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May 15, 2006 - Freedomain Radio - Stefan Molyneux

31:02

236 Corruption

How a stateless society deals with the problem of corruption

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	Good morning, everybody.
	It's Steph. I hope you're doing well.
	It is Monday, the 15th of May, 2006.
	Thank you to those people who donated this weekend.
	I really appreciate it.
	And, of course, to a gentleman who posted on the boards the perfectly logical question of, does it trouble me that an anarchist podcast is suffering from the free rider problem?
	Well, no. It really doesn't trouble me at all.
	I mean, for two reasons.
	One is that it's my choice that people are able to voluntarily donate rather than For me to insert commercials automatically into the podcast or to simply move the podcast to a login and pay server.
	So it doesn't trouble me.
	I mean, I would certainly, the more people donate, the happier I am with the Anarchist solution as a whole.
	But no, it doesn't massively trouble me.
	I'm also learning a little bit about it, too.
	I have actually only had the donations going, I think, for about six weeks.
	So, I'm sort of learning that every time the tide goes out, it's not like the sea is never coming back.
	So, I'm just learning that as well.
	And I'm sort of trying to communicate in a way, and learning how to communicate in a way that's positive, to invite people to...
	I don't want to be Mr.
	Berating Guy, and I also don't want to be...
	Hey, you know, if you just feel like it, whenever you get a chance.
	So I just want to be sort of Mr.
	Direct, I appreciate the money kind of guy.
	So I'm learning how to communicate about it.
	I'm also learning the pluses and minuses of when the money comes and then doesn't come, that it's sort of statistically random, as you would imagine.
	So an excellent question.
	I will certainly figure out in the long run whether or not the donation thing works for me or not.
	But somebody else also asked on the show, this was in the chat portion of the show, They said, could I get from you a PDF of your novel, Revolutions, and how much would that cost me?
	Now this is more of a straight sort of purchase, not a donation.
	You can still use the PayPal account.
	So what you can do, if you do want a copy of the novel, Revolutions, Then send me 10 bucks Canadian, and I will send you a PDF of the novel, which is 450 pages.
	It's a good, solid, meaty read about an anarchist in Russia shortly before the Russian Revolution.
	I always find that what's interesting that's going on in any historical movement is always going on one generation before.
	What is actually going on when the shite hits the fan, so to speak, is less important to me.
	What was important to me and what is important to me is trying to figure out, well, what is it that is occurring?
	A generation before, a massive event like the Russian Revolution that puts that as a possibility into society, puts something like a communist takeover in society.
	So I wanted to go back a generation, so I took from history two fairly famous people, Sergei Nechayev, who was a I'm a pretty radical anarchist, like an anarchist of the old school, not so much of the Bakunin school, but of the sociopathic school, sort of the stereotype that we anarchists are sometimes trying to get over.
	And also Alexandre Hozen, who was more of a humanist writer and more of a gentle change kind of revolutionary.
	And so these were sort of two real historical characters.
	No proof they ever met, but I had them meet.
	And many adventures ensue, a lot of which has to do with the question that I was wrestling with in my 20s, which is peaceful change versus not-so-peaceful change.
	And I think you'll see where the novel comes down.
	But I think you'll find it quite an enjoyable read.
	There's romance, murder, thrills, spills, chills, and so on.
	And a corrupt priest.
	So I think you'll enjoy it.
	So just send me an email and just say that my donation is not a donation, but a request for a book.
	And I will be happy to send you the PDF copy.
	Of course, you can go to freedomainradio.com.
	And you can also...
	Just look for products and you'll see Revolutions.
	There's a link to it also on the very first page.
	And when you log in to, or before you log in to the board, you can see a link to it as well.
	So you can get the book through Barnes& Noble, through Amazon, and so on.
	So if you want a copy of the novel but don't want to wait and don't want to pay the $20 plus shipping, just send me a tenner and I will be more than happy to send you a PDF copy.
	Well, thank you so much for listening to that minor piece of self-marketing genius.
	But I wanted to talk this morning about a topic that came up briefly on the show yesterday, which I think is worth expanding on just a little bit.
	And that is the question of bribing consumer protection agencies in a free market society.
	So, if you're not an anarchist yet, but it's probably going to take you another podcast or two to get there, no problem.
	This works within a libertarian or anarchist or classical liberal model as well.
	And the example that was given was something like this.
	So, you've got an agency that puts labels on foods saying what they contain.
	And that agency has the capacity and can be bribed by a food manufacturer.
	So let's just say some food manufacturer comes up with some high-fat...
	I think this was a Seinfeld episode, right?
	Comes up with some high-fat yogurt and instead labels it as low-fat and no sugar.
	So everyone is like, wow, this stuff tastes fantastic for low-fat and no sugar?
	This stuff's amazing!
	And they all start scoffing it down like nobody's business.
	And next thing you know, the waistlines are expanding and horror upon horrors and so on.
	And so how did this occur?
	Well, there's this independent labeling agency that analyzes the food that's put out by some sort of manufacturer, some food manufacturer.
	And unfortunately, the food manufacturer, due to their nefarious evil tendencies, has bribed the label guys to say it's no fat or low fat or non fat or something like that.
	And that has caused them to end up putting the label on which has misled the consumers, and so the consumers have been hosed, and so on.
	And this bribe, I think the phrase millions of dollars was used.
	Let's just say it's a million dollars.
	And that is the approach that's taken to the detriment of the consumer.
	So, of course, that's a problem.
	And, of course, whenever somebody identifies a problem in human society or in economics, it's not an argument for government because they have to prove...
	Even to get the first step of the journey, and of course the journey ends up with who's waving a gun around at whom, and so you can never solve that problem.
	But even to get to the first step of solving the problem from a state standpoint, you have to prove that government agencies are not susceptible to corruption in any way, shape, or form.
	Because obviously if corruption is a problem, and it is obviously a problem, let me just use the word obviously a couple more times, If human corruption is a problem, then it's going to be a problem in government agencies as well as a problem in the free market with the not inconsiderable difference that the government is a legal monopoly.
	So if some private labeling agency, let's just say it does get corrupted by some nefarious food manufacturer, well, you just switch to another one.
	You publicize it, that company goes down, and then you switch to another one and everything's fine.
	So people get hurt, there's a problem, you switch to another agency, and everything gets better, at least for a time or whatever.
	But if it's a state situation, if it's the government, it's entirely different.
	Of course, what happens with the government if an agency becomes corrupt is that it continues to be corrupt.
	It puts out press releases.
	Whoever comes in who's the new guy, it puts out the same damn press release.
	Mistakes were made. We've cleaned house.
	We're turning this ship around.
	Everything will be fine right now, right, five years later.
	Mistakes were made. We've got a new guy now.
	Everything's been turned around. They have these sort of rotating shoot-the-duck kind of guys.
	The politicians are sort of senior people who come through who are the spokespeople who represent this agency, and then when it's found that the agency is completely riddled with corruption, it just ends up...
	They just switch the head guy, and everyone goes, oh, I guess it's a new agency because it's a new guy, right?
	So... If human corruption is a problem, then the last thing you want to do is to provide a social agency with a coercive monopoly on whatever service is being provided.
	But the theory, of course, was that the government people can be paid more and therefore more pay means less corruption.
	Now that is really a fascinating thing.
	The idea that if you pay people more, they will be less susceptible to corruption.
	I mean, I'm just going to go out on a limb here and give sort of my counter-argument to that, which is to say that someone like Yasser Arafat or, gosh, who are Idi Amin, Aristide and Ceausescu and people like that were all multi-multi-millionaires, and in fact, Arafat was over a billionaire.
	And I don't think, if memory serves me right, I'd have to check the Lexus Nexus, or whatever the heck it's called, which everybody references, whoever writes about the media.
	I'd have to do a search, and I could be mistaken in this, but it would seem to me that it's not like additional wealth made these people less corrupt.
	So it's not like Ceausescu started out like a poor guy, and then he became corrupt because he wanted more money.
	And then, once he had more money, he became more honest because when you have more money, you don't really feel like being more corrupt.
	The idea that corruption is a desire for money is really not true at all.
	I'm going to talk about this another time.
	Corruption is not a desire for money.
	Corruption is a desire for vengeance.
	Corruption is a desire to harm and brutalize other people as you were harmed and brutalized, usually by passive-aggressive parents.
	So if you were violently beaten up when you were a kid, then you're more likely to become sort of a low-rent, fisticuffs kind of guy.
	But if you were manipulated and bullied emotionally, then you're more likely to become a bureaucrat.
	With one, the force is obvious, just as it was in your childhood.
	And with a bureaucrat and with people who are corrupt and so on, the force is not obvious, but the corruption is very real, which is exactly what happened in their childhood, right?
	If they were emotionally bullied and manipulated and controlled...
	Through guilt and so on, then it would seem to me that that violence was subtle, but everywhere, and very destructive.
	And that's the same is true of corruption, right?
	The violence is not obvious, as is true of most of the state, right?
	The violence is not obvious, but the violence is everywhere and utterly corrupting.
	So that would sort of be my suggestion as to how to approach that question of whether people become Less corrupt if they get more money.
	I think it's the mistaken assumption that corruption is about a desire for money, that corruption is about money.
	No, corruption is about the destruction of trust and humanity, and that is a childhood corruption after effect.
	That is an after effect of childhood brutality of some kind.
	So that would sort of be my suggestion of how to approach it.
	And what it does is if you mistake corruption for a lust for money, it is exactly the same to me, sort of emotionally or psychologically, as mistaking sexual addiction as a desire for intimacy or rape as a desire for lovemaking.
	And to say that, well, an addict, to be a corrupt person is to be addicted to The trust destruction in others, right?
	You arouse their desire to trust through behaving in a trustworthy manner, and then you undermine their trust by being corrupt.
	And this is what states do, of course, all the time, is that they arouse people's desire to trust them by having all these commercials and having all these noble speeches and so on.
	But, of course, under the table, it's like Han Solo with that guy from the...
	The cantina, right?
	Everything's nice and chatty up front, but there's a gun under the table which vaporizes you if you ask for anything in return.
	To make that mistake, I think, is also similar to taking the Christian approach that money is the root of all evil.
	Because money is the root of all evil, corruption is, of course, the desire for more money.
	And so, if we give people more money, we'll lower their desire, and so on.
	Corruption is nothing to do with money, just as rape has nothing to do with sex.
	It's about the destruction of another human being's capacity to reason, to feel secure, to be happy, and so on.
	And I think it's sort of important to not look at the surface of what people are doing.
	Politicians aren't after power.
	Politicians are after destruction.
	Politicians aren't after control.
	Politicians are after harm, brutalization.
	If you look at the history of these people, it's almost all one and the same.
	Successful, callous, cold, destructive parents who abused their authority, and so people who are in this sort of political hierarchy grow up with this absolute terror and desire for authority.
	Because authority was so cold and destructive to them, they're absolutely terrified of being at the mercy of authority, and so they aim to be at the head.
	Of these kinds of brutal power structures, whether it's democratic, or whether it's fascistic, or it's tribal, or communist, or socialist, or whatever.
	These people can't...
	They're terrified of authority because they were so brutally harmed by authority.
	And so they sort of reach for authority, reach for power in the same way that if a criminal drops a gun, you're unarmed, a criminal has you gun to your neck and then he drops the gun, well, you're going to scrabble for that gun even if you're a pacifist because you know that if you don't get a hold of the gun, you're you're going to scrabble for that gun even if you're a pacifist because you Well, it's the same way with people's panic and drive and desire for political power.
	They are so terrified of authority based on their experience with their parents or with other, probably their parents, I guess it could be other authority figures like priests, but they're so terrified of authority that they simply have to have power at any cost because the alternative is to reawaken the helplessness and fear of their own childhoods and so on.
	And, of course, their parents all use false arguments for morality all the time, right?
	The parents, oh, we do anything for you.
	All we want is for you to be happy.
	We love you. We're, you know, blah, blah, blah.
	While at the same time, utterly undermining and destroying their personalities, rationality, sense of security, capacity for joy, and so on.
