Halving It All featured in the October 15 issue of Kirkus Reviews!

Yesterday I received word that Halving It All, the science fiction novella that illustrates in a funny and snarky way some of the basic differences between capitalism and socialism (a great book for homeschoolers!) was chosen to be included in today’s issue of Kirkus Reviews by their indie editors. What an honor! Fewer than 10 percent of the indie authors reviewed by Kirkus are chosen to be featured in the publication!

Scotland’s free banking era

Banking practices in 18th century Britain are as captivating and romantic to me as a moor-set novel. The stories of Edinburgh’s competing bank houses in 1765 offer as much drama and intrigue as any feuding Georgian manor houses and, looking at the history, I can just imagine chemise-clad Regency women, fainting behind their kerchiefs, just as fearful of unregulated banks as they were of their own muscular servant gardeners.

What gives me a case of the vapors, myself, is that people rarely read these stories, even though these stories have absolute relevance to their own bank accounts. If more soccer moms, frightened by the idea of unregulated banking, understood how Scottish banking worked in the 1700s, they wouldn’t be at the mercy of predatory banks today, nor would they fall for (or, worse, support) all the banking regulations being pushed through Congress by the big banks, themselves.

The time period from 1716 to 1844 in Scotland was an era of “free banking” (or about as free as the planet has yet known): back then the Scottish government imposed very few regulations on banks and all the banks existing in and around Edinburgh and Glasgow were free to issue private currencies. (Today, we have corrupt laws against private currencies here in the U.S.) These competing Scottish currencies were also sound or “hard,” meaning that every currency note was backed by gold or silver. Anyone holding a bank’s note could redeem it at the teller window for an equivalent amount of gold or silver bullion, usually in the form of coins. Paper currency back then was simply used to conveniently replace the handling of heavy coinage. (In fact, paper currencies emerged from the practice of the public’s trading their bank receipts for stored gold and silver nuggets.)

The benefits of competing currencies have been mostly lost to history, though crypto has revived their study somewhat. But here in the U.S., with the Federal Reserve holding a monopoly on the issuance of money since 1913, and the removal of that money’s hard backing by gold in 1971, most of our citizens have lost any understanding of the ways competing hard currencies can benefit the consumer. We’re also quite shielded from understanding the ways a money printing monopoly can benefit a few high-ranking central bankers enjoying life in the 1%. Which is why books like Free Banking in Britain are so important.

The primary argument against competing hard currencies has always been that private banks would print too much of their own money. This can be a problem because the more units of a currency that get circulated, the less valuable each unit becomes. A similar plot twist happened in The Hitchhiker’s Guide to the Galaxy when the Golgafrinchans decided to adopt the leaf as legal tender. “[W]e have run into a small inflation problem,” explained the Golgafrinchan management consultant, “on account of the high level of leaf availability, which means that… the current going rate has something like three deciduous forests buying one ship’s peanut.” Let’s call the idea of printing too much money, then, a Leaf Problem.

But wait a minute, isn’t overissuance of money exactly the problem we’ve had with the Federal Reserve for over a century now? Why are we not making the Leaf Problem argument every time the Federal Reserve prints a $2 trillion stimulus package? The Federal Reserve has over-printed dollars to such a degree that the value of a dollar has fallen over this time to a measly four cents. Of course, the “value” is still one dollar by law, but we see the true loss in its value as prices continually rise. What was worth a dollar in 1913 is today worth about four pennies, a loss of 96 percent of our purchasing power.

So we, the people, have been denied the freedom to enjoy competing hard currencies (and the preservation of our purchasing power and wealth) because the government is worried we’ll print too much of our own money. But that’s exactly what the government has turned around and done. Now you see why I no longer vote.

Anyway, White’s research in Free Banking in Britain shows that, oddly enough, private banks in 18th century Scotland tended not to over-issue their currency notes. Why was that?

Well, first we need to define what it means to over-issue. How much is “too much” when it comes to printing hard money? “Too much” is simply more money than a bank could back with its gold reserves. If a bank did over-issue its currency, its customers might decide to redeem that currency for gold and if the bank didn’t have enough gold on-hand, that could spell doom for a bank. This is precisely why many banks have failed throughout history. (Today, the Federal Reserve is shielded from any consequence arising from over-issuing the dollar because the Fed is no longer is obligated to redeem dollars for gold, which might be one reason it so happily over-prints them.)

