Furloughs for Freedom: Downsizing the Government

On Milton Friedman's theory of the negative income tax - direct payments with no questions asked would be cheaper than the welfare system - it would be better to furlough all (almost all) of the government employees and keep paying them not to work because what they do is destructive.  If they stop doing it, we all would be better off.

Of course we would have a huge debate about what is the absolute minimum necessary government. Conservatives and  libertarians know Ayn Rand's specification that a government holds a monopoly on the use of (retaliatory) force. Thus, the government must have police forces.  Rand actually was echoing Max Weber who said the same thing in his address, Politik als Beruf (Politics as a Profession), to the Free Students Union of Munich in 1920.  In that address, he acknowledged that he was quoting Trotsky at the Brest-Litovsk Conference.  So, it seems that everyone left, center, and right agrees that the government should keep the police.  What about the post office or the patent office?  Both of those are in the Constitution of 1789.

Reducing government looks a lot like this.

It might be that we should pare down the government in reverse chronological order.  But perhaps in the days of FedEx, UPS, and big pharma and GMOs we do not need the US Postal Service but do need need the Food and Drug Administration.  The FBI was founded in 1908, the Federal Marshals in 1789.  Which do we need more?  Let the debates go on.   The principle remains.

 The principle is that political power is economically inefficient, and causes market misallocations, and therefore poverty.

The government decides what to do based on power - votes won or control extended - not on market, i.e., profit.  Therefore, all government decisions are misallocations of resources.  Therefore, all government decisions result in poverty.  The less government you have, the more prosperity you have.  That is a general principle.

The specific losses caused by taxes, regulations, prosecutions, and enforcement of laws are easy to see and hard to compute because of their volume and magnitude.  

In the case of truly essential services, we might be willing to accept a dislocation of resources for clear social gain.  It is better to have economically inefficient police than to have chaos, or so we say. Of course, government is much more than mere policing.

Federal Executive Departments

Department of Agriculture (USDA)

Department of Commerce (DOC)

Department of Defense (DOD)

Department of Education (ED)

Department of Energy (DOE)

Department of Health and Human Services (HHS)

Department of Homeland Security (DHS)

Department of Housing and Urban Development (HUD)

Department of Justice (DOJ)

Department of Labor (DOL)

Department of State (DOS)

Department of the Interior (DOI)

Department of the Treasury

Department of Transportation (DOT)

Department of Veterans Affairs (VA)

Federal Independent Agencies and Corporations

Administrative Conference of the United States

Advisory Council on Historic Preservation

African Development Foundation

AMTRAK (National Railroad Passenger Corporation)

Broadcasting Board of Governors

Central Intelligence Agency (CIA)

Commission on Civil Rights

Commodity Futures Trading Commission

Consumer Product Safety Commission (CPSC)

Corporation for National and Community Service

Court Services and Offender Supervision Agency for the District of Columbia

Defense Nuclear Facilities Safety Board

Director of National Intelligence

Environmental Protection Agency (EPA)

Equal Employment Opportunity Commission (EEOC)

Export-Import Bank of the United States

Farm Credit Administration

Farm Credit System Insurance Corporation

Federal Communications Commission (FCC)

Federal Deposit Insurance Corporation (FDIC)

Federal Election Commission (FEC)

Federal Energy Regulatory Commission

Federal Housing Finance Agency

Federal Labor Relations Authority

Federal Maritime Commission

Federal Mediation and Conciliation Service

Federal Mine Safety and Health Review Commission

Federal Reserve System

Federal Retirement Thrift Investment Board

Federal Trade Commission (FTC)

General Services Administration (GSA)

Institute of Museum and Library Services

Inter-American Foundation

Merit Systems Protection Board

Millennium Challenge Corporation

National Aeronautics and Space Administration (NASA)

National Archives and Records Administration (NARA)

National Capital Planning Commission

National Council on Disability

National Credit Union Administration (NCUA)

National Endowment for the Arts

National Endowment for the Humanities

National Labor Relations Board (NLRB)

National Mediation Board

National Railroad Passenger Corporation (AMTRAK)

National Science Foundation (NSF)

National Transportation Safety Board

Nuclear Regulatory Commission (NRC)

