Introduction to Libertarianism.

 By Mark Berny

  Democrats proposed ‘Reasonable Profits Board’ to regulate oil and gas companies and apply “windfall profit tax”.

   Children are banned from blowing up balloons under new European Union safety rules.

   The UK tax collection agency is putting a proposal that all employees send employee paychecks to the government, after which the government deduct what it deems as the appropriate tax and pay the employees by bank transfer.

   Michelle Obama would like to see more healthy choices for Americans dining out, even if it means a restaurant deleting a best selling menu item.

   What is the common denominator for the headlines above? It seems that ultimate ideas are rather noble. Show the greedy oil and gas companies their place – do not let them exploit consumers. Protect the children who may suffocate by blowing up birthday balloons. Make the tax system more convenient for government, eliminate tax avoidance and collect more ‘tax revenues’. Make Americans healthier by altering restaurant menus.

   These ‘righteous’ ideas share the same characteristic: Someone else makes a decision for you whether you are an oil company owner, a 12-year old kid blowing up a balloon or a restaurant patron choosing between a salad and French fries.

Motivation

Basically, throughout the human history there were only two types of political philosophy: Freedom and Authority. Either people were allowed to live their lives and respect the rights of others or they were allowed to impose views and actions on others, controlling their property and lives. It is hardly surprising that philosophy of authority dominated in most regimes and had different names: Despotism, theocracy, socialism, fascism, communism, monarchy or welfare state. The arguments in favor of such regimes were quite assorted, nonetheless the essence couldn’t be hidden – oppression and enslavement of one individual by another.

The philosophy of freedom was tagged creatively too, however, all freedom followers were tight by one string: Respect to other’s individual and property rights and one’s ability to make qualified decisions regarding own life. This notion implied total rejection of violence and force as an instrument to achieve the desired result.

Up to this day, the Western world proven that a free society produces by far better results in terms of life expectancy and quality of living in every aspect: From access to medical services and nutrition to speed of travel and exposure to arts and culture.

Why would results produced by variously organized societies vary that much? What is the source of the Western world domination? What is the underlying reason for great achievements of United States and great suffer of people in China, Soviet Union or North Korea?

In the following series of articles we will examine the fundamental principles that comprise a corner stone of today’s free society, we will inspect what outcomes are achieved by applying libertarian ideas in everyday life and finally we will inspect the effects of practices and laws that disregard ideas of freedom.

The Idea

The main idea of libertarianism can be summarized in one simple sentence:

YOU BELONG TO YOURSELF

This statement may seem trivial. If the principle that no one can kill, enslave, beat or rob is obvious to you, congratulations – you recognize the main libertarian principle. What does it mean – self ownership? If you own a car, a business or company shares – you and only you may decide what to do with these possessions. In the same way owning yourself means that no one can decide what you are going to do with your deeds, words, energy, aspirations and property. No one can force you to act despite your will or interest (as perceived by yourself.)

Interestingly, any other individual also owns him or herself. Therefore, the respect of the concept ‘one belongs to himself’ is completely mutual and symmetric. You can not force other individual to live or act on your command, no matter how noble or great you defined the purpose. Consequently, you bear full and entire responsibility for you life, and no urgent needs or wills give you the moral right to claim other’s individual life, property or fruits of labor.

The libertarian principle is supported by a central concept: No individual or a group of individuals may aggress against another individual or his property. The aggression is defined as use of threat, straightforward physical violence or invasion to the private property.

Natural Rights

The very atomic right that is defined by libertarianism is property right. This is the most fundamental, inherent and natural right that an individual possesses regardless of external factors. The rest simply follows.

Let’s re-state it: Property right. First and foremost, it implies the two basic rights: (1) the right to your own body and (2) the right to any property you acquired in a fair way. A fair way means that the property was either created by you or obtained through a voluntary exchange with another individual. The concept of voluntary exchange is another corner stone of a free society.

If every individual owns the property and has the full right to do whatever he pleases he also has the right to give that property away and to exchange it for the property of others. The free voluntary exchange and libertarians’ view of the unrestricted property rights together define a system called “laissez-faire capitalism.”

The Society

“Society” is often presented as superior or divine entity that can choose or act. This obscures and distorts the reality and facts. The “society” is nothing else but a set of interacting individuals. The society doesn’t feel or think – individuals do. It is a collective definition, convenient to designate a number of people and not an extra entity in your interactions with others.

Whenever you hear the terms “greater good” or “society needs” it is an immediate hint that intervention into individual life is about to begin.

Voluntary exchange

There are only two ways for an individual to obtain a property – create/exchange it or expropriate by force. While the former can be called economical way: creating, producing and exchanging the products with others, the latter would be rather political: One side forcefully takes over the creations and production of another for the sake of a certain idea or without any justification.

Voluntary exchange, thereof, is an expression of freedom. It serves as a keystone of the free market. (We will discuss the economic principles and free market model in a separate article.) If the exchange is performed in free, peaceful and voluntary manner then no third party can interrupt or otherwise control such an exchange. Nor anyone is allowed to claim any share of that transaction (unless, of course, it was agreed prior to that – a mediator would be such an example.)

Example Demystified

Rarely those who propose another tax or ban a certain activity think beyond step one. You don’t have to be an Economics Nobel Prize laureate to unfold a simple chain reaction in the marketplace caused by such tax or ban.

Let’s examine the situation with potential “Reasonable profit committee.” The players are: An individual (or a group of individuals) who owns the oil company, explores develops and produces oil products and an end-consumer who buys the product.

Some committee is assembled from individuals that took no part in any of the oil delivery phase – neither in exploration, development or production nor in refining, processing of crude oil and gas products, their distribution and marketing. This group with some special political interests regulates the voluntary exchange between the oil company and the end consumer claiming some part of the performed transaction in a form of a tax.

Committee’s tax will lead to the lack of motivation of an oil company to produce more of its products, therefore increasing the price of oil product to the end consumer. Since there is no economic incentive for an oil company to profit more from increasing its output, the total amount of oil products on the market will drop, consequently raising the price (given that demand stays the same).

In the meantime, the committee will bite its share from the oil company profits and reroute the funds to some special interest group in form of grants under any noble purpose they can come up with.

In the end of the day, what happened here is simple robbery of one individual by an organized group of other individuals, hurting the pocket of an end consumer along the way and benefiting yet another individual who never was a part of the process by handing out collected cash.

Conclusion

Applying the libertarian principles when analyzing any kind of this transaction clearly demonstrates how individual rights and property rights are violated numerous times every day and every minute.

One particular dilemma often questions the libertarian approach: Is freedom practical? The less constraints the government puts on people – the better people handle everyday problems? Or the lack of centralized coordination brings only chaos? We will try to these very questions in this series.

In the next article we will discuss the role of government, what it should and shouldn’t do, what activities it is engaged in and what the consequences of government regulation on our lives are.