The Gun Debate

As could be expected, the gun debate reappeared in full force after the tragedy that took place in Orlando.  All of the typical arguments from both sides are again being repeated ad nauseum.  From “we need to prevent this from ever happening again” on the left, to “from my cold, dead hands” on the right, and everything in between.

In the post-9/11 world, both major political parties are increasingly coming out in support of restrictions on gun ownership.  The idea that anyone who is on a government watchlist (such as the no-fly list) should not be able to own a gun is now supported by both Republicans and Democrats.  Libertarians beg to differ.

The problem is the way that these watchlists are assembled.  One simply must be accused of “potentially” being a terrorist for their individual rights and civil liberties to be severely restricted.  There is no presentation of evidence, no opportunity for refutation, little to no recourse for clearing one’s name, and no assumption of innocence until proven guilty.

Watchlists take a significant step toward elimination of the fundamental human freedom of habeas corpus which goes back over 800 years to the Magna Carta.  Movement in this direction has accelerated in recent years with Bush’s Patriot Act, and sections 1021 and 1022 of Obama’s 2012 NDAA.  It is the acceptance of this type of thinking by too many that is driving freedom in the wrong direction.

Of course, the arguments for restrictions on gun ownership don’t end there.  Gun advocates, and libertarians especially, make many worthy arguments for why the right to own firearms must be jealously protected.

Everyone possesses the right to self-defense – the right to protect themselves, their family, and their property from aggression.  Gun controllers argue that there is no reason to own guns, that possession of a gun increases the likelihood of violence, and that if one needs protection they should call the police and “let the professionals handle it.”

When looked at honestly, the statistics associated with the “likelihood of violence” argument leads to the exact opposite conclusion, and all responsible gun owners know how to teach proper handling and gun safety to their family and their children.  If one is afraid of having guns in their own home, fine, don’t own one; but to restrict the rights of others based on one’s own fears is unjust.  To the latter point of calling the police, it has been said that, “when seconds count, the police are only minutes away.”  For many, this has proven true.  Further, the people who push for gun control are often the same ones who complain about police brutality.  This is a puzzling contradiction.

Another argument made by defenders of gun rights is heard in the common refrain, “a good guy with a gun can stop a bad guy with a gun.”  The other side responds with the completely unfounded argument that this rarely, if ever happens.  That’s blatantly untrue.  It’s happened countless times, and just because such events are not blown up by the media does mean they don’t happen.

Gun rights defenders will also often invoke that private gun ownership is the last defense against a tyrannical government.  The response to this is usually audible laughter.  That’s impossible, only lunatic conspiracy theorists could believe that tyranny is actually a possibility, they’ll say.

The movement towards tyranny in the US is indisputable.  From warrantless wiretapping and massive collection of electronic records, to indefinite detention without charge, to making it a felony to protest wherever Secret Service is present, to executive branch ‘kill lists’, the US government is unquestionably on a tyrannical trajectory.

Aside from the current state of the US government, one simply needs to look around the world and at recent history to see the risk of disarming a people.  Every single tyrannical government – past and present – preceded their atrocities with disarmament.  Today, the Palestinians’ only form of defense against the IDF are knives and rocks.  It’s not too hard to see that their situation would be vastly improved if they were able to effectively defend themselves and their property from the tyrannical atrocities committed against them everyday.

In all fairness, most gun controllers don’t claim to advocate for complete disarmament, but rather for “sensible” regulations that could might maybe prevent “mass shootings” in the future.  This is a red herring for two main reasons.

First, “sensible” regulations such as gun registration, background checks, and permit requirements in no way prevent the possibility of violent crimes being committed.  Instead, they only serve to make it more difficult for poor people to be able to acquire tools for self defense.  All of these regulations directly or indirectly add cost to the purchase of a firearm.  Obviously, increased cost doesn’t affect an upper or middle income person to the same extent that it does a low income person.

The second reason is that governmental collection of data on gun purchasers makes it that much easier for them to come for those guns in the future.  While it is a stretch to believe that full on gun confiscation will happen any time soon, it’s easy to imagine the government targeting a particular group of people for such an effort.  In the age of the “war on terror,” would it be a shock to see a future administration come to power and choose to target America’s Muslim community for disarmament?  Precedents exist of this type of action by the US government as is seen by FDR’s internment of hundreds of thousands of Japanese Americans during WWII.

