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Fier Kashes (four questions)

On Thu, Oct 6, 2022 at 1:10 PM Flenser wrote:

Hi Walter,

I have a growing interest in Austrian economics and libertarianism, and because I believe you’re the world leader on these topics, I’d very appreciate it if you can help me with the following questions (actually I have lots of questions, but these are the most pressing ones I have at the moment):

1. If FRB is fraud, isn’t insurance in general a fraud? Just like banks, insurance companies cannot pay all of their clients in case all of them, or a large portion of them, lay a claim at the same time.

2. If banks were to add 1 simple clause in their contract with you: Your checking deposit is redeemable only if we have sufficient reserves to satisfy your claim – would then FRB be non-fraudulent? (and I claim that the current condition in real life is very similar to this, as almost everyone is aware of that proviso).

3. Regarding cardinal utility: If I’m willing to pay max 6 bucks for a hat and only max 3 bucks for a pen, why doesn’t it mean I value the hat twice as much as the pen? And hence I derive twice as many utils from it?

Also, it makes no sense to deny that life saving medicine doesn’t give a lot, lot more utility than, say, a can of coke. Even if it’s not accurately quantifiable, it seems hard to deny that cardinal utility is real.

4. Punishment in libertarian law – Rothbard has the “2 tooth” argument. But doesn’t it fail in cases where the criminal act has a very low chance of being detected? Say I steal 100$ from you and there’s only a 1 in a million chance I get caught – it’ll still pay me to keep robbing everyone if the max punishment is just “2 teeth” (200$ more or less?)

Thanks a lot and I wish you Chag Sameach,

Dan

Dear Dan:

See below for my responses.

Best regards,

Walter

From: Flenser

To: [email protected]

Subject: Re: Questions about Austrian economics

Hi Walter,

I have a growing interest in Austrian economics and libertarianism, and because I believe you’re the world leader on these topics, I’d very appreciate it if you can help me with the following questions (actually I have lots of questions, but these are the most pressing ones I have at the moment):

1. If FRB is fraud, isn’t insurance in general a fraud? Just like banks, insurance companies cannot pay all of their clients in case all of them, or a large portion of them, lay a claim at the same time.

<<< the frb banks have an instantaneous debt greater than their assets. This is not true for the insurance firms. They have no debt at all yet, since the calamity didn’t yet occur.

2. If banks were to add 1 simple clause in their contract with you: Your checking deposit is redeemable only if we have sufficient reserves to satisfy your claim – would then FRB be non-fraudulent? (and I claim that the current condition in real life is very similar to this, as almost everyone is aware of that proviso).

<<< yes, that would be fine. But this would turn the demand deposit into a frb time deposit, which no Rothbardian such as I looks upon as fraudulent

3. Regarding cardinal utility: If I’m willing to pay max 6 bucks for a hat and only max 3 bucks for a pen, why doesn’t it mean I value the hat twice as much as the pen? And hence I derive twice as many utils from it?

<<< there aint no such thing as a util, a unit of happiness. “I’m now happy at the rate of 7.6 utils” is a meaningless statement.

Also, it makes no sense to deny that life saving medicine doesn’t give a lot, lot more utility than, say, a can of coke. Even if it’s not accurately quantifiable, it seems hard to deny that cardinal utility is real.

<<< Austrians support ordinal, not cardinal, utility. I have no trouble saying “life saving medicine is preferrable to a can of coke.” That’s not meaningless

4. Punishment in libertarian law – Rothbard has the “2 tooth” argument. But doesn’t it fail in cases where the criminal act has a very low chance of being detected? Say I steal 100$ from you and there’s only a 1 in a million chance I get caught – it’ll still pay me to keep robbing everyone if the max punishment is just “2 teeth” (200$ more or less?)

