KOL023 | “Libertarian Legal Theory: Property, Conflict, and Society: Lecture 6: Applications Continued; Common Libertarian Mistakes (Fraud Etc.)” (Mises Academy, 2011)

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Kinsella on Liberty Podcast: Episode 023.

This is lecture 6 (of 6) of my 2011 Mises Academy course “Libertarian Legal Theory: Property, Conflict, and Society.”

Video, Transcript and Slides below.

This lecture’s topic is “Applications Continued; Common Libertarian Mistakes (Fraud Etc.),” and discusses:

• Defense of corporations
• Common libertarian mistakes
  • Self-ownership
  • Positive obligations
  • Fraud

For slides for all six lectures, plus extensive hyperlinked suggested reading material, see this Libertarian Standard post. For a listing of the syllabus and topics covered in each lecture, see this Mises Academy Course Page (archived).

For more information, see my Mises Daily article “Introduction to Libertarian Legal Theory,” and Danny Sanchez’s post Study Libertarian Legal Theory Online with Stephan Kinsella.)

Video:

Slides:

The videos of all six lectures are also available on this playlist.

TRANSCRIPT

Libertarian Legal Theory: Property, Conflict, and Society, Lecture 6: Applications Continued; Common Libertarian Mistakes (Fraud Etc.)

Stephan Kinsella

Mises Academy, March 7, 2011

00:00:02

STEPHAN KINSELLA: The cuckoo clock just went off.  It’s zero past the hour.  Okay, let’s get started on class number six, 24 people online.  This is good.  Oh, let me hit record.  Hold on a second.  And even my whiteboard is on.  Okay, by popular request of some students, what I will try to do is defer any non-urgent or pertinent – immediately pertinent questions until the end of the class or until the Q&A session, the office hours later in the week on Wednesday depending on how long we go today.  Or if I do stop, I will try to read the questions so people listening on audio only like in their cars will understand the context.  So let’s get going.

00:01:00

Today is really about more applications, a lot of the applications of the ideas we’ve developed and talked about in the first five lectures, especially the first four lectures.  So I’m going to talk for maybe one fourth – one third the class about corporations, which is a fascinating topic that I think confuses people when they don’t think clearly about it or don’t really have a good understanding of the underlying law that they’re really criticizing or discussing.  Then we’re going to talk about just a lot of smaller issues that I’ve come across and collected over the years that libertarians quite often fumble or confuse or misstate, common libertarian misconceptions.

00:01:44

I have a lot of those in here that are in the slides.  I probably will not be able to finish all those.  They’re kind of randomly organized with the more important ones first or the more interesting ones first.  But first let’s talk about corporations.  Some administrative matters.  So later this week, I’ll post the final exam.  It might not be until Wednesday or Thursday, try to give you about a week to get it done from when we post it.  Danny will announce that at that time.  It will be weighted 60%/40%, so 60% for this and 40% for the mid-term.

00:02:16

I’ll let Danny answer that.  Danny’s understanding is that these are all understood to be open book.  Jim Bowman just asked if the test would be closed book.  That’s what I’m answering now.  What I will feel free to put questions up about would be everything I state in the lectures or the office hours all the reading material I have listed as suggested, not the optional reading material, and also the slides, which do have some embedded links to blog posts and things that would be fodder for questions.  So go through all the slides, all the lectures, and the suggested reading material.  That’s basically what’s going to be covered.

00:03:00

00:03:06

Okay, go on to slide three now.  So if you remember, last class we talked about intellectual property law, and I just won’t go over all that here just to save time.  You know what we talked about last time, but it was, I think, a good course.  We covered basically all of IP law plus some clean-up from the previous lecture last time.  Excuse me.  I’m recovering from a sinus infection, so I might be a little cough-y.

00:03:31

So as I mentioned, today we’ll talk about defensive corporations, and then I’m going to go through a bunch of common libertarian mistakes, some of which we’ve already talked about in the class.  I’ll just mention them.  I won’t go over the logic of them.  I’ll just briefly mention those like self-ownership, which we’ve talked about before, so I’ll go over those more quickly.  Give me just a second here, guys.

00:03:55

00:04:07

Okay, all right, let’s talk about corporations.  Now, some of you may have read some of the literature on this.  Let me just mention, in my view, probably the single best work on this is a book from the ‘70s by Robert Hessen, libertarian, I think quasi-objectivist who wrote a great book In Defense of the Corporation.”  And I summarize a lot of his reasoning in some of these blog posts that I have here on slide five.  Also, Murray Rothbard and even Roger Pilon, who is a libertarian theorist at Cato, they’ve both written good things about this and kind of common-sense insights on this whole issue.  I’m a lawyer, and I’ve dealt with this, and I’ve seen a lot of confusion over the years on this issue.

00:04:52

Basically, you’ll have libertarians who object to the corporation because they say it’s statist and it gives limited to liability when it shouldn’t.  Quite often, I find they misstate what limited liability is.  For example, they believe it has something to do with the liability of the managers or even the employees of the corporation.  And to the extent that they criticize it as giving limited liability to the shareholders, I think there’s a misunderstanding that’s crept into their reasoning, which I’ll get to as I unfold this.

00:05:23

So let’s just back up a second.  Let’s talk about the current legal theory that the state advances for corporations.  It’s something called the Entity Theory or the Legal Personality Theory.  So the idea is that you have Mises Institute, Inc. I-N-C, which means incorporated.  So this is an entity that has legal personality.  It can be viewed – it can sue on its behalf in court so the government can make contracts.  It has perpetual existence potentially, and it has something called limited liability.

00:06:02

So the current theory is that it’s an entity, a separate legal personality distinct from individuals that make it up or that it employs or that own it or own shares in it.  And so the theory is this.  So remember, it’s got perpetual duration, limited liability, and legal personality.  But one thing to keep in mind is limited liability is for shareholders.  It does not extend to officers, managers, directors.

00:06:33

For directors, there’s something called the business judgment rule, by the way, which insulates them from liability from making bad decisions for the company, as long as they’re in good faith, from being sued by the shareholders.  So let’s say the directors of a company make a mistake and the company goes down in value.  Well, the shareholders could sue the directors in what’s called a derivative action.  They could sue them for mismanaging the company’s assets, etc.  But usually they’re going to be off the hook under the business judgment rule.

00:07:03

And even if they are liable, then usually the D&O, or directors and officers, insurance that the company usually carries for them would cover them anyway.  So limited liability says that a corporation is liable.  Let’s say BP would have been liable for more than it was worth for that oil spill in the Gulf last year.

00:07:26

Let’s say it would have gone bankrupt and still owed certain tort claimants billions of dollars more.  Well, the idea is that you could sue the shareholders directly for liability, and they would have to each be jointly and severally liable for the billions of dollars.  So the richest ones would have to pay out everything.  They’d go bankrupt too.  Limited liability says they’re only liable to the extent of the value of their shares, which is to say their shares could fall to zero value, but they’re not personally liable.

00:07:55

Now, this is what a lot of libertarians and especially a lot of left libertarians object to.  Barry just asked a question:  That is always legislated differently in different jurisdictions of course.  It may be.  I’m going by the American conception.  I believe it’s roughly similar to other countries.  But this is a hotly contested issue based upon at least this standard rule, which is at least in place in America and Britain.

00:08:22

Now, the thing is corporate – or consumer activists like Ralph Nader, for example, they believe all three of these features are privileges granted by the state, and the state claims this too.  So that’s legal personality having an entity theory, perpetual duration, and limited liability are all privileges.  So what they say is, well, the state grants you this privilege, and thus it justifies the state regulating the company imposing all the SEC regulations on public corporations imposing regulations on corporate shareholder and stakeholder relations, double taxing them, which means to – if they’re an entity, then they have to file a personal income tax because they’re actually an entity or a person in the eyes of the law.

00:09:12

But of course, this results in double taxation of shareholders because shareholders, really, if they get the income from the corporation, then they have to pay their own tax on it.  So it’s basically double taxation.  So this – by the way, this is similar to, for example, the government’s theory of attorneys.  So what they say is you don’t have a right to practice law.  You have to get a license from the state.  And it’s just a privilege that we grant you, and in exchange for that privilege, we can impose pro bono duty on you.  The judge can force me to go represent for free at some indigent defendant in a murder case, even if I’m not a litigator.

00:09:52

And the theory is, well, you don’t have the right to practice law, and if you don’t do what the judge says, we’re going to revoke your license.  So this is the danger of the state classifying exercise of natural rights as a privilege.  Then the state feels they can claim that they can condition that privilege on limitations and call it a fee instead of a tax, etc.  Okay, so this is what – this is the current theory.

00:10:20

And this is famously expressed in 1819 by Chief Justice John Marshall of the US Supreme Court.  His comment that a corporation is an artificial being, invisible, intangible, and existing only in contemplation of law.  So this is still widely quoted.  So the point is the government is saying we don’t have to let you exist, and if we do, it’s only at our pleasure, and so we can condition it as much as we want.

