February 6, 2016 § 25 Comments
Suppose your best friend needs wheat and can’t afford to buy any. He doesn’t need paper: he needs wheat. You’ve got some excess wheat you could lend him, but you like the way paper futures look better, and you want a guarantee that you won’t lose any buying power when you are doing your best friend a favor.
So you lend him paper (even though he needs wheat, and is just going to exchange the paper for wheat) just so that, as a formality, the kind of thing he owes you back is paper. Or you tell him that you know he needs wheat and you have plenty to lend, but you like paper futures better. So you’ll give him wheat, but you want him to repay the wheat you gave him by doing imaginary wheat-to-paper exchanges (they will be imaginary to avoid transaction fees and taxes) at the point of borrowing and repayment. Because of the excursion into the land of imaginary paper he ends up owing you back more wheat than you lent him on this mutuum loan – usury.
It seems to me that your friendship is as imaginary as the wheat-to-paper exchanges. That is no way to treat a friend in need.
And mutuum lending is only morally licit as an act of friendship or charity. It is not morally licit in pursuit of gain. Preservation of market buying power as something guaranteed by someone else is a kind of gain.
If your best friend decides to pay you back more wheat than you loaned him out of gratitude, that is a gift from him to you. There isn’t anything wrong with that. It is even true that he owes you gratitude in a sense. But gratitude between friends is not convertible into a specific dollar amount which he can be said to owe you as a financial matter. No true friend is going to quibble, in dollar terms, as to whether his best friend has been grateful enough in the natural exchange of favors which occurs among friends.
It is possible for friends to do each other injustice in mutuum lending; even to have a falling out and to no longer be friends. Suppose you lent your best friend the wheat, he now has enough to repay you the amount that he borrowed, but he refuses to do so. In that case he is not being a good friend; and he really does owe you back the amount of wheat that he borrowed, as a matter of justice. His refusal to pay it back now that he can is a kind of theft or fraud. You truly are entitled to return of the principal amount, and the falling out of your friendship does not remove that entitlement in justice.
But this does not make mutuum lending morally licit as a wealth preservation investment strategy. There are plenty of ways to look after your own property financially: many different kinds of contracts for preserving and growing wealth are morally permissible.
But the security on those contracts must be property, not personal IOU’s. Otherwise you are unjustly profiting financially from arbitrage over friendship.
February 6, 2016 § 4 Comments
Modern man is so acclimated to usury that when it comes to wealth, he has convinced himself that the second law of thermodynamics runs backwards. Back here in the real world though property and its buying power deteriorate unless the owner does work himself, invests more property to protect what he has, and/or takes risks with his property in putting it to work as productive capital.
Even the most durable property – a cache of precious metals, say – requires some investment of work, risk, and additional property in order to merely preserve it. To bury a pot of gold takes work. To acquire or rent the land on which it is buried absorbs additional resources, as does protecting that land from prospecting trespassers and thieves. To bury it on someone else’s land which is not owned, rented, or otherwise protected through ongoing expenditure of work or capital is to take a more significant risk. You have to keep track of where it is, make sure that thieves don’t find out where it is, and be ready to retrieve it or just lose it if someone else finds it.
Even when a non recourse insurance bond covering the loss of the property is purchased, this does not eliminate risk: it simply spreads the risk over a larger pool of property, compensating the insurer for renting his property to the insured as security, thereby putting it at risk. If the insurer’s overall losses on all claims are too great then the property he has staked to insure your property will not pay your claim: the well is only so deep. And of course you have to pay for the insurance bond.
It is a commonplace among investment advisors that a wealth preservation strategy involves investing a portfolio in such a way as to maximize the chances that it will preserve its buying power: to take the smallest risk possible with respect to losing buying power. You cannot even preserve the buying power of your property without investing: without doing work, employing your capital in some inherently risky enterprise, and/or taking on other risks. (Other investment strategies include aggressive growth with high risk, and various intermediate strategies in between). Portfolios of property – that is to say, the collection of all of the property that a person owns – do not preserve themselves. Just staying even takes work, investment, and risk. If you don’t swim, you are going to drown. That is the nature of life in the universe in which we live.
One way to understand usury is as the unjust compensation of the lender for work, risk, and investment undertaken by the borrower; because in a mutuum loan the borrower personally pledges to make the lender whole, restoring property equivalent to what was originally given to the borrower, no matter what actually happens to the actual property borrowed. This is why interest on mutuum loans is intrinsically unjust, and mutuum loans may only be licitly undertaken as a favor to a friend or a person in need, expecting no compensation in return.
February 5, 2016 § 11 Comments
This is just a theoretical exercise, so the specific numbers aren’t all that important: I’m just spitballing here. Basically what I am proposing is (say) a $1000 tax per voter, paid by the voter, to cover the carbon footprint of that person voting.
Suppose 100 million voters average 2 miles to get to the polls each at 20 miles per gallon. That is 10 million gallons of gas.
Polling places consume another 5 million gallons of gas or equivalent keeping facilities open, setting up and tearing down, running computer equipment, and the like.
The politicians these voters elect consume about 1 billion gallons of gas or equivalent in the process of providing for their own facilities, transportation, perks, interns, hookers, bribes, kickbacks, drugs, and alcohol.
Elected politicians also consume the equivalent of about 1 trillion gallons of gas in the process of providing goodies back to the voters, who elected them in order to receive those goodies.
Again I am just spitballing here, but I think is it pretty easy to see how a $1000+ carbon tax on everyone who votes could be straightforwardly justified.
