It is just past 17 o'clock on February the 9th, 2007.
And we're going to go back a little bit towards statism and economics just for today.
So, there's a board topic that is receiving some very wonderful and exciting attention.
And the original thread was, how is it that capitalism gets rid of poverty?
Which is, I think, a false dichotomy question, which we don't have to talk about right now.
But it has moved into a discussion of mercantilism, which is a fascinating, fesquinating, otopic aroma.
And... I'll sort of toss my two cents in.
I would write it up as a post, but it's tough to get the manic giggling in in a way that's really comprehensible.
The thing that I would sort of suggest as a possible way of approaching understanding the state and particularly understanding mercantilism is to sort of work from first principles.
Mechanism has a lot of different definitions, and some sort of make sense economically, some make sense morally, some make sense politically.
But the first thing to recognize, at least the way that I try to approach a concept, if such a concept exists, My friend John, who you've heard occasionally on this show, and I, when we were, oh gosh, 20 years ago, we worked up north together,
and we were doing this claims-taking and gold-panning thing, and to while away the walks and hikes and clamorous and drillings through the woods, we would pick similar words and try and figure out why there were two rather than one.
So envy and jealousy.
Why would there be two words rather than one?
And, of course, there is a multiplicity of language that naturally occurs, but there's also a whittling down and Occam's razor approach to language that is also valid or also works.
So, if a term exists, then it usually has some reason.
It usually has some differentiator to every other possible term that could be used in its place.
Mercantilism, of course, is both invented and discovered.
It is discovered insofar as I will argue that it represents a real term, Economic, quote, relationship.
But also I will argue that it is invented insofar as it is very, very advantageous to those who use violence to confuse people about violence and freedom.
That's a very natural desire of those with blood on their hands is to say either this is not blood or everyone has blood on their hands and it's got nothing to do with me individually.
So... Let's take that sort of approach and say, well, why would something like mercantilism as a concept even exist to begin with?
Now, everybody pretty much understands who's in the debate that mercantilism is something to do with economics and government.
Nobody would say that a purely free market system was mercantilist.
Mercantilism has something to do with trade and the state.
And that much I think we can relatively agree on.
But the question is, what is mercantilism and why would it be differentiated from things like taxation or state enterprises or whatever?
And I'm going to put forward a theory here and you can, of course, let me know what you think.
And I look forward to your feedback.
So, if we start with first principles, as we well know, there's two ways of interacting with people.
Fundamentally, there is trade.
And there is force.
Now, everything fundamentally is trade.
Everything fundamentally is trade.
Even in horrible situations like rape, there is a trade that is going on, which is that the guy is going to kill you if you don't submit to the rape.
So you're trading your life in return for the rape.
It's just not a voluntary sort of situation.
But there's always trade involved.
So I choose to pay off the government so that I don't...
I'm buying my freedom with taxation in the same way that you buy having your store not burnt down if you pay protection money to the mafia.
So... There is voluntary trade, and then there's coercive trade, sort of quote trade.
And we'll just make those voluntarism versus coercion, if you don't mind, just to sort of keep things simple.
And there are other kinds of things, like a baby doesn't threaten you, and it doesn't have anything to trade with, but still you give it resources.
So there's other things which we don't sort of have to worry about, particularly at the moment, because they don't really show up in a state context.
Now... We're all very aware, those of us who've had even the most basic training in economics, we're all very aware that coercion causes economic destruction or the destruction of capital, the destruction of value within society.
To make things sort of simple, if there are 100 people in a community and 99 of them are thieves, it's not very likely that the hundredth one of them is going to open up a shop.
It's not very likely.
This is, of course, violence in this sense is the great destructor of human value, of economic value.
When the hordes of Cossacks or Mongols are riding through your village every couple of months taking all your food, it's not likely that you're going to be experimenting with agricultural crop innovations.
In fact, it took the enclosure movement of the late Middle Ages to sort of blend together these strips of lands that had been inherited from the feudal system into private privately owned and large enough lands that experimentation in agricultural improvements became something that was valuable and possible and achieved and you got a five to ten to fifteen fold increase in the crop yields of the land through winter crops turnips and crop rotation and all this other kind of geeky farming stuff so when you have violence within an interaction Either explicitly or implicitly,
the threat thereof of jail or a knife to your throat.
When you have violence in an interaction, you have a diminishment of wealth.
Because you lack creativity.
And of course the labor to constantly keep holding knives to people's throats or to keep stealing from them or to keep threatening them with X, Y, and Z. All of that is labor that's taken out of the productive economy.