00:10:45

Now, as Bob Hessen showed, every one of these three features can be created by contractual networks.  So he has what’s called the inherence theory of the corporation instead of the entity theory.  That is, individual humans have a natural right to make contracts, etc.  And they can basically – you don’t merely need to regard it as an entity.  That’s just a convenience for filing a lawsuit or something, but it really just means the current people that own the corporation.

00:11:15

You don’t need the state for perpetual duration.  You can have a contract crafted so that it specifies procedures for who the members are and how they can evolve over time and how you can have votes and things like that.  So really, the only thorny issue is limited liability.  Now, there are two types of liability the corporation can have.

00:11:38

Now, remember, when the corporation has enough assets to pay the liability, whether it’s tort or contract, then there’s no problem.  And you never go the shareholders.  The corporation just pays it out of its assets.  The only question arises when the corporation can’t pay, and then the question is who’s on the hook?  Is it the person who’s owed money, or can he pursue some individuals other than the legal corporation itself?  So you have to divide the idea of liabilities into – excuse me just a second.

00:12:06

00:12:11

You have to divide the corporation into two different types.  I’m sorry – you have to divide the liabilities into two different types: contractual liabilities and liabilities from damage to third parties who didn’t consent, basically some kind of torts.  So for contract, it’s still pretty easily handled, although some left libertarians seem to have trouble even with this.  But for contract, you can just imagine a corporation takes out a loan from a bank.

00:12:49

Well, it’s holding itself out as a corporation, which has a certain meaning, and the bank is aware that basically it can only pursue as sort of security the assets of the corporation but not of the individual shareholders.  So that’s a voluntary contractual undertaking.  You don’t really need the state to do that either.

00:13:06

In fact, quite often in small corporations, closely held corporations, the creditors will insist that the main owner, the guy who started it, he will have to sign something saying I promise to be personally liable, a guarantor for the loan because they know that that will give him an incentive to make sure the company pays it off.  So that’s quite common, so it’s all negotiated.  So again, no problem.  You don’t need the state to form a corporation in that respect.  So really, the only difficult issue is torts.  But then the question is this: The assumption behind a left libertarian and the leftist and consumer activist, Ralph Nader-type critique of the corporation and limited liability law for torts is that it changes the status quo.

00:13:55

In other words, they’re assuming that if you didn’t have this law, then shareholders would be liable for torts.  But why is this?  Remember, the basic libertarian perspective is that you are responsible for your acts of aggression or negligence, for your actions.  You’re not responsible for other people’s actions unless there’s some special reason that you are responsible for them.

00:14:21

So in this case, let’s take the case of a FedEx truck.  The driver is negligent.  He is an employee of FedEx.  The driver is negligent, hits someone, injures them.  Now, this person has a claim against the driver.  He is the human being who committed an act of negligence and who is potentially liable.  They will also usually sue the employer, which is the corporation, as being vicariously liable for his – for the employee’s liability.  This is based upon a type of vicarious liability called respondeat superior, which means you’re responsible for the acts of your servants.

00:15:04

Now, whether even that’s justified is questionable.  But even if you are, the point is why would the shareholder be liable?  So all I have is shares of stock in, say, FedEx.  I have, let’s say, one share of stock.  I’m sitting at home.  I’ve never had a thing to do with the company except I have one share of stock.  All that share of stock gives me to is basically two things.  Number one, I have the right to participate in votes for the board of directors on a periodic basis, whenever that vote comes up.

00:15:40

I don’t have to vote, but I can.  Number two, the event of a liquidation event, which means the company winds up, it distributes its assets, or it just winds up, goes bankrupt or just winds up and decides to fold shop, then I get a [indiscernible_00:15:55] share of the remaining assets.  That’s basically what it means.  It’s a claim on assets.  It’s like an ownership claim and a right to vote, which is like a procedural claim.

00:16:04

Now, the point is shareholders who are passive according to Hessen and Pilon and Rothbard, they’re not the cause of the torts that are committed by the employees.  Now, maybe the boss should be.  Maybe the board of directors should be because they’re the ones running the company.  Those who are actively managing play a role in the torts committed by the negligent employee but not the shareholders.

00:16:30

Let’s go on to slide eight.  Now actually, I’m going to read a little quote from Hessen here.  Well, let me just read the quote.  Despite the widely held belief that the status of the inactive investor is a perversion introduced by the giant corporations in the 20^th century, this status actually was introduced in the 12^th century by Italian merchants who created limited partnerships or commenda, to attract capital from investors that did not desire any role in the management or any responsibility for decision making.

00:17:06

You see, there’s a type of legal arrangement firm called a partnership.  Typically, it’s a general partnership.  All the partners can help manage the partnership, and they all put their money into it, and they all have a partial ownership.  And they’re usually all considered to be equally – not equally but jointly and severally liable for all the debts of the partnership.  But when the limited partnership is created, there’s two classes of partners created.  One is a general.  Those are actively managing the partnership, so they’re responsible for the actions of the people that they supervise.

00:17:41

Passive partners or inactive partners are not liable.  They basically just gave money to the company.  And then they have a right to receive part of the profits upon winding up or distribution, something like that.  So they – and their status is similar, or they’re similar to passive shareholders in a big – in a joint stock corporation.  This is why, according to Hessen, Rothbard, and Pilon, they wouldn’t be liable in the first place for torts committed by shareholders that they – torts committed by employees of the corporation in which they just happen to own a stock.

00:18:22

So let me give some arguments that some people have advances for why the shareholders should be liable.  Number one, they sort of make the argument that, well, you give money to the corporation, so you’re profiting from it, so you’re responsible.  You have to take the good with the bad.  You’re aiding and abetting this company.  Well, this is based upon sort of a misunderstanding of how corporate law and the modern business world works.

00:18:48

Number one, being a shareholder doesn’t mean you gave money to the corporation.  I might have bought the share from one of the original shareholders, and I gave him money, but I never gave money to the corporation.  Number two, it’s not only shareholders that give money or investors who give money to the company.  Lenders do it.  Customers do it.  I mean if I buy – if I give FedEx $20 to ship a package for me, I’m giving them money too.

00:19:16

Am I liable for the negligent actions of the driver as he leaves my house?  And also, it’s sort of un-Austrian to focus on money as being something unique in terms of giving value or aid and abet.  I mean there’s lots of ways you can support a company and help it.  Employees help it by being employees, vendors and suppliers, landlords, and so on.  So they have such a loose standard of causality or responsibility, vicarious liability we could say.  You would not implicate only shareholders but also lenders and employees and everyone is liable for everything every employee does, which is ridiculous.

00:19:54

Another one is this sort of legalistic argument.  Well, the shareholders are the owners, and therefore, if you own, you’re responsible for it.  Well, you remember we talked about strict liability in the last lecture, and you have to be careful about distinguishing what ownership is from what responsibility is.  Ownership is the right to control.  It doesn’t necessarily or automatically imply responsibility to control.

00:20:18

I mean, look.  Let’s say I have a gun.  I have the right to use that gun, but it could be stolen from me.  Some thief could overpower my right to control it and take it from me.  Now, he uses the gun to hurt someone.  Is it my fault?  After all, I still own the gun.  I mean do I have to go run down to the clerk and abandon the ownership of the gun before a crime is committed with it so I’m not liable?  It’s ridiculous.  So the connection between me and the gun is my right to get it back, not my obligation to keep someone else from using it as a means to a crime.

00:20:49

00:20:53

Also, as a practical matter, the state might call the shareholder the owner, but as a practical matter, ownership is distributed and divided by contractual relationships.  So I mean I might be a part owner of Google as a shareholder, but I can’t go use their corporate jet or their HQ to have my kid’s birthday party.  Who controls that?  On a day-to-day basis, the actual managers and employees, and that’s done by contract.  They’re appointed by the board and the officers, and there’s the bylaws.  There’s the shareholders agreement sometimes.  There’s articles of incorporation.

00:21:29

Kevin is asking a question about ownership of a dog that bites a person.  I’m just going to defer that.  Ask that again at the end if we have time or on the office hours later.  So I don’t want to distract us too much for the 70 or so people that aren’t here live.

00:21:50

So basically, you have to say that those who actively participate in management and control, those are the ones that it makes sense to hold most liable for the actions of employees.  But even then, there’s a limitation.  I mean let’s say I send my driver off to go do something, and he’s negligent.  Am I responsible for his negligence?  I mean it’s sort of hard to argue exactly why I should be under respondeat superior or under some kind of causal theory.

00:22:18

But at least I have some role in telling him to do this.  But let’s say he runs home, off on a frolic, is what the law calls it, F-R-O-L-I-C, a frolic.  Or let’s say he decides to rob a bank using the FedEx truck.  Is that my responsibility?  I don’t think so.  So it’s got to at least be within the scope of the duties and be somewhat foreseeable that he might accidentally cause some damage, which we’re responsible for.  But beyond that, you have to attribute responsibility to the individual actor who does it.

