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L: Doug, you keep saying you’re an anarchist. I suspect most of our readers know that doesn’t mean you like to wear black army boots and throw Molotov cocktails at McDonald’s restaurants during WTO protests, but I’m not sure how many really know what it is you do mean. And since this is central to your world-view and hence touches on all your thinking as an investor and speculator, it seems useful to clear the air. Few may agree with us on this topic, but let’s talk about anarchy.

Doug: Sure. If people aren’t open-minded enough to even consider an alternative view, they’re their own worst problem, not my ideas. In point of fact, anarchism is the gentlest of all political systems. It contemplates no institutionalized coercion. It’s the watercourse way, where everything is allowed to rise or fall naturally to its own level. An anarchic system is necessarily one of free-market capitalism. Any services that are needed and wanted by people — like the police or the courts — would be provided by entrepreneurs, who’d do it for a profit.

Look, I’d be happy enough if the state — which is an instrument of pure coercion, even after you tart it up with the trappings of democracy, a constitution, and what-not — were limited to protecting you from coercion and absolutely nothing more. That would imply a police force to protect you from coercion within its bailiwick. A court system to allow you to adjudicate disputes without resorting to force. And some type of military to protect you from outside predators.

Unfortunately, the government today does everything but these functions — and when it does deign to protect, it does so very poorly. The police are increasingly ineffective at protecting you; they seem to specialize in enforcing arbitrary laws. The courts? They apply arbitrary laws, and you need to be wealthy to use them — although you’re likely to be impoverished by the time you get out of them. And the military hardly defends the country anymore — it’s all over the world creating enemies, generally, of the most backward foreigners.

In a free-market anarchy, the police would likely be subsidiaries of insurance companies, and courts would have to compete with each other based on the speed, fairness, and low cost of their decisions. The military presents a more complex problem, beyond our range here, although we’ve gone into a lot of aspects in our discussion on terror last week and the military a couple months back.

L: That’s a lot for most mainstream folks to swallow at once, Boss. On the other hand, the way I see it, it would be inconsistent with my libertarian principles to demand that anyone agree with me — but I don’t need to be helping those who would enslave me to make money anyway. That said, let’s try to ease into this…

Doug: So, let’s start with a definition. Many people think of anarchy as being chaos. They see riots and chaos on TV from some place in conflict and think, “What anarchy!”

L: That’s if the talking heads don’t tell them that what they are seeing is anarchy to begin with.

Doug: Right. But chaos and bomb throwing are not anarchy. Chaos is the actual opposite of anarchy. Anarchy is simply a form of political organization that does not put one ruler, or ruling body, over everyone in a society. Whether that’s actually possible is a separate matter. This is what it means. And I see it as an ideal to strive for.

L: I’m looking at Webster’s, and it says that anarchy is: A: Absence of government. B: A state of lawlessness or political disorder due to the absence of governmental authority. C: A utopian society of individuals who enjoy complete freedom without government. People might say you’re focusing only on C.

Doug: Look at the etymology. It comes from the Greek anarchos, meaning “having no ruler,” an-, not, and archos, ruler. Definition B has come into popular use, but that doesn’t make it right.

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“Anarchy” is a word that’s been stolen and corrupted by the collectivists — like “liberal,” It used to be that a liberal was someone who believed in both social and economic freedom. Now a liberal is no better than a muddle-headed thief — someone who’s liberal only with other people’s money.

I refuse to let the bad guys control the intellectual battlefield by expropriating and ruining good words.

In any event, there’s no conflict whatsoever between anarchy and the rule of law, since there are private forms of law and governance. That’s what Common Law is all about. So the correct definition is a combination of A and C.

But I never said a truly free, anarchic society would be a utopia; it would simply be a society that emphasizes personal responsibility and doesn’t have any organized institutions of coercion. Perfect harmony is not an option for imperfect human beings. Social order, however, is possible without the state. In fact, the state is so dangerous because it necessarily draws the sociopaths — who like coercion — to itself.

What holds society together is not a bunch of strict laws and a brutal police force — it’s basically peer pressure, moral suasion, and social opprobrium. Look at a restaurant. The bills get paid not because anybody is afraid of the police, but for the three reasons I just mentioned.

