Is 'Tax Dodging' Immoral?

            Recently, I was exposed to an interactive piece on the state-owned Canadian Broadcasting Corporation’s (CBC) website about how rich people use tax havens in order to pay less tax (http://www.cbc.ca/news/interactives/offshore-tax-havens/). Throughout the piece, people who do this are labelled “tax dodgers”, “tax cheats”, and “ethically challenged”. Are these labels justified? Is the practice of employing, even ‘illegal’, means in order to pay less taxes morally wrong?

            

           Before attempting to answer this question, let us first recall what I concluded in my earlier post on Morality and Utility (http://thinkingabouthumansociety.blogspot.ca/2013/03/morality-and-utility.html):

“1. At its root, any good moral code must be based on some kind of utilitarianism.

2. The moral code that, if followed consistently by many people in a society, results in the greatest facilitation of peace and increasing material prosperity, is the one that is objectively good, except when judged by murder-loving psychopaths or ascetics.

3. Though the root of a good moral code is ultimately utilitarianism, the only way that a good moral code can have desirable utilitarian effects is when it is treated not just as a means to greater utility, but as an end in and of itself by individual actors. This works with human psychology, in that it seems that humans feel a need for some kind of moral code so that by following it, they can think of themselves as ‘good’, as ‘righteous’, or as ‘heroes’. The job of the social thinker is to make sure that a moral code with positive utilitarian effects fulfils this role rather than one with negative utilitarian effects.”

            

           Turning now to taxation, there are three points we must keep in mind when considering it. Regardless of what the proceeds of taxation are used for, the act of taxation itself is:

1. An aggressive, physically coercive act.

2. If we believe at all in private property rights, taxation is a violation of them, being a coercive expropriation of the private property of individuals by the government.

3. Thus, taxation is not consonant with the pure principles of individual freedom and private property.

            

            Turning now to the moral status of ‘dodging’ taxes that an individual has been assessed for, assuming that the political system assessing the taxes is a democracy of some kind, there are essentially three options:

1. It is a citizen’s moral duty to pay whatever taxes the democratic government of the territorial area he is living in assesses him for, and immoral to try to get out of paying these assessed taxes.

2. It is a citizen’s moral duty to pay taxes that will support any beneficial actions of government, but not to pay taxes that will support harmful or unproductive actions of government.

3. The act of taxation, being coercive and a violation of private property rights, is immoral itself, so trying to get out of paying taxes cannot be immoral.

            

           Let us assess these options in turn. Option #1 is the one adopted by the CBC piece mentioned above and is the one that most democratic governments in the modern world push for. For anyone who believes in the beneficial effects of individual freedom and private property though, this option is very problematic. A good moral code is one based on a general principle that, if followed consistently, will result in subjectively better results for most members of the human race than the following of any other such moral code. As any reader who has read a few of the posts on this blog will know, I am of the opinion that the general principle of individual freedom and private property is, on the whole, much more conducive to human peace, prosperity, and well-being, than the rival general principles of egalitarianism and socialism, or of elitism and special political privileges. (for more on this, see: http://thinkingabouthumansociety.blogspot.ca/2013/04/dynamic-versus-static-political-ideals.html).

            

           Option #1, due to the nature of taxation discussed above, is not consonant with the general principle of individual freedom and private property. Rather, it adheres to the social-democratic/democratic absolutist principle that, so long as the leaders of government are elected by ‘the people’, they have the right to violate individual freedom and private property rights at will, with no limits. The individual supposedly has a moral duty to obey ‘the people’s representatives’, and if he does not like their commands, he must wait for the next election and vote for some other such representative, in the hopes that other people will join him in his protest.

            

           Option #1 basically implies that whatever the majority’s ‘representatives’ decide to impose on a minority is, by definition, morally right, and it is morally wrong for the minority to resist it. There is no logical reason why this monstrous principle should be confined purely to taxation and economic issues. If a democratic government, for instance, declares ‘sodomy’ (homosexuality) to be a crime because it is allegedly ‘immoral’, are homosexual people by definition immoral because the democratic government decrees it so? The same applies to taxation. If an individual thinks that he should be able to keep at least 80% of his income for himself, but the government says otherwise and wants to take more than 20% in taxation, is it immoral for the individual to try to get out of paying the extra taxes?

            

           Advocates of the morality of any level of taxation will argue that the difference between these two cases is that taxes are paid to fund ‘services’ that the government provides, and thus everyone must pay his ‘fair share’ in order to defray the costs of these government ‘services’. But why is whatever the elected representatives decide to impose on people as taxation necessarily their ‘fair share’? How can you determine someone’s ‘fair share’ of the costs of a service that are provided whether he wants the service or not? What could possibly be the ‘fair share’, besides nothing, which an absolute pacifist should contribute to his government’s military expenditures, or which parents who sends their children to private school should contribute to their government’s public schooling expenditures? If a modern Robin Hood is robbing the houses of people living in a rich area in order to distribute the loot among slum dwellers, is a rich person who takes better security precautions and prevents his house from being robbed, immoral for being guilty of avoiding paying his ‘fair share’ of the Robin Hood dues? How about if the robber is of a different bent and plans to use the stolen funds to fund a spectacular fireworks display to entertain the inhabitants of the rich area, is the security-conscious rich person in this case guilty and immoral for not paying his ‘fair share’?

            

           To answer any of these questions in the affirmative would be to confirm either the general principle of egalitarianism or of elitism and special privileges. For those who think that the general principle of individual freedom and private property is, on the whole, more conducive to human well-being than those others, Option #1 is unacceptable.

            

           Option #2 is trickier to dispose of, even for those who generally believe in the freedom principle, but I think that it is still not the right option. In fact, Ludwig von Mises, a staunch defender of freedom and private property, seemed to have believed in Option #2. He objected to the statement that ‘government is a necessary evil’, preferring to compare the government to sulfuric acid, useful and eminently suitable for some purposes (defence, law, and order), but completely unsuitable and destructive when used for other purposes (general economic interventionism). Though he did not talk about how taxes should be assessed in his ideal free society, he implied, with the argument above, that any taxes levied to fund useful government activities would indeed be moral.

            

           The main problem with Option #2 is that it is too ad hoc and situational to serve as the basis for a good moral code. In order to serve its purpose as a behaviour-modifier and in order for it to be accepted by the human mind as a fixed standard for evaluating actions, a moral code must be consistent, relatively simple, and based on universal, general principles. Accepting Option #2 essentially means agreeing with the statement that: ‘robbery is immoral and people may properly take steps to avoid it, except when a government does it and they use the proceeds for a good cause, then it is moral to rob and it is immoral to try to avoid this robbery’.

