Carl Person: A State Bank for Every State

Carl Person, a candidate for the Libertarian presidential nomination, has sent IPR and posted on his website a release calling to “CREATE COMPETITION FOR “TOO BIG TO FAIL” BANKS BY HAVING EVERY STATE, CITY AND TOWN SET UP A NORTH DAKOTA TYPE STATE BANK”.

I haven’t been able to copy and paste the text of the release without massively messing up the formatting, but you can see it in .pdf form at http://carlperson.org/node/41. If any other IPR writers would like to take the time to copy and paste it and fix the format for IPR, please feel free.
-paulie

23 thoughts on “Carl Person: A State Bank for Every State

  1. Thomas L. Knapp

    Yes, it’s a bad idea. But not as bad as the current “socialize the risk, privatize the profits” reality.

    I’ve heard the same argument for single-payer health care as well — if we’re not going to have a free market, better that government just run the whole thing.

    Maybe Lincoln was meta- right: “I believe this government cannot endure, permanently, half slave and half free. I do not expect the Union to be dissolved — I do not expect the house to fall — but I do expect it will cease to be divided. It will become all one thing or all the other.”

  2. paulie Post author

    TK,

    Why isn’t it as bad?

    If we follow that logic to its conclusion, the only alternatives presented are either anarchy or a totalitarian state which owns all property.

    Such a state would have some form of hierarchy. At the top of the hierarchy would be those who amass goods, social standing and the ability to procure services – the functional equivalent of profits. Risks and injuries would be dispersed to the bottom of the hierarchy (the functional equivalent of socializing risks and costs).

    How would this be better than a monetized system of socializing risks and privatizing profits?

    Obviously, like you, I think both a totalitarian state that controls the economy directly and an authoritarian state that partners with “private” entities to control the economy are bad choices. But why would a totalitarian state controlling the economy directly be preferable?

  3. Robert Capozzi

    3 tk, I guess it depends what one means by “better.” As a general proposition, somewhat free banking or health care industries seem preferable to state-run ones, where there at least some incentives to innovate and generate profits.

    The current banking industry is not only the “too big to fail” institutions. Not all risk is socialized.

  4. Thomas L. Knapp

    Paulie @ 4,

    “If we follow that logic to its conclusion, the only alternatives presented are either anarchy or a totalitarian state which owns all property.”

    Yep. Those are the two alternatives. Everything else is either transition toward one or the other, or attempts in vain to avoid the choice.

  5. paulie Post author

    OK, let’s say they are.

    For the moment at least we have privatize profits/socialize risks as an alternative, even if a temporary one.

    Why is direct state ownership better, especially when people within the state do the same thing under other names?

  6. Gene Berkman

    The state bank in North Dakota was established in 1917 after the Non-Partisan League won control of the state legislature, mainly by running candidates in the Republican primary who were committed to the socialist program of the League.

    The League also established state owned grain elevators. The victory of the socialistic Non-Partisan League led to the creation of the Independent Voters Association, the first anti-socialist political organization in America.

    The IVA was never able to abolish the state bank.

    I would oppose nominating somebody on the Libertarian ticket who proposed a state-owned bank. Rather, getting rid of the government owned Federal Reserve should be a priority.

  7. Robert Capozzi

    6 tk: Everything else is either transition toward one or the other [totalitarianism or anarchy].

    me: Yep, transitioning in one direction or the other seems to capture each passing moment. Yet, neither endpoint is ever reached, perhaps because neither works.

  8. Thomas L. Knapp

    Paulie,

    “For the moment at least we have privatize profits/socialize risks as an alternative, even if a temporary one.

    “Why is direct state ownership better, especially when people within the state do the same thing under other names?”

    I can think of at least three reasons:

    1) Direct state ownership is more honest than state regulatory control and social redistribution of losses with a false “private enterprise” label.

    2) Of the four possible alternatives (private risk/private profit, private risk/public profit, public risk/public profit, public risk/private profit), I’d rate the last one — which happens to be the existing one — as the one which is most overtly evil and the most harmful to the most people.

    3) The two unmixed alternatives (private risk/private profit and public risk/public profit) offer purity as an analytical benefit — whatever their results, those results can only be attributed to one class or entity. If they succeed, that class or entity gets the credit. If they fail, that entity gets the blame. To some extent, anyway — not fully, since they can’t be laboratory isolated with all external variables controlled for, but it’s the best that can be done.

    The mixed alternatives above and beyond their obvious facial inequities, are composed so as to allow both sides to attempt to take credit and shift blame, leaving us with much less clear answers as to what works or does not work and why.

  9. Robert Capozzi

    10 tk, re: “honest”…are you saying that you find the institutional framework in N Korea more honest than Canada?

    Is the Canadian model more “evil” and hurtful to more people than the N. Korean model?

  10. Darcy G Richardson

    While it’s highly unusual to see a self-proclaimed Libertarian espousing the idea of a state-owned bank, a number of candidates across the political spectrum pushed the idea during the 2010 mid-term elections, including Lansing Mayor Virg Bernero, the Democratic nominee for governor of Michigan:

    http://www.battlegroundblog.com/2010/06/11/khavari%e2%80%99s-idea-gains-momentum-candidates-from-maine-to-california-push-state-owned-banks-in-mid-term-elections/

  11. NewFederalist

    Gene @ #8… who says the Federal Reserve is government owned? I don’t believe it is. They just put the word “Federal” in the name to make people think so.

