This essay’s main theme is about borders, boundaries, and barriers. As background for this presentation I will provide a brief summary of the conclusions of the first presentation in this “Invisible Hand” series which examined the physical object nature of our money and some of the unfortunate consequences of that nature. I will be concise so if you have already read one or more of the other essays don’t worry, this review won’t take long.
All money in history (and pre-history) has been considered to be or to represent physical objects such as a basket of grain, a cow, a coin, or a paper bill. Today most money is in computer accounts and though it zips around the world from account to account at almost the speed of light, it still is treated as if it were a physical object of some sort. Because we treat money as if it were a physical object, anything which is true of physical objects in general will also be true of money. This obvious point is ignored by economists and others who talk and write about money even though it is the most important truth about money. The importance of the physical object nature of money cannot be overstated. What follows are some of the consequences of that physical object nature.
First, money is like other physical objects in that it can be taken from its owner against that owner’s will; by force, fraud, or stealth and it can also be lost or destroyed. This means that you need to suspect almost everyone of trying to get your money by fair means or foul.
Second, money must be amoral because all inanimate physical objects are amoral. Even animals are amoral, in that they have neither an ethical sense nor morality, especially when they are used as commodity money. You can use your physical object money for anything, good or bad.
Third, the money supply is independent of the supply of goods and services for sale because the supply of one physical object is independent of the supply of other objects.
Fourth, money falsely simulates a zero-sum game in monetary transactions because the money gained by one party must be lost by some other party or parties. Money makes us think that other people can gain money at our expense and that we can only gain money at their expense. It makes us treat others as if they were competitors, rivals, opponents, or even enemies.
Fifth, money is almost impossible for a society or nation to control. In every nation that attempts to limit, regulate, or tax trade a black market comes to exist; and organized crime flourishes in all nations.
Sixth, money transactions are two-party interactions. Two-party interaction is inherently unstable because if one party gets an advantage in power such as having more money, the stronger party can use that power to gain still more advantages. This is particularly true of money. The old saying “them as has, gets” is true. Possession of money does make getting more money quite a lot easier. Naturally, the weaker party in such two-party interaction will eventually want to end the interaction. Thus the relationship is unstable.
Keeping that review in mind, let’s consider borders, boundaries, and barriers.
Personally, I love maps. As a small child I used to follow along on the highway maps that service stations gave away (would you believe), as my family drove on vacations or visits. When I was falling in love with libraries as an adolescent I often read books of military history. Naturally, some of the best pages were maps showing the arrangements of the different armies. I even bought both the volumes of the West Point Atlas of American Wars and the companion Atlas of the Napoleonic Wars. In R.O.T.C. in college I excelled at the skills involved in map reading.
Now there are many kinds of maps so not all maps show borders or boundaries. Not all maps show a human element. I have seen a map of the back side of the Moon which showed no human boundaries or borders though it did appear so show quite a few barriers to human surface travel. (And I thought my town had a serious pothole problem.) This essay is concerned with human beings and their interaction so we have a limited interest in mere physical barriers.
At one time, physical barriers constituted the main source of borders or boundaries. Things like seas, rivers, mountains, and deserts kept peoples apart thus allowing them to develop significantly different cultures, languages, and technologies. With such barriers between peoples there was unlikely to be any conflicts or rivalries between nations so separated.
Even animal species often have territorial concerns. I am told that bird songs are often ways of saying “this area is mine so stay away” to other birds of the same species. Likewise dogs and cats mark with scent landmarks (like trees or bushes) to tell other dogs and cats that another party lays claim to this land. Of course these species do this because their instincts tell them to. With human beings, it’s different. We have reflexes but no instincts. When people establish boundaries or borders between nations or to delineate jurisdictions, this is a learned behavior.
