Gold and Guns
In his extraordinary book Democracy: The God that Failed, Hans Hermann Hoppe points out that the process of civilization is stopped when government continually violates property rights.
The natural process of civilization comes through delaying consumption, saving, and building capital. Undoing it leads to higher societal time preference.
When natural disasters strike or a gunman robs you in an alley, "the effect of these on time preference is temporary and unsystematic," Hoppe explains.
Victims are entitled to defend themselves against the individual aggressor and prepare themselves for the calamities of the occasional act of God. Resources will be reallocated to defend one against potential robbers, and provisions will be made for potential natural disasters.
However, when government aggresses, it is considered legitimate and "a victim may not legitimately defend himself against such violations." Democracy legitimizes this government aggression because the violence is sanctioned by a majority of voters.
This decivilization process that Hoppe describes continues in fits and starts. The uneducated continue to live in never-never land, believing that each new ruler means change and that their lives and happiness can safely be put in the hands of a kind and caring government. But government's current ham-handedness — with its bailouts, money printing, and rights violations — has alerted more than a few individuals to do what comes naturally: defend themselves and prepare for the worst.
The government's legal-tender money — the dollar — is now under questioning. While the commercial-banking fractional-reserve monetary engine is stalled with loan write-downs and bank failures, the Federal Reserve has expanded its balance sheet like never before. Man of the Year Ben Bernanke is deathly afraid of deflation, and John Maynard Keynes is a hero again. The inflation cake is in the oven, albeit not quite fully baked.
And the current administration does not seem friendly to the property right of allowing us to protect ourselves. The president believes that only law-enforcement officers should have weapons.
So while high-time-preference folks like Shannan DeCesare shout "Merry Christmas to me" after unloading some gold jewelry for $610 at a gold party, low-time-preference types are lining up in pawnshops and gun shows to buy gold, silver, lead, and guns.
DeCesare attended a gold party that the Wall Street Journal describes as an example of the new Tupperware party. These parties appeal to the cash-for-gold crowd trying to maintain a boom-time lifestyle by unloading their valuables. The cash poor end up taking between 65 and 75 percent of what their gold would be worth to a refiner according to the WSJ.
January 4, 2010
Doug French [send him mail] is president of the Ludwig von Mises Institute and associate editor for Liberty Watch Magazine. He is the author of Early Speculative Bubbles & Increases in the Money Supply. He received the Murray N. Rothbard Award from the Center for Libertarian Studies. See his tribute to Murray Rothbard.