            

           This statement, if it can be demonstrated that the positive effects of the good cause outweighs the negative effects of the taxation levy, does indeed adhere to the utilitarian principle for evaluating the morality of actions. The problem with it is that it does not affirm a universal-enough general principle to form the basis for a behaviourally-useful moral code, which must be consistent and relatively simple. It also gives the cloak of morality, even if only temporarily, to anyone who proclaims that the coercive measure he is proposing would be in ‘the general interest’.

            

            Thus, we are left with Option #3: declaring taxation to be an inherently immoral action, and thus finding no moral fault with the person who seeks to avoid these taxes. This is the option that anarchists would choose unhesitatingly, as declaring taxation to be immoral leads to the government being declared an immoral institution, which anarchists want to completely eliminate anyway. For minarchists like myself though, who think that some limited government interventions, particularly in defence, law, and order, and perhaps to provide a minimal social safety net, could be useful and beneficial to humanity, it becomes more complicated.

            

           The answer, I think, is to somewhat separate (though not completely separate), policy from morality. For example, I think that while taxation, being an aggressive coercive act and thus not consonant with the generally beneficial general principle of individual freedom and private property, should be labelled immoral, if the proceeds are used to fund courts and police to keep potential life and property violators (criminals) at bay, this can be considered inflicting a lesser evil to fight a greater one. Similarly, if the  proceeds of the immoral taxation were used to fund the maintenance of a bare-bones social safety net, whose sole purpose was to guarantee that people will not die due to poverty (unless perhaps they have a disease that is ludicrously expensive to cure or something), than I would also consider this to be inflicting a lesser evil (coercive taxation) to fight a greater one (the possibility of poor people dying in the streets and the political ammunition this gives to egalitarians who trumpet this theoretical possibility in order to mislead people into supporting their egalitarian schemes).

            

            Thus, contrary to Mises, I think that the concept of government action being an ‘occasionally useful evil’ is a proper one. I would not join the ad hoc utilitarians who claim that ‘whenever I deem a certain action to be useful to ‘society’, it is by definition moral’, nor would I join the moralistic anarchists who claim that morality, based on the pure principle of individual freedom and private property, must always trump expediency in policy-making. I would not even join rule utilitarians like Mises who imply that, because the government confining its activities to defence, law, and order can be formulated as a general rule that is conducive to human well-being, any governmental actions associated with providing defence, law, and order are by definition moral.

Rather, I would adopt the deepest form of rule utilitarianism as a basis for a code of political morality (ie. based on the pure general principle of individual freedom and private property). But, for policy decisions, I would adopt a slightly less deep form of rule utilitarianism to aid in making decisions, allowing exceptions to the pure general principle of individual freedom and private property, as long as these exceptions can be formulated as general principles themselves that can be demonstrated to be beneficial and that do not pose too great a danger of being used as a precedent for more and more exceptions to the pure general principle. Allowing the government to control the defence and legal sectors, as well as perhaps to provide a minimal social safety net, could be some such limited exceptions to the pure general principle of individual freedom and private property that can be formulated as general principles themselves.  

            

           An advantage of this formulation is that, if the moral code is adopted by many members of the populace, it will hopefully make people think twice before making proposals that will violate individual freedom and private property, in the name of the so-called ‘common good’. Another advantage is that we can affirm the general immorality of physical coercion and taxation, without necessarily committing ourselves to following this condemnation to its logical policy conclusion: anarchism, which may not be the way of organizing society that is the most conducive to the prosperity and well-being of humanity. Rather, the immorality of a government measure (the fact that it violates the pure general principle of individual freedom and private property) will hopefully present itself as a cost of the measure to most people, while not necessarily having to override all of the benefits to be expected of the measure.

            

           Thus, what of the avoider of taxes, what is his moral status? We must conclude, based on the foregoing, that the label of immorality should never be attached to his actions. Even if it could be demonstrated that the government measures funded by the taxation assessed on the populace were more generally beneficial to humanity than harmful, rather than at present where most government measures funded by their excessive taxation levies are unnecessary or downright harmful, the label of immorality should still not be attached to tax avoidance. To call tax avoidance immoral is to deny the fundamental general principle of individual freedom and private property, that individuals should be free from physical coercion and their legitimate private property should not be expropriated. This fundamental general principle is the one that I think must underlie the moral code that would be the most useful and beneficial code for the peace, prosperity, and well-being of humanity in general.

If on a policy-level, we feel that a government measure funded through taxation would be generally useful on a long-term basis, we need not leap to calling taxation moral and tax avoiders immoral, thus opening the floodgates to the degeneration of political morality. Rather, we should treat taxation as an evil, but as an occasionally useful evil, and expect government tax collectors to treat it as such, not act as if they had the moral high ground. One could argue that defeating the Axis powers militarily in WWII was something that, on net, was beneficial to the world. But that does not mean that one has to argue that the killing of German, Japanese, and Italian civilian that necessarily occurred during the war was morally justifiable. The end does not  justify the means, though sometimes it is best to pursue the end anyway. A beneficial end does not automatically make any means employed towards that end morally good themselves. This is how taxation for, on net, beneficial government ‘services’ should be treated: as immoral means employed towards a beneficial end. No matter what the end, the victims of the immoral means should not be labelled immoral for resisting these means. Therefore, tax avoidance is not immoral, and the CBC writers responsible for the piece on tax havens need to reconfigure their moral compasses.            

               

  

Dissecting 'Rightist' Statism

            ‘Rightist’ Statism, the ideology that politicians and ideologues considered to be ‘on the right’ of the political spectrum use to justify government intervention, consists of three main pillars: legislated ‘morality’, nationalism, and conservatism. We will examine and critique these pillars in this post to see what ‘right-wing’ statism is all about and why I think it is best to avoid most of it.

1. Legislated ‘morality’:

            One important pillar of right-wing statism is legislated ‘morality’, also known as socially conservative policies. According to this idea, it is the job of the State to ensure that people adhere to some code of personal morality, usually based on a religion. The result is a series of what libertarians call ‘victimless crime’ legislation: legislation that makes some personal behaviors which don’t involve a physical transgression on the person or property of other citizens illegal, restricted, and punishable. Prohibition of recreational drugs and restrictions on marriage between gay people are examples of such legislation.