  12. Thomas L. Knapp

    RC@12,

    “are you saying that you find the institutional framework in N Korea more honest than Canada?”

    The institutional framework? Absolutely.

    They Pyongyang regime are unabashed Stalinists. They lie about what the results are, but they don’t lie about where the results come from.

    The “mixed economy” institutional framework is custom-tailored to facilitate and encourage lying about both.

  13. paulie Post author

    Direct state ownership is more honest than state regulatory control and social redistribution of losses with a false “private enterprise” label.

    Direct state ownership is dishonest in a different way. The state is made up of people. Theoretically, it can be made up of all the people as equals, but in reality there are those with power – doing the functional equivalent of privatizing profit and socializing risks and costs, all but in name. Of course, other forms of dishonesty also abound in totalitarian systems.

    Of the four possible alternatives (private risk/private profit, private risk/public profit, public risk/public profit, public risk/private profit), I’d rate the last one — which happens to be the existing one — as the one which is most overtly evil and the most harmful to the most people.

    Can you cite examples of public risk/public profit in real life which are less evil and less harmful to people? The examples I can think of – outside of voluntary communes and cooperatives existing inside a larger society with individual property rights – are totalitarian dictatorships which were/are certainly the epitomy of evil and harm to most people. Other such “public” institutions in a system with some, but not total, property rights are very flawed as well; they are less terrible than they might otherwise be because they can rely on outside factors for help.

    Of course, I would prefer private risk/private profit. However, I have yet to see that allegedly public risk/allegedly public profit makes things better than the system we actually have.

    The two unmixed alternatives (private risk/private profit and public risk/public profit) offer purity as an analytical benefit — whatever their results, those results can only be attributed to one class or entity. If they succeed, that class or entity gets the credit. If they fail, that entity gets the blame. To some extent, anyway — not fully, since they can’t be laboratory isolated with all external variables controlled for, but it’s the best that can be done.

    I’m not sure what exactly such an analytical exercise is supposed to prove. The Soviets royally screwed things up, but some people can – and do – say that some minor tweaking, or better people in charge, would have fixed things.

    The mixed alternatives above and beyond their obvious facial inequities, are composed so as to allow both sides to attempt to take credit and shift blame, leaving us with much less clear answers as to what works or does not work and why.

    There will always be people trying to pass the buck, even if they are part of the same bureaucracy or part of the same corporation. Even if there is a single owner, he may blame his employees while they will blame each other or the owner.

  14. Thomas L. Knapp

    Doh — hit “submit” too soon. More on RC@12:

    It’s certainly hurtful to more people domestically (Canada’s population is about half again that of North Korea).

    Abroad, it’s hard to tell how many people each is actually hurtful to. North Korea is more rhetorically belligerent, but Canada seems to be doing more of the “give people guns and send them to far-off, exotic lands to meet interesting, exciting people … and kill them” stuff lately (Iraq, Afghanistan, Libya, the former Yugoslavia, etc.).

    As to which regime is more hurtful to the people it’s hurtful to, we’ve been through that kind of calculation problem before. Even figuring out how many North Koreans were starved to death by their government versus how many Canadians were killed by state-imposed waits for essential medical treatment would be a major effort.

  15. Thomas L. Knapp

    Paulie @ 16,

    “Direct state ownership is dishonest in a different way. The state is made up of people. Theoretically, it can be made up of all the people as equals, but in reality there are those with power”

    The evolution of an apparatchik class seems to be an inevitable result of any “public ownership” scheme. The difference between that in a “mixed economy” and that in what claims to be a totally socialized economy is that in the latter case, there’s no doubt from whence that class evolved.

  16. paulie Post author

    There are few if any federal responsibilities or institutions for which division into 50 state programs wouldn’t increase freedom in America.

    As far as I can tell, Person is not proposing state banks as an alternative to the (quasi-private, quasi-governmental) federal reserve system. He is proposing them as an alternative to the shortcomings of commercial banks.

  17. paulie Post author

    The evolution of an apparatchik class seems to be an inevitable result of any “public ownership” scheme. The difference between that in a “mixed economy” and that in what claims to be a totally socialized economy is that in the latter case, there’s no doubt from whence that class evolved.

    An apparatchik class may naturally evolve over time into a mixed economy owner class. At least, that’s how it went in the USSR, China, and Animal Farm.

  18. Thomas L. Knapp

    @12 and @16,

    FWIW, Canada is on my short list of places to go if I ever decide to attempt to escape the US, and North Korea is not, and not just because it’s easier to slip across the border into Canada than to get to North Korea.

    Just anecdote, not real data, but I’ll happily concede that much.

  19. Robert Capozzi

    21 tk, me too. It’s a subjective, relative thing, beyond meaningful measure, at least with an precision. All else equal, I prefer a mixed economy to a Stalinist one, even if on some levels the Stalinist regime is more “honest.”

    Of course, I don’t know if there could be a completely non-mixed economy, but I’d certainly prefer to keep the mix of statism down to the lowest levels possible at any given moment.

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