L: I saw some of this in Argentina over the last few days. Here we are at your Harvest Celebration. Two hundred people, most of whom have never met before, a hundred miles from nowhere — I don’t know if the nearby town of Cafayate even has a cop, but if it does, he’s well hidden. For all anyone can see, it’s us, the grape vines, and the mountains.

And yet, there was order. The Estancia is private property. Your people organized things, and the guests went along with it and had a great time. Why? I don’t think many of them calculated the odds of getting killed if they tried to use violence to get everything they wanted, though a rational person making such a calculation would decide it wasn’t worth it.

Most people are brought up to be decent, and the people you tend to attract have a certain moral fiber. In other words, the event was governed by a culture of voluntary and honorable cooperation.

Doug: Just so. It’s like when people form lines at movie theaters or ski lifts. There doesn’t have to be a cop with a gun there to make everyone take turns. Everyone knows that if they take turns, it all works out better for everyone — and they are brought up to act that way, so they usually don’t even have to make that calculation.

A more obviously government-like example is Disneyworld, which is nothing less than a private city, complete with numerous rules that would be called laws if it were run by politicians instead of a corporation.

Why would anyone go along with rules that aren’t laws? Because they want to go to Disneyworld. They agree, and for the most part, they go along, and if they cause too much trouble, Disney kicks ’em out — which they have every right to do as owners of their private property.

As Pareto’s Law indicates, there’s inevitably a bad element in most places. 80% of folks are truly decent, and 20% are perhaps problematical. And 20% of that 20% are bad apples. You have to have a culture that keeps them hiding under rocks, rather than rising to the top — as they wind up doing quite often in government.

The reaction of a person to the idea of a truly free society is an excellent moral litmus test. The more negative the reaction, the more likely you’re dealing with a sociopath.

L: What would you say to people who point out that when the government collapsed in Somalia a few years ago, bloodshed ensued, or that when the government disappeared from New Orleans in the wake of Hurricane Katrina, ugly chaos did erupt?

Doug: It’s as you said: a cultural matter. If you have people who’ve been brought up to believe that the only limits on what you can or should do is the force exerted by the authorities, it’s no surprise that when the greater power disappears, they reach out to take whatever they want, by force.

That’s clearly the case in Somalia, but it’s also true of the people stranded in New Orleans, who were primarily those with no money to flee — in other words, the inhabitants of government housing projects. It’s not politically correct to point this out, but those people had, on average, a distinctly different culture from that of the average American.

Actually, ex-police states are the most dangerous places — like Russia in the early ’90s, the Congo in the early ’60s, or Haiti today, because they have a culture of repression that’s like a pressure cooker. When the lid comes off, it’s a mess.

L: I seem to recall a flood in West Virginia in recent years that wiped out half of a small town. Instead of raping and robbing each other, those not hurt helped the victims. They housed them, fed them, and even helped them build new houses. And no one made them do it. It wasn’t a case of better government — it was just their culture to do so.

Doug: And culture is a matter of education, which means that societies that function on voluntary cooperation, as in Cafayate, Disneyland, or the town you’re talking about in West Virginia, are possible.

There is nothing in human nature that makes it impossible to create a society of people who respect each other’s rights and follow accepted systems for working out differences, like getting in lines at movie theaters. There would still be criminals and sociopaths to deal with, as these occur in a standard distribution in every population — but the point is that the society doesn’t have to be built around an essentially criminal organization, the state.

L: And those sociopaths would be limited to whatever mischief they could wreak personally, instead of having access to the machinery of the state to multiply the harm they can do. But I think most people would balk at your characterization of the state as essentially criminal.

I know that’s a big topic people have written whole books about, but can you give us something brief to substantiate your view?

Doug: Well, it’s really not that complicated. We can probably agree that it’s wrong for me to point a gun at you and take all your money. Some people might feel sorry for me if I did that to buy medicine for my dying mother, but it’s still a crime, because it violates your human rights. And it’s still a crime if I ask someone else to do the same thing for me — and still a crime if a whole bunch of people vote to ask someone with a spiffy uniform and a badge to do the same thing.

