Lesser of Two Evils?: Taxes versus Deficits
by Alex Merced
Hello everyone, in this months article what I wanted to talk about was the effects of higher taxes versus deficit spending. While from a political view, deficit spending does less political damage; the more important paradigm is economics and liberty as these are the factors that determine the quality of life of you and those to come. First off let's understand how both function.
Increased Taxation
If government is to increase taxation, this means more of a persons earnings must be taken whether through a direct tax like an income tax which is virtually unavoidable, or an indirect tax such a sales tax which to some extent you can control your payment of. Although one must understand what happens when someone is taxes, they are not only being stolen of their money, but since their time was spent to labor for that money or was earned from money you invested that originally came from you or someone elses labor. If more of your wages are taken, it means more of your labor is needed to maintain the same amount of purchasing power. If they decide not to labor more than then you won't have the same purchasing power meaning you have a choice, save less for rainy day, or cut back on your consumption.
The Bottom Line, taxes take away the fruits of your labor and time which you can't get back. Although, the effect taxation is to reduce CURRENT savings/consumption in the time period the tax takes place. (of course there are larger changes in institutional structures, but that's beyond the scope of this article)
Deficit Spending
If government does not want to raise taxes then it has to borrow the money to make up the deficit in it's budget. This money that is borrowed is received generally from bank lenders who are lending out the savings from a previous period, that would otherwise be lent out to other parties usually to invest in growing or starting new enterprises. If the money is not borrowed out the local or global stock of savings, then a financial intermediary like a central bank can be used to increase the money supply and offer to buy this debt from the banks to encourage the banks to make the loan. This increase in the money supply has the same effect of robbing the savings stock by devaluing the currency the stock of savings is denominated in, and also has the effect of encouraging speculation with that savings stock because of the drops in interest rates that is caused by this increase. Even worse, these loans must still be paid off from future tax increases generally on people who had nothing to do with the need to borrow initially.
Bottom Line, Deficit spending pillages savings from the past to be repaid from robbing/taxing the wages of the future.
Conclusion
Whether you find one of these tactics to fund intrusive monopolies of force (government) preferable really depends on WHEN you want to steal from: The Past, The Present, or the Future. No matter what the result is the change in peoples available resources from this financing does change the outcome of economic and social calculation of individuals in any of these periods of time causing material changes to how institutions in society are created, developed, or even destroyed.
Showing posts with label Anarcho Capitalist. Show all posts
Showing posts with label Anarcho Capitalist. Show all posts
Friday, March 4, 2011
Wednesday, December 15, 2010
Economic Equality versus Economic Liberty
Economic Equality versus Economic Liberty by Alex Merced
One of the fundamental divides among activist economics is what is the goal when thinking of policy and the economy. Progressives focus on Economic Equality and how policy can manipulate the economy to distribute resources in a more "equitable" or "fair" way as measured through income statistics. While Libertarians and Conservatives are more concerned with Economic Liberty allowing capital to flow freely increasing the odds of that capital to flow into the hands of those with the greatest entrepeneurial ability who can put that capital to use developing the division of labor, structure or production, and into innovations that create more accessibility to scarce goods for all.
It's hard to measure the effects of Economic Liberty via statistics because it's about the quality of products and services improving and their costs dropping. For example, the Iphone may not be a cheap gadget, but because of it there are many other purchases I can bypass such as buying watches, gaming consoles, calculators, and many other things people would spend a lot of their wages on is now in one device for much less than all of those individual goods put together. So while looking at income statistics may show "real wages" havn't grown in decades but quality of life sure has increased since less wages are needed to have access to a variety of benefits since you need fewer devices to do more tasks. This is the result on entrepeneurship and innovation which can be magnified by free flow of capital and information which those who support economic liberty focus on.
Although, those who support Economic Equality measure their policies via aggregate macroeconomic income statistics. Just because numbers such as "real wages" grow or "the income distribution" narrows doesn't mean that an increase in the quality of life has occured because quality of life is not tied to how much you make, but what you can buy with it (oh yeah... and if it makes you happy, which is not measurable) which is constantly being imporved by productivity gains and innovation from entrepeneurs. So instead of the hyper focus on labor wages, they'd be better of focusing on fostering entrepeneurship in individuals like the Economic Libertarians.