            

           There are two main problems with such legislation. The first is that the subjective utility of the person whose activities are being restricted is certainly being reduced, for the sake of the questionable benefits of busy bodies feeling that their neighbours are ‘more moral’ now. Though such a statement cannot be made with scientific precision as subjective utility cannot be measured or compared interpersonally, I would venture to guess that the gay person who is prevented from marrying their partner, or the recreational enjoyer of marijuana from indulging in their pastime, are more injured than busy bodies being slightly more satisfied with the ‘good morals’ of their neighbours as a result of the legislation are benefitted.  

            

           The second main problem is the general principle such legislation embodies, or the precedents it sets for further government action. Once it is admitted that ‘personal morality police’ is a legitimate function of government, the ideological way is cleared for all kinds of tyrannical legislation. Forcing a particular religion on the populace, prohibiting the consumption of alcoholic beverages for being ‘immoral’, and even prohibiting certain classes of people from wearing certain styles of clothing through ‘sumptuary laws’ are all extensions of this general principle that governments have tried in the past. Prohibiting ‘unhealthy’ foods, or violent video games and movies, or pornography, are other ways that governments could extend this general principle, to say nothing about the possible further extension of the principle to political and cultural statements, censoring those that are deemed ‘immoral’.

            

           Ultimately, personal morality just seems too arbitrary to be profitably imposed by force, as opposed to the minimalist moral code that protects people’s persons and properties against physical violence, which is easy to define and the near-consistent following of which can be demonstrated to be materially beneficial for almost everyone in society. When a version of personal morality is to be imposed by force, the question always is: whose version of personal morality? The answer will be the loudest political interest group that manages to capture a share of political power, and there is no reason to believe that their version of personal morality is more worthy of being imposed on others by force than anyone else’s, to say the least.

2. Nationalism:

            Nationalism can be divided into two sub-categories: ethnic nationalism and civic nationalism. Ethnic nationalism is an ideology that says that the interests of ‘your ethnic group’ (however that is defined) takes precedence over the interests of any ‘other ethnic group’, and that one should usually try to advance the interests of your ethnic group even if by so doing the interests of other ethnic groups are demonstrably harmed. Civic nationalism is similar, but rather than ethnic groups, it refers to ‘your country (territorial political grouping)’ and any ‘other country (territorial political grouping)’. For example, French ethnic nationalism would be concerned with the French ethnic group, probably meaning French-speaking, light-skinned people whose families have inhabited the territory in the political grouping known as France for a relatively long period of time (although the concept of ethnicity is largely not grounded in biology and thus is quite malleable). French civic nationalism, on the other hand, would be concerned with everyone living and accepted as citizens in the territorial political grouping known as France, regardless of their ancestry, mother-tongue, or skin colour.

            

           In either case, those who identify with ‘right-wing’ ideology tend to be proponents of one of these nationalisms, or sometimes both. An example of an ethnic nationalist policy would be forcing the language of the majority ethnic group on the minority ethnic groups living in the country through public schooling, or the Swiss policy of banning minarets on any mosques that might be built. An example of a civic nationalist policy would be protectionism through tariff barriers, supposedly in order to develop certain industries in that country.

            

           These nationalist ideologies are often used to criticize free-market ideals because, it is alleged, putting these ideals in place might not immediately benefit the ethnic group or country of the criticizer. It is possible for there to be some truth in this statement, for the simple reason that ethnic groups and countries are not analytical units in economic theory. Free-market economic theory concerns itself with the individual, a grouping of individuals combined for a common purpose known as a firm, corporation, or association, and with the world market society as a whole. It does not say that economic freedom will especially benefit ethnic group A over ethnic group B, or territorial political grouping A over territorial political grouping B. It says that economic freedom will, in the long-run, tend to benefit the material interests of the world market society and the individuals who constitute it, over any other form of economic/political arrangement.

            

           The problem with nationalist ideologies intellectually is that they tend to be short-sighted and hypocritical. This is because they ignore the long-term consequences of their nationalist ideologies if they were universalized and nationalist policies were being carried out all over the world. For instance, take protectionist policies. Proponents of protectionism imply that members of their territorial political grouping should not be satisfied with the place that their territory will be assigned by market forces in a free-market, international division of labour, world market society. Rather, they want ‘their’ countries to develop certain kinds of industries which they deem ‘superior’, even if to do so they must put up tariff barriers to keep out ‘foreign’ competition in those industries. Nowadays, high-end manufacturing and scientific industries seem to be the protectionists’ industries of choice. The problem with this is that the whole point of an international division of labour, or any division of labour for that manner, is so that different people and different geographical areas can specialize in different things, and then can exchange their respective products. If every country has a copy of the industries of every other, kept artificially profitable through competition-excluding tariff barriers, than there’s no more international division of labour, and everyone is poorer as a result due to less specialization and less efficient utilization of the earth’s land and natural resources.

           

           I am not going to talk about protectionism too much more here, mainly because I have discussed it at length in a previous post, found here: http://thinkingabouthumansociety.blogspot.ca/2013/03/the-dark-side-of-historical-prosperity.html

            

           Here, suffice it to say that nationalist policies must, by their very nature, always be sectional policies: policies designed to benefit only a section of humanity. Fighting for these sectional advantages through policies that undermine the free-market order make the people of the world as a whole poorer, and would make the people of the world a lot poorer if nationalist policies were universalized and pursued consistently by every territorial political grouping.

3. Conservatism:

            ‘Right-wing’ and ‘Conservative’ seem to be almost synonymous in today’s political vocabulary, and many people identified as ‘right-wing’ adopt the title of ‘conservative’ with pride. What exactly does conservatism mean as an ideology though?

            

           From my understanding of it, conservatism seems to suggest that rapid change is to be avoided and that political ‘traditions’ must have something good in them and should not be tampered with lightly. Thus, American Conservatives often praise the ‘founding fathers’ of the United States and the Constitution that they drafted, and advocate for a return to their political ideals. Canadian Conservatives often sought to have closer political and cultural ties with the imperial/former imperial mother country of Great Britain, and nowadays want to keep the British monarchical traditions going strong in Canada.

