Slashdot Mirror

http://mises.org/story/1623

or

http://www.census.gov/prod/www/abs/decennial/1940.htm

since you think anything from the Austrian school of econ is flawed, you can look at the census info.

I'd rather see some citations

See Murray Rothbard, America's Great Depression.

-jcr

Ahh I see.. such logic.

Man has always ruled other men.. so men *must* rule other men, right? Great scholars such as yourself had made similar statements before. "Man has never flown.. so man will never fly.. right?" They way you think I'm surprised we do not have a king or tribal chieftain.

I can't try it. The state wont allow me to ignore it.. such as ignore my taxes.. or ignore their courts.. they will kill me if I don't bow to them. However.. there are those that are trying.. http://freestateproject.org/

If you believe it is an issue with complexity then why do you support a centrally controlled system? How can a leader or government more accurately gauge the needs and desires of a large number of people better than those people themselves operating independently? They can't.. it's not about complexity and any child should know bureaucracy only *adds* complexity.. it's about force, plain as day. Forcing people to do what you, or the majority, or the king believes is best. I am opposed to this system because I believe it's wrong to instigate force on others. Force is at the root of all of the wars, murder, death, theft and rape man has ever known.. and it's the only tool a government has to use upon you. You asked me to.. so try saying no to government and see how far you get.. they will beat you, steal your property, throw you in a cage, ruin your life, and eventually kill you if you continue to resist them.. go on.. tell a cop no next time one asks you to do something.. test it out..

You say it "Can not work, because it has never worked.".. but how many have actually tried it? With the hundred of thousands of tyrannical governments created in all of history.. there are less than a dozen that have been truly free. Various forms of tyranny and oppression are ancient but still a popular idea.. freedom is the new untested idea. Some nations have actually done better under anarchy then otherwise. http://www.mises.org/story/2066 but you know.. you believe in magic and expect me to present you with a perfect utopia.. and such a thing will never exist.

The battle is not a battle of force.. it's a battle of education and it's a battle of philosophy.. Some day, in some future age, I hope all men will look back on this age and see the barbaric ways we control others just as we today look back on former societies and their similar barbaric ways.

Now I have a philosophical question for you.

What would you say a state is? (As in "The State of California".)

It's a simple question.. but the answer is not so simple. Is it the ground? If "The State of California" is a geographic location, can you tell me where "The State of California" was located before September 9, 1850? Perhaps we are getting ahead of ourselves.. lets try looking at the "facts" they teach us in school. The "states" and the "United States of America" were somehow "created" by men and women and pieces of paper and ink called "constitutions.". Now being nothing more than paper and ink, "constitutions" are only obligatory on men and women as contracts, a form of agreement, this is called a "body corporate (or politic)" in legal language, however those people who formed such agreements are now dead. Hmm.. Going back to the basics just brings up more questions such as.. "If contracts are always voluntary.. how does this agreement formed by now dead men extend to you?" Well never mind that.. we want to focus on this question.

You see.. The truth is.. "The State of California" is not much more diffrent than "The Pepsi Corporation" .. it's a figment of our imagination, a type of mass religion, it exists.. only because we believe it exists. It's a lot like the Tooth Fairy or Santa Claus, the only problem is there are a lot of people who believe in that Tooth Fairy and they will kick your head in you you don't follow what they believe to be the "rules" the Tooth Fairy decided on. If there is anything at all that is actually tangible for a state.. it is nothing other than a piece of paper lying in some file cabinet somewhere..

The broken window fallacy assumes that resources are fully employed.

The argument from idle resources, huh? Here's a great article about it: Does "Depression Economics" Change the Rules?

Why is the government trying to take away every incentive to act prudently and responsibly?

I too have been asking the same question for years and it is only getting more and more pertinent as time goes on and the recessions and bailouts get larger and larger. I *really* hope that Obama doesn't "keep homeowners in their homes" by supporting sagging home values (which are still too high btw) with a price floor. Again, that would reward the spendthrifts and idiots while kicking away the ladder for all of the prudent people who didn't make a big dumb home purchase with an NINJA loan. I swear, it is like Uncle Sam takes savers and other prudent types, grabs them by the nose and then kicks them in the ass for not being spendthrift consumers like the rest of the idiots out there. It almost couldn't be worse if the government tried on purpose to enact policies which encourage people to save as little as possible, take on as much debt as possible, and push the dollar down the road to being worthless. If there are any Americans out there who still care about this country then I would urge them read The Revolution: A Manifesto by Ron Paul and then to follow it up with The Bailout Reader on mises.org. Everyone who values freedom and wants to learn the truth about our monetary system and the roots of the present crisis owes it to themselves to read these books.

Why is the government trying to take away every incentive to act prudently and responsibly?

I too have been asking the same question for years and it is only getting more and more pertinent as time goes on and the recessions and bailouts get larger and larger. I *really* hope that Obama doesn't "keep homeowners in their homes" by supporting sagging home values (which are still too high btw) with a price floor. Again, that would reward the spendthrifts and idiots while kicking away the ladder for all of the prudent people who didn't make a big dumb home purchase with an NINJA loan. I swear, it is like Uncle Sam takes savers and other prudent types, grabs them by the nose and then kicks them in the ass for not being spendthrift consumers like the rest of the idiots out there. It almost couldn't be worse if the government tried on purpose to enact policies which encourage people to save as little as possible, take on as much debt as possible, and push the dollar down the road to being worthless. If there are any Americans out there who still care about this country then I would urge them read The Revolution: A Manifesto by Ron Paul and then to follow it up with The Bailout Reader on mises.org. Everyone who values freedom and wants to learn the truth about our monetary system and the roots of the present crisis owes it to themselves to read these books.

When you steal from one person to give to another person, nothing is created, it's only destroyed. So no, jobs won't be created, wealth will simply be redistributed.

http://mises.org/story/3058

Economists have always worried about whether the patent system actually works as intended or not. For evidence that it probably does not work for e.g. software, start here: http://researchoninnovation.org/ Before reading the recent literature, however, I'd recommend reading Machlup's famous review: http://www.mises.org/etexts/patentsystem.pdf in which it is made clear that fairness is an outdated way of thinking about patents and a weak justification for them at best: the disclosure benefit is dubious, to say the least, and the patent privilege is something which needs to be justified as beneficial despite its potential for *unfairness* (and its various other negative effects).

Hoover obeyed your wishes.

No, he didn't. This myth of Hoover being "laissez-faire" is completely unfounded; see, for example, this article by Murray Rothbard. His harmful interference included signing disastrous bills like the Smoot-Hawley Tariff Act and the Revenue Act of 1932. In Hoover's own words:

We might have done nothing. That would have been utter ruin. Instead we met the situation with proposals to private business and to Congress of the most gigantic program of economic defense and counterattack ever evolved in the history of the Republic. We put it into action...