Before there were nations, before any human beings practiced agriculture, back when all human groups were hunter / gatherers, in that day and time there were no nations and no national boundaries. Groups that met had no need or motive to be in conflict. All the resources these groups used were either in abundant supply (like wood or flint or water) or there were many other species using that same resource. Let’s say that you are a hunter who prefers antelope. If you meet hunters from other groups who also like antelope are they rivals? No. Look how many species eat antelope. Big cats of which there are several species, dogs (hyena, jackal, and coyote), and large birds go after baby antelope. So a few more human hunters are going to make little to no difference in the number of antelope available to be hunted. With regards plant products, there are other species which eat the same nuts, berries, and roots as do human beings. So unless the number of others is quite large, other human groups put no pressure on the food supply. Cultural anthropologists have found many cultures which pay little attention to boundaries and borders.
Agricultural societies are quite different. Land is a form of property. Those crops in your fields are a form of food which you have produced through great effort, hard work, and some significant skills and knowledge. Those crops are a kind of wealth and they are a scarce commodity. If someone else tries to take them from you, it is unlikely that you will think it’s all right for them to do so. The same holds true for your domestic animals and their grazing lands. They are a scarce item which you may not choose to share with others, particularly strangers or those unrelated to you.
As agriculture developed and the populations became larger and the land more thickly settled, the significance of boundaries increased. Property and property rights as concepts entered the cultures. But the relationships between neighbors depended on how carefully the various parties were to not violate the norms having to do with property and ownership.
From these ancient days we begin to find evidence that formal rules and regulations were propounded which appear to have been intended to minimize conflict within the nation (or city or village). The Code of Hammurabi, which dates back to about 1750 BCE, and the Code of Ur-Nammu from before 2000 BCE include property crimes and punishments among other matters. Needless to say, some conflicts must have arisen over who owned what property and the property in question might be land.
To identify ownership of land the boundaries must be specified. When we are talking about these ancient times, perhaps even before the invention of writing, there had to be some way to determine where my land ended and yours began. Thus the boundary and its markers became important soon after agriculture developed. The old saying “Good fences make good neighbors” when viewed in this context indicates that many conflicts can be avoided if the boundaries between property owners are clear and obvious to everyone. But good fences also keep my cows out of your pasture land and your sheep off my pasture. When we begin to own land there are all sorts of ways that you and I might come into conflict. Boundaries become not just necessary but they become a focal point for conflict between individuals, between families, and between political jurisdictions.
Now in these ancient times, family was political when the families involved were ruling families. The distinction between land owned by a subsistence farm family and the land owned by a king, emperor, or religious leader was slight. So those families who had the most power tended to acquire more land as time went by thus increasing their power. Does that sound like the situation with regard to physical object money? It should. Both land and POM are physical objects. Possession of the one allows one to gain the other.
Boundaries also have political consequences in the modern democracy. We have all heard about gerrymandering. The arrangement of the borders of voting districts has a lot to do with who wins elections. Then there are zoning ordinances. If you want to open a business in your home in the modern U.S. economy, you may find your activity against the local laws. The zone in which you live will have its own special laws concerning what you can do with your property. Then there are laws which control and specify the jurisdiction of officers of the law. A sheriff may be limited to a county, for example. State patrolmen may have to give up the chase when the fugitive crosses the state line into another state. The location of the scene of the crime may determine which court is to hear the case. So for the law and government a host of limitations and restrictions apply based on borders even internal to a nation. It’s really complicated and most people are completely unaware of most of the geographic areas in which they live. What parish of the Catholic Church do you live in? Most non-Catholics neither know nor care. What district of Little League do you live in? You see, there are many such areas for almost every part of a modern nation.
If different geographic areas have to do with money in some way those boundaries may be a source of advantage or disadvantage for many people. Currently there is conflict over international trade agreements. But there are also conflicts over tax provisions from state to state, city to city, county to county, and so forth. Different states and cities have different minimum wages. Large businesses have lawyers and other experts on the law (like lobbyists) to maximize income by minimizing costs. The situation is complicated, to say the least.
