capital in the 21st century

I‘ve just finished Thomas Piketty’s much talked about book Capital in the Twenty-First Century. There is much that could be said about this rather long book, but I will not attempt a review. Piketty’s theme is the concentration of capital at the top of the income hierarchy. Income inequality has become a political issue of some importance, and Piketty’s book speaks directly to this interest, which partially explains its popularity.

One point that Piketty does not make explicit in his book, but which could be said is implicit throughout, is the transition to an economic paradigm that could only be called a “winner-take-all” model. Many have commented on this. Skyrocketing executive pay is only only symptom of this social transition. It is arguable that the upward skewing of income and expectation is a function of what has been called the “attention economy” (and which in terms of the internet specifically is sometimes called “clickbait”). In a world flooded with a cacophony of voices competing for attention, those who can best capture the interest of others have an advantage. In each field of endeavor — music, sports, entertainment, industry, government, media, etc. — there are a handful of superstars who disproportionately command public attention and the rewards that follow therefrom. They are the winners, and they have scooped up the pot and left nothing on the table.

Kevin Kelly discussed the winner-take-all aspect of contemporary society in The Technium: A Conversation with Kevin Kelly [2.3.14] (I previously discussed this interview in Science, Knowledge, and Civilization). Kelly said in this interview:

Another point about this winner-take-all phenomenon is that at first we have a natural reaction saying, “Well, winner take all; there can only be one winner,” but here’s what technology is doing: technology is increasing the number of races in which you can win. There are more and more niches and more and more places in which the technology creates new ways in which one can win. There isn’t a finite number of winners, there’s an infinite number of winners as long as you’re not trying to win someone else’s race. The way everybody can become a winner is to continue to increase the number of ways to play, even though you have these winner-take-all phenomena. There’s only going to be one search winner, but there are so many other ways to race and to win other than in, say, search. In most cases, trying to compete against a winner is not going to succeed in this kind of dynamic. What you want to do is make up a new way to win.

I suppose that you could call this the “long tail” argument for a winner-take-all economy, and Kelly is arguing that technology is increasing the length of the tail and therefore the number of individuals who can find some place to call their own along this long tail. But the long tail is a tail only, and not the bump in the statistics that identifies the explosive growth of attention (and therefore income earning potential) that takes place at the center of things. Sure, if there’s an infinitely long long tail there could be an infinite number of “winners,” and each of these winners will take all that is at stake in the miniscule region they dominate, but the share of society’s total wealth available in the infinitely long sections of the long tail is also infinitesimally thin. Being a “winner” in this sense is like the boast of being “big in Japan.”

What will we do with the losers in a winner-take-all economy? Keep in mind that most of us are “losers” — including those who are “winners” along some thin segment of the long tail. Most of us are neither rich nor famous nor well-connected and influential. What is to be done with us? are we to be quietly forgotten? Are we to go gentle into that good night of poverty and obscurity?

There is a well-known quote from Boswell’s Life of Johnson about the condition of the poor in relation to those better off:

He said, ‘the poor in England were better provided for than in any other country of the same extent: he did not mean little cantons, or petty republics. Where a great proportion of the people,’ said he, ‘are suffered to languish in helpless misery, that country must be ill policed and wretchedly governed: a decent provision for the poor is the true test of civilization. Gentlemen of education,’ he observed, ‘were pretty much the same in all countries; the condition of the lower orders, the poor especially, was the true mark of national discrimination.’

For Dr. Johnson, then, the mitigation of poverty is a civilizational issue. This is, moreover, the differentia that marks the distinction between true and false civilization. The condition of the well-to-do is pretty much the same everywhere. That is still true. Indeed, it is likely to be even more true today than when Johnson said this to Boswell. The technocratic elite of global society have access to similar resources, they shelter their wealth in similar ways, they travel in the same circles, gather in the same hotels, eat at the same restaurants, and send their children to the same schools. What continent they happen to come from is much less important than their bank account, or what tax haven they happen to use as their address — or the address for their offshore bank accounts.

One of the ways in which individuals become impoverished, marginalized, and socially invisible is through unemployment. While growing income inequality is a complex problem with many historical forces driving it, the problem of unemployment — a problem intrinsic to industrial-technological civilization that can never be “solved,” but only managed — may be significantly exacerbated in the near future (by which I mean within the next 50 years). If technological unemployment becomes a major economic factor in the coming decades, this could drive an already widening social gap to dangerous levels that are not socially sustainable. This may happen anyway, but my point is simply that technological unemployment could make this happen more rapidly.

In several posts on technological unemployment (“…a temporary phase of maladjustment…”, Autonomous Vehicles and Technological Unemployment, Automation and the Human Future, Addendum on Automation and the Human Future, Technological Unemployment and the Future of Humanity, and Addendum on Technological Unemployment) I have pointed out that, not only is our society not making the transition to an economic regime in which the structure of employment realistically mirrors the nature of industrialization, but rather the prevailing attitude is punitive. Unemployment is seen as a personal failure, and even as a moral failure — a moral failure deserving of social disapproval. The poor are widely viewed as requiring discipline, regulation, and oversight by the professional classes.

Is it possible to find a way to compensate the losers in a winner-take-all economy when losing is seen as a sign of moral failure and winning is ascribed to meritocratic success? These social attitudes exacerbate rather than mitigate the damage of extreme income inequality. And social attitudes cannot be easily changed. Piketty in his book makes a case for a global tax on capital, but honestly calls it utopian. He probably understands all-too-well that nothing like this is politically possible. But changing policies is much easier than changing social attitudes. Social attitudes do change, but they change with glacial slowness, and while they are ever so incrementally adapting to changed conditions, generations are being effectively lost.

As Dr. Johnson rightly observed, this is a civilizational concern. If we care to pay attention, we can see this before our very eyes. The homeless live the life of nomadic foragers within the interstices of civilization. They have ceased to participate in civilization as we know it; they have given up on civilization, and civilization has given up on them. Of course we know that many of the homeless are mentally ill, and that many are alcoholics and drug addicts. Even today there are a few individuals who devote their lives to trying to help even those who spurn help and who abuse those who seek to help them. This is a thankless task, and it is only done out of love if it is done at all.

That many of these individuals who have gone from merely being unemployed to being utterly destitute have serious deficits that require significant intervention to overcome is an indication that they come at a price that even the destitute are unwilling to pay. We have all heard stories of the indignities visited upon the impoverished and the helpless. Some of these stories are horrific, and, somewhat disturbingly, cultural Foucauldianism is sometimes invoked in order to excuse the failure to intervene in the lives of those who have suffered from the tender mercies of institutionalized “kindness.” I can both understand and sympathize with a desire to live free as an urban forager rather than to be subject to the discipline of some “total institution.” But are these our only choices? Are there not ways to intervene without insisting on control, regulation, and discipline conceived as a moral corrective?

Compensating losers in a winner-take-all society is something that must be done with our eyes wide open, understanding the mistakes that we have made in the past, but understanding also that we are not limited by the mistakes we have made in the past. And if we do not find some constructive way to address the glaring inequity of our society, before the end of the century even the most pleasant lives will not be able to be fully insulated from the growing masses of marginalized and impoverished individuals whose only failing is that they are not good at making money.

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Grand Strategy Annex

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Regulating the Poor

28 March 2012


Last January in Ica to Lima I quoted a famous line from Anatole France:

“The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread.”

And last September on Twitter I wrote:

We shouldn’t say that anything is “banned,” only that it has been “denied to the poor.” The rich can always satisfy their wants and needs.

I don’t think that there has been a sufficient appreciation of the intimate relationship between law and poverty.

Our legislators like to pretend that they are making laws that are universally applicable to everyone within a given nation-state, and the mass media is complicit in this illusion by reporting on an egalitarian society that simply does not exist. Of course, our legislators have plenty of practice in this art, because every two or four years they must go out on the campaign stump and pretend as though they are “just plain folks” when they are not.

There is an old saying that, money can’t but you happiness, but it does allow you to choose your own kind of misery. So it is that the wealthy have choices denied to the rest of us, and among these choices are opportunities to avoid any law felt to be onerous or an inconvenience. The rich live in a libertarian anarchy in which all things are possible.

This I take to be F. Scott Fitzgerald’s point at the end of The Great Gatsby when the narrator says:

“Tom and Daisy — they smashed up things and creatures and then retreated back into their money or their vast carelessness, or whatever it was that kept them together, and let other people clean up the mess they had made…”

The same essential idea was expressed with less poetry and more viciousness when Leona Helmsley, the “Queen of Mean,” was quoted as saying, “We don’t pay taxes. Only the little people pay taxes.”

