Article: Europe's pain is coming America's way

[AdamA]

Do we have to have government?  In at least a majority of cases I would say no...

I have always thought that it was good that the government can 'coerce' someone into not killing me or stealing from me.  In the past, I would have said with certainty that protection from violent crime is one of the minority cases wherein we do need government.    The tradeoff is obviously that this power is so easily eventually abused.  

What I wonder now is if this is actually true.  What do you think would happen if we didn't have a government that protected us from these things? Would people continue to be civil because it is beneficial for them to do so, or would they be more likely to cheat, steal and kill?  

[MediumTex]

Do we have to have government?  In at least a majority of cases I would say no...

I have always thought that it was good that the government can 'coerce' someone into not killing me or stealing from me.  In the past, I would have said with certainty that protection from violent crime is one of the minority cases wherein we do need government.    The tradeoff is obviously that this power is so easily eventually abused.  

What I wonder now is if this is actually true.  What do you think would happen if we didn't have a government that protected us from these things? Would people continue to be civil because it is beneficial for them to do so, or would they be more likely to cheat, steal and kill?  

Or how about this question:

Through all of history, who has been responsible for most of the killing and other acts of violence?

Has it been the street thugs and psychopaths, or has it been the Woodrow Wilson types who are not afraid to dump as much blood and treasure as needed toward the achievement of delusional personal ambitions?

Where does most violence in the world come from?  Is it individuals in conflict with one another, or is it assorted examples of the exercise of state power, often against its own citizens?

When you pay the neighborhood gangster "protection money", from whom do you really expect to be protected?

[AdamA]

When you pay the neighborhood gangster "protection money", from whom do you really expect to be protected?

I get your point and agree, but isn't there always a neighborhood gangster to pay?  It becomes a devil-you-don't-know scenario, in my mind.  i.e., better to pay taxes to the US government than, say, the Third Reich, right?

[MediumTex]

When you pay the neighborhood gangster "protection money", from whom do you really expect to be protected?

I get your point and agree, but isn't there always a neighborhood gangster to pay?  It becomes a devil-you-don't-know scenario, in my mind.  i.e., better to pay taxes to the US government than, say, the Third Reich, right?

A few hundred years ago people would have said the same thing about kings.  They would have said that no one really likes having a king, but isn't it better to hope for a good king than a bad king?

Then people like Thomas Paine came along and convinced the world that maybe no king at all was needed, and that personal liberty could be the new organizing principle for society.

I think that at some point a similar realization will be made about the current welfare state as people realize that they are really losing a lot more than they are gaining under such arrangements. (JMHO, of course)

[AdamA]

A few hundred years ago people would have said the same thing about kings.  They would have said that no one really likes having a king, but isn't it better to hope for a good king than a bad king?

Point well made.  I would have never thought of it like that.

[Pointedstick]

Over the course of the last three weeks, I read this whole thread, as well as most of the PragCap links. I have to say, MMR has totally rocked my world. I considered myself an Austrian before; now I'm not so sure. It's a little disconcerting to have your entire worldview basically melted into slag right in front of you, but hey, sometimes it has to happen!

However, there is one troubling loose end that MMR has not managed to tie up for me. MMR seems to rely on some common themes such as "government by the people for the people" and "government exists to improve the private sector". MMR appears to assume and require that government be a good steward of its currency monopoly and act to serve some ill-defined "public good". Indeed, Cullen repeatedly asserts that the system can go kablooie if the fed/government were to do irrational things or become corrupted.

But isn't this the inherent tendency of representative democracy? Now, Cullen's football scorekeeper analogy really helped clarify things for me, and shot a few good holes in my previously-held belief that the US government could go bankrupt.

