The Laffer curve

If you've listened to conservative talk radio, you've heard about the concept of the Laffer curve, although you might not have heard that name mentioned. The Laffer curve is a hypothetical concept about what happens when you change the tax rate. At a tax rate of zero, the government obviously gets zero dollars in taxes. As you raise the tax rate, as a percentage of people's income, the amount of revenue the government gets rises.

But as you raise the tax rate, you are also chewing away at people's incomes. The total income of the people gradually diminishes. As a result, taking a percentage of their income is less and less effective: for each percentage rise in tax rate, you get more tax revenue, but this is increasingly offset by the fact that there is less total income to take (as the very result of your taxes). Eventually you reach a point where the rise in taxes attacks the people's income so much that increasing the tax rate actually decreases your total revenue. You've gotten to the point where you're "better off" lowering the tax rate, because you'll then increase people's income so much you'll get more tax revenue even though the rate is lower. As you raise the tax rate all the way to 100%, eventually you'd get zero revenue: if you take all the people's money, they won't have any income at all, and they won't be able to invest it or use it to buy gas to get to work. Therefore they won't make any money, and even with a 100% tax rate, the government coffers will be empty.

I don't know if anybody's ever "proved" the Laffer curve concept, but it makes intuitive sense. Any tax is an economic disincentive on the people's income, and eventually it seems like this effect should begin to outweigh the amount of tax revenue you take in.

Conservative radio trumpets this concept all the time, although they don't often fully explain it. Conservative radio hosts seem convinced that we are perpetually on the top side of the Laffer curve, that we are always at a point where cutting tax rates will spur the economy and generate more revenue (while benefitting everybody in the process). They constantly cite successes in the Reagan and/or Bush administrations of instances where cutting taxes actually brought in more tax revenue. This is the triumph they say proves the concept, and they boldly declare that cutting taxes will always bring us more tax revenue, and is therefore always the right thing to do. (Of course, since I believe it's sinful to tax and harmful to tax, I'm glad to hear them proclaiming this.) I don't know if some of these conservatives just don't know about the lower end of the curve, or just think it's a safe bet given our exorbitant taxation that we are on the upper end of the curve, have been for a long time, and have little hope of getting out of it in the future.

Meanwhile, I don't know if liberals just don't believe in the Laffer curve concept, or believe we're in the lower end of the curve. (Or just aren't capable of the reasoning involved in the concept.)

But regardless, my perspective is that the Laffer curve is a big mistake in the first place. Not because it isn't true; it makes perfect sense to me. What I question about the Laffer curve is the whole goal involved: maximizing government revenue. Sure, if you're goal is to get as many dollars into the government as possible, then it makes sense to use this curve to try to maximize that. But that's not my goal. My goal is to a) do what's right, and b) do what's best. What's right and what's best is to not steal. Taxation is wrong, and it harms the economy. And increasing the size, scope, and budget of government is wrong (insofar as government engages in activities other than defending the rights of its citizens, and it certainly does!). So why do I want the government to have more dollars? And why in the world would I think that doing a little damage to the economy is okay as long as it's offset by getting enough dollars to the government to spend? That's not success; that's a tragedy!

A far better goal than "maximize government revenue" (so you can maximize government spending) is "maximize the productivity of the economy." When you have this goal, you produce as many goods and services as possible, and people's needs and wants are best served. Want to help the poor? Aside from charity, one of the best things you can do for them is support dismantling all the government institutions that interfere in the economy that is supposed to be serving them. Wal-Mart has done far, far more to help the poor than all the government institutions in the history of the United States combined; because of Wal-Mart, the poor can get what they really need: cheap groceries. And the free market could help them still more if it wasn't hampered by government regulation. The theory goes that government should only take an action when the benefits outweigh the costs. But the fact is that when it comes to government interference, whether by taxation or regulation, the costs always outweight the benefits. Therefore, the government shouldn't take action. And Christians certainly shouldn't support these damaging and sinful interventions!

If you took the Laffer curve concept and plotted against some measure of economic output, like GDP, rather than government revenue, you'd see not a curve, but a straight line. Plummeting straight down. It would be obvious that every increase in tax rate results in less prosperity for everyone. And if your goal was to maximize economic prosperity, it'd be obvious what tax rate to set: ZERO.

Sins in the market, conclusion

How do you reconcile your belief in unregulated free-market capitalism as a divine protection against tyranny, with the fact that so many of the most profitable commodities in a capitalist market are the ones that appeal to our very basest and most disordered desires (drugs, p&rn, etc.)?

It is true that there is a lot of money to be made in the market by catering to people's sinful desires. Christians are, of course, forbidden to be the ones to make this money.

But remember that many items are multi-purpose. A gun may be used to murder, or it may be used to hunt for food to provide for one's family. A pencil may be used to draw a pornographic drawing, or to write an evangelistic sermon. Radio may be used to play music advocating violence, or to preach the Gospel. The Internet ... well, you already know about the Internet.

People all the time use good things that God has created for evil purposes. The free market is one of them. Evil people may prosper in this world, but in the end, the pleasures of sin are only for a season. None of this is an argument for getting rid of the free market, especially since God commanded it.

How much do you trust God?

It's just that I think our families share some other things in common - things we aren't used to sharing with other people, LOL - that I was curious about why we came down differently on the free market. I look forward to being given something interesting to think about.

Christians disagree about a variety of things. One reason for this is that none of us perfectly understands the will of God, yet. No matter how long we keep studying and living the Christian life, we will always be learning. Hopefully we will always be willing to accept correction from the word of God, and willing to repent when we discover that we've been in error.

With that said, I want to reiterate that the free market is taught by and required by the word of God. When God said "Thou shalt not steal" -- that's a free market. That completely prohibits taxation as something Christians can engage in. (Note: I'm talking about requiring taxes of our neighbor, not talking about paying taxes.) As Walter Williams says, "He didn't say thou shalt not steal unless you got a majority vote in Congress.."

"Thou shalt not steal" means we practice charity, not socialism.

God said about property that while a man owns it, it remains his own, and if sold, the money remains under his control (Acts 5:4). Nowhere did He authorize us to make decisions for everybody's property, as a whole, rather than as individuals. Not even within the church, as evidenced by this passage.

Nor did God authorize us to govern other people. We may hold people accountable within the church, but if they choose to reject that accountability, the maximum judgment we are allowed against them is to put them out of the church, to "abandon them to Satan," and for those outside of the church, we can do nothing other than repeat the call of God (I Corinthians 5). And as I've said previously, the most effective power against sin is that call, not things we could do by taking away freedom.