00:22:51

Another one is – another argument given is that – another argument is that the shareholders can vote, and then they control or they influence the corporation’s actions.  But, as I mentioned, first of all, not all shareholders even have the right to vote.  There’s non-voting stock.  Number two, not all shareholders vote.  In fact, most ignore these ballots they get in the mail.  And number three, even if you vote, you might vote for a director who didn’t win.  You don’t vote for the winning director.  And number four, you’re not voting for the director to appoint negligent managers or negligent employees, and he’s not running on that platform usually.  And what if you vote against the director?  And finally, voting in that sense only has a very weak influence over the – who is actually hired by the company.

00:23:40

You basically are only appointing directors.  The directors themselves don’t even usually actively manage.  They basically appoint the officers who appoint the managers who hire employees, etc.  So you have to actually look at actual causality and responsibility.  And finally, as for influence, a corporation that has a big loan, let’s say, with a bank, has tons of ratios and restrictive covenants, things like this that they’ve agreed to.

00:24:08

They might even have to agree to let the bank supervise or veto certain actions.  So there are lots of outside companies like – I mean let’s say Apple has a huge influence over its vendors.  They can tell them what to do and not to pay these poor Taiwanese workers minimum wage so they’re committing suicide.  I mean you have lots of important customers, important vendors even, and suppliers, employees unions, stakeholders in the corporation, creditors, and lenders who have tons of influence over the actions of the company, not to mention the customers themselves who have influence over the corporation.

00:24:45

So if you’re talking just pure influence, again, it’s such an open-ended theory of causation and legal responsibility that it doesn’t ensnare only the shareholders who have the right to vote.  It implicates a lot more than them.  The point is, it shows you that these people who just sort of – they spout off these ad hoc, sort of regurgitated lines they’ve heard about why shareholders should be liable, they don’t have a coherent theory of causation that they’re applying.  And they’re not thinking carefully about it.

00:25:17

00:25:24

Now, okay, I think let’s move on now.  We are done with corporations.  I could – I would be willing to stop here and answer a couple of questions, but to keep on track, let’s try to stay more than – spend more than two or three or four minutes on this before we go on to some common libertarian mistakes.  So is there anything I just talked about that was not clear?  Someone here in the comments, Steve Allen says, this was – all these theories would imply that we’re all liable for war crimes our governments commit even though we didn’t support those.  Yeah, I think that’s true.  And in fact, that’s one of the arguments I’ve heard for the – somewhat justifying the Arab attacks on the Twin Towers on 9/11.

00:26:09

And yes, I do think it was what it seems to be, not a truther-type thing.  But some people say, well, the wars against Muslims in Iraq, etc. were financed by taxes of Americans and corporate capitalism centered in New York.  So the American people are liable for that.  Well, this is how you can extend these theories to harm innocent – relatively innocent people.

00:26:38

00:26:45

Matt says, even as an anarcho-capitalist, I believe to the extent I don’t fight the system complicit.  I’m complicit in its acts, hence, my moral responsibility to fight the system.  I mean that’s sort of a personal ethical view.  I won’t really comment on that.  I don’t pretend to know any better than you about that.   I mean we all have our motivations for being libertarian.  I’m skeptical of that myself because I think there’s no duty to be a martyr.  I think we have a duty to refrain from actively harming other’s rights.  But anyway, I feel the same compulsion, but I’m not sure it’s a duty in that sense.

00:27:22

Steve says, taxation is – I mean Steve says, taxation is involuntary.  Part ownership of companies is.  Well, okay, so – but some people would say taxation is voluntary.  You can just – you can refuse to have a job that makes that kind of money.  You can move out of the country, or you could pay the penalty.  You still can’t participate in helping to pay for missiles that are going to be dropped on brown people in Iraq, which I think is not a realistic argument, but some people make it.

00:27:52

But owning a share in the corporation is not causing harm.  You have to argue that owning a share causes harm.  The employee causes an act of negligence.  Owning a share does not enable the company to do it any more than these other actors do, in my view, like lenders and vendors and employees.  And Jock has some good comments here about how the market allocates liability.  Of course it does, and there’s a wide variety of these entities, and there would be still, absent the state involvement.

00:28:33

Now, of course, I think the state should get out of the business of chartering corporations.  They should just leave it alone.  Let it be a totally private contractual matter, whether they would still be called corporations or not I don’t know, probably not because corporation means body, which sort of implies it’s got a separate legal personality.  And in fact, as I mentioned, even today the state, if it grants limited liability to shareholders, quite often the creditors will insist that the main shareholder obligate himself personally to back the company’s loans.  So people negotiate these things.  It’s contractual.

00:29:06

Okay, it’s 30 past the hour, pretty good timing.  Why don’t we go on to some common libertarian misconceptions and mistakes?  Everyone ready?  Anyone not ready?  Speak now or forever hold your peace.  Okay, good.  What I’ll do is I’ll take a break in about 25-30 minutes, right at the hour, and for about five minutes, and we’ll continue on.

00:29:37

Okay, so the first thing is – and I encounter this all the time.  If you say something like the right to self-ownership, some libertarians will – they’ll start screaming that, oh no, it’s mystical.  You’re assuming the religious view of libertarianism or philosophy.  Now, I’m not actually religious myself.  It’s not my view at all.  I just think it’s a convenient, conceptual way to describe what our view is about who owns your body.  Is it you, or is it someone else?  It’s very simple.  It’s not metaphysical.  You don’t need to take a stand on religion or the soul or even mind-body dualism or anything.

00:30:14

You just have to conceptually be able to distinguish what your body is.  That’s it, and the fact that you’re a person, and there’s some relationship between you.  Whether you’re the same thing or not, I don’t care.  I mean this is libertarianism, not dorm room bull session in grad school at 6 o’clock at night eating pizza and watching David Letterman and trying to get sophisticated with philosophy.  It doesn’t matter to me for this purpose whether I am my body or whether I am a soul that has a body or whether I’m just an epiphenomena of my body or whether there’s a – it doesn’t matter.

00:30:58

I mean the point is you can identify me as an individual with a name and an identity, and I’m definitely closely connected to my body somehow.  I’m trying to mute this before I cough.  Excuse me.  And this is not some new, modern, new-fangled view.  I mean it’s just basically another way of saying we’re against rape and aggression and murder, and we’re against slavery.  We’re against other people owning your body.  We’re for you owning your body.  It doesn’t imply anything mystical or incoherent at all in my view, and I think criticism of this is ridiculous.

00:31:35

So just some famous quotes on this: 1646, Richard Overton said: To every individuals in nature is given an individual property by nature, not to be invaded or usurped by any; for everyone, as he is himself, so he hath a self-propriety, else he not be himself.  In other words, you have to own yourself.  You have to have a propriety or a sense of control or ownership over your own self.  Now, what does this mean in a metaphysical sense?  I don’t know, but we all know what it means.

00:32:08

We’re talking about stopping people from sticking holes in your body with knives without your permission.  It’s not that deep, but it’s profound, and it’s true.  John Locke, 1690: Though the Earth and all the inferior Creatures be common to all Men, yet every Man has a property in his own Person.  This, no Body has any Right to but himself.  So this is just kind of an expression of a common-sense, intuitive sense of justice that most normal people have.

00:32:38

Okay, let’s go on to the next one.  I think I mentioned this one earlier.  You’ll see, libertarians will sometimes say libertarianism is about negative rights only.  There are no positive rights, and there are no positive obligations.  Well, of course, there can be positive obligations.  The point is – Jock has a comment here, by the way, about self-ownership, which I agree with.

00:33:05

As Hoppe says, he says there are only two possibilities:  You own yourself, or someone else does.  And if someone else does, we couldn’t function.  Rothbard has a similar point.  Also, the third possibility would be like collective ownership.  If everyone owns everybody else, then we would just – no one could move because no one could get permission to do anything.  It’s just a self-contradictory idea, which is sort of the criticism I had of that book, Unincorporated Man.  I just didn’t quite understand how that overcame that problem.

00:33:32

Cheryl, let’s save that question to the end, okay?  Or to the office hours.  Okay, back on positive obligations.  The point is this.  Libertarianism is not against positive obligations.  It’s just against positive obligations that are not voluntarily undertaken.  So the common view of contract is that you can obligate yourself to do something.  Now, the title-transfer theory that I’ve adumbrated earlier, the Rothbard-Evers idea, is that contracts are not really obligations.

00:34:02

But you could imagine a sort of natural obligation or a moral obligation associated with a promise connected with a contract.  In any case, the contract issue is a little dodgy because they may or may not give rise to obligations, and the classical theory does, and our theory would not.  But you can also perform certain actions that give rise to obligations, like a certain tort or a crime.

00:34:28

Like let’s say you push someone in a lake negligently or evilly, intentionally, and now they’re drowning in the lake.  You have thereby incurred an obligation to mitigate the damage you’ve caused, and you have an obligation to rescue.  A stranger walking by has no legal obligation to rescue, no positive obligation to rescue, but you do because you have caused them to be in this position of peril.

00:34:51

Or arguably, according to some libertarians, some agree on this.  I actually lean towards this view.  Some libertarians lean away from this view.  But the argument is that if you have a child, at least voluntarily, it’s similar to pushing someone in a lake.  You’re giving rise to a dependent fetus or baby – not fetus, a baby, which is by the nature of the human – mammalian kind is more dependent and can’t function on its own.  So you have an obligation to care for the child, at least until it’s somewhat mature.

