An Empowering Monetary System

What might a maximally-empowering monetary system look like? Before I tell you that, I will begin with a brief description of the monetary system in the Anglosphere countries.

The Current System

At the center is an institution known, quite fittingly, as the ‘central bank’. The central bank possesses the power to legally create additional units of their corresponding national currency (either physically or digitally). Besides allowing them to control the country’s money supply, this power also allows them to act as the ‘lender of last resort’ to commercial banks. When a commercial bank is in danger of going bankrupt, the central bank can just whip up some new currency and lend it out to them, thereby helping the commercial bank to weather the storm.    

Because indeed, without the central bank, commercial banks would be in constant danger of sudden insolvency. This is due to a practice that they engage in known as ‘fractional reserve banking’. When you deposit money into a checking or savings account at your bank, you would be forgiven for believing that the bank is simply holding your money in safekeeping for you (as the word ‘deposit’ would seem to imply). But you would be mistaken in that belief. Actually, the bank is only required to hold about 10% of the money that you deposit in reserve; the rest they can, and often do, loan out to other people and businesses at interest. Although this practice is highly profitable to the bank, it is also very risky. If, for whatever reason, the depositors’ confidence in the bank is shaken (perhaps due to the revelation of some high profile bad loans that the bank made), many will rush to the bank to try and withdraw their money before the bank goes under. This rash of withdrawals will quickly deplete the bank’s reserves and, because the rest of the money is tied up in loans, will render the bank insolvent (unable to fulfill its contractual obligations to its clients). Such an event is known as a ‘bank run’, and happened quite regularly before the advent of modern central banking in the early 20^th century.

The inflationary nature of the current system

Central banks acting as ‘lenders of last resort’ have indeed been effective at preventing bank runs. Unfortunately, this blessing comes with a steep price tag: inflation. Inflation occurs when the quantity of money in a society is increased. Inflation leads to the reduction of the purchasing-power of each monetary unit, unless counterbalanced by a sufficiently-increased demand to hold money reserves or by a sufficiently-increased quantity of goods/services on the market. Central banks’ directly increasing the supply of money (printing/digitally-creating money) is one obvious source of inflation, but the practice of fractional reserve banking is another, more subtle, one.

It works as follows: a man deposits $100 into his checking account. Assuming a reserve requirement of 10%, the bank holds $10 of this in reserve, and loans out the rest ($90). Now, the first guy has $100 in his checking account, and the recipient of the loan has $90. Where there was once $100, there is now $190! But it doesn’t end there: those $90 will soon end up in bank accounts, and the process repeats. The depositors have $90 in their accounts, $9 is held in reserve, $81 is loaned out. Now there is $271! This process repeats until the money supply has been multiplied to about ten times the ‘monetary base’ (the part of the money supply directly controlled by the central bank).

Some may object to this analysis by arguing that the first man, after the bank has done its magic, doesn’t really have $100. Rather, he has some kind of financial instrument worth $100, while the bank has $10 in cash and $90 worth of loan assets. Technically, this is correct; strictly speaking, ‘cold hard cash’ and ‘money in the bank’ are two separate economic goods. However, the demand for these two goods is highly interrelated. Most people, unless they wish to engage in large illegal transactions, don’t have a marked preference for cash over money in the bank. Why would they? Bank money can be used as payment at most commercial establishments (using a debit card), at the same rate as cash, and if, for whatever reason, cash is required, bank money can be converted into it at virtually no expense. As such, both goods fit into the category of good, ‘generally accepted medium of exchange and means of final payment’. Most people will have a certain demand for this category of good, while the specific array of goods in this category that they choose to hold is mostly dictated by convenience. Evidence of this virtual interchangeability of cash and bank money can be found in the fact that their values, since the advent of modern central banking, have never deviated by a non-negligible amount from one another. And therefore, when discussing the monetary system overall, it is sound to classify both cash and bank money as the good ‘money’, and to consider it using a unitary supply and demand analysis.

All of this is to say that central banks, and the fractional reserve banks which they enable, are jointly responsible for virtually all of the inflation that occurs in modern monetary systems. Inflation, in turn, has two significant effects on the respective individual power levels of people in a society. We shall discuss them in turn.

