DemocracyThe God That Failed
Page 40
There is a second obvious shortcoming. Nature—earthquakes, floods, hurricanes—is blind in its destruction. It does not discriminate between more and less valuable locations and objects but 'attacks' indiscriminately. In distinct contrast, an aggressor-invader can and does discriminate. He does not attack or invade worthless locations and things, like the Sahara desert, but targets locations and things that are valuable. Other things being equal, the more valuable a location and an object, the more likely it will be the target of an invasion.
This raises the next crucial question. If political borders are arbitrary and attacks are never indiscriminate but directed specifically toward valuable places and things, are there any nonarbitrary borders separating different security-risk (attack) zones? The answer is yes. Such nonarbitrary borders are those of private property. Private property is the result of the appropriation and/or production of particular physical objects or effects by specific individuals at specific locations. Every appropriator-producer (owner) demonstrates with his actions that he regards the appropriated and produced things as valuable (goods), otherwise he would not have appropriated or produced them. The borders of everyone's property are objective and intersubjectively ascertainable. They are simply determined by the extension and dimension of the things appropriated and/or produced by any one particular individual. And the borders of all valuable places and things are coextensive with the borders of all property. At any given point in time, every valuable place and thing is owned by someone; only worthless places and things are owned by no one.
Surrounded by other men every appropriator and producer can also become the object of an attack or invasion. Every property—in contrast to things (matter)—is necessarily valuable; hence, every property owner becomes a possible target of other men's aggressive desires. Consequently every owner's choice of the location and form of his property will, among countless other considerations, also be influenced by security concerns. Other things equal, everyone will prefer safer locations and forms of property to locations and forms which are less safe. Yet regardless of where an owner and his property are located and whatever the property's physical form, every owner, by virtue of not abandoning his property even in view of potential aggression, demonstrates his personal willingness to protect and defend these possessions.
However, if the borders of private property are the only nonarbitrary borders standing in systematic relation to the risk of aggression, then it follows that as many different security zones as there are separately owned property holdings exist, and that these zones are no larger than the extension of these holdings. That is, even more so than in the case of industrial accidents, the insurance of property against aggression would seem to be an example of individual rather than group (mutual) protection
Whereas the accident-risk of an individual production process is typically independent of its location—such that if the process were replicated by the same producer at different locations his margin of error would remain the same—the risk of aggression against private property—the production plant—is different from one location to another. By its very nature as privately appropriated and produced goods, property is always separate and distinct. Every property is located at a different place and under the control of a different individual, and each location faces a unique security risk. It can make a difference for my security, for instance, if I reside in the countryside or the city, on a hill or in a valley, or near or far from a river, ocean, harbor, railroad, or street. In fact, even contiguous locations do not face the same risk. It can make a difference, for instance, if I reside higher or lower on the mountain than my neighbor, upstream or downstream, closer or more distant from the ocean, or simply north, south, west, or east of him. Moreover, every property, wherever it is located, can be shaped and transformed by its owner so as to increase its safety and reduce the likelihood of aggression. I may acquire a gun or safe-deposit box, for instance, or I may be able to shoot down an attacking plane from my backyard or own a laser gun that can kill an aggressor thousands of miles away. Thus, no location and no property are like any other. Every owner will have to be insured individually, and to do so every aggression-insurer must hold sufficient capital reserves.
VII
The analogy typically drawn between insurance against natural disasters and external aggression is fundamentally flawed. As aggression is never indiscriminate but selective and targeted, so is defense. Everyone has different locations and things to defend, and no one's security risk is the same as anyone else's, yet the analogy contains a kernel of truth. However, any similarity between natural disasters and external aggression is due not to the nature of aggression and defense but to the rather specific nature of state-aggression and defense (interstate warfare). As explained above, a state is an agency that exercises a compulsory territorial monopoly of protection and the power to tax, and any such agency will be comparatively more aggressive because it can externalize the costs of such behavior onto its subjects. However, the existence of a state does not just increase the frequency of aggression; it changes its entire character. The existence of states—and especially of democratic states—implies that aggression and defense—war—will tend to be transformed into total—undiscriminating—war.14
Consider for a moment a completely stateless world. While most property owners would be individually insured by large, often multinational insurance companies endowed with huge capital reserves, as bad risks most if not all aggressors would be without any insurance whatever. In this situation, every aggressor or group of aggressors would want to limit their targets, preferably to uninsured property, and avoid all "collateral damage," as they would otherwise find themselves confronted with one or many economically powerful professional defense agencies. Likewise, all defensive violence would be highly selective and targeted. All aggressors would be specific individuals or groups, located at specific places and equipped with specific resources. In response to attacks on their clients, insurance agencies would specifically target these locations and resources for retaliation, and they would avoid any collateral damage as they would otherwise become entangled with and liable to other insurers.
