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Source link: http://archive.mises.org/5327/the-problem-with-fraud-fraud-threat-and-contract-breach-as-types-of-aggression/

The Problem with “Fraud”: Fraud, Threat, and Contract Breach as Types of Aggression

July 17, 2006 by

Recently I pointed out something that has irked me for years: the misuse by libertarians of the term “coercion” as a synonym for aggression. Coercion is not necessarily aggression; and aggression does not necessarily employ coercion.

I have also noticed several times over the past few years that libertarians often use the term “fraud” imprecisely, with no definition–as if it’s some kind of obvious concept that needs no definition; and as if it’s obvious that is a type of coercion. Er, I mean, aggression. Rand, e.g., wrote: “The only proper purpose of a government is to protect man’s rights, which means: to protect him from physical violence… The only proper functions of a government are: the police, to protect you from criminals; the army, to protect you from foreign invaders; and the courts, to protect your property and contracts from breach or fraud by others, and to settle disputes by rational rules, according to objective law.”

So you have this linking of aggression, fraud, and breach of contract as the exhaustive ways that crime can be committed, with sort of the assumption that the latter two are variants of aggression. It is also assumed that the threat of aggression is a type of aggression. Sadowsky, e.g., defines rights this way: “When we say that one has the right to do certain things we mean this and only this, that it would be immoral for another, alone or in combination, to stop him from doing this by the use of physical force or the threat thereof.”

Breach of Contract

Now it was never immediately obvious to me why fraud, or threat, or contract breach, are species of, or imply, aggression. To my simple mind, perhaps, I needed to look further into each of these, to see just why. So let’s look at each in turn. First, in my view, a coherent understanding of contract shows how it basically transfers title to property; and crime occurs when property rights–including those allocated by contracts–are violated (see my A Theory of Contracts: Binding Promises, Title Transfer, and Inalienability). (A promise-based theory of contract would be harder to square with the standard theory of aggression, which is why, I believe, Rothbard views contract only as title transfer, not as enforceable promises.)

Threats

And I tried to show, in Punishment and Proportionality: The Estoppel Approach (pp. 68-69), why threats can be a form of aggression (see also this version of the Punishment article, p. 639, section “Why Assault and Threats Are Aggression”).

Fraud

The case of fraud is tricky too. I believe the failure to carefully define what fraud is, and to specify exactly when and why it is a type of aggression, leads to confusion. For example, some of my esteemed Austrian colleagues seem to think fractional reserve banking is “inherently fraudulent,” and therefore, not merely uneconomic, but also one that should be legally prohibited (I believe Hülsmann, Hoppe, Block hold this view: see, e.g. Hoppe, Hülsmann, and Block, Against Fiduciary Media; see also Rothbard, What Has Government Done To Our Money?; and George Reisman, Capitalism, pp. 514-, and 594-), as does Reisman–I don’t have the links at hand, if someone can post them I can update this). In my view, fractional reserve banking is economic nonsense, but not necessarily fraudulent. Likewise, it is sometimes said that plagiarism (2, 3), or even just reprinting someone else’s writing, is a “type of fraud,” so that copyright law is justified. Others claim that establishing a corporation is “a fraud” and therefore corporations are not justified. Frank Van Dun, in Against Libertarian Legalism, criticized my “legalistic” theory of trademark (see my Against Intellectual Property, p. 43-44), arguing that my attempt to base trademark on a type of fraud or contract-breach theory fails because, under my contract/IP theory, one cannot say that the consumer has a fraud or breach of contract claim. (I replied to this as noted below.) Libertarain critics use it against us too: See James W. Child, “Can Libertarianism Sustain a Fraud Standard?“, 104 Ethics 722 (1994).

The problem is in most people’s minds “fraud” basically means misrepresenting the truth–i.e., lying. But clearly merely lying is not a rights violation. I think imprecise use of “fraud” permits it to be used to arrive at unlibertarian conclusions. It is imperative to understand it properly and to integrate it into libertarian theory in a way that is compatible with our notions of property and rights and aggression.

I tried to to explain what fraud is, if it is to be considered a species of aggression (and to briefly debunk Child), in A Theory of Contracts (p. 34). As I wrote there,

The theory of contract espoused here demonstrates that fraud is properly viewed as a type of theft. Suppose Karen buys a bucket of apples from Ethan for $20. Ethan represents the things in the bucket as being apples, in fact, as apples of a certain nature, that is, as being fit for their normal purpose of being eaten. Karen conditions the transfer of title to her $20 on Ethan’s not knowingly engaging in ‘fraudulent’ activities, like pawning off rotten apples. If the apples are indeed rotten and Ethan knows this, then he knows that he does not
receive ownership of or permission to use the $20, because the condition ‘no fraud’ is not satisfied. He is knowingly in possession of Karen’s $20 without her consent, and is, therefore, a thief.