Occupational Safety and Health Review Commission

Office of Compliance

Office of Government Ethics

Office of Personnel Management

Office of Special Counsel

Office of the Director of National Intelligence

Office of the National Counterintelligence Executive

Overseas Private Investment Corporation

Panama Canal Commission

Peace Corps

Pension Benefit Guaranty Corporation

Postal Regulatory Commission

Railroad Retirement Board

Securities and Exchange Commission (SEC)

Selective Service System

Small Business Administration (SBA)

Social Security Administration (SSA)

Tennessee Valley Authority

U.S. Trade and Development Agency

United States Agency for International Development

United States International Trade Commission

United States Postal Service (USPS)

67 Federal Boards, Commissions, and Advisory Committees

(Mostly volunteers from the communities: Citizens Stamp Committee, for instance. They do entail some operational costs, even if the work of management is freely given.)

Additional Advisory Committees cost about $350 Million per year

http://www.gsa.gov/portal/content/249013

Quasi-Official Agencies

Legal Services Corporation

Smithsonian Institution

State Justice Institute

United States Institute of Peace

SEE 

http://www.usa.gov/Agencies/Federal/Executive.shtml

PREVIOUSLY ON NECESSARY FACTS

The Cure for a Failing Empire

Active Defense and Passive Aggression, Part 2

Stand Up and Be Counted

Etruscans and Americans

The American Political Tradition and Profiles in Courage

Schulman’s Alongside Night Released

J. Neil Schulman’s Alongside Night is modern myth of liberation.  First published in 1979, in 1989, libertarian science fiction fans granted the novel their Prometheus Hall of Fame award.  After more than two years in production, it finally became a movie.  

(This review is based on a post intended for April 2, 2012, as I exchanged emails with Schulman about the script. He asked me to not write about the movie until it was finally released.  The March 5, 2014, issue of Liberty's Outlook from the Liberty Coin Service of Lansing, Michigan, made that announcement. The film was shown nationwide. It ran here in Austin, on June 18, bringing the author to the screening and to dinner with fans.) 

In the world of the present future, inflation is rampant.  The federal government has issued emergency scrip and vending machine tokens circulate as a convenience.  The pan-European currency is backed in gold; and the Europeans are unwilling to underwrite the U.S. Treasury.  Among the architects of Europe’s money is Dr. Martin Vreeland.  As the crisis deepens and the U.S. government becomes more desperate, Dr. Vreeland is among thousands targeted for round-up and perhaps execution.  Only his international status cushions him and his family, however briefly.  The Vreelands plan to escape. 

Our viewpoint character is high school senior Elliot Vreeland.  The family is separated.  Elliot is on his own in New York City with about 30 ounces in gold coins and some thin contacts with the underground economy of gypsy cab drivers and adult bookstores.  Elliot then discovers a literal underground, a free market utopia including comfortable hotels and luxury malls that sell whatever you want.  He also discovers a naked girl in a swimming pool.  Then, the federal government raids the place.

Evacuation is orderly, thanks to the firm but polite private security guards who know that the customer is always right. This scene and a couple of others were inspirational to me over the years, and still provide parameters for me when I work as a security guard. 

Later, Elliot finds his father in conference with the chief of federal security, but his mother and sister are still held hostage and must be rescued.  The Revolutionary Agoric Cadre comes to their rescue, though not without losses.  

Schulman was kind enough to share the present version of the movie script.  Written by the author of the book, the cinema adaptation is crisp and concise, a faithful translation from one medium to another.  Of course, there are updates:  Elliot has an iPod.  But very little needed to be changed because very little has improved for the federal government since 1979. 

Alongside Night is a worthy story and a craftsman's work.  Schulman was inspired when he wrote it in 1979; and his dedication has not slackened. 

The theory behind the book is more radical than Ayn Rand’s Atlas Shrugged.  Based on the works of Murray N. Rothbard, “Agorism” is attributed to Samuel Edward Konkin III.  Agorism holds that free market alternatives are so vastly superior that even building a secret city beneath an existing metropolis can be done for gold pennies on the hyper-inflated dollar.  When it was written, the theory that private security could replace the public police was unsubstantiated by evidence that we now accept.  (Generally, in the USA today, there are two private guards for every police officer; in California, three.)  In Atlas, the heroes hole up in a Colorado valley.  Here, they build and rebuild physical undergrounds which could be anywhere. At one point, Elliot quips to his new girlfriend that from what he has seen so far, they could be under the National Mall.  Actually, they resurface at Elliot’s private school in Manhattan. 