            

           The tricky thing about conservatism is that it does not really represent a set of concrete political ideals, but rather an aversion to rapid change and a championing of whatever the political ‘tradition’ of their country happens to be. Thus, the original Conservatives, the ‘Tories’ of late 17^th century and early 18^th century Britain, sought a return to the days of hereditary absolute monarchy, as opposed to the ‘Whigs’ who supported the ‘Glorious Revolution ‘and constitutional monarchy. Absolute monarchy was not the political tradition on which the United States was founded, but rather limited-government, liberal republicanism, so it is this ideology that the American Conservatives of today are said to favor. However, American Conservatives also seem to be enamoured with presidents such as Abraham Lincoln, a protectionist, anti-states’ rights president, and Theodore Roosevelt, a ‘trust-busting’, imperialistic president, not exactly the governing styles that the founding fathers had in mind.       

              

           Thus, if we were to be ungenerous, we could just call conservatism an ideology that calls for slavish devotion to an arbitrary selection of the ‘traditions’ of an arbitrarily chosen historical period in the past. If we were to be more generous though, we could interpret conservatism as an ideology which seeks out what policies ‘worked’ in the past and calls for their implementation in the present. We could also interpret it as an ideology that recognizes that rapid societal changes are usually bad news, and that tried and true principles and slow progress are safer than schemes which seek to rapidly ‘remake’ society.

            

           To be fair to conservatism, it is this generous interpretation that we will focus our critique on. As for the first point, finding out what ‘worked’ in the past is simply another way of saying that empirical historical studies can be useful for social thinkers. I would agree with this statement: empirical historical studies, coupled with logical theorizing, can help keep the theory grounded in reality. Also, as I have noted in my issue analyses, social theories only come up with qualitative effects, not quantitative ones, and thus empirical research, though never completely decisive, can help suggest what magnitudes of the qualitative effects predicted tend to appear. The problem is that conservative ideologies tend to lead social thinkers to be too fixated on what happened in the past, to the detriment of their logical theorizing and their consistent recognition of the difference between correlation and causation.

The American Conservatives’ love for the founding fathers, Abraham Lincoln, and Theodore Roosevelt mentioned above is a good example of what being overly fixated on the past can do. Ideologically, the policies of Lincoln and Teddy Roosevelt were not logical outgrowths of the ideals of the founding fathers. But, for the Conservative fixated on the past, the founding fathers’ ideology seem to have ‘worked’ in one historical period, while Lincoln and Roosevelt’s ideologies seem to have ‘worked’ in another. But this is not helpful for deciding on which political ideology to adopt in the present, should it be the founding fathers’ limited government ideology, or Lincoln, Teddy Roosevelt, and their successors’ bigger government ideology? Which is, as American Conservatives like to put it, ‘more American’? Ultimately, only social and economic theories and targeted historical research to illustrate them and/or to help ascertain what the magnitude of their predicted effects are likely to be can decide this question, a procedure which conservative ideology is generally not conducive to.

            

           As for the second point, it is true that in the past, many political attempts at rapid societal changes, such as the radical stages of the French Revolution or the Bolshevik Revolution in Russia, were bad news. But the rapid socio-economic changes, made possible by a certain political environment, which constituted the Industrial Revolution, and the pretty radical, for the time, American Revolution and experiment in republican self-government itself, are examples of rapid societal changes that probably worked out for the better. It is somewhat ironic that modern American Conservatives take the ideals of the founding fathers and their young, radical, experimental new republican country as the ‘traditions’ to be preserved if they are so against rapid societal and political changes.  

             

           In general though, there is definitely something to be said for the conservative emphasis on ‘tried and true’ principles and slow progress, as opposed to radical social schemes. I am very aware that the general principles represented by policies are very important, and that policies that set up a dangerous general principle are dangerous themselves. However, it is possible that the general political principles currently being applied are dangerous and bad principles, and thus should be reversed and replaced by better ones. For example, take Britain in 1980. Since the late 1940s, Britain had been run by both Labour and Conservative governments, whose policies were heavily influenced by social-democratic ideology and political principles. When Margaret Thatcher, as leader of the Conservative Party, became Prime Minister in 1980, rhetorically denounced social-democratic political principles, and made some fairly significant changes in policy direction, this was by no means a ‘conservative’ move. Some might say it was a ‘radical’ shift away from the prevalent political principles of the last three decades. Whether the old social-democratic principles or the new Thatcherite political principles were ultimately better then becomes the question for social thinkers.

            

           All this is to say that it is their theoretical and empirical soundness rather than their oldness or ‘tried and true-ness’ that makes a political principle, such as the sanctity of private property, worth preserving. A very old political principle, found in Ancient Egypt in the 3000s BC, that the ruler has the right to use slave labour to build himself a ridiculously expensive tomb, is not, I think worth preserving just because it is old, or because subtle variations of it were adopted by many absolute despots throughout human history.

            

          Thus, whatever is true in conservatism, can be adopted quite easily into social thinking by just recognising that material progress takes some time, even given the right institutional conditions, that empirical historical research can be useful, and that logically sound general principles should not be compromised based on political whim. The rest can be profitably discarded.        

             

             

Dissecting 'Leftist' Statism

            ‘Leftist’ Statism, the ideology that politicians and ideologues considered to be ‘on the left’ of the political spectrum use to justify government intervention, consists of three main pillars: belief in extensive government control over business, egalitarianism, and Social Safety Net-ism. We will examine and critique these pillars in this post to see what ‘left-wing’ statism is all about and why I think it is best to avoid most of it.

1. Government control over business:

            Leftist statists generally believe that government should be relatively heavily involved in the business world, whether through ownership of government enterprises, nationalization of industries, or regulation of otherwise private businesses. Some justify this on Marxist grounds, arguing that private business exploits their workers and/or rip-offs their customers regularly. Some justify it by pointing to positive and negative externalities, and in recent years, environmentalism has been used to justify government ownership and regulation.