In other words, for the libertarian, fraud is a type of aggression (namely, theft), just because it is a means by which one party receives or uses or takes the property of someone else without their consent–and there is failure of consent because the first party’s misrepresentation meant that one of the conditions to transfer of title was not satisfied. (I have elaborated on this in various articles and posts: see, e.g.: Reply to Van Dun: Non-Aggression and Title Transfer, pp. 60-61, where I tried to explain how a coherent theory of contract and fraud does, in fact, support a type of fraud claim compatible with the non-aggression principle; my exchange with David Heinrich in Comments: debt and the trade against risk; my comments in Objectivists on IP; my exchange with Heinrich regarding “limited liability” and corporations in this thread (2); my exchange, again, w/ Heinrich, regarding fractional reserve banking, in the comments section of Randians go from Mises to supply-side economics)

Looking at fraud this way, it is clear that for there to be fraud–at least of the type that counts as aggression–there must be some victim who did not give genuine consent for the defrauder to use or take his property. There must be a victim of the fraud, and the victimization must be of a type in which there is an ostensible title transfer but which fails because of lack of true consent.

Now in informal language you could use “fraud” more broadly and loosely to refer to any case where someone deceives someone else, but if it is merely sneaky, or shady, or untruthful, there is no fraud. If I put up a website claiming I wrote The Da Vinci code, this is a lie, but who is defrauded? You can call me “a fraud” but there is really no fraud committed. If I place a singles ad saying, “handsome and looks 10 years younger than he is”, to try to get some single women to give me a chance, is this really fraud?

{ 90 comments }

JIMB July 18, 2006 at 9:17 pm

Stephan – You’ve got to try on the coat to see if it fits not just look at it and presume you know. For a discourse with potential common ground to have benefit, you’ve got to see how things (such as the arguments above) can be true. Frankly, language cannot communicate to you if you fail to adopt the writer’s point of view long enough to understand what is being said.

Fraud is misrepresentation (of which you’ve been given many examples) – in this case intentionally causing some people to accept lower-than-normal wages and yields UNKNOWN to them until later when other prices adjust.

Curt Howland July 18, 2006 at 9:23 pm

Mr. Kinsella, I find your article above very interesting. When I have in the past labeled “fraud” to the use of someone else’s name in order to leverage their reputation for gain, you have said I used the word wrong.

Yet in your article, you use the example of using the word “apples” in order to leverage a buyer into thinking they were getting something they weren’t, specifically apples fit for eating, and this time it’s a crime because the buyer isn’t getting what they think they were paying for.

Yet when it is an intangible, a miss-labeled book, a miss-labeled TV, the use of a company name or person’s name on an object falsely in order to capitalize on that reputation, you have consistently argued that it is not “fraud”, that it is not “theft”, that since the third party has no ownership of their “reputation” they cannot claim that they are harmed because someone uses that “reputation” by lying. When I call it “fraud” you say I am using it wrong.

I believe I am the one here being consistant. If it is fraud to say this these are apples fit for eating when they are not, it is also fraud to say this is a Sony TV when it is not. It is fraud to say it is a MacDonald’s restaurant, in order to leverage the reputation for fast food (regardless of one’s personal opinion of that reputation) if it is actually not a MacDonald’s restaurant.

I agree with you that just lying isn’t always a crime of fraud, any more than walking is always a crime of trespassing. That is what juries are for.

Curt Howland July 18, 2006 at 9:31 pm

On Fractional Reserve Banking, what’s the problem?

As long as there is no representation that one’s deposits are being retained absolutely, there is no fraud.

Under a real free-market, I expect I would be able to put my money in an account specifically contracted as either 100% reserved, earning maybe no interest other than the utility of safe keeping. I might also put my money in an account specifying 50% reserve with the 50% remaining available within 120 days of receipt of withdrawl request, but this time it earns interest.

The “fraud” of fractional reserve banking is that it is not done openly, with depositors knowing what is being done with their money. However, looking back at even such children’s fare as _Marry Poppins_, the bankers at the end who are trying to get their paws on the children’s two pence are telling them _up front_ that those pence will in fact be loaned out if they are deposited.

Combine the “open secret” of fractional reserve with the Federal Deposit Insurance scam, and that becomes a very serious license to make money with little or no repercussions for making bad loans. So maybe the source of the “problem” is government intervention …again!

