Dave Smith vs Gary Johnson vs Mises vs Rothbard on “No Fly, No Buy”

Ever heard of Dave Smith? He’s a libertarian comedian and host of the podcast “Part of the Problem.” He is very funny, and he has a great podcast.  His podcast has become part of my regimen along with Tom Woods and Marc Claire.

I actually have no beef with Dave but his show from June 18 brought up some very interesting ideas which build upon my most recent post that dealt with arguing means instead of ends.

Dave Smith ripped Gary Johnson to shreds and rightfully so, regarding Johnson’s recent comments concerning the “no fly, no buy proposal”. Gary Johnson is on the right side of the issue. He is in opposition to the proposal, but only because “these lists don’t work.”

And just like any good Rothbardian, Dave Smith latches onto Johnson like a dog on a bone. And the route that Johnson takes is embarrassing. Johnson argues,”Hey these lists don’t work…there are sitting members of congress on these lists.”

And Dave Smith just goes to town on Johnson from a Rothbardian framework. Dave says that the lists not working is no argument and is weak, that a real libertarian would argue about natural rights; about the immorality of using force to take guns away from people, about our natural rights to trade and to own guns, to overthrow a tyrannical  government and all of that. It really was good. (link to The relevant show, gets relevant about 46 minutes into the show.)

And while I find no flaw at all in this line of argument, and use it myself sometimes, I see a tactical flaw in using it. And this is where my last post and Jonathan Haidt come back into play.

In my last column I wrote about the differing categories of disputes. About how we can argue over ultimate ends, such as abortion and gay marriage. Or over means, such as our bitter disagreements over education, rent controls, minimum wage laws, drug prohibition, central banks, and regulations on the medical sector, where both sides are seeking the same ultimate ends, such as well educated children, an end to homelessness, help for the poor etc., and that there is only a disagreement over how to get there.

In this case I think it’s important to take note that Dave Smith is arguing along the lines of ultimate ends. He is arguing down the Rothbardian Ethical line. And I agree with it and love it.

The only problem is that our opponents are arguing along utilitarian lines. If people were never killed by murderers who used guns, they wouldn’t care about people owning “assault rifles.” but the thing is, things like Sandy Hook and Orlando do happen. And they have a point. if no guns existed, then shootings wouldn’t happen.

Think back to the broken window fallacy of Fredrick Bastiat. They can see clearly enough the seen, that people die from gun violence, but what they fail to see is what is unseen, the alternative, the opportunity costs. If no one was allowed to have guns, more people would be victimized, more homes would be invaded. If no one was allowed to have guns where would that put the police? It’s not like the police are nobodies, they are people too.

Of course those on the left aren’t complete crazies, they just want to keep the bad guys from having guns. Hence the no fly no buy policy.  Their ends are the same as ours. They don’t want people to be slaughtered by the dozens in mass shootings, and neither do we. Yes we believe in the principle of self ownership, the right to trade, and the right to property. But these are ultimate ends. And they are arguing means. So in a sense we are arguing past one another. It may feel good to pound your fist and shout defiantly “Fiat Justistia Ne Pereat Mundus,” But It isn’t going to win many arguments.

This means that Gary Johnson’s line of attack is the right one. But he does it poorly. He says that he would be in favor of the no fly-no buy IF it were ever effective. Mises would have argued that we should be against such a policy because it can never be effective! You can never prevent guns from falling into the hands of the bad guys. Because
1. They can merely obtain the gun illegally on the black market.
2. They can learn what to do to get placed on these lists and then not do those things and obtain a gun legally.
3. Good people can go bad. Hard to believe I know but it happens. If this is too hard to swallow, let me state it another way – that bad people can pass as good people for a very long time before they actually do anything bad.

That should be our argument, and that given bad people can always find a way to get guns, the best solution is to make sure that good guys can get a gun as easy as they can get a pie. No bad guy stops shooting until a good guy with a gun shows up to shoot him. So gun proliferation among good guys is the answer.

The ends is to prevent mass shootings. The way by which that happens is not by outlawing “assault rifles.” That will only make things worse. Instead we should let people carry everywhere. This will save lives. If it doesn’t deter mass shooters in the first place, it will ensure that a good guy with a gun is much closer. and fewer lives will be lost.

I like Gary Johnson’s reasoning, except that he sucks at explaining it. It isn’t that the lists are flawed, it is that the entire notion of creating a list is flawed! It can never work.

I do use the Rothbardian approach, but if that doesn’t quickly change their mind I switch over to full on Mises Mode!  Rothbard will convince the non political, and those who aren’t in the 2 party system maybe. But the Misesian line is the one that will work on the die hards, If they’ll listen, and if they are convinced we are all seeking the same ends.

In this instance I think Gary Johnson does have the more appropriate arguments, the problem is he doesn’t know how to use it. And he doesn’t do the Ron Paul Double-Down. It isn’t enough to oppose government intervention, one must roll it back. This is where a good Austrian would also go on the offensive and attack the current no fly list for being ineffective, and contrary to the ends which its advocates wish to attain.