Why do these many boundaries and borders exist? Remember that they got started in order to minimize conflict between neighboring farmers and herdsmen? They have continued to exist since that time for similar reasons. They all have to do with conflict and the gaining of or retaining of advantages, particularly advantages in gaining or retaining money. (Now you can see why that section on POM at the beginning of this essay is relevant.) Many court cases deal with boundaries. (Whose land is that strip of ground, anyway?) Wars are fought over which nation can claim what land. The big names in military history are of those commanders who conquered territory. Organized crime gangs also fight over territory. In almost all these cases the driving motivation is to gain more money and more sources of income (taxes).
Psychologically, people have a bias in favor of their local teams and neighbors. If you are from the same side of some border as I am, I will tend to favor you in dealings involving trade. We even have names for those who share a geographic region with ourselves. One might be a Texan or a Hawkeye. We are expected to favor those with whom we share some geographic region. “Buy local” is recommended and to do otherwise is somehow disloyal.
But are all these boundaries and borders really good for us? Given the context of a POM it’s hard to say whether they net out as beneficial or harmful. We pay a large price in conflict resolution fees (court costs and the military for example) in order to prevent what some would call anarchy. But is what we have now much short of anarchy? Don’t the strong oppress the weak just as if there were no rule of law? Don’t the rich take advantage of their greater power and influence to “tilt the playing field” in their favor? Isn’t there theft, swindles, and taxation throughout the world in all nations?
In this series of essays we have contrasted the POM economies of the world throughout history with the possible non-POM economy that we might implement if we only could choose to do so. Let’s see what would happen if the U.S. transitioned to a non-POM economy with respect to these borders.
One of the features of a non-POM economy is that the Law becomes irrelevant. That means that borders likewise become rather pointless. Since political factors become trivial within a non-POM nation, all those local political boundaries of the POM economy days get pretty much ignored after the switch to non-POM. There are no taxes of any kind so there are no sales or property taxes to collect. Zoning laws are pointless with non-POM since harming others costs one future income. (Zoning laws exist to protect property values.) School districts are no longer enforced so one can send one’s children to whatever schools will accept them and there’s no distinction between “public” and “private” schools any more. Also, one can educate one’s own children without needing to ask the permission of any state official. What about neighboring farms? Well, all farm owners are responsible for their land. If they cease being responsible for some land it becomes available to the first person to assume that responsibility. Note that responsibility affects future income both positively and negatively. If the land harms others (breeding mosquitoes for example) then the responsible person loses future income. If the land benefits others, that adds to the responsible person’s income. Almost anything one does with the land will generate some benefits and some harms. These consequences will vary by each individual case and the circumstances specific to that case. Thus each case must be judged on its own merits. Non-POM economies do this as a matter of course. POM economies make broad laws and take some of the more serious harms to court. There’s little fair or just about the system and it is very expensive to administer. Considerable harm may result.
What about when two non-POM land owners have a conflict? There will almost certainly exist courts to deal with situations in which the land owners cannot settle their differences on their own. After all, each of the parties will maximize money income by cooperating and coordinating their activities. So in the great majority of cases, they will find a solution between themselves which works to the advantage of both. But let’s say that such is not the case in the specific instance we are dealing with. People are only human after all and they don’t always feel as they should nor act as they should. The court would be one acceptable to both parties. (How else would both be willing to accept the rulings of the court?) The court, itself, maximizes the income of those involved by settling the dispute to the satisfaction of both the contending parties but also to the maximum benefit of the community as a whole. All the consequences of the court’s actions are considered in determining the pay, if any, for the court’s actions.
But why should the two (or three or more) parties to the land conflict agree to go to court at all? That brings in reputation. In a non-POM system one’s reputation for cooperation and coordination is quite important for the opportunities one gets to produce benefits or reduce harms. If you do not cooperate, others will not be inclined to work with you on projects. Since the workplace is a completely free market, there’s no means of getting anyone to cooperate with you by coercion. Having a bad reputation is almost sure to greatly reduce one’s potential income. If one seems to have an intractable dispute with someone else over how property should be used, and this includes real estate, then agreeing to have a court settle the matter and cooperating in following the dictates of that court shows a good attitude and a devotion to the public well-being. Remember that the court will be striving to maximize benefits for everyone. To refuse to take an issue to court is to refuse to act in what appears to be the community’s best interests. It appears to be taking actions that reduce everyone’s income.