14on the relationship between state and war, and on the historical transformation from limited (monarchical) to total (democratic) war, see Ekkehard Krippendorff, Staat und Krieg (Frankfurt/M.: Suhrkamp, 1985); Charles Tilly, "War Making and State Making as Organized Crime," in Bringing the State Back In, Peter B. Evans, Dietrich Rueschemeyer, Theda Skocpol, eds. (Cambridge: Cambridge University Press, 1985); John F. C. Fuller, The Conduct of War (New York: Da Capo Press, 1992); Michael Howard, War in European History (New York: Oxford University Press, 1976); Hans-Hermann Hoppe, "Time Preference, Government, and the Process of Decivilization," in The Costs of War, John V. Denson, ed. (New Brunswick, N.J.: Transaction Publishers, 1997); also this volume, pp. 1-44. Erik von Kuehnelt-Leddihn, Leftism Revisited (Washington, D.C.: Regnery, 1990).
All of this changes fundamentally in a statist world with interstate warfare. If one state, the U.S., attacks another, for instance Iraq, this is not just an attack by a limited number of people, equipped with limited resources and located at a clearly identifiable place. Rather, it is an attack by all Americans and with all of their resources. Every American supposedly pays taxes to the U.S. government and is thus defacto, whether he wishes to be or not, implicated in every government aggression. Hence, while it is obviously false to claim that every American faces an equal risk of being attacked by Iraq (low or nonexistent as such a risk is, it is certainly higher in New York City than in Wichita, Kansas, for instance) every American is rendered equal with respect to his own active, if not always voluntary, participation in each of his government's aggressions.
Second, just as the attacker is a state, so is the attacked, Iraq. As its U.S. counterpart, the Iraqi government has the power to tax its population or draft it into its armed forces. As taxpayer or draftee, every Iraqi is implicated in his government's defense just as every American is
drawn into the U.S. government's attack. Thus, the war becomes a war of all Americans against all Iraqis, i.e., total war. The strategy of both the attacker and the defender state will be changed accordingly. While the attacker still must be selective regarding the targets of his attack, if for no other reason than that even taxing agencies (states) are ultimately constrained by scarcity, the aggressor has little or no incentive to avoid or minimize collateral damage. To the contrary, since the entire population and national wealth is involved in the defensive effort, collateral damage, whether of lives or property, is even desirable. No clear distinction between combatants and noncombatants exists. Everyone is an enemy, and all property provides support for the attacked government. Hence, everyone and everything becomes fair game. Likewise, the defender state will be little concerned about collateral damage resulting from its own retaliation against the attacker. Every citizen of the attacker state and all of their property is a foe and enemy property and thus becomes a possible target of retaliation. Moreover, every state, in accordance with this character of interstate war, will develop and employ more weapons of mass destruction, such as atomic bombs, rather than long range precision weapons, such as one might imagine, laser gun.
Thus, the similarity between war and natural catastrophes their seemingly indiscriminate destruction and devastation—is exclusively a feature of a statist world.
VIII
This brings on the last problem. We have seen that just as all property is private, so is and must all defense be insured individually by capitalized insurance agencies, very much like industrial accident insurance. We have also seen that both forms of insurance differ in one fundamental respect. In the case of defense insurance, the location of the insured property matters. The premium per insured value will be different at different locations. Furthermore, aggressors can move around, their arsenal of weapons may change, and the entire character of aggression can alter with the presence of states. Thus, even given an initial property location, the price per insured value can alter with changes in the social environment or surroundings of this location. How would a system of competitive insurance agencies respond to this challenge? In particular, how would it deal with the existence of states and state aggression?
In answering these questions it is essential to recall some elementary economic insights. Other things being equal, private property owners generally and business owners in particular prefer locations with low protection costs (insurance premiums) and rising property values to those with high protection costs and falling property values. Consequently, there is a tendency toward the migration of people and goods from high risk and falling property value areas into low risk and increasing property value areas. Furthermore, protection costs and property values are directly related. Other things being equal, higher protection costs (greater attack risks) imply lower or falling property values, and lower protection costs imply higher or increasing property values. These laws and tendencies shape the operation of a competitive system of insurance-protection agencies.
Whereas a tax-funded monopolist will manifest a tendency to raise the cost and price of protection, private profit-loss insurance agencies strive to reduce the cost of protection and thus bring about falling prices. At the same time insurance agencies are more interested than anyone else in rising property values because this implies not only that their own property holdings appreciate but that there will also be more of other people's property for them to insure. In contrast, if the risk of aggression increases and property values fall, there is less value to be insured while the cost of protection and price of insurance rises, implying poor business conditions for an insurer. Consequently, insurance companies would be under permanent economic pressure to promote the former favorable and avert the latter unfavorable condition.
