Peter Jospeh: “Money is not a natural resource…”
However, the form money takes often is, such as gold. When money doesn’t take the form of a natural resource this is when corruption ensues, as there is no tangible stability for the monetary system.
Peter Jospeh: “Nor does it represent resources.”
A stable money supply, being based upon a stable resource such as gold or silver, has intrinsic *value* both in industry and in its usefulness as a means of exchange. This means that it not only *is a resource* of its own nature, but it also provides a means of trading for other resources.
Peter Jospeh: “Problems & Scarcity = Profit”
If a particular good (such as corn) is hit by a plague, reducing its supply, this naturally will increase prices. However, assuming this problem is geographically distributed, it will result in exactly the same profits for the corn-growers.
For example, if usually 100 units of corn are produced in a given year and each unit of corn trades for 1 unit of money, 100 units of corn are traded for 100 units of money. However, if the global amount of corn is reduced to 50 units equally over the world, these 50 units will probably sell for double the price - again, 100 units of money.
Since the growers put the same amount of effort into growing the 50 units of corn as they did the 100 units of corn, they will receive the same pay (but not greater pay) as before. However, everyone who purchases corn pays twice the price. This is natural and equitable, as the reduction in the amount of corn is bad for everyone who purchases corn, and they all share this burden of a poor harvest together.
Now, let us consider an uneven distribution of corn. There is one corn grower who produces 50 of the 100 units of corn, and 50 other corn growers that each produces 1 unit of corn. If the larger grower wishes to artificially increase the price of corn, he could indeed grow less corn - say, 25 units.
However, the overall marketplace now has 75 units of corn which it will trade for the standard 100 units of money. This means that each of the smaller growers of corn will receive 1.3 units of money instead of the usual 1 unit they receive. They generate a profit. However, the larger grower of corn only gets 1/3rd more profit from his 25 units. This means he sells his 25 units for 32.5 units of money - taking a LOSS of 17.5 units of money.
In the meanwhile, with the larger grower producing less, each of the smaller corn growers will likely reinvest their .3 unit of money profit into growing more corn. Let’s say each of them increases their corn yield 50%. The next year, the larger grower grows 25 units of corn and each of the 50 smaller growers grow 1.5 units. We are naturally back in harmony, with 100 units of corn being sold for 100 units of money. This is the naturally self-correcting nature of the marketplace.
The ONLY exception to this rule of the market is a monopoly. If a single grower controlled all the corn in the world, he could decide to only grow 1 unit of corn - saving himself much time and energy. This unit of corn would trade for 100 units of money, but it might not. Those who desire corn may consider its price way too high, and decide to purchase wheat instead, reducing the value of corn as the demand is reduce. So the grower may receive 50 units of money for this one unit of corn.
With the value of corn 50x higher than ‘normal’ market value, this provides tremendous incentive for entrepreneurs to enter the corn-growing business, so that the next year they can cash in on this windfall. Eventually, the supply will increase as competition enters the marketplace, until all growers of corn must produce as much as the market desires, and sell it at competitive prices. This means that the price goes down for everyone.
Now, in order for the problem to continue the only way for this to happen is to the monopoly owner to prevent other corn growers from entering the business. This can be achieved in two ways. First, by contracting with government to make the growing of corn illegal. No matter how rich the company they cannot make laws on their own - they need government to do it for them. So they might use 20 of their 50 units of money as bribes to the government to make the growing of corn illegal; and thus continue to make windfall profits.
Or, they might try to own all the land in the world. Unless they relied upon government to confiscate land from every citizen of the world, they would somehow have to achieve this through the market. As they purchase land, the supply goes down, the price goes up, infinitely. Thus they would never be able to purchase all the land in the world, no matter how much wealth they started with. Some people simply won’t sell, unless they are FORCED to do so by government. See: Eminent domain.
Thus, the only time Problems and Scarcity equal profit is when a single company or collection of companies are given a monopoly enforced by the laws of government. It is only through the power of government to force people to comply that interferes with the marketplace, and thus allows scarcity to truly profit.
To give a modern example of this, the US government is helping the major oil companies monopolize the world’s oil supply. Seeing as oil is limited in quantity and not producible everywhere, this is possible. However, without military force companies would have to purchase oil reserves on the open market. As with any commodity of limited supply, as the supply does down, the prices goes infinitely up. Thus again, the market would prevent anywhere near monopoly ownership of a commodity by one company or cooperative of companies. That is, without the force of government to steal on their behalf.
Peter Jospeh: “There is little intrinsic motivation to completely solve any currently profitable problem.”