The revisionism surrounding Hoover is much like what's happening with Bush the Younger: for some reason, people stubbornly believe him to be pro-market, despite the fact that federal expenditures have risen dramatically during his administration, as have federal regulations.

The US economy didn't recover until WWII rendered it the SOLE FUNCTIONING ECONOMY in the world.

If by that you mean that the war had an even worse effect on most other major economies than it had on that of the U.S., you may be right. If, on the other hand, you are saying that the war actually helped the U.S. economy recover, then you are falling for the broken window fallacy.

You've got a nice little thought-stopper there

If he does, you're the one it's affecting.

Read and learn

The Federal Reserve is the root of the problem. When you inflate the currency, it causes market distortions. In this case, the biggest distortion was the housing bubble. Fannie and Freddie are their chief accomplices, and the mortgage originators are like the corner drug dealers.

every respected economic expert on the planet disagrees

When you try to argue ad veracundiam, you might want to cite specific economists who happen to have been correct in their predictions. Just waving your hands like this makes you the idiot.

-jcr

It's a pain that popular compression algorithms are covered by patents

Quite.

http://www.ross.net/compression/

but I think it's quite fair to say that advances there are patentworthy, just like advances in analog techniques of bandwidth reduction for broadcast video.

And as any student of the patent system will tell you, the patent system never has been and (for various reasons) cannot be made to issue patents only for "patentworthy" inventions. Unless there is good reason and evidence to believe that making patents available in some field/industry "promotes progress...", the economically (and ethically) rational thing to do is to not make them available. See e.g. Machlup's review http://www.mises.org/etexts/patentsystem.pdf and http://researchoninnovation.org/

Actually, Friedman and von Mises (or it might have been Murray Rothbard) wrote comprehensive works on the causes of the depression that were published right around 1962, IIRC.

Both implicated the Federal Reserve in greatly contributing to the impact of the Depression. Bernanke admits that the Fed is responsible making the depression worse and contributing to its deleterious effects, inspite of the fact that the creation of the Fed was supposed to stop a depression from happening in the first place.

I haven't watched much Fox news, but I cannot imagine them getting into the finer points of Chicago or Austrian Economic theory, which correctly places the fault of the depression on the myriad of factors which contributed to and excaborated it. But the idea that the Federal government was quite instrumental in bringing about the depression is neither new nor ignorant.

You do slashdot readers a great disservice by misunderstanding the causes of the depression, misunderstanding the body of written expert analysis on it, and then trying to distill the entire thing into the dubious "lack of regulation" refrain that is so popular with statist-technocrats.

Go read your Austrian economists. For the benefit of those easily swayed by unsubstantiated invective, never say anything else about the economy until you've finished reading. http://www.mises.org/ is a great start.

Open market operations are not form of bookkeeping, "legitimate" or not. This seems to be the first problem in your understanding. Clearly, records have to be kept of open market operations, but those records are not the operations.

They are a purchase (or sale), obviously, not a form of bookkeeping... but you have to account for the money spent on the purchase (or earned by the sale). If you promise IOUs but aren't good for the money you've promised, then you are committing fraud — even if you are the government. If this were a business or a city government or a state government, people would be in jail for it. But it's the Federal Reserve, so it's "business as usual". Nevermind that the creation of the Federal Reserve itself in 1913 was itself the cause of the Roaring Twenties speculative bubble, and the inevitable spectacular crash as the federally-enforced Ponzi scheme unwound.

So? Physical dollar bills are nothing special, they're just an expense. A fiat currency of account is exactly the same as a physical fiat currency.

(Plus, of course, this isn't true: paper dollars change hands between the Fed and banks all the time, which is, in fact, how all paper dollars get into circulation. The banks pay for the paper dollars out of their reserve accounts.)

A paper currency still maintains a fig leaf of respectability, because inflation is limited by (a) how fast your physical printing presses run, and (b) people noticing that more physical notes are circulating. Previous attempts to inflate a physical fiat currency (e.g. the Civil War Greenback) resulted in a currency crash as people fled from the inflating currency into more stable currencies, like gold coin. Having a fiat currency of account means that (a) you can inflate your currency as much as you desire, and (b) people won't notice it as quickly, because numbers on a check or credit card statement don't have the same visceral impact as piles of paper bills or stacks of metal coins. Having a currency of account is a move to reduce accountability and thus hide fraud.

The velocity of money is the number of times the same dollar is spent (within a bounded, temporally and often geographically as well, universe of analysis), whether it touches a bank anywhere in between is irrelevant. It is not the magnification in the actual supply of money caused by fractional reserve banking.

In a system where the vast majority of money is in the form of a fiat currency of account, money cannot change hands except through the banking system. All transactions begin as deposits in the account of the buyer and end up as deposits in the account of the seller. This is what allows the Federal Reserve's open market operations to have more than a trivially small effect.

Except when it doesn't, as now, when the Fed is pouring out money, and prices are deflating. But, yes, the a major point of open market operations is to influence inflation, both by contracting the money supply to avoid high inflation (tight money policy), and to expand the money supply to fight deflation (loose money policy) as the Fed is currently attempting.

The deflation of prices in the current economic environment is inevitably a temporary matter. There is a massive amount of pent-up monetary inflation that has been pumped into the system, but cash is a hedge against uncertainty and banks are facing a mountain of uncertainty, therefore banks are choosing to hold reserves nearly equal to 100% of demand deposits because they're terrified that they'll be the next bank run victim. The result is that the multiplier effect isn't currently happening, therefore the Fed's actions are having little to no immediate effect. As that uncertainty

I always thought the boom and bust was the market trying, not very well, to keep its balance.

You're half right according to Austrian economics (the kind pushed by Mises.org). The booms are caused by intervention in the market and the busts are the market's reaction to keep its balance. To overextend the drunk analogy, the forces that cause the loss of equilibrium would be whoever keeps giving the drunk more liquor. The Federal Reserve plays that role when it manipulates interest rates--the easy credit it offers is exactly like alcohol to a drunk. There's no way he will turn it down, and it will cause him to make poor decisions--in the most recent high-profile case, investing in building thousands of new houses that appear to be profitable due to artificially low credit interest rates rather than consumer interest. This is the boom portion of the cycle.

