We have not acquired any debt. The so-called public debt really belongs to the oligarchy. We the peoples have not acquired anything or been benefited, and thus we owe nothing.

–Confederation of Ecuadorian Kichwas (ECUARUNARI), quoted in Daniel Denvir, AlterNet (2008-12-15): Ecuador Calls foreign Debt Illegal, Defaults on Payments

Last month, the government of Ecuador defaulted on a US$ 30,600,000 interest payment on US$ 510,000,000 in bond debt. They will be defaulting on payments on two other series of bonds, amounting to US$ 9,937,000,000, or 19% of the entire country’s GDP.

Kevin Carson, in his first (hooray; congratulations) regular weekly commentary at the Center for a Stateless Society, says It’s about time, and Good on them. He points out that this massive government debt has nothing to do with freed trade or voluntary production. It has everything to do with building political alliances between governments and providing government funding for massive forced-modernization boondoggles and corporate privateering — with the costs, as always, taken out of the hides of Ecuadorian workers and farmers. As Carson writes:

That's entirely correct. In the specific case of Ecuador, according to John Perkins (Confessions of an Economic Hit Man), the loans were designed to foment conditions that make [Ecuador] subservient to the corporatocracy running our biggest corporations, our government, and our banks. Infratructure loans were granted on the condition that engineering and construction companies from our own country must build all these projects. In essence, most of the money never leaves the United States; it is simply transferred from banking offices in Washington to engineering offices in New York, Houston, or San Francisco.

. . .

[The main function of the government agencies set up to receive and manage foreign debt] is to work in collusion with the World Bank to run up debt building the infrastructure foreign capital needs for profitable investment. A majority of World Bank loans since that agency's inception have gone to building the roads and utilities necessary to support foreign-owned industry. The effect is to crowd out decentralized, small-scale, locally-owned industry serving local markets, and to integrate the domestic economy into a neoliberal framework of providing raw materials and labor for foreign industry.

The resulting debt (which the people of the country never approved) can then be used to further cement neoliberal policies, by blackmailing the local government into adopting a structural adjustment program. And the policies adopted under such programs generally include the privatization of the same infrastructure the loans were taken out to build, and selling it to the very people it was built to serve. Not only that, but the privatization is generally arranged on terms virtually dictated by the purchasers, with native governments sometimes spending more taxpayer money to make the assets salable than the sale actually fetches.

— Kevin Carson, Center for a Stateless Society (2009-01-05): Ecuador Repudiates Foreign Debt: It's About Time

Kevin has an excellent discussion of the structural and economic effects of massive government debts in formerly colonized countries like Ecuador. I think he’s entirely right. Of course, I couldn’t care less about the fact that the government of Ecuador has trouble raising funds for its own domestic parasitism and government-funded, government-regimented programs. Like all government programs, these range from useless to foolish and destructive. Would that the government of Ecuador couldn’t raise any money for any purpose. But what is a problem is the fact that the money for the payments on those debts — like all government payments — is always taken out of the pockets of the Ecuadorian people, through taxation, which is to say, by force.

And it’s that that I want to say something about today — not only the structural effects of government debt and government-lubricated neoliberalism (which is to say, government-financed state capitalism), but also the moral case for unilateral and unconditional repudiation. That case is a simple case, and it’s exactly what ECUARUNARI said: people should never be forced to pay debts that they never agreed to take on.

So-called public debt is, of course, never contracted by the public (if that means all the people of a particular country) it is contracted by a tiny, parasitic minority that lives at the expense of the rest of the public, and which has arbitrarily declared itself the rightful rulers and the designated collective-bargaining agents of everybody else in the country — whether or not anybody else ever agreed to that arrangement. When banks or foreign governments loan money to a government, they loan it to that tiny, parasitic minority, and they do so with the expectation that their investment will be repaid by means of taxation, which is to say, by means of the money that the government extracts from the public by force. None of the rest of us are ever asked to take on these debts; none of us are ever given any meaningful choice over whether to take on these debts, or how to disburse the money that has been loaned to us; we are just made to pay them against our will. (And it will not help to say that we somehow consented to let the government act as our financial agent, and so consented to cover the costs of the decisions they make on our behalf; nobody ever consents to the State.)

Now, those individual people — members of the tiny, parasitic minority — who did contract the debt may try to pay it — out of their own pockets — if they like. That’s their business. If they think it’s worthwhile to do so, they can even pass the plate and ask people to voluntarily help pay it back. That’s between them and their donors. But neither they, nor any governments which may show up later to assume the old regime’s usurping claims, have the least duty, or the least right, to inflict their debts on any other living person, or to send the bill to the government tax apparatus (which just means forcing taxpayers to pay for it). But then there are no legitimate government debts at all; at the very most, there are private debts that the tiny, parasitic minority have taken on themselves and then ransomed from the rest of us by force.

Whatever the would-be governmors of Ecuador may owe, the people of Ecuador owe not one damned dime to the World Bank, the IMF, CitiBank, or any other lender. And so the real issue is justice, not charity — except insofar as the most charitable thing that rich governments can do for poor people is to get their boots off, and their fangs out, of those people’s necks. All of which means that the political focus needs to be on inciting indignation and resistance from the people being forced to pay these criminal debts — not on appealing to the better natures of the people collecting them. And that the only just policy with regard to government debt is to burn the bills and stop taking the collectors’ calls — to repudiate all government debts unilaterally, immediately, completely, everywhere, and forever. Whether or not you have taken the time to get permission from the IMF, the United States government, or the humanitarian rock stars of the world.