One of the fundamental divides among activist economics is what is the goal when thinking of policy and the economy. Progressives focus on Economic Equality and how policy can manipulate the economy to distribute resources in a more "equitable" or "fair" way as measured through income statistics. While Libertarians and Conservatives are more concerned with Economic Liberty allowing capital to flow freely increasing the odds of that capital to flow into the hands of those with the greatest entrepeneurial ability who can put that capital to use developing the division of labor, structure or production, and into innovations that create more accessibility to scarce goods for all.
It's hard to measure the effects of Economic Liberty via statistics because it's about the quality of products and services improving and their costs dropping. For example, the Iphone may not be a cheap gadget, but because of it there are many other purchases I can bypass such as buying watches, gaming consoles, calculators, and many other things people would spend a lot of their wages on is now in one device for much less than all of those individual goods put together. So while looking at income statistics may show "real wages" havn't grown in decades but quality of life sure has increased since less wages are needed to have access to a variety of benefits since you need fewer devices to do more tasks. This is the result on entrepeneurship and innovation which can be magnified by free flow of capital and information which those who support economic liberty focus on.
Although, those who support Economic Equality measure their policies via aggregate macroeconomic income statistics. Just because numbers such as "real wages" grow or "the income distribution" narrows doesn't mean that an increase in the quality of life has occured because quality of life is not tied to how much you make, but what you can buy with it (oh yeah... and if it makes you happy, which is not measurable) which is constantly being imporved by productivity gains and innovation from entrepeneurs. So instead of the hyper focus on labor wages, they'd be better of focusing on fostering entrepeneurship in individuals like the Economic Libertarians.
Saturday, August 28, 2010
Accumulation of Capital and Knowledge
Accumulation of Capital and Knowledge
by Alex Merced
While I've discussed capital accumulation a couple of times before I though I'd re-explain this concept and it's implications again since it's so pivotal in understanding many of todays fundamental political questions such as...
Why do the rich grow wealthier at a faster rate than the none rich, why do the smarter get smarter faster than the none-smart?
Capital Accumulation
The basic premise is this, every input creates output, so the more inputs I have the more output I can create. While innovation and new technology will help magnify the effect of this process let's suspend disbelief and that technology is no longer progressing forward how can a society still become more prosperous?
Example:
Smith has $100 with which he can buy a machine that he can create enough goods that he'll generate $20 each week when bringing those goods to the market. So in 5 weeks he'll have recovered his cost and buy another of the same machine and begin to generate $40 and now it'll only 2 1/2 weeks before another machine can be bought.
So even though the machines weren't getting any better or efficient, accumulating the capital of this machinery allowed Smith to generate more wealth in a smaller period of time. It's this process that explains why people with more capital, or "rich" people may be able to accumulate more wealth at faster rates. Those who aren't rich are either earlier in this process of wealth accumulation if they are making these investments, or may be stuck in their circumstances due to lack of investment spending, because they chose to consume instead.
If smith instead bought $100 worth of apples and ate or consumed them, the end results is that smith has nothing left. So consumption in itself does not create more for smith, he must make an investment in order to ensure he can continue his consumption habits. In this case he could save $50 worth of the apples for later or sell them for $100 (assuming he can find a buyer) and consume the other $50.
Notice the difference...
In the first scenario Smith consumed $100 of apples and now has nothing
While in the second scenario Smith consumed $50 of apples and invested/saved the other $50 of Apples is still left with $100 in the end even after consuming $50 meaning a total of $150 of wealth existed for Smith throughout this scenario.
(NOTE: It's with this realization that one should look very suspect at statistics like Gross Domestic Product which assume the creation of value for Consumption spending is the same as Investment Spending, and that all Government spending is equally valuable whether it's on investment or consumption since it only measures the dollars committed not the dollars returned from expenditures. In either of the above examples the GDP of smith would be $100 yet it's obvious he was better off in one example over the other.)
(NOTE 2: The Reason GDP would only be $100 for Smith personally either way cause the only purchase he made was the $100 of apples, and GDP ignored the $100 returned from selling half his apples until he spends it. So GDP is always ignoring return of expenditures, which is this example are vastly different.)
