The Anarchy That Surrounds Us
Are you aware of the anarchy that we experience in our daily lives? Probably not, since even the most educated advocates of free markets rarely mention it. If you are still paying cash, or engage in barter, then you still have a foot in the anarchy that surrounds us.
Take for example a trip to Starbucks® for a cup of coffee. It usually goes like this: You place your order; they accept your money before beginning to make beverage; they fill the order; you accept the order. Was a cop standing over your shoulder, or the shoulder of the barista? No. Sure, behind the scenes there are all sorts of government busybodies poking around in everything from the SBX stock filings to the portion of your paycheck that the government allowed you to keep. However, when you go out to buy things, anarchy is king of the road.
You will notice that at stores like Starbucks®, (with exceptions) you do not get your product before you pay for it. Some may say that this is the shadow of government keeping everybody honest, which is preposterous. The shadow of government includes all sorts of things, from simple theft laws to Defrauding an Innkeeper. Perhaps you are unfamiliar with that one. Defrauding an Innkeeper is a body of law that rightly criminalizes people for skipping out on their bill. The title was descriptive when it was created, and it was about people spending the night at the inn, and then sneaking out the back window. Today it includes skipping out on your bar tab at the tavern, as well as taking off with a cup of coffee without paying.
Why doesn’t your local Starbucks® rely on the government catching coffee thieves and accept payment when your beverage is ready? Quite simply, because that would be a really stupid thing to do. If you have ever been the victim of a burglary, as I have, you will find out just how worthless your local constabulary is at doing anything about getting your belongings back. Just how effective do you think they are at getting stolen cups of coffee back? So, Starbucks® instituted a very simple measure that merchants have used for centuries: Pay before delivery.
Of course, there are exceptions and variations even at Starbucks®. When I frequented a particular store in Virginia, they knew after a while what I ordered and the barista frequently started making a mocha as soon as they saw me walk in. Sometimes it would be waiting at the pickup counter, where I would take it to the cashier and pay for it. Note that the exception here is that I was familiar to the barista. Of course, if I were so inclined, I could have taken the drink without paying, which would only work once. As civility is the glue that holds society together, trust is the lubricant of commerce.
Trust is key in our world. Diamond merchants make transactions worth hundreds of thousands of dollars, without paperwork, based solely on the reputations of the people they are dealing with, every single day. Those who have studied that market describe a world similar to my Starbucks® example where I was a familiar customer, except they are trading bags of cut diamonds rather than coffee.
Where does all of this go wrong? As soon as the government steps in to make it fair. One of the outcomes of the Savings & Loan “Scandal” of the 1980’s and 90’s was a federal requirement for all new mortgages to have an accompanying independent appraisal. Realize now that average homes at that time were worth a lot less than the tossed around bags of diamonds mentioned earlier. You would think that when some stranger comes on bended knee to his bank or savings & loan for $75,000 to buy a house, that the lender would take a look at the place on their own and see if it is worth the mortgage value. They should be making a few estimates of the future of property values too, as iffy a proposition as that is itself.
One of the big problems then was federal insurance of banks and savings & loans. If a financial institution made enough bad loans, their federal insurers rushed in to secure the deposits leant, in large part, as mortgages. For some reason, the army of regulators and inspectors could not be bothered with examining the business end of these institutions, so a blanket rule was imposed that raised the price of a 1993 era home about $250: The price of an appraisal.
Now, imagine if you will, if the government decided to make sure you were getting a square deal at Starbucks®? Yes, we should recognize and celebrate the anarchy that we have left, and demand back that which has been taken from us.
Some finer points for this article were inspired by this video featuring Peter Leeson:
Ⓐ Steve Ⓐ