Inflation’s redistributive effect

Firstly, inflation has a redistributive effect. Inflation benefits those who are economically closer to the source of the newly-created money, at the expense of those who are further away. This can be seen most clearly in the case of a criminal counterfeiter. Imagine the counterfeiter creates a bunch of perfect cash replicas, and spends them at his favorite local establishments. While the biggest beneficiary of the new money is the counterfeiter himself, these establishments also benefit via a direct increase in demand for their offerings. The establishment owners will then use the extra money to either consume or invest, thus benefitting those towards which this extra monetary demand is directed. The process continues until the new money has flowed through most of the economy.

The problem is that, as the new money flows through the economy, it causes a tendency for prices to rise as a result of the increased monetary demand going around. This is not a problem for those who got a piece of the new money early, but for the economically-distant parties, it means that their buying prices will have increased before benefitting from any of the increased demand themselves, thus leaving them worse off.

A similar process occurs as a result of inflation orchestrated by the central bank and their fractional reserve bank cronies. In this case, one of the biggest beneficiaries of the new money will be the society’s government, due to the large quantity of government bonds that central banks tend to purchase with fresh money. Other big winners include: commercial lending banks, well-connected investment banks (such as Goldman Sachs), government employees and contractors, owners of real estate and stock market assets, and the many businesses who cater to these groups.  On the other hand, some of those most harmed include: anyone on a fixed income, workers for whom negotiating a raise is difficult, people who are economically/geographically far-removed from the centers of finance and government, and people with substantial money holdings.

Looking at these lists, it would appear that, in general, richer people are more likely to benefit from this kind of inflation, while poorer people are more likely to be harmed. Thus, this kind of inflation tends to affect a redistribution of resources from poor to rich. Since, in the previous post, we concluded that, taken in isolation, a redistribution from rich to poor is a net positive for aggregate individual power levels, the reverse of this, which is the result of central bank inflation, must be considered a net negative.

In addition, as we also discussed in the previous post, when power is redistributed from individuals to government (or any large institution for that matter, although the problem is the most serious with the government), ‘leakage’ and ‘friction’ cause significant amounts of it to be lost. Since the kind of inflation that we are discussing has this effect, this must also be considered a negative.

Business cycle effect

Little known fact: central bank/fractional reserve bank inflation is the primary cause of the dreaded business cycle that plagues most modern economies. Here’s how. This kind of inflation is also known as credit expansion, because the new money generally begins its journey through the economy in the credit markets. Traditionally, central banks have favored government bond purchases as a conduit for expansion of the money supply[1]. These bonds are purchased on the secondary market, usually from large investment banks, rather than from the government’s treasury directly. This increased demand for government bonds operates to reduce the interest rate (or yield) on such bonds. It also operates to reduce the interest rate/yield in the credit markets generally. The non-central-bank capital that was tied up in the government bonds that the central bank purchases, is now freed up and redirected, usually towards increasing the demand for some other kind of investment, which then operates to reduce the interest rate/yield on that investment, and so on. Eventually, most of the new money will gradually leak out of the credit markets and enter the wider economy, but generally not before exerting a powerful downwards pressure on interest rates. This is why central banks use bond purchases as a tool when they want to lower the market’s interest rates: it works.

So, credit expansion results in inflationarily increasing demand in the credit markets, before increasing demand in the rest of the economy. The result is a lowered interest rate; the same thing that would occur if people, in a non-inflationary environment, decided to direct more of their monetary demand towards the credit/investment market, and less towards the consumer market. However, with credit expansion, there is no necessity that people actually reduce their consumption demand. In fact, there is reason to believe that credit expansion inflation causes people in general to increase their consumption demand. This results from the lower interest rates making saving/investment less lucrative, the inflation making cash holding more costly, and the illusion of prosperity that inflation creates among those who are less aware of the rising prices that it causes.  

Thus, we get a situation where both investment demand and consumption demand seem to be increasing. But how is this possible? Either resources are consumed in the present, or they are saved and then invested in an attempt to improve the effectiveness of future productive endeavors. It can’t be both. And indeed, it is not. What happens as a result of the credit expansion is a redirection of the resources destined for investment. The lower interest rates draw investment resources towards longer-term investments (such as R&D or expensive facilities/equipment that are only expected to pay off over a long period of time). At the same time, the increased monetary demand for consumer goods draws investment resources towards businesses/assets that are close to the final consumer (such as retail stores, restaurants, consumer tech companies, residential real estate, etc…)

So, this is where the resources are being redirected to, but where are they being redirected from? The all-important middle. The economy becomes schizophrenic; not knowing whether it is supposed to become more long-term oriented or more short-term oriented. Investment in the intermediate steps necessary to eventually turn a long-term investment into a series of goods ready for consumption is relatively neglected. A scramble for these, now underproduced, intermediate goods results in a bidding up of their prices. Those undertaking to bring long-term investments to fruition begin to worry that they may not have enough money to carry it through. They attempt to borrow more, which the central banks often, initially, enable via yet more credit expansion, at an increased rate to accommodate all the extra demand.