This incentive structure has a fundamental impact on the operation of insurers. First, as for the seemingly easier case of the protection against common crime and criminals, a system of competitive insurers would lead to a dramatic change in current crime policy. To recognize the extent of this change, it is instructive to look first at the present and familiar statist crime policy. While it is in the interest of state agents to combat common private crime (if only so that there is more property left for them to tax), as tax-funded agents they have little or no interest in being particularly effective at the task of preventing it, or if it has occurred, at compensating its victims and apprehending and punishing the offenders. Moreover, under democratic conditions, insult will be added to injury, for if everyone—aggressors as well as nonaggressors and residents of high crime locations as well as those of low crime locations—can vote and be elected to government office, a systematic redistribution of property rights from nonaggressors to aggressors and the residents of low crime areas to those of high crime areas comes into effect and crime will actually be promoted. Accordingly, crime and the demand for private security services of all kinds are currently at an all-time high. Even more scandalously, instead of compensating the victims of crimes it did not prevent (as it should have), the government forces victims to pay again as taxpayers for the cost of the apprehension, imprisonment, rehabilitation and/or entertainment of their aggressors. And rather than requiring higher protection prices in high crime locations and lower ones in low crime locations, as insurers would, the government does the exact opposite. It taxes more in low crime and high property value areas than in high crime and low property value ones, or it even subsidizes the residents of the latter locations—the slums—at the expense of those of the former, eroding the social conditions unfavorable to crime while promoting those favorable to it.15
15On crime and punishment, past and present, see Terry Anderson and P.J. Hill, "The American Experiment in Anarcho-Capitalism: The Not So Wild, Wild West," Journal of Libertarian Studies 3, no. 1 (1979); Bruce L. Benson, "Guns for Protection, and Other Private Sector Responses to the Government's Failure to Control Crime," Journal of Libertarian Studies 8, no. 1 (1986); Roger D. McGrath, Gunfighters, Highwaymen and Vigilantes: Violence on the Frontier (Berkeley: University of California Press, 1984); James Q. Wilson and Richard J. Herrnstein, Crime and Human Nature (New York: Simon and Schuster, 1985); Edward C. Banfield, The Unheavenly City Revisited (Boston: Little, Brown, 1974).
The operation of competitive insurers would present a striking contrast. For one, if an insurer could not prevent a crime, it would have to indemnify the victim. Thus, above all insurers would want to be effective in crime prevention. If they still could not prevent it, they would want to be efficient in the detection, apprehension, and punishment of criminal offenders, because in finding and arresting an offender, the insurer could force the criminal—rather than the victim and its insurer—to pay for the damages and cost of indemnification.
More specifically, just as insurance companies currently maintain and continually update a detailed local inventory of property values, so would they maintain and continually update a detailed local inventory of crimes and criminals. Other things being equal, the risk of aggression against any private property location increases with the proximity and the number and resources of potential aggressors. Thus, insurers would be interested in gathering information on actual crimes and known criminals and their locations, and it would be in their mutual interest of minimizing property damage to share this information with each other (just as banks now share information on bad credit risks with each other). Furthermore, insurers would also be particularly interested in gathering information on potential (not yet committed and known) crimes and aggressors, and this would lead to a fundamental overhaul of and improvement in current—statist—crime statistics. In order to predict the future incidence of crime and thus calculate its current price (premium), insurers would correlate the frequency, description, and character of crimes and criminals with the social surroundings in which they occur and operate. And always under competitive pressure, they would develop and continually refine an elaborate system of demographic and sociological crime indicato
rs.16 That is, every neighborhood would be described, and its risk assessed, in terms of a multitude of crime indicators, such as the composition of its inhabitants' sexes, age groups, races, nationalities, ethnicities, religions, languages, professions, and incomes.
16For an overview of the extent to which official—statist—statistics, in particular on crime, deliberately ignores, misrepresents or distorts the known facts for reasons of so-called public policy (political correctness) see J. Philippe Rushton, Race, Evolution, and Behavior (New Brunswick, NJ: Transaction Publishers, 1995); Michael Levin, Why Race Matters (Westport, Conn.: Praeger, 1997).
Consequently, and in distinct contrast to the present situation, all interlocal, regional, racial, national, ethnic, religious, and linguistic income and wealth redistribution would disappear, and a constant source of social conflict would be removed permanently. Instead, the emerging price (premium) structure would tend to accurately reflect the risk of each location and its particular social surrounding such that one would only be asked to pay for the insurance risk of himself and of that associated with his particular neighborhood. More importantly, based on its continually updated and refined system of statistics on crime and property values and further motivated by the noted migration tendency from high-risk-low-value (henceforth "bad") to low-risk-high-value (henceforth "good") locations, a system of competitive aggression insurers would promote a tendency toward civilizational progress (rather than decivilization).