For over 30 years, Alongside Night has been an escapade for libertarians, a diamond flash to offset the sable of Atlas Shrugged.  If you have not read it – or not read it in a while – you deserve the reward.

In addition to Kevin Sorbo, the movie features Tim Russ and Garrett Wang (Star Trek: Voyager), David D. Friedman as the King of Sweden, and Dr. Ron Paul as himself. 

The newest trailer on YouTube is here.
The official trailer (2:25) on YouTube is here.Alongside Night (book) site here.

Alongside Night (movie) near-mirror site here

“Soon to be a major motion picture” by Darian Worden here

A summary of the book at Wikipedia here 

Download the book as a PDF free here

Official "Teaser Trailer" here:

https://www.youtube.com/watch?v=2HQsVgxMTnc

Fan Trailer with "Citizen, Go Back to Sleep" by No Really.

https://www.youtube.com/watch?v=o6kBbGHq6Bk

Neil Schulman's promotional video with music by Soleil on YouTube here:

https://www.youtube.com/watch?v=zcU1mzW_eHk

J. Neil Schulman placed the entire movie on YouTube:

https://www.youtube.com/watch?v=aX6q4qp55Q0

Also on YouTube are other fan works.

The book is available on The Internet Archive here:

https://archive.org/details/alongsidenightno0000schu

Or buy the Kindle Edition at Amazon.

Find Alongside Night t-shirts, coffee mug, etc., at Cafe Press.

From the Liberty Coin Service Liberty's Outlook newsletter:In the movie, Liberty Coin Service has a cameo appearance as a kiosk store in an underground free market mall, staffed by LCS Senior Numismatist Tom Coulson. Four other LCS people have bit parts in the film.The private issue Gold Liberties used in the movie (and in real life) were provided by Liberty Coin Service. Lansing television station WILX NBC 10 and Lansing radio station 1320 WILS get credits in the film for services they contributed to the production. LCS General Manager Pat Heller is an Executive Producer. Alongside Night author J. Neil Schulman wrote the screenplay, acted in the film, and served as director and producer. Schulman’s daughter, Soleil O’Neal-Schulman sings the haunting theme song, which you hear when you view the trailer.

ALSO ON NECESSARY FACTS

Alongside Night Runs in Austin
Private Security in the 21st Century
Shifting the Paradigm of Private Security
Numismatics Informs Economics
Money is Speech

SLOW DOWN AND THINK

Thinking, Fast and Slow by Daniel Kahneman (Farrar, Straus, and Giroux; 2011)

Humans generally have two modes of perception.  System 1 is intuitive and it tells us all about a person and their immediate context relative to us by looking at their face.  You know when someone is happy, sad, angry, puzzled.  System 2 is effortful and computational; it informs us of our choices for agency by engaging mental concentration.  This book is about the very many errors caused by confusing the two modes.  For example when statisticians intuitively assess statistical data, they are predictably wrong. 

Kahneman is primarily a psychologist, but his Nobel prize was awarded for his work in economics.  Economics is all about choice; and yet since Adam Smith economists have had only a rough, poor, or wrong understanding of how people choose.  Economics is supposed to be about our calculations to maximize our advantages.  This book examines our habitually wrongful processes of intuitive calculation. 

Kahneman’s advises that for anything involving computation, we must slow down and think to avoid error and arrive at the right conclusion.

We easily think well in terms of metaphors.  We can identify causes.  We can associate facts and processes.  But we do not think well easily about statistics.  This leads to overconfidence supported by erroneous inferences of hindsight.  System 1 makes up stories to explain what System 2 misunderstands. 

• You see a woman reading the New York Times.  Is she more likely to hold a doctorate or to lack a high school education? 
• Tom W. is of high intelligence, but lacking true creativity.  He has a need for order and clarity.  His writing is dull and mechanical, but sometimes flashy with puns and allusions to science fiction.  Is he more likely to be a librarian or a farmer?