But it also made me wonder:

What if there were only two teams that worked to destroy all other teams, and what if the scorekeeper were elected by the players on those two teams? And what if the players themselves were elected by their fans? Assume the fans are like voters in that they are ignorant of the functioning of the system and easily swayed by the promises of favoritism and short-term gains. All of the sudden, that impartial point-giving scorekeeper starts to look like a mighty valuable position that I would expect everyone to jockey for. Soon people are spending more time fighting for control of the scorekeeper so they can hand out points to their team and less time earning the points they need to make that score seem legitimate. What could previously described as a "public good" (impartial score-keeping) becomes corrupted by those who wish to use the power to the advantage of themselves and their team/fellow fans.

…Which appears to me to be a pretty accurate assessment of the state of our nation. I find MMR to be a brilliant description of how the monetary system actually works, but if Cullen's right that it can only continue to work so long as the federal government doesn't dramatically stray from the "public good" by favoring either itself or specific private interests who can capture its power, I'm not sure I'm optimistic. But then again I'll admit that I come at this from an anarcho-capitalist perspective, so fire away.

[jackely]

as the federal government doesn't dramatically stray from the "public good" by favoring either itself or specific private interests.

At this point in human evolution should it not be considered settled science that governments will always stray from the "public good" by favoring either itself or specific private interests? That should be a given like gravity and the debate should proceed from there.

[Pointedstick]

as the federal government doesn't dramatically stray from the "public good" by favoring either itself or specific private interests.

At this point in human evolution should it not be considered settled science that governments will always stray from the "public good" by favoring either itself or specific private interests? That should be a given like gravity and the debate should proceed from there.

I would certainly agree. However, I'm interested in hearing how hardcore MMR'ers deal with this inevitability. Any system that says, "this will work so long as the government acts in the 'public interest' " is surely doomed to failure… and yet the current debt-based fiat money system has survived for 40 years. Is this a testament to its surprising resilience in the face of regulatory capture, government corruption, and the total non-existence of any kind of agreed-upon "common good"? Or is it in fact not working well at all?

[MediumTex]

as the federal government doesn't dramatically stray from the "public good" by favoring either itself or specific private interests.

At this point in human evolution should it not be considered settled science that governments will always stray from the "public good" by favoring either itself or specific private interests? That should be a given like gravity and the debate should proceed from there.

I would certainly agree. However, I'm interested in hearing how hardcore MMR'ers deal with this inevitability. Any system that says, "this will work so long as the government acts in the 'public interest' " is surely doomed to failure… and yet the current debt-based fiat money system has survived for 40 years. Is this a testament to its surprising resilience in the face of regulatory capture, government corruption, and the total non-existence of any kind of agreed-upon "common good"? Or is it in fact not working well at all?

I think the question is whether you have a productive underlying economy that can dampen the errors that are going to occur within an MMR-type arrangement.

The U.S. has an extraordinarily productive economy, as does Japan, and thus MMR not destroyed these economies.  In other economies where MMR is accompanied by poor protection of property rights and an underlying economy that is not all that productive to start with, I can see how a mis-step in MMR policies could lead to disaster.

I think that it's obviously a very unstable system that relies upon economic productivity to keep it going. 

It is sort of amusing when you realize that the IRS only exists to help force currency through the system, and serves no purpose whatsoever as a revenue collection agency.  When you look at all of the intellectual horsepower that goes into the IRS's regulation writing and enforcement apparatus and realize that it's essentially all an elaborate Kafkaesque ruse that even many its own employees are unaware of, it's really bizarre.

[Pointedstick]

I think the question is whether you have a productive underlying economy that can dampen the errors that are going to occur within an MMR-type arrangement.

The U.S. has an extraordinarily productive economy, as does Japan, and thus MMR not destroyed these economies.  In other economies where MMR is accompanied by poor protection of property rights and an underlying economy that is not all that productive to start with, I can see how a mis-step in MMR policies could lead to disaster.

I think that it's obviously a very unstable system that relies upon economic productivity to keep it going. 

I agree, but then again couldn't you say this of any inefficient or dangerous policy regime? A strong economy would also be able to absorb a lot of unnecessarily dug ditches with bridges built over them, no?

