Abolition of the public sector means, of course, that all pieces of land, all land areas, including streets and roads, would be owned privately, by individuals, corporations, cooperatives, or any other voluntary groupings of individuals and capital. The fact that all streets and land areas would be private would by itself solve many of the seemingly insoluble problems of private operation. What we need to do is to reorient our thinking to consider a world in which all land areas are privately owned.
Let us take, for example, police protection. How would police protection be furnished in a totally private economy?
Part of the answer becomes evident if we consider a world of totally private land and street ownership. Consider the Times Square area of New York City, a notoriously crime-ridden area where there is little police protection furnished by the city authorities. Every New Yorker knows, in fact, that he lives and walks the streets, and not only Times Square, virtually in a state of “anarchy,” dependent solely on the normal peacefulness and good will of his fellow citizens. Police protection in New York is minimal, a fact dramatically revealed in a recent week-long police strike when, lo and behold!, crime in no way increased from its normal state when the police are supposedly alert and on the job.
At any rate, suppose that the Times Square area, including the streets, was privately owned, say by the “Times Square Merchants Association.” The merchants would know full well, of course, that if crime was rampant in their area, if muggings and holdups abounded, then their customers would fade away and would patronize competing areas and neighborhoods. Hence, it would be to the economic interest of the merchants’ association to supply efficient and plentiful police protection, so that customers would be attracted to, rather than repelled from, their neighborhood. Private business, after all, is always trying to attract and keep its customers.
But what good would be served by attractive store displays and packaging, pleasant lighting and courteous service, if the customers may be robbed or assaulted if they walk through the area?
The merchants’ association, furthermore, would be induced, by their drive for profits and for avoiding losses, to supply not only sufficient police protection but also courteous and pleasant protection. Governmental police have not only no incentive to be efficient or worry about their “customers’” needs; they also live with the ever-present temptation to wield their power of force in a brutal and coercive manner.
“Police brutality” is a well-known feature of the police system, and it is held in check only by remote complaints of the harassed citizenry. But if the private merchants’ police should yield to the temptation of brutalizing the merchants’ customers, those customers will quickly disappear and go elsewhere. Hence, the merchants’ association will see to it that its police are courteous as well as plentiful. Such efficient and high-quality police protection would prevail throughout the land, throughout all the private streets and land areas.
Factories would guard their street areas, merchants their streets, and road companies would provide safe and efficient police protection for their toll roads and other privately owned roads. The same would be true for residential neighborhoods.
We can envision two possible types of private street ownership in such neighborhoods. In one type, all the landowners in a certain block might become the joint owners of that block, let us say as the “85th St. Block Company.” This company would then provide police protection, the costs being paid either by the home-owners directly or out of tenants’ rent if the street includes rental apartments. Again, homeowners will of course have a direct interest in seeing that their block is safe, while landlords will try to attract tenants by supplying safe streets in addition to the more usual services such as heat, water, and janitorial service. ‘
To ask why landlords should provide safe streets in the libertarian, fully private society is just as silly as asking now why they should provide their tenants with heat or hot water. The force of competition and of consumer demand would make them supply such services. Furthermore, whether we are considering homeowners or rental housing, in either case the capital value of the land and the house will be a function of the safety of the street as well as of the other well-known characteristics of the house and the neighborhood.
Safe and well-patrolled streets will raise the value of the landowners’ land and houses in the same way as well-tended houses do; crime-ridden streets will lower the value of the land and houses as surely as dilapidated housing itself does. Since landowners always prefer higher to lower market values for their property, there is a built-in incentive to provide efficient, well -paved, and safe streets.
Private enterprise does exist, and so most people can readily envision a free market in most goods and services. Probably the most difficult single area to grasp, however, is the abolition of government operations in the service of protection: police, the courts, etc. — the area encompassing defense of person and property against attack or invasion.
How could private enterprise and the free market possibly provide such service? How could police, legal systems, judicial services, law enforcement, prisons — how could these be provided in a free market?