Another key feature of free banking in 18th century Scotland was that banks operated under unlimited liability. If a bank failed as a result of over-issuing its currency (or any other bad business decision) the shareholders were obligated to cover their customers’ losses. This was such an important feature in the free banking market that when the Scottish government made limited liability available to private banks in 1862, most of them refused it, worrying that it would cause their customers to lose confidence in them. Honest bankers were proud to operate under unlimited liability as they had no intention of over-issuing their currencies or driving their profitable banks into the ground.

That’s not to say bad decisions weren’t sometimes made. A spectacular crash involving the Ayr Bank, for example, occurred in 1772. But because of the free-market force of unlimited liability, Ayr’s 241 shareholders covered the entirety of the bank’s losses. Today, of course, we have limited liability and shareholders are shielded from their bank’s poor business decisions, forcing the government (us, the taxpayers) to cover any losses through the FDIC.

White covers other reasons why these free, private Scottish banks tended to operate so well in the 18th century (including the note exchange systems and joint stock structure), and he also compares and contrasts them with the heavily regulated English banks, large and small, of the same time period. It’s certainly an eye-opening subject of research and White has covered it exhaustively (including a refutation of a few counter-arguments made by Rothbard).

Of course, as with all economic non-fiction, the writing can be dense and filled with jargon. I do wish economists could learn to write in more engaging ways; their failure to do so keeps most people ignorant about basic economic truths and it’s a complete shame. But White’s book contains information that is worth our time and effort to slog through. Banks like the Federal Reserve literally ciphon money from the public by regulating competing currencies out of the industry and the public will continue to experience the theft of inflation until it begins to learn what inflation is and which regulations allow it to proliferate.

Incentives also work on dogs

At our local park, dogs can play off leash as long as owners have “voice control” over the dog. There are at least two reasons a dog might come when called at the dog park. One reason is that it’s being forced with loud demands and shrieking whistles implying a future punishment should the dog refuse. The other reason is that the dog has an incentive to come to your call. For example, if every time you call your dog, he gets a treat or a back scratch, he will learn that he has an incentive to respond to your call. It’s the difference between power and force and just another example of basic economic realities that are present everywhere, even at the park.

Economic poetry… an excerpt from the sci-fi novella Halving It All

From Chapter 10, pages 63 – 65
[ To order Halving It All on Amazon, please click here. ]

Economic poetry has been, throughout history, one of the great ignored literary forms in the western Milky Way. Its early proponents, writers like Wenckle Farthing and Pluber, may have enjoyed a smattering of recognition, but many other economic poets have struggled in obscurity, toiling away within a genre that many traditional readers mindlessly eschew.

One of the earliest economic poets was Onk the Elder (an ancestor of many reluctant decentralized planners on Silvid), who first captured the attention of fiduciary verse consumers with his period piece, “Winter Trade-Offs, Spritely Spring.” Criticized by some as being too optimistic and faery-centric, his whimsical floral style was to become a favorite of Kingman Twelve, a popular leader on Moon Forty during the Torrential Down-Wars.

Centuries later, a young lanky girl would came of age in the Xelian box neighborhoods. Julia Serving had always been keen to alliterate terms of sale; her hobby of editing ad copy had landed her an entry-level position in the advertising department of Corrugated Planetary Banks. But demand-stimulating jingles couldn’t hold her interest for long, especially after she read her first Onk chapbook. Her favorite poem of his, “Dragonflies Don’t Pay Taxes,” spoke to her soul of the diminuitive economic truths of the insect world and Julia eagerly expanded where he had left off, melding the worlds of monetary inflation and Gaelic faeries in her first multi-verse written in anapestic tetrameter:

”Song of the Inflationary Faeries”

Of the three acts of thievery we now allege,
know the first theft is clipping the silver’s crimped edge.
And the second theft funds a despicable hedge:
it’s the flooding of money demanding a dredge.

Let’s imagine a vat of Old Malcolm’s White Vine
when a gallon he makes sells for eight shillings nine.
This he weakens with water, diluting the wine
and his cheating the townsfolk makes Malcolm a swine.

Well, the flooding of money’s like wine-making tricks.
When diluting with coin, unseen crime it predicts:
Forty coins where there should only be thirty-six…
a percentage of each is the value it nicks.

Note these four extra coins are just part of a game
and the wealth that is stolen they’ll never reclaim.
For it’s four extra coins that these clippings became
while the silver amount, overall, stayed the same.

But the third theft’s inflation is cleverer still;
it depends not on clipping, just printing a bill,
and the effort required to steal will be nil,
so the inking of money will now be our drill.

This is how we can confiscate coins in a vault
all without our directly committing assault.
We’ll debase the coins’ worth, stealing wealth by default.
Here’s a scheme to administer, praise, and exalt!