It may be claimed that, even if repaying the loans by means of taxation is an injustice against Ecuadorian taxpayers, policy-makers (the dignified term that some people use for ranting, violent power-trippers in government offices) must balance that against the injustice of defaulting on the loans — which would be an injustice against investors who made those loans in good faith, expecting to be repaid. But no, it wouldn’t. They made the loans expecting that their return would be stolen from out of the pockets of the Ecuadorian people. (This is why government bonds are traditionally rated as safe investments; the safety consists in the fact that the interest payments are extracted by force rather than depending on market success.) There is no such thing as a good-faith loan to a piratical enterprise; if those who made the loans get nothing for their trouble, then they’ve earned, and deserve, exactly what they get.

It may also be objected that, whatever the justice of the case, insisting on the right to repudiate government-contracted debts will be harmful for the Ecuadorian people — more harmful than the alternative of paying off those illegitimate debts — and so that it would be a good idea to pay them off anyway, as a sort of a ransom. But these objections always depend on one of two lines of argument, both of which are fallacious. First, there are those who argue that repudiating government debts will make Ecuador a pariah, and cut them off from trade, credit, and other resources for economic growth. Thus, for example, Enrique Alvarez, head of research for Latin America Financial Markets for IDEAglobal in New York: They were already sort of headed into isolation. Essentially now they’ve drawn shut the gate. But this line of argument only makes sense if you talk about Ecuador and completely forget the difference between the Ecuadorian government and the Ecuadorian people. Repudiation of government debts will surely make it more difficult for the government to find credit or make financial deals in the future. But so what? If we’re interested in the well-being of the people in Ecuador, and if development means prosperity for ordinary people, rather than a government-driven fetish for great big centrally planned projects, then the important issue has nothing to do with whether or not the government can find credit. It has to do with whether or not people can find trading partners, investors, and money for their own projects. There’s no reason why repudiating government debts would make people in other countries less interested in trading with or extending credit to individual people or private outfits in Ecuador, and so no reason why anyone other than the Ecuadorian government would end up in isolation. And if the Ecuadorian government ends up in isolation, well, who cares, as long as the Ecuadorian people remain free to do their own work and make their own deals?

Others, having recognized that repudiation only immediately harms the financial prospects of the government, not ordinary Ecuadorians, will go on to object that it will still harm the Ecuadorian people, anyway, because that will make it harder for the Ecuadorian government to raise money for its own projects in the future. But while that’s true enough, it’s a plain non sequitur to infer from it that the Ecuadorian people will be harmed by that fact — unless you help yourself to the auxiliary premise that the Ecuadorian people somehow benefit when the Ecuadorian government has easy access to money for its projects. That in turn makes sense only if you suppose that the Ecuadorian government’s projects tend to benefit the Ecuadorian people. But while lots of people make that claim, either tacitly or explicitly, hardly anyone makes any real effort to defend it. And in fact, given both what we know about governments in general, and in particular about the kind of governments that tend to rule countries like Ecuador, it’s a claim that happens to be ridiculously implausible. As a matter of fact, permanently crippling governments’ ability to raise funds for costly government projects is one of the best developments I could hope for on the world scene.

When Progressive outfits like Make Poverty History have noticed the problems that government debts create, their response has been, mainly, to beg rich governments to cancel the existing debts of poor governments, as a sort of charitable hand-out to the poor dears, preferably through a process mediated by some international bureaucracy, probably under the control of the U.N. The whole proposal is absurd; the main consolation is that, like most other grand Progressive proposals, it is more or less completely ineffectual. (Who do you think has more influence over the U.S. government’s trade and international finance bureaucracies? Bono or the IMF and CitiGroup?)

In fact, discussions of government debt should not focus on mediated settlements or relief from creditor governments, but rather on unilateral repudiation of so-called public debt by debtor governments. Not because enforcing the collection of these debts is scroogish or because it ought to be tempered by considerations of charity, but rather because the debts themselves are completely illegitimate and enforcing the collection of these debts is absolutely unjust. Whether that’s the debts of the governments in Ecuador, or in Tanzania, or, for that matter, in the United States of America — where we are all being extorted to pay off US$ 10,000,000,000,000 of debts that we never once agreed to. Debts that were taken out without our permission, then inflicted on us against our will, so that this government could pay for its murderous wars, its tyrannical surveillance and intelligence apparatus, its brain-dead federal programs, its byzantine busybodying regulation, and its multitrillion dollar preservation programs for endangered capitalists and their habitats in the economic status quo.

So here’s to repudiation; and here’s hoping for two, three, many Ecuadors….

One of the points that I wanted to stress in my recent response to Danny Blogaduce’s recent article on left-libertarianism is that, at least as far as it touches on questions of strategy and practical politics, Blogaduce is more or less right about the kind of thing he calls libertarianism — that is, the sort of gradualist and reformist pet projects advanced by limited-statist outfits like Cato and the Libertarian Party. (The problem with his article is that he wrongly thinks that what he thinks of as libertarianism is all there is to libertarianism — an odd stance to take in an article responding to a radical Left, anti-electoralist market anarchist.)