	And so, of course, they perfectly then slither into this black, evil, spiky, bloody nest of state power, spouting off all of these false arguments for morality while hiding all the violence that's occurring and And destroying everybody's capacity to be an adult to trust themselves.
	I mean, by the by, this sort of just struck me last night.
	Wouldn't you love one of these human lifespans to be an actual adult, your own adult?
	Rather than to be bullied and prodded and poked by state power and told what you can buy and what you can't buy and where you can live and how much you got to pay for things and all these little regulations that you have to obey.
	Wouldn't you just love for at least one set of human beings before this planet vaporizes into nothingness to actually get to be adults?
	To actually get to be adults and not to just be prodded and poked and herded around by all this state power and authority and churches, just for human beings to wake up and go, my life is my own.
	I'm actually an adult here, rather than for this perpetual parenting.
	And bad, evil, brutal parenting to go on.
	I mean, they're parenting people who are 90 years old.
	People who are 90 years old are being parented and prodded and brutalized and poked and pushed around by cops through 25.
	It never ends.
	You never get to be an adult.
	In the modern world, you never get to make your own decisions.
	You never, ever get to be free of authority.
	I'd just love to see that.
	I hope I'll be around when it really starts to take off.
	I would love to see just one generation of human beings actually get to be adults the way that nature intends, and not just be stuck in the state of perpetually being parented and bossed and bullied and nagged and ugh.
	Just to be an adult, oh, wouldn't that be wonderful?
	To not be pushing 40 and still have to obey everybody else's injunctions about what I should do and how I should live and what I should smoke and what I should eat and when I should stop having a drink at night.
	Oh, man, wouldn't that just be something?
	I yearn for that.
	I yearn for that.
	So, to get back to the economics of corruption, in case you're wondering why I substituted the word construction there, there is in fact construction, even, yay, on the private roads.
	And I'll sort of have to look into why that's happening.
	There is construction in Russia or on the private roads, and I'm not exactly sure why.
	I'm sure the government's at the root of it somewhere, and if the government's not at the root of why there is, the government is at the root of how long it takes, because I bet you these private roads have to use state unions, which is why there are all these people standing around holding signs.
	So, as far as corruption goes, what is the purpose of the people who claim to act...
	For the sake of consumer safety.
	Their sole purpose is to save the consumer, to help the consumer, to inform the consumer.
	And their sole asset is their integrity.
	Their sole asset is their good word.
	And the fact that consumers know that people can be corrupted and that they're relying on these people to sort of watch the manufacturers and make sure that they're on the up and up means that they have to come up with a business model that comforts the consumer Regarding their integrity.
	Now, you could, of course, have a thousand validators check every single product, and that's going to be rather expensive.
	That's going to, like, I don't know, make food cost five times as much or twice as much.
	At some point, it's going to be non-economically viable to continue to have people check the checkers, so to speak.
	So there is some optimum level.
	If you just have one, like a monopoly, then the corruption can be pretty significant because nobody's watching that person, right?
	So it's better than having the manufacturer do it directly because there's two agencies involved.
	And of course, they're both private, right?
	So they would both be subject to market forces.
	So, it's better to have two agencies telling you that something is safer than one, like two companies, but it's better still to have three or four or five.
	And the reason for that, of course, is that the way that you want these kinds of situations to occur, like is a label safe, is you want to have independent verifications.
	So, the way that I would do it, if I were a company that...
	I was claiming to provide safety labels for manufacturing goods or something.
	And this is just sort of off the top of my head.
	Maybe it'll work, maybe it wouldn't.
	But the way that I would work it is I would have an independent agency from myself and I would say, okay, there is this ladder that needs to be checked whether it's safe.
	And then I would hand it over.
	I would sort of be the label person who'd be responsible for setting all this up and managing it.
	And then I would hand it over to some third party who would then farm it out to 10 different testing agencies that I would use on a rotating basis, right?
	So these testing agencies would work for a whole bunch of people who had testing labels, and I would not know who...
	Was doing the testing, right?
	So the manufacturer gives the latter to me.
	I give it to a third party who then hands it out to a rotating group of 10 or so, or however many would make sense, testing agencies.