It is sort of amusing when you realize that the IRS only exists to help force currency through the system, and serves no purpose whatsoever as a revenue collection agency.  When you look at all of the intellectual horsepower that goes into the IRS's regulation writing and enforcement apparatus and realize that it's essentially all an elaborate Kafkaesque ruse that even many its own employees are unaware of, it's really bizarre.

Very true. Now that I understand this stuff better, the tax system is all the more frustrating, especially since I'm a small business owner. It's clear that the mazelike tax code doesn't actually benefit anybody at all. The goal of destroying money could easily be accomplished with a simple flat tax or something, levied only in years where the money supply is getting too high. And it could probably only be levied on banks, since that's where most of the money is held/created. It's all clearly a relic from a bygone era, full of decades of crufty social engineering designed to favor certain industries at the expense of others and generally frustrate and discourage entrepreneurship.

I think to me the biggest drawback of MMR is that it needs a government. Most of the government doesn't seem to know shit from shinola on a good day, let alone understand the functioning of the monetary system. So we still have things like long-term bonds and yearly taxation and borrowing instead of printing and the idea that tax cuts need to be "paid for" and calls for austerity during recessions. To be honest, it seems like a minor miracle that the whole house of cards hasn't collapsed yet.

[Gosso]

Pointedstick,

Keep in mind that the loans created by the private sector create the majority of the wealth (debt).  I believe that this is M2.  The government is there to just create the base currency which I believe is M0 and M1.  Although I could be wring about this -- I'm an MMR newbie as well. 

In my mind the private sector (ie the banks) create the majority of the debt that greases the wheels of the economy and allow it to function the way it does.  Businesses and the public accept the loans from the banks to grow their businesses or buy homes/cars/boats/ etc.  If the economy is suffering, then people will be unwilling to accept more debt, since the prospects of growing a business or increasing home prices will no longer be attractive.

The government has an important role to play, but I think the private sector far out weighs it.  If this ever changes then I'll be more worried.

[AdamA]

It is sort of amusing when you realize that the IRS only exists to help force currency through the system, and serves no purpose whatsoever as a revenue collection agency. 

MT,

Can you (or anyone) explain this a bit more.  I've heard this point made several times, and it's very interesting to me, but I don't fully understand it.

[Gumby]

It is sort of amusing when you realize that the IRS only exists to help force currency through the system, and serves no purpose whatsoever as a revenue collection agency.  

MT,

Can you (or anyone) explain this a bit more.  I've heard this point made several times, and it's very interesting to me, but I don't fully understand it.

The IRS exists simply to destroy base money from the private sector. A fiat government doesn't need "revenue" to operate, since it can always print up more debt-based money.

As to why the tax code is so complex...

Warren Buffet — who has shown a relatively good understanding of MMR in some interviews — was once asked as to why the tax code is so complex. His response was this...

"Every line in the tax code is important to some constituency...Actually, you've got thousands of lobbyists there protecting each line in the tax code....Our tax code is an attempt by various interests — income, divided by income, divided by demographics...all kinds of things — for people to get more of the pie."
— Warren Buffet
Source: http://youtu.be/u7Pxbu4WMeE

He's right. Lobbyists write the tax rulebook, through Congress. And the IRS controls and enforces the rule book as to which team gets to keep or get the most money/support for their constituents.

[Gumby]

Keep in mind that the loans created by the private sector create the majority of the wealth (debt).  I believe that this is M2.

M2 includes a lot of bank loans and credit. But there is an unbelievable amount of shadow banking credit (derivatives, mortgage backed securities, etc) that is not included in M2. Huge amounts of credit exist beyond M2. The shadow banking system is mind boggling. When you put money into a money market fund or a bank CD, you are really investing some or all of your money into the shadow banking credit world. This is why Harry Browne shunned the entire private credit system (aside from stocks).

In my mind the private sector (ie the banks) create the majority of the debt that greases the wheels of the economy and allow it to function the way it does.

