Voting with Democracy VS Voting with Money

When we talk about a free market, especially a free market without government (AKA the only kind), people ask how will you represent the people without voting and democracy. Without democracy how will we do social programs? Without voting how will everyone get an equal say? Let's explore this a bit.

by Quinton on July 5th, 2016

This is a fundamental topic for society which gets very little discussion. We discuss what to vote on and how we should divvy up resources, but we never stop to think if voting with our mouth is the best way to vote.

Ludwig von Mises on it:

"The capitalist system of production is an economic democracy in which every penny gives a right to vote. The consumers are the sovereign people. The capitalists, the entrepreneurs, and the farmers are the people's mandatories. If they do not obey, if they fail to produce, at the lowest possible cost, what the consumers are asking for, they lose their office. Their task is service to the consumer. Profit and loss are the instruments by means of which the consumers keep a tight rein on all business activities."

This quote nails it. In a free market you are voting every time you buy something. If you don't buy something then that something is not getting your vote. If you buy something from Company A and not Company B then you are voting for Company A. You are voting to keep Company A in business. If nobody buys from Company B they will eventually go out of business and dissolve. If Company A does something shady that people don't like they can stop buying from them and instead buy from Company C or somebody can start their own Company D.

So few people truly grasp the simplicity and beauty of this. Voting with your money is better technology than voting with democracy. It becomes hard to imagine we could run society with anything other than democracy since we have become so accustomed to it. But we forget that we already go through 99% of our daily lives in a non-democratic way because it is far superior to democracy:

  • When we plan our day we do it non-democratically.
  • When we buy our groceries we do it non-democratically.
  • When we decide what to eat we do it non-democratically.
  • When we purchase anything we do it non-democratically.
  • When we fill our car up with gas we do it non-democratically.
  • When we find friends we do it non-democratically.
  • When we find somebody to date we do it non-democratically.
  • When we find somebody to marry we do it non-democratically.
  • When we choose where to live we do it non-democratically.

We do all these things without democracy because it works really, really well without democracy. If we used democracy to run our lives they would be a complete mess. Our lives run not on democracy because democracy is worse at obtaining what we want than simply doing it directly. We hardly stop to think that we are already living 99% of our lives the free market way. We aren't taking a vote on everything we're doing. We aren't grouping everyone's opinions into our choices. We are making our choices directly.

Democratic Mexican Restaurant

Let's say we want to decide on what people should eat for dinner in a society. We can do this the democratic way, or we can do this the free market way (voting with money -- resources you traded your labor, creativity and energy for).

  1. If we do it democratically we would all take a vote and whatever majority of people chose would be the dish we ate.
  2. If we do this the free market way we can just let each person vote for what they want to eat by buying it.

To better illustrate democracy let's imagine walking into a democratic Mexican restaurant. Imagine walking into a restaurant and being forced to eat the same dinner as everyone else. Imagine walking into a Mexican restaurant and then having the owner be like, "Alright guys, tonight is going to be either tacos or enchiladas. Everybody vote for what it is we're having". And then picture 55 of the people voting for tacos and the other 45 of the people voting for enchiladas.

This is a terrible way to go about it for a number of reasons. Think about some of the absurdities which can be garnered by looking into this a bit:

  1. You only have 2 options to choose from. Why only tacos or enchiladas? What about burritos, or taquitos, or chile rellenos?
  2. The owner doesn't know what people truly want. He only forced 2 choices on them.
  3. 45% of the people are eating something they don't want to eat. The other 55% may or may not be eating something that they want.
  4. Why is it that what is greater than 50% is the choice we use? Why doesn't it have to be greater than 75% or greater than 90%?
  5. Other Mexican restaurants are going to allow their customers to choose anything and take the business from this restaurant.

These are just a few quick things to consider with this restaurant example. It's totally obvious with a restaurant that democracy would be a terrible thing. This would be a horrible user experience for the customers and the customers would quickly find a restaurant that isn't a democracy.

But here's the kicker -- as soon as we talk about things like police, or courts, or roads, or charity or things of this nature we think that democracy is the right way to solve it. We think that this is different than a restaurant.