	And then I would get the report back.
	I would have no idea who actually did the testing.
	And of course, if you felt that that was too many layers, then you could be the manufacturer who hands out these ladders to 10 people, who gets a report back and does not know who has tested them.
	They sort of drop it in a mailbox or something, not the ladder, but the specs, or the location of the ladder, and they get these things back.
	They have no idea who has done the testing.
	And that's fairly important, right?
	Because if you don't know who's done the testing, but you agree to abide by the label result that comes out of that, or the safety rating that comes out of that, then it's going to be impossible for you to bribe.
	Unless you want to bribe all ten, at which point you're really not making any sense economically.
	So, there's lots of ways to handle it such that it's sort of anonymous and yet legitimate.
	So that, of course, anonymity is the greatest strength against bribery, right?
	That's the way that you try and combat that.
	Now, let's take one other example, which is that there are 10 rating agencies that deal with ladders.
	I don't know how many. There would be in a free market.
	Let's just say there's 10. Now, of course, the greatest label value that could exist would be something that had, like, it's a 10-star rating.
	Which means that every single one of the rating agencies has determined that it is, you know, great.
	If 10 agencies give it 10 stars each, then obviously all of those agencies have combined.
	Now, if you only get 10 stars from one agency, then the consumers are going to know that it's more likely, not for certain, but it's more likely, That you've been involved in bribery at that point because you've only gotten one agency, they gave you a 10 star, and of course if your product was that great, wouldn't you then go to every other agency and get 10 stars from them and get all the added benefits from that?
	And no other agency has ever been allowed to see it, then people are going to be a little suspicious, right?
	At least I would be. I don't know about you, but when I'm thinking about renting a movie, then I go to RottenTomatoes.com, which has a summation of the reviews from everyone, right?
	This, to me, helps avoid the problem that occurred where you get these planted reviews from studios or these sort of, it's fantastic-erific kind of things that come on from studios where it turns out that they've just bought or paid for or made it up or whatever, right?
	So that, to me, is a sort of pretty obvious way of dealing with it.
	But let's sort of deal with the last way that corruption would be dealt with in a free market situation, or one of the ways.
	I mean, there could be a near infinite number of ways.
	These are just things that are occurring to me.
	But another way that you could do it, of course, is you would say, if there are 10 rating agencies, and the first one gets bribed, then the economic value of refusing bribes goes up For each agency that is not bribed.
	So let's say that the first agency gets bribed to give a 10-star rating to some food that's really dangerous or bad or whatever, right?
	Or a ladder, let's say with a ladder.
	Then, if you bribe that agency for a 10-star rating, right?
	Then, if you go to the next agency and you say, I will give you a million dollars for a 10-star rating, well...
	And this is, of course, assuming that the agency itself or the DRO that represents it has no internal checks and balances, which is not very likely.
	But let's just say that this happens and the bribery sort of works.
	Well, you then have two agencies down, but one of the things that's very interesting is that If somebody comes along and says, I'm going to give you a million dollars to give me a 10-star rating, your real question, if you're the owner or somebody who's responsible for this business who hears about this, even if you're just some cold callous economic calculator, your real question is, okay, who else has done it?
	Which of the other 10 rating agencies have these guys already been to?
	Now, they're not going to tell you, right?
	But one of the amazing things about it is that if they've gone to nine of the other ten agencies and they've already secured bribes and gotten commitments to get a ten-star rating, then the economic value of you to refuse that bribe is absolutely enormous.
	Because if you refuse this bribe, And then you go to the media and you say, look, this company that makes these ladders has given me, has offered me a bribe, which means that I assume, I assume that this means that their ladders aren't very good.
	However, their ladders have been given 10-star ratings by all these other companies.
	So I'm going to test these ladders without the bribe and I'm going to give it a real rating.
	And then you come out with like a two-star rating or something.
	Well, then, DROs are going to investigate, the media is going to investigate, because this would be pretty gripping stuff, you know, like consumer protection agencies endangering consumers, right?
	That would be a nice juicy headline for your nightly danger news, right?
