Power & Market

Following the tragic events of Uvalde Texas, the whole country saw a disgusting act of senseless killing, and the police waiting outside as it unfolded. This article has a purpose to discuss police ineffectiveness in situations where they’re expected to serve and protect, and how private police companies are superior to government funded police departments. 

Prices: Providing Incentives

Thomas Sowell wrote in “Basic Economics” (p.59) how prices lead people to take more risks as they have an incentive to make profit. He writes:

When a Spanish blockade in the sixteenth century tried to starve Spain’s rebellious Antwerp into surrender, the resulting high prices of food within Antwerp caused others to smuggle food into the city. However, Antwerp authorities decided to solve the high food prices by laws fixing the maximum price to be charged for given food.

These price controls may have lowered the cost of food artificially, but it then caused a shortage within the city, as the smugglers would not risk their lives and freedoms for a low price incentive.

 Humans naturally run on incentives, and if one takes risk or puts in time, labor or some other form of action, they will expect  a reward. This rewards can vary, but it is more often than not some form of currency that is accepted by society as the medium of exchange, such as money. However public entities do not give out bills to people who use their services, at least not directly, as citizens pay through state or federal taxes for public services. 

In fact, the official webpage of the Uvalde Office of Finance shows that the police budget from 2018-19 is just shy of $4.1 million out of the city’s budget of $24 million. However, Bloomberg News states that the Uvalde Police Department takes up 40 percent of the budget. 

Despite this, the impersonal funding of the police department through taxation was not enough incentive for the officers to take action, the department does not rely on upfront prices for its very existence as they will always get funded, even if they fail in times where it matters most.

 In Uvalde Texas, according to a CNN timeline, the shooter entered the building at 11:33 am, and only at 12:50 did the police enter the classroom with a key and kill the suspect. However, the police were also in the school much earlier, as the timeline states. “The officers entered the building more than an hour before the shooter was killed.” Some have claimed that since the shooter supposedly barricaded himself in a classroom, the standard procedures were different, but the official Uvalde PD active shooter manual says differently in this case. The manual states the priority of life is first of innocent civilians in the area and that the officers must either isolate, distract, or neutralize the attacker.

The manual explains on how to handle barricaded suspects, “If an officer forces an attacker into a room or area where they are isolated, cannot escape, and can do no more harm to students, staff, or visitors, the officer is not obligated to enter the room to deal with the attacker.” Ignoring the obvious lack of obligation to neutralize a shooter, it was found out that the classroom the shooter was locked inside of still had at least one child in it, which meant the officer was still obligated to engage the shooter.

 Just as smugglers entered the blockaded Antwerp, private police would have more incentive to enter the school and stop the shooter, not only because of prices and morality, but because of competition.

Competition and Incentives

Competition is one of the most important aspects of a free market, as it provides an incentive for a business to provide the best service or product at the best price and quality. Economist Ludwig Von Mises noted on competition “The free market is not a struggle to defend one's own life against predators but a competition over who can be the best cooperator, over who can benefit the most people.” The current system of state or public funded policing, creates a monopoly over not only law enforcement, but of safety as well. 

The citizens of Uvalde have no other option other than the now loathed state-run Uvalde police department. At least if there were competing police companies and a particular company refused to help those children in the school, the Uvalde residents could have the freedom of choice and go to that company's competitors and leave the other underperforming business out of business.

A good example involves Cornelius Vanderbilt's steamboat company. Burton Folsom explains the story of Vanderbilts steamboat company in his book, “The Myth of The Robber Barons.” During Vanderbilts time (1806-1815) Robert Fulton owned a government regulated and subsidized steamboat company that carried its passengers up and down the Hudson River. 

However, travel was expensive and competing with this government monopoly was illegal, but Vanderbilt did it anyway, he would make his own steamboat company and carry passengers for a low price. Eventually, the price for Vanderbilt's steamboat would be $0, as he instead opted to sell products on board the ship to make profit. 