And there's a diminishment in people's desire to generate wealth.
There's the cat and mouse game of stealing from people and them hiding stuff in terms of the gray market.
All of that starts to kick in.
So violence itself enormously diminishes the capacity of individuals or the desire of individuals and effectively their capacity to generate wealth, to come up with the time and profitability improvements that allow you to make 70 widgets where before you only made 60 but with the same amount of labor providing a net or same amount of energy consumption in one form or another providing a net plus 10 widgets to society which is the root of profit and economic growth.
So that kind of innovation doesn't occur in a violent society.
So the state kind of has a problem.
The state has an uneasy problem.
The state wishes, and I'm going to just anthropomorphize this evil institution, if you don't mind, just for the sake of clarity and, believe it or not, succinctness.
Shocking, I know. But the state has a difficult problem.
The people who end up running the state want to make a lot of money.
And so they want to wave guns at everyone and take their money.
But the problem is, you see, the problem is sort of twofold.
One is that everyone they wave their guns at doesn't want to deal with them, and also doesn't want to generate wealth over the long run, the more they wave their guns around.
And so fundamentally, I think it's not a mischaracterization to view the state as an enormous, drunken, bloody-minded, heavily-armed infant.
And I'll explain what I mean by that if you don't mind.
I think it makes sense. Let's see, shall we?
Let's find out.
An infant is fundamentally helpless and requires, sort of relies on, to characterize infants in a negative kind of way, relies on sort of kicking and screaming and fussing to get what it wants.
It can't generate any value in and of itself.
It can only inflict negative stimuli, and to some degree positive stimuli, which is where the relationship with the state breaks down.
Let's just say you've got a colicky, angry, cranky, evil baby.
I don't know if babies aren't evil, but you know what I mean.
So the only way, the baby's helpless, the only way that the baby can get what it wants is to inflict negative stimuli on others.
Bully baby, we shall call it.
But it can't generate anything else.
So it's fundamentally helpless, fundamentally dependent.
And because it is fundamentally helpless and dependent, it's a bully.
I mean, that sort of goes absolutely hand in hand.
The people who bully us are the people who have no power.
I mean, you have power, and by power I sort of mean like other people want to help you, other people want to do good things for you.
Influence is probably better, or trade, something to trade.
Those who are bullies have nothing to offer.
Those who are bullies have nothing to offer, and that's why they bully.
It's the realm of negative. I don't have anything positive to offer you.
It's like a rapist. I can't make you want to sleep with me, so I'm just going to make you not want to die and sleep with me as a way of buying that.
So this is the realm of negative economics that we've talked about before, not the provision of a positive, but the withdrawal or withholding of a negative.
So a baby says, if you feed me, I won't scream all night.
If you change my diaper, I won't scream all night.
Or whatever, right? So there's the helplessness that brings about the aggression.
And those in the state are fundamentally helpless.
Nobody wants to deal with them.
They can only inflict punishment on people.
And they want to make lots of money, but nobody wants to deal with them voluntarily.
And the more that they steal from people, the less there is To go around, right?
Because people don't want to start making wealth anymore, right?
Like, if you've got a community of 100 people, you can support maybe one or two occasional thieves.
And those thieves are going to be on the lookout to make sure no other thieves come along.
This is why governments require monopolies.
They just don't want anybody else.
So if you sort of understand that a state is the helpless enraged infancy of the species writ large, and there are big psychological reasons about all of this that we sort of don't have to get into right now, but there are very sort of powerful root psychological reasons as to why the state gains all of this power, because it is an evocation of this helpless and enraged infancy where nothing of value can be provided by the infant.
The infant has what seems at times like insatiable needs, And can't provide anything for itself.
So, once you sort of understand that the state, nobody wants to deal with the state, and also that the state can't generate anything for itself, and also that the more the state tries to take from people, the less wealth there is to generate, then you sort of understand the fundamental helplessness of the state.
And now we're in a position to really parse out what is meant by mercantilism.
The government, if it just goes around taking money, it can't do anything for itself, because it's just waving guns around.
So the government creates value in one of two ways, or at least maintains the appearance of value in one of two ways.
The first is by creating a monopoly.
So if you look at roads or water provision or electricity provision and so on, for the most part, it is a state monopoly in just about every country in the world.
And that means that, like garbage pickup, all the stuff that's annoying and badly done and incompetent and expensive and debt-ridden and all this kind of stuff, all of that stuff, the state creates value simply by banning competitors, outright, violently banning competitors.
