Sunday, September 25, 2011

Bought and Paid For

The following from Harvard law professor and Massachusetts Senate candidate Elizabeth Warren has become a rather popular "Like" option on Facebook and elsewhere:

Of course, there is much that could be and has been said about Warren's comments.[1] However, I want to focus on the following:

You were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn't have to worry that marauding bands would come and seize everything in your factory and hire someone to protect against this because of the work the rest of us did.

The implication appears to be that anarchy would unfold and marauding bandits would be the norm if government-run police forces were not intact. Of course, it may be desirable for governments to provide such services, but these can be handled on a small-scale and/or local level. However, historical scholarship over the last few decades demonstrates that the need for state-sponsored enforcement agencies may be less than we think. Despite Western folklore, some historians argue that the "wild" West was actually less violent than today's urban cities despite the lack of government institutions. For example, according to historian Thomas Woods, Dodge City had only five killings in 1878, the highest amount in its Frontier history. Five of the major cattle towns (Abilene, Caldwell, Dodge City, Ellsworth, and Wichita) only produced 45 reported homicides from 1870 to 1885. As for "marauding," fewer than a dozen bank robberies took place in the entire frontier West from 1859 to 1900. Overall, crime (including burglary or robbery and rape) might have been lower in the less regulated Old West than our modern age.[2] Even West Coast gold miners were capable of establishing lawful mechanisms without the help of a centralized government:

This outcome is all the more remarkable when we recall some of the details of miners' lives. These were men of vastly different backgrounds, who were complete strangers (and thus possessed no preexisting community camaraderie upon which to build) and who intended not to put down roots and stay for years but simply to get rich from their gold finds and return home...The miners settled disputes either through a district-wide meeting or by an elected jury or alcalde. The alcalde kept his position only as long as the miners accepted his rulings as just. They replaced those whose judgments did not conform to generally accepted standards of justice. Crime was also notably low in the districts, a fact attributed to widespread gun ownership among the miners as well as to the efficient nature of the miners' legal system.[3]

This feat was accomplished through "private, voluntary mechanisms." These mechanisms "successfully carried out the very functions of which the private sector is routinely assumed to be incapable: defining and enforcing property rights, adjudicating disputes, and protecting people against all manner of crimes."[4] In other words, the exaggerations of the writer in Clint Eastwood's Unforgiven are not far off.

From another perspective, law and order arises even among those who could be called "marauders." Economist Peter Leeson of George Mason University has shown the incredible organization and cooperation amongst 17th and 18th century pirates. As science writer Michael Shermer explains in his review of Leeson's work,

Pirate societies, in fact, provide evidence for [Adam] Smith’s theory that economies are the result of bottom-up spontaneous self-organized order that naturally arises from social interactions, as opposed to top-down bureaucratic design. Just as historians have demonstrated that the “Wild West” of 19th-century America was a relatively ordered society in which ranchers, farmers and miners concocted their own rules and institutions for conflict resolution way before the long arm of federal law reached them, Leeson shows how pirate communities democratically elected their captains and constructed constitutions...From where, then, did the myth of piratical lawlessness and anarchy arise? From the pirates themselves, who helped to perpetrate the myth to minimize losses and maximize profits.

The real question, however, regards the efficiency of pirate organizations. How did these "lawless" ships compare to other government-sanctioned ships such as merchant ships or privateers? Quite well, actually. Internal conflict was largely avoided due to the fact that adherence to particular rules determined the success of the crew. Voluntarily created order led to an efficient enterprise. Ironically, "pirates were more orderly, peaceful, and well organized among themselves than many of the colonies, merchant ships, or vessels of the Royal Navy."[5] "Pirate democracy," Leeson writes, "ensured that pirates got precisely the kind of captain they desired. Because pirates could popularly depose any captain who did not suit them and elect another in his place, pirate captains' ability to prey on crew members was greatly constrained compared to that of merchant ship captains. Similarly, because pirates were both principals and agents of their ships, they could divide authority on their vessel to further check captains' ability to abuse crew members without loss."[6] Leeson calls this "piratical checks and balances." This "democratic or self-governing vessel organization...facilitated crew cooperation at least as successfully as autocratic vessel organization, and probably more so."[7]

The concept of spontaneous order may be unintelligible to Ms. Warren and the like, but that does not mean it has not been or cannot be done.[8]

1. Aaron Ross Powell of the Cato Institute has an excellent response to Warren's "fair play" philosophy, while National Review's Rich Lowry emphasizes the importance of individual drive and innovation. Robert P. Murphy and George Will also weigh in. As I've pointed out before, there is ample evidence that low taxation actually increases economic growth to the benefit of everyone. If that does not fulfill Warren's form of social contract, I'm not sure what would.