Faith means "trust." The very word, pisteuo in Greek, is Greek for "trust." May I please encourage you to trust in God, to step out in faith and believe in His commands, even if you don't yet fully see how it could work? It worked for Abraham, who believed he would receive a multitude of descendants, even as he offered his only son on the altar (Hebrews 11:17-19).

What's a libertarian?

Okay, now you're gonna have to explain to what a libertarian is. It was mentioned in the original article. I've heard of the term, but don't really understand.

Briefly, a libertarian is someone who believes that government should be as small as possible. Some libertarians believe the government should be very small, some believe it should be so small it doesn't exist. The ones who believe in shrinking the government completely down to nothing are called "anarcho-capitalists" or even "anarchists" (but that's not what most people think of when they hear the term anarchist). The ones who believe in still having some small government are called "minarchists." The main thing they agree on is that it's wrong when government does ANYTHING other than just defending the rights of its citizens. Most libertarians count most of the founding fathers of the United States as sharing the same political philosophy, so they see themselves as continuing the grand tradition of liberty begun by this country -- however, most think that the values of the founders have been pretty much completely rejected by society, the political parties, and the government.

Since Republicans/right-wingers have traditionally been in favor of limited government, libertarians are sometimes called "ultra right-wing." However, left and right isn't really a good description of the differences, because the libertarians believe in liberty in some things that right-wingers generally do not. But there are a lot of former Republicans among the libertarians.

Just about all libertarians are completely anti-public schools. After all, public schooling doesn't secure rights, so it's not a legitimate government function, in their minds.

One helpful explanation of libertarianism I found is Eric Raymond's libertarianism FAQ. Couple of warnings: Raymond incorrectly depicts all libertarians as being "pro-choice" (i.e., on the abortion issue). This is a false impression; Libertarians for Life is located here. Note also that libertarianism believes in allowing people freedom, even the freedom to sin; so you'll see that the libertarian position on some controversial issues is to "let them do it." This isn't incompatible with Christianity; it just means we preach the Gospel without trying to punish people for rejecting it. In fact, according to I Corinthians 5, this is what we are required to do.

Does the free market protect against tyranny?

How do you reconcile your belief in unregulated free-market capitalism as a divine protection against tyranny, with the fact that so many of the most profitable commodities in a capitalist market are the ones that appeal to our very basest and most disordered desires (drugs, p&rn, etc.)?

I wanted to comment on a misperception that I saw in this question. I don't believe in the free market as a divine protection against tyranny. It's more of a definition thing: tyranny is what you get when somebody takes away freedom. So the free market is what you get when there is no tyranny, at the moment. Freedom and tyranny are opposites.

I do believe the free market is divinely inspired, because God is the author of private property (Exodus 20). And I do believe that this free market has spectacular benefits in a lot of areas, chiefly that it satisfies the greatest value of human wants (including needs) possible in a world of scarcity. It is the only way to achieve the benefits of division of labor.

And it is the only moral way. Not having a free market means people exercising ownership rights over things that are not theirs, either by taking what is not theirs, or by telling them what they can and cannot do with it. It is to the Lord's glory that the only moral way to arrange human affairs is also the economically best way. It is to man's shame that we have so little trust in the Lord that we entertain the idea that other ways might actually outperform this one, and might therefore be worth trying. (If we have enough faith in the Lord, we will choose His way even when it looks to us like it doesn't work best, trusting that we are not seeing what He sees (I Corinthians 2)).

I have referred to a few of our institutions as protections against tyranny, but they are only partial protections. For example, democracy protects against tyranny by preventing the governing authority from taking some, but not all, actions which are offensive to the populace. Of course, democracy still allows plenty of tyranny. The people can vote to outlaw Jews, for example, or to educate each other's children. Separation of powers also helps to function as a check on tyranny, because an action is required to pass multiple checkpoints before it is put in force. However, one of the main reasons we have these imperfect safeguards is that rulers of centuries past learned that if they did not give the people some of what they were asking, the people would revolt. The rulers found they could take away much liberty, then give some back and claim that they were the source and guarantee of the rights and liberty, rather than its main oppressors. They found that they could take away much of the wealth of the people, then use it to provide some services and goods, claiming that the market would never provide these things and therefore presenting themselves as the "benefactors" of the people (Luke 22:25). As long as they gave the people enough to keep them happy, the vast majority of people would never entertain the idea that they might be better off without the rulers, and revolt would be staved off.

Since the free market makes it possible to provide for all kinds of services, it does make it possible to provide for protection against tyranny, like any other service. Just as you can today hire a security guard, even though the state tries to provide some security for you, under a truly, 100% free market, you could contract with a service to provide your security. These services would look a little bit like our governments, in that they are organizations formed to secure our rights (this is what Thomas Jefferson said was the purpose of government, in the Declaration of Independence). But unlike our governments, they would be prohibited from just assuming control over everybody in a region, potentially taking away their rights, by virtue of the fact that competing services would exist, and those services would be out securing the rights of their "citizens" against any other group that started encroaching. One of the real problems of government is that rather than allowing this need to be met on the free market, where all needs are best met (most economically), we've instead socialized this process. We know socialism is a horrible way to provide food. It's also a horrible way to provide security. Or anything else.

Freedom also helps perpetuate itself because a taste of freedom makes people discontent with tyranny. This is one reason the United States revolted against Great Britain: a century of "salutary neglect" got the colonists used to enjoying the benefits of their liberty, and they got upset when moves were made to take it away.

But the important thing is not that the free market provides some protection against tyranny. It's that if you don't have a free market, you have tyranny.

Judge not

Do Christians have the right to govern? We've already seen that they do not. We've also seen that governing other people is immoral unless they agree to participate, and that restricting people's liberty like this is bad for the prosperity of society, because it's bad economics. (Basically it's socialism, even if you like to call it "democracy" and pretend it is "liberty.")

But people have the right to establish whatever voluntary associations they want. The members of those associations may delegate their authority to those associations. So, they may give or loan some of their property to the group. They may empower the group to act in their defense. They may not legitimately have the group take what doesn't belong to its members, or use force against non-members for purposes other than defense of rights. (If they do, they have founded a criminal organization, like the Mafia, even though (like the Mafia) the group may go around telling everybody that it is "protecting them" and so they need to "pay up," calling itself "the state" to pretend it is something other than a criminal organization.)

As a Christian, I take Jesus Christ as my King. (Contrary to popular premillenial theology, the Bible teaches that Jesus is sitting on the throne now and that Christians are members of His kingdom in the present tense, not waiting for it in the future. See Colossians 1:13.) With the Lord as my King, I submit to His commandments, and His administration. We won't study all that the Bible has to say about church organization here, nor cover the differences of opinion within different churches on the subject, but the Bible indicates Jesus commands that I be part of a church or congregation, and subject to the leadership of that congregation, which from my reading I understand to be a group of bishops. The exact organization of your church may vary somewhat from mine, and I'm not going to debate that here, but either way, we are each part of what is essentially a voluntary association of human beings. We are all of us members of our churches voluntarily; for the most part, nobody is a member of a particular church because they were told to be. And to some extent, we are governed by our churches.

