As someone romantic about the free market, a capitalist optimistic, I normally say that cooperation and profits can solve anything. The main exception I make in this is domestic and foreign security, aka the local police force. This is a long-held debate about the free market’s capacity to solve the major issues that face humanity. Minarchist libertarians hold out and think that the police/military cannot be fully privatized, but most other roles of the government are unnecessary. They still believe the government is needed but needs to be minimized (aka the min in min-archist). The anarchist libertarians claim that there is nothing that the free market cannot fix. They see the need for the government as just a pretend need instead of an actual need. In this article, I will wade into the conversation around this topic. I will address the financial part of security forces and whether it is possible to provide adequate security for poor neighborhoods.
This article will be part two of this conversation; here is the first article on this subject, Power Vacuum and Anarchism (Libertarian Anarchocapitalism) (laborfortruth.com) (this conversation as to why I think that anarchism is logically impossible to actuate). In talking to one of my think tank buddies, Adam Leavens, I wanted to explain my stance on how the ability of free markets to deal with the universal need for security. Some things are preferable wants, but security is not one of those things. People need security, provision of substance, and shelter. This article is my attempt to rehash that conversation (I was kind of in the zone when I was talking to him. It was kind of a mind flow that left me surprised at the amount of development I did in such a small timeframe. Sometimes, great ideas come to you out of nowhere, and you follow them to their logical conclusion like Alice followed the rabbit wherever he was going).
Catching You Up
The interactions between humans can be summarized under three categories:
First, Right of Thought
The right to think what one will (preferred religion or worldview are examples)
Second, Right of Body
The right to use one's body to do good or evil with it. ( the use of substances, the partaking of food, working out or not, sexual preferences)
Third, Right of Spending (or to not spend)
The right to use the fruit of one's labor how they want (money, assets, buying things)
The conversation about people’s right not to be acted against aggressively in a non-consensual way covers all three of these areas. Most wants and needs people have can be best served by companies making products and goods and having to compete with other companies for the dollars of the patrons who might use what they offer.
A minarchist (limited government advocates) would advocate the need for a public police force and military to protect these things. Anarchists are more optimistic, romantic, and idealistic that the free market will be able to eventually put the police out of business.
I want to give a defense of why we think the free market will not be able to provide universal security in place of the government. ( in this article, I will be addressing the financial reason, in the above article, I give the power vacuum reason).
Free Market Nightmares
In my book “Are You Free, a Beginners Guide to Liberty?” (which is free on Amazon as of the writing of this article), I make the case that in many industries, the free market can solve the world’s problems. I gave examples of privately built toll roads being better performers than the public roads and how Amazon, UPS, and FedEx outperform the USPS (which is billions of dollars in the hole financially at the moment). I argued that the private sector was much more responsive to the consumers’ demands than any public alternative because of the constraint of things like competition, prices, and supply/demand. I argued that what drives businesses to innovate is incentives due to profits. Unfortunately, there are industries that have trouble in overtaking the public sector.
The main three areas that the free market struggles with are: (we all have had debates about these three, I do not think these are controversial; even anarchists can say these will be tough to solve).
One,
Spending habits (people going into debt because they live above their means)
Two,
Health/Sickness (people who have most ailments and sickness having crazy high health bills, but their injuries make it hard to work to pay these bills on top of their own living expenses)
Three,
Crime Rate (places where there is a ton of crime in a small area; thus, a high need for security and countermeasures)
We will address each one of them a bit and then really hunker down on the third one since that is the main one we are addressing in this article.
Spending Habits
If someone is deep into debt and has bad spending habits, they will be scored very low on a spending test called the credit score. With a low credit score, any money that is borrowed will be paid back with high interest rates, and the low score makes it hard to get a large loan, like a loan for a house. The credit score is a money report card for these companies and tells them if they are likely to get their money back in a timely manner, if at all, or is this person going to try and default on the loan or run from it? The free market allows freedom to cooperate and associate both ways. Often, we think the consumer chooses which company to work with, but the companies can also all choose not to work with someone. This issue is not impossible for the free market, but it is a deep hole that people can climb into, and the deeper they go, the harder it is to recover from it.
Health Issues
The second issue area is health. If one has a ton of health issues or a few really bad health issues, it becomes very difficult for a health insurance company to justify the promise to cover a client’s bills after they hit their deductible. In order to be profitable, they will either want to move the deductible to a higher amount to maintain the same monthly payments, or they make the monthly payments much more to justify the deductible. The problem is that health is not something that one can recover from; at least the things I am thinking of that are perpetual, things like diseases. The first issue of money is a slippery slope, but it can be climbed out of, but once health reaches a certain point, it’s a spiral. Companies that provide huge financial promises and cushions if things go sideways take a huge risk on themselves. For them, their huge client base is boiled down to a huge formula of probability based on the past experiences of people with similar health circumstances. Those who have high health costs perpetually kill most of their profit potential. Most companies would like to opt out of these people if they could, but then those who are most vulnerable and most in need of their services are left out of it. This is a similar issue that we will harp on in the next one, namely those who most need the service are cumbersome financially to those who are established to help the parachute fall of a bad situation.
