The Power of the Poor

From the Freedom To Choose Network we see that a legal system and entrepreneurship emerges from humble origins even when government bureaucracy stifles opportunity and access to rights. Human beings don't need a government to organize, to create values, to act lawfully and to be legitimate productive members of a society.

Hayek at Bodega Bay

I was away with family for four days just this weekend. We rented a home near Bodega Bay in California; the weather was lousy except for the very first day. The beach was chilly and we had fog most of the time. We still had a great time all in all. During quiet times, I managed to re-read some chapters of F.A. Hayek’s The Road to Serfdom. I came across this paragraph and I felt that it is as relevant today as it was back in the 1940’s:

Economic liberalism [Free-market capitalism] is opposed, however, to competition’s being supplanted by inferior methods of coordinating individual efforts. And it regards competition as superior not only because it is in most circumstances the most efficient method known but even more because it is the only method by which our activities can be adjusted to each other without coercive or arbitrary intervention of authority.

It seems that the events of the last several months have moved us away from freer markets and to more government oversight and planning. How long before we see the “unintended consequences” of these actions?

Arrrggh ye scurvy dogs!!!!

I couldn’t resist posting this article from the Boston Globe. It’s about an upcoming book by economist Peter Leeson. My first thought after reading this was on F.A. Hayek’s elaboration of ”spontaneous orders”. In the case of pirates, an equitable democratic process arose from what seems to us as a strong environment for anarchy. Here’s a snippet:

The pirates who roamed the seas in the late 17th and early 18th centuries developed a floating civilization that, in terms of political philosophy, was well ahead of its time. The notion of checks and balances, in which each branch of government limits the other's power, emerged in England in the Glorious Revolution of 1688. But by the 1670s, and likely before, pirates were developing democratic charters, establishing balance of power on their ships, and developing a nascent form of worker's compensation: A lost limb entitled one to payment from the booty, more or less depending on whether it was a right arm, a left arm, or a leg.

To Leeson, pirate democracy was an institution born of necessity. In one successful cruise, a pirate could take home what a merchant sailor earned in 50 years. Yet a business enterprise made up of the violent and lawless was clearly problematic: piracy required common action and mutual trust. And pirates couldn't rely on a government to set the rules. Some think that "without government, where would we be?" Leeson says. "But what pirates really show is, no, it's just common sense. You have an incentive to try to create rules to make society get along. And that's just as important to pirates as it is to anybody else."

Much thanks to Café Hayek for turning me on to this topic.