As a closing note, I’d recommend “Liberalism” by Ludwig von Mises.  As always you can find it here for free.   And if you’re looking at a 7 hour round trip drive, you can have the book read to you for only $12 if you’re a member at audible. (That’s a link for a 30 day free trial which includes 1 free audiobook if you’re not already a member. So just use that link, and get it free!)

Gresham’s Law

On page 364 of Basic Economics, Thomas Sowell makes a few remarks about cigarettes circulating as money in P.O.W. camps. He writes, ” […] cigarettes from Red Cross care packages were used as money among prisoners, producing economic phenomena long associated with money, such as interest rates and Gresham’s Law.”

A footnote reads, “Gresham’s Law is that bad money drives good money out of circulation. In the P.O.W. camp, the least popular brands of cigarettes circulated as money, while the most popular brands were smoked.” This isn’t exactly right.

For Gresham’s Law to be in force, legal tender laws need to be in place, which fix an exchange rate between two monies. If the law designates 1 ounce of silver to exchange for 1 ounce of gold, but the market exchange rate is 20 ounces of silver for 1 ounce of gold, a man will hold his gold—which is undervalued by the law—and spend only silver, which is overvalued by the law. Gold will be pushed out of the market, not because silver is a bad money, but because of laws that overvalue silver and undervalue gold.

As far as the P.O.W. camp goes, we’re talking about 2 different goods when comparing the high-quality cigarettes with the low-quality cigarettes. Remembering from yesterday’s post that a desirable money is fungible (i.e., mutually interchangeable), one unpopular brand of cigarette is just as good as another is, but is not as good as a popular cigarette. While either a high-end or a low-end cigarette may circulate separately as money under P.O.W. conditions, they may also circulate simultaneously such as gold and silver have done on the global market in the past.

I speculate the reason the market chose one grade of cigarettes over another to circulate had more to do with the ease of divisibility. For example, a pair of socks might exchange for 3 low-grade cigarettes or 1.5 high-end cigarettes as a matter of pure convenience. At the end of the day, it’s just plain easier to pass around 3 cigarettes than 1.5 cigarettes.

If you want to delve into this more, see Hulsmann’s  “The Ethics of Money Production”.

What is Money?

We got into the topic of money a little bit yesterday—mostly how it developed and its humble origin as a run-of-the-mill commodity.

Money is a commonly used medium of exchange. Money has certain characteristics, which you might think would be found in a book titled “Basic Economics”,  but most economists seem to neglect this all important subject.

Money must be valuable: It is wealth, like a herd of cattle, a barn full of tobacco, a storehouse of salt, or a vault filled with gold. All of the above have been used as money at different times and in different places. Money has to be something of some value before it can ever be considered a commodity.

Next, it needs to be relatively scarce. There is a reason coins were made out of gold and silver, not iron. Today our coins are only token money, but were we to actually trade iron on its value, that would come out to about $50 per ton. For a young man taking his date to dinner and a movie, he would want to bring along at least one ton of iron and maybe a few hundred pounds change. Well, what about something along the lines of diamonds? Most simply, diamonds are too rare. Rarity is a problem. There simply are not enough floating around to be used.

Diamonds also are not fungible. That is to say, every diamond is unique. It’s impossible to consider a pricing system with diamonds—not only do you have size and carat, but also clarity. It truly boggles the mind…or mine, anyway. However, something like gold is fungible. One 1/2 ounce of gold is just as good as any other 1/2 ounce out there.

Another very important feature of a money that either allows for a more complex economy, or is brought about by a more sophisticated economy, is durability. The quality of not being used up over time is very desirous. This is why gold and silver have won out over time whereas cattle, salt, tobacco, and animal skins have finally reverted to regular old commodities.

Diamonds are durable, cattle are not—not over 15 years, at best, anyway—but neither are divisible. This is another essential to a more complex economy.  If I want to buy only 1 goat, but the going rate is 5 goats per 1 cow, what should I do with the other 4 goats? Now I’m back to bartering around to get rid of them. I only want 1 goat, I cannot trade 20% of my living cow, now can I? I can take either 5, or none. This isn’t good.  The same problem would arise with the diamond example above.

About the only things that seem to work are gold and silver, with copper making a guest appearance from time-to-time for extremely small exchanges.

I will deviate from some Austrians and add that bitcoin and crypto-currencies seem to be sound and meet all of the above criteria. Their inherent value being found in their ease of moving value through space without 3rd party participants. It’s possible to easily send any amount of value of bitcoins from a farm in Montana to a village in central America, so long as both people have internet, and with the bonus of no transaction fee. To send money through Western Union it would cost upwards of 10% of the amount sent.  That is the value of bitcoin, and had I caught upon this 2 years before I did, I just might be a rich man today.

But that should do it for the properties of money.

They are:
1) Value
2) Durability
3) Divisibility
4) Fungibility, or homogeneity
5) Scarcity

If you want a quick resource page, I recommend checking out: http://wiki.mises.org/wiki/Money

It has a good, quick little run down on money, as well as plenty of resources.