Saturday, April 29, 2006

The Role of Government (part 3)

People are ruled by incentives, nothing more and nothing less. When your paycheck depends on returning customers and their business, you will provide good customer service. When you face competition, you will work to ensure that your customer service is better than your competitors are. When you face the risk of bankruptcy, you make sure customer service is an essential part of your business plan.

Some people think that customer service is a cultural thing. If someone in government doesn’t provide good customer service, it’s because that person wasn’t raised the Samoan way. Some think customer service is a question of honesty. If only honest people ran government, then there would be good government customer service (or so the logic goes).

But when someone’s pay doesn’t rely on satisfied customers, face competition or risk the threat of bankruptcy, then that person doesn’t have those incentives to provide good customer service. It’s that simple. Don’t you like the fact that if McDonalds doesn’t give you what you want, you can withhold your dollars and go to KFC? You hold McDonalds accountable and transparent by the simple fact that you have the freedom to choose.

Now some people believe that government can adopt private sector methods to make it better. But private sector strategies are bred out of competition, risk-taking and failure. The only real way to implement private sector methods into government is to force departments to face the same incentives such as profit seeking, competition and risk-taking. Such incentives are possible in government with the implementation of revolving fund operations, user fees, outsourcing of nongovernmental functions, performance-based pay and management and elimination of failing programs.

As soon as the ASG can adopt such practices, it will soon find that it can lighten its burden and allow market-based incentives to improve services to the people of American Samoa. Its costs will come down lessening the urge to raise taxes and allowing the government to focus on protecting the people’s rights to their life, property and liberty.

Friday, April 28, 2006

Living Under Government Means Ceding All Your Rights?: A Reply to Tali Satele's 'Tragedy of the Taxes'

Stuart K. Hayashi

This post is a reply to Tali Satele's answer to me in the comments for his post "Tragedy of the Taxes."

Dear Tali,

In your reply to my first comment, you wrote that

if individuals want to be members of the government institution they can go and sign a contract to do so.

To this, the Social Contract peddler replies that every adult living under a democratic government already has signed a contract stipulating that he or she consents to following every single democratically-ratified law, no matter how immoral he or she perceives it to be.

Many libertarians reply that they do not ever recall seeing such a contract saying it, nor have they ever taken a pen to sign such a document. This argument fails because it makes the false assumption that a contract must be written and signed in ink to be legally binding. The fact of the matter is that the vast majority of contractual agreements made in the United States are done so without the contract being written.

Say you go to a store and purchase a stereo -- one with packaging that promises you that the stereo plays music when it is electronically powered. Then, when you try turn your new stereo on, you realize that it does not run because it is broken.

So you go to the store and ask for a refund.

Suppose the store refunds your money. Why is that? You may believe that the store does this because the store's managers understand that, if the store's refusal to refund you makes you angry, you may choose to stop at a competitor's establishment.

There is more to it than that, however. In actuality, every time you make a purchase, there is an implict conctractual agreement that the product or service being paid for actually does what its sellers claim it does.

When you buy your stereo from the store, the stereo's packaging claims that the stereo will play music. By selling you this item -- complete with the packaging it came with -- the store implicitly also makes that promise to you.

The implicit contract is this: if you give your money to the store, then the store provides you with a good or service that does what the seller says it will do.

Thus, if you buy a stereo from a store and it does not work, then the store is in breach of the implicit contract it has made with you.

So if the store refused to refund your money, you would have a valid claim to sue the store in small claims court.

The store can only weasel out of this implicit arrangement if the store established a different set of ground rules before the deal was sealed. In other words, if you go to the store and the owner warns you, before you even take your money out, that the stereo might not work, and you go ahead and pay for it anyway, then you have no claim against the store owner when it turns out that the machine indeed malfunctions.

That sort of pre-emptive renegotiation of contractual terms is also seen in the case of prenuptial agreements. When you enter into a marriage contract, the default version of such contracts stipulates that both partners are merging their estates into a single entity, with each marriage partner holding joint ownership over all the assets.

But what if you want to marry a woman while, even after getting married to her, retain 100-percent ownership over your pottery collection? That is, even after you marry her, she has absolutely no stake or claim in any part of your pottery collection; it's all yours. If you want that arrangement to be codified legally, so that she cannot take any of your pottery away should you later get divorced, then you need to put that in a prenuptial agreement -- a prenuptial agreement being a further clarification of the terms of your marriage contract.

Now, my stereo example is part of a much larger phenomenon. Implicit, non-written contracts are necessary in order for a free society to exist. This principle is known as contract by estoppel. As Wikipedia explains the principle,

a landlord may tell a tenant that the rent is reduced or cancelled for a specific period of time, e.g. "You can pay half rent until the noise and dirt from the maintenance of the common parts is over." If the tenant changes behavior as a result of what is said, the landlord might be "estopped" from retrospectively claiming the full rent."