Knowledge Accumulation
Now if your reading this it's safe to assume your interested in accumulating knowledge, and knowledge accumulation works very similar to that of the example above.
For example, when you were a child in Kindergarten or First Grade you were learning the basics of communication such as the alphabet and how to read, and it takes long time develop those basic skills. Yet, as you get older and you master these fundamental pieces of knowledge your able to attain other pieces of knowledge at greater rates in smaller time frames, or else no child would be able to handle the difference in workload from 1st grade to college. The more you participate in this process the faster and great it becomes. The smart get smarter faster cause they've invested more in previous knowledge to attain future knowledge in the same way smith had invested more in previous capital to purchase future capital.
Conclusion
Many find this magnification of wealth growth to be a sign of inequity, although it's actually the result of the process that creates prosperity, knowledge and wisdom. To demonize capital accumulation and say capital must be taken from the rich and given to the poor is like saying we must take knowledge from a genius and give it to someone who may be referred to as "stupid". We should not fault those who are later in the process of capital accumulation for other being in the early stages of it, their participation in this process does not prevent other from participating in it.
Also, it's this process that separates developed countries from underdeveloped countries. It's not that technological innovations and practices are kept secret from these developing nations, but they are earlier in the stages of capital accumulation making growth seem slower relative to countries further along in the process. Yet if countries further along in this process take it for granted and consume all the fruits of these investments they may find themselves falling behind quite quick.
by Alex Merced
While I've discussed capital accumulation a couple of times before I though I'd re-explain this concept and it's implications again since it's so pivotal in understanding many of todays fundamental political questions such as...
Why do the rich grow wealthier at a faster rate than the none rich, why do the smarter get smarter faster than the none-smart?
Capital Accumulation
The basic premise is this, every input creates output, so the more inputs I have the more output I can create. While innovation and new technology will help magnify the effect of this process let's suspend disbelief and that technology is no longer progressing forward how can a society still become more prosperous?
Example:
Smith has $100 with which he can buy a machine that he can create enough goods that he'll generate $20 each week when bringing those goods to the market. So in 5 weeks he'll have recovered his cost and buy another of the same machine and begin to generate $40 and now it'll only 2 1/2 weeks before another machine can be bought.
So even though the machines weren't getting any better or efficient, accumulating the capital of this machinery allowed Smith to generate more wealth in a smaller period of time. It's this process that explains why people with more capital, or "rich" people may be able to accumulate more wealth at faster rates. Those who aren't rich are either earlier in this process of wealth accumulation if they are making these investments, or may be stuck in their circumstances due to lack of investment spending, because they chose to consume instead.
If smith instead bought $100 worth of apples and ate or consumed them, the end results is that smith has nothing left. So consumption in itself does not create more for smith, he must make an investment in order to ensure he can continue his consumption habits. In this case he could save $50 worth of the apples for later or sell them for $100 (assuming he can find a buyer) and consume the other $50.
Notice the difference...
In the first scenario Smith consumed $100 of apples and now has nothing
While in the second scenario Smith consumed $50 of apples and invested/saved the other $50 of Apples is still left with $100 in the end even after consuming $50 meaning a total of $150 of wealth existed for Smith throughout this scenario.
(NOTE: It's with this realization that one should look very suspect at statistics like Gross Domestic Product which assume the creation of value for Consumption spending is the same as Investment Spending, and that all Government spending is equally valuable whether it's on investment or consumption since it only measures the dollars committed not the dollars returned from expenditures. In either of the above examples the GDP of smith would be $100 yet it's obvious he was better off in one example over the other.)
(NOTE 2: The Reason GDP would only be $100 for Smith personally either way cause the only purchase he made was the $100 of apples, and GDP ignored the $100 returned from selling half his apples until he spends it. So GDP is always ignoring return of expenditures, which is this example are vastly different.)
Knowledge Accumulation
Now if your reading this it's safe to assume your interested in accumulating knowledge, and knowledge accumulation works very similar to that of the example above.
