Over in this thread, our own Lib made some comments regarding the new bankruptcy law that I thought were a little inconsistent with his previously stated worldview. When asked for elaboration, Lib suggested I open a new thread. OK, fair enough.
The thrust of the question is this: is there any kind of bankruptcy protection for creditors in Libertaria?
I note at the outset that I am not referring to libertarianism as a system that critiques and seeks to reform the existing political and economic system. I’m referring to Libertaria, as espoused by Lib, where governments in the traditional mold do not exist and where every rule derives from the one core principle of noncoercion.
I would think, given that Libertaria (as envisioned by Lib) is so focused on noncoercion and the initiation of force, and since under Lib’s system failing to live up to your contractual obligations is deemed an initiation of force, that there would be no bankruptcy protection. After all, bankruptcy law essentially forces creditors against their will to accept less than full repayment of the amounts they have lent to a debtor.
So I was naturally puzzled when Lib posted this with respect to recent changes in the bankruptcy law:
This struck me as odd – isn’t a reform that makes it more difficult for creditors to have access to bankruptcy law actually operating to make the market more free by limiting access to a market-interfering mechanism? So I asked what he meant, and got the following exchange, to which I am responding in this new thread per Lib’s request:
Well, OK, but I’m surprised that in a nontheoretical discussion, you wouldn’t favor measures that reduce the ability of one party to initiate force against another. I realize that you would prefer to completely remake the entire world, but failing that, I would think you would favor measures that move the world closer to your ideal.
Well, it isn’t a matter of just “piling on new laws.” It’s a matter of what those new laws actually do. In this case, the new law reduces the ability of a creditor to evade his freely-contracted-for responsibilities. Isn’t that a good thing, in your view?
Well, OK. Here we are. I’ve opened a new thread. Now will you answer the question I posed?
If I understand Libertaria correctly, it’s not that there’s no government, but rather that the minimum of government necessary to accomplish the “proper” social ends of government is all that is permitted. (Of course this begs the question of what are the “proper” ends, but that’s a quite different debate.) So if bankruptcy is permitted under Libertaria law, it would in fact be a government function, the minimal but existent Libertaria government setting the terms and conditions under which it is properly declared and the consequences of so declaring.
It might also be noted that bankruptcy need not result in dimes-on-the-dollar payoff of debts, but simple relief from deadlines in paying off debt. In other words, “I’ll pay you all of the $10,000 I owe you, but I can’t do it at the rate we agreed five years ago.”
I look forward to seeing Lib’s answer to your question. But I thought those two points needed to be brought out explicitly, for the discussion to make sense.
This is why I specifically addressed the OP to Libertaria as Lib has described it, because I do not think that is the case in his particular construct. Libertaria in this sense doesn’t have a government in the traditional sense, but rather a collection of services (police protection, etc) offered to willing purchasers at a price.
Lib’s Libertaria is a pure opt-in state, which in my view creates all sorts of problems but which also makes for an interesting discussion.
I also note that I do not believe Lib believes in “‘proper’ social ends of government.” He has stated time and again that all laws in Libertaria can be derived from the noncoercion principle, and I think talk of “social ends” would be anathema to him – his view is “there is no ‘society.’”
Even this is a dimes-on-the dollar payoff of debt. Money has a time value. Paying a sum off in one year versus fifty years are completely different propositions.
At any rate, what you describe still represents a government action that changes the terms of a freely-bargained for exchange without the consent of both parties to that exchange. I think that would be completely violative of the principles Lib has espoused.
I don’t understand why you continue to (mis)represent me as an anarcho-capitalist when I have corrected you on that point again and again and again. The government that I advocate is a government in every sense of the common understanding, except that it enforces noncoercion. You are either refusing to understand or are incapable of comprehending that the existence of a government does not preclude the existence of private protection as well — which is remarkable since such tandum services exist in the very society in which you live.
And speaking of society, it is also not the case that I think that society does not exist, but rather that it is a reified or hypostatized entity (again, explained many times) — it exists in the same way that set theory exists. It is, in fact, a set. Just because I don’t think that society is a rights bearing entity does not mean that I don’t think society exists.
In another thread, Tom has called to task those who create giant straw men to burn in effigy. That seems to be what you do every time you drag my name into a discussion of libertarianism. You should do two things: (1) stop trying to explain what I believe until you actually understand what I believe, and (2) start listening and stop just trying to pick fights so that you can accomplish number 1.
In Libertaria, defaulting on a loan is a breach, and breach is a crime. Need I construct the modus ponens for you?