The bust comes when the drunk realizes that he has built way too many new homes and tries to salvage as much money as possible, causing the market to take a tumble. The same thing happened in the dot-com bubble, where microniche-market startups were inflated to ridiculous values because of loose credit policies. The same thing happened in the oil speculation bubble for the same reasons. So the boom part of the cycle is the abberation while the bust is a market correction. Each bubble has its individual facets, and in each case something different tipped the markets into bust mode, but the root cause of each is the monkeying-about of interest rates.

The problem with government bailouts is that we end up throwing more money at a problem caused by excessive amounts of money in the first place. Failure, while not good for the individuals involved, is necessary for a free market economy to work. If governments continue to bail out failing industries, the process will only be prolonged and, since many governments don't HAVE the money for these bailouts, new money is created which devalues all of the currency in circulation. There is a big advantage to being first in line for new money as the markets will not have adjusted to the inflated money supply yet, which gives ordinarily responsible bankers incentive to take as much credit as they can get. Early birds get more bang for their buck while we Joe Schmoes see only costs rising faster than our pay rates.

I'm getting off-track because it's a big, interrelated tangle that can only be solved by cutting the worm out of the root: getting rid of, or at least heavily restricting, the Federal Reserve and other central banks. I'm also pretty new to this stuff, so hopefully a more seasoned scholar of Austrian economics can correct the mistakes I may have made here. For an in-depth analysis of the boom/bust cycle, check out Economic Depressions: Their Cause and Cure on the Mises.org site. It's lengthy, so if you want to get right to the meat, start at this sentence:

Fortunately, a correct theory of depression and of the business cycle does exist, even though it is universally neglected in present-day economics.

are all industries everywhere simultaneously going broke just now?

You can get a pretty good idea how we got into this situation from here.

Not all industries are going broke, but economic activity in general is falling sharply. How long this lasts will depend on how much effort governments put into delaying and interfering with the repricing and deflation that must follow an inflationary bubble of this magnitude.

-jcr

I think you're misreading the mainstream economics position on inflation. Consistent increases in the overall price level are completely sustainable.

Inflation is not price increases. Prices increase as a result of inflation, which is why it is often used as one measure of inflation.

The problem with bubbles is a misallocation resources because the players in the market did a bad job of assessing risk and predicting future prices of that asset. I can't think of a rational argument that could make a good causal relationship between uniform price increases and an asset price bubble.

That's because I didn't make that argument. I am not sure what gave both you and the other responder the impression that I was talking about inflation. It is the manipulation of interest rates and the legislative obsession with increasing home ownership that kicked off the price appreciation. Then, once there was consistent price appreciation, investors jumped in looking for those same high returns. That continued to fuel the bubble.

I'm just suggesting that misallocation of investments are not a necessary consequence of consistent monetary policy.

What is "consistent monetary policy"? The Fed is manipulating the cost of capital at its will. How is that consistent or predictable?

http://mises.org/story/3130

How can you realistically value an asset if the Fed can change interest rates tomorrow and completely invalidate your valuation? The Fed's policies create unnatural volatility and unnatural volatility causes bubbles.

How can you do a proper cost-benefit analysis to determine if an investment is a good investment by market standards if the cost of capital is x% one day and y% the next day? The Fed manipulations alter cost-benefit analysis and result in businesses investing in things they would otherwise not invest in -- OR NOT investing in things that they otherwise would have invested in -- if the cost of capital was at the market valuation.

I can respond more precisely if you can clarify what you meant by "consistent monetary policy", as I genuinely don't know what that means when it comes to closed-door government intervention in the market.

Sorry about replying to myself. This covers the fall of the Soviet Union re: internet. http://mises.org/story/3060

... Conservatives (Read: Classical Liberals) ...

This isn't a fair characterization of Classical Liberals. Classical Liberals (i.e. laissez faire libertarians, a rare breed these days) are by nature enemies of Conservatism. Conservatism, perhaps best represented in the US tradition by Alexander Hamilton, seeks to re-create the "moral clarity" of divine kingships and feudalism, by having the government legislate morality, foment nationalism, start foreign wars, and favor "moral" businesses. In short, fascism. The fact that a lot of the Classical Liberals have teamed up with the Conservatives is a historical accident: after many Classical Liberals abandoned the optimism that made them radicals, they borrowed Conservative ideas and created Communism. The Conservatives, in response, raged against Communism as a threat — and correctly so, as Communism threatened to use Conservatism's own weapons against it, outcompeting and destroying Conservatism on a much shorter timescale than the radicals of Classical Liberalism. To gain allies, they positioned themselves as victims: Conservatism hid its agenda behind loud screeds against Communism, and here in the US they went further by cloaking nationalist rhetoric behind libertarian rhetoric — a task ironically made easier by the founding ideals of the US. Classical Liberals took the bait, and many have even taken to calling themselves "conservative" ever since.

But, despite the misnaming, Classical Liberalism was and is a fundamentally left-wing, revolutionary idea — one fundamentally at odds with the Conservative goal of undoing the Liberal revolution and restoring the centralized power of the State. Murray Rothbard's Left and Right: The Prospects for Liberty is an illuminating read on this subject.

The whole concept of working hard to earn a good income and have a good quality of life seems to be disappearing.

Up front warning: this might well come across as a slightly crazy "THAT guy" ramble. If so, feel free to smile and nod as you back away slowly.

In light of the recent financial crisis, I've been reading up on Austrian-school economics. One of the key insights held by Austrians over other economic schools is that interest rates exist because humans have time preferences: if I offer you a choice between giving you $100 one week from now versus $110 one year from now, you'll take the $100 because having the money now is more valuable than receiving the extra $10 later. Interest rates and time preferences are intimately related. Therefore, government interference with interest rates manipulates peoples' time preferences.

First, a quick digression. What is "investment" in the context of an individual or a family? Education is the obvious one. Cars are another: fuel efficiency and reliability both reduce the operating costs of owning a car. There are also some home improvements, like better insulation or more energy-efficient HVAC systems. Cosmetic improvements like flower beds might be investments too, if it means you spend more time at home admiring the view instead of getting out of the house and spending on entertainment. Even food can be construed as an investment, or happiness itself if you squint at it right. Through the right lens, all human actions have economic interpretations as investments of some sort: all actions are directed toward goals, whatever those goals may be, and economics is the practice of attaining those goals at the lowest possible costs (i.e. highest possible efficiencies, i.e. satisfying the maximum number of goals). Money just happens to be a frequent intermediary in this process of goal-attainment — there's nothing special about money that makes financial investments better than happiness investments. (This is the basic thrust of Human Action by Ludwig von Mises, one of the luminaries of the Austrian school.)

Okay, digression over. What about interest rates and time preferences?

