The fallacy of liberty without property rights

I did a tweet that was a take off on a famous H. L. Mencken observation. I tweeted, “Anti-capitalism is best defined by the fear that someone, somewhere, is getting rich.” This set off a few folks who are anarchists of the leftist variety. One of the biggest disagreements was on the word “capitalism” rather than “rich”. I asked my correspondent to kindly read yesterday’s post on Free market capitalism vs. State capitalism and that did not seem to please him.

Turns out we disagree on the use of the term “capitalism” itself and a couple of other points. He told me he believes in a free market and in anarchy, but not in capitalism. That is OK with me, as some people just hate the word given that so many have conflated State-Capitalism or Fascism with the name “capitalism”. That was hardly worth doing a post on, especially given yesterday’s topic. But there was more. As I see it, our main disagreement,  other than semantics over a word, is that he believes a “free market” in an anarchy would lead to no private property at all and to no one working for wages. He wrote: “I disagree. I don’t think wage labor or private property would exist in a free market...”

Well now; that is an interesting notion. I have seen it before of course, but it is interesting never the less.

Murray N. Rothbard wrote:

The central core of the libertarian creed, then, is to establish the absolute right to private property of every man: first, in his own body, and second, in the previously unused natural resources which he first transforms by his labor. These two axioms, the right of self-ownership and the right to “homestead,” establish the complete set of principles of the libertarian system. The entire libertarian doctrine then becomes the spinning out and the application of all the implications of this central doctrine.

I believe it was Rothbard who first pointed out that there were three possibilities on ownership of the human being. First, he owns, and therefore controls, himself. He has the right to control himself without coercive interference. Now if a man does not own himself, who does? If it is one person or a small group then we are talking about slavery. One group owns another and hence one group is fully human while the other group is sub-human. This option is foul and odious to us, and is rejected out of hand. (of course others have gone on at length about the immorality of slavery)

If a man does not own himself and is not owned by some other individual or group of individuals then he must be owned by everyone on the planet equally. It is the state of total mutual ownership! But that leads to a man needing over seven billion people to agree with an action before the poor devil can do anything. That is obviously not possible and so everyone would die waiting for unanimous approval to act. It is also obvious that any steps in the direction of mutual ownership spells harm to the race. Besides, there is no physical way that everyone can even keep tabs on everyone else; much the less give consent to billions on all their acts.

It is clear then that only self-ownership by humans makes any sense. This is a property right that apparently some of our socialist-anarchist friends have not considered. The radical libertarian rejects any alternative except for the human owning himself, and that is our primary axiom. Notice that it is a property right.

This brings us to the disagreement with anarchists of the left who claim that all property would be jointly owned and that there would be no wages paid to anyone.

First of all, if there is no government or other coercive group imposing its will on the people, then the people would be free to trade goods and services with one another. So if I wanted to pay someone to work for me that would be a natural thing as long as we both felt we benefited from the arrangement. The division of labor is necessary in any society above the most impoverished and primitive one. Try to imagine a surgeon building all tools of his trade all by himself! Try to imagine an airplane pilot building both the plane and the landing strip all by himself. We have to have mutual cooperation and division of labor to create the kind of wealth that the modern world has generated and that my friends leads to some selling their time and talents for monetary wages.

Now on to property itself. There are many kinds of property, but all involve ownership and title. Our socialist-anarchist friends believe that all people should have and equal ownership to all property even though we have established that only the individual’s right self-ownership, to a property right in his own body and person, makes any sense at all. But people need a place to stand, shelter against the elements, warm clothes, food, and many other things. Mankind must turn natural resources into consumer goods for the populace. Food must be grown and eaten and minerals must be mined to make capital goods which lead to consumer goods.

If a man clears a forest and plants corn to eat, does that belong to everyone on the planet equally? How could that work? Would we have the whole planet vote on every move he made? Would there be a mad dash to take the corn when it ripened? Would anyone who wanted to move into his house do so? Would we snatch the cloths off his back if we wanted them? None of these actions could be illegal or immoral if there are no property rights to tell us who owns (controls) the properties in question. Hell, the fool might grow one crop of corn but he would never grow another if everyone else thought all of his hard work and labor was theirs for the taking!