It's easier to call it bank loans and "credit" instead of just debt — since the majority of our bank accounts are really just lines of credit.

Businesses and the public accept the loans from the banks to grow their businesses or buy homes/cars/boats/ etc.  If the economy is suffering, then people will be unwilling to accept more debt, since the prospects of growing a business or increasing home prices will no longer be attractive.

Yes and no. All bank accounts are really just lines of credit off of reserves held at the Fed. When you open up your bank statement, your balance is just a line of credit from the bank's reserves. The problem isn't whether people accept bank credit or not (we all do). The problem is that when the economy slows, the private sector has trouble paying back its private loans in time, and that causes credit to default and become less stable.

[moda0306]

I already feel the difference (working in tax) between cash-strapped states and the federal government.  The states are much more aggressive to get money that they can't print.  There's two aspects to this, 1) all the silly complications of the tax code that don't really serve to increase revenues as much as induce behavior and give people breaks as they see fit.... 2) The aggressiveness of the IRS in general.  Even though they don't NEED the money per se, it serves to take money out of the system so that spending on SS, medicare, military, etc, does not cause inflation (or a lot of it), and so there is a back-door need for them to have clout in collecting money.

And to Pointedstick, I'd add that one of the main purposes of government, as most MMT/MMR people see it, is to do things that it is difficult/impossible for the private sector to do effectively, but that people seem to demand anyway.  In the 1800's, money was not just gold coins, but contracts (IOU's) built out of our real economy.  The nature of accounting for economic realities left us with the equation that Saving = Investment.  In a given period, the private sector could not save in excess of the investment that occured, and some believe this tends to cause very big problems when people simultaneously are trying to save at the same time, and the current level of aggregate demand does not warrant new investment.  This is how depressions happen.  The whole idea is that there should be two forms of money in the economy... private money as a result of investment (a bank loans Steve Jobs $1 Million to start Apple), and money as a result of a deficit from some other sector (foreign or government... foreign being very unreliable and unaccountable... so, mainly, government).  This form of saving can allow people to, as MMR calls it, "Net Save," which in even somewhat small doses adds a ton of stability to an economy, in their opinion (mine too).

I'd also add that MMT/MMR probably sees the democratic process as somewhat more legitimate than Austrians, who tend to see democracies as just another form of tyranny... tyranny of the majority.  I don't see government as being so inevitably destructive, but I can see why people do.  I guess the big question is will our productive capacity and collective faith in our society hold up enough to ground the value of our currency, because I think those are much stronger factors than short-term quantity/velocity trends.

[moda0306]

I'll add that I think if we had a bunch of MMRists in government that realized how important production was to the value of a currency (and the prosperity of a country), but also saw where government can add value to the private sector, we'd be in a much better place than having any Austrian "cut everything" or statist in government... at least IMO... that said I'd probably like to have all of those types with a seat at the table so ideas are constantly getting challenged.  Nothing's worse than an echochamber.

I think as long as you have a government that views itself as a way to protect and enhance the private sector, not stomp on it, you have the potential for much better things than no gov't at all.

I have plenty of things I'm disgusted by in our government, but when I look at the people that have to design transportation systems or keep them running on time, keep utilities running effectively, patent judges trying to keep a balance between monopolism and entreprenurialism and all the technical knowledge they must at least try to manage, the members of our military who are extremely good at what they do, despite any misallocation of those resources that constantly gets applied... I really think gov't not only can but DOES enhance the capabilities and productive capacity of the private sector.  I could cut a ton of fat without even thinking about it, but left alone I don't see markets & the private sector as functioning as effectively as we might hope for... in fact, the idea of private property itself, as it exists today, relies on a big promise from a big gov't to use big guns to defend and recognize that property as yours.