We have already seen how a great deal of police protection, at the least, could be supplied by the various owners of streets and land areas. But we now need to examine this entire area systematically. In the first place, there is a common fallacy, held even by most advocates of laissez-faire, that the government must supply “police protection,” as if police protection were a single, absolute entity, a fixed quantity of something which the government supplies to all. But in actual fact there is no absolute commodity called “police protection” any more than there is an absolute single commodity called “food” or “shelter.”
It is true that everyone pays taxes for a seemingly fixed quantity of protection, but this is a myth. In actual fact, there are almost infinite degrees of all sorts of protection. For any given person or business, the police can provide everything from a policeman on the beat who patrols once a night, to two policemen patrolling constantly on each block, to cruising patrol cars, to one or even several round-the-clock personal bodyguards.
Furthermore, there are many other decisions the police must make, the complexity of which becomes evident as soon as we look beneath the veil of the myth of absolute “protection.” How shall the police allocate their funds which are, of course, always limited as are the funds of all other individuals, organizations, and agencies? How much shall the police invest in electronic equipment? fingerprinting equipment? detectives as against uniformed police? patrol cars as against foot police, etc.?
The point is that the government has no rational way to make these allocations. The government only knows that it has a limited budget. Its allocations of funds are then subject to the full play of politics, boondoggling, and bureaucratic inefficiency, with no indication at all as to whether the police department is serving the consumers in a way responsive to their desires or whether it is doing so efficiently. The situation would be different if police services were supplied on a free, competitive market. In that case, consumers would pay for whatever degree of protection they wish to purchase.
The consumers who just want to see a policeman once in a while would pay less than those who want continuous patrolling, and far less than those who demand twenty-four-hour bodyguard service. On the free market, protection would be supplied in proportion and in whatever way that the consumers wish to pay for it. A drive for efficiency would be insured, as it always is on the market, by the compulsion to make profits and avoid losses, and thereby to keep costs low and to serve the highest demands of the consumers. Any police firm that suffers from gross inefficiency would soon go bankrupt and disappear.
One big problem a government police force must always face is: what laws really to enforce? Police departments are theoretically faced with the absolute injunction, “enforce all laws,” but in practice a limited budget forces them to allocate their personnel and equipment to the most urgent crimes. But the absolute dictum pursues them and works against a rational allocation of resources. On the free market, what would be enforced is whatever the customers are willing to pay for.
Suppose, for example, that Mr. Jones has a precious gem he believes might soon be stolen. He can ask, and pay for, round-the-clock police protection at whatever strength he may wish to work out with the police company. He might, on the other hand, also have a private road on his estate he doesn’t want many people to travel on — but he might not care very much about trespassers on that road. In that case, he won’t devote any police resources to protecting the road. As on the market in general, it is up to the consumer — and since all of us are consumers this means each person individually decides how much and what kind of protection he wants and is willing to buy. All that we have said about landowners’ police applies to private police in general.
Free-market police would not only be efficient, they would have a strong incentive to be courteous and to refrain from brutality against either their clients or their clients’ friends or customers. A private Central Park would be guarded efficiently in order to maximize park revenue, rather than have a prohibitive curfew imposed on innocent — and paying — customers. A free market in police would reward efficient and courteous police protection to customers and penalize any falling off from this standard. No longer would there be the current disjunction between service and payment inherent in all government operations, a disjunction which means that police, like all other government agencies, acquire their revenue, not voluntarily and competitively from consumers, but from the taxpayers coercively. In fact, as government police have become increasingly inefficient, consumers have been turning more and more to private forms of protection. We have already mentioned block or neighborhood protection.
There are also private guards, insurance companies, private detectives, and such increasingly sophisticated equipment as safes, locks, and closed-circuit TV and burglar alarms. The President’s Commission on Law Enforcement and the Administration of Justice estimated in 1969 that government police cost the American public $2.8 billion a year, while it spends $1.35 billion on private protection service and another $200 million on equipment, so that private protection expenses amounted to over half the outlay on government police. These figures should give pause to those credulous folk who believe that police protection is somehow, by some mystic right or power, necessarily and forevermore an attribute of State sovereignty.