Truly an ingenious idea that benefited everyone!

 This is the point of a free market, competing companies trying to deliver the best product to its customers. But of course, people will have questions, what if the police company forms a cartel and raises prices for consumers and businesses? Economist Murray Rothbard talked about voluntary cartels businesses formed, and looking at the facts many of these cartels after six to nine months started to fall apart. Rothbard talks about the biggest enemy to cartels, undercutting, Rothbard notes railroad cartels “These guys are restricting production, rates are up, let me start undercutting them a little bit and I can pick up all that business.”

 Rothbard continues on how this will be done in secrecy because once competitors know you broke the cartel price, the advantage will be lost and they will start doing the same thing and the cartel breaks down in hatred. In the end, the only cartels that are able to last, are government cartels like the police department.

Conclusion

Through prices and competition, private police will have an actual incentive to provide you the service of safety and upholding rights. If news gets out of brutality against a suspect or violation of rights of a suspect by a private company, consumers will be more willing to go with their competitor. While some may complain about prices being paid, prices are meant to be prohibitive so that you will think before you buy, and at least this way you have a freedom to choose and when you do call the police, they’ll be there faster since their company's existence relies on you, the customer. 

Remember that state-provided police are not free either. In the fiscal year 2021, the U.S. Government spent $71.9 billion on policing and prisons and in 2019 that number was $205 billion. How can we spend this much money, of taxpayer money, on an organization that will not stop a school shooter? We do not even have the freedom to choose where our tax money goes, let alone have competing police companies, this is the true change needed in the problem of policing.

The following policies would result is a more peaceful and equitable society:

-- Federal legislators are limited to one term each, with much reduced pay. Senatorial terms are cut from 6 years to 4. These changes would make Congress less responsive to constituent demands, inducing people to meet more of their needs in the private sector. After the government incurs a deficit, the remuneration of legislators and administrators is reduced during the year that follows. Judges are limited to ten-year terms.

-- The government is isolationist. The U.S. State Department and its embassies are abolished. The U.S. leaves the United Nations and requires the United Nations to leave the United States. The U.S. defends the nation from military and electronic incursions only from Mexico, Canada, the sea, the air, and from space. Its navy stops patrolling the world’s oceans.

-- Private-sector Americans, including those engaged in trade, tourism, and private foreign aid, may be as interventionist as they please. Military weapons owned by private parties may be stored in America for use by them elsewhere. The U.S. government does not ensure the safety of its citizens abroad.

-- The Federal Reserve Bank is abolished. Attempts by anyone, never mind a government agency, to regulate the economy cannot help but make things worse. The Fed has greatly increased economic volatility, making life especially hard on the poor during downturns. Keeping interest rates low increases the value of assets. Since most assets are owned by the prosperous, wealth has become ever more unequal. The government’s monopoly over the dollar is removed. Anything may serve as a currency. Currencies are freely exchangeable, allowing the people to choose which ones are most convenient and best hold their value.

-- The Civil Service System is abolished. The former spoils system did little damage and created far less incentive to expand government.

-- The premiums for health insurance are low, since policyholders pay all of their medical costs up to the year’s substantial deductible. Policyholders thereby become familiar with healthcare costs, and competition between suppliers drives the costs way down. After a person’s deductible is spent, the insurance company covers all health costs. Younger people leave most of their deductibles unspent.

-- Government has nothing to do with education. Many government schools are poor, especially in low-income areas, and universities are replete with idiotic notions. All schools are owned privately, for profit or non-profit. With taxes lowered, the prosperous would likely compete as to who can provide the most help to central-city schools.

-- Government stops gathering statistics, because the statistics induce the government to try to solve problems, and most such solutions make things worse. Statistics are collected and paid for by the private sector.

-- Bank deposit insurance is terminated. The guarantees have caused depositors to care about the rate of interest and the convenience, but not the money’s safety – a partial cause of the nation’s enormous expansion of debt.

-- Government zoning impedes free markets and is abolished.