Thus, the Social Contract peddler can reply to you that you do not need to "sign" anything literally for the Social Contract to be valid.

Basically, say the Social Contract believers, your entry into the Great Pact is implicit. You consent to it when you reach adulthoood and choose to continue living in the democratic society instead of moving somewhere else or deciding to become a hermit in the woods.

Thus, you sign an unwritten, implicit Social Contract By Estoppel.

Just as the scenario with the stereo involved an unwritten contract that could still be enforced by the government's guns in court, so too can your refusal to abide by the Social Contract.

In your response, you said that

every individual has the right over his or her own life and is therefore the only person who can give permission to who they do or do not want to associate with.

The Social Contract theorist replies that you only retain absolute ownership over your life if you're a hermit in the woods. By living in society, you must agree to the Social Contract and, in so doing, you relinquish some ownership over your life to the rest of society. By living in society, you must partially live under your neighbors' terms. If your neighbor wants to do something that you don't want to do, you have a legal obligation to cede a portion of control over your life to your neighbor.

You touch upon what's wrong with the Social Contract pusher's argument when you say,

a contract is only binding where each party intentionally (or gave the impression of intent)gave consent to an agreement. so people can contract and be bound to the organization's rules like homeowner associations.

There is something to add to this: You cannot truly consent to any contractual arrangement -- not even an implicit contract-by-estoppel -- if, before entering into the contract, the party whom you are dealing with has given you no opportunity to learn of what the contract's objectively-definable terms are.

In the example of the defective stereo, there was no written contract, but there are a set of objectively definable terms. The packaging of the stereo promisees the stereo will function when you have properly followed the instructions for its usage. By selling you the stereo with that packaging, the store is legally considered to have made the same promises about the stereo that the manufacturer has.

And yet, the terms of any Social Contract are not objectively definable. It does not help for the Social Contract theorist to say that you were made aware of the terms of the Social contract when you were a child being coerced into taking civics lessons at school, because those such lessons (indoctrination, really) do not provide us any clear standards.

What Thomas Hobbes said are the Social Contract's terms are completely different from the terms that John Locke and Thomas Jefferson believed it had.

Do you know why? Because it's fiction! It's completely made-up. There is no more proof of a Social Contract existing than there is proof that gray space aliens have abducted human beings.

Those who doubt this can try an experiment. Visit ten contract lawyers separately. On every single occasion, ask that lawyer what the specific terms of the Social Contract are.

Most of the answers will be extremely different. The more similar the answers are, the more vague they will be. The more specific two answers are, the more dissimilar they will be.

And try posing this question:

Suppose that, when I first reached the age of contractual competency, there was no draft. I only agree to live under that government if there is no draft. Ten years later, the government drafts me. I then dodge the draft. So which party breached the contract first -- me or the government?

Any lawyer who tells you that you instigated the contractual breach has actually contradicted the implicit message of the Declaration of Independence.

In the Declaration, Jefferson says that once you agree to a certain system of government, then the government is contractually obligated to retain that system of government. Should the government then introduce an entirely new system of law -- in the American colonists' case, a whole new set of taxes on trade --- then it is the government that instigated the contractual breach.

Also note that because every single adult, upon reaching the age of contractual competency, has very different ideas about what kind of government he would live under. Thus, one set of terms in a "Social Contract" that one young adult may agree to is not necessarily the same as the terms that another young adult would agree to his own "social contract" with society.

Thus, if all of these people are to live under the same government, then it is inevitable that the government's compliance with its "contractual agreement" with one young adult will lead it to defecting on its "contractual agreement" with other adults.

For political philosophers to argue over what the true terms of the one best Social Contract (that Americans are supposedly held to) is really comparable to Renaissance-era monks arguing over what number of angels dance on the head of a pin.

In actuality, we have no proof that any angel dances on the head of any pin, and likewise have no proof that a "Social Contract" exists.

Tuesday, April 18, 2006

A Distinction Between Freedom and 'Due Process'

Stuart K. Hayashi

The following is a slighlty revised version of an article of mine that originally appeared in the Tuesday, April 18, 2006 edition of Hawaii Reporter. It also appears here on my blog The Fiftieth Star.

"Government is not reason; it is not eloquence. Government is force ... " --Apocryphally attributed to George Washington

Political freedom is security against spoliation. Dictionary.Com defines spoliation as "the act of...plundering."

More precisely, "spoliation" means the initiation -- that is, the starting -- the use of physical force against non-consenting parties' person or property. That includes larceny, kidnapping, and unintended property damage.

