Monday, August 15, 2016

Selection from Man, Economy, and State by Murray Rothbard

Link to new edition:

It is not accurate to apply terms like "gambling" or "betting" to situations either of risk or of uncertainty. These terms have unfavorable emotional implications, and for this reason: they refer to situations where new risks or uncertainties are created for the enjoyment of the uncertainties themselves. Gambling on the throw of the dice and betting on horse races are examples of the deliberate creation by the bettor or gambler of new uncertainties which otherwise would not have existed. The entrepreneur, on the other hand, is not creating uncertainties for the fun of it. On the contrary, he tries to reduce them as much as possible. The uncertainties he confronts are already inherent in the market situation, indeed in the nature of human action; someone must deal with them, and he is the most skilled or willing candidate.
Thoughts of Gary North:
Insurance is one of the great discoveries in the history of man. It enables people to secure themselves against the effects of statistically predictable negative events in life. By surrendering ownership of money in advance, we gain legal access to far more money in the future, if some statistically predictable negative event occurs in our lives.

I don't believe any of this is random, but I surely believe in taking advantage of insurance to protect myself against the outcome of statistically predictable aggregate events.

Gambling is a zero-sum game. Somebody wins because other people lose. I don't want to win on that basis unless the nature of the game is imposed by the real world, and therefore is not a game. Commodity futures speculation is a zero-sum transaction, but it is not a zero-sum game. It enables people who don't want to bear uncertainty, namely, producers, to transfer this uncertainty to speculators. Then speculators enter into a zero-sum transaction with each other. Out of this competition comes an array of prices. These prices guide other producers free of charge -- a tremendous benefit to society. This is no game.


CP said...

I think of all those billionaires in the world today, and I shudder when I think of the responsibility they have. As long as they keep making money, they are doing the world a service. But they are going to have to transfer that money at some point to nonprofit, tax-deductible entities, in order to keep the governments from getting their hands on the money. We know what disasters governments would do with the money. But think of the disasters that a bunch of upper middle class lifetime bureaucrats in nonprofit foundations would do with the money. We already know what they would do with the money. We can study the history of the Rockefeller Foundation, the various Carnegie foundations, the Ford Foundation, and the neoconservative Washington Beltway think tanks.

Taylor Conant said...

Right! The non-profit scam is taxation by other means. Aside from "opting out" of taxes by moving from a high-tax to a low-tax state, for example, I think every libertarian/sane business person or investor needs to accept that taxes WILL be paid and to stop kidding ourselves that sheltering our wealth in non-profits is some kind of end-run around the State, rather than a means of playing right into its hands.

Great to see the MES quote! I believe he is channeling Frank Knight there.

CP said...

Speaking of low tax states:

I mean the lesson is if you’re ambitious and smart steer clear of engineering as a profession. The Red States are more unambitious “play-it-safe” people who want an easy life. That’s why everyone here who thinks places like Kentucky are great praise the low housing costs. They only think downside not upside because they’re unambitious, simple-minded folk who just want their easy factory supervisor job.

CP said...

Key insight:

This correspondence between tax rates and good places to live is no accident. It is exactly what the model of government as a stationary bandit, or my theory of Dynamic Geography, predict. Government works partly by exploiting fixed populations. The more the population likes its fixed location, the higher the rent that government can expropriate from them without driving them away.