-- Federal laws that support unions are repealed. The interaction between employees and employers is none of the government’s business. Workers can unionize, but without government backing.

-- Government’s flood insurance with excessively low premiums is terminated. When floods occur, the costs are spread among all the people or added to the debt. The benefits to the few seacoast dwellers are substantial and obvious. The per-capita costs to the many Americans are small and hidden.

-- The Jones Act restricts American shipping and imposes significant costs on Americans. It is abolished.

-- The government stops paying farmers for staple commodities, especially corn. The subsidies have lowered consumer costs of staple commodities and contributed to widespread obesity. 

-- Drug testing is not performed by the government. Bureaucrats avoid blame by keeping effective drugs off the market longer than necessary. More lives are lost from the delays than are saved by ensuring the drugs are safe.

-- Government funding of scientific developments has politicized science and is terminated. Scientific development is funded exclusively by the private sector, partly in concert with the military.

-- All tariffs and impediments to trade are repealed. Nations that do not impede international trade are more prosperous and more equitable.

-- Gun controls prevent good people from owning guns. Bad people obtain them anyway. Gun controls therefore make things worse and are abolished.

-- Government does nothing about viruses. Corrective measures, if any, are taken within the private sector.

-- The forfeiture of privately-owned assets to benefit police departments is terminated.

Dynamics of Government

Like everyone else, government bureaucrats act in their own best interests. Having no profits, they measure their self-worth by expanding their budgets, avoiding blame, and increasing their power over others. They generally avoid actually solving problems, because doing so would render their jobs unnecessary. Government’s principal objective is to expand its reach and power. With few exceptions, government is the worst and most expensive way to do anything.

With big government, the rich gain wealth faster than the poor, because legislators reward the rich for their campaign gifts. With small government, the poor gain wealth faster than the rich, probably because they’re willing to work harder.

Media stories about government are newsworthy. But unless wrongdoing or sex is involved, stories about individuals going about their private affairs are not newsworthy, since they usually affect only the individual involved. The media’s natural inclination to favor government is a danger to society and is partly corrected by education.

Police Funding

Providing the following provisions are first enacted, the funding of police departments is much reduced:

-- Members of the public may carry weapons, hidden or not, without licenses. The public would largely police itself, as occurred successfully in the 19^th Century. Trying to prevent unbalanced people from owning guns is the job of the private sector, not government. 

-- The disastrous war against drugs is terminated. Drugs are treated as medical problems, not crimes, and information about drugs is taught in schools.

-- Prostitution is legalized. What people choose to do with their bodies is none of the government’s business.

-- Since unions try to prevent bad cops from being fired, police departments may not unionize.

-- Businesses that fail to obtain suitable property and casualty insurance cannot obtain financing. Insurance companies coordinate with banks and finance companies to determine the proper conditions.

-- Cameras at intersections are operated by a consortium of insurers. If a car has not stopped appropriately, the owner is automatically sent a ticket and notified that his auto insurance premiums have been raised. 

The Federal Debt

The default of at least a portion of the federal debt is closer than people realize. If the cost of carrying the debt rises even to the current rate of inflation, it would crowd out current expenses and force at least a partial government default.

The federal government owns 28% of the nation’s land and almost $5 billion of gold. It should transfer these assets to private parties in return for their accepting portions of the nation’s debts. Rivers, inland waterways, lakes, swamps, aquifers, mountains, forests, prairies, deserts, tundra, roads, highways, bridges, dams, reservoirs, the national parks, and the 12-mile band of ocean that rings the nation could all be exchanged for debt relief. Amtrak, urban transportation, airports, and the postal service should all be privatized.

The owners of the Mississippi and Missouri Rivers, for example, could earn money from those who use the waters for irrigation, transportation, manufacturing, fishing, drinking, and recreation. After Congress decides the extent of liability by the owners for floods, the values of these rivers would be sky-high.

