To End War, Privatize National Defense

Editor's Note: This is part 2 of a two-part series on national defense. Read: "National Defense Should Be Privatized"

In part one I explained why privatizing the state eliminates the need for a national defense force in the first place. In this article I explain why the state creates wars and waste when it funds defense forces through taxation.

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.


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:

Chaos Theory, by Robert Murphy

For a large collection of published peer-reviewed essays on this subject, see the collection entitled:

The Myth of National Defense:  Essays on the Theory and History of Security Production

Photo Credit: Wikimedia Commons

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Michael Suede

Michael Suede is an Austrian economist and author who holds a business degree from the University of Wisconsin. Michael's articles have appeared in numerous economics publications. Michael is also one of the few economists who is well versed in the economics of voluntary crypto-currencies such as Bitcoin. Michael is a veteran of the US Navy and an advocate of voluntarism. Michael authorizes the use of all his content under Public Domain copyright. Any organization or individual may freely republish, edit, modify and distribute Michael's works without restrictions.

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