In a healthy market, the supply side of loans is relatively simple. If people have relaxed time preferences and don't mind saving their money for the future, then interest rates are low because lots of money is available for investment. Likewise, if people have very strong time preferences and want to spend their money immediately, interest rates are high because there's less money available to invest.

The demand side is a little more subtle....

High interest rates are a signal that, if you want to make any big purchases you need to save your own money, because you won't be able to afford credit. Also, if you save up for a big-ticket item, it should be for something that has a good chance of paying for itself: since it only makes sense to save up for one big-ticket item at a time, you can't save up for something very risky or you'll risk losing everything you've saved. The net result is that you favor low-risk investments, especially those with short-term payoffs: you only buy big-ticket items if you're sure they'll add a lot of value to your life, but otherwise stick to the necessities.

Low interest rates, by contrast, signal that you have the choice of making big purchases now and paying for them later. If you buy something that reduces your costs over the long run, then you can pay off the loan using the cost savings and come out ahead. You can also feel more confident about risk: by making multiple investments simultaneously, you can spreading out the risk that any one investment will fail to pay off. You can also pay off the loan for one investment with the cost savings from a previous investment. The net result is that you favor high-risk investments: you still buy necessities, but your attention is n

This statement is blatantly false, not "insightful". First, the responsibilities of governments are a political matter, not an economic one. Second, plenty of economists consider aggressive monopoly-busting to be a net loss rather than any sort of public good. Inform yourself.

Anyway, if the government really had a responsibility to "break up monopolies" it would have to start with itself, as government -- in all its forms -- is the biggest and most destructive monopoly in existence.

Churchill, as usual, was wrong. The best alternative to democracy, imho, is no government. Please take a look at the following and let me know what you think:

Democracy: The God That Failed
The Ethics of Liberty by Murray Rothbard

First, I did mention a "state of emergency" exception, which would fully address your concerns.

Second, World War II is what got us out of the Great Depression, by diverting resources away from the massively wasteful government programs that created the Great Depression in the first place.

The economic conditions leading up to the GD weren't any worse than we'd experienced previously, but the GD was the first time the government got seriously involved in trying to put off the correction process (made necessary by significant inflationary policies from 1921-1929). As a result, instead of the painful-but-quick corrections of the past we spent a number of long, miserable years attempting to avoid the inevitable effects of prior interventions.

Lack of consumer spending doesn't cause depressions, and stubbornly continuing to waste resources can't get us out of one.

See also: America's Great Depression.

I would disagree on inflation being a fair tax, it discourages savings and hurts people on fixed incomes. Also, consider where the money is being inflated from: The banks down. The money is created by the Fed, and it hits the richest people first, giving them an unfair advantage over the working classes. Meanwhile, the working classes see an increase in prices because of more demand on the market (the exact same thing as the value of the money going down, since prices are just an exchange ratio), but no increase in their wages. The inflation tax disproportionately hurts anyone who depends on the value of the money--the lower class, people on fixed incomes, the retired, and those saving to invest in capital, among others.

Inflation of a backed currency is (kind of) fairer because it actually costs money to produce (you have to do productive work that is valued by the market), and is sold on the market, not handed out (but yes, that doesn't mean it can't be damaging, because of the 1600s new world explorers, Europe saw inflation rates on gold currency of 100-200%).

It should be noted too, that is the argument that was used to take us off the gold standard- the use as a money was supposedly propping up it's value, and it's non monetary use was estimated at something like a tenth of the value. However, the prices never fell when we went off of it. Point is, there is no proper supply of money, so long as it remains fairly static. As for industrial uses of gold, that is what helps it keep it's value, and I don't think the industry would be affected as much as one might think, prices would adjust accordingly to reflect the new supply. We might not see much of a change in relative gold prices in the long term.

I should have noted, I am not all out for a gold standard, but we, the US (and other countries) really need to make it a legal tender for government debts, and drop all related taxes on it (and silver, and platinum, and most all valuable metals for that matter). If this crisis makes the money go the way of Zimbabwe (this is the first real crisis we have had on a fiat currency), we need competitive alternatives.

Just search Google for New Zealand Subsidies, here is one article.
As for controlling prices, that is part of the function of speculators who help keep the prices stable. I don't know as much about farming subsidies in particular (this CAP?) my guess is that the supply is elastic enough that rising prices could be fairly quickly satisfied on the free global market.
Also an interesting, maybe relevant article

Finally, as a side note, when special interests prosper, I think it means that there are not enough representatives for the population. Few representatives = less votes to buy = less money needed to get your way.

That's only half the story.

The Myth that Laissez Faire Is Responsible for Our Present Crisis

For the first time in a long time, the Fed Funds Rate was lower then inflation. That is to say, the Real Fed Funds Rate was negative. You couldn't afford to not get a loan! Naturally, this increased the money supply (by definition), and combined with new types of loans that we had never seen before (AIG was the biggest victim of this) because of certain deregulation (another thing we saw during the great depression as you pointed out), it caused borrowing, more money was invested in things you might use a loan for, say, houses, and prices went up. The new money filters out through the economy, rich down, turning good decisions at the time to bad ones (and causing accusations of greed), then when energy and costs of living go up, people couldn't afford to continue payments, and all of a sudden, prices pop.

The last time the Fed Funds Rate was this low was the 1970s. The time before that, the 1920s. Perhaps there is a connection?
The Housing Bubble in 4 Easy Steps

That's only half the story.

The Myth that Laissez Faire Is Responsible for Our Present Crisis

For the first time in a long time, the Fed Funds Rate was lower then inflation. That is to say, the Real Fed Funds Rate was negative. You couldn't afford to not get a loan! Naturally, this increased the money supply (by definition), and combined with new types of loans that we had never seen before (AIG was the biggest victim of this) because of certain deregulation (another thing we saw during the great depression as you pointed out), it caused borrowing, more money was invested in things you might use a loan for, say, houses, and prices went up. The new money filters out through the economy, rich down, turning good decisions at the time to bad ones (and causing accusations of greed), then when energy and costs of living go up, people couldn't afford to continue payments, and all of a sudden, prices pop.

The last time the Fed Funds Rate was this low was the 1970s. The time before that, the 1920s. Perhaps there is a connection?
The Housing Bubble in 4 Easy Steps

That's only half the story.

The Myth that Laissez Faire Is Responsible for Our Present Crisis

For the first time in a long time, the Fed Funds Rate was lower then inflation. That is to say, the Real Fed Funds Rate was negative. You couldn't afford to not get a loan! Naturally, this increased the money supply (by definition), and combined with new types of loans that we had never seen before (AIG was the biggest victim of this) because of certain deregulation (another thing we saw during the great depression as you pointed out), it caused borrowing, more money was invested in things you might use a loan for, say, houses, and prices went up. The new money filters out through the economy, rich down, turning good decisions at the time to bad ones (and causing accusations of greed), then when energy and costs of living go up, people couldn't afford to continue payments, and all of a sudden, prices pop.