The Marxist justification rests on the notion of ‘economic power’ being just as bad if not worse than power to inflict physical damage, which I am critical of here: http://thinkingabouthumansociety.blogspot.ca/2013/04/why-physical-violence-is-useful-basic.html    

The general externalities justification can be valid in some cases, but must be used with care and is liable to be abused, which I discuss here: http://thinkingabouthumansociety.blogspot.ca/2013/03/economic-externalities-raison-detre-for.html

The environmentalist justification is generally overplayed by leftists, and there are many better ways besides heavy handed government intervention to deal with any environmental problems that might arise, which I discuss in the series of posts starting here: http://thinkingabouthumansociety.blogspot.ca/2013/03/thoughts-on-environmentalism-general.html

However it is justified, whether there is some truth to the justifications or not, there are certain significant disadvantages of government interventions with business and government ownership of businesses which cannot be dismissed lightly by anyone seeking to make an informed decision on whether to support economic freedom or government interventionism in a particular case. These apply to any government-provided service that can be provided by private enterprise, and to a lesser extent to government regulation of private business, which is when the government arrogates to itself a portion of the ownership/management functions of an otherwise privately-owned business. They are:

1. Lack of market pricing for the government service and less importance placed on profit-and-loss calculations impairs the processes of capitalistic economic calculation that serve as a guide to private business. Political considerations (what will be popular or allow the incumbent government to maintain power) will correspondingly play a greater role in decision-making (for more on the benefits of economic calculation, see tip 5 here: http://thinkingabouthumansociety.blogspot.ca/2013/02/5.html).

2. The funds necessary to start and usually to continue operating the government enterprise are collected through taxation levies on the population. This will tend to lead to a more cavalier use of the initial ‘investment’ funds than private business would, who only receive investment funds by convincing investors that it is a promising investment, well-worth taking a risk on. In addition, when gathering private investment funds, the funds available are limited by the willingness of investors to put their money in one particular venture rather than in any other. When levying taxation money to fund a government service though, it is impossible to know exactly how much to levy to fund that particular service over other government services, or over leaving the money to private individuals. The willingness of investors and their consideration of the prospects for profit of a particular venture over any other sets a limit to the amount of private investment going into any enterprise, but this limit does not exist for government services. Also, the taxation levy will generally fall more heavily on the funds of richer people, which will tend to undermine incentives to produce for the consumers and will most likely undermine capital accumulation (discussed in more detail here: http://thinkingabouthumansociety.blogspot.ca/2013/03/issue-analysis-higher-taxes-on-wealthy.html)

3. Either through legislation or through the unfair advantage of being able to get funding through coercive taxation levies, government enterprises are able to legislate away (by prohibiting competition) or drive away all of their private competitors. As a result, not faced with fierce competition as private enterprises are, government enterprises are able to be more lacklustre and less cost effective in their service to the consumers.

4. When it comes to pricing, government enterprises tend to either charge subsidized prices, below what would have been the market price for the service, or monopoly prices, above what would have been the competitive market price for the service due to their legal or quasi-legal monopoly position in the industry. If they charge below-market, subsidized prices, the service is not allocated efficiently to the consumers who want it most urgently, and shortages result because of the government artificially stimulating demand without an increase in supply. ‘Free’ roads are a good example of this, and constant traffic jams their logical result. If the government charges monopoly prices in order to try not to run too big a deficit to be paid for by taxpayer money, then access to the service is artificially reduced below what it otherwise would have been if free-market competition had been allowed to operate to reduce costs and prices, and improve quality, in the industry, as it so often does.  

            

           The main error in this aspect of leftist, statist ideology is to either ignore, deny, or unjustifiably downplay these important disadvantages of government ownership of business.

(Note: For a great, succinct critique of government-provided services, check out the following excerpt from Murray Rothbard’s Power and Market, found here: http://mises.org/daily/1471)

2. Egalitarianism:

            There is no getting around the fact that something about an inequality of material wealth and income among members of a society just bothers leftist statists, and thus egalitarianism becomes a major pillar of their ideology. One can sometimes convince holders of this ideology that a certain degree of inequality of material wealth and income is necessary in a prosperous society to maintain incentives to produce for the consumers and such, but they will tend not to be happy about it and will constantly seek ways to reduce it.

             

           There is certainly something to be said for considering more material equality among members of a society, other things equal, as a good thing. Though we cannot say so with scientific certainty, it is likely that a billionaire accumulating another billion dollars would result in less of an increase in general happiness than 10000 people with modest incomes being able to accumulate an extra hundred-thousand dollars each. The problem is that, unless this change in income distribution occurs through the play of market forces, other things are necessarily not equal. If it is brought about through government tax and transfer policies, then incentives to produce for the consumers and capital accumulation are reduced, while harmful government bloat is encouraged, all resulting in a tendency towards a decline in the material standards of living of all members in a society. For a full discussion of this, see: http://thinkingabouthumansociety.blogspot.ca/2013/03/issue-analysis-higher-taxes-on-wealthy.html

            

           However, even if an egalitarian were to recognize these negative effects of egalitarian government policies (which most do not), the question remains: how highly does the social thinker evaluate egalitarianism, taken on its own? More specifically: how much societal material wealth is the social thinker willing to sacrifice in pursuit of egalitarianism?

            

           To these questions, I, personally, would respond: egalitarianism is generally overrated as a good. if we are to value ‘fairness’ in the distribution of material goods as a good in its own right, what’s wrong with market-meritocracy (reward through ability to serve the consumers) as a standard? Most egalitarians probably wouldn’t be convinced to change their views because of this answer, and I wouldn’t really expect them to. Whether a more egalitarian distribution of material goods or a more market-meritocratic distribution of material goods (divorced for now from the respective consequences of their implementation) is more ‘fair’ is, I think, a bit of a subjective question. For whatever reason, I think the latter is fairer, while for whatever reason, others think the former is fairer. I don’t think that there’s a rational way, divorced from the utilitarian effects of the implementation of these ideals, of evaluating which standard of distribution is fairer, just as there’s no rational way, divorced from say, their respective health effects, of evaluating whether chocolate or vanilla ice cream is ‘better’. The answers will change depending on whose subjective preferences are being consulted.

            

           How then, to critique the egalitarian aspect of leftist statist ideology? Even if we can’t ultimately critique people’s subjective evaluations of egalitarianism as an isolated good, we can critique egalitarianism based on the other utilitarian effects of its implementation through the coercive power of government, which we have done above. We can also critique the conviction, found among many, though perhaps not all, egalitarians, which holds that egalitarianism, is objectively, morally better than any other standard for evaluating the distribution of material goods among members of a society. These people are certainly entitled to their opinion, but at the end of the day it must be recognized that this is merely a value judgement that not everyone accepts. As such, it should not be employed as some kind of intellectual trump-card, used to banish any objections to egalitarian policies by merely proclaiming them to be ‘immoral’.