IT'S NO DIFFERENT.

These are all just services the same way a restaurant is a service. We don't need to vote for this democratically. These can all be handled the exact same way a restaurant can be handled -- through the free market, with individual choice. After all, the more choice we have the more freedom we have.

Group Taxes VS Individual Purchases

This brings up the topic of how things are paid for in a democratic state system vs a free market system. With democracy you pool everyone's money together and let other people spend it. In a free society you spend your own money directly. There are 3 main benefits to spending your money directly as opposed to spending it the democratic tax route.

  1. You get exactly what you want
  2. You spend less money for it
  3. You get higher quality for your money

Take the Mexican restaurant example. If you can get exactly what you want without taxes why would you ever be in favor of taxes? Why would you want to let somebody else have in a say in your decision if you don't need to? Everybody wins when we let each person buy the meal they want. Why would we ever want to do it an inferior way? If you can have car that can get you from point A to point B quickly, why would you ever want to go back to horse and buggy? It's inferior technology. When it comes to getting what we want democracy is inferior technology.

In democracy we use taxes to pay for things. Taxes are a less efficient way of paying for things than paying directly. Taxes, as done democratically, don't represent the full 100% of what each individual of the group wants. They represent what majority of the group wants. Paying directly without taxes does represent 100% of what each individual in a group wants. Paying directly is much more representative of what each person wants than democracy.

The main reason we use taxes to pay for things is because we are too stupid to understand that we can pay for these things without taxes. That is really what it comes down to. We get confused on how to pay for certain things without taxes because we lack an understanding of the free market and because we have always done it the tax way.

We get confused on how we would pay for roads without taxes. We get confused on how you do a project that goes through the property of multiple property owners and how you pay for that. We get confused on how we would do police without taxes when police are a service that maintains law and order. We get confused on how we could have courts without taxes since everyone body needs and uses courts. As I said before -- IT'S ALL THE SAME.

These are all just services. If we understand free markets then we understand the benefits of it. Free markets make everything better over time because humans make things better over time. The more we do something the better we get at it. And the more we allow people to compete at doing things, solving problems and making our lives better the better people get at it. The free market is the framework that allows for this to take place. If we allow the free market to operate in roads, police, education, healthcare and all these other government controlled services then it would make them far, far better -- for less money. That's how free market technology works.

And this all comes back to individuals voting with their money instead of voting democratically. Voting democratically does not allow the free market dynamics of choice to take place. Democracy allows people to lie. Have you ever heard the saying, "Put your money where your mouth is?" We say this because we know people talk BS. People might talk a big game but when it comes to actually backing that big game up with money people won't. This is what democracy is. Talk. Rhetoric. The whole goal of a politician is to talk a big game. They have absolutely no skin in the game with their own money. They don't put their money where their mouth is. This is a big problem with democracy.

In democracy we hear about how it is for the people. Democracy is by the people for the people! If we really want to represent people then we should allow the most amount of freedom and choice. Would you take that Mexican restaurant example we did and say that choosing what to each democratically was for the people? Which is more for the people? Choosing what to eat democratically or letting each person choose their own dish? Paying for things directly is for the people much more than democracy. Paying for things directly represents each individual much more than democracy does.

And I can get why people are so into democracy. Relative to complete control democracy is better. Relative to slavery democracy is better. But the only 2 choices aren't slavery or democracy. Democracy isn't the height of society. There is a method that is even more for the people, more for freedom and more for representing each individual -- the free market and voting with your money.

Because of the incentives created through competition everybody wins a free market system. When you pay for something in a free market you are getting exactly what you want without needing to convince anyone else to support your purchase.

Schools

Let's look at public schooling as an example. Right now public schools are paid for via tax dollars, and these taxes come primarily from property taxes in most cities. We're forced to pay these taxes. If we don't pay these taxes then we invariably await that eventual knock on our door by big brother to force us to pay or put us away behind bars.

