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The unforgivable stupidity of the anti-banking “libertarians”
At the recent Mises Seminar in Sydney there was a speech by Chris Leithner that explicitly called for the banning of fractional reserve (FR) banking. Leithner and other Australian libertarians (including Michael Conaghan & Benjamin Marks from Liberty Australia) follow the lead of some American libertarians (Walter Block, HH Hoppe, JG Hulsmann — BHH) and argue that FR-banking is fraud and should be banned, and further that it is economically damaging and causes inflation.
These two issues need to be addressed separately. The first is a deontological issue about whether FR-banking is consistent with a free world. The second is a consequentialist issue about whether FR-banking leads to bad outcomes. It is possible that FR-banking is consistent with freedom and yet leads to bad outcomes, and then those libertarians who accept the “non-aggression principle” would have to tolerate FR-banking even if they don’t like those outcomes. But before delving into that debate, it is worthwhile quickly explaining what we are actually talking about with FR-banking.
Vaults, loans & banks
Anything can be money. In jail (and POW camps) cigarettes have been used as money. In the early years of Australian settlement, rum was used as money. In some small island nations, shells have been used as money. Through much of history, precious metals (especially gold and silver) have been used as money. And today, the most common sort of money is “fiat” paper money that is created by government but is intrinsically worthless (ie it has no value except as money). This is not the place to go into a debate about what should be money or who should decide, but the important point is simply that there is some original supply of money that then becomes the standard “unit of account” and “store of value” and “medium of exchange” in an economy. For the sake of this discussion, this original supply will be called “base money” and in Australia it is created by the Reserve Bank of Australia (RBA).
Questioning the climate crusade
From the 16th to 18th of May the Heartland Institute will be hosting their 4th international conference on climate change in Chicago.
Heartland takes a position that has variously been described as “denialist”, “skeptical” or “realist”, but which I like to call “non-scared”. I say that because the conference includes science contrarians (Willie Soon, Richard Lindzen, Fred Singer, Chris Monckton), but it also includes people who accept the mainstream story of a warming planet caused by greenhouse gases (and I cautiously include myself in that category) but who nonetheless don’t believe this represents an impending catastrophe, and it certainly doesn’t justify rushing into bad public policy.
Should we learn to speak “Australian”?
Linguists argue about the specifics, but by some counts there were hundreds of Australian aboriginal languages and there remain dozens spoken today. But these languages are dying out. The 2001 census reported that only four aboriginal languages had 2000+ speakers, and that most aboriginal languages are endangered. Badimaya was said to have three speakers, Thalanyji had six and Wagiman eleven.
A 2005 government report lamented the decline of aboriginal languages, and came up with 51 recommendations about spending money, writing reports, drawing funky flow-charts and having committees.
They totally failed to come to terms with the simple fact that languages have network qualities so that they are only functionally useful when there is a critical mass of other speakers. Unless a language is functionally useful it is unlikely to survive long-term. That is why the vast majority of languages on earth have disappeared, and that is why most aboriginal languages will die out.
The problem with democracy
I just finished reading Bryan Caplan’s excellent book “The Myth of the Rational Voter”. It is an extremely valuable book for anybody who really wants to understand what drives democratic government.
Public choice theorists have long known about “rational ignorance” where people recognise their vote is almost worthless and so they don’t bother informing themselves about politics, political philosophy or public policy. The consequence is that most people can’t explain how the political system works, who their politicians are, the details of most policies, or the arguments underlying public policy debate.
Caplan’s addition to the literature is to say that people aren’t simply “rationally ignorant” but that they’re “rationally irrational”. Ignorance should lead people to making “random errors” where they are equally likely to make mistakes in either direction. But Caplan shows what political watchers already know… voters often make “systemic errors”, where many people are wrong in the same direction. The problem isn’t that people don’t know enough (ignorance), but that what they “know” simply isn’t right.
The argument against anti-defamation laws
Most people accept anti-defamation laws as a legitimate restriction on free speech. For a starters, the laws have always existed so it just seems normal to keep them. If we remove them then society would be plunged into chaos as everybody accused everybody of being a paedophile, a thief, or a murderous nutcase… and if those rumours are believed then they could cause lots of damage to the victims, such as loss of work and/or loss of friends. And that’s just not fair.
Perhaps. But before we give up on fully free speech we should fully understand the arguments.
Defamation involves (1) somebody lying about you, leading to (2) other people holding a bad opinion about you, leading to (3) a bad outcome for you because of lack of trade. None of these things are nice. But they are all voluntary and, all else being equal, none of them should be illegal.
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