The Tale of Two States

By Michael Suede
Libertarian News
Jan. 11, 2013

There once was a man named John who lived in a place called A. The country of A was a rather dreary place. Some 200 years ago, a majority of the people of A decided that they should be able to impose their will upon a minority of citizens for the good of all. So the majority got together, pooled their resources, and then set about arming groups of young men to go out and collect money from all the business owners in order to fund “protection and welfare” services for the country.

The people of A held elections for their leaders, but the elections were soon corrupted by the largest businesses. The business owners realized that they could keep out new competition from the markets by having the state create regulations which made start-up costs prohibitive. Some businesses also realized they could make a healthy profit from government contracts and subsidies without the risk of a competitive market. It was easy for them to get the public to go along with whatever regulations they proposed, because it was all done in the name of public safety.

The state of A had virtually unlimited funds, since it could go into unlimited debt or take as much as it pleased from its own citizens; the biggest businesses took full advantage of these deep pockets. It soon came to pass that the largest businesses took most of the government contracts, subsidies and bailouts. All of this government largess took its toll on the economy of A. It also created a class of super-wealthy individuals who made much of their money from the state regulated banking system or by owning businesses that the state granted favors to. The profit from these regulations and subsidies further cemented this super-wealthy class’s power over the political system.

Because the state had made creating a new business to be so burdensome, and because it had subsidized the largest businesses, huge corporations monopolized every area of the economy. There were only a handful of large banks, large insurance agencies, large automakers, large healthcare providers and so forth. Since these handful of large corporations were given so many advantages, they didn’t face any real competition. This lead to huge economic waste and soaring costs as the markets began to fail.

Further, the majority of people in the state of A had decided that the elderly should be able to take money and resources from their grandchildren to fund their retirements and healthcare in old age. These retirement and healthcare programs grew to become so huge that the annual cost of those two programs alone was more than the entire tax revenue collected by the groups of armed young men.

Of course, the state of A didn’t stop there. The state set about banning drugs, guns, alcohol, pornographic movies and anything else deemed to be subversive by old men. These bans created tremendous black markets run by the most brutal organized criminal gangs. Many cartel leaders ended up colluding with politicians to ensure the bans stayed in place no matter how bad things got. Eventually the state of A had 1 in 20 of it’s adult male population under some form of correctional supervision.

Our man John eventually found himself without a job. His public high school education was essentially worthless, leaving him without any technical job skills after 12 years of education. John thought he would be able to get a good paying factory job after high school like his grandfather had, but because the state had printed so much money, all of the industry had flowed next door to the land of B. The land of A was now a “service” economy that didn’t produce anything of trade value. The land of A didn’t need to produce anything, because for the time being, the land of B was still selling all of its goods to the state of A in exchange for A’s funny money.

John felt hopeless and worthless. He couldn’t find a job. His life had no meaning. He spent his days drinking and smoking pot, scraping by on the welfare checks he collected from the state. But then one day John found a website talking about the land of B. It turns out that the people of B never created a coercively funded state like the people of A had. In the land of B, people voluntarily paid security and insurance agencies to protect their property and health. The vibrant markets in B meant the people hardly spent anything on security or healthcare, and the people got to keep all of the money they earned for themselves. There was simply no such thing as bureaucratic waste in the land of B.

This lack of regulation was creating huge problems for the state of A. Business were moving out of A and into B in order to avoid the heavy taxes. Highly skilled labor was fleeing the country to a land of more jobs that paid with real money that didn’t lose its value. Drug cartels were shipping in drugs from B with wild abandon, while shipping huge amounts of cash resources out. Many of A’s middle class, who didn’t have insurance, found themselves frequently heading to B in order to get healthcare that was so cheap they could afford it out of pocket.

Eventually the people in control of A decided they had enough. Too many people were leaving the state of A for a more comfortable life in the land of B. The only people who were remaining in A were those who were completely dependent upon the state for their subsistence. Obviously this infuriated the political class of A.

At first, the state of A used capital controls and tax regulations to make leaving the state of A incredibly difficult for its citizens. But after a while, it became obvious these controls were not enough. Eventually the state of A decided to build a huge wall around the country, along with making it illegal for people to leave.

While the state of A had decided that the land of B was causing it problems, the population of B also came to the conclusion that the land of A wasn’t being a very good neighbor. B eventually grew tired of A’s money printing. The population of B stopped buying A’s debt and accepting A’s currency in exchange for their goods. This lead to A to the brink of a civil war.

You see, because A had engaged in so much money printing, and had burdened their manufacturing sector with so many regulations, the land of A hardly made anything of its own. When the land of B finally stopped taking A’s funny money, the state of A imploded from hyper-inflation. Things must be produced in order for money to have value. It is the production of things that makes a society rich. A’s indebtedness, driven by its own citizens’ greed, caused its downfall.

Of course, the state of A still remained because the men with guns still remained. The armed gangs of young men, empowered by the state to loot the citizenry, set about taking the last scraps of food from the tables of A’s citizens. While some industry still remained in A, the people of A could not afford any of their own products. The manufacturers and farmers in A were now forced to export most their products to B in exchange for either gold or trade goods in order to keep themselves operating.

The political and financial elite had divested themselves of their domestic assets and corporations, taking the lions share of resources with them to the land of B before the state of A imploded. The common people of A were left to their own devices. John was one of the lucky few who made it into the land of B before the state of A fell apart.

In our real world today, the land of B does not exist. People don’t have the option of moving to a place that is free from a coercive state. A-type personalities always demand that the B-type personalities submit to the mob or be imprisoned. This is true all over the globe. A-type personalities would never even entertain the notion that some small plot of land be given to the B’s, for they know they would lose all of their most industrious citizens to that land. However, there are plenty of A’s who are presently feeling, or about to feel, the full consequences of their wicked ways. Unfortunately, the B’s are going to be dragged along for the ride.
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Michael Suede runs the website LibertarianNews.org