The last time the Fed Funds Rate was this low was the 1970s. The time before that, the 1920s. Perhaps there is a connection?
The Housing Bubble in 4 Easy Steps

Oh I'm sorry, looks like I jumbled that sentence. What I meant is that Wild West wasn't purely anarcho-capitalist which is what I believe to be the pure libertarianism. As I said in my first post here my position is usually called by multiple terms: anarcho-capitalism, market anarchy, voluntaryism or pure libertarianism (pure in the sense that it is purely based on the non-aggression principle and doesn't compromise it at all by legitimizing the existence of the state, that is, a coercive (thus aggressive) monopoly.

So to avoid the confusion, let me just define what I believe (and what I think the above terms represent). I believe that all human action must be voluntary rather than coerced. Because of that I cannot ethically validate the existence of state or government as we know it because it is a coercive monopoly. What that means is that this organization we call the government gives itself a monopoly on offering certain services, such as protection, charity (welfare) etc. and violently enforces this monopoly. Thus it did not earn this monopoly status by simply offering the best services. It took it by force and continues to maintain it by both threats and exercise of force and disinformation and spreading delusions (such as the delusion of existence or even possibility of such thing as "public property", "common good", "nation" and other collectivist ideas. Every time it pushes a collectivist idea it does so at the expense of an individual, yet a collective can never exist without an individual.

I believe that the best way to establish a stable voluntary society (market anarchy, an anarcho-capitalist system or a pure libertarian system; whatever you wanna call it) is for ideally all people to agree not to initiate force or fraud on others and instead agree to govern only their own life and no other.

I'm not however saying that absolutely everyone must agree to that (though I do think anyone who actually explicitely wishes to initiate force or fraud or another and control other people is a CROOK which has to be dealt with as soon as he exercises this desire), but there has to be a critical mass within a given area for it to form an axis upon which a stable free market based on voluntary interaction (the only way a market can be free) can be built.

So speaking of Wild West and Somalia, what I'm saying is that this critical mass was either not established and thus it couldn't have been a pure voluntary society, which is probably one of the main reasons it collapsed. So you can't really point to these examples as examples of voluntary societies that collapsed if they weren't actually such to the fullest extent.

That said, when we speak of their collapse we speak of the establishment of a WORSE state of things, one which involves legitimization of violence through the state. Instead of defending such a state of things I would think it to be more sensible to strive towards building a society in which such violence is not necessary instead of using every chance to point out how it's not worth building.

It's like accepting failure as the only thing that "works" because success was not achieved.

That said, there ARE examples of at least stateless societies which MAY have been anarcho-capitalist and which lasted for centuries. One such example is medieval Iceland, that is the Icelandic Commonwealth which lasted for 300 years. Here are some sources: http://mises.org/story/1121 on mises.org and http://en.wikipedia.org/wiki/Icelandic_Commonwealth on wikipedia.

Thank you

Just like the Wild West, right? Oh wait, the era only lasted fifty years -- an eyeblink by historical standards. If you are trying to convince me that a libertarian society can be stable, you're not doing a very good job.

Wild West was not necessarily a pure libertarian society, that is anarcho-capitalist and what ended it largely seemed to be the intrusions of external government rather than its own implosion. This might shed some light on it: http://www.mises.org/journals/jls/3_1/3_1_2.pdf

You could have just as well quoted an example of Somalia, a recent stateless society, which was much more wild than the wild west and also ended by the intrusion of external governments. The belief into the illusion of necessity of legitimized coercive monopoly prevailed over the belief into exclusively voluntary interaction and thus they let themselves revert back to the system of legitimized violence. UN actually funded the strongest of the warring militias in order to establish it as a government. If anything that clearly tells you the true nature of government: an armed militia which took a monopoly on violence.

But if the voluntary society was built intentionally, with the strong belief in non-violence from the very beginning, and we have the closest example of that happening in New Hampshire, then the resistance to foreign external government intervention may equal that of the Swiss against Hitler's invasion. As you may know, Swiss were not conquered because the people were all well armed and trained for effective defense. There was no standing army, yet it was too much for Hitler to swallow and thus Swiss neutrality was preserved.

Same can happen in New Hampshire.

And that competition would shortly be dead, literally. It is extremely unhealthy to fight a mafia that is much bigger than your own.

You're ignoring the elements you don't see at play, such as the fact that the whole population of a voluntary society is ARMED, not just that brand new competing agency, thus any sort of a would be cartel or "mafia" as you call it would have to face the whole population instead of just those competing agencies.

It doesn't mean that as soon as there is suspicion that a given protection agency is trying to take over the market and proclaim itself as the government, the people will all of a sudden organize a mass revolt and go into war. No, that would be preemtive war and that's foolish. Instead they would go about their lives, but as soon as the given agency starts to exercise violence against anyone who competes, they will rise to defense. So it is impossible for them to do this without prohibitive costs, so why, again, do this if you can make more profits by being a good and peaceful protection service provider?

Note also that participants of the modern voluntary society know full well what government means. A return of government once it is established is the last thing anyone in the free market would want.

All this said, don't you see how ridiculous a position you're defending? All forms of socio-economic organization involving a coercive monopoly (government) have failed miserably and with incredible amount of destruction of wealth and life. Communism, socialism, fascism and as we are seeing today state controlled capitalism.

Yet people still keep calling for a system that involves a coercive monopoly and feverishly resist every suggestion that "Hey, perhaps we don't need a government! Maybe that's the huge flaw we have been having all this time - legitimization of coercion!".

But no.. people would rather come up with a gazillion of imaginary scenarios of how would a stateless society disintegrate into chaos, before they even give a chance to the idea, without realizing that... WE ALREADY LIVE IN CHAOS.

It's interesting that we've finally come to a time where people are actually vocally discussing a change of the whole system. That really says something about the magnitude of the changes that are happening.

That said I think you got it quite right about the problem being that humans govern other humans and thus face a conflict of interest.

However I dare to claim that the program you are proposing already exists and is in place and has been for practically ever since humans existed on this planet. That program is indeed open source to the core and completely free for everyone to participate in. It is called THE FREE MARKET.

If the problem is humans governing other humans how about letting human individuals governing ONLY themselves. I govern me and you govern yourself. If you want somebody else to do something for you or believe as you do, do not apply force to make them comply (like the current governments do), but instead use persuasion and other PEACEFUL non-violent means. And if it doesn't work then simply give up. Using violence against another (which current governments unfortunately legitimize, even while forbidding everyone else from doing it, thus taking a monopoly on violence) only results in more violence - violence breeds more violence.

