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 Ⓐ