3. Social Safety Net-ism:

            Social Safety Net-ism is the doctrine that government has a right and a duty to ensure, using funds levied from taxpayers, that people living in the territory under their rule do not die or suffer serious physical damage due solely to their material poverty. This is the aspect of leftist statist ideology that I, and I think many others, sympathize the most with. Leftists seem to realize this, and as such use Social Safety Net-ism as the vanguard of much of their argumentation in favour of government intervention. Consider the following disparaging remark about libertarianism from leftist political comedian Bill Maher, saying that while Social Security and Medicare are flawed programs: “it beats stepping over lepers and watching human skeletons shit in the river and I also like not seeing those things. I’m selfish that way!”. Here, Maher is using Social Safety Net-ism to try to discredit an entire intellectual movement and to defend some pretty questionable and controversial government policies. Of course, libertarians contend that such horrors would never occur in a prosperous free-market society due to the greater general material prosperity that would result from greater economic freedom, combined with private charitable efforts that would almost certainly grow if they weren’t being crowded-out by government programs. Even if we were to ignore or reject such considerations though, Maher’s criticism is still misleading.

            

           We see why when we ask the question: is the entire apparatus of the United States welfare state really necessary to prevent people from dying in the streets? Is that really the sole purpose of these programs and policies? Obviously, the answer is no. Social Security and Medicare have clear egalitarian motivations, and both are premised on the assumption that government will be able to make better use of the money collected from taxpayers through these programs than individuals would. Medicare is also premised on the assumption that a private medical market is not the way to go, and that heavy government interventions are necessary to ‘correct’ the alleged ‘failings’ of that market. In fact, if the entire current US welfare state was scrapped, and simply replaced by a welfare system that came to the aid of truly impoverished people who really were at risk of death or serious physical damage due solely to poverty, the principle of Social Safety Net-ism would be preserved in a form that would cost the taxpayers much less of their funds and liberties. What wouldn’t be preserved would be the first two principles of leftist statism which we discussed earlier, the desirability of government control of business and egalitarianism, principles that are embedded in the vast majority of government welfare programs.

            

           Thus, leftist statists, particularly when confronting libertarians, often pull an intellectual bait-and-switch maneuver. They use their most sympathetic principle, Social Safety Net-ism, to argue against libertarianism in general, using it to defend policies that also involve a heavy dose of government control of business and egalitarian principles.

            

           Personally, I sympathize enough with Social Safety Net-ism to advocate it as a political principle, but I am always careful to separate it from government ownership of business and egalitarian principles. For my reasons for advocating Social Safety Net-ism, and my proposal for a government welfare system that advances this principle and this principle alone, see the following: http://thinkingabouthumansociety.blogspot.ca/2013/03/issue-analysis-welfare-social-safety-net.html.

           

           Besides unjustifiably lumping it together with policies that clearly advance government control of business and egalitarian principles, leftist statists also tend to overrate the importance that Social Safety Net-ism policies would take on in a free-market society. This is because they tend to underrate the extent of upward social mobility in a free-market society and mistake it for a caste society, an idea which I criticize here: http://thinkingabouthumansociety.blogspot.ca/2013/04/why-free-market-society-is-not-caste.html         

                

   

The Perniciousness of the Obfuscatory 'We'

            

           One of the biggest obstacles to clear thinking in the social sciences is the failure to adhere to methodological individualism. Rather than taking individuals as the basic unit of analysis, many fuzzy thinkers arbitrarily assign people to collectives and assume that the collective has separate interests and characteristics, different from the individuals that make it up. Such thinkers will often use the term ‘we’ to denote the most common collective: the territorial political unit to which the reader and the thinker belong.

            

           This kind of thinking, and its perniciousness, is illustrated by the saying that: “government debt doesn’t matter, because we owe it to ourselves”. To the methodological individualist, several questions immediately pop up. Who are the individuals that are the creditors in this arrangement and who are the individuals that are the debtors? Pursuit of this line of thinking will lead to the conclusion that the creditors are the holders of government bonds, while the debtors are the future taxpayers. For the government does not create resources, it takes and redistributes resources. And the people it is taking from must necessarily be future taxpayers or inflation victims, if the government is not to renege on its debt. The absurdity of the quoted statement can easily by shown because it implies that defaulting on the government debt would be equally as irrelevant as piling it on! If ‘we’ owe it to ‘ourselves’, then if ‘we’ stop owing it to ‘ourselves’, then there has been no change. But this is absurd: everyone who held government bonds would be significantly affected if they were totally repudiated. That this might actually be the most tolerable and ethical solution to the public debt problem is not the issue at the moment, the point is that the paying of government debt is a redistribution from future taxpayers to government bondholders.

(Note: This example and discussion was inspired by the following Murray Rothbard article: http://mises.org/daily/1423)

            

          Another common use of the obfuscatory ‘we’: “we (Canada) won three gold medals at the Olympics”. This might seem like a relatively benign use of the term, after all, everyone residing in the territorial borders of the political unit called Canada can properly be called Canadian. But, the methodological individualist would inquire, did ‘we’ really win any gold medals? Athletes, who were on team Canada, through their excellence in a particular sporting event, won some gold medals. What did the random Canadian insurance broker do to contribute to this success? One could argue that he paid taxes that went towards covering part of the expenses of the athlete, but this just means that the government of Canada forcibly took some of the insurance broker’s resources and gave it over to this particular athlete. But this operation is not enough to fuse the athlete and the insurance broker into a ‘we’ that is winning anything! What if the athlete doesn’t want ‘us’ to win the medal, he/she wants himself/herself to win the medal alone? What if someone in the ‘we’ does not want to be part of the Canadian ‘we’? Is there a way to get out of the Canadian ‘we’, or are you in the Canadian ‘we’ forever, like it or not, no matter what this ‘we’ is said to have done? What if, instead of something benign like showing excellence in athletics, the ‘we’ in question is off killing foreign civilians in the Middle East, or wantonly robbing and imprisoning its own people? Is there still no way out of this all-encompassing ‘we’?

            

           The examples abound, sometimes even including all of humanity: ‘we’ are destroying the planet, ‘we’ are going to blow ourselves up with nuclear weapons, ‘we’ need to help the poor, or the Africans, or cure cancer. But all this means nothing. The methodological individualist will ask: ‘who’ is destroying the planet? ‘Who’ is going to blow people up with nuclear weapons? ‘Who’ would be materially responsible for doing these charitable things mentioned? Only once we know specifically ‘who’ is doing something negative can be explain why they are or why they are being allowed to, and hopefully think of a solution. Only once we know specifically ‘who’ will be responsible for providing the resources for some project or another can we decide whether funding the project in this way will be effective and moral, and what its effects on the incentive structure of society will be.

