Tuesday, May 14, 2019

A Further Comment on Ass-Backwards Libertarians

At my post, Another Case of Ass-Backwards Libertarianism, a number of commenters take me to task for my position against the state run Bank of North Dakota.

The comments include:
Humor me for a moment. Wouldn’t 50 state banks be preferred to one Fed? At least there would be some type of competition.

Robert, let me pose this hypothetical situation to get your thoughts.

The federal government controls a park in a local village. The local mayor successfully fights to get the park taken out of federal-government control and under the control of the village government.

Both before and afterwards the park is run by an arm of the state. However, one could make the argument that moving the control from DC to the village provides a better opportunity to eventually move the park into local, private hands, because the village board members are likely to be more responsive to their residents -- among whom they live, and with whom they interact on a daily basis -- than would any state bureaucrats in DC, thousands of miles away (i.e., the principle of subsidiarity).

Would you disagree?
There is a problem with this kind of thinking.

It creates scenarios that have nothing to do with the Bank of North Dakota.

Somehow these advocates think that a statist pig that has a new color lipstick is somehow a great statist pig.

They do not consider what the bank is doing. To them "It's not the Fed" is good enough. No, that is not good enough. It must be asked: "What is the bank doing?"

And first, we must note that it is no threat to the Fed. Zero.

Thus, it is not a move in taking the Fed down, it is an addition, at the local level,
to statist financial power in North Dakota.

And there is this historical note:
A.C. Townley, a politician who was fired from the Socialist Party, organized the Non-Partisan League with the intent of creating a farm organization that protected the social and economic position of the farmer.
The Non-Partisan League gained control of the Governor’s office and the legislature in 1918. Their platform included state ownership and control of marketing and credit agencies. In 1919, the state legislature established Bank of North Dakota (BND) and the North Dakota Mill and Elevator Association. BND opened July 28, 1919, with $2 million of capital.
It is statist through and through(my bold)
The Bank’s profits are utilized in three ways: appropriation through the North Dakota Legislature to fund the General Fund, mission-driven loan programs and BND’s capital.

There is nothing libertarian about this bank. This bank is not going to go libertarian. It is a statist layer, at the state level, that distorts the capital sector to favor the government, on top of the Federal Reserve distortion layer.

As Jordan Peterson would put it, to think this bank is somehow a positive for less statist banking is very low-resolution thinking.



  1. The commenter above seems to think that local village governmental control is better that DC governmental control because the village board members are much more likely to be responsive to their residents because the board members are residents themselves.

    This is faulty logic because government bureaucrats, wether they are local or not, respond to incentives. And they have an incentive to stay in power, stay in control.

    Moreover, what the commenter posits is not true in practice. The church where I minister has been fighting with the city (i. e. village board members) for almost 8 months trying to get plans approved for a new building. However, the residents who populate the planning, zoning, and permitting departments of the city government have erected one roadblock after another, thus preventing the Church from moving forward with construction. Why would they do this? They do it to maintain their existence and the illusion of protecting the city by controlling the type, size, look, etc. of new and existing construction. In short, the incentive to stay in existence and control leads these “wise” government overlords to act in ways that are counterproductive.

    1. I wasn't suggesting that the local bureaucrats would be as responsive as we would like (an absolute standard), only that they're likely to be more responsive than far-away bureaucrats (a relative standard). In my experience, I see lots of agitation at the local level by angry residents having an impact, much more so than they could possibly have had at the federal level. The local, prickly bureaucrats have to commingle with the residents at the local diner, baseball game, church, parade, etc., so it's much more personal and "in your face."

  2. I agree NAPster. It seems to me true on its face that decentralization is preferable to our national government. At worst, if it necessarily came to blows, a local government is easier to defeat than Leviathan. Perhaps our current examples of local tyranny can only exist because the local tyrants are backed up by Leviathan. If Chicago PD didn't have the eventually backing of the US Army, perhaps they'd think twice about their corrupt ways.

    Thinking out loud.

  3. The Napster & Sherlock,
    In theory, you are both correct. However, the difference between local and federal tyrants is not as meaningful as you suggest, in my experience. The city in which I’ve lived for the past 21 years has grown from about 45,000 to 60,000 and gotten worse over time in terms of taxes, ease of doing/forming business, etc. Maybe not as bad as the general government, but it’s running pretty close. The locals complain and vote, but things continue to worsen. I suspect this is the case across the country with few exceptions.

    1. Derek, obviously it's hard to quantify which level is worse, and this is probably a subjective assessment -- as they say, beauty is in the eyes of the beerholder (personally, I believe that the death, caging, and robbery is much worse at the federal-government level than at any local level) -- but, even if they were both as bad as the other, the benefit to increased subsidiarity is that it's much easier to move to the next village than it is to move to the next country.