2. See Thomas E. Woods, Jr., 33 Questions About American History You're Not Supposed to Ask (New York: Three Rivers Press, 2007), Ch. 6: "Was the "Wild West" Really So Wild?" Update: More sophisticated models on 19th-century homicide provide strong evidence that these numbers indicate these towns to be extremely homicidal. See Randolph Roth, Michael D. Maltz, Douglas L. Eckberg, "Homicide Rates in the Old West," Western Historical Quarterly 42 (Summer 2011): 173-196. Law professor Adam Winkler also notes that strict gun laws were enforced rarity in the Old West. This makes the issue far more complex than stated in the post.

3. Ibid., 50-51. Civil disputes in medieval England were also handled in a voluntary manner prior to the creation of centralized law enforcement. The court system was viewed by kings as a potential source of revenue. Rather than provide full restitution to the victim of the crime, government fines and punishments were introduced instead. See Nicholas A. Curott, Edward P. Stringham, "The Rise of Government Law Enforcement in England" in The Pursuit of Justice: Law and Economics of Legal Institutions, ed. Edward J. Lopez (New York: Palgrave Macmillan, 2010). Robert P. Murphy argues for a modern version of stateless law.

4. Ibid., 51.

5. Peter T. Leeson, "An-arrgh-chy: The Law and Economics of Pirate Organization,” Journal of Political Economy 115:6 (2007), 1076.

6. Leeson, 2007: 1065.

7. Leeson, 2007: 1087.

8. For more on intellectuals and their biases, see Thomas Sowell, Intellectuals and Society (New York: Basic Books, 2009); F.A. Hayek, "The Intellectuals and Socialism," The University of Chicago Law Review (Spring 1949).


  1. (The page didn't load after I tried posting this comment, so if this is a repeat, feel free to delete it. Thanks!)

    I need to read this blog more (and not just because of clips involving Keira Knightley).

    Well said, actually, and informative. I've never done any research on either pirates or the old west, but, frankly, they do provide excellent counterpoint to Ms. Warren's comments (or implications at least).

    I did find it rather amusing that she happily pinned 4 trillion on President Bush (over his 8 years), but nicely failed to mention either the (small) budget surplus we had during his administration, or the multiple trillions more spent by President Obama in the first year of his presidency.

    Nor did she mention that President Obama has continued to pay for "Bush's war" since he took office almost four years ago. I suppose we should be able to attribute at least *some* of those "two trillion" dollars spent on our wars to the current administration.

    Thanks for your research and comments.

  2. I also felt to raise some other points in response to Mrs. Warren:

    1) The Bush tax cuts--the first "trillion" she mentions--were extended by the sitting administration. That wasn't an accident.

    2) "Obamacare" hasn't exactly solved the Medicare/Medicaid problems she mentions. Perhaps she ought to take her talking tour to the White House?

    3) The roads, employee education, police and fire forces that "everyone else paid for" were also paid for the guy who built the factory. In fact, the way taxes are structured, the wealthy pay not only more, but a larger (considerably larger in some cases) percentage of those costs.

    4) Those who are running the factory are often the ones handing out the paychecks that allow "everyone else" to put their tax dollars into the infrastructure in the first place. An unemployed nation--or one largely subsisting on welfare-- probably won't have that large of a tax base to begin with.

    5) Whence this "social contract" she speaks of? I'm all about helping my fellow man, but history seems to clearly indicate that when such "help" is forcibly required (which her comments seem to imply), it goes sour quickly.

    6) We, as a society, decided to move away from God's way of doing things--the *best* way of doing things. This means that any alternative will inevitably be flawed and have real potential to fail in the long run. You can't truly fix a broken system by replacing it with another broken system. Unfortunately, God is being actively excluded from this country by some very vocal people. Thus, a nation seals its own doom.