Eventually though, the party must come to an end. In order to avert a hyperinflation (one of the biggest disasters that could possibly befall a capitalist economy), the central bank must eventually halt or slow down the credit expansion. When it does, the credit markets tighten up and interest rate rise, thereby dooming many of the long-term investments undertaken during the expansionary period to unprofitability or loss. The expansionary boom turns to contractionary bust, and a period of recession/depression ensues.

During this period, businesses go bankrupt, jobs are lost, people’s houses are foreclosed. This period lasts until the economy has had a chance to adjust to the reality of the situation, after years of being misled by the false signals of the boom. Or, until the central bank foolishly decides to embark on another credit expansion, which often seems to help the situation in the short-term, but really is just setting the economy up for an even bigger crash down the road (for instance, in the US, credit expansion to ‘combat’ the 2000 burst of the tech bubble set the stage for the far worse 2008 financial crisis).

So, central bank inflation causes the business cycle, but is the business cycle positive or negative for power levels? It is almost certainly negative. The economic instability makes it more difficult for people to plan for the future, as the business cycle, which is entirely outside their control, could throw their economic lives into disarray at any moment. It could cause them to suddenly lose their jobs, or to suddenly lose a great deal of their savings. The latter is particularly cruel, because it is inflation that pushes people away from cash and safer investments and towards riskier investments, which in a significant inflation, are the only kind that allow their savings to grow in terms of purchasing power. Then, the inflation-caused business cycle proceeds to put these riskier investments in grave danger. It is almost as if the policy of central bank inflation were designed to make people feel more powerless over their economic futures. And as such, I must vociferously oppose it.

A better way

As we’ve shown, the current monetary/banking system is quite disempowering, and therefore, is not to be recommended. A better alternative to it would meet the following criteria: 1. It would eliminate or severely limit inflation. 2. It would ensure that people’s deposits weren’t constantly threatened by bank runs and bank insolvency.  3. The transition from the current system to it wouldn’t cause too much turmoil.

Luckily, there exists an alternate system, and a transition plan to get to it, that meets these criteria. It would work as follows:  first, the central bank whips up enough new cash to bring all of the banks’ reserve fractions on their customers’ checking and savings accounts to 100%. The banks are given this money in exchange for title to the loans that they had made with the checking and savings account funds that they had not held in reserve. The banks must henceforth remain on 100% reserve for these accounts.

Second, the government transfers all liability for its debt to the central bank, to be paid off as much as possible with the portfolio of loans just acquired from the private banks.

Finally, the government just needs to prohibit the central bank from creating any more new money. The result of all this will be a stable currency, rock solid banks, an end to credit expansion and their corresponding business cycles, and a debt-free government.

Objection: credit shortage

One objection which could be made to this system is that, by forcing banks to be on 100% reserves for their checking/savings accounts, the amount of credit available to the market will be significantly curtailed. Whereas before, banks could lend out 90% of the money in these accounts, now they must hold all of it as unproductive cash. This could cause problems for businesses and individuals who rely on bank loans.

This objection assumes that withdrawal-on-demand accounts (checking/savings) will remain as popular in a 100% reserve system, as they are in the current fractional reserve system. I believe this assumption to be inaccurate. On 100% reserves, banks would have to start charging customers for the service of holding their money for them (rather than recouping their costs by loaning out 90% of the money at interest).  This will likely prompt bank customers to look for alternate places to put their money. Low-risk, but interest-bearing, financial instruments such as Certificates of Deposit (CDs) would likely become more popular. Money in CDs cannot be withdrawn-on-demand; depositors must wait until the maturity date of the investment before being able to withdraw their money[2]. With these, it is clear that the depositor doesn’t have ownership of the money until the investment has matured. The inflationary duplication inherent in withdrawal-on-demand fractional reserve accounts is avoided with these instruments, while still allowing the bank to loan out the money on the depositors’ behalf at interest.

