(Don Boudreaux)

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… is from page 83 of my late colleague Jim Buchanan‘s pioneering August 1954 Journal of Political Economy article, “Individual Choice in Voting and the Market,” as this article is reprinted in volume 1 of The Collected Works of James M. Buchanan: The Logical Foundations of Constitutional Liberty:

While it is no doubt true that both the individual’s earning and expenditure patterns are conditioned to a large degree by the average patterns of his social group,

MD: What? What came first, the chicken or the egg? Hint: Indisputably, the individual came before the group.

the distinction between this indirectly coercive effect involved in the social urge to conform and the direct and unavoidable coercion involved in collective decision seems an extremely important one.

MD: It’s easy to see “social urges” are largely (totally?) the purposeful result of “propaganda”. Polls are a “measure of the effectiveness of the propaganda”!

DBx: The collective decisions that Jim had in mind here are, of course, ones made through, and enforced by, the state.

MD: The state is the product of the money changers. The state is propagandized every bit as much as the people it claims to “govern” and openly propagandizes!

For an individual to sense an urge to conform to the expectations of others – and almost always (more than you think!) to give in to that urge – is common and natural.  This urge is part of human nature.  We are social animals.

MD: Some of us are way less social than others. Many among us are totally valueless … they are just manipulative busybodies.

(The fact that Buchanan mentioned this reality in 1954 – and did so with an “of course” – is itself evidence against the straw-man ‘free-market’ economist who allegedly believes that each real-world individual is immune to social pressures – that is, believes that each individual is neither formed by, nor is part of, society.)

MD: I repeat. Propaganda (and brain washing) plays the predominant role now. This is easy to see after a long life span (70+ years). We are a product of our teaching … and almost none of that comes from our family … as it did in more sane times. It all now comes from government and media … both instituted by money changers.

But, as Jim says, this universal urge of A to largely conform to the expectations of B and C (who are part of A’s social group) is categorically different from A being threatened with violence by B and C if A does not do as B and C command.

MD: … assured by forcing A, B, and C to share the same space … in the interest of diversity!

This difference grows even greater in those many cases in modern, legislation-using societies when B and C command A not simply to conform to the evolved expectations of the group but, instead, to obey the arbitrary will of B and C (as when, for example, B and C use threats of violence to prevent A from driving a car for hire, or when B and C command A to pay to them a punitive fee if A insists on purchasing goods from a foreign seller).

MD: We are a society of laws … 40,000+ new ones each year. If we were a society, not of laws, not of the people, but of principles (the first being the golden rule), many problems would not exist … and those that surface would be easily addressed. And we would be far better off if we had many separate spaces … instead of uniting! Read the Anti-Federalist Papers. Those people got it … and the founding “children” did not!

Iterative secession!

(Don Boudreaux)

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… is from page 55 of my late Nobel laureate colleague Jim Buchanan‘s insightful 1979 article “Politics Without Romance,” as it is reprinted in volume 1 of The Collected Works of James M. Buchanan: The Logical Foundations of Constitutional Liberty:

Once we so much as move beyond the simple committee or town-meeting setting, however, something other than the passive response of suppliers [of public goods] must be reckoned with in any theory of politics that can pretend to model reality.  Even if we take only the single step from town-meeting democracy to representative democracy, we must introduce the possible divergence between the interests of the representative or agent who is elected or appointed to act for the group and the interests of the group members themselves.

MD: Town-meetings are not even representative democracy. Democracy doesn’t work when more than 50 people are involved. WIth towns, hundreds to thousands of people are involved. If we were individuals of principles, any issue needing group attention would first be addressed by a group of 50 or less people. If the problem was beyond that scope, those 50 people would select a representative to go to the next lower group to address the issue with representatives from 50 other adjacent groups. With just six such layers, the entire population many times over can address all issues in a truly democratic fashion. In actuality, it would be rare indeed when an issue  would progress to the sixth (and bottom) group.

DBx: I understand that my training as an economist ‘biases’ me.  (Can someone point to a discipline the training in which does not then ‘bias’ its practitioners?)

MD: I am biased by “engineering training” .. and rejection of religious indoctrination. I can’t think of a single one of those biases that has proved to be untrue. Of what I have seen of economics, I don’t see a single one that “is” true … beginning with their concept of what money is! And what could be more important to their focus than that?

I understand also that my bias might be especially strong given that I began reading Jim Buchanan’s works while still an undergraduate – that I later was a colleague of Buchanan’s and Tullock’s – and, indeed, that I served for several years as the Director of the Center for Study of Public Choice.  I plead guilty to being “biased.”

MD: Those who immerse themselves in religion also have such a strong … and misguided bias. Put on blinders and you “will” be blinded.

But I’ve also another plea – this one, for a clear-eyed, objective, unbiased person – say, Nancy MacLean – to tell me what is objectionable about Buchanan’s above-quoted statement?