Stephan Kinsella July 18, 2006 at 10:18 pm

JIMB: “Stephan – You’ve got to try on the coat to see if it fits not just look at it and presume you know. For a discourse with potential common ground to have benefit, you’ve got to see how things (such as the arguments above) can be true. Frankly, language cannot communicate to you if you fail to adopt the writer’s point of view long enough to understand what is being said.”

I am not sure what you are saying. Is this supposed to demonstrate that FRB is necessarily fraudulent?

Curt: “When I have in the past labeled “fraud” to the use of someone else’s name in order to leverage their reputation for gain, you have said I used the word wrong.”

Give an example, please, of exactly what case of this you would maintain is fraud.

“Yet when it is an intangible, a miss-labeled book, a miss-labeled TV, the use of a company name or person’s name on an object falsely in order to capitalize on that reputation, you have consistently argued that it is not “fraud”,”

YOu have to show that this is actually some kind of misreprentation that caused the owner to give you the property under false pretenses, something like that. Can you provide one simple concrete example that you think is the clearest, best, easiest case of fraud in this respect? Please be very clear. I will then pronounce on whether it is fraud or not.

“If it is fraud to say this these are apples fit for eating when they are not, it is also fraud to say this is a Sony TV when it is not.”

Of course. Did you read my Against Intellectual Property article (re trademarks), or the comments above about my interchange w/ Van Dun about trademarks? Are you aware that this *is* my theory of how some form of TM can be justified–? that the person who sells a Sony when it is really not, has defrauded his customer? I actually agree that this could be a form of fraud. But if you try to make a similar argument re reputation rights (in general), you’ll see (I believe) that you cannot actually connect it up.

“It is fraud to say it is a MacDonald’s restaurant, in order to leverage the reputation for fast food (regardless of one’s personal opinion of that reputation) if it is actually not a MacDonald’s restaurant.”

Sure. Unless the buyer’s realize it’s a fake-Mickey D’s. If they konw you’re a knockoff, there’s no fraud.

“I agree with you that just lying isn’t always a crime of fraud, any more than walking is always a crime of trespassing. That is what juries are for.”

Er, yes. And principles.

“As long as there is no representation that one’s deposits are being retained absolutely, there is no fraud.”

Yes, this is my oint. And even if this representation is being made, still, it’s contrary to the nature of what is going on and any depositor should well know this.

“The “fraud” of fractional reserve banking is that it is not done openly, with depositors knowing what is being done with their money.”

Um. We are talking about a private freebanking system in anarchotopia. How do you know that it “is” not done openly?

Mike Sproul July 18, 2006 at 11:08 pm

Stephan:

Fractional reserve banking is neither fraudulent nor inflationary nor economic nonsense. A bank first accepts 100 paper dollars on deposit, for which it issues 100 checking account dollars. Then it lends 200 checking account dollars to a farmer who offers his IOU (worth $200 and backed by his farm). The additional $200 is adequately backed by the $200 IOU, so it causes no inflation. Even if all $300 checking account dollars are presented to the bank at once for payment in paper dollars, the bank can either sell the $200 IOU for $200 in paper, or sell the $200 IOU for $200 of its own checking account dollars, or hand the IOU itself over to the holders of checking account dollars. As long as customers agree to the arrangement before accepting checking account dollars, there is no fraud and no nonsense.

See my paper “There’s No Such Thing as Fiat Money”
http://www.geocities.com/sproulmike/nofiatmoney.doc

Stephan Kinsella July 18, 2006 at 11:50 pm

Mike Sproul: “Fractional reserve banking is neither fraudulent nor inflationary nor economic nonsense. A bank first accepts 100 paper dollars on deposit, for which it issues 100 checking account dollars. ….”

Um, I think the idea is that in a private society we would have, say, gold money. Ther are no paper dollars. First there is real money, e.g. gold. Then paper banknotes that are basically claims to actual gold stored in the bank could circulate and become popular. FRB would occur when you give a FRB your gold and they give you a note with a right to redeem that much gold, and they then loan out some of your gold to others.

It is nonsense, in my view, because it is an attempt to get something for nothing; it conflates wealth with money; and it presupposes some non-existent problem (stickiness of wages etc.) that has to be “solved” by fidiciary media.

Nonsense though it may be, I don’t see that it’s fraud.

I would refer you to papers on this by Huelsmann, Hoppe, et al. for a cogent explanation of what is wrong with the notion of FRB being economically viable, sound, or needed.