So basically, all that will change is that the reality of the situation will become more apparent to bank customers. In the 100% reserve system, bank customers will explicitly decide how much of their money they wish the banks to hold and to be available on-demand, and how much of it they wish the banks to lend out for them, with the knowledge that the money will not be available to them while it is tied up in loans. It will give individuals much more power and control over their economic affairs than either the old fractional reserve system, when bank runs were commonplace, or the modern central banking system, where constant, power-sapping inflation is the norm. This, I think, is well-worth giving up a little bit of credit availability for.

Objection: no more government debt  

Another objection that will likely be raised has to do with the way the government’s debt is handled in my plan. Because there is no guarantee that the assets acquired from the commercial banks in exchange for bringing them up to 100% reserves will be enough to pay off the entire national debt. Certainly not in the United States, where there are (as of January 2017) about $9 trillion in savings accounts[3], $1.9 trillion in checking accounts[4]. Take 90% of this as the approximate value of the assets to be acquired, and we reach about $9.8 trillion, less than half the total US national debt of $19.9 trillion[5].

So, government debt holders will most likely have to take a significant haircut. They will not be very happy about this, and the government’s credit rating will take a severe hit as a result. Perhaps the government will never be able to borrow at non-prohibitive interest rates ever again. But to this, I say: good! There is no good reason why governments should be perpetually in debt.  It costs a fortune in interest payments every year, sucks up savings that could have been more productively invested in the private economy, and encourages the ballooning of government by allowing politicians (in the short-term anyway) to engage in politically popular spending without politically unpopular tax increases.

Ah, but what if the government actually needs to make a real investment (such as an expensive piece of infrastructure)? Then wouldn’t it make sense for them to finance this with debt, like private companies do? It would; but there’s actually no need for governments to be building infrastructure. Private companies would do a better job of it anyway. This is something we will explore in a future post.

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[1] In the wake of the 2008 crisis, the US central bank broke from precedent and bought over $1 trillion worth of ‘troubled’ mortgage-backed securities held by a number of major financial institutions. Ordinarily though, they stick to government bonds.

[2] http://www.investopedia.com/terms/c/certificateofdeposit.asp

[3] https://fred.stlouisfed.org/series/WSAVNS

[4] https://fred.stlouisfed.org/series/TCDSL

[5] http://www.usdebtclock.org/

An Empowering System of Redistribution

In a free-market system, you are accorded a greater share of your society’s productive efforts, the better you succeed at giving the society’s consumers what they want. You could access a good share of the production by being a successful businessperson; which means taking charge of a portion of society’s production effort and directing it in a way that the consumers approve of. Or, you could sell your labor to such businesspeople, or to the consumers directly. The rarer and more in demand (valuable to the consumers) your skills are, the more money you will be able to earn with them.

The problem with this, when it comes to maximizing individual power levels (my political end goal), is that in order to make a good income on the free-market, one has to submit, to a certain extent, to the dictates of the consuming public. The free-market doesn’t reward you for doing what you want to do, it rewards you for doing what the consumers want you to do (whether you are a businessperson or a seller of labor). It is true that sometimes, by a happy coincidence, the two will line up. Most successful musicians, architects, or authors, for instance, would probably wish to practice their craft regardless of whether they were being paid for it or not; although the fact that they are catering to a consuming public will probably result in some differences to how specifically they practice it.

Unfortunately, many people’s passions will simply not coincide with practical ways for them to make money. The unadulterated, free-market system of distribution poses some problems for such people. They are faced with the choice of either pursuing their passion but foregoing access to a great deal of purchasing power as a result, or of doing something which they are not passionate about for the purposes of acquiring more purchasing power. Either way, these individuals are taking a power level hit: whether by losing some purchasing power or by losing some power over the expenditure of their own time and effort.

Is there anything that can be done about this that doesn’t involve overly compromising the free-market system of production? I believe there is. I call it pure redistribution. It involves taking a fixed portion of every citizen’s market income via taxation, and then dividing the proceeds up evenly amongst every citizen in the country. For example, Canada has a gross national income of about $1.6 trillion. Assuming that all of this could be taxed at a rate of 15%, and 30 million citizens to distribute amongst; it would come out to $8000 a year for every citizen (including children).