How it benefits bankers, the folk rarely see
but the prices all rise, the more money there be.
See, the shire’s demand for a hen fricasee
will have grown by four coins but immediately.

And the quantity of the demand thereby lends
to the increase of prices by fives and by tens
as now forty are fighting for thirty-six hens.
But the rising it waits ’till the banker, he spends.

See inflation can’t spark till the new coin is spent
only then will the value of old coins indent.
Soon lost power of purchase the folk will lament.
So we faeries shall spend ‘ere the shire dissent!

The nefarious first-person anapests of the fictional inflationary faery sisters rocketed Julia to poet stardom virtually overnight. And of course, when she met economic historian Riordan Vastly at a literary derivatives conference on the planet Snetterson, syllables flew! They were married in the third quarter of the Silvidian Year 890 and the bride now goes by the name Julia Serving Vastly.

[ To order Halving It All on Amazon, please click here. ]

Just another false dichotomy

The best way to divide a population is to offer up a series of false dichotomies that draw stark lines in the sand and force people to choose sides. A useful example of this is the line that’s been arbitrarily drawn by the Black Lives Matter (BLM) movement on the issue of racism. Many people who haven’t studied economics are easily misled into thinking that the BLM is only about ending racism. It’s not; the movement embraces various communist economic goals. And many more people are easily misled into thinking that people who refuse to embrace BLM are, therefore, racist. They’re not, because it’s possible to oppose racism without supporting communism.

Those of us with an understanding of basic economic ideologies realize that some of the BLM’s stated goals align with the form of state communism advocated by Karl Marx. The connections are easy to spot. One of the BLM founders, Patrisse Cullors, was quoted as saying, “Myself and Alicia (Garza) in particular are trained organizers. We are trained Marxists.”

This year, the Black Lives Matter movement backed off quite a bit from its Marxist rhetoric, as noted by Canadian news magazine, The Post Millennial: “With little fanfare,” the article states, “Black Lives Matter removed a section of text that had been under a section (of its website) called ‘What We Believe’ that sought to engender the destruction … of the nuclear family structure.” But scrubbing websites doesn’t mean BLM has suddenly disavowed Marxism.

In fact, the BLM founders have been openly quoted as saying, “We disrupt the Western-prescribed nuclear family structure requirement by supporting each other as extended families and ‘villages’ that collectively care for one another.” This is literally “communism,” a lifestyle of communal living in which property is shared and private property is, thus, abolished. Marx included the removal of the nuclear family as necessary to his vision of state communism because the nuclear family defined a basic unit of private property ownership in society.

Another aspect Marx saw as a necessary tenet of communism was central banking, specifically, “Centralisation of credit in the hands of the state, by means of a national bank with State capital and an exclusive monopoly.” Marx didn’t invent central banking, but he saw the potential for centralized control in bringing about what Ron Paul called the “essence of socialist economics”: government allocation of resources. In the case of central banking, that means government allocation of money.

Remember, the only time the dollar held a stable value was during the “free” banking era of the 19th century (see below). When central banks constantly inflate the money supply, the value of the dollar falls consistently, eroding purchasing power and opportunities to acquire private property.

How does the idea of central banking connect to the Black Lives Matter movement? An article at populardemocracy.org entitled “Do Black Lives Matter to the Federal Reserve?” describes the alignment: if you support BLM then you also support the ‘Fed Up’ campaign, which opposes any move by the Federal Reserve to raise interest rates. “At its core, the Fed Up campaign is about answering two questions… “Whose recovery is this?” and “Whose Federal Reserve is this?”

Leah Downey, writing in Foreign Policy, notes that, “The U.S. economy needs reform, and the Black Lives Matter movement shows how it can be done… The genius of the BLM movement is that it is not just about cultivating anti-racism among individual Americans… Rather, it calls for the United States to change its existing infrastructure.” The answer here is put forth as public banking, and Downey calls for the Federal Reserve to “give every American a public bank account (perhaps via the post office).”

It’s absolutely true that the Federal Reserve has made black Americans poorer. But that’s because the Federal Reserve has made everyone poorer. Rather than demanding an end to the Federal Reserve, however, the BLM movement advocates an expansion of the Federal Reserve. Central banking is necessary to a communist state, therefore it would only make sense that the BLM would align with efforts to expand central banking.