But Yglesias is right that minimal-statist reformism, more or less necessarily, depends on an unrealizable and ultimately incoherent notion of State neutrality, and that, strategically, it also inevitable falls into the trap of trying to intervene in government policy debates while taking the basic presuppositions of that debate for granted, on the foolish belief that by doing so we will somehow be able to restrain or undermine the manipulation of that debate and that policy apparatus by the well-organized and well-funded forces that created it and that continue to rig the matches and game the system. There’s a reason why (reformist, minimal-statist) libertarians so often lose track of the subject and smother the revolutionary notion of freed markets and free association with a bunch of tax-subsidized choice programs, outsourced government monopolies, and other cockamaimey privateering schemes. If you start out by trying to take hold of a system of domination rather than resisting it, and by trying jump into a rigged debate rather than challenging the notion underlying the debate itself–where you’re allowed to file slowly away at only one of the bars of the statist cage, while leaving all the other criss-crossing bars in place, unchallenged or (more commonly) simply unmentioned–then you shouldn’t be surprised when your attempt to intervene in that debate ends up consisting of little more than No reasonable person is advocating that we are going to stop destroying money! But the American people earned that money. They have the right to decide how it should be destroyed.

When the limits of Beltway consensus policy debate are the limits on what a reasonable person can advocate, what decent people have to do is to start being unreasonable. Anything else, and you’d better just learn to love the money fires. Because that’s all you’re getting, even if you somehow managed to win.

See also:

• GT 2007-12-08: Privateering illustrated
• GT 2007-11-08: Sprachkritik: Privatization
• GT 2008-09-10: The Stupid Campaign Season Distraction

(Via Austro Athenian Empire 2008-11-10 and a bunch of other places.)

Congratulations to Roderick for heading up a round-table discussion in the latest Cato Unbound on corporate power, with a fine introductiory essay on left-libertarianism, and left-libertarian takes on corporatism, the alliance of big government and big business, class, and vulgar libertarian conflation of freed markets with actually-existing capitalism. Our efforts to cover the world with lying, thieving mutualism proceed apace.

Defenders of the free market are often accused of being apologists for big business and shills for the corporate elite. Is this a fair charge?

No and yes. Emphatically no—because corporate power and the free market are actually antithetical; genuine competition is big business's worst nightmare. But also, in all too many cases, yes —because although liberty and plutocracy cannot coexist, simultaneous advocacy of both is all too possible.

First, the no. Corporations tend to fear competition, because competition exerts downward pressure on prices and upward pressure on salaries; moreover, success on the market comes with no guarantee of permanency, depending as it does on outdoing other firms at correctly figuring out how best to satisfy forever-changing consumer preferences, and that kind of vulnerability to loss is no picnic. It is no surprise, then, that throughout U.S. history corporations have been overwhelmingly hostile to the free market. Indeed, most of the existing regulatory apparatus—including those regulations widely misperceived as restraints on corporate power—were vigorously supported, lobbied for, and in some cases even drafted by the corporate elite.[1]

Corporate power depends crucially on government intervention in the marketplace.[2] This is obvious enough in the case of the more overt forms of government favoritism such as subsidies, bailouts,[3] and other forms of corporate welfare; protectionist tariffs; explicit grants of monopoly privilege; and the seizing of private property for corporate use via eminent domain (as in Kelo v. New London). But these direct forms of pro-business intervention are supplemented by a swarm of indirect forms whose impact is arguably greater still.

. . . So where does this idea come from that advocates of free-market libertarianism must be carrying water for big business interests? Whence the pervasive conflation of corporatist plutocracy with libertarian laissez-faire? Who is responsible for promoting this confusion?

There are three different groups that must shoulder their share of the blame. (Note: in speaking of "blame" I am not necessarily saying that the "culprits" have deliberately promulgated what they knew to be a confusion; in most cases the failing is rather one of negligence, of inadequate attention to inconsistencies in their worldview. And as we'll see, these three groups have systematically reinforced one another's confusions.)

Culprit #1: the left. Across the spectrum from the squishiest mainstream liberal to the bomb-throwingest radical leftist, there is widespread (though not, it should be noted, universal)[10] agreement that laissez-faire and corporate plutocracy are virtually synonymous. David Korten, for example, describes advocates of unrestricted markets, private property, and individual rights as corporate libertarians who champion a globalized free market that leaves resource allocation decisions in the hands of giant corporations[11]—as though these giant corporations were creatures of the free market rather than of the state—while Noam Chomsky, though savvy enough to recognize that the corporate elite are terrified of genuine free markets, yet in the same breath will turn around and say that we must at all costs avoid free markets lest we unduly empower the corporate elite.[12]

Culprit #2: the right. If libertarians' left-wing opponents have conflated free markets with pro-business intervention, libertarians' right-wing opponents have done all they can to foster precisely this confusion; for there is a widespread (though again not universal) tendency for conservatives to cloak corporatist policies in free-market rhetoric. This is how conservative politicians in their presumptuous Adam Smith neckties have managed to get themselves perceived—perhaps have even managed to perceive themselves—as proponents of tax cuts, spending cuts, and unhampered competition despite endlessly raising taxes, raising spending, and promoting government-business partnerships.

Consider the conservative virtue-term privatization, which has two distinct, indeed opposed, meanings. On the one hand, it can mean returning some service or industry from the monopolistic government sector to the competitive private sector—getting government out of it; this would be the libertarian meaning. On the other hand, it can mean contracting out, i.e., granting to some private firm a monopoly privilege in the provision some service previously provided by government directly. There is nothing free-market about privatization in this latter sense, since the monopoly power is merely transferred from one set of hands to another; this is corporatism, or pro-business intervention, not laissez-faire. (To be sure, there may be competition in the bidding for such monopoly contracts, but competition to establish a legal monopoly is no more genuine market competition than voting—one last time—to establish a dictator is genuine democracy.)

Of these two meanings, the corporatist meaning may actually be older, dating back to fascist economic policies in Nazi Germany;[13] but it was the libertarian meaning that was primarily intended when the term (coined independently, as the reverse of "nationalization") first achieved widespread usage in recent decades. Yet conservatives have largely co-opted the term, turning it once again toward the corporatist sense.