Despite the persistent idea of equality before the law in democratic societies, we all have known, even if we don’t much talk about, the fact that the rich are not subject to the same laws as everyone else. Back before abortion was legal in the US, if a girl from a privileged family got in “trouble,” she went to Sweden for a safe and legal abortion, or she was sent to have her child in Europe where such things carried less social stigma. Today, abortion is legal in the US, but the political climate in large swathes of the US means that an abortion is almost impossible to obtain in some states, but for those for whom travel out of state presents no difficulties it is not a problem, though it is a problem for the poor.

The middle classes don’t have the scope of free action that the wealthy possess, but they do posses some scope of action that the poor do not. For example, the middle classes have just enough money that, if they prioritize some particular interest or activity, they can choose one or two or maybe three areas where they will exercise their freedom — whether these areas might include private schools, exotic vacations, or boutique health care.

And to mention medical care brings us back to the topic of yesterday’s Three Alternatives to PPACA. It is important to understand that the debate over health care is really a debate over what health care the poor will have, and then this debate is really a debate over how the poor will be regulated (in ways that do not regulate other segments of society).

Regardless of what measures are imposed on the US population as a consequence of PPACA, the wealthy will continue to enjoy the best medical care that money can buy. They can afford to pay into whatever system they need to pay into, and then still buy themselves whatever they want outside the system (or above and beyond minimum requirements). It is those without options who will be stuck with the system and whose lives will be most profoundly affected by it. And, as I noted yesterday, most of those who have no health care or no health insurance at present do not have it because they cannot afford it. They will be the ones forced to face either unaffordable premiums or fines.

Neither the wealthy nor the middle class will have to make painful decisions about cutting back on food or cutting back on electricity or cutting back on heating in order to meet health insurance premiums (and thereby ensure that the insurance industry continues livin’ large), but these are issues as real to the poor as the monthly worry of making rent and having enough to eat.

Thus we can say in precise analogy with the earlier quote from Anatole France:

“The health care law, in its majestic equality, obligates the rich as well as the poor to purchase health insurance, to choose between paying bills and paying premiums, and to face fines if they cannot afford the premiums.”

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Grand Strategy Annex

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Poor Cousins

9 July 2011


The eurozone currently consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain.

A Parable

Once upon a time there was a large family, which either because of or in spite of their long intimacy and shared history, was a fractious and disputatious bunch, with old fights and old grudges that were never forgotten, even though the principals to these disputes were long dead. Over time the fortunes of the family had diverged, and some that had been rich in the remote past had become quite poor, while others who had started with nearly nothing had done very well for themselves.

The wealthy members of the family, who owned many industries, employed many people, and had large, modern, comfortable houses for themselves and their immediate family, were fully aware of their improved status in their world, while those members of the family who had fallen on hard times were equally well aware of their fallen status.

The poor cousins nurse a sense of resentment over the lower living standards and their perceived lower social status, while the well-to-do cousins nurse a sense of resentment over contributing to the support of their ne’erdowell cousins. The former never lose sight of the fact that every penny given has been given begrudgingly; the latter never lose sight of the fact that every penny spent on the poor cousins is a penny they are not spending on themselves or their children.

The wealthy cousins were constantly faced with the question of what to do with the poor cousins. Say you put the poor cousins on the dole. They become lazy, drink too much, pick fights, and cultivate a sense of entitlement. Do you help the poor cousins find work? Do you make work for them in your own industries? The same problems reappear: the poor cousins show up drunk and do shoddy work.

Say that the wealthy cousins attempt to observe the old maxim that if you give someone a fish they eat for a day, but if you teach them how to fish, they can feed themselves in perpetuity. In this spirit, the wealthy cousins help the poor cousins to start businesses. But the business doesn’t go well. Do the wealthy cousins continue to support the failing business, just so the poor cousins have something constructive to do? And, if they do, for how long?

In the fullness of time, the wealthy cousins decide to pool their resources and create a bigger business enterprise than ever before. The poor cousins want to be part of this, so the wealthy cousins tell them that if they maintain certain standards, stop drinking, and promise to work very hard, that they can be part of the new business enterprise and share in the wealth that will be produced.

Alas! the present plan works no better than previous plans. The poor cousins join in the new business, but they can’t quite make it work, and worse, they threaten to pull the whole industry down with them. What’s a wealthy cousin to do? Cut the poor cousins loose? Keep giving them money so they can continue with their end of the business, even though it is obvious that they can never turn it around?