So, at the cost of imposing a tax at a level which should not harm production incentives too much, every citizen gets $8000 worth of free money every year. Although it would be difficult to live exclusively on such an income, it would certainly help a great deal in reducing the amount of work necessary to reach a living income. It could also serve as a nice top-up on any relatively low-paying job, helping to enhance the lifestyles of people working at these jobs.

Basically, this kind of redistribution provides a much-appreciated boost in purchasing power to those who have the most trouble acquiring it on the free-market, while doing little to impair the free-market system of production that imbues money with its purchasing power in the first place. Although the increased purchasing power of the poorer folks does come at the expense of reduced purchasing power for richer ones, one can say that the sum total of individual power in this society has increased. This is because people who struggle to make money on the free-market (poorer people) generally have to give up more power over their time/effort expenditure in exchange for each unit of additional purchasing power acquired on the market. Richer people, due to their superior skills and/or resources, generally get more purchasing power bang for their time/effort buck than poorer people. The pure redistribution thus results in a reallocation of purchasing power towards those for whom it tends to have a higher value (poorer people). For this reason, the policy must be considered a positive for individual power levels in the society where it is applied, and therefore is to be recommended.

Some might ask: ‘Why stop at a 15% income tax rate? Why not carry this lovely policy further by making it a higher rate? The rich can afford to pay more than 15%!’ Diminishing returns. Although the rich could afford to pay a higher rate, it is actually advantageous to let them keep most of their earnings for themselves. The more they get to keep, the less diluted their incentive to serve the consumers well. Also, more importantly, people who have become rich on the free-market tend to save and invest more of their income, and to do so more skillfully, than poorer people. And the more capital invested skillfully in this country, the higher the real wages for the average worker, and the lower the prices for consumer goods. Such investment is good for just about everybody, including relatively low wage workers and those who just want the free money that they already receive to command more purchasing power on the market. If the redistribution is carried too far, the harm to the economy that results from any forced redistribution will begin to exceed the benefits from the reallocation of power.

Although I of course don’t know that 15% specifically is the optimal rate, about 10% on top of the redistribution rate should be reserved to fund the other useful activities of government (such as defense and law/order). And it seems reasonable to suppose that a quarter is a clear and reasonable limit for governments’ share of people’s free-market incomes, one that if blown past, could eventually result in the imposing of counterproductively high rates.

Other kinds of redistribution?

The system of redistribution discussed above is very different from the system of ‘redistribution’ that governments and leftists of the present day tend to favour. In this system, purchasing power is disproportionately taken from rich people (as in my system, but more so), but rather than being reallocated to poorer people directly, it is used by the government to fund various ‘programs’ and ‘services’. These ‘free’ services, such as welfare, public education, and public healthcare, are intended to disproportionately benefit poorer people, and thus to affect a redistribution of resources in this manner.

This system has two main problems. Firstly, it is not as empowering to be given access to free services, as it is to be given the money necessary to purchase services of a similar quality on the market. The latter allows the recipient to allocate their purchasing power in the manner that they see fit; the former gives government bureaucrats this prerogative. Except that it doesn’t really, because the bureaucrats are answerable to their political masters, who in turn are answerable to the voting public, who in turn feel powerless because their individual votes often seem inconsequential. All this ‘power leakage’ results in a great deal of it being lost to ‘friction’, a result that could have been avoided had the purchasing power simply been allocated to the poorer person directly.

A second problem is that these government-operated ‘services’ are generally not as efficient (in terms of consumer satisfaction) as their free-market equivalents. This is because of the lack of monetary incentives and competition inherent in government service provision, which results in a far lower degree of responsiveness to consumer demand. 

For these reasons, the currently favored system of ‘redistribution’ is far less empowering to poorer people than the system of pure redistribution that I propose. Why, then, do leftists, who claim to love redistribution and poor people so much, not favour my far superior system? It is because most leftists actually love increasing the power of the government more than they love redistribution. They say they want to help poorer people, but they don’t actually trust these poorer people to help themselves if given the resources. They would rather have government use the resources to ‘help’ poorer people according to the government’s own plans. Their idea of helping poor people is the paternalistic one of forcing things upon them ‘for their own good’. It is in marked contrast to the idea of help via individual empowerment that the system of pure redistribution is grounded upon. Therefore, as someone whose ultimate political objective is individual empowerment, I must categorically reject the left’s notion of redistribution via government-provided service.