 If you are primed to spot trick questions, you guessed that the woman was more likely to lack a high school education, and that Tom W. was more likely to be a farmer.  If these, and the many other examples throughout, were just the amusing foibles of the average citizen, this book would have limited value.  Kahneman and his collaborator, the late Amos Tversky, found by careful sampling that scientists who should know better routinely rely on their intuition and therefore produce research results that have a 50% chance of being wrong.

The Law of Small Numbers is the complement of the gambler’s fallacy, the so-called “law of large numbers.”  Flip a coin five times.  Most people will say that HHTHT is a more likely outcome than HHHHH.  But in any large run, both small sets will appear.  The fallacy is the assumption that a small sample reflects the larger population.  The Law of Small Numbers leads us to conclude that recent profits are the result of good management.  That is System 1 talking, telling you a story to explain an intuition. 

This book is dense, replete with examples that are citations to research conducted by Kahneman and Tversky (and others).  A large array of basic truths supports the many thematic points. 

• You cannot refrain from understanding a simple sentence in your own language.
• If you are shown a word in a language you know, you will read it.
• Conservatism is defined as the underestimation of the impact of evidence.
• Frowning increases your vigilance and reduces your overconfidence for intuition. 

Kahneman claims (pp 411-415) that the libertarian policies of the Chicago school of economics must fail to bring the greatest good to the greatest number because humans are not the System 2 rational calculators that economists suppose.  My reply is that if this book were assigned to all 12-year olds, we would be.

ALSO ON NECESSARY FACTS
Science versus Common Sense
Two Books on Fermat's Last Theorem
The Man Who Loved Only Numbers
Science in the Middle Ages

Numismatics informs Economics

If economists actually collected and studied the media of commerce, they would avoid errors common even to advocates of capitalism.  Milton Friedman and the monetists were not much smarter than Keynesians.  In fact, even von Mises and Marx made the same claims about the evolution of gold as the highest form of commodity money.  A numismatist knows better, and knows more.

"Bad money drives good money off the market" is a cliche.  More clarity comes from adding that both moneys must be declared equal by law.  In that case, the markets will operate. People will break (avoid, evade, ignore) the law. The undervalued money will go into other channels (savings, export) and the cheaper overvalued money will circulate.  

Social sciences attempt to mimic physical sciences with concise and precise laws about complicated phenomena.  But, even astronomy is theoretically limited to a two-body universe.  Add more bodies and the nice algebra of theory must give way to laborious numerical approximations.  So, too, with economics.  Gresham's Law applies to two currencies - say the silver dollar and the gold dollar; or to silver dollars of one standard versus minor coinage of another fineness.  Reality is more complicated than that.  As Hayek pointed out, a plethora of moneys circulate.  Economists just focus on one or two issues of the government.


Unfortunately, lacking knowledge of numismatics, Hayek could not state his case empirically.  The Austrian school is rationalist, deriving universal laws from a priori assumptions.  

Spanish 8-reales "dollar" a world trade coin
of the 18th and 19th centuries, this one
chopnarked by Chinese merchants

Many conservatives across the spectrum know that the US Silver Dollar was modeled on the Spanish 8 Reales of the 1780s.   Fewer know that until 1857, Spanish money was one of about a dozen foreign currencies in silver and gold that were legal tender in America, alongside issues of the Federal government.  Many banks of the time issued paper money that promised U.S. federal silver coin in redemption but showed pictures of Spanish and Mexican coins.  (See Spanish Coins on American Notes here.) 


From the beginning of the Federal Mint, there was always a push for alternate currencies to make daily commerce easier.  The US ten-cent dime and 25-cent quarter dollar were not commonly convenient.  Many people relied on worn Spanish pistareens or "fips."  These were approximately half-reales (about 12-1/2 cents when full and new) but circulated at different values depending on circumstances.   That is a basic lesson for economists: to see what people actually do, not to prescribe how they should conduct business. 