For example, when you were a child in Kindergarten or First Grade you were learning the basics of communication such as the alphabet and how to read, and it takes long time develop those basic skills. Yet, as you get older and you master these fundamental pieces of knowledge your able to attain other pieces of knowledge at greater rates in smaller time frames, or else no child would be able to handle the difference in workload from 1st grade to college. The more you participate in this process the faster and great it becomes. The smart get smarter faster cause they've invested more in previous knowledge to attain future knowledge in the same way smith had invested more in previous capital to purchase future capital.
Conclusion
Many find this magnification of wealth growth to be a sign of inequity, although it's actually the result of the process that creates prosperity, knowledge and wisdom. To demonize capital accumulation and say capital must be taken from the rich and given to the poor is like saying we must take knowledge from a genius and give it to someone who may be referred to as "stupid". We should not fault those who are later in the process of capital accumulation for other being in the early stages of it, their participation in this process does not prevent other from participating in it.
Also, it's this process that separates developed countries from underdeveloped countries. It's not that technological innovations and practices are kept secret from these developing nations, but they are earlier in the stages of capital accumulation making growth seem slower relative to countries further along in the process. Yet if countries further along in this process take it for granted and consume all the fruits of these investments they may find themselves falling behind quite quick.
Thursday, August 12, 2010
Elaborating on the Austrian Time Preference Theory
Elaborating on the Austrian Time Preference Theory
by Alex Merced
I write this article after listening to Robert Murphys lecture Capital and Interest from Mises U 2010
While Listening to this having heard explanations of Time Preference theory plenty of times, I started having flash backs to an Austrian Scholars Conference lecture where Robert Murphey was actually giving a critic of the ATPT based on his dissertation, basically challenging the idea that a future good is always less valued than a present good. This made me start to think, I do understand ATPT, but I'm not sure if it fully explains why this preference exists fully other than a sort of hedonistic view of human nature to want to satisfy all it's wants now. Then again Patience is a virtue, and one can look at virtues as efforts to fight human nature.
First off let's recap the ATPT for those of you unfamilar...
Austrian Time Preference Theory
The Bottom Line: Present Goods are always more valuable then Future Goods
Example: Pre-Sale Tickets (future good) are cheaper than tickets at the door (present good)
This is an important theory for explaining the Austrians view on Capital and the Interest from Capital. For example I have a $100,000 and I have these two choices which would I make.
Buy $100,000 of Bonds and invest them in Bonds that yield 5%
or
Buy a $100,000 of fishing supplies expecting to catch enough fish to make $110,000 (10% yield)
So you see here the capital I have I'll put towards the fish equipment cause In the end I'll have a greater yield from my investments, this is how capital naturally gravitates towards it's most productive purpose. If my calculation was correct I can now buy another $100,000 of fishing equipment and next year catch enough fish to make $220,000. As you can see the more I go through this process the more capital I accumulate and the better my life gets even though no new science or technology has been developed, cause I've accumulated capital and can continue to re-invest that capital for interest.
This is what seperates developed countries from developing countries cause they may only be able to afford $20,000 of fishing equipment so a year later they'd only have $22,000 so it'll take some time and re-investment before the capital accumulation brings them to the developed level.
So where time preference theory comes into play is in the issue of why would someone pay me $110,000 for the fish if they can instead get the same fish by buying the Fishing Supplies for $100,000 and save themselves the $10,000. The reason is cause they have a time preference, they don't want to have to wait for a year of fishing to save $10,000 so they rather pay the extra $10,000 to have the fish now. So as we stated, the current good, these fish I've already fished is worth more than the future good, the fish they'd fish if they made the same capital investment.
Ok, so that should sum it up, so now for my addition...
Is it a "Time" Preference or a "Tangibility" Preference
I think the time preference exists not cause there is a time bias, but because there is a tangibility bias. A future good isn't as tangible as a current good so provokes less of a reaction. This Tangibility preference can not only be applied to intemporal scenarios but also other scenarios of differeing subjective values.
Example 1:
"The Stimulus Bill has saved the Jobs of Teachers and Public Sector Workers"
or
"If the Government had not gotten involved new jobs would've been created from capital reformation"
You ask the typical person which statement seems more plausible, they'd more than likely say the bizzarre keyensian statement I put up first. Why, it's more tangible to them cause they see the jobs that would've been lost, but they can't see the jobs that were prevented from being created. Now of course an Austrian is trained to understand opportunity cost so the increased tangibility from that understanding may have them choose the second statement.