The Lesson

Europe has not an essence, but a history. Like the individuals who jointly constitute Europe, there is no metaphysical center to the continent any more than there is a metaphysical center of the individual person. It is the shared history that constitutes Europe that makes Europe what it is. But in addition to being a shared history, it is also a disputed history. Every part of Europe has its own perspective on European history, and therefore its own sense of its place within Europe.

The shared history of the European nation-states makes the Eurozone seem like an obvious idea, so much so that it would only seem to be a matter of financial engineering in order to get things right. It would seem to be a mere matter of details to be cleaned up and the whole scheme put into practice, but, as is often said, the devil is in the details. The disputed history makes the obviousness of the Eurozone not quite so obvious in practice.

The crafting of the Eurozone turned out to be more political than financial engineering. As a political creation, the Eurozone was more diplomatic than a strictly business deal would ever be. Businesses deal with hard and unpleasant facts; if they fail to do so, they will go bankrupt. Diplomacy, however, avoids hard facts because hard facts are the rocks upon which ships of state come to grief. In diplomacy, nothing that can be stated indirectly is stated in direct and unforgiving terms.

This diplomatic behavior is fine for cautious nation-states who always keep an eye on neighbors, even when they have signed a peace treaty with them, but when it comes to unifying economies, it is no longer an acceptable practice. To make the Eurozone work for all members of the Eurozone would have required internal mechanisms that would, quite without sentiment, transfer wealth from where it was abundant to where it was needed. But rich cousins don’t want to support poor cousins, and poor cousins have no incentive to go to work if rich cousins are there to foot the bill.

It was widely reported not long after Greece joined the Eurozone that it had cooked the books to show itself as having met the Eurozone standards for entry into the monetary union. This was no secret once it came out. Greece was not summarily dismissed. Once made part of the family firm, how do you fire your poor cousin? Now the Eurozone is paying the price both for its diplomacy and its family sentiment.

Every large extended family has at least one drunk, one lunatic, one pervert, one criminal, one womanizer, one ne’erdowell, and one layabout — at least one, and more likely several of each. Europe is a family, it has its share of misfits, and some of these misfits are the most successful among the European nation-states. Family sentiment can paper over the strained relations withing families in the limited and controlled context of a family reunion, but when it comes to sharing the family purse, family sentiment is not enough.

It has been a fascination and an education for me to open up the Financial Times over the past few weeks, since every day has brought a new round of stories and opinion pieces on the looming Greek debt problem, possibly leading to default. Every possible opinion has been presented and argued for and against. I suspect that what is happening in the pages of the Financial Times is often more important than what is happening in government bureaucracies and boardrooms around the continent, since everyone in the bureaucracies and boardrooms reads the FT before they attend their meetings, and they probably all take their arguments from those already presented in the press.

I have the luxury of being intellectually fascinated by the process; those in the Eurozone must be experiencing that sinking feeling and so cannot really fully engage in the question as an intellectual exercise. For the Europeans, this is about family. And so the question remains: what is to be done with the poor cousins?

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Grand Strategy Annex

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alexis de toqueville

The rapacity of the ruling class

One of the most striking features of most pre-modern, pre-industrialized societies was the rapacity of the ruling class. Anyone with their hands upon the levers of power would manipulate whatever institutional apparatus was available in order to enrich themselves at the expense of those less fortunate — a practice that reached such obscene extremes that the vast mass of the populace was impoverished while a privileged few enjoyed unimaginable luxury. Since that time, modern industrialization has raised all boats, flooding many societies with unprecedented consumer goods and therefore giving the impression that there has been a leveling of the human condition. Unfortunately, it has been only a relative leveling, and the agents of rapacity have been exchanged. What has changed is that rapacity has been displaced from splendid individuals onto the nation-state.

The principle of redistribution

The basic principle at stake is that those with enough should be satisfied with enough, and therefore render to the government anything beyond what is enough in order that this should be re-distributed to those who are judged not to have enough. The rhetoric of “needs” is common in this context, and we often encounter formulations like, “needs being met,” though this ought to give pause to anyone who notices that one of the basic confusions of consumer societies is that between wants and needs. Whereas rights are counterbalanced by duties, there is no political concept to counterbalance that of needs, except perhaps superfluity. Needs become associated with a minimal condition of bare survival (i.e., subsistence) that no one has the moral right to question, whereas the countervailing conception of superfluity is associated with luxury and conspicuous consumption, which everyone has the moral duty to censure.

