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Freedom, coercion , and the invisible incentive structures that steer humankind.

Last updated on October 21, 2020

It is the natural course of government to continually grow larger over time, something like a parasite eating (and eventually killing) its host. There are many reasons for this growth, all of which can be attributed to human nature, and simple incentive structures.

First, we must look at the type of people that are typically drawn to work in government, after all, when we boil it down, government is just a group of individuals working together within the same organization, therefore in order to understand the organization, we must understand the nature of the individuals that it is comprised of.

Let’s start out with the type of public servant that we are taught about in our middle school textbooks, this person (we will call him Joe) is an outstanding citizen, family man, is involved with the community, has high moral standards, and is widely considered an all around good guy. Joe wants to get involved in his government so he decides to run for congress, and he wins. (hooray!) The very act of Joe running for a seat tells us a few things about Joe. It tells us that he is ambitious, he thinks he has good ideas, and ultimately thinks him he can make a difference. Joe, as the representative of his state, gets to make certain votes on behalf of his constituents, perhaps he even gets to create legislation. Joe, along with the rest of his well intentioned colleagues, have a bias for always taking action, they signed up for the job to make a difference and to help the community, not to just sit on their hands. It is extremely rare that the government doesn’t have some type of solution (by way of new laws) to offer up to any given perceived problem. However, if we extrapolate this over time, this bias for action means we will constantly be adding more rules, regulations, taxes, restrictions. As we create a more complex, and less free society, there become problems that result from this over regulation, and over involvement of government in every aspect of our lives.

In the above story about Joe, we used the fairy tale scenario that everyone in government is well intentioned, of course, we all know this isn’t the case in reality, but the point is, that even IF every single person in government was well intentioned, the structure of government is set up in a way where there is nothing preventing them from continued expansion. We then enter an arena where, it can be difficult to tell what problems actually need legislation or regulation to solve, and what problems have arisen or been made worse as a result of previous government regulation and legislation. Are we really to believe that even the most well intentioned government representatives are humble enough to look objectively at their own organization to assess if their actions are making problems worse rather than actually solving them? I’m not saying that this is what is happening, I’m just asking the reader to think that if this was happening, would it be seriously and objectively looked at? The government fails all the time, but it rarely ever admits failure, instead, it often doubles down on whatever mistakes it has made. To admit government failure would be to say, “program X is not working, therefore we no longer need the funding we were once receiving from the taxpayer, we will now lower taxes and lay off the staff in this useless division”, but without any profit and loss statement, or market mechanism to measure success and failure, this becomes a political decision rather than an economic one.

Once government agencies are put in to place, even if we find out they are not helping or doing a good job, it is extremely difficult to get rid of them. Since there is no market mechanism to judge the success or failure of government programs, even the worst ones continue on, draining resources from the people. As a matter of fact, we almost always throw MORE money at failing programs, and they become an even bigger financial drain on the people, the only answer government has for failure is to throw more money at the problem. So what we have is an organization that not only is always growing, but on the other side of the coin, is almost impossible to shrink, even if the area we want to shrink is failing miserably (think post office). One thing that most people never consider when we talk about failed government programs, or government in general, is the opportunity cost, what else could that money have been used for that would have better served society?

Since all taxation is compulsory, we are taking money from productive members of society, and throwing it into a black hole (against the free will of the taxpayer), where we cannot measure the return on capital, or the return to society. Often times, the money confiscated from taxation is used for things that the taxpayer would otherwise not pay for voluntarily, or is even vehemently opposed to! There are an infinite number of other things that the confiscated money could otherwise be used for to better help society, and if we had an honest way of measuring how effectively our capital was being put to use, we could make better decisions as a society. As luck should have it, we do have a system that can measure return on capital, it is called free market capitalism. Let’s juxtapose the above scenario with how things work in a truly free market.