Brent Nelson July 19, 2006 at 12:05 am

Stephan, I admire your persistence in replying to questions here. I think I’ve got the gist:

  • A private counterfeiter is committing fraud, because he is representing his note as something it is not.
  • The fact that a bank pays interest should be used as an indication that the bank has a fractional reserve.
  • A known fractional reserve bank isn’t committing fraud at the moment it accepts deposits or makes loans.
  • If the fractional reserve bank cannot make good on a withdrawal, at that point it is committing a form of theft, but not fraud.
  • The fractional reserve banker looks a lot like a private counterfeiter. He prints some notes that are backed by currency. He prints some more notes that are not at the moment backed. The difference is that the counterfeiter never intends to back the notes, the banker does. So in the event that there is a run on the bank and some notes cannot be redeemed, the banker is guilty of theft. But he is not committing fraud.
  • In the case of a bank charging for bailment and issuing warehouse receipts (if I’m using those terms correctly), the assumption would be that it has 100% reserve.
  • If a known 100% reserve bank issues additional, unbacked warehouse receipts, it would be committing fraud.

JIMB July 19, 2006 at 12:11 am

Stephan – So try on the coat: Fraud is misrepresentation – in this case intentionally causing some people to accept lower-than-normal wages and yields UNKNOWN to them until later when other prices adjust.

Simple.

Paul Edwards July 19, 2006 at 2:32 am

Stephan,

I’ll give your arguments some thought.

Thanks for the discussion.

Artisan July 19, 2006 at 4:07 am

Mr Nelson

“The fact that a bank pays interest should be used as an indication that the bank has a fractional reserve.”

I guess you’re speaking about day account interest rate, which are quite low anyways.
Do you mean they are NECESSARILY tied to FRB?

If interest rates can be seen as the price paid for swapping high against low time preference, then those daily IR are something paid for an almost zero duration switch between high and low time preference… still it’s worth something isn’t it?

I’d also say FRB is a fraud, yet not so much because it’s not telling you that all money cannot physically simultaneously redeemed w/o lowering the value of the bills.

In my opinion, FRB is more a fraud because Government/bankers deceive people into the believe that the value of money is naturally decreasing, and they’re really doing everything they can to secure inflation at 2% a year pace (which they say is practically NOTHING while healthy!). The more I read about the financial mechanisms, the more this sounds like lies.

Curt Howland July 19, 2006 at 5:31 am

Mr. Kinsella, “Are you aware that this *is* my theory of how some form of TM can be justified–?”

What I find amazing is that I have been consistant in this and you have repeatedly disagreed with me. Now you state that what I’ve been saying all along is just restating your theory on a justification for trade mark. I’m in awe.

“Can you provide one simple concrete example that you think is the clearest, best, easiest case of fraud in this respect?”

How about the three I gave, including your own example of selling apples? Are they (including yours) still insufficient to exemplify a deliberate lie in order to leverage some third party’s reputation (apples, Sony, MacDonald’s)?

“How do you know that it “is” not done openly?”

I’m sorry, Mr. Kinsella, do you actually read what I write? Not only did I state clearly the example that in an honest banking situation maintaining a fractional reserve works just fine so long as depositors have no expectation of 100% reserve, I also gave the example of _Mary Poppins_ where the bankers tell the children up front that their money will be loaned out and therefore not be kept in 100% reserve.

I have long had the impression that you and I just don’t get along. It has nothing to do with principles, we agree on every substantive practical point, but something about how I use the English language causes you to respond in such a way (I of course cannot know how you feel since I am not a mind reader) that frustrates me utterly. What I read of your words informs me that the frustration is mutual, since I cannot write in agreement with you without your reply being one of contradiction and challenge.

Artisan, the central bankers, pet economists, politicians and bureaucrats are certainly aware of what inflation is, and they indeed deserve to be held accountable for the fraud of their deliberate efforts at misdirection and cover-up of their own duplicity by talking about “reining in the inflation monster” as if it were something they were saving us from.

Stephan Kinsella July 19, 2006 at 7:54 am

Brent:

“Stephan, I admire your persistence in replying to questions here.”

Hey, no problem. There are some really thick-headed people out there, no? (Just kiddding.)

>* A private counterfeiter is committing fraud, because he is representing his note as something it is not.< Ja.

>* The fact that a bank pays interest should be used as an indication that the bank has a fractional reserve.< Sure; but I would also think that this very fact would be somehow advertized by the bank.

>* A known fractional reserve bank isn’t committing fraud at the moment it accepts deposits or makes loans.< Right.