Now, to anticipate your most obvious pre-stored rejoinders based on your historical caricature of my philosophy: (1) yes, that does mean that Libertaria imprisons those who breach contracts if that is what is necessary to restore the party who entered the contract in good faith and kept the terms; (2) your inevitable usage of the term “debtors prison” is analogous to what you perceive in my usage of the term “authoritarian” — full of baggage; (3) it is not required that a party enforce the terms of the contract, and in fact he may profit by extending or modifying the terms, though why he would is unclear, since the breach party has clearly demonstrated his untrustworthiness; (4) a man should not take on debt he cannot afford, and should have on hand at all times whatever liquid assets might be required to settle his debt; (5) the reason he might borrow money even though he already has liquid assets is that he wants to have the assets and the money too; (6) yes, there can be unforseen circumstances, and he stands to lose his assets, which is why borrowing money is considered a risk; (7) that is exactly the sort of thing he should have weighed in his considerations of whether to borrow the money before he constented to the terms.
You will doubtless represent this view as the fall of civilization, resulting from the harshest descent into chaos since the burning of Atlanta. But I submit that civilized men honor their word and do not misrepresent their consent, and that civilization benefits from a mindset of thoughtful responsibility and the weighing of consequences more than it does from a mindset of entitlement and the disregard of personal responsibility.
Finally, the enforcement of a mutally consentual contract is not an initiation of force. The fact that you represent it as such is, frankly, intellectually startling. The breach is the initiation of deception — a declaration that you misrepresented your consent, and that you now wish to reserve it. Ha ha, just kidding about the handshake or signature. Joke’s on you. Thanks for paying for my car.
Now, here is how you will respond. It is so pathetically predictable. You will begin formulating your response long before you’ve finished reading the post (if you read it at all). You will have learned nothing new. You will continue to misrepresent my views and will pretend that you’re just trying to understand them. You will parse the paragraphs and sentences and respond with gushing astonishment at this or that turn of phrase. You will assure me that you have nothing personal against me. You will feign an interest where none exists. You will type out five or six questions in a row in an attempt to form a hypothetical that you will later amend on the fly as your [del]soliloquy[/del] discussion ensues. It will consist of a mean old man whose sole pursuit in life is the emaciation of his neighbors simply because for him it is a turn on to ruin a whole economy so that he sits on piles of worthless dollars, having left no one else with anything to spend. And your list. You will of course post your list because you believe that it represents your victories over me in past discussions wherein I fell for your ruse and attempted in good faith to engage you in reasonable conversation.
So unless you have something different to say, unless you’ve turned over some new leaf (hope springs eternal, after all), unless you intend to drop the pretenses and ask questions about the theory of libertarianism rather than hash out pointless and worthless inane Boss Hoggs scenarios and actually demonstrate come comprehension of the things discussed, unless you stop marginalizing me as some sort of madman philosopher who fell of a truck into libertarianism last night without having thought anything through — then the extent of my participation has already been realized. If that’s what you want, fine. I will check back in case a miracle has happened, but if I find this post parsed and peppered with your aw shucks silliness, I’ll click out of here as fast as the server will allow.
Lib, begging your pardon, but in describing your ideal society in the past, you have described a situation where no man is bound by the rules of any particular government unless he gives his explicit consent to such rules. I’ve even asked you in the past whether such consent could be implicit, and you responded “no” – I can dig out the thread if you really want me to.
In short, you have described a world where governments do not exercise power based on geography, where a citizen has to give an explicit opt-in before he is bound by the rules of a governing body (and, of course, before he gains the benefits of the rule of such a governing body).
I don’t think I’m being pedantic when I say that is a significant deviation from what a “government” is commonly understood to be, and I hardly think it represents a misrepresentation of your views.
If you have in the interim modified your view, you have not broadcast that change of perspective to this message board (or, at least, I’ve simply missed it). I can only base things on what you’ve said in the past, and I hardly think I’ve misrepresented anything at all.
Which is basically what I was getting at, albeit using a bit of shorthand. You don’t believe in “societal rights,” correct?
OK, that’s what I thought you believed. (Step 3 of the modus ponens is “therefore, in Libertaria defaulting on a loan is a crime.”)
Which is why I was surprised at your reaction to the bankruptcy bill as making the market “less free,” since the bill makes it more difficult to invoke bankruptcy protection after defaulting on one’s obligations.
In order:
OK. Thank you for the clarity of that response.
Full of baggage or no, a “debtor’s prison” is in fact what you advocate, correct? At least, if the creditor thinks that the best solution?
Of course, this is true even in real life – contracts are often renegotiated (and not always because one party is untrustworthy – in fact, rarely because of that reason). But if parties can resolve their differences, there is no need for either bankruptcy law or a debtor’s prison. Bankruptcy/debtor’s prison only arises in those cases where the parties cannot work out an acceptable alternative. Accordingly, those cases where the parties can work out other solutions are irrelevant for the discussion at hand.
This sort of misses the point of debt. If you’ve got liquid assets sufficient to pay the debt, why borrow (leverage notwithstanding)? Most people, myself included, don’t have the liquid assets necessary to fully pay off their home mortgages – should they all rent until then can?