Again, in contradistinction to pre-modern, pre-industrialized society, we have it good. Sufficiency under the agricultural paradigm (that is to say, agrarian-ecclesiastical civilization) was subsistence farming, and this often meant the barest of bare survival. Given that rudimentary baseline, anything over and above bare subsistence can be seen as superfluous. But we all know that in a social climate of rising wealth, allowing too great a gap to open up between haves and have nots can be disastrous, possibly even leading to catastrophic state failure, also known as revolution. Thus the have nots must be raised above mere subsistence, but the level of increase in standards of living will always be relative to the socio-political context. Being poor in Sweden implies a different standard of living than being poor in Gabon.

Notwithstanding the fact that “sufficiency” in this context is a term of art, the welfare state will take anything that it judges to surpass mere sufficiency, will count itself righteous for doing so, and will judge as deviant anyone who resists the expropriation of their property. Expropriation, even for the highest and noblest of motives, is still expropriation. Moreover, it remains expropriation even when expropriated according to the most meticulous machinations of due process and procedural rationality. As noted above, anyone with their hands upon the levers of power will manipulate whatever institutional apparatus is available in order to enrich themselves at the expense of those less unfortunate — though now rather than anyone it is anything, and in particular it is the nation-state in the form of the welfare state.

Origins of the welfare state

The contemporary welfare state is the result of a pragmatic political compromise intended to forestall the spread of communism in Western Europe. In this it was successful. The German Historical School of economists, in other respects not particularly well respected, was instrumental in this compromise. From the perspective of later communists, this compromise constituted the capitalists “buying off” their workers (cf. the above referenced flood of consumer goods). From the perspective of the privileged, it was a remarkable act of enlightened self-interest scarcely equaled in history. Look to the reluctance of dictators today unwilling to relinquish power even as their fellows are being removed (and often killed) one after another, and it is easy to see the extent to which the privileged and powerful will go to retain their privilege and power.

The state knows best

The logic behind the rapacity of the welfare state, like the logic of the rapacity of the kings, emperors, popes, and cardinals that preceded the nation-state in privilege, and like the logic of dictators ruling today, reveals its relentless, implacable extension to other areas of life — ultimately, to all areas of life — in the current healthcare debate in the US. I have written several times about the individual mandate (i.e., the requirement that would force individuals to buy health insurance) and its presumption to know the best interests of consumers better than consumers themselves know it. This is but one facet of the rapacity of the welfare state, but it is both an important and a telling facet.

If individuals believed contemporary individual health insurance policies to be a good deal, these individuals would be clamoring to buy them. That is the way that capitalism works: you offer something for sale; if consumers want what you have for the price you offer it, you sell your product; if consumers do not want what you have for sale, or don’t want to pay your price, you will not sell your product. It is pretty obvious that individuals not covered by employer-sponsored health care coverage (which latter are therefore insulated from the true cost of health care) are not clamoring to buy individual health insurance policies. These policies are not a good deal, and they are becoming a worse deal with the passage of time. These policies cannot compete in the market. In fact, they choose not to compete. Rather than compete, they choose to legislate and litigate.

Health insurance providers have the heavy hand of the welfare state to intervene on their behalf and to force consumers to buy products that consumers will not and would not buy on the open market when free of compulsion. Instead, these policies will be sold upon threat of legal prosecution.

Promote the general welfare

The welfare state intends to provide welfare for all. This is a noble aspiration. No one can rationally argue with the desire to improve the lives of all and to reduce the glaring inequities of our society. (Some on the contemporary left like to say, “When everyone does better, everyone does better” — and this tautology certainly is true.) One can, however, rationally argue with the means intended to accomplish this end. For we all know, in the overwhelming complexity of the world, that unintended consequences often swamp intended consequences, so that means are uncertain in the extreme: particular means may contribute more to the defeat of the intended aim than to eventually securing the intended aim. How, then, should we go about supporting the general welfare in a manner consistent with democracy and liberty?

And there is a tension between democracy and liberty, as embodied in a now well-known quote frequently mis-attributed to Benjamin Franklin: “Democracy is two wolves and a lamb voting on what to have for lunch. Liberty is a well-armed lamb contesting the vote.” (I have also seen versions of this substituting “rabbit” for “lamb.”) The simplest form of democracy — majoritarianism — is especially vulnerable to this tension. More sophisticated incarnations of democratic ideals have made provisions for individual rights that are not to be infringed even if social consensus supports infringement. This is the enlightened tradition that the Founders extended to the US Constitution, and it is the model that we should continue to follow: the democratic ideal pursued in so far as it is possible, and in such a way that its infringements upon individual liberty are minimized. It is in this spirit that I return to the health care debate.

