Protection and the Market for Security (lecture 28 of 32)
These notes are from the lecture Protection and the Market for Security, given at the Mises University. Any errors are mine, feel free to point them out so that I can correct them. This lecture was given by Prof. Hoppe
Argument Against the Constitution
* It is impossible to use a State to obtain protection.
* The State is a geographical monopoly on taxes, that is supposed to protect property.
* There is an inherant contradiction: The State is supposed to protect propery, yet it necessarily expropriates property. How can an institution which is always the judge possible by just? There is a permanent perversion of justice in favor of the State.
o Constitutional courts are part of the institution of the State.
o Inherently, the State will expand its own power.
* How many resources does the State need to produce its "services"?
o On private markets, consumers direct resources.
o The State will use more rather than fewer resources.
o As soon as the consumers do not determine this, the answer will always be the same -- more resources to produce security, while the quality of the work (security) decreases, because the State can tax.
Alternative: Free-Market Protection
* Competing insurance companies:
o Police
o Courts
o Detectives
o Prisons
o Etc, all either joined or separate
* All would be voluntary, being able to exchange one thing for another.
* In contrast to the State, the tendency would be for prices to protect property would fall. Prices, the premium we'd have to pay for protection, would tend to fall.
* No over-production. Whatever is spent on one thing can not be spent on another. Consuemrs determine how many resources to allocate to security vs. other things.
* Insurance companies indemnify you if they haven't fulfilled their obligations. Does the government do that? No. Why should they.
* Prevention:
o What is the incentive of the government to prevent crime? Very little to none: lots of crime, yet the State can always ask for (take) more money.
o Insurance companies want to prevent crime, so as not to have to pay out.
o Insurance companies also want to prevent crime to compete for customers.
* Compensation -- want to be compensated for any wrong done against you
* Catch criminal:
o Try to catch the criminal. Usually, the State doesn't even find the criminal.
o Do they force the criminal to compensate the individual? No.
o Private insurance companie have a motive to do that.
o Instead, the State puts criminals in prison with luxeries (paid for by the taxpayers, which includes the victim).
o Private agencies would put criminals to work to pay their victims.
* Stability:
o State changes laws yearly, all year round.
o Private agencies would have constant rules, to compete with one-another.
* De-arment:
o States de-arm you, so they're a protection racket.
o Insurance companies would encourage weapon ownership, encourage competence, and charge lower rates for it.
* Wealth-redistribution:
o No geographical wealth-redistribution under insurance.
o Pay more dpending on the region and desire for safety.
o State forces one group of people to support another group of people.
* Insurance agencies would encourage peaceful behaviour, so they wouldn't have to pay out.
* Victimless crimes -- insurance agencies wouldn't waste resources on victimless crimes.
Alternatives: Courts
* If the conflicting parties have the same agency, then they'd go to that agency.
* If the conflicting parties had different agencies:
o Companies agree -- verdict enforced.
o Companies disagree: provisions offered:
+ Independent arbitrators.
+ The independent arbitrators incentive would be to come up with a judgement that insures they'll be selected for appeal again.
+ Won't b e chosen again if their judgements aren't considered fair.
+ Incentive is to come up with a universally accepted set of principles of judgement guiding the situation.
+ As unrealistic as this may sound, it already exists and works on the international level between citizens.
Alternatives: How do these free, Stateless territories defend themselves against States?
* They'd be much wealthier than States.
* Heavily armed.
* Whenver a State attacks somebody it needs a justification for invading -- soldiers might not follow orders:
o No provocation from free territories.
o Incentive to repress crazies.
o Very difficult to persuade a nation to attack an area that has done nothing; so, no public support, and need public support all the way down to soldiers.
* If the State invades, it would be a guerilla war.
* Anarcho-capitalistic societies would have an incentive to specifically kill the aggressors -- the politicians. Anarcho-capitalistic societies would have precise technologies.