It wouldn’t matter any more if a group of people calling themselves Congress went through some rituals that involved a leader putting some ink on some paper and said a violation of your rights was now “legal” than if a witch-doctor told a tribe’s warriors that it was okay to take slaves and sacrifice them to the gods. Laws are just a “civilized” man’s taboos.

L: Obamacare is a case of exactly this. Socialized medicine puts you and me in the position of the tribe’s sacrifice, because the mass of voters want free goodies at the expense of those who produce more than they do.

But to get back to the word “criminal” — you’re saying that the state is inherently criminal because it violates human rights. But does it have to be that way? Didn’t Ayn Rand have an idea for a kind of government that would not violate anyone’s rights?

Doug: I don’t think she ever came up with a detailed plan. I find it interesting that her “Galt’s Gulch” in Atlas Shrugged was clearly a private city. It was built on land owned by Midas Mulligan, and people who bought in agreed to his terms. There was no mention of police or elected officials. What Rand said was that a moral government could not violate anyone’s rights, and that meant raising revenues through user fees and other voluntary means — no taxes. That’s a great step in the right direction, but leaves a lot of unanswered questions as to how to do this.

Here’s the rub; imagine that the Quebecois decided unanimously that they really didn’t want to be part of Canada anymore but wanted to be an independent, French-speaking country. So they peacefully vote and take their marbles to play their own game. In doing so, they don’t violate anyone’s rights, so there is no moral way the government of Canada can stop them. They could use force, but that would violate the rights of the Quebecois, who would not be hurting anyone. And if the Quebecois could do this, so could Disneyworld, or your neighborhood — or you individually.

There’s no moral way to prevent peaceful secession — but if a state doesn’t prevent secession, it soon disintegrates. People always want to do things differently, and they would if the threat of force from the state didn’t stop them. Brute force — although gussied up with myth, propaganda, and red, white, and blue bunting — is what holds the state together. That force is ugly and corrupting.

No matter how benign a state might be, even one that found a way to fund all of its activities without resorting to force, it must still violate the fundamental human right of self-determination in order to preserve its own existence. That’s why the state is inherently a criminal organization — it must rely on force. Even the best of them are never based entirely on consent of the governed; there is coercion of the non-consenting minority. And there are always some who do not consent.

Democracy is no solution — it’s just 51% bossing the other 49% around. For God’s sake, Hitler was democratically elected. Democracy is just mob rule dressed up in a coat and tie.

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You and I do not consent to Obamacare, but we’re forced to accept it. Of course socialized medicine is totally counterproductive, as we discussed in our conversation on health.

I suppose I can live with the idea of a state, as long as there were about seven billion of them in the world — and everybody had one. That would show that the whole idea of the state is just a scam, where everyone tries to live at the expense of everyone else. But the only people who really benefit are the guys on top.

L: The state’s requirements for self-preservation are why people so often say that the state is a “necessary evil.” It must violate some rights to exist, but people think that the state’s protection and support of civil society, which is a great value, is worth the violation.

Doug: I find the concept of a necessary evil rather repugnant. It’s largely sophistry, usually trotted out to justify some type of criminality. Can anything that’s evil really be necessary? And can anything that’s necessary really be evil?

Entirely apart from that, people say the state is necessary because that’s all they’ve ever known. But it’s not, in fact, part of the cosmic firmament. There have been times and places in history when central authority was so distant, or negligent, that the people did function — and prosper — in what was essentially a functioning anarchy.

David Friedman draws attention to medieval Iceland as one example of this. I recommend his book The Machinery of Freedom for lots of great discussion on how society would work without the dead hand of the state suppressing it.

L: And the reality is that there are all sorts of private institutions that provide regulatory and governance systems, from private cities like Disneyworld, to Underwriter’s Laboratories that puts “UL” seals on electronics they deem safe, to churches, some of which govern their members’ most intimate life functions — all through voluntary subscription.

The Mormon Church, for example, exerts a very significant amount of regulation of the private behavior of its members. I’m not a Mormon, of course, but I’ve lived in predominantly Mormon communities, and I have to say they tended to be cleaner, nicer, safer, etc. I’d say the Mormon religion exerts more control over its adherents than any state’s laws have ever exerted over citizens — but those regulated like it. They believe they benefit from it, and most important of all, they are physically free to leave any time they want.