People like to compare certain economic systems, we often hear about the ideological battle between capitalism and socialism, but I think there are many misunderstood facets of each of these that the majority of the public does not pick up on. First, capitalism is not really a system, capitalism is simply freedom, it is the free trade amongst voluntary parties. There is no system needed for this, it is our natural state, and it is how we all interact with each other on a daily basis. There is no high and mighty power that needs to be appointed for capitalism to work, as a matter of fact, any high and mighty ruler is always a threat to freedom and capitalism. Socialism and democratic socialism on the other hand, are most certainly systems that requires a central authority. When we talk about these concepts of socialism and capitalism, we are talking about systems in which to most efficiently and equitably organize humanity, but it is important not to lose sight of the fact that HUMANS are still the ones doing the organizing!, so we must not forget human nature, and the structures in place that keep the darker aspects of humanity in check. Anyone who studies history knows that humanity has had many dark moments, and these moments have overwhelmingly come from certain humans being given power with no check or balance. Millions have been slaughtered by their own government for this reason. Any time we talk about giving power to some type of governing body, it is of vital importance that we do not forget this, and we must remain skeptical of anything that the governing power tells us, because rest assured, they will say whatever they need to stay, in order to maintain, and/or seize more power and control.

There are many problems with socialism, for starters, it goes against human nature, it makes everyone equally poor (except for those in power), it destroys human initiative, incentive and creativity, and it eliminates any sort of market feedback, but the most important flaw is the appointment of an unchecked central power tasked with planning the entire economy, and the potential (certainty) that they will abuse that power. It doesn’t matter who this ruler is, or how nice you may think they are, we must acknowledge that we as humans all have the potential for good and evil within ourselves, but that unchecked power always leads to abuse of power, and eventually, tyranny.

Capitalism, on the other hand, as mentioned briefly above, doesn’t require a “system”, and doesn’t require a central authority. Capitalism is simply the free trade amongst individuals. There is nothing more democratic, or more empowering to the people. When we are able to choose exactly where our money goes, then we are given the freedom to choose who and what we support, and who and what we don’t. Anytime you are unhappy with a service or product, you can simply stop buying it. This is the ultimate freedom, but also has larger societal repercussions and can serve as a way to quickly eliminate bad things, and to support good things. If I go to a certain supermarket because they sell the best organic fruits, and then one day management changes and they decide that in an effort to bring their costs down and profit up, they switch out the organic fruits for GMO fruits, I am able to simply stop supporting that business, and take my dollars somewhere else that follows practices that I do support. If enough people feel the same way I do, and all cease to shop at this business, then they will either be forced out of business, or will be forced to look critically at what they are doing, and return back to organic produce to regain their customer base. Voting with our dollars gives the people way more power than having an elected official that is supposed to be the voice of thousands of different people. I don’t need to petition anybody to stop shopping there, I simply stop. I don’t need to hope that 51% of the people agree with me that this particular supermarket is no good. I don’t need to have a heated debate with my neighbor about it. This is a simple concept that most people understand, because most of us use this power on a daily basis in one form or another, but if simple things like grocery shopping can be handled in this manner, why cannot things that are thought to be more complex, such as defense, healthcare, schooling, roads and social security? The items I just mentioned (in their current form) are the financial biggest drains on society. These items continually expand our budget defect and national debt at an alarming rate. Can you imagine if we had the CHOICE to fund war in the middle east? How many people do you know that would voluntarily support this with their own dollars if they weren’t forced to? The majority of Americans can’t put together $500 for an emergency right now, I would be shocked if more than a small percentage of people gave anything to fund war when they can barely fund their own lives! It’s extremely easy and effort free to stand behind all sorts of different causes when you don’t need to actually commit any of your own funds, or personally take any action. How many of our congressman and senators would support war if they had to personally go and fight that war, or if they had to commit their children, or if they had to fund it! The answer is very few.