Regardless of fear and emotion, liberty must be guarded for all people.  The right to self defense is a fundamental liberty, and is the benchmark upon which all other liberties are safeguarded.  While it may make some people feel good for the government to “do something” in response to acts of atrocity, the only just way to deal with a murderer is to levy harsh consequences.  Preemptively punishing law abiding gun owners by restricting their rights to purchase and possess firearms doesn’t make any sense.  Preemptive aggressive intervention against a peaceful person is and always will be unjust.

The Corruption of a Local GOP

In the 2013 mayoral election for the city of Syracuse, there was no Republican candidate to run against incumbent Democrat, Stephanie Miner.  To give the people of Syracuse a choice, Ian Hunter, a local conservative, and a small group of activists wore out their walking shoes going door to door to collect enough signatures to get his name on the ballot.  The requirement was 569 signatures.  The group was able to collect 680 thereby securing his nomination.  

After their customary review, the Board of Elections ruled that they’d only collected 572 “valid” signatures.  According to people knowledgeable of the process, the BOE will often deem a signature invalid for the tiniest mistake – if the person’s street address is misspelled, a T isn’t crossed, or the name they write doesn’t match exactly to the name on record (i.e. the signator leaves off the ‘Jr.’).  For an institution that is charged with ensuring a fair electoral process, it sure has a lot of power to suppress a voter’s voice.  Still, Hunter was on the ballot with three more signatures than needed.

The Onondaga County GOP leadership, led by Tom Dadey, however; was for some reason afraid of Hunter’s candidacy.  Maybe they were afraid that if elected, he’d actually stand on the limited government conservative principles that his campaign was based on.  Some speculated whether the local GOP leaders are actually double agents for the Democratic Party.  That seems ludicrous, but their actions during the election certainly invite that kind of accusation.

To start, the local GOP never made a serious effort to find a Republican candidate to challenge Miner in 2013.  Tom Dadey, Onondaga GOP “Boss”  (as he pompously calls himself) put his own name in as a candidate, but was knowingly unqualified because he wasn’t a resident of the city.  Next, he put in Kevin Kuehner, who never intended to run, and against whom the Democrats filed a lawsuit to challenge his candidacy.  In response to that lawsuit, Dadey said, the “Democrats are pulling out all of the stops to ensure that this is a coronation and not an election.”  That statement could just as easily be applied to Dadey himself.

When the petitions were filed to put Hunter’s name on the ballot, there were expectations that Dadey would comb through every last signature in order to disqualify Hunter.  When the Board of Elections didn’t succeed in getting the number of signatures below the required amount, Dadey took matters into his own hands.  Dadey took Hunter to court to remove him from the ballot.

The pettiness of Tom Dadey and the local GOP establishment can be detailed by one particular signature they fought to invalidate.  During petitioning, an elderly gentleman answered the door of his house, listened to the spiel, liked what he heard, and was glad to sign the petition.  The problem was that he had a severe case of Parkinson’s Disease and was too shaky to sign his name.  He instead had his wife sign for him.  Dadey and his team of lawyers argued that this was an invalid signature because it did not come from the person in question.

The judge ruled in favor of Dadey on this and in several similar circumstances.  His rulings brought Hunter to below the required threshold and disqualified him from being able to appear on the ballot.  For a so-called democracy, this should give people pause.

Dadey and his cronies won, and Miner ran for mayor unopposed.  For the first time in over 100 years, Syracuse’s mayoral election consisted of a solitary candidate.  Local grassroots activists were able to do what the local GOP establishment could (would) not – field not just a Republican candidate, but a genuine conservative at that.  In response, the GOP establishment went to the extreme in order to prevent that from happening.

The actions of Tom Dadey and his GOP machine should say all that needs to be said about the state of our “representative” government.  If this is the kind of thing that happens at the local level, one can only imagine what kind of shenanigans goes on in D.C.

Ayn Rand, Rand Paul, and Paul Ryan Walk Into a Bar…

The age of social media has given rise to an increasingly large group of people who believe that a couple sentences, or even just a few words posted on a picture constitute an effective argument.  While in some ways, political and philosophical debate is healthier than ever before, the over reliance on simplistic arguments is creating a “meme world” where an asinine idea can be conveyed in few words and posted in mere seconds.  Proper refutation, however; takes more than a few words.