00:35:25

But whether you have that obligation or not is arguable, but if you do have it, it’s because of your action, so there can be positive obligations.  Someone asks whether it runs the other way around.  Trey asks whether the parental obligation goes the other way from parent to kid.  I think you mean from kid to parent.  Does the kid owe anything to the parents, like to take care of parents in old age?

00:35:47

I would argue no.  The child didn’t ask to be born.  However, if given the choice, like if you said we’re going to pass a law tomorrow, like I think they’re threatening to do in China where every child has an obligation to take care of their parents in their old age, I think it would be an improvement in the sense that it would put the responsibility on the family level instead of on the general welfare dole.  So it wouldn’t be ideal, but in a way, it would be an improvement, but that’s just a second-best issue.

00:36:21

All right, let’s go to slide 12.  We talked about this one already.  Libertarians quite often just mangle the word fraud.  They will use it left and right without defining what they mean.  Basically, they’ll use it in an equivocating way, not usually intentionally, but they’ll use it in a general broad way.  Fraud means just being dishonest.  That’s fraudulent.  But if you’re sloppy with that, then you end up calling some things illegal or aggression, which are really not.  They’re just dishonest or immoral.  So fraud is not merely dishonesty.  You have to root the idea of fraud in the title-transfer theory of contract.

00:37:04

Fraud, as I mentioned, the best way to think about fraud is this old doctrine of theft by trick.  You can look it up, theft by trick.  Basically, it’s a way of obtaining someone else’s property without their effective consent by deceiving them about the terms of the deal you’re doing with them, something like that.  So unless you’re actually receiving property without the effective consent of the owner, then it’s not really fraud in the sense that it’s a species of aggression under libertarianism.

00:37:37

All right, next issue.  I’m going to zip through these because they’re kind of fun.  If there’s anything you think I got badly wrong or need to clear up, just save it and ask me at the end or in the office hours because I’ve got a lot of these.  I’d like to get through as many as possible.  And, by the way, if I don’t cover any tonight, feel free to flip through the ones I miss, and if there’s any that you don’t – that my approach wouldn’t be obvious from the slides, call them out in the office hours or email them to the course page, and I’ll deal with them either in writing or in the office hours on Wednesday.

00:38:11

Okay, so the next one is forgetting the important point that all rights are property rights, which is Rothbard’s point.  And it has to be this way because every right is basically an allocation of control over some resource that people could otherwise fight about or conflict over or dispute.  So what we do is we use mental shorthand to come up with all these sort of consequences of the basic right to property, which are important, like we’ll say the right to free speech or the right to freedom of the press, the right to expression or whatever.  And that’s fine, but you have to keep in your mind that this is really just a way of describing one of the benefits of liberty, which means property rights.

00:39:01

Or it’s one of the consequences or a derivative of that, and so it can’t contradict it, and it’s not independent of it, and it’s not in addition to it, which is why, when some libertarians say, well, you have a right to free speech so you could never be in trouble for inciting a mob, as Walter Block’s view that it’s just mere incitement, well, if you have sort of a more unified view of causation, which we talked about in lecture three or four I think – two maybe.  I can’t remember now.  Then you’ll see that words can of course play a causal role in commission of aggression sometimes.

00:39:41

And this is what rights are about.  It’s about not invading someone’s property with whatever means is causally efficacious including speaking words like ready, aim, fire, or drop that bomb.  So you have to keep in mind that all these other rights are just derivative, and they’re just sort of shorthand descriptions of it.  You can’t lose sight of the real rights, which are property rights.  As Rothbard wrote: The concept of rights only makes sense as property rights.  For not only are there no human rights, which are not also property rights, but the former rights lose their absoluteness and clarity and become fuzzy and vulnerable when property rights are not used as the standard.  I think that’s absolutely brilliant and genius and absolutely correct.

00:40:29

Here’s – I mentioned already lynch him.  Lynch that guy.  He did it.  Or lying on the witness stand, how about that?   He raped my sister.  I saw him.  And you’re lying, and you get the guy put in jail.  Now, maybe the jury is guilty too.  Maybe the judge is guilty.  Maybe the jailer is guilty.  But you are too because you played a causal role in getting this guy wrongly convicted.  So these are words.

00:40:49

Here’s another interesting thing.  People always say, well – threats is another good example.  Steve says, what about threats?  Threats is another good example.  A threat is a communication to someone that aggression is imminent.  In other words, you’re letting them know you should be afraid because your life is in jeopardy or something like that, and so the person is justified in stopping that defensively.  That’s yet another good example where free speech is not absolute, not that it’s not absolute in the Oliver Wendell Holmes or the statist sense.  It’s just that it’s not an independent right.  It’s all derivative of property rights, and the question is, are you violating property rights?  And if you do it with words as a means, then you’re still violating property rights.

00:41:32

Here’s another interesting example.  This is sort of mine, and I don’t know if most libertarians would agree with me.  But most libertarians, if you pushed them, as long as you just insult someone, let’s say – I’m not talking about causing aggression like lynch him or I’m going to kill you or drop the bomb on Hiroshima.  I mean let’s say you’re in a bar and you walk up to some guy and you look at him and you say your mama is ugly.

00:42:01

Now, most libertarians, if you pushed them, would say, well, technically that’s not coercion, they’ll call it, or aggression.  It’s not a threat of force.  It’s not the use of force.  It might be insulting, but the guy who’s insulted, if he punches the other guy, he’s the actual aggressor.  I think technically that’s true, but I think there’s two considerations here libertarians should have.  Number one, even if we go with that analysis, you might have a right to insult someone and not get your nose punched.

00:42:32

But you don’t have the right to have other people pay for your defending your rights.  In other words, that’s up to you to do that.  And if you’re going to go around as a cocky guy engaging in reckless behavior that’s going to just cause trouble like this, other people are going to just not be involved in helping you remedy your rights.  If the guy beat you to a pulp, they might ignore it because you basically made yourself a nuisance to the community.

00:42:55

Everyone is trying to live their lives, and they don’t want to have to go out of their way to spend resources to help you out and to bail you out of jail or bail the other guy out of jail or be a witness in the trial.  And some people are just troublemakers, and they’re going to be kind of quasi-ostracized, and they might get what they’re expecting.  But I think a better way to look at it is that, in that kind of case, it’s actually not aggression when the guy gets punched in the nose because he’s basically inviting a fight.  It’s sort of like stepping into the boxing ring with a boxer or going into the football field with a bunch of football players.  American football I’m talking about, rugby.

00:43:35

00:43:41

So Jim says it’s like slapping someone with a glove and provoking you to a duel.  I think it is like that because that’s not really an aggression.  That’s sort of a very minor action in society, but you’re basically challenging him to a duel, and if they do the duel, that’s voluntary.  Interestingly, there’s a book by a soft libertarian named Patrick Burke called No Harm published I think in the ‘80s.  I reviewed it for Reason Papers years ago at my friend, Tibor Machan’s request, who was a friend of Patrick Burke’s, B-U-R-K-E.  And he’s got a pretty good argument.  He goes with this no-harm principle.  He says libertarianism is about not harming people.

00:44:16

I think the harm principle is too fuzzy and vague to really be rigorous.  I also think there’s a similar problem with Jan Lester’s book.  I think it’s called [no audio_00:44:26]. I was going to say libertarianism is not about not harming people.  It’s about not committing aggression.  It’s perfectly okay to harm someone if you do it in a legitimate way, like if you compete someone, if you steal their girlfriend, make better grades than them in the class, you become the valedictorian instead of them.  You can harm people in all sorts of ways.

00:44:44

Anyway, Burke also argues specifically – you just reminded me of this with the duel case.  He says that if you challenge someone to a duel, you are harming them because you’re kind of making them too embarrassed to back down, so it’s not really voluntary on their part.  Now, that’s just not libertarian reasoning.  I’m sorry.  And I criticize that explicitly in my review.  If anyone is interested, look up – just go to stephankinsella.com/publications and look up my review of No Harm.

00:45:12

Anyway, a couple of deviations that he has to – that come from sloppy use of principles like this no-harm idea, just – it won’t take you too far, and it leads you to error because these terms are too general and vague and fuzzy, wishy washy.  I understand, Julian, what you mean about Burke’s argument being rubbish.  He’s a good guy.  The book is good overall.

00:45:35

All right, I’m going to go to slide 13 now.  Here’s another one.  We talked about this a little earlier.  For fun, I would urge you guys to click on these links.  They’re pretty short links, two or three links here about these income tax protestors.  I call them income tax nuts.  Now, I’m as opposed to the income tax as anyone, but I don’t fool myself into thinking that it’s actually not the law.  This is wishful thinking, you know.  Along those lines, and we talked about this a little bit already about legal positivism, now, a lot of libertarians say they’re opposed to legal positivism.

00:46:16

But legal positivism is a confused doctrine, and there are sort of two parts of it that you can identify, one of which I think is not un-libertarian and one of which is.  The part that is not un-libertarian is sort of the H.L.A. Hart idea.  Hart is H-A-R-T.  I agree, poor Irwin Schiff.  He doesn’t deserve it, but he’s in jail because it’s illegal someone said.  We’re talking about the income tax.