With the existence of a monopoly which benefits by creating scarcity maintained by government force, this is entirely true. In a free market with uninhibited competition, however, people who desire a product that is overpriced have motivation to fund companies and other endeavors to increase supply of this product, and thus reduce the prices to reasonable levels. In the meanwhile, because they are entering the marketplace, they also stand to gain some of the temporarily-higher profits, which will not only justify but fund their expense in entering the industry.
Peter Jospeh: “If oil companies know that they can make more money by having their items scarce, the propensity to deliberately limit production and disregard social concern, or simply be dishonest outright about available resources is very high.”
In the existence of a monopoly this is entirely true. However, with free competition, even if the companies that produce 75% of the world’s oil get together and decide to produce less, the other 25% will be highly motivated to produce more to reap the higher profits per barrel of oil. Again, this is the self-corrective nature of a free marketplace. Without government force backing up monopolies over any particular resource, any attempts by even the majority of companies in that industry to “make their items scarce” will be met with a desire by the minority of companies in that industries desire to make MORE of their item available to take advantage of higher prices.
If this situation continues for long, the profits of the smaller companies will far outstrip that of the majority of companies who made this deal with each other. Eventually, the smaller companies will have the resources needed to buy oil resources from the larger companies, and then they themselves will become the majority.
There is no motivation in a non-monopolized industry to create scarcity. UNLESS, and only unless, you can convince *every other company* in that industry to do the same. Naturally, with free competition, even if all the companies agreed other entrepreneurs would enter the industry seeking these high profits for themselves. Thus, even with a mutually agreed upon deal to limit production, more and more new companies would enter the industry until production of that product reached its previous levels. The only result would be lost profits for those companies who decided to produce less.
Peter Jospeh: “The same goes, unfortunately, for every other socially dire problem, such as environmental pollution. The more polluted our water tables and taps become, the more industry can compensate by offering profitable solutions. This creates a perverse indifference to environmental concern by industry, for the more damage there is, the more money can be made.”
The solution to this problem is very simple. Sell all so-called ‘public property’, returning it to private hands. This would also be the natural result of ending government. People who work to manage public property have no real incentive to care for it. If it gets polluted and thus loses value, they are not out a dime.
Not so, with private property. If someone dumped garbage on your property, naturally this would reduce the value until it was cleaned up. Moreover, the dumper would be violating your property rights, and should be taken before arbitration to pay the cost of both the arbitration itself, and cleaning up the damage done to your private property. If every inch of the planet were private, every inch would be cared for by the property owner. Those who violated private property with pollution would have to pay monetary damages to those they violated.
For example, if I own a factory upriver from your property, and decided to dump garbage into the river, this garbage ends up polluting your private property. You would be well within your rights to take me to arbitration to receive in full the costs necessary to clean up the pollution of your land, as well as any costs you incurred due to damaged resources. These costs could be immense, especially if a natural resource on your property were irrevocably damaged. I may well be responsible to pay you the entire value of the land I polluted, providing a tremendous incentive not to pollute. Even if I were a bottled water production plant, the money I would gain by polluting your property would not be justified by the profits I would make selling water to you. And if it somehow were, it would be worth my effort to purchase property to use as a dumping ground, or invest in technology that makes dumping unnecessary. This would be less financially costly to me than the possibility of being required to pay for damaging every piece of property down-river from my factory.
Peter Jospeh: “Let’s consider the medical industry. Which should be one of the most altruistic and progressive institutions we have; as our quality of life often depends on it. However, we need to realize the simple reality that the medical establishment, with its millions of employees, thrives off of the sickness of the population. The more problems solved in the realm of disease, the less money can be generated.”
It is important to clarify the last line, which should read “The more problems solved in the realm of disease, the less money can be generated *by the MEDICAL INDUSTRY*.” The medical industry indeed could be accurately called the ‘disease’ industry, because the more diseased the society is, the more money they generate treating disease. However, because of the massive cost of medical procedures, there is demand in society for alternatives that either reduce the cost of medical procedures, or make them unnecessary.
To this end, “alternative medicine” was born; an entirely new industry whose unstated mission is to provide an alternative to the high costs of modern medicine. This could be seen as a new competitor entering the field. Whenever this happens in any industry, either supply goes up, demand goes down, or both - and both reduce the prices reaped by that industry for its services.
While it is true that many ‘alternative medical providers’ are truly con artists, trying to profit at people’s expense, there are many legitimate alternative means of avoiding the need for traditional medical care as much as possible. In a free market, any ‘con artist’ who promised to provide a service but failed to abide by this would either not receive payment (making the con not worthwhile) or would be taken before arbitration for failing to deliver on their claims. This leaves only the legitimate ‘alternative medicines’ worthy of discussion.