Not so for the state. This is why I’ve said in the past that the state is not a necessary evil but merely necessarily evil.

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Doug: Good example. The Amish and Mennonites provide other examples, although religious communities are entirely too uptight to suit my taste. And UL is a good one too, because people worry that businesses would all turn rapacious if the state weren’t there to regulate them. But electronics producers are not required to get UL seals on their products. They go to the extra expense of meeting UL standards because they know they’ll make more money if their products have the UL seal of approval on them.

L: Best Western hotels are the same way. Best Western doesn’t own the hotels; it’s largely a private regulatory agency that inspects hotels and gives those that make the grade the right to put a Best Western sign out front, which is worth a lot to a small mom-and-pop joint.

Doug: There are lots of private regulatory services. Insurance companies also exert a lot of influence on the insured, who have to go by certain rules to stay insured. And, of course, there’s a huge private security industry used by those who want to protect their assets, rather than call 911 after they’ve been robbed, etc. All by subscription.

You don’t need government for anything; if something is needed and wanted, an entrepreneur will provide it for a profit. And do so far better and cheaper than anything a government could possibly hope to.

The economic arguments for a free-market anarchy are overwhelming. I’m of the opinion we’d already be living with the technology of Star Trek if it wasn’t for the state slowing things down. But that isn’t the reason I’m an anarchist. The real argument is moral and ethical.

L: You know, I keep sending “unsubscribe USA.gov” messages to Washington, but I never get a response.

Doug: Good luck. To them, you’re cattle. They care only so much as you and all the others don’t stampede. Other than that, you exist for their benefit and have as much say in the matter as a steer.

L. Maybe that’s true for most people, but I can still vote with my feet. I’ve done it before, and I’ll do it again. And so have you. Which is why I was looking at property in your neck of the woods in Argentina.

Doug: It makes a lot of sense to be in a place where they have to treat you as a guest, to be courted, rather than an asset to be exploited. Of course, all governments are dangerous, destructive, and annoying. But the ones that are incompetent and disrespected are easiest to deal with…

Anyway, love to have you as a neighbor.

This brings up another problem with the nation-state — it forces obligations upon you. I’m a big believer in being neighborly, but when the state tries to force you into a relationship with other people, it only breeds resentment. I like communities that are self-selecting, where you can assume neighbors share some basic premises about the way the world works.

L: I loved the Estancia. Those mountains would probably convince me if you and your friends didn’t. But anyway, there are a million directions we could take this conversation, a million objections I could raise for you to answer, but I’d like to move from theory to practice. Even to those who agree with you, at least in spirit, this all sounds very theoretical — of no practical consequence since the whole planet, as you’ve observed, is covered with nation-states.

I’ve been your friend for the better part of 20 years, and I’ve worked with you closely for most of the last six of those. I know this is not all theory for you. You live your philosophy. I’ve seen you get up in front of a large lecture hall with hundreds of people and tell them that the whole of the law should be: “Do what thou wilt — but be prepared to accept the consequences.” They laugh or roll their eyes, depending on their beliefs, but I doubt many realize that you are not only completely serious, but that that is exactly how you live your life.

You’re not shy, but you’re not a braggart either, so I’ll go ahead and say that I have watched you match deeds to words. You routinely go in “Out” doors, you light up under “No Smoking” signs, you walk through metal detectors with your belt on, you get back on polo ponies regardless of what your doctors tell you, you leave your electronics on when all the other sheep on the airplane turn theirs off… I could go on and on.

The beauty of it is that most of the time, nothing happens. You did exactly as you pleased, hurt no one, and enjoyed life on your own terms. On the occasions when some busybody does confront you, you usually respond calmly and say, “Oh. Well, what should we do about it?” The worst that happens when you are confronted is usually that you end up where all the submissive people put themselves to start with. Sometimes you even fight back. I’ve watched you make fools of airport security guards or take your business to another hotel.

The important thing is that you start out doing what you want, not what the busybodies want. You may end up penned in with the sheep sometimes, but not as often as most people would think. And you start out doing things your own way. I admire the heck out of that.