Using ‘we’ is a way for sloppy thinkers to advocate programs without presenting the full analysis of their effects by obfuscating all the important social aspects through excessive aggregation. For instance, Keynesian and Monetarist economists always go on about a ‘price level’ that goes up or down depending on what ‘monetary policy’ (ie. speed of governmental money printing) is adopted. It is implied that when money is injected into the ‘economy’ (another obfuscatory collective), all the prices in the economy will move up or down at the same time, and it just falls to the monetary planner to make this level correspond to the point of ‘full employment’. But, the pesky methodological individualist will object, how would all the prices in the economy move up or down at the same time when they are set by millions of individual market interactions? In fact, the newly injected money must start in the possession of one individual, and only through the purchasing of this individual, and the purchasing of those businesses that the individual patronizes, and so on, will the money flow through the economy, eventually raising all prices in an uneven and choppy fashion. Obviously, the earlier receivers of the new money will benefit because their money income is higher due to the injection before all the prices in the market society have adjusted to the new amount of money in circulation. The same applies in reverse to the later receivers of the new money, who will lose.

Thus, we see that when we drop the obfuscatory collectives and mechanistic analogies and look at real life individuals, we see that government money printing is a redistribution of resources. The biggest beneficiary is the money creator, ie. the government (officially the central bank, but they remit their profits to the government and buy government bonds with the new money), and then those bankers connected to the central bank, then their favoured clients, etc… Moreover, this uneven effect disrupts the economy in other ways besides this redistribution, as it temporarily, artificially lowers the interest rate and misleads entrepreneurs into investing in riskier and longer-term projects, when the requisite savings to make this profitable have not in fact been accumulated. This error will be revealed in a painful bust when the money printing slows (which it must eventually, unless it ends with a catastrophic hyperinflation).

            

           These are some notable examples of obfuscatory collective terms being used in the service of sloppy social science analysis. To keep your thinking on this subject sharp, rigorous and accurate, be sure to always adhere to methodological individualism, and be wary of ‘we’.     

Why Physical Violence is a Useful Basic Concept

            Central to libertarian political philosophy and free-market economics is the distinction between voluntary action and coerced action. This distinction presupposes that the threat of physical violence is an important enough concept to warrant making its presence or absence, when an individual is making a decision, a vital categorization device. In this post, we will examine this presupposition, and will end up supporting its employment.

            

           The central axiom of many branches of social science is that humans engage in action, or act, in order to substitute a less satisfactory state of affairs for a more satisfactory state of affairs, evaluated based on their subjective value scales. This axiom applies to both voluntary and coerced action. Voluntary actions imply that when faced with a choice: do I do a certain thing or not, or do I exchange a certain thing/things for a certain thing/things with another human, if the decision was made in the affirmative it was because the actor estimated that the action would be an effective way of proceeding from a less satisfactory state of affairs to a more satisfactory state of affairs. For example, if we observe someone cutting their nails, we can deduce that they estimated that cutting their nails would be an effective way of proceeding from a (subjectively) less satisfactory state of affairs where their nails were long to a (subjectively) more satisfactory state of affairs where their nails are short. If we observe someone exchanging an orange for another’s watermelon, we can deduce that they estimated that having a watermelon at the cost of having an orange would be an effective way of proceeding from a (subjectively) less satisfactory state of affairs where they had an orange but not a watermelon to a (subjectively) more satisfactory state of affairs where they had a watermelon, even at the price of giving up an orange.

            

           We must change our analysis of the particulars when we are faced with a coerced action. In this case, the coerced actor has two basic choices: do what the coercer tells them to do, or face physical reprisal, which could be as severe as a violent death. This is what Ludwig von Mises calls a “hegemonic bond”, as opposed to a “contractual bond” like the one described above with the exchange between the orange and the watermelon owners. The characteristic feature of a hegemonic bond is that the coerced actor does not determine the particulars of his actions; the coercer does this for him. All the coerced actor decides is: do I do what is commanded, or face physical punishment?

For example, let us return to our one man with an orange and another man with a watermelon. This time, however, the man with the watermelon has a gun, and has no qualms about using it to inflict harm on the man with the orange. Let us assume, this time, that the man with the orange does not want to exchange his orange for a watermelon, thus demonstrating that he values the orange more than the watermelon. But the man with the watermelon will have none of it, he brandishes his gun at the man with the orange and says: “hand over the orange or I’ll shoot you in the head!” The man with the orange, after having rejected the contractual bond of exchange, is now faced with the choice inherent in any hegemonic bond: do what is commanded or face a violent physical reprisal (in this case, death). If the man with the orange decides that he values his life more than his orange and his pride, and hands it over to the thuggish watermelon man, we must still say that he chose to substitute a (subjectively) less satisfactory state of affairs where he was at risk of imminent death, for a (subjectively) more satisfactory state of affairs where his life is preserved at the cost of his orange and his pride. However, it would seem that there is something so primordially different between the contractual exchange described previously and the hegemonic bond described above, that we are justified in treating them as two very different phenomena.

            

           What effect, exactly, did the credible threat of physical violence have on the actions of the coerced man? Firstly, while in the case of the contractual exchange, the man received what he wanted, in the case of the hegemonic bond, the man just avoided what he did not want (death) at a price (the orange and his pride). This distinction is not decisive though, as we can think of a few cases where, even in the absence of the threat of physical violence, a man can be induced to act to just avoid what he does not want at a price. For example, imagine a man who owns a hardware store. One of his customers has bought a drill from him, which the customer is unsatisfied with. The drill had a 90 day warranty, but started to malfunction on the 99^th day of ownership. The customer returns with it to the store and says: “I demand that you replace this drill, at no charge, with a new one. If you do not, I will tell everyone I know and I will post on the Internet that your store sells shoddy merchandise and I will recommend that no one shop here.” Here, we have a case where the hardware store owner is faced with the choice: give in to the customer’s demands and give them a new drill, or face the loss of reputation that the customer’s threatened actions would entail.

            

           What is it that separates this scenario from the hegemonic bond described previously? Leaving aside questions of legitimate property rights (which presupposes that arbitrary physical violence is deemed an illegitimate and vicious way of acquiring property), the main distinction is the level of harm that the reprisals in question could cause to the deciding actor. While potentially damaging, the aggrieved customer’s verbal hate campaign can cause only so much damage to the hardware store owner’s business, and thus the concessions that this threat could extort from the hardware store owner would be fairly circumscribed.