00:46:38

Anyway, the idea that you can identify something that is a law without condoning it, so the idea that you can’t even call something a law unless it’s a justified law I think is just – is crankishness.  It’s ridiculous.  We need to – we do live in a somewhat unjust society.  There is a state that enforces certain rules with the use of force, and there is a practical consequence to not abiding by these rules.  Now, you might not want to do it.  You might choose not to, but by and large, you can identify as a legal scholar and as a citizen, enforceable norms in society, and these can be called laws.  That doesn’t mean that they’re legitimate.  It also doesn’t mean that any decree of a dictator is a law, as I think Hart points out also.

00:47:33

If Hitler just starts totally becoming a maniacal dictator and not having any semblance of the rule of law at all and just arbitrarily executing one guy after the other, you can’t even really call that a law at all just because it doesn’t follow the description of law.  But there are lots of things that are laws but that are not justified.  I believe the problem is most people don’t have a coherent theory of justice like we libertarians do.

00:47:59

So they are afraid to de-link their sort of intuitive, common-sense, religious ideas about justice and rights and the law because they’re afraid that if they don’t say law has to be just, then they lose all their morals.  I don’t think we have that problem.  I have no problem saying that is illegal but it’s wrong.  It is illegal for me to sell cocaine.  It is illegal for me to evade income tax.  But those laws are immoral.  They’re immoral by a higher-law standard, which I have.  I don’t need to consult the legislature to see what the law should be because I’m not a positivist in the bad sense.  So positivism in the bad sense is the idea that law can only come from an authorized source.

00:48:50

Now, I actually personally think that this is a flaw also of even some natural law thinking because, admitted, they will criticize a given state law or legislated law by comparing it to what they call higher law or like God’s law, like the abortion-type people, etc.  The problem is even they will sometimes say, well, the source of law is what God says.  It’s not what the legislature says.  But the common similarity from my point of view is both the natural-law type and the statist, they both see some entity that can decree the law and can decide what the law is, whatever they want.  So by their conception, God could make murder right tomorrow.  God could make up, down and evil, good.

00:49:40

Now, it’s not a religious thing.  I don’t want to get into a religious debate obviously, but I think that is contrary to the nature of libertarian justice.  We believe certain things are right and wrong.  And the religious libertarians think that thank God we have a good god.  But when they say a good god, they’re thinking there’s a standard of goodness outside of God himself that he happens to conform to, lucky for us.  But it’s not something he could change if he wanted to.  Now, that’s a religious debate, but that’s my perspective on that.  So I think there are hints of positivism in the bad sense even among some natural law and theist types.

00:50:21

So yes, I think you can distinguish just law from unjust law, and we’re in favor of just law.  We’re in favor of the positive law conforming as closely to possible to libertarian law is what I would say, which is justice.  All right, you can see this all the time, these income tax protestors.  They’ll say, show me the law.  Now, what they’re saying is they want you to point to something written on – they’re so used to this American idea of law being legislated and written down like a written constitution like we have, like Britain has an unwritten constitution.

00:50:49

That’s inconceivable to this protestant mentality.  If you click on these links by Doherty on this page here, on page 13, you’ll see what I’m talking about.  He explains why it’s a protestant mentality to want to look at the text and show me the law, and they sort of conflate what’s written down on a piece of paper with what the state actually does.  It’s like they think they can find some magic incantation or formula.  If they find the right spell, they can unlock the keys to the state, and they totally don’t see the nature of the state.  The state doesn’t care about these things.  The state is evil.  It just wants to get away with what it can, and it just uses these things as a pretext.  It’s not really going to unlock the jails if you can just find the right constitutional argument.

00:51:33

00:51:42

I’m going to skip this Rothbard quote on page 14.  It’s sort of redundant what we talked about already.  Here’s another common misconception or mistake, the idea that we can have limited government.  Now, this is the minarchist idea.  Now, I’m an anarchist, and most modern Austro-libertarians are anti-state.  But the problem for me is not that I wouldn’t prefer a limited state or a minimal state or a minarchy to what we have now.  Of course it would be infinitely preferable.  But the question is why do minarchists even think limited government is possible?  I mean public-choice economics, theory, history, and experience all point against it.  I mean every government on the face of the Earth is wildly un-libertarian.  Every government you can ever point to is wildly un-libertarian.

00:52:37

Now, sometimes they say, well, early America came close.  Well, that’s nonsense.  It didn’t come close.  Come on.  We had slavery.  We had taxation.  We had wars from the beginning.  It might have been better, but it wasn’t close, and it started metastasizing right away.  And closely allied with this sort of myth among some libertarians that limited government is even possible is this sort of common assumption that the move to democracy like in the early 1900s worldwide was progress.

00:53:09

Even Rothbard and Mises sort of believed that as Hoppe shows.  It wasn’t unalloyed progress.  It might have been progress in some ways, but it wasn’t necessarily better.  And another myth is that Hans-Hermann Hoppe is a monarchist.  Of course he’s not.  All he does is point out that monarchy is systematically less bad than democracy in many respects and maybe not even every respect.  But he explicitly says he’s not a monarchist.  He’s an anarchist like all anarcho-libertarians are.

00:53:44

Here’s another one: the idea that we can have something called restitution that can be objectively determined without at least a theoretical right to punish.  This is why I believe the right to punish is primary, and even if society would tend to almost never use it because of the unproductiveness of it and the extreme horrendous cost of a possible mistake, the idea of punishment being primary, the right to retaliate proportionately to a harm-none view can at least help tell the jury how to conceive of the magnitude of what the victim could do and then translate it into some kind of money.  It’s not perfect, but it’s better than having no standard, which is what restitution is absent that.

00:54:32

The reason I say that is restitution makes sort of intuitive sense for simple crimes like theft of a purse or a car.  You just give it back, or maybe twice that back, the two-teeth-for-a-teeth example of Walter Block and Rothbard.  If you take my car or you destroy my car, then you have to give me a car back of equal value, something like that.  But for other crimes like rape or murder, kidnapping, assault and battery, I mean restitution, the original idea, is restoring someone to the state they would have been in had the crime not occurred.

00:55:07

So if you take something from someone and you give it back, you’re sort of putting them back to where they were before, fine.  But if you – if a woman is – if a person is tortured and imprisoned for years, how could you – what does it even mean to restore?  They can never be restored.  Crimes cannot be undone.  This is why they have the right, I think, the fundamental right, to retaliate proportionately in kind.  Now, if society doesn’t permit that because it’s too expensive, at least that right can be used to mentally determine an appropriate monetary damages award or some kind of restitution.

00:55:44

Okay, I think I might have mentioned this in the anarchy talk earlier.  So there’s this idea among libertarians that you have these networks of PDAs, private defense associations, in anarchy.  There may be another acronym among some people.  Some of them – I think Bob Murphy or some other people – more modern anarchists use something other than PDA.  But I’m going by the old idea of the Tannehills, which is a great book, by the way, Morris and Linda Tannehill’s The Market for Liberty, fantastic book, one of the two or three that converted me to libertarianism.

00:56:25

Anyway, some libertarians say, well, you would have this society with multiple PDAs, and most people would be a member of at least one of them, and you would agree to a jurisdiction of each other.  They have interlocking treaties and agreements, so anyone who’s convicted of – accused of a crime would be hauled into court, and if they’re found guilty, they’ve already agreed to the jurisdiction of that court or its sister court or PDA, etc.  So you could hold them liable and do whatever.  But they’ll say, well, what about outlaws?  We say, well, you can’t get them because they haven’t agreed to anything.

00:56:57

I think that’s bunk.  I think that when you commit a crime – remember it’s like that pushing-into-the-lake-example.  When you commit a crime, it’s an action.  And that action itself is consent that’s irrevocable.  You can’t take it back.  It’s consent to basically response by the victim or his agent.  So that is consent to the victim’s justice system if you’re not a member of the court system.  Now, that doesn’t mean that we actually would use force against them or even against members.

00:57:28

Still, ostracism might be the preferred approach for people who refuse to cooperate, and I still tend to think some kind of restitution and ostracism system is probably the way a private justice system would look like predominately, and it would probably work fine.  But that doesn’t mean that theoretically it’s wrong to use force against these outlaws anymore than it’s wrong to use force against some stranger who is attacking you in self-defense.  I mean the guy attacking you has never signed an agreement that it’s okay for you to defend yourself against him.  He’s consenting to being hit by you by attacking you by his actions.  Okay, it is almost at the hour here, and I need to grab a glass of water, so why don’t we take a five-minute break?  And I’ll be back at about three – or let’s to four minutes past the hour.

00:58:22

As for incorporating, I think that – I’m not a tax expert, but I think even if you’re incorporated in Delaware, if your headquarters is somewhere else, you’re going to have to pay tax in the state where your headquarters are.  So it doesn’t insulate you from tax I don’t believe.  But Delaware is the best one to incorporate in.  They just have the most well-developed body of law.