What if an artist took some natural materials and created a great work of art. Do I own that art as much as he does? Do you own it? Would it be right to just go grab it out of his hands and take it for your own pleasure against his will? If every man has a property right in his own person then he must have the labor of his body and the work of his hands as his own property also. How else could it be and make any sense?

As in the case of the ownership of people’s bodies there can be only three alternatives for property other than self. First, some group (like our government) owns all your work, labors, ideas, and all other property which effectively makes you a slave as the group controls your production. Or on the other hand, the person who creates and produces is the owner who should control that which is put into use. But if those two options are rejected as the anarchist-socialists do, then everyone on the planet has an equal share in everyone else’s goods, and services. How would that work? How can we get total agreement on anything? If a thousand people want a bit of land on a beautiful lake to be their home — how would the decision by made? (by force obviously)

But some socialist-anarchists (which is, in effect, the “pure” communism) say that it is only land and factories that they want to see jointly owned. The individual can keep his pants, shirt, and shoes; but not his home since it sets on land. Murray Rothbard once wrote: “The Georgists argue that, while every man should own the goods which he produces or creates, since Nature or God created the land itself, no individual has the right to assume ownership of that land”.

We believe that whoever first uses a piece of land for productive uses becomes the title holder and owner of that land. Who else should be? If it is another individual or group then they are thieves. But what about everyone? That is the recipe for violence as various groups take what they want by force. It would be illegal and immoral to allow the title holder of a piece of land to be the victim of some aggressive taking but superior force.

Now some have argued that the titles to land in our age are not all good titles since the land has been stolen or appropriated from the rightful first users and their decedents. If someone has a legitimate claim to a given piece of property then a libertarian court in an anarchy would rule in their favor as the rightful owners.  But in the end, we must have owners of land that has been put into use and we must have respect for their property rights or we invite violence, gang warfare, and chaos.

I hope my twitter friend reads this and considers my position on property. Many others have written about this topic much better than this short rant of mine today. I don’t have the time to write long posts considering every augment since I do have to trade my time and talent to a boss for some wages!

Clowns, Collectivists and Stupidity

Most of the time you can depend on progressives saying the stupidest things about economics. Since they think that all blessing flow from the central government, there is little hope of the greedy, envious little so-and-so’s ever realizing that the government is not making wealth but destroying it.  As it so happened, I was reading a thread at the progressive Guardian newspaper when I ran across the following comment by a poster who does not post often, but when he does — it is usually a good one. The progressives, as usual, had been saying how “capitalism” was so awful and only the crazed could believe in the free market. Part of his response was:

Well well. Looks like the collectivist circus is back in town and the clown car just showed up.

Everything that makes up our current standard of living exists thanks to evil capitalists who greedily created things that other people wanted to buy, saved capital and created capital goods that other evil capitalists used to invent even more sophisticated things that have made everyone’s life more pleasant.

You know, things like modern housing, automobiles, airplanes, vaccines, MRI machines, increased crop yields and other such things that collectivists apparently think simply appeared out of the aether.

What we have today, useful idiots, is not anything resembling capitalism, but rather corporatism, the beloved system formerly known as fascism, which is a direct result of progressive collectivism.

You know, the folks who worship at the alter of the State and have “progressively” empowered the State to the point where it now openly claims the power to kill anyone, anywhere, at any time, for any reason whatsoever, and to suck the population dry via taxes and inflation to reward itself and it’s corporate cronies.

He went on to say that since nearly every abuse, every atrocity, every evil that Glenn Greenwald (a good solid anti-war type even though a progressive himself) writes about is a direct result of the poisonous collectivist progressive ideology of unlimited State power, and that the progressive clowns had a lot of audacity to talk about capitalism, which makes everyone wealthier, while their vision of an all powerful State makes everyone but a privileged few poorer.

The trouble we have convincing progressives that the laissez-faire free market is the route to go (along with voluntarism in general) is that they want the powerful state. They want the state to impose their vision of utopia upon the rest of us; or, they simply want the state to steal from the general population and give them what they desire.  It does not take a genus to see that if you empower the state to the point that it can loot others for your benefit then it is strong enough to loot you!

Even worse is the empirical fact that the state is using all the powers granted to it to engage in endless war. War is the health of the State, after all, and progressives destroyed the last of the constraints on the state going to war long ago. The “progressive era” was the death of what remained of the semi-constrained central Republic.