Free markets and a stable currency, however, would benefit the black population much more than a communist state. How do we know this? The United States has been socialist since its founding. Socialism is the transfer of costs and benefits from individuals onto society and with everything from public education to Medicare, even back to its first tariff in 1789, the U.S. has embraced socialism. The U.S. has also adopted several communist policies such as a national postal service, state funded police forces, and its three iterations of a central bank. With all of these socialist and communist policies in place, you would think the supposed benefits of socialism and communism would have appeared by now. But oppressed groups claim to be more oppressed than ever. For example, how have our current socialist and communist policies prevented a level of systemic racism in our state-funded police force? They clearly haven’t.

Communism does not liberate the oppressed. Communism is the definition of oppression.

So in opposing communist economic ideals, we shouldn’t allow ourselves to be automatically painted as racists. It’s exactly the opposite. Because, oddly enough, it’s possible to oppose racism without supporting communism.

Medical cartels an early response to natural medicine

This is part of a series on the history of health care, originally published on the geke account on Steemit, exploring how and why health care costs in the US have risen beyond the levels a free market would normally bear. In light of the 2020 viral pandemic, a better and clearer understanding of the structure of our modern healthcare system is necessary.

If you were pregnant in Charlottesville, Virginia in 1848, according to the “Fee Bill” below, it looks like you would only pay $20 for a doctor to deliver your baby. And if your husband broke his arm, it would only cost $10 for a doctor to set his fracture. Even accounting for inflation, 1848 healthcare costs seem insanely cheap!

But to give some context… let’s imagine that John is a bricklayer who earns the 1848 bricklayer average of $36 a month. He and his young wife, Sally, live on the east coast of the United States. They pay 8 cents for a loaf of bread, 25 cents for a pound of butter, and another 25 cents for a bag of potatoes. In 1848, a train ticket from New York City to Philadelphia costs $4 and a year of college, about $100. 1

In light of these average wages and costs from the mid 1800s, a $20 fee to deliver a baby is still somewhat expensive; it equates to about three weeks’ work for John. It’s likely a young family like this would have just hired a midwife at a much lower cost. But it’s worth asking: were medical expenses more fair in the 1800s than they are today?

Not necessarily, and the newspaper clipping above is a great example of an attempt to keep medical costs high. That Fee Bill isn’t a price list; it’s a form of price fixing that’s also intended to call the reputation of natural healers into question.

Fee Bills were often published in newspapers in the 19th century. The general public may have assumed a bill like the one above was a simple price list, but if you read the fine print more closely it’s clear that this was the work of a medical cartel:

“We, physicians, practising in Charlottesville, mutually agree to charge and require fees not less than the following, in the cases hereinafter specified.”

A “cartel” is defined by Oxford as “an association of manufacturers or suppliers with the purpose of maintaining prices at a high level and restricting competition.” And that’s exactly what these doctors were up to: they were printing a list of minimum prices that the undersigned doctors promised not to undercut. Ultimately, they were agreeing not to compete with each other and this agreement kept the medical costs in Charlottesville higher than the market would normally bear.

Customers in any market rely on healthy competition between sellers and producers because that competition is what keeps prices down. In the case of the 1848 Charlottesville healthcare market, one doctor might to decide to charge less to attract more patients. This would force other doctors in that market to charge less, too, in order to keep their current patients. That’s how competition works, and the Charlottesville physicians of 1848 were having none of it.

They didn’t want to compete with one another. They wanted to collude with one another to keep prices artificially high.

To add insult to injury, the published Fee Bill above didn’t prohibit any of the doctors from charging more. And it’s likely that when Sally went into labor, she and John would have paid more than $20 if they chose a doctor instead of a midwife.

So why did people like John and Sally put up with these shenanigans? Because doctors had convinced them that these shenanigans actually protected consumers.

Allopathic doctors (called “regulars” back then) were also facing competition from natural healers like herbalists and homeopaths. Trying to reduce that competition, they sought to denigrate natural medicine, much like we see today. And according to journalist Todd Savitt, “Naming the physicians who signed the fee bill served to advertise to the population who among local healers were the trained, respectable physicians and who were the low-cost (and, according to the regulars, presumably less competent) healers – the irregulars and quacks. Patients were thus ‘protected’ from unscrupulous practitioners.”

The implication here was that “regular” doctors were the only respectable providers — because they charged more — and that anybody charging less for medical services was surely a quack.

Just like today, people in the 1848 healthcare industry were looking for ways to kill their competition. They were putting out forms of propaganda denigrating their competition in newspapers and forming cartels with the competition (fellow doctors) they couldn’t bring down: if ya can’t beat ’em, join ’em.

