Austro-libertarian and other free market oriented economists focus their efforts on explaining the inefficient and destructive nature of the state – how this compulsory aegis of taxation and redistribution retards economic progress and the standard of living, siphoning off ever more productivity into vast bureaucracies that control and regulate every aspect of our lives with a fine toothcomb. The state represents an enormous concentration of wealth and power which could never be attained by a private individual (or even an institution) in a genuine free market, a degree of power and wealth that seeks to extend its destructive influence not only within the territory of the individual state itself, but also overseas with armies, navies and air forces and all of the fire power of destructive weaponry that they can carry.

To any one individual the state can seem like an awesome and overwhelming entity – in the UK, it provides your banking infrastructure, your healthcare, your transportation networks, educates your children and supposedly is the guardian of your health, safety and wellbeing from greedy, unscrupulous companies who might seek to defraud or injure you. Moreover, if you get on the wrong side of the state then its uniformed police force can arrest you, its judges in long black robes can imprison you or freeze your assets and, of course, it promises to do the same to all of the people who attempt to commit a crime against you. And who could not fail to be overwhelmed by the state’s vast and impressive buildings such as the Houses of Parliament or the US Capitol, and the patriotic, flag waving ceremonies such Presidential inaugurations which inspire a turnout of millions?

This essay will in no way dispute the fact that the state is something to be feared (and indisputably so when we consider that the world’s entire nuclear arsenal is sufficient to destroy it tens of times over). What we will explore here, however, is the fact that the monopolistic and overreaching nature of the state is both its source of power yet also its Achilles’ heel – that the state is far from a lean, mean fighting machine and is in fact bumbling, bloated and altogether rather stupid.

First, the state is severely handicapped by its very nature as a monopolistic force. Because it does not need to compete in any areas in which it decides to wade it has a natural tendency to languish in laziness and inefficiency to a degree which renders it extremely vulnerable. For example, the global cyber attacks on state owned and some private computer networks and infrastructure last year are a testament to this. These attacks were made possible by the fact that the operating facilities of the targeted organisations – which included Britain’s National Health Service were outdated and hence highly susceptible to such attacks. Most private consumers of information technology, on the other hand, had had the necessary patches and updates installed. This reliance on out of date technology seems endemic, spreading also to areas which are nominally private but which are heavily supported by the state such as banking. According to entrepreneur Simon Black (who started his own bank when he got so fed up with the service offered by established banks), the Society for Worldwide Interbank Telecommunication or “SWIFT”, which is the premier global financial network, uses Windows Vista as its platform – an operating system which Microsoft no longer supports. Domestic infrastructure seems to be even worse. In the UK, most salary and business payments rely on the BACS network which dates from the 1960s and still, in our age of instant communication, takes three days to transfer funds between bank accounts. How is it possible that vast organisations such as Britain’s National Health Service and SWIFT are basically using technology that is more outdated than that available to any private individual who recently bought a laptop or smartphone? The answer, of course, is that these organisations are simply shorn of any competitive reason to innovate or to stay ahead of the game. Without the threat of losses as a result of the continual supply of tax dollars they are devoid of any reason to maintain the highest standards in order to ensure that they are efficient and up to date. Such lack of standards spreads also to the personnel in these organisations. Bureaucrats, who are more or less promised a job for life so long as the avoid making a major mistake, have little incentive to develop their knowledge and skills and so are unlikely to ever be as smart as private entrepreneurs who always need to keep a sharp eye on the game. This is one of the reasons why (in spite of all of the hullaballoo from politicians seeking election) tax and regulatory loopholes will always exist – because the people finding and exploiting them have both greater ability and incentive than those who are supposed to close them. This is not to imply, of course, that politics is not a competitive arena. However, the nature of competition in politics is very different from the nature of competition in the free market. In the latter, people are competing to create more wealth for the benefit of consumers and so it is a positive sum game – one person’s gain does not depend upon another’s loss. It is true, of course, that in a particular industry one company may prosper while others go bankrupt, and obviously there can only be one CEO of any particular company at a time. But even if a person is beaten to the position of CEO of one company the process of wealth creation itself will allow plenty more enterprises to be started in order to exploit opportunities which have not yet been explored. In the free market, one door closed is two more opened. Politics, however, is decidedly a zero sum game. The power possessed by one individual is necessarily taken from another, and money given to one set of beneficiaries has necessarily been taxed (i.e. confiscated) from another. There can only be one President of the United States or one Prime Minister of Great Britain – the process of politics will not create an unlimited number of great and powerful states in which the opportunities to become either President or Prime Minister are multiplied. Therefore, the budding politician must necessarily gain from what anyone else loses and he must make sure that no one else is able to beat him to the top job. Thus, there is seldom any genuine co-operation or betterment in the political sphere as, ultimately, everyone is the enemy of everyone else – and the only co-operation that does exist is in the form of favours, bribes and other “tit-for-tat” arrangements, with any relationships always susceptible to a sudden backstabbing by the more ruthlessly ambitious partner. With such a widespread lack of trust serving as the foundation for the state it becomes impossible for it to operate as a fast, efficient and unified whole. Indeed, private citizens can often be thankful for the fact that the little feuds and foibles between individual state departments and fiefdoms are a frequent distraction of the state from plundering the average Joe.