[Pointedstick]

I'll add that I think if we had a bunch of MMRists in government that realized how important production was to the value of a currency (and the prosperity of a country), but also saw where government can add value to the private sector, we'd be in a much better place than having any Austrian "cut everything" or statist in government... at least IMO... that said I'd probably like to have all of those types with a seat at the table so ideas are constantly getting challenged.  Nothing's worse than an echochamber.

I think as long as you have a government that views itself as a way to protect and enhance the private sector, not stomp on it, you have the potential for much better things than no gov't at all.

I definitely agree. But then again, this is the age-old problem with government; everyone can see how it could be so great if only the government behaved in the way they preferred…

What government could be would indeed be better than no government. But is what government actually is better than it? In practice, I believe human history shows that most governments are basically some form of hyper-successful organized crime syndicate or military junta. I'm sort of a recovering Austrian right now, but I think one of the strengths of the school of thought is its incisive cricicism of democracy and government in general. Governments never wind up taking our idealized forms because they are too tempting for the powerful to grab control of and use to further their own goals. Even if they start out small and/or effective at protecting and fostering the private sector, it's just too tempting for the powerful to end up using it to hurt their competitors or enemies. I can't think of a single government that hasn't turned tyrannical against at least certain parts of its own citizenry. Most of them do it to everyone eventually. And nearly all of them wind up oppressing foreigners simply as a matter of course.

As MT points out, the idea of trusting a monopolistic property expropriator to protect property contracts among its citizens is sort of a laughable concept IMHO. Especially when it permits no other entity to protect people from it should its decisions or actions be deleterious.

Can you really trust a contract enforcer with whom you have no contract?

I have plenty of things I'm disgusted by in our government, but when I look at the people that have to design transportation systems or keep them running on time, keep utilities running effectively, patent judges trying to keep a balance between monopolism and entreprenurialism and all the technical knowledge they must at least try to manage, the members of our military who are extremely good at what they do, despite any misallocation of those resources that constantly gets applied... I really think gov't not only can but DOES enhance the capabilities and productive capacity of the private sector.  I could cut a ton of fat without even thinking about it, but left alone I don't see markets & the private sector as functioning as effectively as we might hope for... in fact, the idea of private property itself, as it exists today, relies on a big promise from a big gov't to use big guns to defend and recognize that property as yours.

The idea of private property is quite natural, and you can witness this no more clearly than taking an infant's pacifier. It doesn't know language, and it hasn't been indoctrinated into the pro-individual property mindset fostered by western societies, yet it still instinctually knows that your taking is wrong. Now I'll agree that land ownership is more of a social construction, but at that point we're kind of quibbling over the details. Even in stateless societies with a high amounts of social and kinship obligations (I have lived in one such west African society), people still have the concept of property. It may not be as expansive as ours, but it's definitely there, and it needs no government to tell people that stealing is wrong. They know it themselves, believe you me!

[moda0306]

Pointedstick,

Regarding property, I'll first say that you're probably right that it's natural in a "feelings" sense because people have the deep desire to own things for a combination of selfish (not a pejoritive, just descriptive) and just reasons.  Oddly, the baby may cry when you take away the pacifier, but was it really theirs?

I'll agree that land ownership is less natural and more of a social construct than "creative ownership"... in fact I'll go as far as to say that pure creation (a work of art or an idea) and that belonging to you is one of the most good and natural things around... though often without a government to help enforce it, there are few ways to do so yourself in a way that is socially acceptable (you can't go duel with someone who you think stole your idea).

I think it's worth mentioning that some people have benefitted by the initial distribution of land MUCH more than others... namely, wealthy white men over their brown, black, red, poor, and female counterparts.  I'm really not the type to go on racial tirades or anything, but it's easy to tell that much of our nations wealth has been allocated and enforced by government to a relative few (though much better in fairness than many, most, or maybe even all other countries!!).  So private property is simultaneously natural, extremely important (not that it needs to drive every decision, so much as that it's probably the most important single building block of an economy), and, to some degree, a social construct, especially in modern economies where long-term investment decisions are made that rely heavily on that base of gov't PP support.

Further, it probably is good to point out that without allocating land deeds, no other form of private property would be able to be built on top of it to its full potential.  I'm not crediting everything, then, to government, so much as acknowledging that it plays a very crucial (and sometimes quite complex) role in some areas.  I tend to think that social safety nets are the other side of this coin... ie, "We'll create an infrastructure of private property that allows for landowners and entrepreneurs alike to become very wealthy, but we'll also create a base level of economic support for everyone else."... to put it in as simple a sentence as possible... I see the former without the latter as specifically benefitting the adorned rich without an offsetting economic stabilizer for the poor.

[moda0306]

As MT points out, the idea of trusting a monopolistic property expropriator to protect property contracts among its citizens is sort of a laughable concept IMHO. Especially when it permits no other entity to protect people from it should its decisions or actions be deleterious.

Can you really trust a contract enforcer with whom you have no contract?

... in fact, the idea of private property itself, as it exists today, relies on a big promise from a big gov't to use big guns to defend and recognize that property as yours.

In spite of assaults on property that have occured, I totally wonder the same thing.  I guess I would say that I basically have the position that I want my gov't to do things that enhance the private sector (including economic and household stability) in the short-to-medium term, while I constantly, as an individual, do things in my life to hedge against gov't failure (own gold, don't own too much land, don't attract gov't attention, engage your neighbors, learn other skills, store up food that I would eat anyway, always have plenty of gas in the cars, for travel or syphening, learn how to function outside of a system that is so symbiotic w/ gov't to a manageable degree, put myself in a position to defend my property if need be)... most things you can do to hedge against gov't failure can actually be pretty fun or non-issues, and not the huge burden that survivalism would leave us assuming.  But even once I've done all that, I still see value in gov't, including safety nets I'll probably never use.

While I can actively imagine our government doing really good things that actually improve the potential of the private sector, I'm simultaneouly kind of surprised governments don't collapse in on themselves more often.  I suppose it goes back to HB's assertion that people are much more flexible than big lumbering governments, so no matter what gov't does that pisses us off, we're relatively quick to realize ways around it... however, things that gov't does that are actually helpful (roads, courts, and maybe even some social safety nets) we use to the full advantage of our happiness... though this whole last part is not part of HB's thinking so much as my own addition to it.  I think gov't can do some things very well, probably not because it's actually doing well, but more that it's doing better than a private system would due to market inefficiencies (think of a private freeway system).

[Gumby]

What I find interesting about property is that it's really your local "town" government that enforces your property lines and the State which enforces a list of key rules that govern those property lines. (Towns, of course, have their own fine-tuned property rules as well.)

If you think about it, you pay local property taxes to your town or city. In exchange for giving the town money, they will recognize/enforce the exact land divisions between you and your neighbors — there is literally a town official that does this — and provide you with some services (trash, schools, community programs, fire, police etc).

The State collects income taxes, and in exchange, creates blanket rules about those how land divisions should be treated and how disputes between neighbors should be resolved.

The Federal government (which requires no revenue) simply provides nationwide assistance to protect property — against foreign invasion and natural disasters — and to, hopefully, make the means of production more efficient.

How much assistance and influence we want from the infinitely-powerful federal government seems to be the big question.

[Pointedstick]

As MT points out, the idea of trusting a monopolistic property expropriator to protect property contracts among its citizens is sort of a laughable concept IMHO. Especially when it permits no other entity to protect people from it should its decisions or actions be deleterious.

Can you really trust a contract enforcer with whom you have no contract?

... in fact, the idea of private property itself, as it exists today, relies on a big promise from a big gov't to use big guns to defend and recognize that property as yours.