Example 2
"Spend 10% of Income on Your Loved Ones"
or
"Have 10% of your income taxed which hypotheically benefit your loved once objectively just as much"
Which one you'd think a person would subjectvely value more, the first statement cause the results of this same expenditure is tangible, this would probably be true if the tax money got spent in the same way at the same time cause of it's tangibility. Although a left wing Keynesian might actually value the second statement cause they've been trained to value the benefit to society of impersonal expeditures like in the second statement so them it'd be more tangible.
So in conclusion, I feel time preference is a preference that exists but because of the tangibility of intemporal value. I would expect that a Austrian who is trained to think intertemporally would prefer future goods on occasion, cause it's more tangible. For example we prefer the future value of recession that the current good of stimulus spending. While it's a bit more complicated than simply jobs now versus jobs later a lot of Austrian theory actually emphasizes long term benefits over short term.
If you agree, we can still call this the ATPT, it'd just now stand for the Austrian Tangibility Preference Theory
by Alex Merced
I write this article after listening to Robert Murphys lecture Capital and Interest from Mises U 2010
While Listening to this having heard explanations of Time Preference theory plenty of times, I started having flash backs to an Austrian Scholars Conference lecture where Robert Murphey was actually giving a critic of the ATPT based on his dissertation, basically challenging the idea that a future good is always less valued than a present good. This made me start to think, I do understand ATPT, but I'm not sure if it fully explains why this preference exists fully other than a sort of hedonistic view of human nature to want to satisfy all it's wants now. Then again Patience is a virtue, and one can look at virtues as efforts to fight human nature.
First off let's recap the ATPT for those of you unfamilar...
Austrian Time Preference Theory
The Bottom Line: Present Goods are always more valuable then Future Goods
Example: Pre-Sale Tickets (future good) are cheaper than tickets at the door (present good)
This is an important theory for explaining the Austrians view on Capital and the Interest from Capital. For example I have a $100,000 and I have these two choices which would I make.
Buy $100,000 of Bonds and invest them in Bonds that yield 5%
or
Buy a $100,000 of fishing supplies expecting to catch enough fish to make $110,000 (10% yield)
So you see here the capital I have I'll put towards the fish equipment cause In the end I'll have a greater yield from my investments, this is how capital naturally gravitates towards it's most productive purpose. If my calculation was correct I can now buy another $100,000 of fishing equipment and next year catch enough fish to make $220,000. As you can see the more I go through this process the more capital I accumulate and the better my life gets even though no new science or technology has been developed, cause I've accumulated capital and can continue to re-invest that capital for interest.
This is what seperates developed countries from developing countries cause they may only be able to afford $20,000 of fishing equipment so a year later they'd only have $22,000 so it'll take some time and re-investment before the capital accumulation brings them to the developed level.
So where time preference theory comes into play is in the issue of why would someone pay me $110,000 for the fish if they can instead get the same fish by buying the Fishing Supplies for $100,000 and save themselves the $10,000. The reason is cause they have a time preference, they don't want to have to wait for a year of fishing to save $10,000 so they rather pay the extra $10,000 to have the fish now. So as we stated, the current good, these fish I've already fished is worth more than the future good, the fish they'd fish if they made the same capital investment.
Ok, so that should sum it up, so now for my addition...
Is it a "Time" Preference or a "Tangibility" Preference
I think the time preference exists not cause there is a time bias, but because there is a tangibility bias. A future good isn't as tangible as a current good so provokes less of a reaction. This Tangibility preference can not only be applied to intemporal scenarios but also other scenarios of differeing subjective values.
Example 1:
"The Stimulus Bill has saved the Jobs of Teachers and Public Sector Workers"
or
"If the Government had not gotten involved new jobs would've been created from capital reformation"
You ask the typical person which statement seems more plausible, they'd more than likely say the bizzarre keyensian statement I put up first. Why, it's more tangible to them cause they see the jobs that would've been lost, but they can't see the jobs that were prevented from being created. Now of course an Austrian is trained to understand opportunity cost so the increased tangibility from that understanding may have them choose the second statement.