In apparent violation of Gresham's Law, presenting a test case for hard money conservatives, the US Mint 3-cent silver and 3-cent nickel circulated side-by-side. The base metal coin did not drive the precious metal competitor from the market.  The same was true of the US Mint 5-cent nickel versus the silver half-dime.  The US Treasury also issued Fractional Paper, an emergency scrip from the Civil War that circulated alongside coinage, even after the apparent necessity was gone.  People could have demanded hard money (as small silver coins), but they did not.  The paper was good enough.  Moreover, fractional coinage - and of course the paper - was a limited legal tender, typically good only for a dollar or two, maybe five, depending on the coins and the laws of the moment. 

Like Europe of the Middle Ages, America also knew apparent "bullion famines" during which times coins were scarce.  They left the country to buy goods from abroad.  That is what money is for.  At other times, with Americans goods being exported and business at home being brisk, merchants sold off their small change at a discount to get rid of the excess.  

Eric P. Newman was president of the American Numismatic Society.  With Kenneth Bressett, former president of the American Numismatic Association, Newman wrote The Fantastic 1804 Dollar.  He is less famous generally but perhaps more highly honored among serious numismatists for his many explorations of Colonial and Early US paper money and his many monographs on other topics.  According to one presentation, delivered at a Coinage of the Americas Conference, December 2, 1984, counterfeit copper coins of the colonial era circulated for over fifty years, into at least the late 1830s in the Appalachian villages of western Virginia.  In Canada, these small copper conveniences are known as "blacksmith tokens."  

Earlier this year, Bernard von Nothaus was convicted on federal charges for issuing his own Liberty Dollars.  Any active American coin collector with a Red Book knows that private issues in gold and copper claim a long and proud history independent of the faltering efforts of the U.S. Mint.  Private silver was unnecessary because of the masses of Spanish (and English, etc.) coins circulating at the time.  We know from old records that into the 1830s many merchants in Boston, New York, etc., kept their books in Pounds-Shillings-Pence.  Business with English partners was brisk; and traditions have strength. 

The Pounds-Shillings-Pence system itself was a radical innovation, a conceptual leap, an epistemological creation that remains unappreciated by those who are ignorant of the history of trade and commerce.  In the broad centuries we call the Middle Ages, any local authority with bullion could strike his (sometimes her) own coins. Much of it came from "plate" household goods of silver; much came from new mines. Easily a hundred different kinds of coins, struck to different standards, often of lower debased finenesses circulated.  Broadly, the old Roman pound continued, while the new German mark ascended.  To rationalize the chaos, bankers invented pounds-shillings-pence.  It did not matter how you built up the quantities, when the books were balanced, you needed 240 pence or 20 shillings (12 pence each) to make a pound (or 12 "Troyez" ounces) of fine silver.  Bankers in the Middle Ages invented abstract money of account to meet the demands of competing currencies. 

Silver penny of Hughes of Champagne,
about 1 gram: dameter of a dime.

This was spontaneous order.  No Dumbarton Oaks Agreement was needed.  No theoretical papers were published.  And no general law was enforced on all.  The Big Problem of Small Change by Thomas J. Sargent and Francoise Velde is a chronicle of monetary media in the Middle Ages.  As a time when Europe had perhaps a thousand independent polities, the stories carry meaning for anyone who wants to understand international monetary systems today.  The work has been criticized by economics professors of the Austrian school for its larger (and largely questionable) theoretical framework, but as a compendium, it is unexcelled.  

As I said in the previous post, there is no standard textbook in numismatics.  No one-volume Samuelson makes life easy for freshmen.  Nothing from any Foundation for Numismatic Education delivers "Numismatics in One Lesson" or the "The Cliches of Monetism."  You can start with the Red Book, the Breen Encyclopedia, the Garrett Collection.  But you will soon discover the new works from Whitman and Krause and Stanton.  Numismatics is active and aware, curious about new facts, fascinated by new discoveries, open to new explanations of accepted evidence... and always being tested in the largest unregulated money market on Earth.

Quinarius of Cato the Younger struck at Utica.
"Pro Per: for himself."  His own silver
financed republican resistance to
Julius Caesar.

ALSO ON NECESSARY FACTS

Gresham's Conjecture

Supplies and Demands
Numismatics: the Standard of Proof in Economics

Scripophily: the Study of Stocks and Bonds