We live in a world of scarcity. Conflict results in such a world because multiple individuals may seek to employ the same scarce resources at the same time. For this reason, we have developed rules regarding property rights. The existence of such rules does not eliminate conflict but it does provide individuals with non-violent options for conflict resolution.
All conflict resolution has some cost. A compromise regarding ownership, for example, has the cost of time as well as potential dissatisfaction of one or more of the interested parties. From this non-violent starting point, all other conflict resolution gets progressively more violent and, therefore, more costly. Violent resolution can result in injury or death, each of which greatly increases the cost of resolution, particularly to the injured parties.
It is the high cost of violent conflict that makes it less desirable to those who will bear that cost. As long as an individual has other, less costly options, they are more likely to avoid violence as a means of conflict resolution. A corollary of this concerns individuals who do not pay the price of violent action: they are increasingly willing to entertain this option.
Modern wars are conflicts where those initiating and overseeing the resolution pay little of the cost: such conflicts are funded by, and fought by, other individuals under their control. Those in power will often claim that war is the last resort, though this is demonstrably false rhetoric: with little cost to themselves, they lack the incentive to seek non-violent conflict resolution. As a result, if we seek to eliminate war, we must either require those in power to participate or, more likely, remove their power to make such decisions.
In a recent post, we discussed the fact that only individuals can act and supposed “government action” often shields government actors from responsibility of their actions. There is another way that individuals are frequently missed when government is discussed: funding.
Property rights are necessary to mitigate the potential for conflict over scarce resources. As a result, property rights can only be recognized at an individual level and, therefore, only individuals can own property. This doesn’t preclude a group of people from combining their property and jointly “owning” it, but it does preclude any group of people, appointed, elected, or otherwise constituted, from claiming ownership of property other than that which they own themselves. In other words, governments cannot own property, at least not in any ethical sense.
When referring to funding, it is common to hear it referred to as either private or government. Since only individuals can own property, all funding must originate with individuals. Therefore, while government spends money (property), it is always the money of individuals. This is rarely pointed out when proponents of government intervention describe the process of administering what they consider socially beneficial. However, by ignoring this point, we cannot possibly understand the benefit of any government spending. Since all government actions start with the expropriation of the property of individuals, any benefit calculation has to start in the red.
Inflation of the money supply is one of the more insidious means of theft available to the state. Rather than borrowing or taxing, each of which are a more overt and generally understood means of paying off debt, states will often print money as a means of financing debt. Expanding the available money supply can be done in a myriad of ways. One way is through Federal Reserve purchase of government bonds, today called “quantitative easing,” using money that is printed out of thin air. Another is through fractional reserve banking.
Banks are encouraged to lend money as a means of raising capital. Based on existing regulations, banks are only required to keep a small fraction of cash on hand relative to their deposits. For example, if a person deposits one thousand dollars in a bank, the bank can then lend nearly all of that out so someone else. The effect of this is to increase the money supply by the amount loaned out. While none of this money physically exists, it still represents an increase in the money supply and therefore diminishes the value of existing money.
To keep this Ponzi scheme afloat, the Federal Reserve stands at the ready to purchase bad debt (e.g. withdrawals exceeding a bank’s reserves) by printing reserve notes as the master counterfeiter. Over time, this inflation is reflected in prices as the value of money diminishes.