, punish corruption mercilessly, and implement all the advanced reporting and management practices developed in the market, there is a chance that the company will indeed operate like a market entity and with fully comparable indicators. Well, yes, authoritarian modernization is indeed possible, and state institutions are indeed capable of following written rules for some time under strict control. Nevertheless, I wish for the Singaporeans to privatize this company, reducing government spending by the amount of lost budget revenues—and divide the one-time profit from privatization equally among the citizens. They’ve played around—enough is enough; you cannot win at the casino indefinitely. Then, each citizen can decide for themselves whether to use the proceeds to buy shares in Temasek Holdings or something else.

The stylistics of 2021 differ noticeably from 2020: people look back at the rules less and less

As time goes on, I am more and more surprised that there are still people convinced that the state benefits citizens by creating norms, thereby increasing the predictability of life. But if there is anything one can be sure of, it is that the state constantly violates its own norms, and from time to time changes them to legalize these violations. The game can also be played in reverse: if people massively and consciously violate a norm, it will eventually be softened or abolished—but until then, it will ruin the lives of a vast number of people, and when the norm changes, they won’t even bother to offer a fleeting apology.

You are constantly constrained by absurd, impossible norms handed down from above, and you either tolerate it or fight it (the latter is called “engaging in politics”). If you fight, the norms constrain you even further. It doesn’t matter whether you are a cog in the state machine or a completely private individual: there will be absurd norms for everyone. Simply depending on your weight in the class hierarchy, you will have to exert different efforts to evade the execution of some inconvenient norm with impunity or to get it abolished.

Today, the most convenient way for the state to introduce arbitrary restrictions is, of course, covid. Any business can be closed, any offline activity banned, arbitrary expenses can be imposed on people, or passport control, detention centers, and courts can even be merged into one. Millions bear the costs of covid itself; billions bear the costs of covid-related bans. But the suffering of billions in no way helps to save millions; they simply suffer along for the ride.

You have read three paragraphs of whining, which means that the situation with Navalny has left me stunned. I need to at least outline an answer to the question “what to do.” Navalny claims that taking to the streets works best. And how does it work? You go out. You get beaten. You go out. You are fined. You go out. You are imprisoned. Everyone around discusses the failure of the protest. The country becomes a pariah, the economy crashes, and those who are beaten, fined, and imprisoned become poor even faster. This goes on for about twenty years, then a miracle happens, and the regime becomes loose enough to collapse. By this time, only the most inert and incompetent remain in the country, while the clever ones have long since settled abroad.

Of course, any oppositionist would prefer everything to be resolved more quickly. A peaceful rally suddenly turns unpeaceful, the National Guard is driven from the squares, the order to bring in tanks is sabotaged, and suddenly the Prime Minister announces that the President has passed away suddenly and invites the opposition to jointly form a government of national reconciliation. But for now, it is not customary to call for such a thing aloud: the level of bitterness is insufficient. For us, a refusal to authorize a rally is still considered a valid reason to cancel it.

If you count on changing the situation in the country through rallies, at least expand the circle of protesters. Is the person already a regular? Leave them alone, look for a newcomer. It is pleasant to see familiar faces in the crowd, but it is far more useful to see new ones. If authorization was denied due to covid, that is a reason to rally not only for that but also for the abolition of covid restrictions. But it is better, of course, to fundamentally not notify the authorities of the intention to take to the streets. Let them monitor social networks instead of hoping that everything will be told to them voluntarily.

And, of course, if you intend to become regulars at protest actions, you will have to get rid of real estate, cars, and bank accounts—everything that can be seized for refusing to pay a fine. Or do you intend to pay the fines? Really? Do you want to overthrow the regime or feed it? In a while, they will start trying to fire protesters on a mass scale. This is a reason to get ahead of the game by asking employers to fire you and hire you in the same position under the table.

You can do none of this, of course, and just quietly grumble and keep a low profile. Then the inertial scenario described in the paragraph about twenty years will work.

I make a poor politician; I have never known how to motivate people to perform heroic deeds…

When the legal is illegal, it’s better to look to the shadows

The state wins, anarchism does too

The Anarchy+ channel, from which I continue to draw ideas from time to time, demonstrated a creative application of game theory to the anti-statist movement. As I have mentioned repeatedly, game theory is used not for proofs, but merely as a tool to illustrate the logic of one’s reasoning.