. . .

Culprit #3: libertarians themselves. Alas, libertarians are not innocent here—which is why the answer to my opening question (as to whether it's fair to charge libertarians with being apologists for big business) was no and yes rather than a simple no. If libertarians are accused of carrying water for corporate interests, that may be at least in part because, well, they so often sound like that's just what they're doing (though here, as above, there are plenty of honorable exceptions to this tendency). Consider libertarian icon Ayn Rand's description of big business as a persecuted minority,[14] or the way libertarians defend our free-market health-care system against the alternative of socialized medicine, as though the health care system that prevails in the United States were the product of free competition rather than of systematic government intervention on behalf of insurance companies and the medical establishment at the expense of ordinary people.[15] Or again, note the alacrity with which so many libertarians rush to defend Wal-Mart and the like as heroic exemplars of the free market. Among such libertarians, criticisms of corporate power are routinely dismissed as anti-market ideology. (Of course such dismissiveness gets reinforced by the fact that many critics of corporate power are in the grip of anti-market ideology.) Thus when left-wing analysts complain about corporate libertarians they are not merely confused; they're responding to a genuine tendency even if they've to some extent misunderstood it.

— Roderick Long, Cato Unbound (2008-11-10): Corporations versus the Market; or, Whip Conflation Now

Read the whole thing. It’s great.

The post has already provoked a lot of discussion. Some of it — for example, from Wirkman 2008-11-10, Peter Klein 2008-11-10, and Will Wilkinson 2008-11-10 — is insightful and raises important issues. I’ll also be interested to see the upcoming promised replies from Steven Horwitz, Dean Baker, and the Danny Bonaduce of the Blogosphere. The commentary is a bit much to cover fully here, and is getting hashed out in comments threads, anyway; but I will say that I’m a bit puzzled about this from Will Wilkinson:

But this hints at a thicket of trickier issues. We want a system in which profit-seeking behavior creates the greatest net positive externalities (like continuously increasing the consumer's share of the cooperative surplus from mundane purchases). But positive spillover maximization within the constraints of a sub-optimal overall system is really desirable, despite the less-than-best incentive structure.

Dude, I just want Sam Walton to get his cold, dead hands out of my pockets. The rest is all details, as far as I’m concerned.

In any case, it seems to me that whether or not Wal-Mart and its business practices ought to be regarded with admiration, contempt, or indifference is really an importantly separate question from the question of whether or not Wal-Mart would have a sustainable business model under freed markets. If Wal-Mart as we know it could not exist but for State privileges, that’s reason enough for libertarians to be wary of reflexively defending Wal-Mart’s bidniz practices as examples of the free market at work, even if it’s not yet clear whether or not libertarians ought to find Wal-Mart objectionable (as a matter of thickness from consequences, and it seems to me that Roderick’s point has to do more or less entirely with the simpler point about sustainability, not the more complicated point about how to feel about the State-dependent business in question.

Meanwhile, Jesse Walker also kindly posted a notice over at Hit and Run, which provoked a discussion in which Hit and Run commenters were fully able to live up to their reputation for fair, insightful, and thought-provoking discussion of issues in libertarianism. For example, here’s the top comment in its entirety:

joshua corning | November 10, 2008, 2:14pm | #

If libertarians are accused of carrying water for corporate interests, that may be at least in part because, well, they so often sound like that’s just what they’re doing

Fuck you Roderick Long.

I mention the Hit and Run thread, though, mainly because it contains the nicest illustration you could possibly hope for of vulgar libertarian reasoning. Roderick wrote:

In a free market, firms would be smaller and less hierarchical, more local and more numerous

To which R. C. Dean replies:

I don’t see why. Just to take one example of a market that is pretty free of overt government intervention of the kind listed above: Bookstores. Most smaller, less hierarchical local bookstores are now history, replaced by Big Box Bookstores and on-line booksellers that have huge inventories and lower prices.

So, you see:

1. Big box bookstores are more successful than smaller, more localized bookstore in the (unfree, government-regulated, privilege-infused, development machine-driven) actually existing market.

2. …

3. Therefore, big box bookstores will be more successful than smaller, more localized bookstores in the free market.

Far be it from me to bag on Borders and Barnes and Noble — I like them each a lot. But this notion that we can just look at their current market success, under the constrained and distorted conditions of the actually-existing unfree capitalist market, in which their business model is fundamentally dependent on the use of government highways to ship huge piles of books, on the use of the government development machine to seize huge tracts of land and lucrative subsidies to artificially encourage big box retail outlets, and, lest we forget, on government copyright laws that forcibly restrict booksellers to a limited number of centralized, monopoly-priced suppliers; without them, any jackass with a printer or a Kinko’s card could start her own local bookstore for little more than the cost of ink and paper — the notion, I say that we can just look at their current success on the unfree market and immediately infer it to be the result of processes that would continue with no noticeable reduction in a freed market, is desperately in need of a substantive argument that has not been given. Economies of scale only seem to matter here because, as usual, the costs of scale (like, the freed-market cost of consensually acquiring big blocks of contiguous land; like, the freed-market cost of competing with hyperlocal, extremely low-cost competitors that current laws force out of business) are being ignored, and while the rest of the (artificially centralized, subsidized, monopoly-protected) corporate market is assumed to remain fixed just as it is, even though the whole supply chain would in fact be radically altered by freed markets.