People look at our system now, and think that what we have is Capitalism. This is false. What we have is corporatism, cronyism, but certainly not capitalism. We have a system where large corporations lobby to the government to enact and enforce laws that hurt their competition and help themselves, where companies lobby the government to make their products mandatory (Vaccines). The public looks at this with outrage (as they should) but they generally blame the corporations and capitalism. This is by design. This is because of the “education” we receive in school that tell us that the businessmen are greedy and just out for a buck, and that the government is there to protect the public from these greedy capitalists. Of course the government is going to bad mouth capitalism, it’s a system that requires no central authority. If true capitalism was allowed to work in its purest form, we would all quickly realize that a violent monopolistic government is completely unnecessary, therefore, the government needs to control the narrative by controlling our media and our education (indoctrination) system.

Without the government there to protect these large corporations from competition, they would have to compete with other companies based on the merits of their product/service, but with the governments help, and in some cases, taxpayer bailouts, these bad companies stay afloat for way longer than they should, in spite of the fact that they are not serving the public. It’s a simple yet vicious cycle. A company grows on its own merit, becomes large enough and successful enough by serving its customers that it now has the money and weight to lobby to Washington. The company donates large amounts to a certain politicians campaign, now that politician owes a favor to the company. The company talks with the politician about a bill they want passed that would, for example, make some sort of stringent requirement to enter into the industry, or some sort of new tax on the industry, knowing full well that only large, already established companies (like theirs) could comply, and that it would crush any small competitors, or entrepreneurs looking to get into the industry. This now leaves us with only a few large companies within a certain industry, stifling innovation and competition, thus benefiting the large company at the expense of all others. In the case of the pharmaceutical industry, there are more lobbyists in Washington DC than there are congressman and senators. They even work with the government to have their products mandated, and even have had the government assume all liability for any harm their products may cause. Sound criminal? You bet! Capitalism? not even close.

Now imagine for a moment, a system without that central authority. Companies only grow large and successful because they serve their customers well. They keep on gaining new customers, and maintain plenty of repeat customers, no mandating, or government intervention required. Customers voluntarily go back to this company because they like the product or service. If the company falls off, or stops serving customers, they simply take their dollars elsewhere, and there is automatic feedback to that company that they need to change something and adapt to the marketplace. If a new innovative competitor comes along that takes some market share, the company will need to reassess what they are doing to be able to better compete, and in the end, the customer wins because they have two (or many) companies competing for their business. They try to offer the best service for the most competitive price. When a new entrepreneur enters the marketplace with a new idea, it may or may not work, but if we make it so difficult for them to get started, then the customer (and society at large) will be robbed of innovation that can, based on the industry, save lives, save the planet, better our health, create a more productive way of doing something etc etc, the list goes on.


In order for society to best structure itself, we must be completely honest about human nature. We must acknowledge that humans have the potential to be amazing, kind, and courageous, but we also have it in ourselves to be evil an tyrannical. There are many factors that go into this, but let us bind each other through incentive structures, rather than by blind trust. There is still this idea floating out there in much of the population that our government officials are simply public servants always looking out for us, without any self interest of their own. This is a cartoonish and dangerous thought that we only beleive because it’s beat into our head for the 13 plus years that we are in public schools . Rather than putting blind trust in our fellow humans, let us set up society and bind each other through incentive structures and voluntary interactions. In a free society, the only way to get money is by serving your fellow humans. Those who serve the most, get the most money, and can use that money to continue to serve on a larger scale. The structure is set up to reward those who do the best. In the current crony system we have, the defacto merging of large corporations with government bodies completely removes these incentive structures that guide us to serve humanity, rather than enriching shareholders. It’s time we open our minds to other ways of structuring society. Although we don’t all agree on the solutions, I think we can all agree that the current system has failed. It’s my contention, that it’s in humanitys best interest to use freedom as our guiding light. Those who benefit from this sytem of coercion and corruption will vehemently oppose these ideas of freedom, because with freedom, these parasites will be removed from the top of the society’s power structure, and that is exactly we must fight for freedom!

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