Policies that Especially Hurt the Poor

The following government policies make life more difficult and more expensive for the poor and are terminated:

-- Government lotteries are advertised heavily in poor areas, encouraging people to treat them as investments, not entertainment. The lotteries create gambling addictions and breed poverty.

-- Used automobiles are bargains. The prosperous pay heavily to buy new cars. The non-prosperous underpay to buy them subsequently. This substantial, non-governmental, income-transfer program operates now because government interferes relatively little with automobile marketing. But land-use, building, banking, environmental, farming, mining, water, tax, and who knows what other laws interfere with real estate sales, preventing a much larger income-transfer program from operating with housing.

-- Occupational licenses require fees and long periods of training, restricting the number of people in the professions. The resulting shortage of workers elevates the prices of their products. The poor can’t afford the fees and expensive training to join the professions, but they pay the higher prices when they buy the products.

-- Rent control enables older, relatively prosperous tenants whose lives are stable to enjoy low rents. But after they vacate the apartments, the rents are raised. The higher rents are paid by younger, less prosperous people who move frequently.

-- Many small businesses are exempt from paying minimum wages. After government requires larger companies to raise minimum wages, the number of employees who begin being paid below the minimum greatly outnumber those who enjoy the higher minimum wages.

-- Regulations often raise child-care costs beyond the reach of lower-income parents, preventing them from obtaining jobs.

-- The Social Security system transfers money from workers to retirees and holds no investment reserves. With the number of retirees growing faster than the number of workers, the system is certain to fail.

-- The life expectancy of black men is shorter than that of white women. Since Social Security benefits terminate when a person dies, the FICA taxes paid by black men support white women, but not the other way around.

-- Anti-gouging laws force down the prices of products during emergencies, reducing the supply of the products, especially in poor areas.

-- Taxing the rich at high tax rates hurts the poor, because the rich have less money available to create jobs.

Without government holding them down, the poor would pull themselves out of poverty. Any social safety net that’s necessary would be supplied by the private sector.

Government’s Proper Duties

The long-term results of the following government duties are beneficial:

-- The federal government defends the nation and sets and enforces immigration policies.

-- The states set and enforce election laws.

-- Local and state governments enact basic laws, keeping people from hurting others by force or fraud. They are backed by the police, the armed citizenry, and the courts. The owners of roads and other infrastructures furnish their own police forces.

-- The enforcement of contracts and adjudication of lawsuits are discharged by the courts to the extent those issues are not resolved by mediators.

Summary

Most laws and government regulations cause long-term harm. The government sector therefore constitutes less than 5% of the GDP.

Since the government sector has grown during most of the years since 1900, the long term has come home to roost, making the nation more and more dysfunctional. Government’s increasing use of force induces increasing violence among the people.

The private sector creates a solution whenever there’s a purchase and sale – literally billions of times a day. On all such occasions, the buyers and the sellers feel that they benefit.

Transactions expected to be beneficial may of course turn out to be mistakes. Some people make more mistakes than others. The only solution is the individual’s effort and learning.

Since government resists change, the only solution for its mistakes is to make government much, much smaller.

With Governor Kay Ivey’s signature on sound money legislation today, Alabama has become the second state this year to expand its sales tax exemption involving gold and silver.

Alabama Senate Bill 13, championed by Sen. Tim Melson and Rep. Jamie Kiel, passed with unanimous support out of the Alabama Senate and then passed unanimously through the Alabama House before making it to the governor’s desk.

In 2019, Alabama originally removed sales taxes from most gold, silver, platinum, and palladium coins and bars. This year, SB 13 clarified that the exemption covers all common forms of bullion, removed burdensome reporting requirements, and extended the sales tax exemption until 2028.

Backed by the Sound Money Defense League, Money Metals Exchange, and in-state supporters, SB 13 now fully ensures that Yellowhammer State citizens cannot be penalized with taxation when acquiring the monetary metals for investment, to protect their savings from the ravages of inflation, or any other reason.