See also:

• GT 2008-05-29: Dump the rentiers off your back
• GT 2008-10-24: How the United States government looks out for small business
• GT 2008-09-29: Not One Damned Dime
• GT 2008-09-12: What’s good for General Motors is good for American state capitalism
• GT 2008-06-06: Carson in the Freeman: Hierarchy or the Market
• GT 2008-03-19: Small enough to fail
• GT 2008-02-13: Liberty, Equality, Solidarity: Toward a Dialectical Anarchism
• GT 2008-01-04: Cognitive Dissonance of the Non-Libertarian Left
• GT 2007-11-08: Sprachkritik: Privatization
• GT 2004-05-02: Écrasez l'Wal-Mart
• GT 2008-08-08: Proof by ostention
• GT 2008-01-26: In which I fail to be reassured

First they taught us to depend
On their Nation-States to mend
Our tired minds, our broken bones, our failing limbs;
And now they’ve sold off all the splints,
and contracted out the tourniquets,
And if we jump through hoops, then we might just survive.

–Propagandhi, The State Lottery

There has been some interesting discussion among Jim Henley (2008-02-21), Tom Knapp (2008-02-29), and Kevin Carson over left-libertarian political programmes, strategic priorities, gradualism, and the welfare state. The debate began with an argument over Knapp’s World’s Smallest Political Platform for the Libertarian Party, and Henley’s worries that the platform, as expressed, doesn’t allow much room for gradualist approaches to repeal, or nuance in strategic priorities. Now, I don’t have much of a dog in that fight, because I’m not a gradualist, but I’m not in the least bit interested about limited-statist party-building or political platforms, either. At the level of moral principle, I have a very simple approach to taxation, government welfare programs, regulation, etc. If I had a platform, it would be three words — Smash the State — and the programme I favor for implementing that is for each and every government program to be be abolished immediately, completely, and forever, whenever, wherever, in whatever order, and to whatever extent that we can, by hook, by crook, slingshot, canoe, wherever the political opportunity to do so presents itself. Political coercion is an evil against which it may sometimes be prudent to retreat, but with which there can be no negotiated compromise. (All such compromises, so-called, are really just conditional surrender.)

In other words, on the one hand, I am an ultra-immediatist, in the sense that I believe that everything’s got to go, and that libertarians and anarchists should make no bones about saying so; and, on the other, I also — unlike certain gradualist anarcho-statists like Noam Chomsky or Ursula K. LeGuin — am an ultra-incrementalist, in the sense that I don’t think that we ought to put our efforts to abolish anything on hold until we’ve somehow (how?) managed to abolish just about everything.

I’m not actually sure whether Henley really is advocating gradualism in the sense that I oppose it; there’s a difference between gradualism in ideals and incrementalism in strategy, which language makes unfortunately easy to overlook. Defending immediate and complete abolition on principle, and the abolition of any coercive program you may get the opportunity to abolish, doesn’t entail any particular order of priorities in terms of the scope or order in which you might concentrate your own limited resources towards making opportunities for abolition that didn’t previously exist. And that’s where I think the interesting part comes in, and where there is a lot of room for interesting discussion about freedom, class, and strategic priorities when it comes to government interventions with distinctive class profiles. Here’s Henley:

… I have a sequencing objection. Figure the state as Annie Wilkes in Stephen King’s novel, Misery. She wants to help the patient so much she’ll never willingly let him go. To a libertarian, much of what the state does looks like providing crutches or shackles. To an anarchist, I suppose everything the state does looks like that. Crutches are actually important for the injured. If you’re to completely heal, though, you have to give them up at the right time. And some badly injured people are never going to be able to do without them – e.g. my mother with her walker.

But the crazy nurse wants you to keep your crutches whether you need them or not, and she’ll chain you to the bed, if necessary, to keep you in her care. If she has to, she’ll cut off your foot, for your own good. … So we want to remove most or all crutches and shed most or all shackles, depending on how, for lack of a better term, anarchistic we are. But which shackles and which crutches when? The liberal libertarian answer is: first take the crutches from those best able to bear their own weight, and remove the shackles from the weak before the strong. So: corporate welfare before Social Security before Aid to Families with Dependent Children. Drug prohibition before marginal income tax rates.

Most libertarians would agree that it’s a messed-up state that:

• Creates a massive crime problem in poor minority neighborhoods with a futile, vicious and every more far-reaching attempt to prevent commerce in popular, highly portable intoxicants that leaves absurd numbers of young men with felony records, making them marginally employable.

• Fails to provide adequate policing for such neighborhoods.

• Fails to provide effective education in such neighborhoods after installing itself as the educator of first resort.

• Uses regulatory power to sharply curtail entry into lines of business from hair-care to ride provision, further limiting the employment options of people in such neighborhoods.

• Has in the past actively fostered the oppression of said minority, up to and including spending state money and time in keeping its members in bondage.

• To make up for all of the above, provides a nominal amount of tax-financed welfare for the afflicted.

But it’s a messed-up libertarianism that looks at that situation and says, Man, first thing we gotta do is get rid of that welfare!

— Jim Henley, Unqualified Offerings (2008-02-21): Ask Me What the Secret of L–TIMING!–ibalertarianism Is

Kevin Carson takes sympathetic notice of Henley’s metaphor of crutches and shackles, quoting an earlier passage in which he’d used quite similar language to make the point:

If the privilege remains, statist corrective action will be the inevitable result. That’s why I don’t get too bent out of shape about the statism of the minimum wage or overtime laws–in my list of statist evils, the guys who are breaking legs rank considerably higher than the ones handing out government crutches. All too many libertarians could care less about the statism that causes the problems of income disparity, but go ballistic over the statism intended to alleviate it. It’s another example of the general rule that statism that helps the rich is kinda sorta bad, maybe, I guess, but statism that helps the poor is flaming red ruin on wheels.