In spite of assaults on property that have occured, I totally wonder the same thing.  I guess I would say that I basically have the position that I want my gov't to do things that enhance the private sector (including economic and household stability) in the short-to-medium term, while I constantly, as an individual, do things in my life to hedge against gov't failure (own gold, don't own too much land, don't attract gov't attention, engage your neighbors, learn other skills, store up food that I would eat anyway, always have plenty of gas in the cars, for travel or syphening, learn how to function outside of a system that is so symbiotic w/ gov't to a manageable degree, put myself in a position to defend my property if need be)... most things you can do to hedge against gov't failure can actually be pretty fun or non-issues, and not the huge burden that survivalism would leave us assuming.  But even once I've done all that, I still see value in gov't, including safety nets I'll probably never use.

That sounds very sane. I guess I'm just less optimistic about the possibility of government acting for anyone other than either the greedy and powerful, or the irrational manipulated masses. And this worries me precisely because long-term, MMR seems to require a better government than I believe can exist.

While I can actively imagine our government doing really good things that actually improve the potential of the private sector, I'm simultaneouly kind of surprised governments don't collapse in on themselves more often.  I suppose it goes back to HB's assertion that people are much more flexible than big lumbering governments, so no matter what gov't does that pisses us off, we're relatively quick to realize ways around it... however, things that gov't does that are actually helpful (roads, courts, and maybe even some social safety nets) we use to the full advantage of our happiness... though this whole last part is not part of HB's thinking so much as my own addition to it.  I think gov't can do some things very well, probably not because it's actually doing well, but more that it's doing better than a private system would due to market inefficiencies (think of a private freeway system).

I can actually envision private freeways working very well; certainly much better than the government-monopolized model that, after all, kills 40,000 people per year and is constantly deteriorating and subject to irrational politicized decision-making. I recommend Walter Block's The Privatization of Roads and Highways:

http://mises.org/books/roads_web.pdf

Also, private court systems are actually a historical reality; the treaty of Westphalia basically put an end to them, but prior to 1648, people (well, non-serfs) could choose to seek justice in whatever city they pleased. Many cities actually became known for their wise judges, and the competition among justice providers checked the hubris and power of individual judges. Compare and contrast this to our current government monopoly justice system that most of the time acts as a rubber-stamp to the power of the police to harm people and various levels of government to instruct the police to do so.

[moda0306]

Gumby,

Good points.  I like Krugman's description of the federal gov't being one big insurance company with an army.  I believe that without the social insurance (much of which is either counter-cyclical or simply non-cyclical) state economies would be much more volatile, especially considering that the federal gov't is the currency issuer, leaving state particularly prone to bankruptcy if they try to enact counter-cyclical measures.

I tend to think that any of level of gov't fails the "coercion" test... whether local or state or federal, some level of gov't is dictating that I can't go on "his" land.

I don't know about you, but I tend to think that it's a good thing that some of these things are administered from the federal level, as the states, as non-currency issuers, are in a bad spot to be able to counteract some decidedly harsh economic events.

With all our talk of financial d0uchebaggery in the private sector, I'm actually glad we have a SS system in place (even if the paygo system isn't ideal (debatable)), as a buffer to prevent our Grandmas from getting COMPLETELY swindled.

[moda0306]

Pointedstick,

Yikes... Private roads?  Still involves gov't telling the "owners" of the roads they are deeded to have that right in the first place, and without a strong, strong promise to defend that right... I don't think it'd develop.  I'll have to read that.. someday... that's some meaty stuff.

Also, regarding "private" judges, eventually force has to be laid out, and I think the judges you mentioned would have to have been part of a system we'd have to call "government".  I don't think they were simply hired arbiters of justice.

[Tyler]

Southern China has a good number of private roads (well, as private any property can be in China). Not a fan.

Not only is every highway a toll road, but the connections between roads are a mess.  Imagine driving on a non-paved entrance ramp during a rainstorm because the builders couldn't negotiate the best way to connect to existing roads. 

[moda0306]

Tyler,

Yes... I'd imagine reading a book about private roads would give me a very "Ayn Randian" cartoonish example of how they can work just fine.  That said, I haven't read it, so I'll put this on the back burner.