Heart disease is the greatest cause of death in America today, killing 2,448,017 Americans in 2005. The average cost of treating heart disease is just over $55000, regardless of this treatment is successful or not. The high cost coupled with the high probability of death provides significant motivation for those with heart problems to seek outside help, and health-conscious people to do whatever is possible to lower their risk of heart disease.
A method originally used to treat lead, arsenic, and mercury poisoning was found to both treat heart disease and reduce the risks of getting this deadly disease. This method is known as Chelation therapy, and is available on the open market today. This method was so successful that by the late 90’s the Medical Industry began to see lost profits in treating heart disease, and corrected attributed this to Chelation therapy. Using their tremendous lobbying pull, the Medical Industry Executives were able to successfully convince (bribe) the FDA to release findings in 1998 that “Chelation therapy is not an effective treatment for heart disease”, contrary to the facts. In 1999, the American College for Advancement in Medicine, who had advocated Chelation therapy, agreed to retract their claims that Chelation is effective in treating heart disease to avoid legal proceedings being brought against them. As most who study the American Court system are well aware, cases between an agency of government and a private company almost always favor the government agency. The government protects its own, you see.
With the average citizen believing that the FDA, an agent of government, always acts in the public’s best interest, many who would have otherwise been interested in Chelation therapy have been convinced to not consider it, and returned to being customers of the Medical Industry. Others never came across information that Chelation therapy was effective in treating heart disease because the FDA effectively made it illegal to do so.
This is just one example of dozens of how the Medical Industry has used the force of government to wipe out competitors and stifle advancement. It has nothing to do with the medical industry itself, and everything to do with the existence of government - an agent of coercive force.
This is just one of many reasons that the Medical industry acts as it does. Government regulation of insurance companies has allowed for micro-monopolies to be set up in certain states, effectively limiting any free competition in the insurance business. Without competition, the Medical industry was able to successfully partner with the insurance giants to only provide policies that cover medical procedures performed through the Medical industry, and not cover any treatments provided through alternative medicine.
This effectively subsidizes the medical industry, and would not have been possible without government creating insurance monopolies by heavy regulation, taxation, and in many cases outright prohibition of any would-be competitors. Combine this with the medical industry being a profitable client of the news-media, and the media happily goes along with the story that alternative medical practices are dangerous, expensive, and illegal, while the mainstream medical industry is the only option considered by ‘educated people’. It goes without saying that the news-media is able to create a virtual monopoly themselves by the same government regulation, taxation, and prohibition of their competitors.
Finally, truly revolutionary procedures have been invented that would completely cure cancer and AIDS. It is suspicious that with all the money poured into research for these two diseases, no cures have been found. However, cures for both of these deadly diseases have been found and then promptly dismissed as fraudulent and made illegal by government. Cures that use simple vitamins to function cannot be made illegal without raising eyebrows of much of the public, so these instead are the targets of either smear campaigns or outright ignored. The best example of this is the Vitamin B17, which has proven extremely effective in the treatment of cancer.
While the details on this subject could fill a book, I’ll move on now without further comment.
Peter Jospeh: “What if a company made a car that could last 80 years, without service, and also runs without the need for perpetual refueling through battery technology? The aftermarket value of that car would be virtually zero and billions of dollars would be lost due to the now-obsolete consumer oil and auto service market industries.”
Part of this example has been attempted at several times throughout history, particularly with the invention of electric vehicles; the most recent of which was produced by GM in 1996, 97 and 99, called the EV1. As might be expected, there was tremendous resistance to this primarily from the oil industry, which would stand to lose massive profits if such a car were to be released. Due to the monopoly profits generated by the oil industry thanks to government intervention, the oil industry had the resources necessary both to pressure the government into banning this technology (justified as being “unsafe” somehow), or to bribe auto company executives into recalling the technology. Being fully aware of the potential loss of investment and profits if the technology were banned, and the potential gains through Oil Company bribes, GM executives did what any self-motivated person would do. They ceased production of this car in 1999, and recalled all of the previously-leased vehicles to be destroyed. It is highly likely that massive oil-company bribes may have been the primary motivation.
Now, in a free market without government interference, would this scenario have been any different? Of course it would. The oil companies would not have nearly the wealth necessary to effectively bribe the GM executives (as they would not be able to attain monopoly profits from oil), and there would be no government to lobby to make the new technology illegal. Standing to gain massive profits from releasing the vehicle to the open market and no government to stop them, any small bribes the oil company could have offered would have not been significant enough to compensate for the massive profits GM stood to gain from making the EV1 available to all who wanted it.