Example 2
"Spend 10% of Income on Your Loved Ones"
or
"Have 10% of your income taxed which hypotheically benefit your loved once objectively just as much"
Which one you'd think a person would subjectvely value more, the first statement cause the results of this same expenditure is tangible, this would probably be true if the tax money got spent in the same way at the same time cause of it's tangibility. Although a left wing Keynesian might actually value the second statement cause they've been trained to value the benefit to society of impersonal expeditures like in the second statement so them it'd be more tangible.
So in conclusion, I feel time preference is a preference that exists but because of the tangibility of intemporal value. I would expect that a Austrian who is trained to think intertemporally would prefer future goods on occasion, cause it's more tangible. For example we prefer the future value of recession that the current good of stimulus spending. While it's a bit more complicated than simply jobs now versus jobs later a lot of Austrian theory actually emphasizes long term benefits over short term.
If you agree, we can still call this the ATPT, it'd just now stand for the Austrian Tangibility Preference Theory
Sunday, July 11, 2010
Understanding Social Policy
Understanding Social Policy
by Alex Merced
You may have seen my recent video discussing how people are socialized by institutions, and how all institutions fall into three categories. I then followed up about how this framework can be applied to understanding and combating institutional discrimination. I thought I'd recap much of what I said in a written article for those who prefer these ideas written.
Intersocial Institutions
Definition: These are institutions that are made of people with similar interests, goals, or other unifying interests that are not spiritual. Since these are not spiritual they cannot use to the fear of violence in the afterlife to accept customs, traditions and practices.
Examples: Family, Friends, Clubs, Jobs, etc.
How it enforces Customs: A intersocial institution can only use the fear of being no longer allowed to participate in the institution to keep members in line. These Institutions are voluntary and since they don't threaten violence only removal from the institution, it's the least influential and least destructive to individual liberty of the three types on institutions.
How to Reform: If certains customs or beliefs of the institution are discriminatory or offensive, one can choose to not to participate in these institutions and encourage others to withdraw as well which would destroy these institutions from within. No further coercive method is needed since these insitutions can only survive through voluntarism.
Spiritual Institutions
Definition: These are institutions organized by institutions that exploit the existance or belief in of spirituality.
Examples: Churches, Religons, Youth Groups
How it enforces Customs: A Spiritual Insitution uses FUTURE VIOLENCE as a threat to get participants to participate in it's customs and traditions. The threat that in the afterlife one may live the next life as an inferior being or be casted into eternal damnation are threats of post-life violence. Due to peoples TIME PREFERENCE* this threat of violence is typically less influential than the threat of violence from government.
How to Reform: If certains customs or beliefs of the institution are discriminatory or offensive, one can choose not to participate in these institutions and encourage others to withdraw as well which would destroy these institutions from within. No further coercive method is needed since these insitutions can only survive through voluntarism.
Governmental Institutions
Definition: Tese are insitutions created by a government which is monopoly of violence, and everyone who's governed by this government may or may not consent to be governed, so withdrawl from these institutions is not an option.
Examples: Internal Revenue Service, Department of Education, Federal Drug Administration
How it enforces Customs: A government insitution keeps all people participating through the threat of CURRENT VIOLENCE. If people choose not to obey laws, they are threatened with penalties, incarceration, and inevitably violence to comply. Due to time preference, this CURRENT VIOLENCE is a much stronger influencer than the FUTURE VIOLENCE of the spiritual institutions, on top no one chooses to participate in a governmental institution but are subject to it due to their location or other arbritrary factors
How to Reform: If certains customs or beliefs of the institution are discriminatory or offensive, one can't choose to withdraw so unlike intersocial or spiritual institutions which can be reformed by voluntarist means, a government institution can only be reformed by using the insitutions own power to reform it which means one must climb the power structure and then change the rules. Since this is the only way to reform this institution, it makes it the slowest institution to change and the more influential in keeping discriminatory and collectivist social structure in place for prolonged period of time even after attitudes and values have changed.
Conclusion: While Intersocial and Spiritual institutions both have their roll in discrimintation, violating liberty, and other social problems; they are fairly easy to deal with due to their voluntarist nature. The government on the other hand cannot be dealt with by voluntarist means and is structured in a way that can only serve to keep the status quo in place much longer than it is in the minds of individuals. This is why Libertarians and Anarcho-Capitalist focus so much on abolishing this particular type of institution versus allowing individual to reform the others through voluntarist means.