<<< the libertarian view is 2 teeth for a tooth, plus costs of capture, plus a penalty for scaring. That is VERY draconian. See on this:

Block, 2009A, 2009B, 2016, 2018; Gordon, 2020; Kinsella, 1996, 1997; Loo and Block, 2017-2018; Olson, 1979; Rothbard, 1977, 1998; Whitehead and Block, 2003

Block, Walter E. 2009A. “Toward a Libertarian Theory of Guilt and Punishment for the Crime of Statism” in Hulsmann, Jorg Guido and Stephan Kinsella, eds., Property, Freedom and Society: Essays in Honor of Hans-Hermann Hoppe, Auburn, AL: Ludwig von Mises Institute, pp. 137-148; http://mises.org/books/hulsmann-kinsella_property-freedom-society-2009.pdf;

http://mises.org/books/property_freedom_society_kinsella.pdf; festschrift

Block, Walter E. 2009B. “Libertarian punishment theory: working for, and donating to, the state” Libertarian Papers, Vol. 1; http://libertarianpapers.org/2009/17-libertarian-punishment-theory-working-for-and-donating-to-the-state/

Block, Walter E. 2016. “Russian Roulette: Rejoinder to Robins.” Acta Economica et Turistica. Vol. 1, No. 2, May, pp.  197-205; https://www.researchgate.net/publication/309300488_Russian_Roulette_Rejoinder_to_Robins; file:///C:/Users/walterblock/Downloads/AET_2_Block_6.pdf

Block, Walter E. 2018. “The case for punishing those responsible for minimum wage laws, rent control and protectionist tariffs.”  Revista Jurídica Cesumar – Mestrado, Vol. 18, No. 1, pp. 235-263; http://periodicos.unicesumar.edu.br/index.php/revjuridica/article/view/6392http://periodicos.unicesumar.edu.br/index.php/revjuridica/article/view/6392/3190

Gordon, David. 2020. “Rothbard and Double Restitution.” September 4;

https://mises.org/wire/rothbard-and-double-restitution?utm_source=Mises+Institute+Subscriptions&utm_campaign=ccce2acf8d-EMAIL_CAMPAIGN_9_21_2018_9_59_COPY_01&utm_medium=email&utm_term=0_8b52b2e1c0-ccce2acf8d-227976965

Loo, Andy and Walter E. Block. 2017-2018. “Threats against third parties: a libertarian analysis.” Baku State University Law Review; Vol. 4, No. 1, pp. 52-64; http://lr.bsulawss.org/archive/volume4/issue1/http://lr.bsulawss.org/archive/volume4/issue1/block/http://lr.bsulawss.org/files/archive/volume4/issue1/4BSULawRev13.pdf?

Kinsella, Stephen. 1996. “Punishment and Proportionality: the Estoppel Approach,” The Journal of Libertarian Studies, Vol. 12, No. 1, Spring, pp. 51-74; http://www.mises.org/journals/jls/12_1/12_1_3.pdf

Kinsella, Stephan. 1997. “A Libertarian Theory of Punishment and Rights,” 30 Loy. L.A. L. Rev. 607-45

Olson, Charles B. 1979. “Law in Anarchy.” Libertarian Forum. Vol. XII, No. 6, November-December, p. 4; http://64.233.167.104/u/Mises?q=cache:gFT18_ZusWoJ:www.mises.org/journals/lf/1979/1979_11-12.pdf+two+teeth+for+a+tooth&hl=en&ie=UTF-8

Rothbard, Murray N. 1977. “Punishment and Proportionality.”  R. E. Barnett and J. Hagel, III (eds.), Assessing the Criminal: Restitution, Retribution, and the Legal Process.  Cambridge, MA: Ballinger Publishing Co., pp. 259 270.

Rothbard, Murray N. 1998. The Ethics of Liberty, New York: New York University Press. https://cdn.mises.org/The%20Ethics%20of%20Liberty%2020191108.pdf;

In the view of Rothbard (1998, p. 88, ft. 6): “It should be evident that our theory of proportional punishment—that people may be punished by losing their rights to the extent that they have invaded the rights of others—is frankly a retributive theory of punishment, a ‘tooth (or two teeth) for a tooth’ theory. Retribution is in bad repute among philosophers, who generally dismiss the concept quickly as ‘primitive’ or ‘barbaric’ and then race on to a discussion of the two other major theories of punishment: deterrence and rehabilitation. But simply to dismiss a concept as ‘barbaric’ can hardly suffice; after all, it is possible that in this case, the ‘barbarians’ hit on a concept that was superior to the more modern creeds.”

Whitehead, Roy and Walter E. Block. 2003. “Taking the assets of the criminal to compensate victims of violence: a legal and philosophical approach,” Wayne State University Law School Journal of Law in Society Vol. 5, No. 1, Fall, pp.229-254

Thanks a lot and I wish you Chag Sameach,

Dan

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3:12 pm on October 6, 2022