In the 140 character world of Twitter, these types of arguments exist almost exclusively.  This tweet from “Miss O’Kistic” has made its rounds in the online world:

“Ayn Rand, Rand Paul and Paul Ryan walk into a bar.  The bartender serves them tainted alcohol because there are no regulations.  They die.”

It’s the classic, “But if not for the state, how would we…” delusion.  People live in such fear over the possibility of government shrinking just one iota, that when confronted with radical reduction of government, or even (gasp!) complete elimination of government, they lose their minds.  The possibility to engage in rational discussion disappears, and they immediately jump to what they believe to be the only possible scenario, “We’d all die!!!”

For anyone even somewhat knowledgeable of free market economics, it is easy to address these concerns.  The market is more than capable of regulating itself, oftentimes much more effectively than is done by government; if something is demanded by the consumer it will be provided by the supplier.  Unfortunately, the economically ignorant often will not be satisfied with that explanation and will demand to know exactly how, in the absence of governmental regulations, people could be safe from dangers such as “tainted alcohol.”

Ok, fine.

To start, a bar or a liquor company would quickly lose customers and risk going out of business if it became known that they had served a bad product that caused illness.  Word of mouth is a powerful tool – especially in today’s digital age – and something like this would spread rapidly.  Businesses are in the game to make profits, so fear of losing customers and incurring losses provides a strong incentive for them to ensure that the products they serve are safe.

If they accept this premise, their next objection will be that this only addresses the problem after the fact – that there would be no way to make sure tainted alcohol didn’t become a problem in the first place.  Ignoring the fact that government regulations don’t prevent food or drink related illnesses, this objection is still unfounded because the free market would do a better job of that as well.

In any particular city, there are at least several bars that serve food and drink which all compete for customers.  With the absence of universal government regulations, one of them might choose to advertise a ‘guarantee of food & drink safety’ as a method of gaining a competitive advantage.  Their guarantee carries with it a promise to cover any and all medical costs associated with illness contracted by ingesting their products and is backed by an insurance company the bar has contracted with.

To receive the best possible insurance rates, the contract between the bar and the insurance company includes various stipulations.  In exchange for coverage of any potential liability, the insurance company requires the following:

  1. The bar will allow a preliminary inspection prior to execution of the contract, and periodically thereafter.  If the bar is found to be noncompliant of the insurance company’s standards, they will have a reasonable period of time to resolve the issue.  If the issue goes unresolved, the rate of insurance will increase.
  2. The bar will serve only food and drink that is supplied by vendors who are satisfactorily certified.  (The insurance company will provide a list of such vendors as well as contact information for food/drink certification firms that the bar’s current vendors can use if they are not already certified).
  3. The bar will display or otherwise make available to their customers a notice of disclosure with all relevant information pertaining to the contractual agreement between the bar and the insurance company.

Upon execution of the contract, the bar launches a marketing campaign to promote their new policy.  The move garners goodwill from the public, and the bar sees an immediate jump in both clientele and profits.

Other bars and restaurants see this and enter into similar insurance contracts so that they too can advertise safety guarantees.  Before long, such agreements are commonplace.  Competition between bars and restaurants drives up quality and safety standards while also driving down the cost of such insurance policies as the insurance companies compete for contracts.  The number of companies that certify food and drink vendors increase alongside the increasing demand for such services which results in similar quality increases and cost reductions.  Consumer confidence ratings soar.

See how easy that was?  All it takes to see how regulation would naturally occur in the free market without government is a little imagination.

James J. Hill and The Liquidation of Malinvestment

James J. Hill is unquestionably one of the greatest entrepreneurs in American history.  This past weekend marked the 100th anniversary of his passing.  He is best remembered for the successful construction of the only transcontinental railroad to not go bankrupt.  He didn’t accept government subsidies, and argued eloquently against his competitors who did:

“The government should not furnish capital to these companies, in addition to their enormous land subsidies, to enable them to conduct their business in competition with enterprises that have received no aid from the public treasury.”

His endeavors can claim to be largely responsible for the settling and economic development of the upper midwest United States, and for making Seattle into the commercial metropolis that it is today.  For the best histories of the man and his legacy, these two articles (here and here) are unmatched.

