A recent proposal out of Iceland has been making the waves around economics blogosphere. In it, Frosti Sigurjonsson critiques the current fractional-reserve banking system and proposes instead a system he calls “Sovereign Money”. But what is “sovereign money”, how is it different from the current system, and how will it work? In this post I’ll first explain how the current system works and the problems it has from an Austrian perspective, then go through the sovereign money proposal to see how it solves any of the short-comings of the current system.
How is money created in the current system?
Before we can analyze the sovereign money proposal, we need to understand how the current system operates. This can be demonstrated in a 4 step process. But first understand that a central bank (like the Bank of Canada or the Federal Reserve) is a lot like any other bank: it offers deposit accounts and loans to clients. The difference is that you can only become a customer of the central bank by invitation only.
A “motte and bailey doctrine” is a style of argument (and informal fallacy) that’s based on a motte-and-bailey castle. The bailey is a big courtyard and where people live and work and generally want to be. The motte is a mound with some kind of fortification on top, that’s used as a last refuge when the bailey is under attack.
A motte and bailey doctrine for arguments goes like this: someone is usually making an argument from a big and comfortable courtyard of ideas, being very liberal with their terms, accusations, and implications. But when someone attacks their argumentative “bailey”, they retreat to a “motte” of strict terms and/or rigorous reasoning. They can’t be attacked at the motte because even their opponent would agree with their definitions and reasoning. The problem is that the motte and the bailey are different arguments: often to get to the bailey, additional assumptions are required; sometimes the arguments are even contradictory.
With all the hype about the new Star Wars movie, I’ve been becoming more interested in the franchise. Specifically, I’ve become more interested in the concept of the Force.
According to Wikipedia, the Force ” is a binding, metaphysical, and ubiquitous power in the fictional universe of the Star Wars galaxy created by George Lucas…. can enhance natural, physical, and mental abilities, including strength (such as during a “Force jump” or to slow a fall from an otherwise dangerous height) and accuracy… other Force powers are demonstrated in the film series including telekinesis, telepathy,levitation, deep hypnosis, enhanced empathy, reflexes, precognition, and enhanced speed.”
So the Force isn’t just the ability to control objects at a distance, it’s something that seems to permeate the entire being of a person possessed with it, including their emotions. Sounds pretty mysterious, right? It’s almost like magic. At least, I always thought so. And others in the Star Wars Universe seem to think so as well.
Everyone knows different countries treat drugs differently. For example, if you get caught buying or selling a large amount of marijuana in Canada, you’re probably not going to get your head chopped off by the government–but in Saudi Arabia, that is the law.
These days, everyone and their mother seems to have an opinion on intellectual property. This has its positives and negatives.
The positives are that the more people are aware of the issues affecting society, the more likely they are to take a stand to demand change or protect the status quo. This applies to everything from police militarization to laws governing the administration of voting.
The negative is that, when it comes to intellectual property at least, nearly everyone is utterly confused by what intellectual property is on a fundamental level. This can lead to misguided outrage and result in even more destructive legislation.
Self-styled “Bleeding Heart Libertarian” Matt Zwolinski is out with a new series of essays defending a “basic income guarantee” (BIG). For those who don’t know, a BIG is a program where the government gives everyone, regardless of wealth or income, a set amount of cash every year. Professor Zwolinksi has previously attempted to justify a BIG on philosophical libertarian grounds, which I considered unprincipled. He is now attempting to justify a BIG on “pragmatic” libertarian grounds. I have issues with this line of defense as well.
Zwolinki’s argument for practicality boils down to four claims: that a BIG is cheaper than the current welfare state, a BIG is less paternalistic, a BIG would require a smaller bureaucracy, and a BIG would remove a lot of the opportunities for “rent-seeking” (meaning it would be harder for the rich and powerful to get special treatment). Zwolinski then attempts to brush aside principled libertarian arguments against a BIG by claiming that a libertarian “Utopia is not an option”. Continue reading “Against the “Pragmatic Libertarian Case for the Basic Income Guarantee””→