Murray Rothbard wrote in the Anatomy of the State:

The State is almost universally considered an institution of social service. Some theorists venerate the State as the apotheosis of society; others regard it as an amiable, though often inefficient, organization for achieving social ends; but almost all regard it as a necessary means for achieving the goals of mankind, a means to be ranged against the “private sector” and often winning in this competition of resources. With the rise of democracy, the identification of the State with society has been redoubled, until it is common to hear sentiments expressed which violate virtually every tenet of reason and common sense such as, “we are the government.” The useful collective term “we” has enabled an ideological camouflage to be thrown over the reality of political life. If “we are the government,” then anything a government does to an individual is not only just and untyrannical but also “voluntary” on the part of the individual concerned. If the government has incurred a huge public debt which must be paid by taxing one group for the benefit of another, this reality of burden is obscured by saying that “we owe it to ourselves”; if the government conscripts a man, or throws him into jail for dissident opinion, then he is “doing it to himself” and, therefore, nothing untoward has occurred. Under this reasoning, any Jews murdered by the Nazi government were not murdered; instead, they must have “committed suicide,” since they were the government (which was democratically chosen), and, therefore, anything the government did to them was voluntary on their part. One would not think it necessary to belabor this point, and yet the overwhelming bulk of the people hold this fallacy to a greater or lesser degree.

We must, therefore, emphasize that “we” are not the government; the government is not “us.” The government does not in any accurate sense “represent” the majority of the people.[1] But, even if it did, even if 70 percent of the people decided to murder the remaining 30 percent, this would still be murder and would not be voluntary suicide on the part of the slaughtered minority.[2] No organicist metaphor, no irrelevant bromide that “we are all part of one another,” must be permitted to obscure this basic fact.

The majority of Americans by this time late in the life of the American Empire have been schooled in government schools and the propagandized by the many minions of the State to believe that “we” are the state and that anything the state does is just “us” doing it “to ourselves”. So, murder, war, theft, intimidation and all the rest is justified in the minds of may as long as the State does it. And when the state does something so horrific that even the deluded progressives see that it is wrong; why then the answer is that a few “bad apples” are the cause and we must replace them next election! (or fire them if they are not elected politicians)

Sometimes we hear progressives decry the influence of the large, favored, and privileged companies on policies both foreign and domestic. What they fail to realize, no matter how many times it is explained to them, is that the large and privileged companies are in a symbiotic relationship with that state and that is a feature of the corporatist economic system (the fascism of Mussolini) that they themselves helped to establish. It is the working of Karma that the progressives now find the gang of thieves writ large that they helped to make so strong are now persecuting them.  (not that the rest of us are doing very well either of course)

It must be the fact that “misery loves company” that causes the progressives to want to follow the old, failed Soviet Union down the path to collectivism. It must be intense envy that causes the progressive to want everyone brought down to their level. What they can never seem to see (or they choose to ignore) is that egalitarianism is a revolt against nature. Humans have differing talents, interests, abilities, motivations, and all the rest. So why should the the achievers pay for the slackers until all are “equal”? Why should the armed goons of the state be empowered to loot the productive to subsidize the lazy?

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The laissez-faire free market is just humans trading with each other in a voluntary and cooperative manner. This is moral, while the theft that the progressives love, when called by the name “tax”, is immoral. But even more to the point is that the laissez-faire free market makes everyone more wealthy while any intervention makes all but the favored few less well off — especially the poor. Yes, especially the poor. Progressives, in their unbridled envy, pursue policies that make the poor more poverty stricken while pretending to be trying to help them. That is hypocrisy writ large.

An answer to a Buddhist on the Tao of the Free Market

I get tweets. I had an exchange with a Buddhist friend on Twitter over “the market” and a few other items. The following is just a representative example of a tweet she sent to me.

Wind From The Sun@jennifermerril2

@MarkStoval The “market” is not a god, and it is comprised of humans and all that being human entails, for better or worse.

She also tweeted that Rothbard and Rand were the same. I think I got her straightened out on the fact that Ayn Rand and Murray Rothbard were not of the same opinions. I hope everyone knows that they had a famous war with each other for a long time. Rand kicked Rothbard out of her little cult for having the nerve to disagree with her. I also hope that none of my readers think that anarcho-capitalism is the same as Ayn Rand’s “Objectivism”.

But the topic is the “market” and its role in our society. What is the “free market”?

Murray Rothbard on “The Free Market“:

The Free market is a summary term for an array of exchanges that take place in society. Each exchange is undertaken as a voluntary agreement between two people or between groups of people represented by agents. These two individuals (or agents) exchange two economic goods, either tangible commodities or nontangible services. Thus, when I buy a newspaper from a news dealer for fifty cents, the news dealer and I exchange two commodities: I give up fifty cents, and the news dealer gives up the newspaper. Or if I work for a corporation, I exchange my labor services, in a mutually agreed way, for a monetary salary; here the corporation is represented by a manager (an agent) with the authority to hire. Both parties undertake the exchange because each expects to gain from it. Also, each will repeat the exchange next time (or refuse to) because his expectation has proved correct (or incorrect) in the recent past. Trade, or exchange, is engaged in precisely because both parties benefit; if they did not expect to gain, they would not agree to the exchange.

I had asked my Buddhist friend if she believed in the non-aggression principle and she responded that he did indeed believe in non-aggression to the point of being a pacifist. I am not a pacifist and neither was Rothbard in that we believe that one must respond to aggression or invasion by resisting the attacker. I would certainly use lethal force on anyone who attacked my wife for instance; but I would never initiate violence against anyone. However, both of us have stated that we believe in the non-aggression principle and that leads ultimately to the laissez-faire market since the NAP rules out force, fraud, and coercion.

With the above setup out of the way, what can a Taoist say about the market to a Buddhist (or anyone else) about the Tao of The Free Market? Tao (pronounced “dao”) means literally “the path” or “the way.” It is a universal principle that underlies everything from the creation of galaxies to the interaction of human beings. It is the absolute principle underlying the universe, combining within itself the principles of yin and yang — the workings of Tao are vast and often beyond human understanding. In like manner the workings of “The Market” are also beyond our effective control if not beyond our understanding.

The “free market” just means the free, voluntary, cooperative exchanges that happen Trillions of times a day on planet earth. Sometimes you trade with yourself! You exchange some leisure time to go work with children because that sort of charity makes you feel better about yourself and the world. Sometimes a man trades his time watching a football game to do something else for his wife. Sometimes you simply trade a dollar for an apple because you value the sweetness of a ripe apple at that exact time more than the dollar. Many of us trade our time and talents to an “employer” for money and other benefits. The employer is trading money and benefits for the value the organization gets from your efforts and knowledge.

A young boy used Craigslist and and old cell phone to trade up to a Porsche car over a two year period involving 14 trades. Every trade involved two sides who were both happy about the trade. (subject of my post for next Wednesday) In a totally free laissez-faire market, every trade is made because both sides of the trade expect to be better off after the trade. How can this be? It is because at the time of the trade both sides have different subjective opinions on the worth of the goods or services to be traded. Both sides walk away a “winner” because both sides got something that they valued more highly than what they gave for the good or service. But that is when the trade is a free will, voluntary trade with no coercion, violence, threat, or intimidation involved. Many exchanges in our country today (and most of the world) are not at all free will exchanges. There may well be trillions of laws, rules, regulations, interpretations, and other barriers to a really free market. Some market anarchists have called for ditching the term “free market” as we don’t have one and those ignorant of economics think that we have a “free market” — they call for using “freed market” to mean laissez-faire markets.

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Most, if not all, trades in our country are coerced trades where a third party (the government) becomes part of the trade, and that is because we have an economically fascist or corporatist system. The government is involved in every aspect of a citizen’s life. Some say we actually follow the mercantilist economic model and some call it the “crony-capitalist” model. Regardless, the robber benefits at the expense of the coerced and the robber is the state. As the Austrian School of Economics has pointed out for generations, every intervention by the agency of force (government) reduces the wealth of the country. It makes some elites very wealthy but the common folk suffer from the intervention.

And so, my Buddhist friend, the “market” is not “god” but is the principle of free humans acting on their needs and desires by cooperating in a peaceful and voluntary manner. It is the root of the “division of labor”. Perhaps the word “market” is tainted in your mind due to people calling our present system a “free” market when it most certainly is not one. Try to think “market anarchy” or “laissez-faire free market” when someone talks about “the free market”. (if they really mean “free” of course)

yinyang

We Owe it to Ourselves

Paul Krugman and many others fail to understand government debt. They claim all the time that we should not be worried about the debt since it is “money we owe to ourselves.”