A little silly, don’t you think? Money isn’t intrinsically valuable. The only reason it would be sensible to borrow even when you’ve got the cash is for investing with leverage (and even then, you aren’t letting your cash sit idle – you’re deploying it in other ways).
OK, I think we can all agree that borrowing entails risk. Indeed, many of those risks are beyond the control of the debtor. I’m curious: why does the debtor bear the entire burden of the loss? Shouldn’t the creditor also be responsible in who he chooses to lend money to? Please note, I’m not suggesting that the debtor hold no responsibility; I am only suggesting that in some situations it might make sense to shift some of that burden to the creditor.
Well, of course, debtors do weigh the risks of failure in applying for credit. The real question is “what should those risks be?” As it stands today, the worst case is “I have to sell all my nonexempt assets, which sucks, and every lender in the world will know I’ve been bankrupt and will thus be reluctant to extend me credit, which also sucks, but I can at least start over.” In your view, it appears to be “Prison. Or possibly slavery. Maybe I’ll just commit suicide.”
Uh, Lib, I didn’t represent it that way. Quite the opposite, really. I thought I was pretty clear on that point, actually.
As I said, I understood your view to be that the breach of a contract (not its enforcement) is an initiation of force. I honestly don’t see where you got that I said anything about contract enforcement being an initiation of force.
See? I take this as meaning that my understanding of your view is correct. Breach is an initiation of force; enforcement is not.
(This does raise all kinds of interesting questions about when repossession of collateral might be an initiation of force – one wonders if there is no limits on the repo man’s mode of operation in Libertaria.)
Gee, you really like questioning my motives, dontcha? Why don’t we try focusing on the issue at hand for a change, rather than your usual battery of personal invective?
Actually, Lib, there are more threads on that list where you or I or both of us are completely absent than there are threads where we are both participants. And one of the first items on that list is your “Sarah’s Gold” story, a thread which contains no opposing viewpoint at all. If my goal in keeping that list is merely to catalog my perceived victories over you, that’s a funny way of achieving it.
More likely, I maintain the list for the reason I’ve plainly stated – this is a topic that arises with some frequency, and I find having the list as a resource helpful. It’s also beneficial to guests who lack the use of the search function.
Why doesn’t this go the other way? Creditors know that there are unforeseen circumstances that could cause the debtor to default on his loan. What coercion has a defaulter who accurately represented their financial situation and made a good faith to fufil the contract done? There was no lie, deception or physical force taken against the creditor.
If all he agreed to do was the best he could, then no problem. I was assuming that he agreed to pay the money back on time. As for the creditor, he did his part when he loaned the money.
Except that your definition of force, and coercion for that matter, doesn’t square with the common meaning. And you can always justify your actions by saying that the other guy initiated force.
Quite a few of us are troubled by the implicit assertion in Libertaria that the government is the only real form of tyranny, when we observe financial despotism on the small scale every day.
Why would the man who loaned the money be in breach when the man who borrowed it fails to pay? What sort of telepathy is required to formulate such an hypothesis?
But we aren’t having a common discussion. “Phenomenal” doesn’t have its common meaning either if we are discussing the philosophy of Immanuel Kant. When he says that something is phenomenal, he does not mean that it is oh wow — he means that it is not noumenal. Same same for every technical discipline: common words are appropriated and defined in new contexts. The term “force of law” doesn’t mean mass times acceleration either, and yet I doubt you would interrupt a legal discussion to point out that the parties aren’t using a common definition of force. So why do you do that here? Why can’t you accept that, for purposes of discussion, coercion means the initiation of force? I mean, why other than you simply don’t like the philosophy.
That assertion is neither implicit nor explicit in Libertaria. It’s just something that, for whatever reason, you’ve assumed. The whole purpose of Libertaria’s government is to suppress the despotism that one citizens exercizes against another. If there were no coercion among people, there would be no need for government at all.
Again, as I said before: “defaulting on a loan is a breach, and breach is a crime”. The debtor has misrepresented his intentions with respect to the loan when he signed his name under the “I will pay you back” statement. He has deceived the lender.
But your system of government seems to require the constant use of a Lib-o-meter. The distinction of when force is coercive and/or ethically justified seems clear to you but the rest of us aren’t seeing the same clarity you are.
We’ve gone over this issue a hundred times: What happens when one party in a dispute believes that force has been initiated and the government has a moral duty to intervene and the other party in the same dispute does not believe that force has been initiated and the government should mind its own business?
How did he misrepresent his intentions? The debtor had all intention of paying the creditor back and presumably still does. He just didn’t intend on getting run over by a car and put out of work. Certainly the creditor knows this risk that this will happen and accepts it when he gives the loan. Its no different from me walking into a store and buying an item that doesn’t quite live up to what its advertised as. Is not the onus on me to research and ensure that the product will be satisfactory to me?