Eventually this problem was “solved” with government regulation, but as usual, government interference didn’t really solve anything. Regulations merely defined who was allowed to collude and price fix… and who wasn’t.

Above all, the doctors’ attempts to rig the healthcare industry were explained away as patient protection… much like today. For example, why are such reliable and natural treatments for viral infections like covid-19, including zinc, vitamin D, high-dose vitamin C, denigrated by the healthcare industry? Because natural treatments aren’t patentable and threaten the financial stability of the pharmaceutical industry.

Other posts in this series will show that healthcare providers have found many ways, over the last century, to rig the industry, eliminate competition, and keep healthcare costs high.

1. 1848 prices and wages sourced from: https://libraryguides.missouri.edu/pricesandwages/1840-1849

Of coconuts and Sweden… ‘Halving It All’ receives a positive review from Kirkus

“A comic and engaging yet didactic look at the mechanisms underlying economies.” ~ Kirkus Reviews

That’s how the review of Halving It All begins on the Kirkus website. The novella was written by Stephanie Petersen, adopting a temporary pen name until she and her fiance marry later this year. Here at geke, Stephanie has been known as Stephanie Herman, author of Cost Benefit Jr., Stories in Microeconomics. But as this book is intended to be the first in a series, the name change was necessary up front to avoid “author confusion” as the series progressed.

Back in March, when the pandemic lockdowns were just beginning, a homeschooling friend named Stefania Vaughan suggested to Herman/Petersen that she write something illustrating basic economic concepts for older students, kids who were no longer in the elementary-school target audience of Cost Benefit Jr. She started writing Halving It All that very day, knowing she didn’t want it to be a textbook. Instead, she envisioned a work of fiction that would entertain readers and students rather than lecture them.

But isn’t lecturing us something economic books do? Maybe so, and as a result, one of the “characters” of Halving It All is a fictional textbook written by a fictional economic historian, Sir Riordan Vastly, entitled, Manual of Basic Economics for the Stupid and Ill-Informed. Using this device as a recurring foil, Petersen is able to put forward some basic economic theory in a comic way that pokes fun at both the field, as well as some of the theorists and economists who have historically defined it.

Halving It All is young adult science fiction, written in a style and voice that many have likened to that of Douglas Adams and his Hitchhiker’s Guide to the Galaxy. The Manual neatly replaces Adams’ Guide in this brief jaunt between moons serving as voluntary economic re-education camps. Coconuts and Sweden appear as recurring themes in the story that are eventually tied together with the work of Swedish economic cameralist Carl Linnaeus. Also an 18th century botanist, Linnaeus attempted to perfect the economic pursuit of mercantilism (the refusal of nations to export gold in payment for foreign goods) by “teaching” coconuts to grow in Scandinavia, thereby avoiding the need to import them from competing nations.

“Petersen’s comic world, rendered in precise prose, brings to mind the work of Douglas Adams,” the review from Kirkus states. “While there is much talk of the underlying theory of economics, Petersen has quite a lot to say about human behavior as well, as here where Violet observes another group of prisoners on Ting: “There was always one person who seemed…not smarter or more industrious, not even more prone to capitalism. But there was usually one person who was unhappier than the other two. More unfulfilled, more driven…it was usually a feeling of frustration, rather than optimism, that pushed people forward.” The book’s message is decidedly pro-capitalist, though its definition of capitalism is a bit more nuanced than the term generally used in American political debates. The story does not have much of an emotional dimension—the cartoonish characters primarily exist to represent various (and often misinformed) ideological positions—but the novel is short enough to mostly satisfy as a satire.”

New young adult scifi story looks at capitalism and socialism through a new lens

Starting in April, all of my free time went into writing this novella, Halving It All, which has just been published on Amazon.

In this fun romp through the western Milky Way, Violet Self teaches economic concepts with her trusty Manual at several moon-based re-education camps. But when the Earth is closed during a pandemic, she befriends a few of her former Earthling campers forced to stay on Violet’s home moon. Together they attempt to solve its vicious hyperinflation, while mitigating the physical effects of an economic vaccine that’s being secretly dosed out. Sir Riordan Vastly, the Manual’s overbearing author, and his constantly rhyming wife join Violet and her cat (Fred) in tracking down the real cause of the moon’s inflationary troubles, while the girls from Earth learn valuable economic lessons about the true nature of both capitalism and socialism. This playful scifi story melds Douglas Adams (Hitchhiker’s Guide to the Galaxy) with Henry Hazlitt (Economics in One Lesson) to impart economic concepts in a clever, entertaining way.