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On that topic Murray Rothbard wrote:

The ingenious slogan that the public debt does not matter because “we owe it to ourselves” is clearly absurd. The crucial question is: Who is the “we” and who are the “ourselves”? Analysis of the world must be individualistic and not holistic. Certain people owe money to certain other people, and it is precisely this fact that makes the borrowing as well as the taxing process important. For we might just as well say that taxes are unimportant for the same reason.

I say that if it were true that we just “owed it to ourselves” then just repudiate the debt and see who hollers the loudest. And then we will all see if “we” ever loan “ourselves” any more money. (seriously, that is not a bad idea!)

In the world of John Maynard Keynesian, which is the world of all government minions, there is no opportunity cost. The fact that Trillions of dollars go to the military, make-work projects, government bureaucracies and not to other productive uses does not seem to matter to the progressives and their allies in the government. Every penny tossed down the rat-hole of the TSA is a penny that could be making the poor in this country better off. (and the rest of us to boot) The government sucks up tremendous amounts of credit which makes any start-up or expansion that much more difficult and the Keynesians can’t see the problem.

The patron saint of all government drones is John Maynard Keynes  who wrote in 1943 that the credit expansion by a central bank performs the “miracle” of “turning stones into bread.” The fact that is that all Keynesians believe that a market economy is destined to implode because individuals save some of their income. They can’t seem to understand that this saved income is the investment capital that helps drive the free market. It is the capital that a start-up uses, in whole or in part, to get new businesses off the drawing board and into action. Nobel prize winner and newspaper columnist Paul Krugman has claimed that governments must “fill the hole” left by the “loss” of private spending when citizens save some of their income. Mr. Prize Winner seems to think that the saved income is not being invested someplace! One wonders how he passed his freshman economics class.

Economist William Anderson wrote a small comment at the Mises Institute where he told us:

When John Maynard Keynes decided that Say’s Law was pesky and got in the way of his master General Theory, he simply created a straw man, demolished it, and — Voila! — academic economists celebrated its demise. Paul Krugman, however, does Keynes one better and allows us to get rid of that oppressive and evil Law of Opportunity Cost.

Krugman continues to insist that if the economy is in a “liquidity trap,” the “old rules” no longer apply, and that means the Law of Comparative Advantage. Since comparative advantage is nothing more than an application of the Law of Opportunity Cost, Krugman is claiming that when there are “special circumstances,” the Law of Opportunity Cost does not apply. And without that lousy law, governments can perform magic with the printing press! I deal with this in my latest post on Krugman-in-Wonderland.

Keynes, Krugman, and all the rest of the Keynesian school think that government debt is the cure for all the ills of the massive government interventions that we see harm the ‘free market’. Government debt is not the cure-all to our problems. It is in many ways one of our biggest problems itself. Government debt is very different from private debt.

Let us hear from Rothbard on this subject:

The public debt transaction, then, is very different from private debt. Instead of a low-time preference creditor exchanging money for an IOU from a high-time preference debtor, the government now receives money from creditors, both parties realizing that the money will be paid back not out of the pockets or the hides of the politicians and bureaucrats, but out of the looted wallets and purses of the hapless taxpayers, the subjects of the state. The government gets the money by tax-coercion; and the public creditors, far from being innocents, know full well that their proceeds will come out of that selfsame coercion. In short, public creditors are willing to hand over money to the government now in order to receive a share of tax loot in the future. This is the opposite of a free market, or a genuinely voluntary transaction. Both parties are immorally contracting to participate in the violation of the property rights of citizens in the future. Both parties, therefore, are making agreements about other people’s property, and both deserve the back of our hand. The public credit transaction is not a genuine contract that need be considered sacrosanct, any more than robbers parceling out their shares of loot in advance should be treated as some sort of sanctified contract.

Any melding of public debt into a private transaction must rest on the common but absurd notion that taxation is really “voluntary,” and that whenever the government does anything, “we” are willingly doing it. This convenient myth was wittily and trenchantly disposed of by the great economist Joseph Schumpeter: “The theory which construes taxes on the analogy of club dues or of the purchases of, say, a doctor only proves how far removed this part of the social sciences is from scientific habits of mind.”