Second, as “Austrian” economists we know that statist intervention can never achieve anything that it is supposed to achieve – or at the very least it can only do so with significantly inflated cost. All of its publicly stated ambitions – conquering poverty, providing affordable healthcare, employment for all of those who want to work, safety and security in retirement, the vanquishing of crime and so on – will never be achieved simply because these things cannot be achieved through the means of wealth redistribution rather than through wealth creation. Indeed, because the state has no area where it can genuinely make a positive difference for the whole of society, its own natural incentive to sustain itself and to maximise its own power instils in it the desire to make problems worse rather than better – solely for the purpose of lending itself a perceived role. It is better for the state, for instance, to keep people poor so that they are dependent upon government handouts; it is better for the state to disarm its citizenry so that the latter present no threat to the state’s own armed guards, at the cost of increasing crime which the state can then step in to solve. Unfortunately this perverse incentive is fed by the fact that many people see the state’s failings as a reason for strengthening the state and giving it more power, rather than as a reason for getting rid of it. Most of the symptoms of these failings are far removed from the state itself and it requires the ability to follow a long chain of thought in order to identify the true culprit. When the government inflates the money supply, for instance, prices rise – yet it is businesses, i.e. all of those greedy, exploitative capitalists, who actually raise the prices directly and so it is them who get the blame. Similarly, when state mandated minimum wages result in unemployment the public view is that the fault lies with those same evil businessmen who are refusing to lower their profits and hire more workers. Most of this is due to the fact that the advent of democracy has severely weakened the distinction between the state and the people – the feeling of “us” and “them”. Rather, through our voting rights, all of us are the state and we are all doing what the state is doing. So, perversely, the state’s failings are perceived not its own but rather as our failings, as if it we ourselves who have failed in the particular endeavour. However, here also lies the state’s weakness. As recent secessionist movements and events within the European Union have indicated, the feeling of unity with and control of the state is severely weakened when the state becomes too big and bloated, swelling to a size where decisions are made by strange and unfamiliar figures in a city many thousands of miles away. Much of the motivation for the Brexit vote, for instance, was the desire to repatriate decision making authority from Brussels back to Britain. This suggests that the degree to which power can be removed from its proximity to the people is finite – a limit which has served as a severe frustration to the unifying, globalising and bureaucratising ambitions of political elites. Indeed, it is now unlikely that these ambitions will ever be fulfilled. Moreover, secession necessarily breaks up large states into smaller units which, as we explored in several previous essays, necessarily makes the state’s power vis-à-vis its citizens weaker rather than stronger.

This leads us onto our third point which is that the state, or rather the people who can be said to form it, are a minority of the citizenry. This is necessarily so because, as a parasitic entity, it is simply not possible for the state to be comprised of the majority. Contrary to popular belief no state has ever retained power as a result of force alone; rather, the state’s sustenance is dependent upon at least the tacit acceptance of the majority of the citizenry. Although the fear of force may constitute a reason for that tacit acceptance, generally the state has to ensure that its subjects are kept within the confines of a basic degree of contentment – that even if they may mumble and groan about the state’s inadequacy in this, that or the other, there is no pressing reason to upset the apple cart. The collapse of the Soviet communism, the Brexit vote and, we might suggest, the election of Donald Trump are instances of when such contentment with the status quo was exhausted in the minds of at least a significant proportion of the population. The end of the Soviet Union led to a markedly different political set up in Russia and Eastern Europe; we are yet to see the full consequences of the other two events. But when the people do decide to support a particular direction and to exert its independence with ferocity then the state has no choice but to yield.

This bumbling, bloated nature of the state is indicated by a joking phrase apparently made by the industrialist Charles F Kettering – “Thank God we don’t get as much government as we pay for”. Indeed, if all of the wealth and resources that the state commands were actually put to use effectively and efficiently then it would truly be a terrifying and formidable obstacle. Unfortunately, however, it is also summed up by what we might call, informally, the “cock up theory of history” – that, rather than great leaders and stewards shaping the world’s events in order to enhance humanity, anything significant that happens in the course of history is more attributable to a series of accidents and mishaps that just happen to have had widespread consequences. And it is here where the true danger of the state may perhaps lie.

One of the most infamous of these incidents occurred in 1983 at the height of the cold war when the Soviet nuclear early-warning system reported the launch of intercontinental ballistic missiles from the United States. The Soviet officer monitoring the system at the time, Stanislav Petrov, believed the warnings to be the result of a system malfunction – a belief which was verified subsequently by inspection of the system. His refusal to act on the false warnings prevented a Soviet retaliatory attack which would have almost certainly elevated the cold war into a full scale nuclear holocaust. In other words, the complete annihilation of human existence was averted by the prudential actions of a single individual who refused to trust his government issued equipment. When the state today still handles so much and handles it so badly the possibility of a grave mistake going the other way is very serious indeed – and all the more so when belligerent tensions are again reaching new highs. Indeed, a not too dissimilar incident occurred in Hawaii this month when a missile attack alert was broadcast publicly, sending the citizenry into a panic for the best part of an hour – all because a state lackey “pressed the wrong button”. It is for this reason more than any other that the state should be regarded as dangerous. So much power in the hands of so few people is at risk of one them making a simple error, rather than at the risk of that same person acting with evil intentions. As awesome as the state may be we have more to fear from its stupidity than from its ingenuity.

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