Countless business, entrepreneurial, and economic lessons can be learned from a detailed study of Mr. Hill.  One particular economic lesson stems from his entrance into the business of railroad ownership – that of malinvestment and the liquidation thereof.

Hill purchased his first railroad when the Panic of 1873 made purchase of the St. Paul & Pacific line financially possible.  The line had been in steady decline, and eventually made its way into receivership.  With a group of three partners, Hill purchased the line for what he estimated to be 20% of its actual value.  He tirelessly invested in his purchase, extending the line to other cities and connecting it to branches of other lines.

His efforts brought him great success and enormous wealth.  His fortune swelled to an estimated $63 million.  His efforts also led to levels of prosperity for anyone who did business with, worked for, or lived near his lines that had previously only been dreamed of.

The catalyst that started all of this was Hill’s decision to provide the capital necessary to liquidate the malinvestment that the St. Paul & Pacific had succumbed to.  Although much maligned, the liquidation of bankrupt companies or of toxic assets is a good and necessary function of a healthy economy.

Malinvestment, as described by the Austrian Theory of the Business Cycle, is most commonly associated with monetary inflation by central banks.  This malinvestment is the source of bubbles, the cause of economic crises, and must eventually be liquidated.  Of course, the Federal Reserve wasn’t founded until 1913, and there was no central bank in the US in 1873.  That fact does not repudiate the theory as it relates to Hill’s purchase of the St. Paul & Pacific.

Panics occurred prior to central banks whenever governments or “private” banks (with special government granted privileges) artificially create money and credit out of thin air.  The Panic of 1873 was the result of US government monetary expansion to finance the Civil War.  This “funny money” was shoveled towards expanding the railroad network and the iron and steel industries.  Many companies in those sectors eventually failed with 1873 (like the recent 2008 crisis) becoming the year of reckoning.

Many are quick to demonize those who take advantage of these situations to purchase bankrupt companies at “rock-bottom” prices.  Mitt Romney was attacked for his company’s role in just such purchases.  Granted, there is plenty to dislike about Mitt Romney – he’s a politician for Pete’s sake.  But from an economic standpoint, companies like his and that of James J. Hill more than a century ago, serve the public good by correcting the problems of malinvestment.

Corrections as described in the preceding paragraph will certainly be economically painful for some people.  Liquidation of malinvestment can result in job loss, and in financial ruin for those invested in the bankrupt companies.  However, as shown by the history of Mr. Hill, there is much to be gained through these corrections.

Another important point related to the economic pain stemming from liquidating malinvestment is that any pain felt is fundamentally NOT the fault of the companies who purchase or liquidate the financially troubled firms.  The malinvestment was only made possible in the first place by central banks or by a governmentally privileged banking system.  Demonizing those who work to correct – and who subsequently further economic growth – the problems that come from artificial money creation is entirely unfounded.  These people should instead be looked upon as benefactors to all of society.  The true focus of demonization should be the institution that made the malinvestment possible.  As with so many societal ills, blame lies solely with the government.

While the story of James J. Hill provides us with many important lessons, it is unfortunate to note that his story did not have an entirely happy ending.  Hill’s success in the railroad business came as a result of his vigorous price cutting and through setting special rates for his biggest customers (along with an obsession for efficient construction and direct railroad routes).

Because all other railroad companies were on the receiving end of government subsidies, and because they were thus able to avoid the losses they would have suffered through competition in a free market, they provided poor service at high prices.  The public rightfully complained about this.  Of course, instead of recognizing their failures and getting out of the railroad subsidy business, the government chose to correct their poor policies by passing more laws and regulations.

The Interstate Commerce Act was passed in 1887.  The Hepburn Act was passed in 1906.  These laws forced all railroad companies to charge set rates for all customers, and effectively ended Hill’s price cutting endeavors.  He eventually began shrinking his business operations, switching his focus from expansion to preservation of what he had built.  An untold number of economic growth opportunities were lost forever.

Answers to economic hardships can always be found in the shrinking of government and in the freeing of markets.  Liquidation of malinvestment will be necessary as long as governments make possible artificial monetary inflation.  Once liquidation takes place, the only way to prevent malinvestment from taking hold again is a return to sound money.

James J. Hill worked to liquidate malinvestment.  That his efforts were eventually undermined is a tragedy.  His story should serve as a lesson in economics for us all.