This is not anarchy in the sense most people have been taught to look at anarchy. It is not lawlessness in the same sense either. It is simply a lack of a coercive ruler in place of self-rulers trading both value and ideas between each other on a purely voluntary basis. And it is law that is private where the only universal, and natural, principle to be followed by everyone and at the same time enforced by everyone (right to bear arms for defense) is the principle of non-initiation of force or fraud.

This philosophy is called by varying names: anarcho-capitalism, market anarchy, voluntaryism (because the CORE idea is that all human action should be voluntary, not coerced) etc. It is arguably also the original libertarian idea, although nowadays libertarianism is seen as compromising with coercion and government a bit too much so with respect to that we can call it a subset of libertarianism, or libertarian purism.

Lastly I want to refer anyone who didn't before think this idea through to check out these sites:

http://en.wikipedia.org/wiki/Voluntaryism
http://www.mises.org/
http://www.lewrockwell.com/
http://freedomainradio.com/ (a fairly popular podcast by a genious market anarchist philosopher Stefan Molyneux which can with great proficiency answer every question you might have about market anarchy).

If you're curious enough that you'd give a book a chance, there's a free one with an audio book available here called "The Market for Liberty": http://freekeene.com/free-audiobook/

It changed my life.

And if you are convinced already or become sufficiently convinced after exploring this, there is good news: a place where free market and liberty stand most chance in the world: New Hampshire, because of a project of moving thousands of liberty minded people to it: http://www.freestateproject.com/

Thanks for your consideration (and sorry for such a long post, I'm just too passionate about this). I truly hope that instead of worsening conditions for our freedoms, this shift we are seeing happening in the world opens the eyes of people towards the true nature of coercive governance and what freedom truly is).

Float your boat so long as it doesn't sink mine.

The boom-bust cycle is a feature of human economics throughout history, and it won't change.

Not really, no. When Marx was making the observations that led to the Communist Manifesto, he saw the rise of the boom-bust business cycle during the Industrial Revolution as proof that laissez faire capitalism — a new thing at the time — was a fundamentally flawed system that would be replaced with his Glorious Communist Revolution(TM). That is, laissez faire capitalism, the Industrial Revolution, AND the boom-bust cycle appeared at roughly the same time, so Marx (and many others) assumed they were all part of the same thing.

What Marx and others missed was that the newly-risen boom-bust cycle wasn't a property of capitalism itself, but rather a property of fractional reserve banking, which was one of the many new forms of fraud to arise in the newly-born free market that was still learning to police itself. When banks kept fractional reserves, they invented money out of thin air by loaning out money that didn't belong to them. In fact, each bank printed its own bank notes, which were notionally worth a given amount of gold, but frequently worth far less. As the banks loaned out un-backed bank notes — bogus IOUs for gold — they created speculative investment bubbles that looked like a good thing at first, but ultimately caused local price inflation within that bank's sphere of influence. As people tried to buy cheaper items from outside the bank's sphere of influence, in other regions of the country, third party banks tried to cash in on the bogus IOUs that they'd been given, draining the inflationary bank's gold reserves. When word got out that the inflationary bank was low on gold, it imploded in a bank run, while reality reasserted itself by bringing prices back down.

When Marx made his observations, few countries had a central bank at the time, so individual private banks could only drive relatively small and localized bubbles within their respective spheres of influence. Smarter banks only leveraged themselves out at a small enough ratio, like 2:1, so that they could survive a run and would not be depleted too badly by other banks cashing in IOUs — gambling that other banks would run at the same or greater leverage, on average. Dumb banks burned themselves out with stupendous amounts of leverage — but, so long as they burned so very brightly, they looked like a benefit to the community, despite the rising prices, because they gave out loans to so many people.

Later, by the early 20th century, banks started cooperating in a centralized manner, allowing them to coordinate their inflationary activities and prevent reality from asserting itself by combining into a single, limitless sphere of influence that simultaneously enveloped an entire country with lockstep inflation. By joining forces, they could keep the bubble growing bigger and lasting longer, with the ultimate goal of making the bubble grow forever. After a series of false starts during the 1910s, they seemingly succeeded at their goal: the Roaring '20s, which at the time were hailed as a new era of prosperity. The bubble grew so big and lasted so long that, when the Ponzi scheme inevitably came crashing down, the result was the Great Depression.

Whine all you want about the Nobel Committee having a political agenda.

As others have pointed out, Krugman did NOT win a Nobel prize; he won a different prize.

Right is right. And Krugman was right.

No, he wasn't. Krugman identified the symptom--a housing bubble--but not the cause.

The Austrians were right. And no matter how much Krugman calls them poopy-heads, they're still right: Keynesian economics is one giant fraud.

That's what's really at the core of the worldwide economic meltdown: the fraud is unravelling. And it's looking increasingly likely that world governments are going to nationalize their entire banking systems to prevent it, rather than doing the sane thing and returning to sound money.

(If any of you have any doubts as to what type of standard of living nationalization leads to, take a good, hard at current and former communist countries--say, North Korea.)

Our founding fathers are weeping in their graves, while Stalin is laughing in his.

Reagan predicted that his tax cuts would increase revenue, which was NOT the case

The Reagan tax cuts really did increase revenue. (Or at least the tax cuts were associated with rising revenue, if you want to argue about causation.) Many other interesting graphs here.

Also, the poster you are responding to is quite correct - Herbert Hoover was ***not*** proactive. Proactive means acting **before** you need to. And that book you cite itself says that Hoover did a big bunch o' not-so-much before things totally hit the fan - because Hoover was a classic laissez-faire idealist. All that the rest of the book covers is Hoover's actions which were ***reactive*** - basically, trying to fix the barn after the horse got out.

Finally, that book you cite has some very clear right-wing conservative bias. As clearly revealed by quotes like this:

http://www.mises.org/rothbard/agd/chapter7.asp#7

"If government wishes to alleviate, rather than aggravate, a depression, its only valid course is laissez-faire-to leave the economy alone. "

Really? It's **only** valid course? That's a fact, like gravity and Angelina Jolie's hotness?

To state that as a definite fact is just ridiculous. Many strongly reasoned and well-documented views oppose this sort of flat statement. You would probably do well to review them - even if you still disagree.

I'm sorry but nobody seems to understand how banking works or what causes a depression. Read The Mystery of Banking and America's Great Depression. Then get back to me. They are very enlightening.

What is the answer to keep our economy from going bust? As history has shown us, the answer is to do nothing. Let the economy readjust itself. Let the banks fail. The markets will readjust, from the ashes of inefficiency the rest of the industries will take that which is efficient and return to prosperity.