The reasoning there is roughly as follows. We are constantly presented with someone like Mad Max as an example of anarchy, and we get angry and try to show that we are “white and fluffy” and want something entirely different. The proposed model breaks down the outcomes of the war between anarchists and the state into a simple matrix, where our desired state of anarchy is the outcome “anarchism won, the state lost,” and the amorphousness we are warned about is the outcome “the state lost, anarchism lost as well.”

At the end, the article leaves a question hanging regarding what to put in the “state won, anarchists also won” square. If the state is defined as a system of centralized coercion and anarchism as a system of distributed deterrence, the author interprets the win-win situation as unattainable.

Of course, panarchists respond to this: nothing of the sort. Federalization, the transition to a system of extraterritorial contractual jurisdictions or functional overlapping competing jurisdictions, is precisely what the sought-after win-win means. The state wins because it is preserved as a system of centralized coercion, while its legitimacy increases sharply. Anarchism wins because the state is decentralized, the influence of citizens on politics is strengthened due to the drastic simplification of changing jurisdictions, and the state’s susceptibility to systems of distributed deterrence also increases.

Nonviolent State. A new video from Libertarian Band.

The team I previously had the honor of representing has released their latest video, partially based on my script, which in turn was based on Bitarch’s article of the same name. On boosty, I posted a whole series of iterations showing how the script evolved. The next video is already terra incognita; my work is not involved there, and I am curious to see what they come up with. If it turns out well, who knows, perhaps I will be able to hand over my main text channel to someone over time.

Readers are wondering why Bitarch’s share on my channel has grown so sharply. It’s quite simple: he purchased a subscription for such publications for 5,000 rubles per month. These terms turned out to be more convenient for me than pondering every time whether or not to post a particular piece of material he suggested for free. Similarly, I guaranteed to answer questions accompanied by donations, while all others will be answered as I can.

By the way, speaking of questions. I want to test a certain model. I have created a separate subscription level on boosty for 50 rubles a month. Subscribers will see all the questions I receive and will be able to mark in the comments which ones they would be interested in seeing answered. In this way, even if a question was not accompanied by a donation, a paid subscriber can promote it (Of course, subscribers of more expensive plans will also have this capability). As we know from economic theory, it is through the pricing structure that real human needs are determined. Let’s see how this works in our case.

I would like to find out about the foreign policy of an anarcho-capitalist society. I have read The Mechanics of Liberty, but I still didn’t understand it well enough.

анонимный вопрос

Friedman devoted two chapters of The Machinery of Freedom to the problem of territorial defense against an aggressor of the “nation-state” type, with an interval of forty years between them. In the first part, he estimated the chances of an anarcho-USA fending off nuclear aggression from the Soviet Union and concluded that for the sake of defense against such a serious aggressor, he was willing to accept the existence of a state. In the second part, once the USSR was reliably dead, he breathed a sigh of relief and began to fantasize about how territorial defense is ensured without a state.

In my view, Friedman pays excessively much attention to the territorial aspect of the problem. For example, when he dismisses the model of financing defense through insurance, he puts the cart before the horse and assumes that clients will be tried to be sold “national defense” specifically (and that they will hope to save money, counting on their neighbor buying it). But the client does not need national defense. They need assurance that if an insured event occurs personally to them, they will receive the money. Whether they are on territory near where they bought the policy or on the other side of the planet is unimportant to them. And exactly what means the company uses to reduce its own risks of having to pay out insurance does not concern them either, as long as the company does not commit fraud.

Thus, if the organization of territorial defense truly reduces the chances of an attack by an external “state”-type aggressor, insurance companies are capable of calculating how much to invest in it to keep it profitable, and how to interact with other insurance companies to share the costs, for example, proportionally to the client base.

Friedman also presents an interesting thesis that the absence of a single jurisdiction over a certain territory is not in itself a guarantee against an aggressor’s claims. And when a conditional USSR arrives in a region where ancap reigns, it is sufficient for them to smash one city with a nuclear bomb and declare something like: look, see, Alderaan was here, it is no more. If the residents of Yavin do not wish the same fate, they owe five hundred million credits by the day after tomorrow, and we don’t care that they have neither a single administration nor taxation; if they want to live, they’ll figure it out somehow.