This is exactly the same with any new technology that threatens the existing order. If government is in place and can force compliance, the wealthiest companies (which will be, by definition, those with government-created monopolies) will be able to use (bribe or lobby) government to prevent any competition and thus keep demand for their products high. In a free market, the main benefit from such a technology would come by its release and purchase by a wide variety of customers, and thus that is what would happen. The dream of a car such as Peter speaks of would be entirely possible, and those employed in that industry would be encouraged to continually develop skills to go to work in newly developing industries.
Peter Jospeh: “Social progress and human wellbeing is always second to monetary gain.”
This is entirely true in a monetary system. However, in the absence of government force and coercive monopolies, the most effective means of generating profit will be to meet the demands of society. That is, solve social problems and improve the quality of life for everyone.
Peter Jospeh: [On the subject of homelessness being a problem that will never be solved because there is no profit in it]
Homelessness only happens because individuals lack the ability to earn an income or are unable to maintain a home with the limited income they receive. The problem stems primarily from the high prices they are forced to pay for just about everything - everything that is provided by a government-created and enforced monopoly, that is.
In a truly free market, without government intervention, people would be rewarded for any idea that benefits society. Companies exist today which pay people simply for ideas that meet a human demand. With unlimited human wants and needs, in the absence of government the number of ways to earn money would be incredible. There would be no excuse for just about anyone of sound mind and body not to have sufficient money. And in such a wealthy society, those who simply are unable to care for themselves will be cared for through private charity. Despite the relative poverty of the society in which we live today, Americans donate three times more to charity than government does. This is to say, they give three times more to charity on average than they are forced to give through taxation.
Peter Jospeh: “The profit mechanism creates established orders which constitute the survival and wealth of large groups of people. The fact is, no matter how socially beneficially new advents may be, they will be viewed in hostility if they threaten an established financially-driven institution.”
It is not the profit mechanism which creates established orders; it is government-enforced monopolies which constitute such orders. Without such monopolies, any new technology would, at worst, create a new industry which would thus be in competition with the existing one. This would allow every individual to decide for themselves where they will get their goods and services - from the old industry, or the new one.
With every individual being able to make the choice for him/herself which is more valuable to them for their money, that and that alone will determine how useful the new technology is to the society as opposed to the older technology. If the newer technology is vastly superior, the old industry will eventually die out as it loses its customers. If the newer technology is very expensive and not a significant step up from the older technology, it may well die out. In the end, whichever is more useful to society will survive.
Peter Jospeh: “Abundance, Sustainability and Efficiency are the Enemies of Profit.”
In a government-enforced monopolistic industry, this is true. In a free market economy, this could not be further from the truth.
Peter Jospeh: “In a monetary system, corporations are not just in competition with other corporations, they are in competition with progress itself.”
This is entirely true. However, without the ability to use coercive force against new technologies and their proponents through government, the existing company is powerless to stop the new product, except through improving its own, or providing much better service and prices than their new competitor.
Peter Jospeh: “Jobs are entirely contingent upon demand for production in some form.”
True, but as previously stated, there are an unlimited number of human wants. Thus, there will be an unlimited number of potential jobs for those who are willing to go out and meet those currently unmet human desires. This provides tremendous incentive for technological growth and implementation, far beyond what would happen without this incentive.
Peter Jospeh: “If there was no demand for goods and services, there would be no demand for labor, and financial circulation would thus stop.”
This statement is entirely without purpose. Human beings need certain things to survive - food, water, housing, etc. And many more things are desirable though not strictly necessary thus creating demand for goods and services and demand for labor. The only time when demand for goods and services would reach zero would either be in the absence of human beings, or if we all became self-sustaining gods. As this is extremely unlikely to happen, and if it did this discussion would not matter anyway, it is pointless to consider.
Peter Jospeh: “Free market capitalism, as if it often called, is now the dominant economic religion of the day.”
Free Market capitalism has *never* existed in any substantial amount anywhere on the globe at any point throughout history. Free Market capitalism refers to a state where the market is not hindered by any coercive force or regulation - particularly from government. As no society without any meaningful government has existed for any significant period of time, thus ‘Free Market Capitalism’ has never meaningfully existed.
What is the ‘dominant economic religion of the day’ is instead what I will term “Government Regulated Corporatism”, which is the economic theory that the marketplace must be dominated by government, who grants legal monopolies to certain corporations to provide goods and services. As noted above, this creates all sorts of problems with society, making it profitable for those monopolies to resist progress and stonewall social change, not to mention making prices insanely high for the rest of society.