If you survived a stickup because you handed the muggers your wallet, the robbery still counts as violence, as you would've been killed if you didn't cooperate.

Contract violation (such as fraud) is also spoliation, as it's theft for me to promise contractually to pay you for something, and then take it without paying.

To secure our liberty from the rule of cutthroats, we entrust government to exercise retaliatory violence. The more someone resists our laws, the more violence the State responds with.

Suppose Murray never pays the compounding fines for his jaywalking offense. The city eventually sends armed men to apprehend him. Murray runs from them, so they mace him. If he fights back ferociously, he may need to be roughed up . . . or even shot.

Laws are ultimately enforced at gunpoint.

Cops are right to employ such force against spoliators -- pickpockets, rapists, swindlers, murderers, and abductors, all of whom start violence. But when it passes laws forbidding peaceful behaviors, the government itself spoliates innocent individuals.

Here critics scoff, replying that citizens implicitly consent to anything democratically-elected legislators decree. I disagree, for ancient Athens was doubtlessly wrong to vote democratically on executing Socrates for his rhetoric.

Of course, U.S. authorities cannot detain or bludgeon civilians arbitrarily. America, unlike Third-World dictatorships, has "due process of law," which places numerous procedural barriers in front of officials before they can kill a lawbreaker without being penalized for it.

However, just because America's Founders set up "due process" to rein in frivolous prosecution, that doesn't mean that "due process" equals freedom. That confuses means with ends. If you lock jewels inside a chest, you wouldn't say the chest is itself a jewel; the chest's purpose is to protect jewels.

Now imagine some democratically-elected lawmakers enacting legislation to incarcerate someone for three years if she houses a cat. Angela illegally keeps one anyway, harming nobody. Neighbors see the pet and snap pictures of her with it.

Eventually, detectives grow suspicious. After they show "probable cause," a jurist awards them a warrant to search her residence, where they find the animal. They read Angela her "Miranda rights" and book her. She gets her phone call in custody. Because she cannot afford an attorney, the state provides her one.

Angela only gets convicted after prosecutors demonstrate beyond any reasonable doubt to impartial jurors that she kept a cat, calling her neighbors as witnesses, displaying their photographs, and exhibiting the evidence taken from her premises. Angela appeals her sentence, but it's consistently upheld since judges find it obvious that she in fact did the crime.

Throughout this entire scenario, Angela received "due process." Investigators could only search her estate because they secured a warrant after establishing "probable cause." Angela got her requisite phone call, reading of "Miranda rights," jury trial, counsel, and appeals, and the onus was upon the prosecution to prove her lawbreaking irrefutably.

Yet the State still violated Angela's rights, because it threatened violence upon her for actions that didn't hurt anyone else's body or private belongings. Her guards would've manhandled her if she tried to flee the courtroom.

Though the above case is imaginary, real-life democratic governments with "due process" really can -- and often do -- promise to imprison people as punishment for peaceful-but-illegal behaviors, with even greater force reserved for those who attempt to escape their captivity. Such measures amount to government-enforced kidnapping.

Government kidnaps those who privately smoke recreational marijuana in their own homes, for example.

Likewise, you cannot legally hire a willing adult who offers to work for you for hourly compensation below the mandated minimum wage. If you're caught doing that and don't pay the fines for it, you can expect government to abduct you over it.

"Due process" won't save you from the slammer if you openly disobey a wicked law that never should've existed. America had long-established "due process" in the 1940s, but that wouldn't have prevented police from locking you up if you, in fact, flouted racial segregation laws back then.

True freedom requires that laws only prohibit spoliation -- not peaceful, mutually consensual activities among legally-competent adults, whether they are personal or commercial in nature.

Related articles by Stuart K. Hayashi
* "The Invisible Gun" (FreelyThinking.Com Version, Mad Prophet Version, Jacques Tucker's Website Version)
* "What Capitalism Is and Is Not" 
* "Freedom Before Democracy" 
* "The Properness of Property" (Pt. 1)
* "The Myth of the Social Contract" (link goes to the first of several installments)
* "Conservative Author Michelle Malkin Defends FDR's Policy of Mass Kidnapping"
* "Positive Reform Through Good Philosophy"
* Campaign Finance Follies"

Recommended Links 

* In Hawaii, convict shot in head as he attempts escape -- story here

Saturday, April 08, 2006


Dear Businesses of American Samoa,

Your government has decided that it knows what’s best when it comes to the price you can charge for your property. Despite the fact that price controls have failed in every political experiment in the last 2000 years, the ASG thinks it can do what the rest of the world hasn’t done before. But they will learn, they will learn.