Therefore, unless the parties are both very emotional about their position for reasons having little to do with producing net benefits for others at least one party will suggest court when all else seems to be failing. So boundaries will have less to do with rights and competition and more to do with the particular uses being available for particular plots. Not only that, but non-POM does not have externalized costs. There’s never an instance in which one of the parties to the conflict could benefit at the expense of the other. Any harm done to one will cost the other as well.
So individual disputes will be greatly reduced and will be resolved rather efficiently. Disputes over political boundaries within a non-POM society would simply not occur as the states will almost cease to exist as political entities. They might still appear on maps and physical addresses and as traditional names but the average person could pretty much ignore such boundaries.
What about national borders? Let’s imagine two nations, one a POM nation and one a non-POM nation existing next to each other with a common, long border (like the U.S. borders are today). On the one side of the border the economy is a traditional POM economy. On the other side is a non-POM economy. What would happen? People from the POM economy could cross the border to get food, clothing, education, and medical care without having to pay money for those goods and services. After all, they are human beings and there’s nothing about a non-POM economy which denies such necessity products to anyone on any grounds. The producers of benefits in the non-POM nation would be paid for benefits derived by those from the POM economy. So those producers would welcome those POM customers. How would the POM economy businesses feel about the situation? They would have real trouble competing with free goods and services. They would want their fellow citizens to be prohibited from crossing the border to get free stuff. So if there was to be a wall or other barrier built by people rather than by Mother Nature, it would be erected by the POM nation.
What about non-POM citizens crossing the border to buy from the POM businesses? Well, the POM businesses would like that. The non-POM businesses would not care. Their opportunities to provide net benefits would be unaffected. The supply of luxuries in a non-POM economy determines the amount of money available to buy them. Thus, demand would be unaffected. Then the question would be whether the same products were available on both sides of the border at the same prices.
Since there are no patent laws in a non-POM economy, any product produced in a POM economy could probably also be produced in a non-POM economy. The price of a POM economy luxury would be set in part by how much of the costs of production could be externalized. Thus, a POM society could have individual companies making their products “cheaply” by externalizing costs to the general public of that nation and selling those products to non-POM customers for less than those customers would have to pay in their non-POM economy. It’s like the POM economy making a gift to the non-POM economy. Naturally, this also applies to the acquiring of capital goods and necessities from the POM economy. On the other hand, the non-POM economy is far more efficient than the POM economy. So unless the POM economy externalizes a lot of its costs and impoverishes itself thereby, the prices for products will almost always be lower in the non-POM economy.
POM economy producers may “export” their products to members of the non-POM economy. If they are available to be paid by the non-POM payers, their accounts will be incremented just like the accounts of any other person in the non-POM economy. Note that the nation of origin or place of residence is completely irrelevant. All that is necessary is for payers to be able to observe the actions and the consequences of those actions. Of course only the individual owner, of the exported goods will be paid and that pay will be in non-POM, not POM. The pay will be only in their account which can only be used to buy luxuries in the non-POM economy. In most cases the POM exporters will be doing barter with producers from the non-POM economy. But in either case, whether by barter or for non-POM there is no circumstance in the POM economy which would prevent trade. The non-POM economy is always willing to trade.
Let’s picture typical border town on the POM nation side of the border. The citizens there are well fed and well clothed and have good educations and good health for such are free on the other side of the border. They can also work on the other side of the border if they choose in order to acquire luxuries which may be sold for POM back home. So things are good for the ordinary people, especially the poor. They are no longer in poverty. They can also cross the border and live there if they choose. So if they are employed in the POM economy, their employers must pay at least a living wage due to the competition for employment from the non-POM economy. Those POM employers don’t have to cover medical costs, however. The businesses on the POM side are unlikely to include many food stores or clothing stores.
