Yves here. In some summers past, we’ve rerun NC classics during slow news periods. We haven’t had slow news period in a while, and one side effect is that we haven’t yet reprised this series on libertarianism, which will run this week and into next week. Enjoy!
This post first appeared on November 29, 2011
By Andrew Dittmer, who recently finished his PhD in mathematics at Harvard and is currently continuing work on his thesis topic. He also taught mathematics at a local elementary school. Andrew enjoys explaining the recent history of the financial sector to a popular audience.
Simulposted at The Distributist Review
Recently journalist Philip Pilkington has interviewed authors with unconventional perspectives on economic issues, including Satyajit Das and David Graeber. I thought it would be fun to interview someone too – but the man I interviewed uses a pseudonym. This is a six-part series.
ANDREW: Some people say that you represent a fringe view, and so interviewing you is a waste of time.
CODE NAME CAIN: If people obsessed with inside-the-Beltway conventional wisdom underestimate libertarians, so much the better.
ANDREW: Can you give any evidence that your ideas are taken seriously?
CNC: Well, people used to think that the financial crisis was caused by antisocial behavior in the finance sector. In September 2007, Tom DiLorenzo pointed out on the Lew Rockwell website that the crisis was actually the result of the government forcing banks to make risky loans to low-income borrowers. Although initially ignored, DiLorenzo’s thesis is now widely accepted among careful observers.
ANDREW: Is that your only convincing example?
CNC: Hardly. Did you notice how over the last year or so, everyone started to talk about how the threat of new taxes and regulations was making producers uncertain? And when producers are uncertain, the economy fails to improve? Well, the fact that worries about taxes and regulations cause uncertainty and so damage the economy is a key insight of Austrian economics that we have proclaimed for decades.
ANDREW: Wait, I thought people said that Obama was causing the uncertainty.
CNC: Obama is causing the uncertainty now. Before Obama, George W. Bush was causing the uncertainty. In general, democratic government causes uncertainty. Hans-Hermann Hoppe made all of this clear in his 2001 book “Democracy: The God That Failed.”
ANDREW: Are there things you have learned from the work of Dr. Hoppe that you had not found in the writings of other libertarians?
CNC: “Ludwig von Mises and Murray Rothbard were great men, but they lived in a time when supporters of freedom needed to be careful about what they said. As a result, libertarians often fail to describe their ideal future society in clear detail. But, as the Cato Institute’s Patri Friedman has recognized, Hans-Hermann Hoppe is an exception to this reticence. He is willing to speak the truth, no matter how much it makes “politically correct” people squirm, and he is so logical and eloquent that I routinely quote from his classic book on the failure of democracy. Please color such quotes in red – I would never try to pass off my own ideas as if they were on his level.
ANDREW: Tell us now about the libertarian society you are working to make possible.
CNC: It will be a free society – no government, no coercion. People will have their rights respected. Everyone will be free to do whatever they want as long as it doesn’t interfere with anyone else’s rights… why are you looking at me like that?
ANDREW: I was kind of hoping for less speeches and more details.
CNC: What do you mean?
ANDREW: In our society, the government is the only organization allowed to kill people. In the libertarian society, which organizations will kill people?
CNC: There will be no government that is allowed to use force against people and kill them.
ANDREW: Some people will be very rich, right?
CNC: Of course. Some people will always be stronger and more brilliant than others.
ANDREW: Will the wealthy people still be worried about people stealing from them?
CNC: Obviously – all property… is necessarily valuable; hence, every property owner becomes a possible target of other men’s aggressive desires. 
ANDREW: So who will protect property owners?
CNC: Insurance companies in a competitive marketplace.
ANDREW: So in your society, insurance companies will be sort of like governments. Can we call them security GLOs (Government-Like Organizations)?
CNC: Sure, as long as we stress that the insurance companies, as security GLOs, will be very different from the statist, coercive governments we have today.
ANDREW: Will security GLOs be different from governments because they will be small family firms?
CNC: No. One reason that insurance companies will be well-suited for the role of security GLOs is that they are “big” and in command of the resources… necessary to accomplish the task of dealing with the dangers… of the real world. Indeed, insurers operate on a national or even international scale, and they own substantial property holdings dispersed over wide territories… 
ANDREW: Will security GLOs be different from governments because they don’t use physical force against criminals?
CNC: You gotta be kidding, right? … in cooperation with one another, insurers [will] want to expel known criminals not just from their immediate neighborhoods, but from civilization altogether, into the wilderness or open frontier of the Amazon jungle, the Sahara, or the polar regions. 
ANDREW: So the security GLOs will be allowed to kill people, if they are known criminals?
CNC: The security GLOs will not kill people, they will just expel them to the Sahara or polar regions. What happens then is up to the criminals.
ANDREW: Can we say that the security GLOs will effectively kill them?
CNC: I really don’t like that choice of wording. You make it sound like the security GLOs will be committing aggression against the criminals. That’s backwards – the criminal commits aggression, and security GLOs will just defend people. They won’t violate anyone’s rights.
ANDREW: Maybe you would prefer that we say: the security GLOs will effectively kill people in a rights-respecting manner.
CNC: Yeah, that’s better.
ANDREW: Will everybody be able to get insurance from the security GLOs?
CNC: Of course – in a market economy, shortages are impossible. Anyone can get anything by paying the market price.