In the meantime, you have to protect yourselves and your property from the government. Because of this price-gouging law, you’re not just pitted against government but also against your customers. A mere dissatisfaction of a particular price is enough grounds for an investigation by the Consumer Bureau Police Chief, Mr. Keyser. Frivolous complaints will cost you time and money in audits and litigation expenses, and it may cost you more than all the $1000 fines combined. It'll be a field day for trial lawyers. So what can you do to protect yourself?

First, you can close your doors during a declared state of emergency. Just shut down your gas stations and your hardware stores (just make sure you have a gun to protect your property against looters because an irate government may retaliate by withholding its protection). You may lose more money in fines, audits and litigation expenses than the resulting loss of sales during the state of emergency. Closing down is the safer bet in this hostile political environment.

Coordinate with your fellow businesses to shut down simultaneously. I would say that in a time of crisis, you should care for the people. But right now, the public and the government have passed a law that makes you a criminal for doing what you want with your property. So take care of yourselves and your families first, and the best way to do so is to work together in the business community.

If you cannot shut down for some reason, you can do what wholesalers of gasoline do here in American Samoa under the MAP system and in Hawaii under the Gas Cap. What they do is quite intuitive. They charge for gasoline at the limits imposed by these caps even when gasoline is cheaper than the limit itself. They make their money while they can, because they know that the cap can be lower the actual cost of gasoline later on.

So a month before hurricane season, treat the price-gouging law like the price cap in the above situation. You should raise the price of your product 10% above costs immediately and indefinitely (even after the storm blows over). While you may lose money on the highly demanded item during the emergency, you can make it up by holding to the threshold afterwards.

Last but not least, if you can’t make up your money on one product (like gasoline) with the 10% limit, you should apply that 10% increase limit to the rest of your goods as well. You should raise the prices of all of your items with a 10% markup and hold them there indefinitely too.

Yet there is some good news in the passage of this ridiculous law. The governor has painted himself into a corner by signing this legislation. If he declares a state of emergency, he will see long lines, frivolous lawsuits, exacerbated shortages, a 10% across-the-board inflation, and unemployment unfold right before his eyes. If he doesn’t declare a state of emergency, he will lose face. Either way, the ASG will learn that there is only one god of prices in this world, and that is God himself.

Saturday, April 01, 2006


Do you want to know how to make a poor argument? All you have to do is rely on conspiracy theories, unsubstantiated claims and outdated rhetoric. This is how we should sum up Common Cause’s latest column on our one-size-fits-all immigration policies here in American Samoa.

Population increases are not necessarily a bad thing. More people mean more customers to serve. More people mean more food, clothes, shoes, cable, newspapers to sell. Even Hawaiian Airlines would provide more flights for a growing Pago Pago–Honolulu market. Businesses see more people as an opportunity while the government treats more people as a threat.

When our government successfully stemmed the flow of our immigrant brothers and sisters from Independent Samoa, one of our local airline companies ceased operations. The company knew it couldn’t make any money because the ASG slammed the door on its customers. We lost jobs and income into our territory and continue to suffer such to this day. Thank you Mr. Politician, thank you.

If anything, immigrants are politicians’ scapegoats rather than their business partners or friends. The administration, the Fono and the High Court have blamed everything under the sun on illegal immigration. To suggest that immigrants have the upper hand here with the ASG is to be blatantly ignorant of the facts.

If anything, we should be thankful for the waves upon waves of foreigners into our great territory for two reasons. First, the influx has brought future problems to the forefront. American Samoa would have eventually reached today’s population someday even without immigration, and we would still have to confront and address the limits of government welfare.

Eventually, we would have to become self-reliant. Eventually, we’ll have to pay for what we receive. Eventually, we would have to ask ourselves whether we should pay for our own education, medical services, public works, broadcasting, telecommunications, shipping and loans. Will we reform our government to achieve self-reliance from a position of relative strength or from a position of weakness very likely in our future? We need to reject welfare and not leave this mess to our children.

Second, we should thank our immigrants (both legal and illegal) and their sponsors for helping to keep our canneries here. Our world is converging into one global market to the world’s benefit whether we like it or not. The tuna industry and cheap laborers (who are willing to do the work) will seek one another out and find each other. Now, would we rather have both parties meet each other here in American Samoa or force them to meet in Thailand, Central/South America or the Philippines?

We need to make our permanent guests a part of our culture and heritage. They need to participate in the Fa’asamoa, not be isolated or segregated from it. Village councils should one day look at granting matai titles to foreigners who buy property within their respective boundaries.

Nonetheless, the most important question of our immigration policies is this:

Who gets to decide who lives on our family lands: the ASG/Common Cause or our families?