Effectively, he suggests that when it is too costly for a stationary bandit to expand its territory, it retains the option to act toward that territory as a nomadic bandit. Further, as you understand, everything depends on how coordinated the response will be. If a community is capable of reaching a level of coordination sufficient to pay a large tribute, it is reasonable to assume that further resistance will be coordinated at a level at least no less. This means that the second Death Star will indeed be destroyed without firing a single shot, unlike the first, which managed three.

At the same time, let us note that it is the free market that contributes to the fastest scientific and technical progress. And if, at the initial stage of ancap, states will still be able to oppose network market structures due to the difference in scale, then by the end of the transition period, the technological backwardness of states will become too obvious, and they will have to focus rather on holding onto the remnants of power over their own subjects.

Perhaps by ancap’s foreign policy you did not mean defense. But since for ancap the state is nothing more than a bandit, relations with a bandit amount to nothing more than deterring it from banditry directed at oneself, and other diplomacy is reduced precisely to this aspect. Visa regimes? That is about ensuring the bandit does not attack travelers. Customs regimes? That is about ensuring the bandit does not rob caravans. Regulatory regimes? That is about ensuring the bandit does not interfere with contracts. All these negotiations will come down to the interested party spending money on a payoff. As long as this money is less than the money required to eliminate the bandit, the latter will have a chance to survive.

Can you fix what wasn’t broken?

I read Vladimir Zolotorev’s book Can something that wasn’t broken be fixed? In it, Vladimir develops his cycle of previously published articles on the nature of the state, shows that it works perfectly in its normal mode, performing exactly what it was created for, and reflects on realistic options for its reduction or abolition.

In effect, he has created something like Rothbard’s For a New Liberty, but using a different conceptual apparatus: Rothbard analyzed the state primarily from legal positions, while Zolotorev does so from the perspective of praxeology, spontaneous orders, and social evolution.

A fairly large section of the book is devoted to explaining how society works (one might not even need to add the adjective “stateless” to it, because that is its natural state; rather, for the current state of affairs, it would be more appropriate to speak of “society with a state”).

The last part of the book presents considerations on the abolition of the state. The key to this is to stop viewing the state as an organization. From this, it becomes clear why political methods of fighting the state do not yield results under normal conditions; rather, they strengthen it, making it more efficient. Ridance of the state in its modern form lies more in the sphere of losing social consent for legalized robbery. At this moment, power is lost, and the state disappears de facto.

Next, a small window of opportunity opens for political methods that allow for the reformatting of the political process itself. This can be done in two directions.

First, the subject of political bargaining can be shifted from budget expenditures to budget collections, that is, turning taxes into fees. Alexander Rozov writes extensively about this in a colorful fictional form in his Meganesian cycle.

Second, the state can be turned into a joint-stock company, not in a figurative, but in a literal sense. Subsequently, the management of this newly formed JSC will optimize the company’s structure within a market paradigm and will join the ranks of all other existing corporations in the world.

All the material and specific recipes are given using the example of Ukraine, so the book should not be perceived as a completely literal manual for action in Russian realities, but it is still more relevant material than recipes based on American material.

Zolotorev’s work was released as part of a collection of works by three different authors. I am posting it in full, but if someone extracts only Zolotorev’s part from the general PDF and translates it, for example, into epub, I would be very grateful, as it would be more convenient to read.

Overproduction of money as the cause of “overproduction crises”

In your note on the Keynesians’ arguments, it says:

In general, the model turns out to be completely counterintuitive: the crisis is caused by the overproduction of goods (according to ABCT it is caused by the overproduction of money, and when there are many goods, that’s actually great, which completely corresponds to the worldview of any ordinary person)

But the gold standard in the USA was abolished only after the main crisis, in 1933. Does this mean that “overproduction of money” could not have been its cause and the Keynesians are right?

Solo 322 (question accompanied by a donation of 322.8 rubles)

To understand the causes of the Great Depression in detail, it makes sense to read Rothbard’s book America’s Great Depression. But that’s 560 pages, and I personally haven’t gotten around to it yet. So my ideas are based mainly on a much shorter essay by Pavel Usanov, The Great Depression and the New Deal – Lessons for Modernity. It’s only 44 pages, including all appendices and the bibliography; anyone can handle that volume.