The only thing this bailout is going to do is delay the readjustment of the markets and cause them to take longer, aka a depression.

'nuff said.

I'm sorry but nobody seems to understand how banking works or what causes a depression. Read The Mystery of Banking and America's Great Depression. Then get back to me. They are very enlightening.

What is the answer to keep our economy from going bust? As history has shown us, the answer is to do nothing. Let the economy readjust itself. Let the banks fail. The markets will readjust, from the ashes of inefficiency the rest of the industries will take that which is efficient and return to prosperity.

The only thing this bailout is going to do is delay the readjustment of the markets and cause them to take longer, aka a depression.

'nuff said.

That's what is happening now to credit, and upshot is that the Fed is losing control of the money supply, and that is very, very bad because controlling the money supply is the main way we have avoided having economic downturns spiral out of control ever since the Great Depression.

You were doing so well up until this point. The Fed's control over the money supply is what kept us on the verge of spiraling out of control since before the Great Depression. In particular, the 1921-1929 "boom" period leading up to and effectively causing the 1929 stock market crash, and the length and depth of the Depression itself, were both largely the result of their inflationary policies.

For more information about the Depression, see America's Great Depression by Morray Rothbard.

Where are you getting all this from? It's like you're from some alternate reality. The government way "proactive" during the Great Depression, right from the start. That's why it lasted as long as it did. If you want to know what really happened, here's a full analysis of the contributing factors: America's Great Depression. You don't have to agree with the economics, but at least pay attention to the historical aspects, which are fully cited.

"I will agree that something needs to be done."

Me too. Nothing. This is about a whole lot of stupid decisions going up in smoke. Sucks to be them.

http://mises.org/story/3132

Bad decisions and investments should end up this way. Poof. Now we go after the fools who made it happen, and toss 'em in jail. They did the same (in result) as Enron.

The alternative is mortgaging your children's future. They'll be the ones paying the bill if the bailout happens.

http://mises.org/story/3098

Is this the basis for the criticism of Republicans? I found it linked from the wikipedia article for the financial services modernization act.

Has austrian economics gone mainstream?

The initial cause was the government deciding that fucking with the money supply was a good idea. Inflation of the money supply creates a market boom that is artificial (not created by demand), and must be followed by a bust. The Community Reinvestment Act certainly had a big role to play in this particular cycle, and I'm glad you pointed it out. But the CRA is another example of how regulation just messes things up. If there was no government mandate for banks to take on these risky loans, and there wasn't an artificially low interest rate on Fed loans making them look more profitable than they really were, these banks would never have gotten into such a mess in the first place. The deregulation that made things worse (by enabling banks to hide their bad debt) would not have had such a negative effect if the banks hand't been coerced and tricked into making bad loans!

This is not a defense of the banks' behavior, merely a description of how their actions relate to the landscape they inhabit. The worst thing we can do right now is to pump more money (that we don't have) into the system. If we leave it alone and get rid of the Fed, or at least greatly reduce its power, we will have a short, sharp year-long recession followed by a full recovery. This could be the last boom/bust cycle if we the people decide to act. If the bailout passes, we're looking at a lingering 10-year recession, further devaluation of the dollar, and a socialist market in all but name.

You're absolutely right about the Law of Unintended Consequences and government's failure to learn, which is why government needs to keep their hands off the markets.

but with the best intentions in the world, to make sure everyone could have a goddam house.

Oh rubbish, the only intention is to make money (literally). The debt spiral has to increase exponentially (Running at 10%+ per year) to survive. That means selling debt to exponentially more people each year. Eventually, you have to find a way to persuade everyone to take on debt. How?

Tulips?
http://en.wikipedia.org/wiki/Tulip_mania

A good time had by all; The Roaring Twenties?
http://en.wikipedia.org/wiki/Roaring_Twenties

This time it was housing in America. In fact, it's irrelevant. The real cause is the fundamental nature of bank credit. When you take out a loan, new money is created, this new money "boosts" the economy, the stock markets. It's really mostly inflation. But along with the money, which doesn't change, you also get debt, which increases exponentially. So there is a boom which has to be followed by a bust, the longer the boom, the bigger the bust and to continue the boom, more and more people have to take out new loans... Remind you of anything?

Eventually you run out of people... And it crashes anyway... You even read about it in the newspapers, they're giving loans to people who have no income... WTF? ... If you've read any Austrian economics, you can see the crash coming a mile off.

That is funny, sure economists don't have to agree with each other.

But honestly take the literature about patent law from the left to the right and you will find no advocacy for the patent system despite some patent economics modeling which assumes that the system works without examination of that matter.

If you view the patent system as an incentive system, an intervention in the market, a kind of Game for market players you have to provide economic evidence that the market with a patent system is "better" than without. You won't find such a normative theory. There is an old study of Machlup but it still represents the state of the art, despite that they didn't have soft and business methods patents back then.

"Without patents large vested interests would simply take all the inventions startup companies produce for their and only their profit."

The patent system does not work for start-ups. Patenting makes only sense when you can build up a portfolio. You cannot enforce a patent against a large player because in our world of patent madness the larger player has at least x trivial patents you infringe. Remains the patent troll. To become a patent troll you have to be able to finance 400k lawsuits which may last several years. Either you concentrate on your product development or on legal action. Real start ups just have no time for the patent process.

Examination of a patent takes 5 years. Either you are bankrupt before you get the patent or no "startup" anymore.

"Slashdot is not the right place to seek advice about these issues because for the most part it is populated by entitlement minded dullards who never have original ideas. I find Slashdot forums rate next to use groups in quality of content."

At least they know that patent attorneys are perpetrators. Get me the economist who tells that the patent system makes sense. Machlup's conclusions still hold.

I found an interesting article of Cole.

Ok, ok, granted, I exaggerated to make a point, 1% was as low as it got, but nevertheless, it was unrealistically low. And as they racked up the interest back up they shouldn't be surprised when people started defaulting on their loans.

If you want more of regulation, then you want more of this. Markets work to direct investment where it is needed pretty damn well, but if you have a central bank that keeps fiddling with the damn interest rates like a PS3 joystick, it is very unfair to point your finger at the 'free market' for fucking it up.

For a more graphical comparison check this little article from Mises.org. Not a close fit as South America and Africa, but close.

Oh geez.

Here's what you missed:

The obvious ... way to handle the problem is to SIMPLY internalize the costs that CO2 emissions throw off ... But the most vocal alarm[ist]s don't want this.

See the difference?