And that's okay for certain things.
But it's not okay for a whole lot of things, right?
That's why the government, whenever it takes over too much in the economy, the whole economy goes to shite, as we've seen in every socialist experiment throughout history from Spenum land onwards.
So the question is then, how does the government get things done in places where a monopoly is not of value, is not profitable, and so on?
Well, of course, what it does is it pays private companies to do stuff.
And I know this just from my own sort of experience in the realm of...
I'm sorry.
Some guy actually cut 90 degrees across.
Actually almost went over the sort of Y where the exit goes.
Almost went over the Y at a complete perpendicular.
Because traffic's going a little slow, so it's very important to get T-Bone to speed things along.
Maybe he wants to get to the hospital very quickly.
I'm not sure. So, you're taking all of this money from people, and you need to get things done.
You need to get your schools built.
You need to get all of this stuff done.
And so, you're going to do one of two things.
You're either going to ban anybody else from doing it, which means that people have to just sort of sit down and shut up and put up with whatever you hand out to them, or you pay some private company to do it.
And one of the things that's really quite fascinating when you start to deal with the government up close, Is you realize just how little they do for themselves.
External of road maintenance and all the crap that's just...
It's a monopoly that's really a state-run enterprise.
It's sort of a communist monopoly there.
But as far as the other things go, it's just fascinating how little gets done by the government.
Because the government can't really get anything done.
It is this helpless infant, just waving guns around and screaming.
It can't really get anything done.
But it needs to get stuff done, right?
So when I've dealt with the government agencies, that's fascinating.
Absolutely fascinating. You have, you know, 500 people working in a building who basically just move coffee cups around, go for lunch, do some paperwork, do a bit of desultory work here and there.
And then what you have is you have like 40 consultants who are actually doing the work.
And that's essential to understand about the government.
The government can't do smack itself.
The government is so fundamentally incompetent because violence always breeds incompetence and fear and paralysis and a lack of desire to innovate, a lack of desire to improve.
The government is so fundamentally incompetent that anytime it needs anything done, it's got to hire private companies.
And that does a lot of good in a lot of different ways, you know, sort of for the government, not for anyone else, but for the government.
And it does good in terms of building up a constituency that relies on its power and so on.
But the sort of fundamental helplessness of the state is just essential to understand.
So the last company I worked at, we did capital planning for fixed assets.
I'm not even going to get into the figures, but it was just horrendous.
The trillions of dollars of required maintenance that needed to be done in the school system was just staggering.
Just a huge and staggering and mind-blowing amount of money.
And that's because the government is so incompetent it can't even keep its schools running.
Because why? Why would you bother?
You can't get fired. It's not your property.
There's no competition.
You have no more interest in keeping the value of the assets that are sort of supposedly under your charge when you're in the government than you have of taking a rented car for an oil change.
Assuming it's not on the contract or anything.
We have no desire to do it.
None whatsoever. In fact, there's impediments to doing it.
One of the things that is pretty much the case perpetually with government is that the squeaky wheel always gets the grease.
So if you let your school run down until it's a smoking rubble, then you get an enormous amount of money.
Because government's all just reactionary.
It's not proactive. Because it's violence-based and paralysis-based, it's reactionary.
So what happens is some wall falls on a kid and scratches the hell out of him or something, and then the parents get mad, and then the government sends $5 million to that school to fix everything up.
And those guys are then swimming.
The guys who are spending $50 grand a year to maintain or prevent this kind of stuff They just get their regular, but everyone else gets all this money.
So it's actually a positive incentive to let things go to hell in a handbasket when you're in the state sphere.
And I've seen this just a large number of times in particular agencies that I've visited.
You know, 431, you know, everyone just vaporizes who's there for the government employee.
And actually, the consultants breathe a sigh of relief.
It's like, great, the warm, dead bodies are out of the way.
Now we can actually get something done.
And you will get a lot of this kind of stuff.
But the government runs on a sort of tiny, muscular skeleton of consultants.
The government, as a massive whole, is, well, just a massive whole, so to speak.
It gets nothing done.
It's fundamentally helpless.
It's totally useless.
It's completely counterproductive.
It's a net destroyer of wealth and value and freedom, and we know all of this stuff, right?
So in order to get anything done, I mean, if the government had to rely on its own employees, government would end in three to six months, max.
Max. And what I mean by that is the government wasn't allowed to take things from the private sector.
The government doesn't create its own computers, and it barely creates its own computer programs now.