Rather than defending my rights, the leadership of my church is empowered to "watch for my soul" (Hebrews 13:17). They have a handful of tools, a set of authorizations from the Lord, in order to accomplish this. The primary method is by teaching. But if I should start having problems in my spiritual walk, they are then supposed to rebuke me. However, they are not permitted to use force against me. Their job is persuasion, not compulsion. They aren't told they can imprison me or fine me (Acts 5:4) to try to get me to do what is right. At the last, if I refuse to repent, they are empowered to put me out of the church. This process is described in I Corinthians 5:5 as "delivering such a one to Satan for the destruction of his flesh, that his spirit may be saved in the day of the Lord Jesus." Once a person has been put out, he is treated "as a heathen and a tax collector" (Matthew 18:17).

Outside of the church, the church has no power whatsoever to judge. This is explained in the rest of I Corinthians 5, which purposely specifies that this limited judging power of the church is only employed against believers:

9 I wrote you in my letter not to associate with immoral people;
10 I did not at all mean with the immoral people of this world, or with the covetous and swindlers, or with idolaters; for then you would have to go out of the world.
11 But actually, I wrote to you not to associate with any so-called brother if he should be an immoral person, or covetous, or an idolater, or a reviler, or a drunkard, or a swindler-- not even to eat with such a one.
12 For what have I to do with judging outsiders? Do you not judge those who are within the church?
13 But those who are outside, God judges. Remove the wicked man from among yourselves.

So the Bible is very clear: Christians are governed by their churches, but not permitted to judge those outside. Within the church, you may confront someone about their immorality, teach them, persuade them, rebuke them, and encourage them to repent. But if you are passing laws that punish immorality for people outside of the church, you are in violation of I Corinthians 5. You are judging outsiders. God judges those people. Leave them alone.

Do we need a government?

Under anarcho-capitalism, government need not disappear. Instead, people could create legitimate governments, voluntary associations that pool resources for defense of rights. This is, after all, what Thomas Jefferson in the Declaration of Independence said a government was. Assisting each other in defense of liberty is certainly a legitimate activity; compelling others to participate in our scheme, however, is not. As the Declaration says, governments "deriv[e] their just powers from the consent of the governed," and the governed should be entitled to "laying its [government's] foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness." There's my right to anarcho-capitalism, under American philosophy. I know for a fact that democracy is not most likely to effect Safety and Happiness, and according to Jefferson I had the right to lay the foundation for a new system, since I don't consent to the old one. Of course, as a Christian, I am directed by God to honor "the powers that be" (Romans 13:1), just or unjust.

This principle also gives others the right to establish their own systems. Want to live under communism? Under anarcho-capitalism, that would be allowed. Establish your system, invite people to participate, and do things as you will within your group. Just count me out. That's the key: you have the right to your system, but you do not have the right to make other people participate. You could also set up a democracy, if you wish, but again, only those who wanted to participate would have to. People from different systems wouldn't be forced to submit to the will of others; they would only have to respect their rights and property. (If they didn't, they'd find justice enforced by the government of their victims. Anarcho-capitalism realizes Jefferson's ideal of governments merely being rights-securing organizations.) If you had somebody you really wanted to obey for life, you could pledge your fealty to him and his offspring and set up a monarchy. All of these are legitimate, to the extent that they do not do anything which their members could not do, to the extent that they use force only to defend the rights of their members, rather than to take what does not belong to them and compel all of society to do things their way.

Do we need a government? Probably most of us do, in some form or other. But do we need to use force to compel innocent people who have not violated our rights to participate in our government? Not at all!

Sins in the market

How do you reconcile your belief in unregulated free-market capitalism as a divine protection against tyranny, with the fact that so many of the most profitable commodities in a capitalist market are the ones that appeal to our very basest and most disordered desires (drugs, p&rn, etc.)?

As long as this world lasts we are going to be struggling with the problem of sin. And the solution to sin is always going to be Jesus Christ. "There is no other name under heaven that has been given among men, by which we must be saved." (Acts 4:12) Jesus is the sacrifice for sin, "the Lamb of God who takes away the sin of the world." (John 1:29) Moreover, those who receive Jesus will have God, the Father, and the Holy Spirit living within them (John 14:23), which is how they will begin to have the power to resist sin, by virtue of the fact that over time they will become more and more like Jesus Christ (Romans 8:29).

God's word has been sent out into this world with this purpose, and it will not fail (Isaiah 55:11). God's power to save is the Gospel, a message -- not force (Romans 1:16).

Any other proposed solution to the sin problem will be substandard. God's word is more powerful than all the other solutions we can imagine. It is more effective to preach God's word to a sinner than it is to force that sinner to stop his sin. We can change a man's outward behavior, but it is God's word that reaches the heart. Moreover, a sinner who stops sinning is still not saved. His guilt will only be taken away by Jesus. Until then, "all our righteous deeds are like a filthy garment" (Isaiah 64:6). His garments are dirty, and ceasing to apply more dirt will not make them cleaner. He needs to be cleaned.

Government is not the solution to the sin problem. It will not work because it can only affect outward behavior. It will not work because it cannot reach the heart. It will not work because it cannot atone for sin. And it will not work because it cannot accomplish a transformation of a person's character into the image of Jesus Christ.

But even more specifically, this avenue is forbidden to us. I Corinthians 5:10-13 prohibits us from executing judgment against those outside the church. We're not allowed to interfere with the behavior of those people. We're required to allow them to go on their way, abandoning them Satan, with the hopes that the destruction of this world will inspire them to seek salvation in Christ. More on this later this week, I hope.

But the free-market is not the solution to this either. The free market is simply the way God has mandated for us to handle property. He mandated this when He commanded "Thou shalt not steal," and He confirmed it when He taught through the apostle Peter that property belongs to its owner, to be done with as the owner (not the electorate) wills (Acts 5:4).

That does not mean the free market solves all our problems. It just means that it's the best way we can live in this fallen world. The free market will not eliminate scarcity, but it has been proved to achieve the best allocation of our scarce resources in order to meet the most wants. Thankfully the free market allows us to use our time, property, and other resources to bring about true change through the preaching of the Gospel, using the power of Jesus Christ to transform people's wants. When the market is not free, the interference constitutes economic waste. That's waste that could be put to better use. And without freedom, people have the right to vote on whether or not we can share the Gospel, how we can share it, and what portions of it we can share.

