In his extraordinary book Democracy:
The God that Failed, Hans Hermann
Hoppe points out that the process of civilization is stopped when government
continually violates property rights.
The natural process of civilization comes through delaying
consumption, saving, and building capital. Undoing it leads to higher
societal time preference.
When natural disasters strike or a gunman robs you in an alley,
"the effect of these on time preference is temporary and
unsystematic," Hoppe explains.
Victims are entitled to defend themselves against the individual
aggressor and prepare themselves for the calamities of the occasional act of
God. Resources will be reallocated to defend one against potential robbers,
and provisions will be made for potential natural disasters.
However, when government aggresses, it is considered legitimate and
"a victim may not
legitimately defend himself against such violations." Democracy
legitimizes this government aggression because the violence is sanctioned by
a majority of voters.
This decivilization process that Hoppe
describes continues in fits and starts. The uneducated continue to live in
never-never land, believing that each new ruler means change and that their
lives and happiness can safely be put in the hands of a kind and caring
government. But government's current ham-handedness — with its
bailouts, money printing, and rights violations — has alerted more than
a few individuals to do what comes naturally: defend themselves
and prepare for the worst.
The government's legal-tender money — the dollar — is now
under questioning. While the commercial-banking fractional-reserve monetary
engine is stalled with loan write-downs and bank failures, the Federal
Reserve has expanded its balance sheet like never before. Man of the Year Ben
Bernanke is deathly afraid of deflation, and John Maynard Keynes is a hero
again. The inflation cake is in the oven, albeit not quite fully baked.
And the current administration does not seem friendly to the property
right of allowing us to protect ourselves. The president believes that only
law-enforcement officers should have weapons.
So while high-time-preference folks like Shannan
"Merry Christmas to me" after unloading some gold jewelry for $610
at a gold party, low-time-preference types are lining up in pawnshops and gun
shows to buy gold, silver, lead, and guns.
DeCesare attended a
gold party that the Wall
Street Journal describes as an example of the new Tupperware
party. These parties appeal to the cash-for-gold crowd trying to maintain a
boom-time lifestyle by unloading their valuables. The cash poor end up taking
between 65 and 75 percent of what their gold would be worth to a refiner
according to the WSJ.
These parties offer a comfortable atmosphere for selling the yellow
metal. "It can be really difficult for a lot of people to walk into a
jewelry store or pawnshop holding a little bag of gold," Lisa Rosenthal,
owner of Party of Gold, told the WSJ.
Ms. Rosenthal's company has specialists working more than 1,000 parties a
month. And why would anyone sell their gold for 65 to 75 cents on the dollar?
In his book More Than You
Know: Finding Financial Wisdom in Unconventional Places,
author Michael J. Mauboussin has a chapter titled,
"All I Need to Know I Learned at a Tupperware Party." People buy
Tupperware because they feel like they must reciprocate the host for hosting
the party and providing the free party favors. Plus, as Mauboussin
explains, "the single most important fact of the Tupperware formula is
the tendency to say yes to people you like."
In the case of gold parties, attendees don't want to just show up,
drink the wine and eat the appetizers but leave turning their noses up at the
low prices offered for their, or their departed mother's, old jewelry,
especially when it's their friend down the block hosting the event. They
happily trade a metal that has proven to have value for thousands of years
for the government's depreciating paper.
But while gold sellers are shy to see the nearby pawn dealer, gold
buyers go where they must to see who has inventory for sale. The demand for
guns is so good that the gun show in Las Vegas recently charged $14 a head
just to walk in and look around — after parking cost of $3. The lot was
full and business was brisk.
The demand for space at gun ranges in Salt Lake City was strong enough
the day after Christmas that it was a 15- to 20-minute wait to rent an
"alley" at the second range we inquired with. The first range
contacted was reservation
only and completely booked for the day.
Panic buying of ammunition, silver, and gold has created shortages and
led to price increases for all three in 2009. "Currently no .380
ammunition — I haven't seen any for about four months…
.38 special, it's been at least a couple of months," Denver
gun-store manager Richard Taylor told CNN earlier this year. "It's just
that there's been a huge demand and it's far outweighed supply right
And in November, Bloomberg reported that the US Mint had suspended
sales of most American Eagle coins made from precious metals, including gold
and silver. With coin sales surging 88 percent in the first 10 months of this
year, the mint is out of metal and sales will resume "once sufficient
inventories of gold-bullion blanks can be acquired to meet market
demand," the mint said in a statement posted on its website.
So, some Americans are unloading their family treasures and cheering
for bailouts, money printing, and gun control, while others are stocking up
on precious metals, guns, and ammo to protect themselves and their wealth.
There is no question which group is the civilized one.
Douglas French is president of the Mises Institute and author of Early Speculative Bubbles &
Increases in the Money Supply.
See his tribute to Murray Rothbard.
Article originally published on www.Mises.org. By authorization of the author