            

            Now though, let us consider a completely unrealistic, but intellectual interesting, hypothetical scenario. Let us assume that a free-market society has been established, and government is confined to protecting property rights and the sanctity of contracts. Imagine that one corporation, the Mammoth Corporation, through outstanding service to the consumers and marvellous business acumen in many different industries, manages to accumulate a massive pile of wealth. It consistently uses this wealth to buy up more and more of the earth’s surface, until eventually it comes to own the entire earth’s service. As soon as it does though, it ceases acting as an efficient, consumer-friendly business firm and starts acting tyrannically. It issues orders to members of the earth’s population, and anyone who disobeys the orders is prevented by the Mammoth Corporation from holding a paid position in the Mammoth Corporation or from buying anything from the Mammoth Corporation. Any company that does business with the Mammoth Corporation (all of them, because Mammoth Corporation owns all the land on earth) is also prevented from hiring or selling goods to these ‘excommunicated’ people who disobeyed Mammoth Corporation orders.

            

           Here we have a case where the directors of the Mammoth Corporation literally have the power of life and death over everyone in the world, without using any threats of physical violence. They essentially have the fearsome powers of a socialist dictatorship, though the method of acquiring those powers was originally through service to the consumers and voluntary purchase of land, where with the socialist dictatorship it is through violent expropriation of property and armed terror. Nevertheless, it would be disingenuous to argue that because of their method of acquiring these powers, the powers are not as bad. The fact is that the Mammoth Corporation, as surely as an armed gang, can threaten their victims with death, and their coerced victims will act with that fact in mind.

            

           Now, of course, this hypothetical situation could never occur in a free-market society. Though there are economies of scale inducing businesses to consolidate, there are also dis-economies of scale (such as more detached management, more bureaucratic structures, less rigorous specialization) which induce businesses not to become too big. Also, completely eliminating a market for an input in a production process by monopolizing it will create an area of the economy where economic calculation cannot operate efficiently due to lack of market prices generated for that input (see Tip #5 in my 'How to Think About Social issues' series for more on economic calculation). This will result in an inefficient and more unprofitable allocation of resources by the monopolizer, which will tend to prevent such monopolization from occurring in a competitive, profit-seeking free-market economy. Empirically, nothing even remotely close to the hypothetical scenario described above has ever occurred or showed signs of occurring. Also, to think that every little usable scrap of land of the entire earth could be purchased from their hundreds of millions of individual owners by one big corporation is incredibly far-fetched.

            

            Note that I deliberately made the Mammoth Corporation a land monopolist for a very good reason. This is because, contrary to the ideas behind antitrust laws, the only way that a market participant can secure a true monopoly is by monopolizing one of the original, raw, production inputs: land (real estate, agricultural land, and natural resources) and labour  Since slavery is not permitted and thus people can’t own any labour but their own, but only rent it, labour cannot be monopolized by a single market participant. This leaves land as the only factor of production that could be monopolized on a free-market. For instance, even if we assume that a large steel company has 100% market share in the steel market, we are still not permitted to say that the company is a real monopolist unless it owns all of the land in the world where iron ore or coal could be extracted. If it does not, it must still serve the consumers efficiently, even with its 100% market share, as if the company became inefficient, competitors could start steel factories of their own using the un-monopolized natural resources that constitute raw inputs for steel-making.  

            

           Despite all this, from hypothetical considerations such as these, some social thinkers have come up with the concept of ‘economic power’. The ownership of private property is seen to give the owner ‘economic power’, which he may use as a weapon by refusing to trade the fruits of that property or give ‘jobs’ to people who he doesn't like. The hypothetical scenario described above is the epitome of ‘economic power’, but, according to the champions of this concept, lesser degrees of ‘economic power’ exist in the real world and can be just as coercive as physical power and the threat of physical violence.

            

           The problem with the idea that physical power and ‘economic power’ exist as problems side by side, coercing people into making all of their choices, is that one cannot combat ‘economic power’ without employing physical violence aggressively  An ‘economic power’ theorist could assert that in the example given earlier about the man with the orange and man with the watermelon with a gun, by refusing to trade with the man with the watermelon, the man with the orange was exercising ‘economic power’ over the man with the watermelon, by withholding his orange ‘monopolistically’. But, the only way to combat the man with the orange’s ‘economic power’, is for the man with the watermelon to establish the hegemonic bond we described above by threatening the man with the orange with physical violence, in order to coerce him into handing over the orange.

            

           Thus, the question, in every instance, is: which is the more worthy of fighting and labelling with the odious term ‘coercion’, ‘economic power’ or physical power, refusal to exchange or employing the threat of physical violence to cajole others to exchange? I maintain that in the vast, vast majority of hypothetical cases, and in all cases that could realistically arise in a free-market society, the threat of physical violence is much more coercive and harmful to its victims than the threat of ‘exercising economic power’ by refusing to exchange. In order to attain the coercive power that any thug with a knife could attain with the threat of physical violence over his chosen victim, a market participant would have to amass such an astronomical amount of wealth and make such an unlikely series of voluntary land purchases to really monopolize the market and amass enough ‘economic power’. Otherwise, the existence of competitors, eager to make a profit by selling goods and employing productive people, would render the threat of any market participant using his ‘economic power’ as a weapon more on par with the magnitude of the threat of the disgruntled hardware store customer than with the magnitude of the threat of anyone capable of inflicting physical injury or death on his victim.

           

            Because of the fact that the coercive magnitude of anyone threatening to inflict physical violence is leaps and bounds above the threat of any realistic exercise of ‘economic power’ or verbal slander power, it is permissible, and indeed necessary for clarity of social thought, to treat the threat of physical violence as a conceptual category of its own, and mostly disregard any other potential forms of ‘coercion’. I would not object if anyone, to prevent abuse of ‘economic power’, proposed putting a law on the statute books prohibiting any individual or organization from owning, say, 30% or more of the earth’s usable land surface, especially because the chances of such an eventuality occurring are negligible at best. In most cases though, the real coercive threat in society is that of physical violence, and thus fighting any negligible amount of influence that ‘economic power’ could have with threats of physical violence does not make sense, if your goal is to reduce coercion’s role in society.

As such, the conceptual validity of treating actions and exchanges not influenced by the threat of physical violence as voluntary, and of treating actions and exchanges influenced by the threat of physical violence as coerced, is sound and necessary for clarity in social thought.