For whatever reason, God gave us liberty to sin. And He does not empower us in any passage of Scripture that I am aware of to take that liberty away from anyone else.

Question Saturday

Welcome to my first question Saturday. Surely after all I've said some readers have some questions, or even some challenges. Comment on this post to let me know what you'd like me to answer, and next week I'll provide my responses.

BTW, if you happen to see this post after Saturday, you can still comment on it to ask questions.

Conscription is slavery

There's a beautiful fable that goes around in Christian circles, about a little boy who was asked to donate blood in order to save his brother's life. The little boy readily agrees, and upon beginning to draw the blood, the doctors learn that the little boy was under the impression he was going to give all of his blood and die for his brother. The story is a touching analogy of the love the Lord Jesus had for us in giving His life, and His blood, for our sakes.

But let's turn the tables a bit. Suppose a person is diagnosed with a rare disease, and we discover that he can only be cured with a substance obtainable from a particular baby boy. But obtaining this substance will require dismantling the boy. The boy must be killed if the man wants to live. Christians would rightfully call this murder and label a man despicable who would kill a baby, even to save his own life. (Whether the baby is born or unborn, I might add.)

It is a beautiful thing for a man to willingly give his life to save others. In fact, Jesus said no man has greater love than this (John 15:13). But it is abominable to require such a sacrifice from another without his consent.

No man has the right to the life of another. The enslavers of former centuries captured human beings and sold them as property. The truth of the matter is that we all belong to God, and since God decreed, "Who are you to judge the servant of another? To his own master he stands or falls" (Romans 14:4), then we are accountable to God, not to each other. Thus a legal system that is moral recognizes the self ownership of each individual, giving them the right to acknowledge their ownership by God or else live to themselves, with God, not the state, as Judge.

To exercise authority over other people is to assert that they are not owned by themselves, or by God, but by the one exercising authority. As Jesus said, such people like to call themselves "Benefactors," pretending that what they are doing is good for all concerned (Luke 22:25), but it is not to be so among us (22:26).

In America today every soldier serving in the military is doing so by his own consent. In fact, it makes me angry when people try to pretend that the stopgap measures that extend the tour of duty of some soldiers is somehow a "backdoor draft," because those soldiers agreed to those stopgap measures, and opposing these agreements means opposing the freedom of people to make agreements, the freedom of contract. (Not to mention that it unfairly accuses the authorities of doing something wrong, when all they are doing is relying on agreements that free people made to them. The authorities exercise immoral compulsion often, but this is not one of those instances.)

But it was not always so. Beginning in the time of Abraham Lincoln, the government asserted the authority to compel its citizens to fight for its defense. In short, the government asserted ownership rights over its people. It declared itself to be the master and the people to be slaves. It stole them from their rightful Owner.

If we agree that people have the right to self-defense, then we agree that they have the right to fight for themselves, their families, and their homes. We would also agree that they have the right to delegate this authority: to request help (volunteer or paid) in their own defense, to band together for common defense, to voluntarily appoint police or other authorities for the defense of their rights. But when do people have the right to compel others to fight for their defense? When do they have the right to compel others to furnish their resources and children for their defense? And if you say, "They have this right because they must do so in order to survive," then you are saying that the ends justify the means, and you need to explain to me why the terminally ill man can't kill a baby in order to survive. Because you are postulating a situation where a man is going to die and has the right to save his life by sending another grown man to a potential death.

If the threat is real enough, won't people band together for defense willingly? Many military and former military members I have known will tell you this is one of the reasons a volunteer army situation is far preferable to a draft: the volunteers believe in the cause being fought for. It worked for the Revolutionary War.

When you get to the point that the government is compelling people to fight in defense, you have reached the point where the government is less worried about preserving the lives and rights of its citizens and more worried about preserving its own survival. Institutions will fight like crazy in order to continue to exist, and to expand their own power.

The draft has been ended, and will hopefully never come back, but the government still requires registration of young men in order to continue asserting this right.

Do you have the right to the lives of others? Or are they owned by God? If they are owned by God, I hope you would never assert ownership rights over them.

Free exchange: why capitalism works

Most people have the idea that when you buy something, you pay (or should pay) an amount of "money" that is "worth" the same as the value of the item purchased. Actually, this is not true.

When somebody buys something, they are giving an amount of money that is, to them, worth less than the item they are buying. However, from the seller's viewpoint, the situation is reversed: he is accepting an amount of money that is worth more (to him) than the item sold.

If this were not true, nobody would ever sell anything. People sell things to earn wealth. Therefore, people sell things for prices that are higher than the worth, to them, of the product they are selling.

Value is actually a subjective thing. An evening watching Monday night football with the guys might be worth a lot to most American fathers and husbands, but it's worth zilch to me because I hate football. (Actually, if there were wings and pizza involved, it wouldn't be worth zilch to me, but it would still be worth less than an evening watching Star Wars with my wife and kids. Or my in-laws, for that matter. With pizza.) The worth of a particular item, service, or experience to you is a very unique thing, because God made you a unique individual. It's not worth the same to you as it is to anyone else in the world, although with prices we get an idea of the average worth of something to society. Tickets to that said Monday night football game might be pretty expensive, because it is worth a lot to most people, even though it is worth nothing to me.

So, if you purchase a pencil for, say, 10 cents, it may be that the pencil is actually worth 12 cents to you, while it's worth only, say, 5 cents to the seller. (He doesn't need a pencil as badly as you. He has plenty.) The price of that pencil is going to be set by supply and demand, which is the accumulation of literally millions of buying and selling decisions across society. If a pencil is worth 12 cents to you, but is worth 50 cents to the seller (suppose it costs 40 cents to make and he needs to make 10 cents per pencil sold or else he could be making more money flipping burgers, in which case he'll give up his pencil selling career and go flip burgers) then no sale of the pencil will take place, to you. (Of course, if the rest of society feels that pencils are worth 90 cents, they are going to flock to this guy and he is going to sell a lot of pencils. This is how football teams continue to earn money despite the extreme drawback that I am not interested in football.)

But in the situation where you and the seller agreed on the price of 10 cents, something wondrous has occurred: you have parted with 10 cents, and gained something worth 12 cents. Your wealth has just gone up by two cents. (Yes, that's not very significant, but it might be if we were talking about beachfront property in Florida instead of pencils.) Meanwhile, the seller has parted with something worth 5 cents, and gained 10 cents. Therefore, his wealth has just gone up by 5 cents. Together, the two of you have 7 cents more of wealth to use. And use it you will. You're going to use that pencil to write something that has some value to you (maybe a grocery list, or maybe a bestseller novel). The seller's going to use those cents to buy something of value to him (maybe groceries). The fact is that, as a result of what the two of you just did, society on the whole has gained seven cents of wealth.