Virtually every alarmist that I'm aware of does not want to "simply" internalize the costs that fossil fuels throw off, that is, do *only* that. (And yes, lots of other context should have made that clear.) Sure, they might want to slap it on, just as icing on the cake, a way to satisfy their sense of justice, but they do not make it anywhere close to their _only_ proposal, the *focus* of their approach.

So, basically, you've been attacking a strawman this whole time while not being aware of even the existence of my real criticism. Almost to the last one, the alarmists *do not want* an economically efficient proposal, *especially* the most economically efficient one, or they would propose this (internalization of costs, period). If they ever do bother to actually figure out a hard, quantifiable value for the fossil fuel externality, it's kind of a footnote that never makes it into the national debate, and never gets seriously vetted, so they tag on all kinds of dubious assumptions that make it unrealistically high.

Because, you know, the purpose of alarmism was *never* to solve an oncoming catastrophe, but to have power over others or something similar to that.

BUT BEFORE YOU ROLL YOUR EYES AT ME, let me try to dispel your contempt. As an intellecutally honest, reasonable individual who has a clue, I absolutely, 100%, do not consider this "psychoanalysis" of alarmists as reason for inaction. I feel obligated to treat all positions as if they were presented as competently as possible (for purposes of determining policy). If the science is right, it's right. The evil intent of the folks who swiped up AGW as their latest, hippest rationalization for policies they'd want anyway does not take away from the validity of the science.

And I have been fighting "on your side" (though I dislike framing the situation that way) in libertarian circles. As a longtime libertarian, I have been absolutely apalled at the refusal of hardcore libertarians to recognize the need for and legitmacy of well-defined rights in the atmosphere, a resource becoming scarce, so that the market can incorporate the price of the CO2's damage and thereby include it in its (very powerful) mechanism for maximizing efficiency given constraints. (Guess who I am on this thread. Hint: I said I was appalled.)

So I do agree with the need for action, but just as strongly, I believe it needs to meet these constraints:

1) It must work: meaning everybody must be on board, or we slurp enough money from non-compliers to make up for their mess.
2) It must be minimally intrusive: meaning send the market the right signal for the cost of CO2 emission, and otherwise not tell people what to do.
3) It must be minimally corrupt: meaning include rotating auditors, rewards for whistleblowing, refunding of all excess revenues to citizens, etc so that such a program is not bent to favor one group of people.

If you can't meet those, I guarantee the cure will be worse than the disease.

But back to the original topic: do you know of any alarmist who doesn't meet my characterization? I doubt it.

It's a problem because like smoking and other addictions, such people can become a burden on society.

It's a problem because collectivist, misnamed "insurance" schemes entitle such people to become a burden on society.

If we were all as awesome as you we could live in Ayn Rand's utopia. Alas, it is not so.

Enter paternalism. When you were a child you were too stupid to understand that ...

You are beneath me. Your argument is childish. If you want to opt into an arrangement in which you are treated like a child, knock yourself out. But your right to swing your stupidity around ends where an expense to me is incurred.

My guess is that companies don't want security. They want security labels.

I think you're right.

They want to show that yes, they passed some audit, so they're secure and may deal with financial transactions or other "high security required" crap. Whether they really are secure or not, who cares?

Only their insurance companies, who ultimately absorb all losses, have reason to care. So the question becomes, "Why doesn't the insurance industry care?" Evidence (crappy standards & porous security on the system comprising 90% of the network, for starters) suggests that the relevant demand curve is such that the perceived level of risk (which equals the incentive to buy insurance) minus the total actual losses claimed, is currently at or near its maximum, with the result that insurance companies, the nominal cost-bearers, are not motivated to demand standards with any more technological legitimacy than the so-called "OOXML Standard." But if the demand curve is as I hypothesize, they are not truly "cost-bearers" in any meaningful sense. The "cost" of business losses to all computer crimes are subtracted from all insurance payments to determine the profit margins that insurance companies realize from IT, but obviously when zero insurance payments are made, the demand for insurance itself completely, and pay-in minus pay-out equals zero. Since some risk is required to make insurance desirable, the inflated cost of doing business is also a side effect that does not motivate anybody within the insurance industry, nor at the tops of the corporations which are their biggest customers, to want technologically valid standards in IT, or at least not better ones than these, which are known in the trade to be crap. In fact, lax security tends to encourage embezzlement by making it both profitable, and of limited interest to the parties directly involved. Only the customer suffers, and only in increased cost of doing business, and in the barriers to enter new markets that result in the totally immeasurable reduction of consumer choices, in comparison to a theoretical ideal. Speculation aside, the large amount of capital required to enter the insurance racket effectively precludes all newcomers from it, therefore free market competition is theoretically impossible, and any present deviations from free market ideals can be expected to remain in perpetuity.

The good news is that business losses are not insurable! According to Austrian economic theory, they are a matter of personal responsibility, conceptually identical to getting out of bed in the morning to work for a wage.

Hoppe:
An uninsurable risk is one where the following condition holds: If I know with regard to a particular risk some or all of the factors that determine its outcome, then such a thing is no longer accidental; its likelihood can be individually affected, and therefore cannot possibly be insured. Or, to formulate it somewhat differently, everything that is within either full or partial control of an individual actor cannot be insured -- cannot be risk-pooled -- but falls within the realm of personal or individual responsibility.
...
Take an example where we have at least partial control. Can I insure myself against the risk of making business losses? Obviously not. While I have no direct control over the actions of the buyers and non-buyers of my products (those who do directly determine my profits and losses) I do have some control over my business's success or failure. I have control over my production costs, as well as the kind and quality and price of the product I produce. In fact, I can make losses deliberately if I want to. It would be impossible for me to pool my risk with other business people, as if losses were something like being struck by lightening.

Now with this distinction between accidental events, which are insurable, and events that are uninsurabl

But copyright law needs to exist in some way.

No, it does not. See http://www.mises.org/journals/jls/15_2/15_2_1.pdf

Here you go: Punishment and Proportionality: The Estoppel Approach, a paper describing how proportional responses (and not disproportionate ones) are objectively and rationally justified without reference to any particular subjective system of right and wrong. Most of the things we think of as human rights (due process of law, free speech, freedom of religion, security in oneself and one's possessions, etc.) are simple corollaries of this principle.

See also: The Ethics of Liberty.

Here you go: Punishment and Proportionality: The Estoppel Approach, a paper describing how proportional responses (and not disproportionate ones) are objectively and rationally justified without reference to any particular subjective system of right and wrong. Most of the things we think of as human rights (due process of law, free speech, freedom of religion, security in oneself and one's possessions, etc.) are simple corollaries of this principle.

See also: The Ethics of Liberty.