00:58:51

Okay, let’s resume the questions now.  Here’s what I propose we do.  I’ve got 15 more pages.  I don’t think I’m going to be able to finish, which is fine.  I didn’t plan to.  I have more here than we need to.  I think I’ll talk for 15 – maybe 10, 12 more minutes.  Then I’ll stop and answer questions for the remainder of the time, and if we run out of questions, I’ll – if I have time left, I’ll do a couple more, but I think probably that will be the best division of time.

00:59:17

00:59:23

Okay, now, this is one that we already talked about in the IP lecture.  It’s sort of this common idea that creation and production or sources of property, so you’ll hear people say that you can come to own things by original appropriation, which is homesteading, or by contractual exchange or by production.  Now, I think what they’re doing is they’re conflating sources of wealth with sources of ownership.

00:59:55

It is true that using your labor, your creativity, innovation, and producing are sources of wealth, but what that involves is rearranging already owned property.  I mean you have to have something physical to work with, so you have to own it, and you have to transform it into some new product or some new configuration that’s more useful.  So remember we talked about this already.  So it’s okay to acknowledge, and you should acknowledge, the vital role of the mind and ideas and innovation and work and labor and production.

01:00:32

But they produce wealth, which means transforming already owned property.  They don’t produce property rights.  You have to already own the thing you transform, and this will help you avoid this whole mistake of intellectual property and reputation rights, which arose from this misidentification way back starting in Locke I believe.  And a related confusion is the idea that we own our labor.  This is just from overly metaphorical fuzzy use of language.

01:01:00

I mean labor is just a type of action.  Would it make sense to say you own your actions?  I mean what does it even mean?  This goes back to the Rothbardian idea that you can’t double count like right to free speech and the right to property.  The right to free speech is just a consequence of property rights.  It’s not an independent separate additional right.  Same thing with the right to labor.  If you own your body, you have the right to control what you do with it, which is your actions or your labor.  So you have the right to own your labor in the sense that you control your labor, but that’s because you control your body.  It’s not a separate thing.

01:01:34

And another related confusion is this idea that we have a property right in the value of our property.  But that’s not true.  We only have the right in the physical integrity of property.  If you don’t keep this clear, you’re going to have the right – you’re going to have the idea of reputation rights.  And imagine you have a neighbor with a nice rose garden which you enjoy looking at.  He’s got such a nice rose garden that it makes your house more valuable.  In other words, you could sell it for a higher price if you wanted to.

01:02:02

Well, one day he chops it down.  Well, he’s diminished the value of your property.  Well, you didn’t own that value.  The value is just what other people think about your property.  You don’t have the right to that, and you don’t have the right to the source of value, which is maybe your neighbor’s use of their own property.  So you’ve got to keep straight that property – someone sets up shop across from you.  They harm you.  They might lower the value of your business.  You have competition.  Well, that’s life.  That’s the market.  That’s freedom.

01:02:33

Let’s go to slide 16.  Here’s another couple of fun ones.  We already talked about one of them a little bit.  So it’s normally assumed if you can sell it, you own it.  And what – they do this to argue that you own your labor because they’ll say, well, if I don’t own my labor, why can I sell it?  You know, in a contract if I have a labor sale.  Well, that’s just a sloppy equivocation because they’re not using the title-transfer theory of contract to carefully analyze it.  Some contracts are unilateral.  Some are bilateral.  Some are exchanges of title to property, but some are not exchanges of title to property.  Sometimes it’s a one-way transfer of title to property that’s conditional upon another party using their body that they own to perform some action.

01:03:20

And if they perform that action, it serves as the trigger for the title transfer.  So you can call that a sale of that action, but it’s not really a sale of the action.  It’s the performance of an action to trigger the transfer of payment to them for doing that action.  So it’s only a metaphorical use that we say a sale of it.  So you don’t really sell your labor, so you don’t own it, so no.

01:03:43

How about the converse?  If you own it, you can sell it.  Now, this assumed in the inalienability debate by people like Walter Block.  So they’ll just say, well, if you own something, that includes the right to sell – imply the right to sell.  Ownership means the right to control, and selling means getting rid of the right to control it.  So it takes another step or another assumption or another argument or some kind of application of this idea in a particular context to get the right to get rid of the right.

01:04:15

And in other words, think about what getting rid of a right means.  It means abandoning.  So the question is can you abandon it?  I mean, look.  I can say I’m not a human.  I can abandon my humanity, but I don’t really abandon it, and just saying it doesn’t change it.  So maybe saying I don’t have the right to control my body doesn’t mean I don’t have the right to control my body.  Just saying it doesn’t change anything.

01:04:40

Now, I do have the right to consent at any given moment to someone touching my body or doing something to it.  But if I change my mind and say no, now I’m not consenting, and my previous self can’t bind my future self and prevent me from changing my mind.  So the theory that I have developed and which I think is correct in my contract theory is that the right to control a thing that you own combined with the particular nature of homesteaded things, which are acquired – if they’re acquired, they’re acquired by your intent to own, expressing that, and owning it as an owner, then you can just get rid of that.  You can stop having that intent to own as owner and make that clear to the world.

01:05:26

Basically, you can unown it or unacquire it.  You can abandon it.  So in other words, things that are acquired can be abandoned, and if you have this ability to abandon it, now they have it, and they can re-homestead it, so they have it.  This is why the right to own applied to an acquired homesteadable thing does give rise to the right to sell it.  But it’s only a consequence of this unique set of things combining together.  In the case of your body, it doesn’t hold.  Your body is unique.  You are bound up with your body if you are not, or your body in some way.

01:06:13

But the point is you are a body going around the world homesteading things.  You don’t homestead your body because without your body you don’t have your same identity, so it doesn’t make sense.  So you never did acquire your body in that sense.  You became you with your body of said unowned things in the world.  Your body wasn’t unowned and you just plucked it up as some kind of soul descending down, or at least if you make that argument, that is a mystical argument that is going to have a narrow set of adherence among libertarianism, and it’s not a general libertarian appeal.

01:06:50

And another related thing, we discussed this in the contract lecture.  You’ve got to not think of contracts as being binding promises.  They’re not.  They’re not enforceable or binding promises or obligations.  They’re just exchanges of title or maybe even one-way transfers of title to owned resources.

01:07:14

Here’s another interesting one.  Someone is asking a question about organs.  I don’t know if I have time to get to that one.  I have dealt with it a little bit in my contract theory article and also in another article with the world inalienability in the title.  It’s on my publications page, stephankinsella.com/publications.  I’ll try to get to it maybe in the office hours next time, but I’m going to touch a little bit on that right here in the next bullet item on page 16.

01:07:56

So Rothbard’s argument and a lot of other libertarians’ argument for inalienability, which means if you voluntarily try to sell yourself into slavery it wouldn’t be enforceable.  Rothbard’s argument is that there’s some kind of “impossibility” involved.  And there’s another argument too that you don’t have the right to promise to commit an act of aggression, and if you’re a slave, you might be ordered to perform an act of aggression.  I think that’s a weak argument against inalienability – or against alienability, sorry, because you could just say that the master has no right to order a slave to perform aggression, and the slave doesn’t have to obey that order.  So that’s not a big argument.

01:08:50

But Rothbard’s argument, and I’ve heard a lot of other people make this argument is that you could never willingly alienate your will.  Well, the problem with that argument is that I don’t think that’s relevant to what slavery is about.  Slavery acknowledges that the slave retains his will.  It just says that the master has the right to use coercion to overwhelm it, basically to threaten you with such physical harm that you will choose to obey his wishes and that your threats and your actual aggressions on him are justified.

01:09:24

And in fact, if Rothbard was right, we could never justify even self-defense against someone.  After all, if someone is trying to attack you and you’re using force against them, well, the aggressor hasn’t alienated his will.  He still has his will, so how is it justified that you’re using force against his will?  Well, because sometimes it’s justified to use force against someone’s will, which is what the alienability people say.  So that’s not the defect with alienability in my view.  I think Rothbard’s argument is not quite right there.

01:10:02

Now [indiscernible_01:10:03] because ownership does not imply the right to sell.  It just doesn’t.  It’s not part of ownership.  It’s part of ownership plus something else, which is present in the case of homesteaded property, but not present in the case of bodies.  I already mentioned this one here earlier.  I guess I jumped the gun about the positivism, when people say, well, what’s the source of rights.

01:10:28

Now, I think sometimes they’re just asking in a confused way what’s your proof of rights, or what’s your reason for believing in rights, or what’s your argument for rights, which is a fine question, although I would turn it around and say, well, what’s your reason for believing in rights?  And if they say, well, I don’t, I’ll say, well, nice talking to you because you’re basically uncivilized and an outlaw and you’re threatening me.  But if they say, well, okay, I do believe in rights, I’ll say, well, then you tell me why you believe in rights?  Why do I need to prove to you why you believe in rights?  In other words, this is sort of like the Hoppian argumentation ethics, by the way.