February 4, 2016 § 26 Comments
Lying about one’s commitments also objectively disqualifies a candidate for public office.
All candidates for notable public office in the United States are either genuinely committed to liberal principles or must lie about being committed to liberal principles in order to be electable.
Therefore, no electable candidates for notable public office in the Unites States are objectively qualified.
February 4, 2016 § 18 Comments
Supreme Court Justice Anthony Kennedy famously wrote, in his opinion on Planned Parenthood vs Casey:
At the heart of [political] liberty is the right to define one’s own concept of existence, of meaning, of the universe, and of the mystery of human life.
This statement is correct.
I have explained in many different ways how and why liberalism simultaneously
- Is rationally incoherent, and therefore logically implies everything and its opposite all at once; but in a way which is not immediately transparent.
- Affirms individuals in their expectations and exalts what individuals happen to desire or will over reality: cafeteria realism.
One of the interesting functions of the Supreme Court in the American political system is that it gives conservatives a strange attractor for hope and blame: a political sink to absorb their resentments, hopes, and fears while stopping short of repudiating liberalism. Authentic political freedom and republican democracy would work if only those tyrants in the Supreme Court would stop legislating from the bench. Certainly (goes the argument) it is unfair to blame democracy and liberalism – authentic classical liberalism – for the tyrannies of the Court.
The Supreme Court keeps everyone on the reservation by playing the roles of referee and tyrant. Part of the problem with populism is that sometimes people decide that liberalism isn’t what they really want: subsidiary authorities and electoral majorities will sometimes violate liberal principles if someone doesn’t keep the electorate and subordinate government bodies in line. So social conservatives end up simultaneously excoriating the Court and hoping to gain control of it, so that their truly authentic vision of freedom and equal rights can be achieved.
Meanwhile, even when the judges are appointed by conservatives – Anthony Kennedy was appointed by Ronald Reagan – those judges inevitably find (shocking, I know) that liberal principles imply substantively liberal outcomes for disputes in law.
When Kurt Gödel was applying for US citizenship he almost got his citizenship denied, because he would argue that theoretically the US could vote itself in a king or strongman dictator. His friend Albert Einstein calmed him down and reassured him that this theoretical possibility was not really a practical possibility: whatever the formal structures may theoretically allow, the United States was incorrigibly committed to freedom and equality as bedrock political principles.
I’ll just suggest that conservatives who think that liberal democracy could work out great, if only it weren’t for the tyrannical Supreme Court, are no Einsteins.
February 3, 2016 § 12 Comments
Why doesn’t the mutuum borrower owe at least enough interest to compensate for inflation?
It is often said that money now is worth more than money later, and a common argument is that this justifies charging interest on mutuum loans: at least enough interest to compensate for the effects of inflation or currency devaluation.
As is typical of modern anti-realist views of property (see Question 10 for a realist view), this gets things almost exactly backwards. In fact if the argument from counterfactuals or opportunity cost were valid in the first place, what would follow is that the lender should pay interest to the borrower.
Property in itself is always subject to decay. Suppose you lend me fresh peaches, and I personally guarantee to give you the same number of fresh peaches six months from now.
In order to provide you with fresh peaches six months from now I have to take risks and invest more capital and labor. If I just hang on to your peaches and return them to you they will be rotten, because the peaches you lent to me are subject to decay. You should pay me interest, since when I give you fresh peaches in six months you are getting a greater value back than what you gave. I personally guaranteed you fresh peaches in six months, and took all of the risk and labor of providing them upon myself.
Guaranteed fresh peaches later requires investment, labor, and risk. (Question 48 is pertinent). Peaches in a bucket right now require none of those things. If any interest based on counterfactuals is justifiable at all it should go to the party who takes on the task and the risk of providing fresh peaches in six months: the borrower.
And the same is true of money, or any property. If entropy or decay (for example inflation) justifies charging interest on a mutuum loan at all, the interest it justifies is due to the borrower not the lender; because the borrower is the person who has taken on all of the risk and expense of preserving the lender’s capital.
The borrower should be compensated for the expenses the lender would have incurred if the lender had kept his capital locked (for a fee) in a safe deposit box rather than giving it to the borrower for preservation and safekeeping. If the borrower is providing a service roughly equivalent to a safe deposit box, interest should flow the opposite direction from what the usurer proposes. Safe deposit boxes have to be rented for a reason.
The fallacy in all of this is in the notion that opportunity costs are compensable in mutuum lending in the first place (see Question 14), and the idea that mutuum lending is ever morally licit as a means to economic gain – where wealth preservation is a kind of gain – as opposed to an act of charity or friendship.
But once we grant the premise that opportunity costs are compensable for the sake of argument, the lender should be paying interest to the borrower. The borrower’s story about counterfactual might-have-beens is more in touch with reality than the lender’s story about counterfactual might-have-beens, because preserving and maintaining property against the forces of entropy always requires risk, work, and investment.
February 2, 2016 § 13 Comments
Laurie Woodward, the director of the Student Union, said that when she approached the union with the question of if they wanted to keep the current MLK quote or supplement a new one, one of the students asked, “Does the MLK quote represent us today?”
“Diversity is so much more than race. Obviously race still plays a big role. But there are people who identify differently in gender and all sorts of things like that,” sophomore architecture major Mia Ashley said.
Here is the result of my muse:
Black is the new white
niggardly niggardly niggardly noobs,
militantly tolerant of men with boobs,
heckle and snark administrative rubes,
until MLK day goes down the tubes