MD: And I have one for DB … and have confronted him with it directly. He declared me to be “unorthodox” when I asked him to disprove the reality (which I prove) that “money is an in-process promise to complete a trade over time and space and is only created by traders … like you and me” and that gold “is not money” … and that “all” money is fiat (because all promises are fiat).

Why is it objectionable to do political theory with the understanding that, with representative democracy, there is a “possible divergence between the interests of the representative or agent who is elected or appointed to act for the group and the interests of the group members themselves”?  What is the better alternative to recognizing this possibility?

MD: Has it occurred to DB that democracy cannot be representative … and thus cannot be democracy … with more than 50 people involved? To have a democratic discourse and decision, “all” participants must have the exact same grasp of the details of the issue … not spoon fed to them by propagandists.

If Nancy MacLean were to write a book on principal-agent law, would she dismiss as uncharitable those legal scholars who refuse to assume that agents always and naturally represent the interests of their principals perfectly?

MD: These days, anytime I see the words “scholar” and “theory” I know I’ve waded into the swamp! This is the most inbred collection of people you will ever want to see.

More practically, if MacLean were to hire a real-estate agent to sell her house, would she simply give – or has she simply given? – that agent carte blanche to act on MacLean’s behalf however that agent chooses?  I ask these questions because I’m still amazed – no doubt due to my bias – that on page 58 of Democracy in Chains MacLean, seemingly in all seriousness, writes:

And, in their assumption that individuals always acted to advance their personal economic self-interest rather than collective goals or the common good, Buchanan’s school went further, projecting unseemly motives onto strangers about whom they knew nothing.

MD: I know not of a single instance where I acted in the interest of a collective goal in violation of a personal self-interest … economic or otherwise. And I don’t need the word “voluntarily” as a qualifier. When I am “forced” to do something (like pay taxes), I act in my self-interest by doing so … the force sees to it that it is in my self-interest that I do. They take away my stuff if I don’t.

The allegedly “unseemly motives” are nothing more than the self-interest that nearly all lawyers and all sound economists assume when doing their work.

MD: “Sound” economists? Do we see the kettle calling the pot black here again?

Indeed, these motives are identical to the motives that each of us assumes is operative in the actions of all people with whom we interact commercially.

MD: Right … they correctly call it price fixing don’t they!

All contracts that specify more than price and quantity – and perhaps even these – are written by people who MacLean would describe (were she consistent) as “projecting unseemly motives” onto others (some of whom they have met, but many of whom are “strangers about whom they know nothing”).

MD: If we were principled we wouldn’t have problems with contracts. Anyone who has created money to buy a house over time and space and used an FHA contract has consented to maintain “replacement value insurance” until the balance is paid in full. And such contracts are not modifiable … i.e. negotiable. Take it or leave it!

What is the principle? Support the insurance industry?

What should the principle be? Deliver on your trading promises. If there is any risk you won’t, insure yourself against that risk… i.e. pay an actuarially determined premium that addresses the risk of failing to deliver … not of failing to put the property back into some state already delivered on.

In my case I pay $2,000+ per year insurance on property improvements of about $130 replacement cost. Over a 30 year record of delivering on my money creation promise (i.e. returning the money I created), this actuarially suggest 1 in 2 properties within 1/2 mile of mine will be totally destroyed (fully 500 out of 1000 houses).

In my 70+ year lifetime not a single property has met this calamity. Further, when I confronted the bank and refused to buy the insurance (my balance being below the value of the underlying land that could not be destroyed), they purchased insurance … at my expense (from themselves) to meet the terms of the contract. The provisions for that are clearly laid out in the contract … violating any reasonable principle.

I then kept my own set of books and have now (by my accounting) completely delivered on my money creating promise. Yet the bank says I must continue to pay them for 3 more years … including paying for insurance for a risk they no longer even have an interest in

Over the time I have confronted them with this issue (a little over two years), 27 houses should have been destroyed. Predictably, none have been destroyed. Now, do you want to talk to me about contracts … especially those that you can’t negotiate … like an FHA contract?

I am having to sue the bank (Wells Fargo … whom I bailed out when they defaulted on their trading promises) for release of the lien … and if the jury says the contract is clear (like judges tell them to decide according to “clear” law) … the banks will prevail.

I’m counting on the jury observing that they are not only evaluating compliance with the contract … they are evaluating the validity (principles) of the contract … i.e. jury nullification. You can’t hand out leaflets on courthouse steps to tell them about this … but for darn sure “I” can inform them about it when I do this case “pro-se”.

If I engaged a lawyer, that lawyer would be disbarred for bringing forth such an argument … yet it is the first  and most obvious valid argument.

If such prudent assumptions about other people’s motives are accepted readily when we do legal analysis – and when lawyers actually practice law – what is so objectionable about using such assumptions when doing political theory?

MD: A false choice! The law is flawed on it’s face. 40,000+ new ones each year are blatant proof.

Laws can’t work when there are more of them than anyone can know … and all of them have multiple decisions (decided meanings) in conflict with each other.