01:11:05

But when people say what’s the source of rights, it often has a positivist connotation like they’re asking who made it so.  Did someone legislate it?  Did God say it’s so?  Is it written down in the Bible?  Is it found in some book somewhere, some authorized decree?  So you see, there’s this idea of law emanating from some source, and I don’t like that idea.  To me, it’s vaguely positivistic in the bad sense.

01:11:33

And the second point here on page 17, the hypocrisy of demanding your argumentative partner prove why you have rights.  You’ll be talking with a fellow libertarian or some non-libertarian, and they’ll say, well, prove to me why we have rights.  And again, like I said, you can have – you can discuss, but you could take another approach, and you could say, well, you prove to me why you think there are rights.  And either they have an answer or they don’t.  If they don’t have an answer, well, then why do they expect you to have one?

01:12:02

And if they say you don’t have rights, then they basically prove themselves to be uncivilized or they’re insincere, in which case you can just walk away.  But if they admit that you have rights, then they either have a reason—let’s hear it.  Maybe it’s the same as yours.  Maybe it’s different, or maybe they don’t have a reason.  If they don’t have a reason, why do they expect you to have one?  I wrote an article a few years ago that affirmative action is not un-libertarian, and it’s kind of a legalistic argument, but libertarians have this knee-jerk sort of Randian, Superman, I’m the product of merit and I made everything myself kind of idea.

01:12:38

I don’t know if there’s anything wrong with the idea of affirmative action as a general matter.  You could imagine a university, for example, a private university thinking it could attract more students if it has a diverse body of students, and if they have underrepresented females or minorities, they might give a boost to them.  I mean there’s nothing wrong with voluntary adjustments and boosts like that.

01:13:01

Bu then the question is if you have a public university or a government university, is it wrong for them to do that?  Well, is it really wrong for them to have any policies whatsoever in admitting students?  It’s got to have some policies.  So why couldn’t some of them emulate what their free-market policies at private universities might be?  I mean the fundamental problem with public universities is they’re based upon theft, subsidized tuition subsidized by state tax funds, but that’s the primary harm.  Once that’s done, how it’s spent is of secondary import.

01:13:33

01:13:39

Here’s another argument I have, and I have a blog post here.  Do campaign finance regulations violate free speech rights?  In other words – and I’m going by the first amendment type of free speech right people assume, which is a valid right in the sense that it’s a limit on government power.  The government has no right to regulate speech and things like that.  As a libertarian, as I said, free speech is only a derivative of property, but if it’s used in a legal doctrine to limit the power of the state, I’m all for it.  I don’t want to put any limits on it, so that’s fine.

01:14:11

But the question is, given the kind of standard first amendment conception of free speech, when the government says the republican and democrat candidates can only spend so much money or can only receive so many campaign contributions from corporations, the knee-jerk assumption by libertarians is that that’s un-libertarian.  Anyway, just take a look at that post.  You’ll see some kind of fun reasoning of that, not anything heavy matter but just kind of fun.  Sorry about the freeze-up here.

01:14:43

Okay, I think let’s pause here.  We’re going to pause on page 18, and I’d be happy to entertain questions about what we’ve discussed so far or anything further.  And I might discuss some of these later, or I can answer them, as I mentioned, subsequently.  So shoot.  I’ll open the floor up to any discussions people might have now.  Julian, let me – okay.  Okay, Jock – I’m going to go to slide 20 now.  Jock has got a question about slide 20.  Let me go to slide 20.

01:15:25

Jock says:  Anarchists need not prove anarchy can work.  Do you mean that we don’t or that it’s a mistake to think we don’t have to prove it?  Okay, so I’m just saying – I’m back, right?  I’m just saying what it means to be an anarchist is, number one, to believe – well, I have it here in the middle.  To believe – to be against aggression on principle, and number two, to recognize that the state necessarily commits it.

01:15:57

That’s all it means to be an anarchist.  It doesn’t mean that you predict or believe that we’re going to achieve it in our lifetime or ever.  I mean, look.  Think about it in terms of murder.  What does it mean to be against murder?  Does it mean you think there will never ever be murder committed?  No.  It just means you think it’s unjust.  So when people say, well, anarchy is just impractical, I mean it’s the same as them saying, well, being against murder is impractical.  Believing we would never have murder just because I’m opposed to it is impractical.  It’s unrealistic.  So that’s what I mean.  I’m just saying about the essence of what libertarianism is.

01:16:39

Now, and I also mean that anarchy is not an advocacy of a given system.  It’s the opposition to a given criminal system.  And what we’re in favor of is whatever would result in its absence.  Now, of course, we go – we do engage in the endeavor of having to guess and formulate what it would be like, but is it incumbent on us to do it?  I don’t think so.  I think we should do it because it deepens our understanding, and it may help persuade some marginal empiricist-minded people or consequentialist-type people that are on the fence.  So that’s my perspective on it.  But anarchists aren’t saying we want to replace this institution with another institution.  We’re just saying we want to persuade as many people as possible that aggression is wrong and the state commits it, and so the state is illegitimate.  And so the state should stop committing public crime.  That’s it.

01:17:39

01:17:43

Joel asks, how can you ensure restitution/justice without outlaws that do not participate in PDAs?  Well, first of all, I don’t think you can ensure it.  I mean there is going to be injustice in the world.  There’s going to be cases where people get away with crimes, and I also think that, by and large, criminals tend to be the low-lifes of society.  They don’t have a lot of assets.  So even if you catch them, what are you going to do?

01:18:13

I mean even if you could put them in the salt mines and put them to work as slave labor and get most of their wages for restitution, will you ever get back enough restitution?  Probably not.  So probably the best thing you can do is preventive force, prevent crime, and that costs money too.  I mean we can spend X percent of the GDP.  Everyone’s salary is going to be spent on private patrols and things like that to stop crime in the first place, but that’s probably better than trying to stop it after.

01:18:45

But I think what you’re getting at is what can you do.  Well, I think you can have posses or more organized things.  They go after these guys.  They try to eradicate them sometimes and wipe them out maybe.  I think in a free society you’re going to have widespread wealth.  Most people are going to be libertarian-ish in their sympathies.  Crime is going to be marginalized and largely unnecessary because you’d have so much charity and wealth in the first place that people that are lazy or sort of scoff laws, people are going to help them out anyway.  And I mean what’s the point of – criminals are going to be so outnumbered by – and so outgunned by a prosperous and free people that they would just be a marginal element.  But occasionally they’re going to get away with it.

01:19:32

01:19:46

Jock points about – I think Jock has a good point here.  Jocke says in response to Joel that outlaws would be a miserable state, outlaw communities where there’s war of all against all.  I agree with all that.  I mean that’s why I think ostracism and outlawry would be very powerful.  There’s actually a Robert Heinlein novel.  I think it’s – I forgot the title, but [indiscernible_01:20:07] criminal thing, kind of like Escape from New York or Australia or something a long time ago.

01:20:13

So Danny said, in the first question – in the first lecture I said that my approach to libertarianism was a combination of a rationalist and a consequentialist approach.  Could I expand on that?  Well, yeah, and that’s sort of laid out in that “New Rationalist Directions of Libertarian Legal Theory” and sort of my estoppel argument.  It’s rationalist in the sense that I’m skeptical of natural law thinking and reasoning, trying to go from is to ought.  I think you can come up with some sort of a priori type truths based upon the structure of argumentation and human interaction and the search for justice and these kinds of things, like Hoppe’s argumentation ethics and estoppel.

01:21:04

So it’s rationalist in that sense, and in a way it’s even deductive.  But it’s consequentialist in that you always bring in a practical context, in Hoppe’s case, the discourse context, which is practical in that, according to Hoppe’s view, people in discourse all necessarily value the practical activity of living and being alive, which requires the use of scarce resources and requires homesteading and ownership and [no audio_01:21:31] shared consequentialist views that almost everyone necessarily has by virtue of being a participant in discourse or civilized society.  Or in my case, the context is more of like you imagine a confrontation between not just participants in discourse but a confrontation between an aggressor and his victim in a court setting or some other kind of idealized setting, and some of the same considerations apply.

01:22:18

01:22:23

Steven says, if I was in receipt of stolen goods and the thief was uncovered and pointed out I’d received them, could I be pursued for looked goods or damages?  Okay, so well, again, this is one of these questions where we have to be careful.  I have to give a lot of caveats because we have to – we can only go so far in our armchair engineering.  Damn, Jock, you’re a good Googler.  I haven’t read that in maybe 25 years, but I recall that it was cool.

01:22:58

Anyway, so here’s my view on stolen goods.  I mean it depends on if you’re a good – what’s called a bona fide purchaser or a good faith purchaser or if you’re kind of in the know.  I think if you know that you’re receiving stolen goods and your hands are not clean and – I mean most people like Rothbard would say – excuse me – in either case, like let’s say a stolen watch, you’ve got to turn it over to the owner even if the middleman, the thief, is long gone.  You’ve got to turn it over to the owner if he finds you.  I’m not sure in every case if that’s true.

01:23:35

I could imagine sort of after time and depending upon the circumstances, certain moveable goods or even immoveable goods like land but probably moveable goods being – having a sort of fungible quality that, after a while, we assume that title is in the new possessor, especially if he’s a bona fide purchaser and especially if the original owner is sort of more negligent than the buyer of the stolen goods is.