— Quoted by Kevin Carson (2008-03-03): On Dissolving the State, and What to Replace It With

I agree a lot with the broad point that Henley and Carson are both making here. In setting strategic priorities, we have to look at which forms of government coercion do the most concrete damage, which forms of government coercion has intended victims who are most vulnerable to it, which forms have intended victims who can more easily evade or game the system on their own, and, perhaps most importantly, which forms serve as the real historical and ideological anchors for establishing and sustaining the distorted statist social order, and which forms are relatively superficial efforts to stabilize or ameliorate the effects of those anchors. I think that on all these counts, a serious look at how calls the shots and who takes the bullets will show that the welfare state, such as it is, is a fairly small and superficial effort to ameliorate the effects of deep, pervasive, and incredibly destructive economic and institutional privilege for big, centralized, bureaucratic state capitalism, and (as much or more so) for the class power of the State itself over the poor folks that it beats up, locks up, institutionalizes, bombs, robs of their homes and livelihoods, and so on. Moreover, it’s a fairly small and superficial effort which doesn’t violate anybody’s rights per se; it’s the coercive funding of government doles, not their mere existence, that involves government violence, and in that respect, while I think they should be abolished, they’re on quite a different footing from things like the warfare state and the underlying government monopolies and privileges that the welfare state is intended to correct for, which involve coercion both in funding and in the very things that the funding is used for. All this tends to support strategic priorities in favor of (as Tom Knapp himself originally put it) cutting welfare from the top down and cutting taxes from the bottom up.

That’s all well and good. But I want to sound a note of caution. When we’re setting our strategic priorities, one thing that we need to keep an eye out for is the fact that not all of what the government passes out as a crutch really is one; the enemy we’re fighting, after all, is a consolidated mass not only of force, but also of fraud. Lots of so-called crutches really have a secret shackle attached to them — welfare per se is a crutch, but remember that welfare comes with a professional busybody social worker attached. Moreover, lots of so-called crutches are themselves crowbars; they’re the tools that the State uses to break your legs, and then have the supreme impudence to claim that they’re helping you to walk by doing it. As I said to Kevin (internal links added for this post):

Broadly speaking, I agree with your and Henley’s point about strategic priorities. It’s an odd form of libertarianism, and a damned foolish one, that operates by trying to pitch itself to the classes that control all the levers of power in both the market and the State, and to play off their fears and class resentment against those who have virtually no power, no access to legislators, are disproportionately likely not to even be able to vote, and who are trodden upon by the State at virtually every turn. It makes just about as much sense as trying to launch a feminist movement whose first campaign would be to organize a bunch of men against their crazy ex-girlfriends.

But … Aren’t there a lot of so-called social programs out there which the government fraudulently passes off as crutches, when in fact they are crowbars? Since you mentioned it, consider the minimum wage–the primary effect of which is simply to force willing workers out of work. If it benefits any workers, then it benefits the better-off workers at the expense of marginal workers who can less afford to lose the job. Or, to take another example, consider every gradualist’s favorite program — the government schools — which in fact function as highly regimented, thoroughly stifling, and unbearably unpleasant detention-indoctrination-humiliation camps for the vast majority of children and adolescents for whose benefit these edu-prisons are supposedly being maintained.

Or for that matter, consider phony pro-labor legislation like the Wagner Act, the primary function of which is actually to capture unions with government patronage and bring them under greater government regulation.

Aren’t there a lot of so-called crutches, usually defended by corporate liberals and excoriated by conservatives, which really ought to be pressured and resisted and limited and abolished as quickly as possible, precisely because, bogus liberal and conservative arguments notwithstanding, they actually work to shackle the poor or otherwise powerless for their own good?

— Rad Geek, in comments (2008-03-03) on On Dissolving the State, and What to Replace It With

Really, to keep my metaphors straight, I should have said cripple the poor or otherwise powerless. Oh well. In any case, Kevin agreed, and added some quite true and important points:

I agree entirely. That’s why I think the setting of priorities for dismantling the state must be combined with educational efforts and building counter-institutions.

Frankly, eliminating the minimum wage and food stamps is at the very bottom of my list of priorities. My guess is that when the landlord and banking monopolies are eliminated, along with intellectual property, Taft-Hartley, and all the regulatory barriers to mutual insurance, eliminating the minimum wage and food stamps will be a moot point because it will be so hard to find anybody on them.

But I also advocate vigorous ideological struggle to counteract the matrix version of reality parroted by the vulgar liberals at Daily Kos, and to expose the role of the state capitalist ruling class in creating the regulatory-welfare state.

And that’s especially true in the case of crutches that play a central role in serious exploitation, like professional licensing and safety codes whose main purpose is to enforce the power of cartels to bleed consumers dry and shut workers out of opportunities for self-employment.

— Kevin Carson, comments (2008-03-03) on On Dissolving the State, and What to Replace It With

But while I agree with him on almost all the details of his reply, I think there’s an important distinction that it misses:

I agree with you on food stamps, but not on the minimum wage. In fact it’s laws like the minimum wage which I especially had in mind when I mentioned crowbars being passed off as crutches. While I agree that a free market would almost certainly result in substantial increases in real income and substantial decreases in cost of living for virtually all workers — to the point where they would either be making well above the current minimum wage, or at least where fixed costs of living would have dropped enough that it amounts to the same — there’s also the question of what we should be pushing for in the meantime in-betweentime, when there aren’t fully free markets in labor, capital, ideas, and land. In that context, the minimum wage law is, I think, actively destructive. Conditional give-aways, like foodstamps, are one thing; the program itself doesn’t violate anyone’s rights (it’s the tax funding that’s the problem), and people can always choose not to go on foodstamps if they decide (for whatever reason) that it’s doing them more harm than good. Not so with minimum wage; the only way to shake off this so-called protection is to seek out someone who’ll let you work under the table, and hope the government doesn’t catch on. The result is forcing one class of workers out of work in favor of another, more privileged class of workers. Hence, I’d argue we should treat abolition of the minimum wage a lot differently, in terms of strategic priorities, from how we treat government welfare, food stamps, etc.

