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Conditions for Prosperity Richard Kieninger Criminals, terrorists and
warlords are well aware of the coercive power of violence. Law abiding
citizens often don’t understand that laws are merely wishes on a piece of
paper unless there is sufficient power to enforce them. Violence can only be
bettered by superior force, not by good intentions. What is yours by man-made
rights and justice is yours only as long as you or some one else can protect
it for you. There are no property rights in Nature. The chief deterrent to
predatory violence is the threat of even greater force. To achieve peace, a
society must find ways to muster enough force to curtail the incentives to
use violence to take whatever one wants from whomever has it. To police
predation effectively, some group must exclusively control the physical means
to overpower anyone. Superior weapons are the primary tools that determine
the civilian police or any army
to employ superior violence for the protection of a populace. If criminals
become armed with the superior weapons, they soon become the government; and
you would have to apply to them for loans or for permission to park your car.
This has to a great extent happened in Columbia where the drug cartel has
more firepower than the government. In some urban neighborhoods of the
U.S.A., the police have lost control and dare not even enter. Democracy and equality are
primitive, matriarchal realities. They were not ideas thought up by the
ancient Greeks. The Greeks merely codified such concepts in their laws.
Hunting-gathering societies are made up of individuals who are equally armed
with primitive hunting weapons and so have equal power. That was also the
case among the Greek hoplites—the soldiers who were independent land owners
who could afford to buy their own weapons, which were very expensive. Because
he was heavily armed, and because defense of the nation depended upon close
cooperation with his equals, he could not be ignored. Greek notions of
liberty and a democratic vote were not extended to everybody. Women, slaves
and the poor had no voice in politics. Power was held only by the men who had
the military means to enforce their claim to it. They all stood in defense of
fair property rights since that was the source of their individual political
and military strength. Even in the U.S.A., liberty depends on the citizens
having modern arms in their homes. The stability of democratic systems has
always rested on an underlying military equality of the citizen electorate. In most of the world’s
history, only a king or warlord had soldiers and weapons. Everyone else was a
serf or slave owned by the man who controlled the army. As agriculture became
established around the world, people left the nomadic way of life and grew
grain in plots of land that took much effort to prepare for crops. People
settled permanently in one place; and since it took half a year of hard work
to sow, cultivate and harvest their crop, they wanted to protect the fruits
of their labor from those who preferred to steal food rather than work for
it. The stores of grain were always a temptation to pillage—not only by
locals but also by outside raiders. The solution to their problem was either
to mount a cooperative defense among all the local farmers when there was a
raid or else to feed and equip a permanent armed force that guaranteed
full—time protection. The latter option proved
more effective, but it usually didn’t take long f or the leader of the armed
force to realize that the army could rule the unarmed farmers and that he
could levy taxes and obtain personal privileges for himself and became king.
In a generation or two this became so institutionalized that the king owned
everything and everybody. This eventually became the case in almost the whole
world. The temptation was always
there for a warlord to use his army to expand the territory he ruled by
making war on weaker neighbors and smaller armies, for it was self-evident
that more serfs meant more riches to support a larger, more powerful army.
Thus empires in the Middle East and Far East and then Europe came about. A
side benefit of this trend was that the larger the empire, the more secure
the public safety. The resources for large public works, like irrigation in
Mesopotamia and Egypt benefited the farmer, and cities became feasible. But
there was no freedom for anyone and no democratic or republican forms of
government. The ruler could do anything he wanted with anyone, and he usually
did. These empires could last
for centuries, but innovations of superior weaponry in the hands of other
kings could bring empires down. If an empire fell apart simply because of
internal corruption and dissention, a number of smaller sovereign governments
would follow. But then trade would suffer because the confusion of many
different rules and imposts in crossing many borders makes a snarl of
everything. The more and smaller the units that exercise sovereign power, the
greater the number of transactions that will be hung up, stifling economic
growth. Historically, the breakdown
of a large political entity has led to criminal violence and economic decline
in its smaller successors. Generally speaking, the larger the scale over
which order can be exercised, the more conducive it is to progress. This is
not to say that small systems can’t outperform large ones, but they need to
have safe avenues for outside trade in order to obtain internally-unavailable
raw materials and to have markets for their products to earn the money to buy
those raw materials. Prosperity can occur only
where the negative effects of violence can be minimized. An important element
in the growth of prosperity in Western Civilization since the 15th Century
was the evolution of institutions that reduced the risks of trade: among which
are a legal system designed to give predictable rather than arbitrary
decisions, bills of exchange which facilitate the transfer of money and
credit for commercial transactions, an insurance market, and the change to
governmental revenue systems from discretionary expropriation to systematic
taxation. These institutions all depend upon internal and international legal
and court systems to enforce them and also upon the threat of force of arms
or embargo against a nation that doesn’t keep its traders in line. The
principal reason poor countries are poor is because they lack a crucial
element required for economic development—a stable government that reliably
provides law and order, impartially protects private property, and enforces
contracts. But this is not to say that the poor countries don’t have laws to
accomplish these things—it’s that they can’t or don’t enforce them. Another major factor in a
nation’s prosperity is partly cultural and partly economic. A people who have
come to eschew violence makes them more fit for commerce, and the long
success of commerce tends to reinforce this taboo on violence. When a
person’s life is secure by having sufficient wealth to provide all his needs,
he is prone to protect the system that provides it. The more stable a
society, the greater will be its store of liquid monetary assets relative to
its tangible assets. These money assets can be in the form of cash, stocks,
bonds and other investments. Confidence in the safety of funds when invested
outside the owners s hands depends upon long-standing stability and the
reliability of the courts enforcing contracts so one can be reasonably
assured that money entrusted to others will be repaid. The richest countries
are those that have the highest percentage of liquid monetary assets. A sound constitution has
great economic value. A constitution will be honored in broad measure as long
as the rules continue to pay off for those who have the power to change them.
Economic decline is destabilizing because then the incentive to abide by the
rules of society falls as well. Although physical force is the ultimate
determinant of the rules by which a society operates, the goodwill and
strength of ethics of its citizens will do more to preserve economic and
political stability than armed force. A man will invest his money in his
personal future only if he judges that the future will be essentially the
same as or better than sound monetary conditions in the present. If he
perceives that stability is on a long-range decline, he will spend now and
not invest, or he will try to emigrate to a place that is more secure. For security, we rely on
sound money, a just and effective legal system dedicated to upholding a good
constitution, a strong police force, and a moral citizenry. If any of these
is missing, history has proven there can be no real or lasting prosperity. |
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