The leaders in both government and corporations call this system “Free Market Capitalism”, both to be removed from positions of responsibility when things go wrong, and because the term ‘government regulated corporatism’ is far less palatable. This is double-speak at its finest.
Peter Jospeh: “Free market capitalism can be defined as ‘A market in which supply and demand are unregulated except by the country’s competition policy, and rights in physical and intellectual property are upheld.’”
Free Market capitalism is by definition a market that is free and unregulated by government entirely. Calling a government regulated market a ‘free market’ is the same as calling war, peace. It again is classic doublespeak.
Peter Jospeh: “In other words, there is no such thing as a pure free market.”
In the presence of government this is absolutely true. However, a society without government is possible, and in this society a pure free market, also known as a Laissez-faire market, would be self regulating.
Peter Jospeh: “The basis of the free market pursuit, meaning the self interest based pursuit, and strategic acquisition of market share, the gaming strategy, can only lead to monopolies and cartels.”
Any evidence to back this up has not been stated. As mentioned above, it is only through government force that monopolies can be created, and any monopoly or cartel that existed under a truly free market would quickly find for itself dozens of new competitors who entered its industry for the higher profits available by the monopoly or cartel temporarily creating scarcity and problems. This additional competition would immediately repair the damage caused by scarcity and problems, restoring the market to equilibrium and resources and prices to normal levels, in line with demand.
Peter Jospeh: “Let’s say I want to open an electronics store in a relatively small town. At that time there are three in the same area, therefore I have to compete with them. As time moves forward, I work to streamline my competitive strategies and reduce overhead in such a way that my store becomes the dominant, most affordable distributor of a certain set of items. Everyone in the town flocks to my store over the other stores for such items. Due to this, two of the other three stores go out of business and leave town. So, at that point it is just my store and the other competitor in the region, dual competition. Now since my profits have been so good, I decide to make an executive decision. I decide to attempt to acquire or buy the other competing store in town… and they agree. So I purchase that store, put my logo on it and boom - I have a regional monopoly.”
This very example has happened in many instances. However, Peter fails to continue the story to its logical conclusion. As soon as the regional monopoly is formed, if he continues providing excellent service, quality products, and affordable prices his monopoly will remain. And why shouldn’t it? He isn’t using his monopoly to extort high prices or sell poor quality goods to the town. He is providing a needed service in a way acceptable to the community. Thus his monopoly is, at current, not proving him any benefits of being a monopoly, or harming the people of the town in any way.
However, the instance he raises his prices dramatically, he creates incentive for other electronics stores to open up in the region to compete with his, thus breaking his monopoly. He could buy these stores as well, but why would they agree when most customers in the town are coming to their store instead of his for the lower prices? In this situation he would be forced to again lower his prices in order to compete, and eventually may buy the store again if he is very successful. He may again raise his prices to take advantage of his new monopoly status. However the cycle just repeats itself.
As long as a monopoly exists purely by merit it hurts no one. If it begins to take advantage of its monopoly status, other businesses enter the field to provide the goods and services in a way that the former monopoly lacks - either lower prices, better products, or higher quality customer service. The only way the monopoly can both continue to exist and take advantage of its monopoly status is by force; preventing other businesses from entering the field, or regulating any new businesses out of existence. This can only be accomplished by government in some form. Thus, without government, the dangers of a monopoly are entirely abated.
Peter Jospeh: “Likewise, let’s assume I didn’t purchase the other store, but just became friends and in turn partners with them. We figure out a way to work together and flourish in a noncompetitive way. Seems logical, right? Guess what: Now I have a cartel.”
In the same situation as the monopoly, if the cartel attempts to take advantage of its status to raise prices, competitors will naturally enter the marketplace seeking the higher profits the cartel has generated, and being willing to charge lower prices to attain them. Almost immediately after the cartel starts to take advantage of its status, it loses it. Unless of course, it can use government force to block any new competitors from entering the marketplace.
Peter Jospeh: “There is no such thing as an objective government in a monetary system.”
True. I would also assert that there is no such thing as an objective government: period.
Peter Jospeh: “Influence and corruption is a natural byproduct of our system: it should be expected.”
Absolutely true, though the ‘system’ of which corruption is a byproduct is not the monetary system; it is the government system.
[Editor’s Note: This rebuttal contains statements used in the first 20 minutes of the video. Additional rebuttals will be posted as necessary for the remaining 25 minutes, and for this video if necessary.]