But strange as it may seem, payers might well cross the border and pay POM economy citizens for being good to (benefiting) other POM economy citizens. Also, owners of luxury products can operate their businesses on the POM side of the border selling their goods to local residents or anyone with a non-POM account. Thus the non-POM economy would sort of seep across the border and render the border town a part of the non-POM economy. So far as the non-POM economy is concerned, human beings are all just people to be rewarded for producing net benefits for other people and everyone is a person who can receive and enjoy benefits.
You can picture a truck load of luxury items destined for a POM economy nation. Since the items are owned by the truck driver and since they are not going to be sold for POM there need not be import duties. (Your laws may differ.) When you travel to Mexico as a tourist you don’t have to pay import duties on your watch or cell phone or belt or shoes or wallet or your clothing. Yet any of those items could be considered to be a luxury product. In Mexico you could give them to anyone you liked on any basis other than in exchange for POM. We can’t say what laws the POM nation might create to thwart such creeping non-POM but we can be certain those laws would be unpopular with the people benefiting from the payers actions, and those who were paid for producing those benefits.
Now let’s consider those deeper inside the POM nation who cannot simply ride the bus across the border to get food and medical care. Let’s consider a farmer who would like to trade (sell) his crop. The chances that he will have access to a free market for his crop are tiny. Capitalist and socialist states hate free markets. Also, the price he receives is quite likely to fluctuate from time to time. He has no control over the price he must accept for that crop. (Few in the U.S. would believe that but it’s true. The farmer must sell in a small time window because he has debts and his crop will not survive being stored on the farm until next year. Also, when conditions are good for a large crop, the prices are low and when he can produce little due to weather or pests, the prices are higher. But whatever they are he will gain barely enough to keep going if that.) So here comes a representative of the non-POM economy offering to barter. He has a catalog of items which he can offer in exchange for that crop. He can offer “points” for the crop and the farmer can pick and choose from the catalog up to the limit of the points offered for the crop. The non-POM economy can offer a huge range of products and it also needs a huge range of products. Thus, a barter trade is quite easy, simple, and does not depend on the POM economy at all. Naturally, the farmer likes the idea. The mill owner down the road and the small business owner in the capital also like such trades. In fact, almost anyone in the POM economy would like such opportunities. The presence of such traders would virtually mean the end of unemployment, for example, since there is bound to be work because the non-POM economy is an unfailing source of demand.
So that’s what the non-POM system would do to a neighboring POM economy. It would gradually infiltrate it without having to confront or coerce anyone. To prevent such infiltration the POM economy would have to create a Berlin Wall situation in which they fortify their borders and keep out all those people offering free stuff and offering to trade. I am confident that no matter how high the walls, human nature will soon have them leaking especially given the business cycle in POM economies. Sooner or later there will be an economic “bust” in that economy and the temptation to trade will overcome the fear of non-POM.
Now let us consider a nation far from the non-POM economy. How does a non-POM nation embassy sustain itself when it has no national currency? If I am not mistaken, embassies are allowed to bring into the nation equipment, food, clothing, and other materials. Also, embassy staff have “diplomatic immunity” from the laws of the host nation. This means that shipments of luxury items (like cars) and necessities (like clothing) would be permitted. Yes, people will work to gain such things. Contractors will do jobs in exchange for luxuries which they can sell. So it will be quite possible to provide the luxuries which are the foundation of non-POM. What nation would resist having wealth brought into their borders? Especially when that wealth is being given away for actions which benefit others? Of course, to sweeten the pot, toys and other gifts for children would make a substantial portion of the imported goods. In order to have non-POM function there will have to be a proportion of payers among the embassy personnel. They will naturally do what payers do. They will pay anyone for net benefits. Something tells me that they will be quite popular.
In every case, the non-POM folks will be acting in ways that are not threatening, that show how successful non-POM economies are, and that “sell the product” to others.
But what about the rich of POM economies? Well, they also suffer from the defects of POM. They will want to move their assets to a non-POM economy where they will be safe. They will want to have available a safe haven if things go bad in their POM dealings. The advantages of non-POM appeal to everyone.