For instance, it is stated there that in 1926 Keynes wrote that thanks to the Fed’s activities, there would be no more crises (this prediction would later be broadcast by mainstream economists after every major crisis, specifically citing the fact that the Fed has now learned how to deal with them). Hayek in 1927 and Mises in 1929, on the contrary, predicted a crisis, based precisely on the Austrian Theory of the Business Cycle, according to which the cause of such crises is the credit expansion of central banks.

Between 1921 and 1929, the money supply in the USA grew from $45.3 billion to $73.3 billion. This was achieved by lowering the Fed’s discount rate, based on roughly the same fractional reserve mechanisms as today. The inflated financial bubble burst in 1929. Something quite similar happened in 1921, when the stock market crash was fully comparable and was caused by the same reasons—the inflation of the money supply during World War I. But then the Harding administration ignored the crisis, and it resolved itself literally within a year. In 1929, the Hoover administration began fighting the crisis through price regulation, injecting liquidity into bankrupt banks, a public works program, and then introducing protectionist tariffs. As a result, the depression truly became Great.

Roosevelt, who came to power under slogans of deregulation and reduction of government spending, on the contrary, only intensified this policy, which later became known as the New Deal. As a result, the Great Depression lasted until the end of World War II, when Roosevelt finally passed away, and a considerable part of his regulatory measures were repealed, while simultaneously enshrining in the Twenty-second Amendment to the Constitution the prohibition of one person holding the presidential post for more than two terms. As an example, I’ll give just a couple of figures: the share of government spending decreased from 44% of GDP in 1944 to 8.9% in 1947—of course economic growth would happen with such a reduction in government appetites!

Now, what happened in 1933, and what abolition of the gold standard are we talking about? We are talking about the confiscation of gold from citizens and declaring settlements in gold illegal within the country. In international trade, gold retained its significance, and the price of gold in dollars was fixed by the government; that is, the gold standard was preserved, but in a very distorted form: there are pieces of paper, it is stated that they are worth so much gold, they must be trusted like gold, but you cannot get gold for them. When the gold standard was finally abolished in the seventies, gold became an ordinary commodity with a floating price.

Roosevelt’s confiscation of gold was not the cause of the growth of the money supply, but rather its consequence. At that time, the government had gold worth approximately $4 billion, while the demands for exchanging dollars for gold totaled $25 billion. To avoid offending anyone, the government refused to satisfy the demands of everyone)))

Making depression great

Is tax-free minarchism possible, where the state earns only from government services?

Anal Magician

This was again a very long question, but it seems I managed to compress it into a single sentence without any significant loss of meaning.

In general, the idea of transitioning to financing the state budget through payment for government services is good because the government thereby declares its intention to be useful—taking money only for what is in demand, and in the volume for which there is demand for its activity. Such a line of thinking among government officials, of course, should be encouraged. Let’s figure out what this might look like.

Purely theoretically, the sale of any services by the state can be either a monopoly or carried out within the framework of free competition with private companies.

Let’s start with services that are a natural monopoly of the state. Yes, such things really exist, and they are linked to the exploitation of the state as a unique brand. For example, a quite significant source of income for young Pacific states in the 20th century was the issuance and sale of postage stamps. Here, private entities cannot compete with the state in any way, because it is precisely the fact that the stamps are issued by the state that gives them collectible rarity. Any fool can color a piece of adhesive paper, but obtaining UN recognition as a state and then coloring a piece of adhesive paper is a completely different matter. I don’t know how much this business flourishes now with the advent of the internet, but stamps aren’t the only thing. The state can sell noble titles, tickets to military parades, and other market-demanded perks. Any such activity of a minarchist government can only be welcomed, even if the money earned is squandered on some harmless nonsense, like maintaining a royal court, rather than on what, according to minarchist myths, should be the exclusive prerogative of the state. What was it—courts, the army, and the police?

Besides government services that are natural monopolies, there is a much broader class of monopolies achieved by the forced exclusion of competitors. For example, a government service such as the sale of entry (or, even more so, exit) visas. While in the case of natural monopolies the buyer themselves wishes to purchase the service specifically from the state, in this case, they would gladly buy this service from a competitor if it were cheaper, and even more gladly prefer not to pay for this service at all—but simply enter the country without any visa. I presume you have already realized that we, the ancaps, cannot approve of dubious services of this sort, unlike corruption, which allows one to avoid their imposition.