Every time people voluntarily exchange goods, services, and/or money, it is because both of them are gaining in wealth (value). And therefore, every time such free exchanges happen, society gains in total wealth. Civilization advances. When such free exchanges are going on at a rapid pace, we are all blessed. We have what we describe as a "healthy economy."

But suppose a gangster comes through and threatens to shoot anybody who sells pencils for more than 5 cents. Hopefully that doesn't happen in your neighborhood, so let's use a more realistic example: suppose people realize that pencils are worth only 5 cents to the seller, and they get mad about the seller who is "exploiting" people by selling his pencils for "jacked up" prices. They vote and pass a law that pencils may not be sold for more than 5 cents, on the principle that a higher price is "unfair."

Interestingly enough, though the motivations are completely different, the economic effects are the same: if the seller can't get more than 5 cents for his pencils, he has no point in selling them. He has to support his family (or even just himself), so he quits selling pencils and starts doing something else like flipping burgers or painting houses. Suddenly there are less sellers of pencils and less pencils available. This maximum price has caused a shortage. In fact, maximum prices always cause a shortage. This is true whether or not the people who imposed the maximum price are gangsters, kings, or voters with pure motives. (There's really not much of a difference, and all three are disobeying God, and society suffers because of their disobedience.)

Suppose people get mad about the shortage and pass a law that pencil sellers may not go out of business. Now the pencil seller has become a slave of society (which is wrong) because he has lost his freedom. Moreover, every time he sells a pencil, he is taking a loss. Why? Because in selling that pencil, he's not just giving up the 5 cent pencil, he's also spending time, money, and effort to sell it. That time, money, and effort has a value, which means he's giving up more than 5 cents of value with every sale. Instead of gaining wealth, he is losing wealth. And instead of gaining wealth, society is now losing it, and instead of advancing, civilization is now running backward. Thanks to the helpful king who imposed the minimum price. Or the voters who think that voting entitles them to do anything a king could, and still call it freedom.

Free exchange results in wealth creation and advancement for all of society. Forced exchange, exchange that has been interfered with in some way, whether through making somebody buy or sell something at gunpoint, or through setting maximum or minimum prices, or anything else that interferes with private property rights, results in a loss to one or both parties in the exchange, as well as society.

(This has interesting consequences if you think about labor as a service and wages as the price paid for that service and think through what happens when people set maximum or minimum prices for it. Remember, people may have good intentions but still cause bad consequences.)

God said "thou shalt not steal." That means other people own their property, and it's not yours. You don't have a say in it. You're not even supposed to covet it. If God told you not to steal, why are you ever telling people what they can and cannot do with their property (including what they can and cannot sell it for) as if you owned it? God dictated this about ownership: "While it remained unsold, did it not remain your own? And after it was sold, was [the purchase price] not under your control?" (Acts 5:4)

God commanded "You shall do no wrong in judgment, in measurement of weight, or capacity. You shall have just balances, just weights, a just ephah, and a just hin: I am the Lord your God, who brought you out from the land of Egypt. You shall thus observe all My statutes, and all My ordinances, and do them: I am the Lord." (Leviticus 19:35-37) When we let the free market function (which God ordained by instituting private property), we all collectively function as a giant distributed supercomputer, which computes appropriate prices to maximize society's wealth. When people start setting rules for other people about what prices they can and cannot set for their property, however, this computation is frustrated. The measurement cannot occur. We set the balances off. And amazingly, God has so written His Law into the fabric of the universe that, if we try to do this as a society, we as a society suffer. How just of the Just One!

If we would have faith enough to follow God's law instead of trusting our own poor judgment, we wouldn't try to exert this kind of power of other people, and we would all be blessed.

Like all the other nations

In I Samuel 8, the Israelites sinfully ask the prophet and judge Samuel to "appoint a king for us to judge us like all the nations." (8:5) Under the direction of the Lord, Samuel explains to them why this desire is not only sinful, but a bad idea, but "the people refused to listen to the voice of Samuel, and they said, "No, but there shall be a king over us, that we also may be like all the nations" (8:19-20) The result was disastrous in many ways, as any child with a mother can tell you that jumping off a bridge is still a bad idea even when all the other kids are doing it.

The United States was established after many years of improvement over the older model of government, monarchy. Under monarchy, a single human being ruled every citizen and had absolute power at whatever arbitrary level of detail he pleased. As we've seen, no such centralized authority can satisfy the needs of the whole society.

The United States was set up with certain restrictions on the power of its government. These may be seen in the Constitution. For example, no state was permitted to make anything but gold or silver a legal tender (and given that the Constitution strictly limits the powers of the federal government to those things explicitly included within it, and given that the Constitution permits the Congress to coin money, but not print it, the same is true of the Federal government as well. Unfortunately, while people of the early twentieth century correctly recognized that a Constitutional amendment was required in order to give the federal government the power to ban alcohol, nobody noticed when the government overstepped its bounds on this matter). The federal government was not permitted to pass laws restricting the freedom of speech, or of the press, or prohibiting the free exercise of religion. The Congress could not pass export taxes, or ex post facto laws. Titles of nobility could not be granted.

All of these restrictions on the power of the government were designed to preserve something that we can have only at the expense of the power and size of the government: freedom. Man's concept of government had evolved from the tyrannical monarch, with the power to do anything, no matter how cruel or selfish, to government as "a dangerous servant and a fearsome master" (according to George Washington). Its powers had to be sharply curtailed, or people could not be free. (And as we've seen, if people are not free, they cannot prosper.)

Unfortunately since the days of those wise but fallible men, much wisdom has been forgotten. The idea that government has any limits to its powers is out of vogue. The standard for judging what the nation is permitted to do is not the Constitution, nor any notions of morality, nor even any notions of what is best (Austrian economics has proved that what is best is for government to dissolve itself and get out of the way). Instead it is presumed that, as long as a vote is taken, the government may do anything any other "civilized" nation does.

Actually it didn't take long for people to forget (perhaps deliberately?) the limitations imposed by the Constitution. On your ten dollar bills is a man named Alexander Hamilton, who pressured the United States to establish a national bank, something not permitted. His rationale? All the other nations do it, so clearly this was something "necessary and proper" for a nation to do. He had a bunch of other schemes he wanted the government to enact as well, a philosophy called "The American System," which was really a system of mercantilism, or an early example of cronyism. (It had to be called the "American" system to distinguish it from the systems of all the other nations, upon which it was based.) You can read a bit more about The American System and find out who eventually enacted it with help from Google. By the way, Hamilton's image goes great on that ten dollar bill, which is an unconstitutional form of money specifically left out of the Constitution. And as any of the anti-Hamiltonian founding fathers could have told you, the results of Hamilton's actions is that ten dollars is worth a lot less than it used to be. (Ten dollars was originally defined as one-half of an ounce of gold. Use this link to check the current price of gold and see how much half an ounce is worth now. The gold isn't worth more; what's changed is that the dollar is worth less. All that value was plundered by the government.)