	So, what would happen is if this 10th rating agency, security rating agency, if it refused the bribe, Then it would automatically knock out from the economic arena all of the other nine agencies, which means that it would sell, and of course then it would be able to get all the work that these agencies were formerly doing.
	So that's something that's very, very important.
	The economic value of refusing bribes increases as more bribes are accepted by others.
	Because in a free market situation you then get to publicize that those other companies are corrupt and then you get to take all their business as they crash in flames because there would be no worse betrayal of the consumer than to give a false rating of safety, right?
	Now, of course, a false rating of safety in food and ladders and so on would also be strenuously resisted by DROs, right?
	Because DROs are providing insurance, and of course, they're going to give cheaper insurance to people who only use 10-star rated products, right?
	So they're going to give better accident insurance to people who don't build their own ladders, but rather take the ladders that are deemed the most safe and so on.
	So the DROs are going to have billions of dollars of liabilities tied up into these rating agencies, so they're also going to make sure that they do a good job, right?
	As far as legal liability goes, of course, if you say this thing's sugar-free and it's not, then some diabetic eats it and goes into a coma or something, then you're obviously liable for that too.
	So that would go all the way to the board level, I'm sure, where you would get pretty significant penalties and sanctions set against you for intent to cause bodily harm.
	And so there's that layer that would cause a problem.
	And also, what's important to remember too is the risk To the manufacturer for doing the bribery, right?
	That's sort of important. It's hard for us to understand because right now there is nobody watching the watchers and bribery is so endemic to the political system that you have a whole class of people called lobbyists, right?
	So that is something that is hard to remember, but it will be absolutely the case in a free market situation that if you are a manufacturer and you try to bribe someone, Then there's going to be enormous cash rewards and so on for revealing this bribery.
	The DROs are going to pay you a fortune, right?
	The other thing that you also have to remember is that in a situation where DROs are absolutely committed to opposing bribery and where every one of your competitors will gain economically from you being bribed and showing your corruption, who's to say that it's not a sting operation?
	This fog of war is very important when it comes to ethics.
	I've talked about this before.
	But if you are a rating agency and someone comes along and says, I'll give you a million bucks to say that this ladder is safe when it's not, and then you say, sure, I'll take it, right?
	And then it turns out to be your annual DRO checkup or your random DRO checkup.
	Or it's come from your manufacturer, sorry, your competitors, your sort of safety label competitors, who then can reveal that you're open to taking bribes and so on.
	Or it's come from a competitor of the manufacturer who wants to say, look, this rating agency that my manufacturer uses is corrupt and so on.
	So, there really is no profit whatsoever.
	There's an enormous amount of risk, and there would be an enormous number of sanctions.
	Does it mean nobody's corrupt ever?
	Well, of course not. All you can do is create a situation where the best behavior is reinforced and the worst behavior is punished, and let human nature, as I mentioned in the show yesterday in a discussion about human nature...
	Human nature is such that it conforms to the incentives and disincentives that are in the environment, right?
	So that's why you want as much volunteerism as possible and as much of a free market as humanly possible.
	And no state, right?
	Because when you have a state, then people conform to that kind of violence and become that much more corrupt.
	So I think if you put all of this stuff together, that a monopoly is not a good solution to the problem of corruption, that people who are paid more don't become less corrupt, and so paying more to government employees doesn't make them any less corrupt, that you have a significant and so paying more to government employees doesn't make them any less corrupt, that you have a significant number of disincentives for corruption in a free market situation, and that there are so many people who have a vested interest in quality and safety
	and that there are so many people who have a vested interest in quality and safety and so on that it's inconceivable that this system would ever break down fundamentally in the way that the FDA does and the way that other government agencies do, then it would seem to me that it's really not a significant issue to worry about in the free market. then it would seem to me that it's really not The more people worry about it, and this is generally true, of course, for all of these solutions, the more that people worry about these problems, the more these problems will be solved.
	Like, if no one ever worried about the problem of corruption...
	Then the problem of corruption would be less likely to be solved.
	But since everybody worries about it, it's exactly the kind of situation that some entrepreneur can come along and take advantage of by providing a solution.
	Thank you so much. Please drop by freedomainradio.com and click on the donate button.
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