Finally, there are services that the state could provide while competing with private entities. State clinics, schools, insurance companies, pension funds, television, and many, many other services. How, properly speaking, do they differ from private ones? In that their nominal owner turns out to be society as a whole, and in theory, all their profits should be spent exclusively on improving the services themselves, rather than being siphoned into the pockets of private owners. Theoretically, this could provide a new quality of service that would be difficult to achieve in the case of a private enterprise. For example, public television could sell only the absolute minimum of advertising, just to cover the channel’s costs. In practice, state companies of this sort will fall victim to the principal-agent problem and will act more in the interests of management than in the interests of society.

To summarize. The only type of government service that remains unconditionally legitimate in the eyes of ancaps is the market exploitation of the state as a brand. Other organizations with rich cultural traditions, such as churches, knightly orders, football clubs, or festivals, can operate on the same principles.

The state provides an exclusive market-demanded good, and that is wonderful!

Belarus 3

This is already my third post about Belarus. In the first one, I gave obvious recommendations that turned out to be practically a forecast. In the second, I gave non-obvious recommendations, and, naturally, reality diverged from those recommendations. Therefore, instead of giving my own advice now, I want to express my happiness for the recommendations that Belarusians themselves are exchanging.

I am talking about a text on Telegraph with the proud title Victory Plan. It proposes a continuation of Sharp’s non-violent transformation from a dictatorship into a freer society. In brief, the plan includes:

  • organizing the main directions of resistance (fronts): protest actions, economic strangulation of the state, propaganda, political pressure, including at the international level, and moral and legal pressure on specific executors.
  • building parallel coordination structures (ministries): non-state economic services, insurance funds to compensate for the costs of state violence, the collapse of state social services, and strikes.

This is a very good plan because, during its implementation, society will receive a practical course in agorism, and there is a great chance that it will get a taste for it. When it turns out that non-state coordination is more efficient and the dictatorship eventually withers away, there is a chance that the new state, which will inevitably be built in place of the old one, will acquire the best traits of liberal laxity and will avoid meddling in things that are not its business for quite a long time. And if it does start to meddle, people will have ready-made recipes on exactly how to put the state in its place.

Is there a chance that after the old regime leaves, a new one will not be built in its place? It is very small, because libertarian ideas are not yet widely distributed in society, and the thought that everyone is better off without a state does not seem obvious to people. They are more likely to repeat the mistake of thinking, “this was a bad state, it’s gone now, now we will build a good one.”

Navalny and Leviathan

When I read about Navalny’s poisoning, I felt completely hopeless. This year, ruling regimes all over the world have finally gone off the rails and have already managed to cause an unimaginable amount of damage to people. And it’s only August! And there is no reason to believe that 2020 is just an anomaly and that things will settle down later. In short, I wanted to fully retreat into internal emigration. To a place where there are no political news, where you have no idea what new orders the disposers of other people’s lives are giving, where there is only a market around—peaceful, cozy, and benevolent. To the place where all decent people actually belong.

I beg you: please, do not feed yourselves to the Leviathan. Stop with these pickets of yours, for which you will be fined—one; jailed for a day—two; given a criminal case—three. Stop the performances with Putin dolls and other risky nonsense. This will not shame the bandits in power. This does not help the victims of the bandits. It simply forces the security forces to turn their extremely unfriendly attention toward you, with a predictable result. You cannot be proud of being a victim of the regime. You should be proud of causing damage to the regime with impunity. But be proud in silence, otherwise, the impunity will turn into a failure.

One should act openly only when backed by power. Until then, we are partisans in this war declared upon us by the state. We must not be visible. Only grotesque rumors should be known about us—that we are everywhere, that 90% of the country’s economy is in the shadows, that no one follows the regime’s orders except for completely naive weirdos, that only suckers keep their money in fiat while the right people keep it exclusively in crypto, that official employment for a normal person is just a smokescreen for shadow earnings, that a normal person has contacts for every occasion, and it is thanks to them, not the state, that he peacefully prospers.

Of course, it is not like that now. But such rumors and beliefs have the power of a self-fulfilling prophecy, which is why it is useful for us to broadcast them. This is a far more effective struggle against the regime than rallies or, Lord forgive me, anti-corruption investigations. Against any regime, not necessarily Putin’s. Against the phenomenon of political power as such.

The Fate of a Hero