Schools are something that not everyone uses. Only families with children make use of schools. But with the democratic tax system even if you don't have children you are still paying for schools. If you're 50 years old with no children, you are still going to be putting some of your property tax to use for schools. This is like going to a restaurant and forcing you to pay a little bit for everyone's meal. You don't need to pay for what you're not using. Let the people who want schools pay for them and the people who don't not pay for them. If we want to be for the people and we want to be fair then we should be. We should use a non-democratic system that actually is fair and for the people. We should use a system that better represents the people than democracy.

It would be much more efficient simply to let the parents who have children pay for their schools directly. Milton Friedman has explained how people are best at spending their own money on what they want. When you let other people spend your money it isn't spent as efficiently. Paying for school directly with your own money it is the most efficient use of your money.

Paying directly also allows people to choose exactly what school they want. Maybe some people want their children to go to a religious school. Maybe some people want a secular school. Maybe some people don't want their children to go to school at all. Paying for things directly allows this freedom of choice. After all, isn't that what we all want and talk so adamantly about all the time? Don't we want freedom? Then let's give it to people. And democracy doesn't cut it.

But What About The Poor?!?!

But what about poor people? What about them? Poor people can buy things too. Poor people have money. And the service they receive will be commensurate to the amount they pay. People who can afford higher quality services will get higher quality services. If poor people want higher quality service they can make more and then pay more, the same way the vast majority of wealthy people have. What's not fair or equal is forcing people who made different choices that created wealth to be forced to pay for poor people via taxation.

Democracy violates the NAP

One of the main principles behind a free society is property and non-aggression. You can't have a free society when you can freely steal other people's property. Democracy allows for theft through taxation. Democracy is violent. If you're a non-violent person then you can't possibly support democratic taxation.

Taxation is force on other people. When you tax you are forcing people to pay money for something they may or may not want. Most people currently pay taxes not because they want what their taxes are paying for, but because they will go to jail if they don't pay them. People are currently forced to pay for taxes in a democratic system, which is a violation of property. Allowing others to steal from each other is a lesser form of civilization. Civilization is linked with property. And if you destroy property then you destroy civilization. Destruction of property is theft and violence. If we don't have property then men are free to rape any woman they want. We have to have property to have civilization.

America is not supposed to be a Democracy

Even the founders of America knew the problems of democracy which is why America was never supposed to be a democracy. America wasn't even founded on democracy because America was superior technology to what had previously been created in the past. The founders created America as a Constitutional Republic in an effort to have rule by law as opposed to rule by the majority. As soon as you let the majority rule, democracy, you are using force on people who are not in agreement with the majority. This takes away choice. You are forcing people to do what the majority of people want. This is a less free way of living. You are less free under democracy.

Conclusion

Democracy is an inferior form of making decisions than a free market. People act much more closer to what they really want as individuals than they do as a group. People are individuals first and foremost. We should be in favor of systems which promote this.

When you vote in the free market you are separating choice to the most simplest form: the individual. The most simplified version of property is ourselves. When we make decisions as a group we are taking away decisions from individuals and forcing the decisions of the group on them. If this doesn't work at a Mexican restaurant what makes you think it will work anywhere else? It doesn't and we can clearly see that throughout society. The places where were have the most problems are the places that are the most democratic.

Places where we can't directly buy what we want are places where we have problems: police, courts, education, healthcare, etc. I don't see many problems with mobile phones or clothing because we have 100% choice on what to vote for here. We have complete representation of our decisions here. When I vote to buy a shirt I get exactly that shirt. I don't get to vote on what school system to buy. I have to vote with my mouth rather than my wallet.

Every way you look at it buying things directly through the free market is better than paying for things democratically through taxes. We should be supporting free markets and voting with our money. Our money represents what we exchange our time, labor and creativity for. When we make money we are exchanging ourselves for money. And when we buy things with money we are exchanging our time, labor and creativity for that thing that we are buying. This is advanced technology. This is the kind of technology that takes us to the stars and back. We need to recognize the humanity behind free markets. We need to recognize how truly liberating and beautiful free markets are. Free markets are unequivocally superior to the outdated relics of the past. Ask the Founding Fathers, they would agree.

 Filed under: Society, People & Culture, Voting, Democracy, Money

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