* Time Preference is a theory developed by Austrian Economist such as Carl Menger and Ludwig Von Mises that states people value present goods over future goods. Alex Merceds views on Sociology/Anthropology are based on an Indivudalist Philosophy (Isaiah Berlin, Murray Rothbard) with an sociological application of Time Preference theory to different threats of Violence.
by Alex Merced
You may have seen my recent video discussing how people are socialized by institutions, and how all institutions fall into three categories. I then followed up about how this framework can be applied to understanding and combating institutional discrimination. I thought I'd recap much of what I said in a written article for those who prefer these ideas written.
Intersocial Institutions
Definition: These are institutions that are made of people with similar interests, goals, or other unifying interests that are not spiritual. Since these are not spiritual they cannot use to the fear of violence in the afterlife to accept customs, traditions and practices.
Examples: Family, Friends, Clubs, Jobs, etc.
How it enforces Customs: A intersocial institution can only use the fear of being no longer allowed to participate in the institution to keep members in line. These Institutions are voluntary and since they don't threaten violence only removal from the institution, it's the least influential and least destructive to individual liberty of the three types on institutions.
How to Reform: If certains customs or beliefs of the institution are discriminatory or offensive, one can choose to not to participate in these institutions and encourage others to withdraw as well which would destroy these institutions from within. No further coercive method is needed since these insitutions can only survive through voluntarism.
Spiritual Institutions
Definition: These are institutions organized by institutions that exploit the existance or belief in of spirituality.
Examples: Churches, Religons, Youth Groups
How it enforces Customs: A Spiritual Insitution uses FUTURE VIOLENCE as a threat to get participants to participate in it's customs and traditions. The threat that in the afterlife one may live the next life as an inferior being or be casted into eternal damnation are threats of post-life violence. Due to peoples TIME PREFERENCE* this threat of violence is typically less influential than the threat of violence from government.
How to Reform: If certains customs or beliefs of the institution are discriminatory or offensive, one can choose not to participate in these institutions and encourage others to withdraw as well which would destroy these institutions from within. No further coercive method is needed since these insitutions can only survive through voluntarism.
Governmental Institutions
Definition: Tese are insitutions created by a government which is monopoly of violence, and everyone who's governed by this government may or may not consent to be governed, so withdrawl from these institutions is not an option.
Examples: Internal Revenue Service, Department of Education, Federal Drug Administration
How it enforces Customs: A government insitution keeps all people participating through the threat of CURRENT VIOLENCE. If people choose not to obey laws, they are threatened with penalties, incarceration, and inevitably violence to comply. Due to time preference, this CURRENT VIOLENCE is a much stronger influencer than the FUTURE VIOLENCE of the spiritual institutions, on top no one chooses to participate in a governmental institution but are subject to it due to their location or other arbritrary factors
How to Reform: If certains customs or beliefs of the institution are discriminatory or offensive, one can't choose to withdraw so unlike intersocial or spiritual institutions which can be reformed by voluntarist means, a government institution can only be reformed by using the insitutions own power to reform it which means one must climb the power structure and then change the rules. Since this is the only way to reform this institution, it makes it the slowest institution to change and the more influential in keeping discriminatory and collectivist social structure in place for prolonged period of time even after attitudes and values have changed.
Conclusion: While Intersocial and Spiritual institutions both have their roll in discrimintation, violating liberty, and other social problems; they are fairly easy to deal with due to their voluntarist nature. The government on the other hand cannot be dealt with by voluntarist means and is structured in a way that can only serve to keep the status quo in place much longer than it is in the minds of individuals. This is why Libertarians and Anarcho-Capitalist focus so much on abolishing this particular type of institution versus allowing individual to reform the others through voluntarist means.
* Time Preference is a theory developed by Austrian Economist such as Carl Menger and Ludwig Von Mises that states people value present goods over future goods. Alex Merceds views on Sociology/Anthropology are based on an Indivudalist Philosophy (Isaiah Berlin, Murray Rothbard) with an sociological application of Time Preference theory to different threats of Violence.
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