For A Life Without Our The State

I began my morning reading an interview with George Selgin, the great scholar of money and banking, published in the official magazine of the Richmond Federal Reserve. This is just about as “mainstream” as you can get. So he does scoff at Rothbardian libertarians.

Despite this, the central point he emphasises (in agreement with the libertarian view) is this:

Question: How is your book relevant today to monetary policy?

Selgin: The real lesson I want to get across with the book is that we should take private production and issuance of circulating money more seriously than we do. There is a great deal of misunderstanding about the historical record and particularly a great deal of myth that has grown out of the ancient and medieval dogma that kings and princes alone should be trusted to coin money. That dogma, which somehow managed to survive episode after episode of royal debasement, lies at the foundation of the entire modern superstructure of state control of money. Through their unthinking failure to question governments’ coinage “prerogative,” economists set a precedent that made it all too easy for them to excuse governments’ subsequent monopolisation of paper currency, which in turn paved the way to fiat money, unlimited government guarantees, and the prevailing international monetary chaos.

I wrote Good Money to challenge the oldest and most fundamental belief behind modern governments’ control of money, by looking at a rare case where government didn’t issue coins, but the private sector did. Contrary to what people assume, the episode suggests that the private sector alone is fit to coin money.

He also emphasises that deposit insurance must end. No more government guarantees to banks. No more moral hazard. No more monopoly note issue by central banks. And much more. And if coins are privatized, everything else will work out fine.

I have also written recently on why “The State should have nothing to do with money, except punish fraud.” This pious statement should also be taken to imply that things are seriously wrong when it is The State that is committing monetary fraud and actually operating in the manner of a “counterfeiter.”

What is the role of The State in a free society?

Recall that I have only just upheld the idea of “private production of security.”

If The State is not required to provide money, nor to provide security, what is it required for?

And what if The State is not some “ideal type” like the Platonic republic, but a fraudster; a Predatory State? What should the people do then?

They should increasingly turn to The Market – and the most vocal among them should publicly voice strong arguments in favour of freeing all markets. This should include the creative elite in film, theatre, music, literature and the performing arts.

I was therefore extremely happy to read an interview with such a “political” theatre personality published in the ToI today. The introduction says:

Theatre personality and writer Shaoli Mitra was among the galaxy of intellectuals who have backed the Left Front government in West Bengal for three decades. All that changed a couple of years ago.

She says they were the official theater group of the Communist Party in West Bengal. They welcomed the arrival of the Communist government and stopped staging anti-establishment stuff. All this has changed now. They now consider the Communist administration to be “demonic.”

Looks like some sheeple are waking up. Good news.

But what does Shaoli Mitra dream of today?

She says:

We are seeking a non-partisan government that is humane in its approach and respects its citizens, the Constitution and the judiciary. The government should allow space for protest and dissent. What's also important is that it should ensure that the police force is neutral and not an extension of its political machinery.

This is surely asking for the impossible. Why not just ask for Free Markets? And let The “demonic” State recede, and go on receding, until it finally withers away?

Of course, there are many among us who argue for a greater role of The State. Arjun Sengupta of the planning commission is top-most among them. Here he is today arguing that “job creation cannot be left to market forces.” He says that The State must play a role in creating jobs! Join the army, what?

He said this in his capacity as chairman of the National Commission for Enterprises in the Unorganised Sector.

I recall my many meetings with small businessmen from the unorganized sector, who operate on the streets. Their only cry was to be Free From Predation (by you know who). Just leave us alone to trade, they all said. They even refused bank credit, saying that they had their own unorganized money lenders to depend on.

Arjun Sengupta is “on the other side.”

So is the Economic Times. An editorial today calls for the “elimination of black money.”

If there is no role for The State, why should anyone pay taxes? Is there any moral claim The State possesses to command the loyalty of the citizens, a loyalty without which paying taxes cannot be our “moral duty”?

We need to think along these lines.