My End Goal of Political Action

What is the end goal of political action? This is a fundamentally important question, and yet it is one that is rarely answered by political commentators. If we don’t know what goal they’re aiming at, how can we know whether their recommendations are good or not? Only when both the end and the proposed means to achieve it are clearly laid out can we evaluate whether we agree with a particular political proposal or not.

As such, it is high time that I laid out my own political end goal, so that my subsequent policy proposals can be evaluated based on how well they advance this goal.

Empowerment as the end goal

For me, the ultimate political end goal is human empowerment. The Oxford Dictionary defines ‘power’ as: “The capacity or ability to direct or influence the behavior of others or the course of events.” Well, I think that this is a marvelous thing; the more of it that I, and the people I care about, possess, the better!

The more power that you possess, the more you can shape the world to better suit your individual preferences and desires. Since I believe that individuality is the most precious thing that we have, I believe that power, which allows us to better suit the external world to our individuality, is the second most precious thing. As such, I believe that maximizing the aggregate, individual power levels of the members of a group of humans, is the best thing that can possibly be done for that group.

Why not happiness?

‘Hold on!’ a critic might interject. ‘Power is only good as a means to the ultimate end of happiness. It should not be considered as an ultimate end in its own right.’

I disagree; I actually think that happiness is a pretty rubbish ultimate end to pursue. This is because happiness is a very slippery concept. There are no units of happiness, and it is impossible to say which of two people is ‘happier’ than the other, or even to determine whether a single person was happier at one point in their life than they were at another point.

Some hardcore science types will suggest that happiness is actually perfectly measurable; it’s simply a question of measuring the levels of the neurochemicals associated with this emotion (dopamine, endorphins, oxytocin, serotonin, etc…). But if achieving this kind of ‘chemical happiness’ were the ultimate end goal of human endeavor, then all people would need to live a perfect life would be some drugs. Just take a bunch of ecstasy and heroine, revel in the euphoria for a while, then leap off a tall building. Why not? Nothing in the ‘science’ tells us that we could do any better.

Those not down for such a drug bender suicide pact must admit that happiness is indeed a vague and slippery concept. By contrast, power is much more definite. Either one does, or one does not, have the option available to soar through the skies in a giant metal flying machine whilst sipping champagne. People of at least moderate means in the modern world have this option; people living in the past did not. Therefore, modern people are better off in this regard. See? Much easier than trying to compare happiness levels!

Why not freedom?

The libertarian-minded might ask why I make power, rather than freedom, the goal. Power, after all, can have a sinister side: the power of the consumer to choose whether he shall have orange or cranberry juice with breakfast is on the same spectrum as the power of the slave master over the lives of his slaves. When one prioritizes freedom over power, the pretensions of the slave master are cast aside, while the freedom of action of the consumer is preserved.

While this is all true, freedom is woefully incomplete as an end goal for political action. This is because being free from violence and coercion is only half the story. Without the positive ability to actually act on the world, such freedom is useless. The government may not actively prevent a poor man from owning a yacht, but without the resources to actually acquire one, such a permission is quite academic. Placing power as the goal recognizes that both freedom and aptitude/resources are necessary in order to shape the world to your liking. To focus on just one of these necessary aspects, and to ignore the other, seems a bit senseless to me.

Power for whom?

Alright, so human empowerment is the end goal. But who exactly is it that I wish to empower? Everyone in the world? No, that’s too broad. Only people living in Canada? No, that’s too narrow. I propose to set my target group as citizens of the developed countries in the Anglophone cultural sphere, including Canada, the United States, the United Kingdom, Ireland, Australia, and New Zealand. Why? Due to cultural and linguistic similarities, I generally sympathize more with citizens of these countries than I do with citizens of other countries. Of course, I care far more about my own empowerment, and the empowerment of those closest to me, than I do about the empowerment of everyone in the Anglosphere. But when writing political commentary with a broad target audience, one cannot just make proposals that will most benefit you and expect to be taken seriously. As such, the Anglosphere (where pretty much everyone can read English, the language of this blog) seemed like a logical grouping for my empowerment efforts.

  

The Case for an Abortion Policy Compromise

Should abortions be legal or not? The debate over this question has raged for decades, pitting ‘pro-life’ (criminalize abortion) against ‘pro-choice’ (legalize abortion) advocates. At present, it would seem that pro-choice has the upper hand, with abortion either fully legalized or subjected only to toothless legal restrictions (Britain, Sweden) throughout most of the developed (and post-communist) world.