It doesn't create its own networks.
It doesn't create its own networking standards.
It doesn't create its own cars.
It doesn't create its own engines.
It doesn't create its own air conditioners.
It doesn't create its own buildings.
It gets them all from the private sector because it's fundamentally helpless.
It's a massive tumorous bag, colostomy bag hanging off society doing nothing.
And what it does, of course, is it takes an enormous amount of money from the general population and then what it does is it keeps, you know, a good chunk of that money for itself.
It It gives a good chunk of money to the people who work, sort of quote, work for the government, who are on the government payroll.
And the remainder, it hands out to private companies so that some shit gets done.
Just some stuff gets done.
Because otherwise, nothing's going to get done and the whole lie falls apart pretty quickly.
One of my very first jobs in the government was I was working for the Department of Education.
Here in Ontario, and I guess I was 17 or 18, and I was doing paperwork.
I was keeping track of and running and keeping the edits going for a large union contract.
There were like 12 people in the office, and I was the only one typing.
I mean, what, they moved pastes of paper back and forth among each other, and they went for long lunches and so on.
But... They have no authority.
They can't get anything done. They're just stuck there.
They can't get fired. Nobody can find any work for them.
And nobody can come in and motivate them because they damn well know they can't get fired.
So nobody's going to be able to come in and light a fire under their belly.
And there are a couple of people. It's not like every single government employee is a statue.
Some of them are more like Jell-O. But to get anything done, the government has to pay private industries to do it.
And here, once we understand the helplessness of government, once we understand the negative economics of government, and once we understand that the government needs to at least keep the appearance of getting things done, Governments don't train their own doctors.
There's no government school of doctordom.
They have universities do that.
Everything that is done in the government is done because some private agency has trained or developed or achieved or manufactured or invented or whatever.
Some particular process or education or something that is going on.
So, from that standpoint, I think we're now in a better position to understand the challenges of mercantilism and what mercantilism really is.
What mercantilism, in my definition of course is completely open to whatever you think of it, but mercantilism in my way of understanding it is simply the relationship between the coercive relationship not Primarily, but secondarily, between the state and the private sector.
So, for the government, there are three sectors.
There is the black market, grey market, criminal element, which it assiduously works to increase and create so that it can do horrible things to people's freedoms and taxes.
So, that's the first segment.
The second segment is those they taketh from.
Those who are net negative when it comes to states, state relationships.
Generally smaller companies and companies without political connections and so on.
So those are the net negatives as far as their relationship to the state goes.
And there are the third set of companies who are the net positive with their relationship to the state.
In other words, Lockheed Martin and Oracle and all these other big companies that get huge contracts, enormous long-lasting contracts from the government.
They may also get tariff protection.
They may also get grandfathered in at a particular legislation that is designed to keep newcomers or at least raise the barrier to entry and the cost for newcomers to come into the Into the economy or the economic sector.
There's lots of complicated things that go on in terms of being net positive with the government.
You might get a direct subsidy.
You might be getting protection from competitors.
You might get tariffs that will keep foreign competitors out of the way.
There just can be many, many...
We could go on and on, but there may be many, many things that will lead you to be net positive with regards to the state.
So there's those the government prosecutes or pursues or harasses, the grey market, black market, criminal element.
There's those that the government steals from, on average.
And there's those that the government gives to, on average.
And the government has to give Money to somebody, because otherwise nothing's going to get done.
Nothing's going to get done. Can you imagine if the government, as simple as, made the uniforms for its own police?
Oh, they have to outsource. All of that stuff has to be outsourced.
All of it. Because everybody in the government knows that if you want a useless pile of shit shipped to you, ask some other government agency for it.
But if you want someone that you can bribe and bully and get good quality work out of, then you've got to go to the private sector.
That is as unspoken and as natural as breathing to people in the government.
The people in the government have no incentive to go elsewhere in the government to get things done.
And they have no incentive to set up internally allocated costs to get X, Y, or Z done.
There's no incentive whatsoever to do any of that stuff at all.
If you are in the Department of Education and you want the Department of Public Housing to come and build your schools, you know you're going to get a pile of shit.
And you know that you're not going to be able to do a damn thing.
And you know that they're going to thumb their nose at you any time you talk about quality.
So you don't even get any power.
And it doesn't give you any benefit because they can't donate to your campaign when you want to run for re-election.
So, if you are in the Department of Education, the last thing that you want is to have the Department of Public Housing or whatever it is to build your schools.
It's not going to do you any good.