How about all the other great things that other nations do? Socialized health care? We want it. Why does it matter if the Constitution permits it or not? Compulsory education? That was based on the system Prussia had. Originally it had to be a matter for the states alone, because the federal government wasn't permitted to address it, as it was not in the Constitution. But after about two generations of state-level compulsory (socialized) education, nobody remembered why that mattered, and today we pass national education bills without ever consulting a judge or a lawyer or a literate person to see if the Constitution permits it.

In the early days of the U.S., the great desire of every man was to learn from the lessons of history and construct a government that was different from the others. Today, I'm afraid, we sound more like the Israelites. And if we don't ever ask, "Why didn't the founders include this in the Constitution, when other countries thought it was a great idea?" perhaps we, like they, deserve what we get.

Three ways to fund government

There are several ways to fund a government. Almost all of them are prohibited to Christians, though we are definitely commanded to submit no matter what they do to us. We just aren't permitted to engage in such actions ourselves. How can you fund a government? You can:

1) Tax. Take money that doesn't belong to you. We're not allowed to do that, even if the money is for good purposes (Acts 5:4).

2) Borrow. Interestingly enough, many Christians believe that verses such as Romans 13:8 prohibit Christians from going into debt (although others disagree and believe this passage is teaching something else. I'm not going to address the theological issues here.). Either way, the Bible definitely proclaims debt to not be a good idea: borrowers become slaves: "The rich rules over the poor, And the borrower becomes the lender's slave." (Proverbs 22:7) And decent finance experts such as Dave Ramsey will tell you what a bad idea debt is. If debt is a bad idea for a person, how much more of a bad idea is it for a whole group of people to go into debt? And if it's bad for a person to be in debt, isn't it wrong to put other people in debt, through the means of the state? And if debtors are slaves, isn't the state enslaving itself and its citizens when it funds itself through debt? How could any Christian support giving an institution (the state) the power to put other people in debt without their consent?

But it gets worse: debts incurred by the government are never paid off by the people who made it. Government loans are paid off a generation or two later. In other words, when you authorize your government to borrow (all those bond issues we vote "YES" on), you are stealing from other people's children, and your own. "Children are not responsible to save up for their parents, but parents for their children." (II Corinthians 12:14) Should we be borrowing from our children's future, or saving up for them?

3) Inflation! This one is my favorite. Inflation is government caused, although you will hear a million and one other alleged causes of inflation. (The government likes for you to think it is not caused by them. They'd rather have you blaming greedy oil companies or something, and coveting what they own and continuing to support government theft.) Inflation is a direct violation of Leviticus 19:35-36. In ancient times, rulers accomplished inflation by melting down all the coins they took in, mixing in more and more base metal, and reminting the coins, so that they could make more coins that were actually worth less, hoping to trick people into accepting them at the same rate for a while. In modern times, we accomplish inflation by producing more and more dollars; the U.S. money supply is constantly growing, when instead it should be constant. Every time we bring a new dollar into existence, every other dollar in the world shrinks slightly in purchasing power in order to "create" the new purchasing power of the new dollar. In other words: creating a new dollar is theft: it steals a small amount of value from every owner of dollars in the world. Repeat it a billion times and you've stolen quite a bit of value. God's ordained free market picked an inflation-proof money; you can read more about this and how government forcibly (and with direct theft) interfered with this decision in order to make inflation easier in Whatever Happened to Penny Candy, by Richard Maybury, or What Has Government Done to our Money? by Murray Rothbard. The Rothbard book is available for free online at the previous link, or you can buy it. The Maybury book is easier to understand (it's written for children) and is actually for sale at most homeschool bookfairs I've been to. Both of them have insights and information that the other does not.

Jesus Christ, socialist?

Last month, Hugo Chavez was reinaugurated into office, saying, "I swear by Jesus Christ -- the greatest socialist in history." Was Jesus a socialist? Did the church which He founded (Matthew 16:18) and the apostles which He required all men to accept (Matthew 10:40) practice socialism?

Certainly not!

Socialism is practiced through state control. As we have seen, Christians are prohibited from exercising state control. Christians are also prohibited from practicing taxation, which is required in order to commit the redistribution of wealth that is the basis of socialism. Christians simply cannot be socialist.

But the early church was commanded to care for the poor, was it not? Isn't this the same as socialism?

No, there's one gigantic difference. Read Acts 5:4. "While it remained unsold, did it not remain your own? And after it was sold, was it not under your control?" Nobody in the Christian Church was required to give all of his property into common control, nor even a set percentage. Nobody was compelled to give. God left this all up to the freedom of each individual and their own personal sense of the obligation to God to help the poor in the name of Jesus (as well as their own individual judgment about holding the recipients accountable, which is required in certain ways, for example, by not helping those who refuse to work (II Thessalonians 3:10)).

Hugo Chavez doesn't offer anyone in his country the terms Peter did in Acts 5:4. Nobody in Venezuela is going to get the choice whether they want to participate or not. The state wants their possessions and industries to be socialized, and they will be. Chavez is taking the Lord's name in vain when he applies It to this.

The early Christian church did not practice socialism. The early Christian church practiced charity.

Am I passionate about anarcho-capitalism?

Am I passionate about anarcho-capitalism? Have you noticed there's a bit of emotion behind my writing in this blog? Yes! I'm deeply committed to this concept. There's two main reasons.

First of all, anarcho-capitalism works. It's been demonstrated time and time again that the free market outperforms all the actions of the state. The state's actions are merely interventions in what would otherwise be the natural order of things, and those interventions disrupt efficiency, cause waste, and even wreak havoc. A large part of my aim in writing here is to demonstrate this, repeatedly, for issue after issue, that we would be better off if we quit supporting the state and its actions. (Of course, as Christians, this is not to say that we should rebel against the state. Just that we should not be authorizing it to act in our behalf. We should not be governing, and we should work to show people what a mess it makes when people perform these kinds of interventions.) Since the free market works, I'm very frustrated that we have to live with the second-rate system we have now. I'd love for it to change some day, but I'm disappointed that it probably won't happen in my lifetime. Everybody wants freedom, but those of us who know what true freedom is aren't allowed the freedom to enjoy it. Democracy and socialism are forced on us.