Crime Rate
The third issue of the crime rate is the one we will primarily focus on. This one poses the biggest issue and is the main reason I am not a philosophical anarchist libertarian (other than the scriptural evidence in Romans 13 that the government is God designed to stop evildoers). All three of these issues have the same core issue of an abundance of need/use of something past the common amount of use of it. Due to its multifaceted nature, security poses the biggest problem. The first two are individual problems that terminate with that person. It is their own person that is causing the issue. Security by its very definition, though, is an outside issue. Thus, cannot be helped (other than buying a gun or learning self-defense) unless you buy security measures and security personnel’s help.
Crime and Incentives
In a high class city in Texas, Frisco, the area I mark Atmos gas for a living (at the time of writing this) has many gated neighborhoods with private security forces that maintain the neighborhood. The people of this neighborhood do not have the same level of financial scarcity that others in the middle class and especially the lower class experience. They probably make at least six figures a year. They are not incentivized by scarcity to commit crimes against others like battery or theft. Thus, those neighborhoods are pretty much run by private securities. They are able to afford these security measures because they have a ton of private security products on their property like large fences, cameras, and security alarm systems set up around their homes. They are also able to cooperate together to pay for the security people. Part of this is that since they have a low crime rate in the area, they pay less. If there were a higher crime rate in their neighborhood, somehow, they would need to pay more for more personnel. They obviously could afford it if it came to that. On the other hand, those in very low-income neighborhoods (low standards by American standards) might struggle to pay their bills, putting them in survival mode; thus, incentivizing them to murder and/or steal to try and get financially ahead. This dilemma would create a nightmare scenario for the free markets. This is the crux of this article.
In order to get a good reading of the cost/profit analysis of any person, a company must do a background check into a relevant area's demographic situation, in the same way that a credit card company or bank would look into someone's credit history to see what kind of person they are with money and how much cash flow they have. In the same way that insurance companies, life/car insurance companies will look at familial/marital status, car driving history, health factors, and other factors like these. After looking at all these and putting them into their own formulas of risk, they decide if they are willing to take the risk and how much they will need to charge to justify the promise to be on the hook if things go sideways (as discussed earlier)
More recently, people have started arguing that everyone in a prosperous society has the right to things like health care and education, referred to as positive rights. These rights are not guaranteed in the libertarian political theory; instead, libertarianism has negative rights. The right not to have one's money stolen and the right not to be attacked physically against one's will. This is based on the libertarian theory of non-aggression (NAP, the non-aggression principle), where people have the right not to act against their will; thus, they have the right to be secure. Security is a negative right to not be acted against, whereas healthcare/education are a positive right to get something universally. In order for people to be able to pursue their own life liberty and the pursuit of happiness, they must be free to choose, and the only way they can be free to choose is if they have certainty that those who seek to harm them can be handled swiftly, so they can continue unperturbed in their pursuits.
Since this is a certain indubitable, inalienable right, this creates a dilemma for the free market.
The heart of the dilemma
The universal security issue goes something like this:
Companies who make a promise to meet a need if something goes wrong want to manage their risk.
Those who have too much need for security because they require too many resources to deliver that promise.
The requirement/cost to deliver on the promise is high.
High risk clients require high premiums to justify the cost of supplying the resources in order to fulfill the promise.
Those who are at high risk of being acted against aggressively and non-consensually live in poor neighborhoods that incentivize crime.
Conclusion, the poorer an area of people, the more they will need security, which requires the highest cost/premiums, but these people are least able to pay the premium because of how poor they are; thus, why they and others are incentivized to do crime.
Based on the logical conclusion of this, the normal way things work is flipped on its head. Normally, those who have the most money have the biggest demand for things since they have the most flexibility of disposable income to spend on whatever comes their way. They do not have to choose between a ton of alternatives for a small amount of disposable income, but they have many more options since they have a large amount of money, both coming in and potentially saved liquid or in assets (Since most people who have a ton of net worth are also good with money and thus defer most of their buying, so they can build wealth with the money they have today to make it compound more tomorrow through assets, business investments, or things like stocks that have a return). This high potential for demand applies to education (the wealthy have the highest percentage to do undergrad and especially to go on to post grad-degrees). The high demand for these schools drive up the price (part of the problem is that college loans are mainly funded by government’s stolen money, 1.5 out of 1.7 trillion dollars in student loans or from the government, which inflates demand for these schools), and those with parents that have wealth can afford to “win the bid” on the seat in those classes. The schools that offer the best programs are incentivized to maintain the highest quality service by the high demand, allowing them to charge more for their services. This drives up the price alongside the supply chain. As demand goes up, the number of seats in these great schools stays relatively the same. This same logic applies to the Super Bowl or really any championship game of any sport. The high demand for the limited seats drives up the prices way more than a normal game during the season. The stadium and the seats are the exact same, but the bid for these seats surges as people compete with one another to get that spot.