It's going to make your job a living hell.
And you'll feel the powerlessness that is at the root of government, which you don't want to feel in this sort of James Taggart kind of way.
You'll feel the powerlessness that's right at the root of government.
The helplessness, the powerlessness, the self-loathing.
All the things that the rapist or the thief feels.
And the soldier, the self-loathing, the self-contempt, the absolute helplessness that causes somebody to pick up a gun to get what they want.
It's immediately saying, well, I can't get what I want, but I can inflict my self-hatred on others rather than deal with it myself.
My self-hatred is such that I can't swallow this venom.
I must just spew it out onto other people.
So, this is, I think, a way of understanding, and if you don't have this differentiation within your mind, then you're not going to understand capitalism as it's practiced now to the degree that it is, which is not a whole lot left, but you're not going to understand capitalism, you're certainly not going to understand libertarianism, and you're never in a million years going to understand market anarchism, anarcho-capitalism.
Never in a million years. Because anarcho-capitalism doesn't deal with either of these three relationships.
Criminal to state, net provider of taxes to state, net receiver of taxes to state.
Because there's no state. So, if for you the state is the center of things, then you build a wheel, right?
Spokes in and you get a sort of ring of wood around the outside to build your wagon wheel.
So that's your structure.
But if there's no state in the middle, you've just got a hoop and a pile of sticks, nothing to make a wheel out of.
So if you don't understand the centrality of the state to modern capitalism, or what's called modern capitalism, which is really mercantilism for the most part, you're either dodging the state because you're a criminal, you're dodging the state because you're being taxed to death,
or you're Praising the state or being enslaved to the state through gaining access to state power in the form of the tax revenues or the power of coercive exclusions of trade or controls of trade or regulations or whatever.
So, mercantilism is simply the transfer of money from the state to particular corporations.
In return for services without which the state simply cannot function.
And if you don't see the state in this, then capitalism and the understanding of the modern economy, I would submit, just isn't going to make any sense to you.
It's not going to make any sense to you.
You're going to be mixing everything up into one big bowl and saying, well, you know, the corporations run the state.
You're going to get involved in socialism or at least maybe anarcho-syndicalism or you're going to get involved in globalization, corporation mongering or something like that, baiting.
If you don't sort of understand this central fact that you have an enormously powerful group of people who have access to all the guns in the world and whose whim is law, if you don't sort of get that, then none of what goes on in terms of discussions within economics or politics from any free market standpoint is going to make a shred of sense.
It's going to be confusing.
You're going to irritate people.
You yourself are going to get irritated.
Of course, I don't want that at all.
But since the state relies on corporations to achieve anything, there's just no possibility that it's not going to continue to expand, it's not going to continue to get worse and worse.
So I hope that that makes some sense about what I at least understand by mercantilism.
Mercantilism is the system which transfers money from companies through the state to other companies.
And this turns it into an infighting petri dish of people attempting to gain all this access to political privilege.
It turns companies into slaves and masters of the taxpayers and of the state.
And it is a wretched and horrible and basically fascistic in its essence, right?
In fascism, you have...
Public ownership of many goods, but private ownership of corporations and in communism you have public ownership of both.
But I hope that this makes some sense.
If you can sort of break it down from the beginning and see why mercantilism is always necessary when you have a state.
You know, mercantilism is inevitable when you have a state.
It always turns from the free market to mercantilism because as the power of the state grows, the state can do less and less for itself.
The state can't do anything for itself to begin with.
It's helpless. It's like a big, squalling, angry infant with nukes.
But as state power grows, there's not going to be any chance that the state's going to get anything done for itself, which means it's got to hire more and more corporations.
Which means that more and more corporations are going to start to get their value and their economic allegiance from the state and to the state.
It's going to get more and more employees, and thus it can do less and less, and it has to start printing money to pay off the mercantilist corporations that it's getting to do stuff for it, and so on.
I mean, there's a reason why Halliburton is distributing the food in Iraq, because the government can't do it.
The soldiers would simply starve.
And the government would be like Katrina, right?
The government can't do a damn thing on its own.
So it needs to continually pour more and more money into the private sector to even maintain the appearance that anything decent or reasonable or efficacious is getting done.
And that's why mercantilism always grows into fascism.
But we'll head that off at the pass, won't we, brothers and sisters?
Yes, I think we will.
We will head that off at the pass and float this train running to a brick wall nice and gently into the soft and lush valley of a narco-capitalist paradise.
Thank you so much for listening. I look forward to your donations.