All taxpayers are on the hook for all the debt of the government (now at about 15 Trillion Dollars) as well as its future obligations which may be well over 200 Trillion Dollars. The taxpayers don’t “owe it to themselves” because if they did they would set all the terms of the debt. The taxpaying public is the  “loan guarantee” in which people who don’t participate in the process still are forced to pay for it. This has been called a “social contract” but it is in reality blatant theft by the government.

Don’t let anyone tell you that “we owe the government debt to ourselves”.

Why do markets work to alleviate poverty and governments fail?

Walter Block once wrote of a politician holding hearings on the problem of poverty. He recommended that the politician instead of wasting money and coming to the wrong conclusion just take An Inquiry into the Nature and Causes of the Wealth of Nations by Adam Smith home and read it. Smith wrote in his book so long ago that those countries that rely mainly on the free enterprise system of private property rights and the rule of law prosper much more than those that do not. Much like the difference between North Korea and South Korea. Block conducted research (Gwartney, James; Lawson, Robert; and Block, Walter. 1996. Economic Freedom of the World, 1975—1995) which found a statistically significant relationship not only between the degree of economic freedom in a country and its per capita income but also between liberty and income equality. Little surprise there; but nice to see published research on the matter.

The main reason markets work and government fails is the profit and loss system of the market. The Austrian School has been telling us this truth for a long time now. There is a “feed back loop” where prices signal to all people information that helps us to make sure we are investing our efforts and our capital where we need to do that the most. Often we neglect to appreciate the entrepreneur whose job is to judge the future and to supply the wants and needs of the population before they even know what they want themselves. Success brings profit for the entrepreneur and failure brings ruin. On the other hand, a government functionary or a politician does not have to personally pay for their errors in judgment. Often they claim failure is a sure sign we need even more government!

In the private market, even with government interventions that are disruptive, we see that businesses have to serve their customers by giving the best product or service they can at the best price they can manage. Those that do the best job stay in business. But they also have to keep good employees to make the operation go and that takes making the job worth having for the qualified men and women that the firms need to function.

Government on the other hand just uses force to stay in business. The road system in the US could be much better and much safer but it is a government monopoly that does not need to compete with anyone else. In politics the government can raise vast sums of money by just stealing it (called taxes) rather than serving others as a large business must do to earn fortunes. When the government rakes in big bucks, the people get poorer. That is the nature of the game. Crumbs go out to the poor and downtrodden as government makes their lives even worse via the help they give them. I once read that slavery could not destroy the black family but government help (“welfare”) was able to turn the trick.

A lot of money goes to favored corporations in the form of subsidies, corrupt contracts, favorable laws, favorable regulations, and other crony graft and greed. The unfavored businesses then have to compete, or try to, with the “cool” corporations that have crony government connections.

We live in a world where people have differing intelligence levels and skills. We live in a world where changing market preferences will cause some industries to lay off people and other to look to hire more people. As a society we need government to stay out of the way so that that market can signal to the producers just where our efforts should be in the ever changing world we live in. As a society we want to ensure that everyone who wants to work has a chance to do so and help create the wealth and alleviate poverty.

Walter Block once wrote that by “repealing minimum-wage laws, comparable-worth rules, working-condition laws, compulsory union membership, employment protection, employment taxes, payroll taxes, government unemployment insurance, welfare, regulations, licensing, antipeddling laws, child-labor laws, and government money creation” we could unleash the market and give the unemployed and those in poverty the best chance of working and improving their lives.

Bill Bonner once wrote on how to achieve full employment:

Want to really fix the unemployment problem? Listen up. Eliminate all bailouts, subsidies, giveaways and support systems – both to business and to labor. Abolish all employment restrictions and employment paperwork. All free labor – undocumented non-citizens – to compete equally with native-born workers. Cut taxes to a flat 10% rate for everyone. Abolish every government agency that begins with a letter of the alphabet. Then abolish the rest of them.

We confidently guarantee that the nation would be back at full employment within 30 days.

The path to jobs that matter and are not government make-work jobs is the free market. It always has been. Government is the obstacle to peace, prosperity, and good jobs for those that want to work.