Living “off the grid”

There is a solution to government coercion in purchasing health care services, but this solution, while simple, is radical in its simplicity and would call into question some of the deepest presuppositions of the welfare state. That makes this alternative politically impossible, no matter how much sense it makes. What is this solution? Simply this: offer the option to “opt out” of health care, i.e., to voluntarily live without health insurance, and to accept the consequences of living without health insurance, essentially opting out and living off the health care grid.

I would opt out, and I would do so with my eyes wide open, and with the knowledge that I would be subject to different protocols in the eventually of illness of injury. And I would be willing to make this official, and to certify my decision to the satisfaction of legal standards of evidence, whatever they might be in the this case. For example, I would be willing to carry a card in my wallet, next to my driver’s license, that in the eventuality of my injury, that I am not to be treated, or taken to a hospital or emergency room, or that only a certain specified amount of money should be spent on my treatment, with this amount of money supported by some oath or affirmation that I possess the amount in question in cash.

Prior to writing this, I have not suggested this to anyone, so I don’t know how others would react. However, it is easy to guess the outrage that would greet my proposal in some quarters. For instance, I can imagine it being said that, while a person feels healthy and fully able, they would say that they would like to opt out, but when it came time to pay the piper, no one would be left who would really and truly accept the consequences of their decision, especially if it meant death or living with disfigurement.

Heath care in extremis

This objection is the same as the old canard that there are no atheists in foxholes: the presumption that, in our hour of need, everyone will fold, without exception, and want the aid and comfort to which scientific medicine entitles us. We know this to be false, because we know principled individuals who accept the consequences of their actions without any attempt to save themselves. Interestingly, however, this argument shows how far we have come in real terms — in terms of the actual ideology by which we live, rather than the ideology that is honored more the breach than in the observance — because the “heath care in extremis” objection is the perfect mirror image of the no-atheists-in-foxholes objection. The no-atheists-in-foxholes claim assumes that in our hour of greatest need that we will all, despite any previous profession made under circumstances of security, seek supernatural aid and comfort. The “heath care in extremis” assumes that we will all, despite any profession made under circumstances of security, seek material aid and comfort. So which is it going to be? Supernatural aid and comfort, or materialistic aid and comfort?

What is it in the welfare state’s conception of human nature that it must embrace the totality of our being, and extract from us our forced consent for our total expropriation by the state, body and soul, such that no exceptions are to be allowed? It is simply this: for the welfare state, man is simply homo economicus. The welfare state is an economic institution; each individual instance of homo economicus is a functioning part of our economic institution; therefore, homo economicus is a functioning part of the welfare state. It is an elegant syllogism that reduces the individual to his role within the state as part to whole.

We must see this development in the context of the evolution and maturation of the institutions of advanced industrialized society. That is to say, we would be misunderstanding the situation if we attributed all of this development to wild-eyed ideologically motivated radicals who have an agenda for a utopian society which would be a dystopia for the rest of us. This is not how most social change comes about. Most social change comes about from incremental changes in attitude and incremental changes in material circumstances, which between the two of them create a coevolutionary spiral that issues in unintended consequences that were no part of anyone’s design. Homo economicus and his role within the economy of the welfare state has not been imposed from above; all of this has emerged organically from historically continuous circumstances.

Implicit consent to welfare state rapacity

As always, the wealthy will be left untouched by the law. They will have health care regardless. The individual mandate will fall most heavily on those who have a limited quantity of disposable income and have made a conscious decision to spend that income in a certain way. As the tentacles of the welfare state find their way into the regulation of every aspect of life, like some kind of secular Hadith, every penny of an individual’s income is more and more spoken for by the state before it is earned and spent. One has the “choice” from what company one will purchase health insurance, just as one has a “choice” between buying Crest or Ultrabright toothpaste (the kind of choices that result from a flood of consumer goods), but the supposed greater number of choices made available to the individual in modern society are choices not worthy of the name. The real choice has already been made, and it has been made by the welfare state before the individual is even born.