Second of all, the reason it works is because it's God's way. As I'm showing here, God commanded us to respect property and the free market, God commanded us not to govern, God commanded us not to steal. Should I not be passionate about God's way? Of course I am. God has written His law into the fabric of the universe in such a way that societies that do not obey these laws suffer. A society that respects the free market will prosper, a society that does not will have perpetual famine and scarcity. But Christians shouldn't need this kind of proof that God's way works. By definition, we have faith in God. Faith means a believing trust. It's based on the evidence of God's past dealings with man: we know that we can trust Him because we know His history and character. When God commands, those with faith obey, even if they don't fully see why His way is best.

Christian anarcho-capitalism

This blog is dedicated to spreading the message of anarcho-capitalism, particularly within a Christian context. Anarcho-capitalism is the responsible belief in privatizing all functions currently monopolized (socialized) by government. It is a type of anarchism, but "anarchy" doesn't mean "chaos," as most people use it; instead, it means "no ruler." (Compare with the word "monarchy.") It also doesn't mean going out and wreaking wanton destruction. That would be a violation of the rights, liberty, and property of others, and would be repugnant to an anarcho-capitalist.

Anarcho-capitalism is a scary thought for most people of Christian faith, but there are two surprising conclusions which I want to teach through this site:

1) Anarcho-capitalism is the system of government the world gets when everybody obeys God's commands. Anarcho-capitalism is God's way. If a Christian is obeying God's commands, he will not be supporting governing systems that interfere with anarcho-capitalism.
2) Anarcho-capitalism has been proven to be the best system possible in this fallen world. Imagine that; God's way works best.

Anarcho-capitalism is sometimes called "right-anarchism" or "right-wing anarchism," distinguishing it from the more common "left-anarchism" or "anarcho-socialism." Anarcho-socialists tend to consider themselves the only true anarchists, rejecting anarcho-capitalists. And vice-versa. Anarcho-capitalism is also considered by many (including myself) to be a type of libertarianism, the other type being "minarchism" (belief in a limited government).

Under anarcho-capitalism, government could and would still exist. It's just that you wouldn't get the right to force other people to be a part of your government. Want to be communist? That's great as long as everybody who participates does so voluntarily. Likewise for other systems: democracy, republic, monarchy. Theocracy even. Unless someone violates your rights, you have no cause for interfering with them.

Under anarcho-capitalism, needs currently addressed by government would be provided instead by the free market, and they would be provided better. This should not surprise us, because God ordained the free market. Like most people, however, most Christians have been educated to fear the free market and think that it produces "failures." They've been taught that government has to provide some things the market simply will not, that we have to provide some things by taking money away from a lot of people to pay for it. The fact is that this system originated when conquerors took over, took what was not theirs, and provided a small pittance of services back to the conquered people to keep them from rebelling by persuading them that they were being "served" by the government. (Compare this with Luke 22:25-26, by the way.) After millenia, we've all become scared of the thought that we could receive these things and take care of ourselves without such force being employed. But it is God's way that we repudiate such force.

Compulsory education is slavery

Texas state Representative Wayne Smith wants to make it illegal for parents to miss parent teacher conferences, in order to encourage more parental responsibility.

As homeschooling parents, we're not worried about missing any parent teacher conferences. (Though according to the old joke, if you talk to yourself you only have to worry about yourself answering back...)

In a free society, free citizens can never be told what to do, where to go, when to be there, etc. The only exception to this is when a free citizen steps outside the law, by violating another person's right, and thus loses his freedom to the extent to which he took it away from someone else. (In older times, the term "outlaw" meant someone who had literally been deemed outside the protection of the law because he had chosen not to abide by the law.)

If we're telling grown parents where to go and when to be there, aren't we taking away their freedom? Of course we are!

But we crossed that line long ago. We tell the children where to go, right? We force the parents to make their children go to school. We've been violating the liberties of parents and children through compulsory schooling for almost one hundred fifty years.

The founders of the United States knew that the free market (the organic institution you get when you respect God-given liberties) furnished the best possible education. Until about 1850, every one of them was privately schooled, either through a private institution or at home. Literacy was near universal, and love of liberty reigned. Then some people who wanted to take away liberty decided it would be a good idea to have a centralized, universal education system so that all children could be educated in the same values. The result is over a century of indoctrination, and a society that is less educated and less interested in liberty. In fact, amazingly, lots of people see forcing children to go to school as being essential for liberty. The founders would've disagreed.

A book you might like to read on this subject is John Taylor Gatto's The Underground History of American Education. You can buy the book, or read it for free online at the link provided. I promise it will open your eyes.

You might also like to know that Thomas Jefferson explicitly declared it to be wrong and inconceivable to violate the liberty of parents and children through compulsory schooling:

"It is better to tolerate the rare instance of a parent refusing to let his child be educated, than to shock the common feelings and ideas by the forcible asportation and education of the infant against the will of the father." (Note to Elementary School Act, 1817.)

Of course, in a free society, uninterfered with by criminal force (whether exercised by the state or others), people have natural incentives to see that their children receive the education they find to be most fitting. But the state has eliminated an enormous number of incentives for this. Chalk up Representative Smith's idea as yet another misguided attempt by the state to correct a problem caused by itself. The solution is less government, not more, Mr. Smith. Government IS the problem.

In earlier posts, I've proved that taxation is simply another name for stealing. Compulsory funding of education means robbing people to educate children. What kind of lessons does this teach? What kind of lessons does it teach when the children themselves and their parents and all of their neighbors have their liberty violated for the sake of this education? As an answer, think how many people (maybe even you, dear reader) will react negatively to this essay, asserting that the state (or society) does in fact have a claim to the lives of its citizens -- perhaps we should say its "subjects" -- and the right to violate their liberty in these ways. Yes, compulsory education teaches its lessons well.

Has God entrusted you with the authority to command other people what to do? I don't think so. Don't support the government doing so in your name.

Governor Rick Perry: in charge

Governor Rick Perry has issued an order to all sixth grade Texan girls to receive the Gardasil HPV vaccine. Funny, the last I checked, state governors commanded the state militias (analagous to the way the President is commander-in-chief of the military), but there was nothing about commanding schoolgirls.

Also, last time I checked, Presidents are governors not kings, and law was to be made by the legislatures. Of course, it would still be wrong, immoral, and detrimental for the legislature to issue such a law, but this principle of separation of powers should function as at least a possible check against such tyranny. Since Governor Rick Perry doesn't really possess the legal authority under our system to make law, every single argument in favor of him issuing this decree because it is "the right thing to do" and because it "needs to be done" also authorizes me to issue such a decree. I've got just as much authority to do this as he does.