— Rad Geek, in comments (2008-03-04) on On Dissolving the State, and What to Replace It With

Here’s Kevin’s response to the distinction in treatment that I wanted to urge:

I’m not sure the minimum wage really has that effect (and again, my purpose is not to defend the MW, but to move its abolition to the bottom of the priority list).

I know the arguments on how they reduce employment, but they all carry an implied ceteris paribus; and most of the polemicists at Mises.Org and the like strenuously advoid any suggestion that things might not be equal.

It’s most likely that, in an industry that employs minimum wage workers, there is little or no competitive pressure to minimize wage costs because all the local employers in that industry are paying the same wage. And if there’s a high elasticity of demand for fast food, etc., it will probably be passed on to customers unnoticed, as one small component in the price of a Big Mac.

In addition, the argument assumes a competitive labor market and cost-minimizing firms, and neglects the possiblity that minimum wage increases may come out of quasi-rents and simply reduce profit. That’s unlikely to be the case for minimum wage employers per se, which tend to be small businesses with narrow profit margins; but it’s more likely to be true in better paying employers who peg wages to the minimum wage plus some differential.

— Kevin Carson, comments (2008-03-05) on On Dissolving the State, and What to Replace It With

I didn’t mean to suggest that Kevin was trying to defend the minimum wage, and I’m sorry if I inadvertently gave the impression that that’s what I’m arguing against. I take it that he’s not trying to defend government welfare, either; just suggesting that libertarians re-order their strategic priorities in terms of which evils to first and most intently put their limited resources towards combating. The point I’m urging is in a similar vein; I’d like to encourage left libertarians, in particular, to make a further distinction of priorities, and put minimum wage laws higher up the To-Agitate-Against list than they put government dole programs. They’re both objectionable, and I’d argue that both should be abolished (immediately, completely) at the first opportunity. But they’re objectionable in different ways, and shouldn’t be considered as part of a single welfare state package when anarchists look at what kind of opportunities to try to drum up for ourselves. The bare existence directly coerces individual workers, and for the most part tends to hurt the most economically vulnerable workers the most, in ways that the existence of welfare state programs (where the problem is not the program per se, but the coercive funding) do not.

I’m not sure I understand Kevin’s argument when he says, And if there’s a high elasticity of demand for fast food, etc., it will probably be passed on to customers unnoticed, as one small component in the price of a Big Mac, and I wonder whether he meant to write low elasticity of demand. If there’s a high price-elasticity of demand for fast food, then that would mean that quantity demanded is highly sensitive to price increases; in that kind of industry that bosses should be more likely, not less, to try to make up the difference in labor costs by stopping new hires, firing workers, reducing hours, and instituting work speed-ups.

And this isn’t just at the level of ceteris-paribus theory. There is that, and it’s important, but on this one, I can speak from the shop floor. I was working at a pizza joint in Michigan when the governor pushed a minimum wage bill through the state legislature, hiking the state price floor on labor to $6.95 per hour — with a tiered plan that raised it again to $7.15 per hour last July, and will raise it to $7.45 per hour this year. I was an inside cook at the time, and most of us already made above minimum wage, except for a couple of high schoolers.

In our shop, the main issue was the drivers. They got the minimum hourly wage for non-tipped employees on their paycheck (mainly so that the corporate office could invoke some plausible deniability on not reporting and paying FICA tax on their tips). When the increase went through, one of the immediate results was that corporate sent their know-nothing goons down from the office to start chewing out our GM over the hours for our regular late-night driver, who worked about 20 hours of overtime every week, because it’s hard to find other drivers who are willing to regularly work a 5:00pm-4:00am shift.

The other immediate result is that corporate forced our store to institute a $1.00 delivery fee — and to change the compensation structure for drivers. Drivers used to get $1.00 per run plus a commission based on the size (in dollars) of the order; after the change-over, they got a higher hourly wage and a flat commission of $0.75 per run, no matter what the size of the order. The result was that if you took more than four deliveries in an hour — or if you took just about any large-order deliveries — then you actually made less money that hour than you would have before Jennifer Granholm gave us all her government-mandated raise.

The delivery fee might make it look like a significant part of the cost of the minimum wage hike was being shifted onto customers, rather than onto workers. But (1) most of it was taken out on workers; the change in compensation for runs reduced pay to drivers, especially lunchtime drivers, by far more than the price increase increased store revenue. And (2) the fact is that customers usually just deducted the cost of the delivery fee from they would normally give as a tip to the driver. I know from questions that a few of them asked me after the delivery fee was instituted that a lot of them were under the mistaken impression that the delivery fee went to the driver. Thus the total costs to the customer didn’t budge; they just got re-allocated so that more would go to the boss instead of to the driver.

So at our store, at least, we could thank Jennifer Granholm’s raise for imposed hours-reductions, reduced tips, and providing management with the pretext for a really massive screwjob on effective pay for those who were working at the minimum hourly wage.