We find here a particularly radical embodiment of the doctrine of implicit consent to a social contract: if you are born into a society, and if you choose to stay, you choose to accept the social contract of that society. In other words, you relinquish all of your rights, in a Hobbesian moment of absolute submission to the Leviathan, in order to receive a few compensatory rights later, as the Leviathan chooses to grant at its discretion. Thus the welfare state arrogates to itself the right to organize your life before you are even born, and once you emerge as an individual within society you are obligated to arrange your affairs, down to the budgeting of your income, according to the dictates of the state. And if your income is limited, and that limited income has already been spoken for by the state and its epigones? That is your tough luck. Next time, come back rich. For this life, cough up your money. All of it, if need be.

Acceptable and unacceptable choices

Are we going to tell people that it is not a legitimate choice to live fast, die young, and make a beautiful corpse, because this is socially unacceptable? Is it beyond the pale that, if an individual prefers danger to safety, that they should willingly place themselves in danger? And is it unacceptable that an individual should allow himself to take risks? Are we going to tell people that it is unacceptable that they buy a sports car because they need to spend this money instead on health insurance? The welfare state bureaucrat has no problem telling individuals that their choices are not allowed because they do not conform to the economic planning of the welfare state, of which the individual is a part, and the state is the whole.

Thus the welfare state sets itself up like Periander, the despot of Corinth, who, not being satisfied by the example of his father, the despot Kypselos, sent to the famous (or notorious) Thrasybulos of Miletus to learn more effective means of depredations upon his people:

“Now Periander at first was milder than his father; but after he had had dealings through messengers with Thrasybulos the despot of Miletos, he became far more murderous even than Kypselos. For he sent a messenger to Thrasybulos and asked what settlement of affairs was the safest for him to make, in order that he might best govern his State: and Thrasybulos led forth the messenger who had come from Periander out of the city, and entered into a field of growing corn; and as he passed through the crop of corn, while inquiring and asking questions repeatedly of the messenger about the occasion of his coming from Corinth, he kept cutting off the heads of those ears of corn which he saw higher than the rest; and as he cut off their heads he cast them away, until he had destroyed in this manner the finest and richest part of the crop. So having passed through the place and having suggested no word of counsel, he dismissed the messenger. When the messenger returned to Corinth, Periander was anxious to hear the counsel which had been given; but he said that Thrasybulos had given him no counsel, and added that he wondered at the deed of Periander in sending him to such a man, for the man was out of his senses and a waster of his own goods,–relating at the same time that which he had seen Thrasybulos do. So Periander, understanding that which had been done and perceiving that Thrasybulos counselled him to put to death those who were eminent among his subjects, began then to display all manner of evil treatment to the citizens of the State; for whatsoever Kypselos had left undone in killing and driving into exile, this Periander completed.”

Herodotus, Histories, Book V, section 92

It remains to give the theoretical justification of opting out of compulsory spending mandated by the welfare state. It will be objected that, in something so fundamental as health care, opting out would create a two tier system, and ultimately a two tier society, and that this is invidious to democracy. I will, for the moment, leave aside the fact that we already have a stratified society in which many individuals receive preferment and privileges because of their income, social status, or family background. It is fundamentally a question of one’s conception of the law. I have many times remarked that the nation-state system is predicated upon a radical and uncompromising application of the territorial principle in law — that is to say, the principle that one law holds for all individuals within a given geographical region. The historical alternative to the territorial principle of law is the personal principle in law, which is the principle that an individual will be subject to the law of their community, regardless of their geographical location.

The possibility of opting out of government programs appeals to the personal principle in law, and we can see on this basis why representatives of the nation-state — and all of the advanced industrialized nation-states are welfare states — would be opposed in principle to anyone opting out of a territorial principle. The advocate of the exclusive legitimacy of the territorial principle in law must hold that the personal principle in law is illegitimate everywhere and always, and that no legitimate political entity can be erected upon the personal principle in law. If any exceptions are allowed, we would be forced to recognize that our society is shot through with instances in which individuals are held to the standards of their community rather than to universal standards enforced throughout a geographical territory.

As I pointed out above, we do in fact have a stratified society, and whether or not we formally recognize it in our legal codes, we have de facto instances of the personal principle in law that hold throughout our supposedly universal territorial law. To point this out, however, would be to contradict the powers that be. And to allow a separate community that has opted out of the health care mandate, and indeed out of the health care system altogether, would be too glaring an exception to the territorial principle in law to be tolerated.

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Grand Strategy Annex

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