ANDREW: What if the market price of insurance for some people is more money than they can pay?
CNC: Don’t worry, competition among insurers for paying clients will bring about a tendency toward a continuous fall in the price of protection… [281-282].
ANDREW: In the future everyone will pay less for security than they currently pay in taxes?
CNC: Well, certain government-induced distortions would be eliminated. Government taxes more in low crime and high property value areas than in high crime and low property value areas.  Security GLOs would do the exact opposite.
ANDREW: So in rough neighborhoods, most people might not be able to afford security insurance.
ANDREW: Suppose there are people who aren’t covered by any security GLO – would it effectively be legal to kill them?
CNC: They would definitely be rendered economically isolated, weak, and vulnerable outcast[s] .
ANDREW: Then people are effectively forced to join a security GLO?
CNC: Maybe you haven’t realized it yet, but this will be a free society. The relationship between the insurer and the insured is consensual. Both are free to cooperate and not to cooperate.  No one will force people to buy protection, and no one will force insurers to offer protection at a price they think is too low.
ANDREW: What are some other ways that you think this would be a good system?
CNC: Well, every property … can be shaped and transformed by its owner so as to increase its safety and reduce the likelihood of aggression. I may acquire a gun or safe-deposit box, for instance, or I may be able to shoot down an attacking plane from my backyard or own a laser gun that can kill an aggressor thousands of miles away.  In a free society, security GLOs would encourage the ownership of weapons among their insured by means of selective price cuts  because the better the private protection of their clients, the lower the insurer’s protection and indemnification costs will be .
ANDREW: Let’s see if I understand. In poor neighborhoods, most people will not be insured, and it will be legal to kill them. The people that are insured will be encouraged by the security GLO to carry weapons that are as technologically advanced as possible. It sounds to me like this would be bad for the poor neighborhoods.
CNC: On the contrary – in “bad” neighborhoods the interests of the insurer and insured would coincide. Insurers would not want to suppress the expulsionist inclinations among the insured toward known criminals. They would rationalize such tendencies by offering selective price cuts (contingent on specific clean-up operations). 
ANDREW: Suppose that security GLOs, or private groups that they sponsor, are looking for criminals. When the enforcers catch the criminals, will they always transport them to an uninhabited area, or will they sometimes put them in prison?
CNC: Prisons like the ones we have? With basketball courts and televisions for the criminals? How would that be fair?
ANDREW: Maybe other kinds of prisons?
CNC: Look, it’s not about putting people in prisons. It’s about people getting what they deserve. And in the libertarian society of the future, people will get what they deserve. Security GLOs can be counted upon to apprehend the offender, and bring him to justice, because in so doing the insurer can reduce his costs and force the criminal… to pay for the damages and cost of indemnification. 
ANDREW: So they’ll have to do forced labor for the security GLO?
CNC: How can you possibly think this could be worse than our current system? Where instead of compensating the victims of crimes it did not prevent, the government forces victims to pay again as taxpayers for the cost of the apprehension, imprisonment, rehabilitation and/or entertainment of their aggressors ?
ANDREW: Still, as a libertarian, aren’t you against coercion?
CNC: Coercion? Obviously you don’t understand what you’re talking about. Coercion is only when someone interferes with rights someone else actually holds. Criminals can forfeit their rights through their own choices. When that happens, requiring them to make restitution for their actions doesn’t violate their rights.
ANDREW: Will there be any other people in the free society who will be slaves?
CNC: Slaves?! Don’t you know that the first condition of a libertarian society is that everyone owns themselves?
ANDREW: Sorry, I meant to say: effectively slaves in a rights-respecting manner.
CNC: Oh. Hmmm. Let me think about that.
ANDREW: For example, suppose someone signs a business contract and then, later, can’t fulfill the terms of the contract. What would happen?
CNC: In a libertarian society, sanctity of contract is absolutely fundamental.
ANDREW: Let me be a little more specific. Suppose some guy can’t pay his debts. Would he be allowed to declare bankruptcy and move on, or would he become, in a rights-respecting manner, the effective slave of whoever had loaned him the money?
CNC: That would depend upon the debt contract that the lender and borrower had together voluntarily signed. If they had chosen to include a bankruptcy proviso, then the borrower could declare bankruptcy.
ANDREW: Suppose that in the libertarian society, lenders would rather encourage borrowers to focus on repayment – and so they decide not to give borrowers an easy way out. Suppose that no lenders offer loans with a bankruptcy proviso. Would that be okay?
CNC: Economic theory tells us that loans without a bankruptcy proviso will be made at lower interest rates than loans allowing borrowers to go bankrupt. So if no loans contain a bankruptcy proviso, it will just mean that borrowers prefer low-interest no-bankruptcy loans.
ANDREW: I see some problems here.
CNC: Look, it sounds from your question like you think that the lenders should be coerced into allowing borrowers to be irresponsible and go bankrupt! That would effectively make them loan their hard-earned money in ways that they don’t want. How is that any different than forcing them to work at hard labor?
ANDREW: Obviously it would be better to have defaulting borrowers be effectively enslaved in a way that fully respects their natural rights.
CNC: Obviously. Now that we’ve cleared that up, can you turn off the tape recorder? I want to get started on my steak.
Now that Code Name Cain has indicated the promise of a libertarian society, in the next part of the interview he will give a step-by-step plan for how we can make this society a reality.