In other shops, there aren’t always the same opportunities for chiseling workers on non-hourly pay in the way drivers at our shop got chiseled. But in a broader sense, I don’t think our shop’s experience was atypical. Any retail or food service company, even if all pay comes from fixed hourly wages, can use hours reductions, halting new hires, and death-march speed-ups for those still on the crew. And that they will do that sort of thing, rather than adding cents onto meal specials that already focus on 99-cent deals and nickel-and-dime savings, seems like a perfectly predictable pattern that a lot of bosses in the low-wage service sector are going to follow, as long as there’s a lot more of us looking for hours than there are of them dangling the hours in front of us.

Of course, that last bit there is the root cause of the problem — government-imposed distortions of the markets in labor, capital, land, and ideas (inter alia) artificially constrain opportunities for people to make a living for themselves, distorting the labor market to keep disproportionate power in the hands of a small and privileged class of rentiers. Without those market distortions, a law against paying workers $4 an hour would matter about as much as a law against selling pork-chops in Mecca — objectionable on principle, but mainly negligible as a strategic matter, due to a dearth of identifiable victims. But as long as those coercive distortions are substantially in place, we do have to keep in mind how bosses will predictably react to additional coercive counter-distortions that are piled on top to correct for the predictable effects of the first distortion, without actually changing anything about the root causes. And with the predictable patterns of reaction in mind, and their current position of power within the labor market, I don’t think we have to turn into a bunch of vulgar Friedmaniacs or Misoids to agree with them that the effects of keeping, or worse, raising legally-enforced price floors on labor are going to be generally quite destructive, and most destructive to those who need most badly to find a place to sell their labor.

Now, when it comes to workers in my position, who were already working at above minimum wage, I agree that they might well see some wage increases from a minimum wage increase, by way of pegging and ripple effects. I never did, but maybe others might. There are some cases in which minimum wage increases might benefit relatively more privileged workers, but it’s the marginal workers — the ones who are working right at, or right above, or would be willing to work below the current minimum wage — who I’m most concerned about, because they are the ones whose backs it’s taken out on. Usually not in the form of firing existing workers — which is highly visible and has a significant marginal cost for the boss — but very often in the form of hours reductions and by simply not making new hires — which call much less attention to themselves and have much lower marginal costs, but can effect just as much in the way of ratcheting down labor costs.

I have lots of other strategic priorities that are higher on my list than the minimum wage. It’s enough work for me trying to take on war, government policing, international apartheid, the American Stasi, government schooling, institutional psychiatry, violence against women, gay-bashing, trans-bashing, government regimentation of healthcare, land-grabbing and privateering, government-enforced licensure cartels, the IRS, and the Wagner-Taft-Hartley framework, and trying to sell all of this to Leftists who mostly get only about half of it and libertarians who mostly get only the other half, without adding yet another windmill-charge at the pet notions of ACORN types and the corporate liberal consensus! But I do think that there’s a big asymmetry between government relief projects like TANF or food stamps, on the one hand, and the minimum wage and other coercively protective labor legislation, on the other.

I agree with Kevin more or less completely on the former. But the point I’m trying to stress is that, in spite of fact that the anti-minimum-wage argument has mainly been promulgated with a vulgar libertarian tone, the thing for left libertarians to do in response is not to kick it back down to the bottom of the priorities ladder, but rather to take it up themselves and re-conceptualize the debate — to treat minimum wage laws and the rest of coercively protective labor legislation as of a piece with government licensure cartels, zoning laws, the health and building codes favored by the Public Interest and Private Property Values racket, etc., as an integral part of the corporate liberal system of coercive power, which coercively ratchet up poor folks’ fixed costs of living while coercively ratcheting down their opportunities to scratch up a living.

Here’s a brief clipping from Wired‘s recent profile on Bill Baker, a structural engineer who specializes in gigantic skyscrapers. He’s currently working on a project for the Emir of Dubai which, when completed, will be the tallest building in the world:

In spring 2003, a pair of developers invited Baker and two of SOM’s managing partners to dinner at a restaurant overlooking the Manhattan skyline. The developers worked for a company in Dubai called Emaar, and they wanted to construct the tallest building in the world. Dubai was eager to make its mark, and because its ruler, Sheikh Mohammed bin Rashid al-Maktoum (known affectionately by locals as Sheikh Mo), supported the project, there would be no litigious neighbors or pesky air traffic controllers to muck things up. There are some places in the world that are like, Let’s do it, get it done, Baker says. Dubai is one of those places. Emaar gave SOM two weeks to submit a proposal for a residential building, to be known as the Burj Dubai. The Dubai Tower.

— Andrew Blum, The Ultrabuilder, in Wired 15.12 (December 2007), p. 224.

In other words, this monumental building project got rammed through, while the people who have to live in its shadow and the airline operators that have to fly around it are legally prevented from doing anything to effectively voice their objections, let alone to get some kind of compensation for the inconveniences, costs and disruptions that such gigantic projects inevitably impose on their private property or their long-established business in common resources and transit lanes. That’s because Bill Baker’s gigantic skyscraper is the pet project of Sheikh Mo, the enormously wealthy, relentlessly self-aggrandizing, and completely unaccountable petty tyrant of Dubai, who can personally manipulate any legal proceeding, override any attempt by ordinary people to get some kind of redress, and shove around any business in the country, if any of them threaten to get in the way of yet another multimillion dollar monument to himself.

It takes a certain kind of mindset to crow about the will and the ability to trample on everybody else’s homes, lives, and livelihoods in order to get a big project rammed through as if it were the positive, can-do sort of attitude that the political-development complex ought to adopt always and everywhere. That mindset is no less tawdry and mean for being so common amongst the most powerful, influential and well-connected people on earth.