An article I authored on PolicyMic.com:
Before we can begin debating whether or not the state should provide “national defense,” we must first ask what exactly the state is “defending.” In part one of this article, I explain why privitizing the state eliminates the need for an organized national defense force in the first place.
I’m going to ask you to do something very difficult. I want you to envision a United States without any kind of coercively-funded government. Imagine that all that exists is a land mass with private businesses and residences populating it. Peace and property rights are protected by individual armed citizens or by companies like ADT and Brinks Home Security. Private security guards are the only “police” in this nation.
Since there is no state, there are no drug laws or any other laws that violate property rights. The only exception being that you can’t use your property to violate someone else’s property or rights. So I couldn’t dump the toxic waste from my factory in such a way as to damage my neighbors’ property or I would be facing a lawsuit in a “loser pays” private court and possibly some not-so-friendly visits from a private security agency that was hired by my neighbor’s insurance company to halt the damage I’m doing to his property.
Once you have this vision of an entirely privatized nation in your head, I now want you to come up with reasons explaining why another nation state would attack us. I also want you to think about what they would specifically attack.
Would China invade us and bomb Google’s headquarters? Would Russia march an army down Main Street and blow up Intel’s production facilities? Would the Cuban military assault Disney World? Why would another nation invade us and what would they gain?
Might they attack us to take our natural resources? A quick economic analysis demonstrates why this argument falls flat on its face. Let’s use China invading us to take our coal as an example.
Obviously coal does not magicly pull itself out of the ground. It takes men and machines to extract coal. If China invades to seize coal mines, it still costs them the same amount of money (resources) to extract the coal and ship it back to China as it would for them to simply buy it from the original mine owners in the first place.
A private mine might take a small profit margin that China could by-pass if it seized the mine, but China would have to ship in its own workers and pay all of their expenses. Additionally, those workers would be working in a hostile environment where no one would want to do business with them. China would have to provide for all of those workers’ needs by shipping in supplies from China. Also, the Chinese state would have to provide for their security while being surrounded by 60 million angry gun owners. This would be enormously expensive. I have full confidence that American insurgents would make Afghan insurgents look like a joke by comparison.
Once these things are considered, it becomes apparent that the cost of an invasion far outweighs any possible gains that could come from seizing resources in a violent fashion. China would lose a tremendous amount of money on an invasion. The cost of building an invasion fleet alone is extraordinarily massive.
Since there are no trade barriers in our scenario, China could buy coal from the private mine owners cheaply without having to pay taxes, tariffs, or deal with any other artificial trade barriers that states like to enact. There is no reason for China to invade if it can get all the resources it wants from us by simply buying them from the people who produce them in the first place.
Let us suppose that the U.S. government cuts off trade with China to protect crony business interests through protectionist measures (something that would not be possible in a fully privitized country). Now China would stand to gain by invading and taking our resources. Since China can’t buy the resources that it needs from the private sector, an attack could open up access to resources that the U.S. state is depriving it of. Most wars are the result of trade disputes that arise from sanctions, tariffs, or other protectionist measures (including protection of the petrodollar).
Because the U.S. state has setup a tax structure and a national bank/currency to fund its defense forces, if China were to succeed in taking over the U.S. government through an invasion, it would assume control of an already existing tax structure that it could use to funnel resources back to China. It would also be easy for China to take over the American central bank if they won a war. This would allow them to print money to steal from the public through inflation, which is much easier than trying to take money directly from people through taxes. Without a central bank and a national currency, China would have a much more difficult time trying to seize control of the private money supply through an invasion. Tax structures, national currencies, and national banks provide added incentive for an invasion.
Moving on to the waste that is produced under a state system, it is impossible for any government to know how much national defense is actually necessary. Should the government spend a million or a trillion on defense? It’s impossible for any coercively funded government to rationally determine this figure. The only way this figure can be rationally arrived at is for the public to set the spending through voluntary markets.
If people fear a Chinese invasion in a free society, they will fund the formation of a private defense force voluntarily. The most likely scenario in a free society would be private insurance companies funding national defense forces. People would have a choice of subscribing to a cheap policy that doesn’t cover protections from invasions or subscribing to a more expensive policy that does cover the funding of a defense force to protect against invasion. If people really felt threatened, there is no reason to assume they wouldn’t put up the money necessary to defend themselves. Taxing people for this purpose is not necessary.
Every tax makes the implicit assumption that the people being taxed are simply too dumb to know how to best spend their own money. If everyone thought that everyone else spent their money wisely, there would be no theoretical reason to tax anyone. To advocate for a tax requires a lot of hubris, arrogance and a proclivity toward violence. Clearly all taxes are ultimately enforced at the point of a gun and clearly the only possible reason someone could want a tax is because they think other people are not spending their money in the way they want them to.
In the grand scheme of things, does it really matter if a tax is levied on your wages by an American state or a Chinese state? Either way, if you don’t pay and you resist the confiscation of your wages, you will end up dead. The coercive funding of a national defense force is tantamount to the American state waging a violent war against its own population to ensure its own survival. If the purpose of a national defense force is the protection of property rights, then clearly it is oxymoronic to argue that the defense of property rights must entail the destruction of property rights.
Economist Hans Hoppe gives an excellent lecture in which he explains the errors that classical liberals (think Ayn Rand) make when advocating for state run defense. He also provides an overview of how property and people would be protected in a free society.
Philosopher Stefan Molyneux debates Jan Helfeld on the moral principles of market anarchy.
For a more detailed review of how privatized national defense could function and why it is superior to state run models, see this series of essays by economist Robert Murphy:
For a large collection of published peer-reviewed essays on this subject, see the collection entitled: