Good government as good customer service

I find it interesting how even UR readers, who certainly can’t be accused of not having thought about the issue (I really have done my damnedest to drive away anyone who has no patience with large thoughts expressed at length, and I’m quite happy with the result), are very used to thinking of the relationship between state and citizen as fundamentally adversarial.

Of course, this is because it is. Clearly, no one who’s still reading this blog is tempted to refer to the State as “us,” or thinks it somehow constitutes a “community.” Most of us are quite sick of this giant cancerous blob which wants to own our minds and tell us what to do.

Nonetheless, it continues to grow. I think it’s fair to say that attempts to reverse this trend, or even to stop it, have been quite unsuccessful. Perhaps it’s worth reconsidering the strategy.

My theory, which I admit is unorthodox, is that most attempts to defeat or limit the growth of the State have failed mainly because they’ve tended to attack it on political grounds. That is, they have proposed governmental mechanisms to limit the growth of government. It is not too hard to see why this might fail—see my latest discussion with Nick Szabo and others.

Instead, I think there is a basic economic problem that needs to be solved. To me, the growth of government looks just like the byzantine structures that evolve around any malstructured market, such as a rent-controlled housing market. Effectively, I think, libertarians who don’t believe the state should exist are like New Yorkers who don’t believe landlords should exist. They pay rent anyway—they just pay it in a bizarre swirl of “fees” to “brokers.” And they think it’s perfectly normal that in 2007, they live in an apartment with no garbage disposal.

To me, the State is simply a real-estate business on a very large scale. The economic error is in thinking that the rents (taxes) its subjects pay are payments for services—much as The New Yorker can tell you what a tiny percentage of his $500/month stabilized rent goes back into maintenance. (Typically this percentage is zero.)

What the libertarian, like The New Yorker, is neglecting, is the capital cost. The nefarious factions that control the State these days put a whole lot of work into gaining that control. They conspired for literally hundreds of years. They didn’t do that for nothing. So, through their system of so-called education, they have convinced us—and, of course, themselves—that we need an enormous variety of “services” and “regulations” which they are happy to administer for lucky little us.

For the most part, these are nothing but disguised profits. And even if you can defeat the interest groups and cut off their lifelines, you create an economic vacuum which, if it can be maintained for a millisecond, will certainly be filled by some other nefarious faction. Like the New York socialist who tries to eliminate rent, you are trying to dig a hole in the ocean.

Of course there is an adversarial relationship between the libertarian and his government, just as there is an adversarial relationship between The New Yorker and his landlord. Every economic relationship which is held in disequilibrium by administrative means is, by definition, adversarial. In both cases, this battle becomes a matter of mental habit.

The New Yorker simply has no conception of what a normal relationship between tenant and landlord, based on mutual interests mutually agreed, might look like. Well, okay, he has some conception, because perhaps he has visited friends outside city limits and noticed that they have garbage disposals, walls that have been painted in the last 20 years, etc., etc.

The libertarian has no such analogy. Nowhere in the world is there a country that is run like a business. The closest examples—places like Hong Kong, Dubai and Singapore—are fascinating in many ways, but hardly free from politics.

This is the point—which I don’t think I’ve been very good at getting across—of my Fnarg examples. The goal of these examples has been to use sci-fi magic to try to ask the question: if a country was run entirely for profit, and didn’t have to worry about securing itself from its enemies internal or external, what would it do?

Naturally, since the question depends on magic, so does the answer. This gedankenexperiment can’t answer the question of how to fix government. But perhaps it’s a piece of the puzzle.

There are two variants of the experiment. In the first, the private country is a monopoly. In the second, it’s competing with other governments—a much more attractive proposition. Let’s answer this one first.

Fnargland is a business. Like any business, it has no reason at all to alienate its customers. Does the barista at Starbucks spit in your coffee? The happier Fnargland can make its residents, the more it can charge them. This is basic economics.

It is also basic economics that you can’t make someone happier by reducing the set of actions he or she can take. In financial terms, you can think of the right to do something as an option. There is no such thing as an option with negative value.

Therefore, the corporate administrators of Fnargland can be expected to operate their country under libertarian principles. Fnargland will ensure its customers deal fairly with each other, and otherwise leave them alone. This is both in its interest and in theirs.

(Except, of course, for the taxes. In Fnargland, taxation is not theft. Taxation is rent. Income tax, however, is extremely annoying, so perhaps a property-tax-only regime—à la Henry George—might be preferred. One benefit of this is that FnargCo’s shareholders find it easy to calculate the expected return on their equity, because it will follow the presumed ascent of the property market.)

For a little libertarian “red meat,” here are some freedoms I think citizens of Fnargland would enjoy. My basis for enumerating these freedoms is not that I think they’re cool and I would love to live in a place where I had them—although I would—but that I can’t imagine how FnargCo could have even a particle of interest in infringing them.

One, freedom of computation and communication. Fnargites can compute any function and send each other the result. Fnargland is beholden to no Mickey-Mouse copyright monopoly. The Ring protects it from any air, land, or sea assaults by the MPAA.

Two, freedom of contract and arbitration. Unless they are conspiring to commit a crime, Fnargites can make any agreement with each other, assign any arbiter to judge performance, and submit to any penalty in enforcement.

Three, freedom of medicine. Fnargites own and are responsible for their own bodies. No committees of bureaucrats are charged with telling them what pills they can and can’t take, what experts they can and can’t consult, etc., etc.

Four, freedom of industry. As long as they are not making weapons to assault each other, Fnargites can build anything they like any time for any reason. Fnargland is also not beholden to any patent monopolies. “Intellectual property” does not increase the value of FnargCo’s real estate—quite the contrary.

Five, freedom of instruction. Bizarre as it may seem in this day and age, Fnargites are responsible for raising their own children. They may instruct them as they see fit, and own them until they choose to emancipate them.

Six, freedom of finance. Fnargland does not interfere with its customers’ financial lives. In particular, it does not subsidize debt, promote “cheap money,” run Ponzi schemes, etc. It also respects the right of its customers to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures. (A particularly anachronistic provision.)

Obviously, these six liberties are not currently enjoyed by us poor non-Fnargites. Perhaps they are not as valuable as we crazy libertarians think, and the dripping, lava-encrusted waste of Fnargland will remain barren forever. But somehow I doubt it.

Of course, if any readers feel that FnargCo would have a motivation to infringe these freedoms, or to abuse its customers in some other appalling way, the comments section is, as usual, open. It may help to imagine yourself as some hotshot from McKinsey, suggesting new revenue measures to the skeptical board of directors.