Democracy, republicanism, constitutionalism, separation of powers -- none of these are liberty, but all of them came about as ways to protect liberty. Unfortunately nobody knows what liberty is anymore. Here's a hint: if you have the power to make somebody do something (other than making them leave you and yours alone), that person doesn't have liberty. When you vote, you're asserting that your society doesn't have liberty, but is instead responsible for doing whatever the vote says, tyrannical or not.

Here's another hint: if a vaccine or any other health care option is a good idea, then you won't need to issue a law (or "executive order," which is a fancy way for saying "a law issued by the king, rather than the legislature") to make people do it. They will do it on their own. The free market is infinitely more capable of making this decision than Governor Rick Perry, or any other single human being or centralized group.

Thought for the day: Romans 13:3-4 says, "For rulers are not a cause of fear for good behavior, but for evil. ... it does not bear the sword for nothing; for it is a minister of God, an avenger who brings wrath on the one who practices evil." Where in here do rulers get to define what is evil and what is not? Rulers are empowered to be a terror against evil. Evil is breaking God's law. When rulers ("us", in a democracy) make law, they are deciding what is and is not evil.

Is not vaccinating your little girl for promiscuity evil?

Hiatus

Sorry for the hiatus the last few days; my son has been very sick, but is much better now. Fun little brush with semi-socialized health care. It's amazing how hard it is to get a doctor to pay attention to what you're saying when 99% of the parents he sees are just there with something minor, rather than there because their regular pediatrician said, "Take him to the emergency room; he's dehydrated."

Prices

In an earlier post, I explained how God commands us to respect the principle of private property and forbids us to make laws that take away from some people to give to other people. In short, God commands us not to covet. Covetousness, however, is now all the rage in trying to set policy and judge disputes. Considering that God condemned this as far back as the Old Testament (Exodus 23:2-3), it seems to have been all the rage for a very long time.

When we respect private property and free trade, we human beings in the free market function as a gigantic distributed supercomputer which calculates the relative worth of items to society as a whole. When the free market is interfered with, this calculation cannot be performed, and no central authority can calculate it on their own. This is why socialism/communism can never work. (Contrary to myth, socialism does not work on paper. Ludwig von Mises proved in the early twentieth century that socialism simply cannot compute.)

Thus, if we respect God's free market, this marvelous creation, prices will be automatically set where they are most needed. But some people complain that the free market results in some people making unfair profits. They paint these people as wicked and greedy "profiteers." What they are really doing is appealing to covetousness, but they would never admit that. Since we Christians are supposed to be eradicating covetousness in our flesh (Colossians 3:5), we should be less and less susceptible to this kind of manipulation.

In a free market, profits are made by serving felt needs. The better you serve the needs of society, the better your profits will be. Capitalism is the only system that rewards man proportionately for serving his fellow man -- and this should not surprise us, since it is God's system. (Of course, if you have somebody stealing or competing unfairly, you do not have a free market. But 99% of the time, people accomplish this stealing or unfair competition through collusion with the government. For example, American sugar producers are competing unfairly against international sugar producers by colluding with the government, which cooperates by passing an import tariff on sugar. As a result, I can't buy a Dr Pepper made from cane sugar instead of high fructose corn syrup without paying through the nose. Meanwhile, the sugar producers and the corn syrup producers are both reaping the great profits that come from having mafia-like protection of their business and "territory." When you have this going on in a market, the proper name is "mercantilism," but unfortunately many people think that this cooperation between government and business is what is meant by "capitalism," leading to a bad name for capitalism.)

In a free market, if a seller tries to set prices too high (which means beyond what the product or service is worth), the market will reject the prices. The seller will punish only himself; there will be no need to pass a law against him or fine him. Consumers will go elsewhere: to a competing seller of the product or service, or to a substitute for the product or service. If there is no other seller, and the market is actually willing to pay the high price asked, the "outrageous" profits available in this one industry will function as an economic signal that results in additional entrepreneurs being attracted to the industry. Additional sellers in an industry mean the prices will quickly fall to where the free market actually values them. In this way, the free market and entrepreneurs serve all of us, and the entrepreneurs are rewarded for detecting and fixing an instance of overpricing. Of course, the biggest barrier to new entrepreneurs entering a market is government.

In times of emergencies, it is imperative that prices rise. Certain items are going to suddenly be in very, very high demand. If prices rise, the market will allocate these items accordingly. If somebody tries to hold the prices down, however, shortages will always result. The market correctly calculates that in an emergency, gasoline, first-aid kits, and generators are suddenly much much more valuable, while speedboats, video games, and Christmas trees are worth relatively less than they were before. God set it up this way. If we try to interfere with it, we will cause problems.

Many people were angry at "price gougers" selling gasoline at "unfair prices" after disasters such as the September 11 attacks and the Katrina hurricane. At root, this is covetousness: wanting something which is not yours and being mad that the owner will not give it to you for less than it is worth. It should be condemned from the pulpit as such. Economically, these people are gravely mistaken, because in these disasters the value of gasoline momentarily rose sky high. It is simply not possible that a gas station can provide all the gasoline people want in an emergency. The rising prices result in people rationing their gasoline: rather than buying enough to travel to their preferred destination, they travel to a closer evacuation point instead and leave some gasoline for everybody else to escape as well. This means less gasoline is wasted and more people are saved in the emergency. No government rationing scheme can come close to the performance of the God-ordained free market in this regard. As Walter Williams says, "Rising prices get people to voluntarily economize on goods and services rendered scarcer by the disaster." And "not allowing the market mechanism to allocate suddenly scarce resources produces the inferior outcome." (Please go read those two articles. They are spectacular.)

Rising prices in this kind of a situation also function as an economic signal to entrepreneurs and investors to bring more of the item affected by the shortage into the market as soon as possible (and definitely faster than your government will do it). By interfering with such rising prices, we kill the potential reward that exists for the people who might be able to do something about the shortages.

And again, in such a situation, if a seller overprices, he will punish only himself, because people will buy elsewhere. As it is, if the market is free (not interfered with by the criminal activity of violating private property, which may be performed by government or others), the seller will be rewarded for doing the best thing to serve the people: raising his prices. And this is good, because if the seller is a Godly man, he needs to be obeying commands of God like "if anyone does not provide for his own, and especially for those of his household, he has denied the faith, and is worse than an unbeliever" (I Timothy 5:8). In a disaster, the gas station owner may not know when he will next receive a shipment of gasoline, and therefore he may not know how he is going to provide for his family tomorrow. He has an obligation laid upon him by the Lord God to do the best he can on that presumed last day of gasoline to earn as much as he can in order to provide for his family. Don't covet his gasoline, and don't begrudge him doing the right thing for all of us.