Doug: Well… You’re Don Lobo, a well-known anarchist in your own right — well known for not cooperating with the state. But, like you, I’m very easy going, and always try to observe others’ rights to the fullest.

While it’s true the most basic law is “Do as thou wilt — but be prepared to accept the consequences,” you can extrapolate that out, as a practical matter, to two others. One, do all you say you’re going to do. And two, don’t aggress against other people or their property. Everybody understands those laws, and you don’t need a corrupt, and corrupting, government to elaborate on them any further, as far as I’m concerned.

The people I like to hang out with, like you, observe those things. Besides that, I find you’re quite good at keeping your cool while questioning minions of the state… maybe you do it just to see if there’s actually a real human in that uniform they wear.

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L: Okay, okay, but I don’t want to comment in print on all the things I’ve done. The point here is not to flatter you, or myself, but to point out to people that submission is a choice, not a foregone conclusion. Freedom is something you never get by waiting for permission but by exercising it as vigorously as your creativity and energy allow. By pushing back against the barriers — like when you told the Inn at Aspen where to shove the city’s “No smoking in the bar” rule, and that you’d accept the responsibility if the mayor walked in.

In the most general terms, I think it’s a mistake to think of freedom as a noun, rather than as a verb. And your actions show the world the consequences of doing freedom, rather than waiting to be given freedom.

Doug: Well, that’s true. And, not to pat myself on the back, it’s worth noting that there have been times when I’ve had my setbacks and even a substantial negative net worth — but it was my problem and nobody else’s. So not having any money is no excuse for not taking charge of your own life and living it the way you want to. I wasn’t given freedom by my parents or the government.

L: Hear, hear! So… Investment implications?

Doug: Attitude is everything, and that matters. If you let yourself be treated like cattle or herded like sheep, you won’t invest so as to maximize your freedom. There’s a lot we could say about this, but we’ve gone on long enough. The place to start is with diversifying your assets across political jurisdictions, making it harder for each would-be Big Brother to corral you. This is a rule almost everyone forgets — but it’s the most important single thing in today’s world.

I would like to recommend a book here. Along with Rand’s The Virtue of Selfishness , I’d say it’s the most important I’ve ever read, and had the most practical effect on my thinking: The Market for Liberty by Tannehill. It describes, clearly and precisely, how a society without government would likely work. Best of all, it’s now a free download from the Mises Institute’s web site. If you understand the basics, you’ll feel much less obligated to support the destructive institution of government — because you’ll know it’s unnecessary.

L: As we covered in our conversations on currency controls and living abroad — and Argentina, of course. What else?

Doug: Don’t feel guilty about finding the lowest-tax jurisdictions for reporting your income, owning property, etc. Shopping with your feet is not only your human right, it’s a positive good for the whole world; the more everyone shops for the least onerous governments, the more governments will have to compete for being less onerous, and the better off we’ll all be.

L: And the easier it will be for people to exercise their freedom as you do. What about trends?

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Doug: Just the ones we’ve already covered — but now the need to take action is getting more urgent. I see that the new employment bill Obama just signed has new currency controls buried in its guts. It doesn’t necessarily prohibit anything new. But it has new reporting requirements and penalties. It’s an overture to what’s coming. As Mencken said, nobody’s life or property is safe while Congress is in session.

L: I figured you were right about this being in the cards, but I have to admit it’s started sooner than I thought it would.

Doug: Sometimes I hate it when I’m right. And I still think things will get worse than even I think they will. Remember my mantra: Liquidate, Consolidate, Create, Speculate.

L: No specific investments?

Doug: Nothing looks particularly good to me right now, except gold. If you don’t have a serious position in gold, you should build one post-haste — with as much as possible outside of the U.S.

L: Okay then. See The Casey Report for details.

Doug: Right.

L: Very good. Talk to you next week.

Doug: Yes. Perhaps we should have a closer look at the implications of Obamacare.

L: Looking forward to it.

Doug and the other editors of The Casey Report tell it like it is — so you can see what’s coming. The government meddling in all sectors of the economy… systematic dollar devaluation… the state and fate of other countries around the globe… and the investment implications that can make or break your future wealth acquisition. Learn all about how to take advantage of any crisis and profit while others lose; click here for more.

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