Stefan Gleason, president of Money Metals Exchange, explained the importance of extending the existing sales tax exemption on precious metals: “Many states surrounding Alabama (Georgia and Florida) have cultivated pro–sound money environments, eliminating sales taxes on gold and silver. Alabama savers and investors are thankful that the legislature expanded and extended the state’s exemption.”

Alabama follows Virginia, which had only days earlier expanded and extended its own sales tax exemption involving the monetary metals earlier this month.

Including Alabama, forty-one US states now fully or partially exempt gold and silver from the sales taxes. That leaves nine states and the District of Columbia as the primary jurisdictions that still harshly penalize citizens seeking to protect their savings against the serial devaluation of the Federal Reserve Note.

Jp Cortez, policy director for the Sound Money Defense League, noted that SB 13 is part of a growing national trend. “Tennessee and Mississippi, both states that border Alabama, have been considering the elimination of sales taxes on gold and silver. So are Alaska, Hawaii, and New Jersey.”

States are removing sales taxes from monetary metals for the following reasons:

• Taxing precious metals is unfair to certain savers and investors. Gold and silver are held as forms of savings and investment. States do not tax the purchase of stocks, bonds, ETFs (exchange-traded funds), currencies, and other financial instruments, so it makes no sense to tax monetary metals.
• Levying sales taxes on precious metals is illogical because gold and silver are inherently held for resale. Sales taxes are typically levied on final consumer goods. But precious metals are inherently held for resale, not “consumption.”
• Taxing gold and silver harms in-state businesses. It’s a competitive marketplace, so buyers in states with precious-metals sales taxes often take their business to neighboring states that have eliminated or reduced sales tax on precious metals. Coin conventions also tend to avoid the sales tax states.
• Taxing precious metals is harmful to citizens attempting to protect their assets. Purchasers of precious metals aren’t fat-cat investors. Most who buy precious metals do so in small increments as a way of saving money. Precious metals investors are purchasing precious metals as a way to preserve their wealth against the damages of inflation. Inflation harms the poorest among us—including pensioners, those on fixed incomes, wage earners, savers, and more.

The Sound Money Defense League is a nonpartisan, national public policy group working to restore sound money at the state and federal level and publisher of the Sound Money Index.

Money Metals Exchange is a national precious metals investment company and news service with more than 500,000 readers and 350,000 customers. It also operates Money Metals Depository for the vaulting of gold and silver and Money Metals Capital Group, a collateral lending institution.

In the last World War, the United States of America beat the fascists, drew a line between freedom and the communists, and then spent the next 70 years turning into what it claimed to abhor. 

There were notable milestones on that road. There was 1971 when government had swelled so large that it had to publicly announce that it could not pay for itself absent a monetary game of Three-card Monte. On August 15 of that year, gold was decoupled from the dollar. Then in 2001, the US went full police state, a framework that it had long been marching toward in small and big ways. In 2020, it shut down all churches, schools, and most businesses, seizing total control over life in the period known as corona communism. 

Like the Reichstag Fire of February 27, 1933, a minor, non-event — a seasonal illness — was turned into an excuse to seize power more completely. Each year, about 1% of Americans died from all causes. That was the normal baseline rate. In 2020, there was not a bubonic plague level event of one-third of the population dying. There was not a decimation-under-seize level event of one-tenth of the population dying. About 1% died that year, just like many other years. Americans had long marched toward communism, and by some mystery, that seasonal illness became the pivotal event that society widely consented to as the moment a defining transition into corona communism would take place. 

Through this all, from the time of its fight against the unfree nations all the way to its shift into an unfree nation, America consistently pushed its chief export in the post-World War Two era. Some may debate that America’s chief export is material. Others may debate that America’s chief export is debt. Both of these claims misunderstand the significance of the American economy in the world. 

Its most significant export in the post-WW2 era was the regulatory framework that America pushed into virtually every corner of the globe — its abolition of financial freedom. 