[Excerpted from Chapters 11 and 12 of For A New Liberty.]
From LRC, here.
The Fed Is Trying to Gaslight the World—It Won’t Work
Good news, everyone, the inflation that Americans are witnessing daily is temporary. That is, at least, what our enlightened technocrats at the Federal Reserve are desperately trying to convince the rest of the world of. The latest reassurance that there is nothing to be concerned about comes from Atlanta Federal Reserve Bank president Raphael Bostic, who claimed Wednesday that “much of the data recently has come in stronger than I expected.”
As Reuters reports, Mr. Bostic told reporters:
Oh, he also noted that inflation is likely to last longer than he had originally thought. As he explained in an interview with NPR:
Going even further than Mr. Bostic is his colleague from Dallas, Robert Kaplan, who thinks that the economy is performing so well that the Fed may even need to consider soon “doing some things to take our foot gently off the accelerator sooner rather than later.”
The meaninglessness of these words should be obvious to anyone who has followed the Fed the last decade. Of course, the Fed does not have a monopoly on meaningless words emerging from the mouths of our technocratic class—what may concern Americans is the degree to which the Fed is counting on this PR campaign as a vital tool to prevent the financial crisis 2020 has created.
After all, along with the explicit tools with which it conducts monetary policy—such as open market operations, the discount rate, and reserve requirements—one the Fed takes just as seriously is its communication strategy. Since the 2000s, the Fed has actively viewed “forward guidance” as a tool that can allow it to alter economic behavior. As the Federal Reserve’s website explains:
To those ends, the Fed has created various communication tools—such as its dot plot—to illustrate the various forecasts for future economic performance from a variety of Federal Reserve governors and regional bank presidents. While the central bank sold this as an act of “transparency,” it is better understood as deliberate propaganda. In an age where an army of bots move markets based on financial Twitter, every future projection shared by a Fed official instantly has an immediate impact on economic behavior in the real world.
As such, the goal of public comments from Federal Reserve officials is always to convince the public that there is nothing to fear—the experts have things covered. Inflation is temporary. Growth is coming. All is well—no matter the economic struggles you yourself may be feeling. To do otherwise would may itself spark the very sort of crisis that the Fed fears.
This does not necessarily mean that either Mr. Bostic or Mr. Kaplan are cynical in their public statements. It is quite possible that both men sincerely believe their rose-colored forecasts and believe that America’s central bank is well positioned to steer the economy out of choppy waters. After all, government propaganda is most effective when it comes out of the mouths of those who truly believe it.
Unfortunately, the Fed’s biggest problem has been getting results to match their optimism.
Since 2010, the Fed has habitually overestimated future economic growth. Even more concerning, the Federal Reserve has repeatedly failed to follow policy timeframes it has set for itself in the past to reverse previous emergency policies.
As Jeff Deist noted in 2016:
The closest the Fed has come since was a slight bump in interest rates—still historically low—at the peak of the economic performance of the Trump administration, which provided policy relief in the form of regulatory and tax cuts. Even then, however, Jerome Powell’s modest attempts to leverage this meaningful economic growth to unwind the Fed’s intervention had to be reversed in early 2019 due to the adverse reaction in financial markets.
So, again, even prior to global economic shutdowns that massively disrupted supply chains, eviscerated small businesses, and put millions out of work, the Fed was lying through their teeth about the tools at their disposal to appropriately handle economic distress.
The question then is, what happens if we face an economic crisis at a time when the Fed is out of ammo for its current arsenal of policy tools?
Well, we can count on them giving themselves even more power—which has always been the primary justification for trying to replace cash with central bank digital currency (and why we should expect escalation from central banks against private cryptocurrencies.)
We can also be assured that they will promise they know exactly what they are doing.
From Mises.org, here.