01:24:03

So let’s say you leave your Rolex watch unlocked on the counter when you got a bunch of unscrupulous workmen in your house, and one of them steals it.  I mean and then he pawns it to you.  I mean who’s more responsible for the harm here?  Is it the original owner, or is it you?  That’s sort of how law looks at it in the case of some hot checks and things like that.  I’m not sure.  But I tend to think that it really wouldn’t matter too much because I think most people would have title insurance, property title insurance like we do now for our houses.  So if your watch gets stolen, if it’s of enough value, you’re going to go to your insurer, and they’re going to pay you back.

01:24:41

Now, if you’ve already been paid back by your insurer, why would you get the watch back again from the guy who’s got it?  So I don’t know the answer.  The kind of plumbline answer is that the title is never lost and it goes back to the owner, but I could imagine cases where, over time or because of negligence of the original owner and having it stolen, not negligent with respect to the thief but negligent compared to the recipient of the good, that you choose [indiscernible_01:25:12] owner is out his watch, so someone is going to be a victim.  So the question is choosing a victim.  Which one is the worse victim?  And I suppose the best answer is the original owner is the better victim in most cases unless you have a good argument against it.

01:25:25

01:25:31

Erika: You say that you have a right to the physical integrity of your property, but the physical integrity of many of the things I own degrades over time, like things out in the weather decay, etc.  How do you reconcile this?  Would it be better to say you have the right to not have another person harm the physical integrity of your property?  Yeah, that’s exactly what I mean.  I don’t mean that you have the right that it stays the same.  What I mean is you have the right that no one invades the physical integrity of your body in its current state.

01:26:02

Of course, you don’t have the right that things don’t atrophy or degrade or – what’s that accounting term?  When houses and land go down in value?  I know I’m having a mental blank.  You know the standard gap or accounting – depreciation, right.  I don’t mean that.  I just mean that property rights are the right to have the physical borders of your property not be invaded by others.  There’s different ways to formulate that.  You could say the physical integrity not be changed without your permission.  You could say not have your property be used without your consent or permission or not be invaded.  Those are all sort of roughly synonyms.

01:26:45

Jock says, insurance might grow up to protect buyers rather than sellers or original owners.  Yeah, I know.  That’s why I say I think it’s going to – a chicken and the egg kind of thing.  I mean if insurance went one way rather than the other, then the default might go that way or vice versa.  If the default rule went towards the buyer or the owner, then insurance would be used to cover whoever the default rule is against.  So I don’t think it’s a big issue.

01:27:11

Kevin said, could you say that the Obama administration is justified in authorizing the killing of Muslim cleric, Anwar al-Awlaki, an American citizen, if you assume that his preaching, which advocates killing Americans, is intended to use overseas followers as efficacious means to commit murder?  Hmm.  Well, I think that’s a complicated question, and I don’t know all the facts.  I mean I have to assume some facts.  I mean we have to look into it in detail to make a better judgment about that.

01:27:48

But I think the first problem I see with that proposal is that – I mean I don’t think the Obama administration is justified in doing anything because they’re criminal themselves.  So I would say no.  They’re not justified in doing anything except disbanding themselves.  But if you ask me if they did that, would they violate his rights, they violate my rights by using my money to do it or something.  Or if a private vigilante goes over there and kills this Muslim cleric, first of all, I don’t think his status as an American citizen is relevant at all to libertarian theory, so again, let’s say there’s some Muslim cleric who is advocating the killing of Americans, I mean to me that’s what you’d call a borderline question or a continuum question.

01:28:39

I don’t know if – where you would draw the line, whether he sort of is using people as a means to do this.  And is it a real threat?  Is it really happening, or if he’s more just using his free speech, which is heinous?  Now, my personal gut judgment is if someone knocked him off given what you’ve said here, I think it probably would be justified, not that I’m advocating the commission of murder against any particular person.  I’m talking hypothetically here.  So yeah, I think that when you start advocating rallying these serious people who are really willing to use force against people and play a serious role in the threat against innocent people, and American citizens are basically innocent people, I think you’re basically conspiring to commit murder, and you’re trying to do it.

01:29:32

If it’s a completely unlikely to be carried out [indiscernible_01:29:38] but I would say it’s close to what I would think is calling for lethal – deadly force.  What do people here think about that?  I’m curious what most people here think.  Would you say kill him, or it would be murder to kill him?  Well, Jock, the problem is, of course, some of his criticisms are justified.  Of course we’re keeping Americans in jail unjustifiably as well.  Now, I’m not in favor of Guantanamo or the American state, but I think of all the people we have in jail, the people in Guantanamo are the ones I don’t feel as sorry for as the drug criminals in American prisons.  I mean – anyway, it’s a complicated situation.  I’m totally anti-war, but I have no illusions about the nature of a lot of these people we have in Guantanamo or that fight jihad against the West.  We may have stirred them up, but that doesn’t mean they’re libertarian either.

01:30:49

Julian, you never saw physical integrity before the mid-term.  Well, if you read Hoppe, there’s a lot of that in his writings, etc.  Matthew says, shouldn’t it be decided through due process of law?  Well, maybe it should, but that wasn’t the question.  The question is – I’m rephrasing it as would it violate his rights.  Now, to my mind, due process of law is a prophylactic measure.  No one has an actual right to due process of law.  Okay, either you’re guilty or you’re innocent of a crime.  The fact is that epistemically or from a knowledge point of view, we don’t know whether you’re guilty or not.

01:31:28

So we have to assume people are innocent until proven guilty, and you have to have a fair procedure to determine it to make sure you’re not punishing the wrong person.  And another reason is because the state is dangerous, and we need to have lots of procedures and rules in place to try to limit the state’s excesses.  But in an ideal system of justice without the state, we had some super-intelligent robot up in the sky with laser guns that could infallibly shoot down his laser and incinerate someone as soon as they committed a crime with no due process whatsoever.  I mean you can’t say that would violate their rights.  If they’re actually guilty, I don’t think it violates their rights.

01:32:10

01:32:20

Oh, Erika has got a question about the mid-term.  I’m sorry you have to – I remember someone had a question about that.  I think – Erika, I think I responded to your question already, and it’s a fair point.  I agree.  It was a subtle question, but I think that – I’m trying to remember exactly what the question was.  Erika is asking about the mid-term.  She felt all three statements were untrue since the actual wording didn’t specify depreciation versus a person aggressing.  I guess you’re asking about the question that has something to do with physical integrity.  If so, I apologize.  I thought I discussed it in one of the lectures orally, and it should have been clear from that.  But maybe it was too tough of a question.  I would remark them, but we’re not really – it wouldn’t matter really too much.  It would just adjust everyone a little bit.  If there’s class clamor for it, I could look into it.

01:33:19

01:33:26

Looks like some people are starting to drop out.  We’re down to – well, we have 23.  We can go a little bit longer.  Anything else?  Any more questions?  Oh, it’s good, isn’t it?  Jock is reading Daemon, the Daniel Suarez book.  It’s really – I was surprised by how good it was.  I thought it would be an amateur first effort, but it’s really a cool novel.  Wait until you get to Freedom, the second one.  The second one is like Daemon squared, I think.  I did the same thing, Erika.  I read it very quickly.  Interesting.  Well, it looks like the questions are petering out, so people that are listening in their cars, let’s go ahead and wind it up.  And I will be here for the regular time on Wednesday for office hours, so feel free to review the missing slides here and ask any questions.

01:34:47

And – oh okay, well, there’s one more question here.  I’ll do this one.  I have a blog – David has a question about how libertarians misuse the term coercion.  This is just a semantic issue that kind of bugged me, not bugged me but I noticed.  I used to do this myself.  So libertarians use the word coercion or aggression synonymously, but coercion, if you just look it up in the dictionary, just means to use force to coerce someone to do something.  So to my mind, coercion is neutral like the word force or even violence.  Violence is not always un-libertarian.  Neither is force, and neither is [no audio_01:35:25]

01:35:26

01:35:44

Okay, I’m back now, and I froze up, but anyway, I don’t know.  Did you get that about the coercion?  It’s just a semantic issue.  It’s just a – it’s a type of force or violence, but it’s not necessarily aggressive.  Some types are.  Some types aren’t.  But people use it as a synonym for aggression.  I think it’s just a little sloppy, and I have a blog post.  I think I have it linked in this slide series somewhere.  I think it’s called “The Problem with Coercion.”  Just look it up under my name.  Okay, it’s just a semantic point.  I’m just trying to encourage clear use of terms.

01:36:15

Okay, I’d better wrap it up.  I enjoyed it.  Okay, I think it is, Jock, and I try to avoid using it in a positive way.  I’m just trying to point out that coercion technically can sometimes be libertarian and justified, just like violence and force can.  That’s all.  Jock is saying it’s useful in talking about coercive state versus voluntary society.  And of course the state has no right to coerce or use force, but that’s because it’s the state.  Thanks, Steve.  I enjoyed it too.  I really did.  It was a lot of fun.

01:37:02