Washington, D.C., Langley, and New York City alike collaborated in a powerful system of “modernizing” banking and financial record keeping globally, to the extent that merely desiring to have privacy in one’s financial affairs was enough to cause one to be declared a criminal and an enemy of the state. 

This took place through rules on taxation, through money transfers, through accounting standards, through anti-financial privacy laws, through innocent sounding “know your customer” policies, through righteous sounding sanctions, and many other methods as financial privacy was effectively renamed “money laundering.” It was presumed that if one were to seek financial privacy that one was a terrorist seeking to harm innocent civilians, a narcotics trafficker seeking to ravage homes and communities, or a human trafficker seeking to drive that which is good and pure from the face of the earth. 

While this system captured many troublemakers, an untold number of innocents were harmed in this attack on financial freedom, a detail that was seldom mentioned by the opponents of financial freedom. Eventually, the biggest troublemaker of them all was hardest to ignore. In time, it became known that the US government, to a virtually incomparable level, engaged in acts of terror on civilians, engaged in trafficking of narcotics, and engaged in trafficking of humans. Just as that government spoke freedom loudly while instituting tyranny, it also became all manner of evil it claimed to oppose.

Eventually, this war on financial freedom became so total that some non-American banks would not even open an account for an American citizen because of the compliance headaches it caused. Once the calling card of freedom in the world, the American passport even turned into a business liability. Far from being seen as a warning sign that such anti-financial freedom regulation had gone too far, this was an indication that some places were too free if there was competition among passports. The regulatory regime increased in both velocity and mass. 

On February 24, 2022, a minor border skirmish between virtually indistinguishable neighbors — one of dozens taking place around the globe at the time — turned into an opportunity for the United States to seize upon a new level of financial control. Never before, not even against Nazi Germany, had such a level of economic sanctions been rolled out against a country. Russia, declared an aggressor nation by the United States in a conflict with the Ukraine, suffered crippling economic sanctions. 

The United States had gone about the world using the financial regulatory framework to de-bank individuals and removing them from the global economy. This brutal de-banking of people had come to be seen as a normal and legitimate role for the US Government to play. This was a new extreme, though. The entire country of Russia was in many ways de-banked, isolated from the world economy, and massive economic ramifications occurred. The currency, the Ruble, plunged in value. It was widely argued by American media experts that the Russia economy and Russian people would crumble in days, perhaps even resulting in a coup d’etat. 

In a desperate effort to prop up its currency, the Russian government responded by requiring payment in its own currency for its exported commodities. Russians, after all, had no access to international banking, so the US Dollar had suddenly become largely worthless to this 2% of the world’s population who occupied about one-tenth of the world’s land mass. The Russian government did an additional, uncommon thing for a post-1971 country. It tied its currency to gold, a move that was considered by leading economists to be a barbarous relic. 

Crippling sanctions continued, proxy war with other nations on Ukrainian soil raged, Russia was soon to be defeated, and its leader deposed by the Russian people, American media experts announced. 

By April 7 of that year, the Russian currency found itself trading even higher than it had on February 24. For the first time ever, the post-World War Two economic order — and its promises of economic destruction for all who disobeyed — had failed. 

No matter how much bluster you have, no matter how much talk, no matter how tough your words are, those things just can not beat gold. Those things can not beat the no nonsense real life call to action appeal of gold. Everywhere in the American sphere of influence, talk of the evilness of those who would stand against American financial regulatory hegemony filled the airwaves. The numbers did not lie, though. Talk lost. 

Gold had taken its proper seat again as money. Paper had taken its proper seat again as gold certificates. A glimmer of freedom sparkled through the world in those darkest days of 2022, the evil empire and its crippling sanctions, sanctions felt even by its own people, that evil empire had finally been shown to have a limit to its evil at home and in the world, and that evil empire had an expiration date on its evil. 

If its most powerful export — the eradication of financial privacy and the elimination of financial freedom — could be combatted with something as powerfully simple and disarming as the truth contained in a room full of gold, then it was clear that there were other simple, disarming truths that could return the world to its proper order as a place of free men.