When it comes to security, on the other hand, those who have the highest need or demand for it (due to the high crime rate in a given geographic area), by definition, are the least able to get it. This creates an unsolvable dilemma, in my opinion. In theory, people could manage to get by without car insurance (take alternative modes of transportation like buses, bikes, or rideshare) or health insurance (can pay monthly installments in perpetuity, since health issues are not pervasive in every neighborhood on a large scale but is instead spread out among all neighborhoods to different degrees, depending on diet and other factors) or education (since we have the internet, free or at least really cheap, people can teach themselves through articles/YouTube, seek others around them to learn from, learn things on the job, or buy/borrow a book). They cannot get by without security, though, because it is an indubitable, universal right of all mankind, whether rich or poor. Those with the most money have little need for any true security force. They have plenty of alternative means, and the neighborhood they live in means there is little incentive to steal from one another. Another way of putting it is that the rich who live in rich neighborhoods have security measures like fencing, security systems, cameras, big dogs.
The conversation with my buddy did start off with the argument that there are many ways that the private market can solve man’s need for security, but all these threats and measures are merely extra deterrents and eyes to try and alert the evildoers that if they try something, there will be swift actions done in response to repress their act of aggression. If someone has cameras and a security system and yet no one will come and confront them, it means nothing. Manpower is the needed measure to be the real force behind all these on-site measures. The above has been my summary of what I told Adam about why the free market would struggle to be profitable and thus justify offering security for those who need it most since they would need to charge them the most, and they have the least ability to pay for that high premium.
Conclusion
My argument is to privatize security as much as possible. I am even okay with the police cooperating with security forces and training them to be competent in doing their security measures. The third reason Adam Smith (father of modern economics) thinks that government is needed is to “erect public institutions. . . because profit could never repay the expense.” (free to choose) I will end this article with Milton Friedman’s commentary on Adam Smith’s view of the legitimate role of government. Also, if this intrigued you, check the other article on this subject out. The first article on this subject, Power Vacuum and Anarchism (Libertarian Anarchocapitalism) (laborfortruth.com).
Adam Smith in Wealth of Nations says:
"According to the system of natural liberty, the sovereign has only three duties to attend to; three duties of great importance, indeed, but plain and intelligible to common understandings: first, the duty of protecting the society from the violence and invasion of other independent societies; secondly, the duty of protecting, as far as possible, every member of the society from the injustice or oppression of every other member of it, or the duty of establishing an exact administration of justice." (third reason cut out due to it being a complex reason) (quoted in Free to Choose on 28-29)
Milton Friedman commenting on this quote says:
"The first two duties are clear and straightforward: the protection of individuals in the society from coercion whether it comes from outside or from their fellow citizens. Unless there is such protection, we are not free to choose. The armed robber's 'your money or your life' offers me a choice, but no one would describe it as a free choice or the subsequent exchange as voluntary." (Free to Choose by Milton Friedman, pg 29)
Tim is a Christian author. His worldview that informs his writing is Calvinist, Baptist, and Libertarian. His main series is his Christian picture book series, "About God for Kids", where he discusses the attributes of God in a way kids can digest. He also wrote a Christian Romance novel, libertarian book for beginners, and Christian coloring books. He graduated with a Bachelor's in Biblical Studies from Southwestern Baptist Theological Seminary.
He has written a book on freedom called “Are You Free” (If you are into listening to books I have it in audio also, Are You Free Audiobook )and he has written multiple children’s books about God. Be Sure to check out the podcast version of the blog, Labor for Truth Podcast. And check out “The Truth About” Youtube Channel. You can find his works at his amazon author page, https://amazon.com/author/timbankes. He even has a free digital ebook on how God is the creator. Get your free copy today at, Greater Creator .Also If you are into Christian Fiction, he has made his first book in his Futuristic Christian Fiction series free, Her Dying Wish
Some of my other favorite books on these subjects that are great for beginners to the liberty movement are:
Free to Choose by Milton Friedman (Major Economist)
Basics of Economics by Thomas Sowell (Major Economist)
Called to Freedom by Elise Daniels (Christian Perspective)
Faith Seeking Freedom by Norman Horn, Doug Stuart , Kerry Baldwin, Dick Clark (Christian Perspective)
The Libertarian Theology of Freedom by Edmund Opitz (Christian Perspective)