In many of these countries where abortion is legal, a secondary debate arises: should governments pay for these abortions with taxpayer money? This debate is particularly fiery in the United States, where new president Donald Trump recently reinstated a ban on federal government funding going to international organizations which promote or provide abortions[1]. Trump and many other republican politicians have indicated that they wish to apply the same ban domestically as well, such that the controversial family planning organization, Planned Parenthood, which promotes and provides abortions, would no longer receive any federal funding[2].   

Pro-choice advocates were predictably outraged by Trump’s move; suggesting that it will put the lives and health of millions of women around the world at risk[3]. This is in keeping with the left-wing tendency to view mere ‘negative liberty’ (freedom from coercive interference) as insufficient, and to insist on securing ‘positive liberty’ (actual ability to engage in a certain action) for all with respects to their preferred courses of action[4]. In this case, many on the left see no real difference between abortion being formally illegal, and abortion being ‘unacceptably’ difficult to access for women with a lack of resources. In order to realize every woman’s supposed ‘right to choose’ whether to have an abortion or not, they insist that the government help fund abortions for low income women.

Thus, if the pro-choice advocates had their way, not only would the pro-life crowd’s desire to criminalize abortion be frustrated, but these same pro-life people would be forced to actively fund, as taxpayers, the abortions which they despise. To deliver such a political double-whammy to these poor folks seems, to me, to be unnecessarily cruel…

Does that mean that I agree with the pro-life position? No; personally, I believe that abortion should be legal. But unlike the pro-choice fanatics, I can understand why pro-life advocates believe the things they do. A human fetus is, after all, a living, human entity, and to get an abortion is to terminate the life of this entity. But for me, this fact is not decisive. I generally have more sympathy for the mother saddled with an unwanted child than I do for the parasitic human-in-development that is growing inside of her. Also, unwanted children are probably more likely to be raised poorly than wanted ones, which in turn makes them more likely to grow up to be menaces to, or parasitic members of, society. That said, I can certainly understand why people with a strong desire to protect all forms of human life (especially if they believe it their religious duty to do so), would come down on the other side of this issue.

It comes down to a question of respect. The pro-choice advocates have won the main contest; to attempt to add insult to injury for the pro-lifers by pushing for government funding of abortion just strikes me as disrespectful. For controversial issues like this, where both sides have valid points, it just creates unnecessary antagonism and polarization when one side pushes for total victory, as the pro-choicers have done. For such issues, a compromise is warranted, and in this case, the best compromise is for abortion to be legal, but for governments to avoid funding it.

What of the pro-choice objection that such a compromise would make abortion effectively inaccessible to low income women? In the U.S, an abortion currently costs about $500 on average[5]. This is certainly not cheap, but neither is it astronomical for a procedure that most women will rarely, if ever, have occasion to undertake. My plan for pure cash redistribution by the government (as outlined elsewhere on this blog) would help low income women with this (and the cost of the procedure would probably fall significantly in a more free-market-oriented medical system). But if pro-choice advocates are still worried, they are perfectly free to help these women out themselves! They should just dig out their pocketbooks and make a donation to a family-planning charity such as Planned Parenthood. If they can’t be bothered to do this, then it is questionable how committed they really are to the plight of low income women seeking abortions.

In sum, when it comes to abortion policy, there are three basic positions: 1. The government discourages abortion (by making it illegal). 2. The government encourages abortion (by helping to fund it). 3. The government neither encourages nor discourages it (by making it legal but not funding it). Only the third position demonstrates good faith and respect for the views of the opposing side on this controversial issue. Only acceptance of this compromise position could possibly bridge the bitter divide between the two sides; otherwise, all we can expect is a perpetual continuation of the war between feuding extremists.

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[1] http://www.usatoday.com/story/news/politics/onpolitics/2017/01/30/president-trump-executive-actions-complete-list-so-far-orders/97229452/

[2] http://www.politifact.com/truth-o-meter/promises/trumpometer/promise/1357/defund-planned-parenthood/

[3] https://www.buzzfeed.com/jinamoore/trump-just-slapped-an-anti-abortion-rule-on-foreign-aid?utm_term=.eoXmy0y5W1#.lrJ7VXVyW0

[4] https://plato.stanford.edu/entries/liberty-positive-negative/

[5] https://clearhealthcosts.com/blog/2014/06/much-abortion-cost-draft-theresas/