>* If the fractional reserve bank cannot make good on a withdrawal, at that point it is committing a form of theft, but not fraud.< No. It is not committing theft at all. If it cannot make good on a contractual agreement to pay, there is nothing to steal. I have explained this in my article on Contract Theory, and in other places. And in this case, due to the impossible nature of FRB actually working, I'd say the FRB has a defense from the outset to any claim of theft, since the depositor should hvae known he was agreeing to something that could never be done.

>* The fractional reserve banker looks a lot like a private counterfeiter. He prints some notes that are backed by currency.< No; let's talk about the private FRB. He prints notes based on gold deposits, but the notes are not 100% backed by the gold. If that is clear from the nature of the note, there is no counterfeiting and no fraud.

> He prints some more notes that are not at the moment backed. The difference is that the counterfeiter never intends to back the notes, the banker does. So in the event that there is a run on the bank and some notes cannot be redeemed, the banker is guilty of theft. But he is not committing fraud.< Again--no theft. How can you steal that which does not exist?

>* In the case of a bank charging for bailment and issuing warehouse receipts (if I’m using those terms correctly), the assumption would be that it has 100% reserve.< Probably; but why would the 100% reservebank leave it up to assumption? They would advertize this fact. In fact I suppose in competition w/ FRBs the 100% reserve banks would tend to adopt some kind of little notice or seal of "100% backed" etc., to distinguish themselves; and the FRBs would not truthfully be able to adopt this seal. So people might start eyeing notes passed to them for this mark. Etc. Yet another reason FRB probably would fail from the outset.

>* If a known 100% reserve bank issues additional, unbacked warehouse receipts, it would be committing fraud.< Well. Depends on exactly how it is done, but not sure if it's fraud, or if it's theft. Say a depositor puts in gold and gets a warehouse receipt. This is not fraud. Later the bank loans out 90% of the gold. This is not fraud--it is conversion, or appropration of someone else's propety (a type of theft).

>Stephan – So try on the coat: Fraud is misrepresentation – in this case intentionally causing some people to accept lower-than-normal wages and yields UNKNOWN to them until later when other prices adjust.< Yeah, I just don't see it.

Paul: >I’ll give your arguments some thought.

Thanks for the discussion.< No problem! I think we can all agree now, that (a) I am 100% right; and (b) I am the greatest libertarian theorist living. Thank you.

Artisan: >In my opinion, FRB is more a fraud because Government/bankers deceive people into the believe that the value of money is naturally decreasing, and they’re really doing everything they can to secure inflation at 2% a year pace (which they say is practically NOTHING while healthy!). The more I read about the financial mechanisms, the more this sounds like lies.< Yeah. See. I thought I made this clear alreayd--mere lies are not fraud. Sigh. I'm losing patience with you people! Don't make me whip out the big guns!

Stephan, I admire your persistence in replying to questions here. I think I've got the gist:

* A private counterfeiter is committing fraud, because he is representing his note as something it is not.
* The fact that a bank pays interest should be used as an indication that the bank has a fractional reserve.
* A known fractional reserve bank isn't committing fraud at the moment it accepts deposits or makes loans.
* If the fractional reserve bank cannot make good on a withdrawal, at that point it is committing a form of theft, but not fraud.
* The fractional reserve banker looks a lot like a private counterfeiter. He prints some notes that are backed by currency. He prints some more notes that are not at the moment backed. The difference is that the counterfeiter never intends to back the notes, the banker does. So in the event that there is a run on the bank and some notes cannot be redeemed, the banker is guilty of theft. But he is not committing fraud.
* In the case of a bank charging for bailment and issuing warehouse receipts (if I'm using those terms correctly), the assumption would be that it has 100% reserve.
* If a known 100% reserve bank issues additional, unbacked warehouse receipts, it would be committing fraud.

Posted by Brent Nelson at July 19, 2006 12:05 AM

Stephan - So try on the coat: Fraud is misrepresentation - in this case intentionally causing some people to accept lower-than-normal wages and yields UNKNOWN to them until later when other prices adjust.

Simple.

Posted by JIMB at July 19, 2006 12:11 AM

Stephan,

I'll give your arguments some thought.

Thanks for the discussion.

Posted by Paul Edwards at July 19, 2006 02:32 AM

Mr Nelson

"The fact that a bank pays interest should be used as an indication that the bank has a fractional reserve."

I guess you're speaking about day account interest rate, which are quite low anyways.
Do you mean they are NECESSARILY tied to FRB?

If interest rates can be seen as the price paid for swapping high against low time preference, then those daily IR are something paid for an almost zero duration switch between high and low time preference… still it's worth something isn't it?

I'd also say FRB is a fraud, yet not so much because it's not telling you that all money cannot physically simultaneously redeemed w/o lowering the value of the bills.

In my opinion, FRB is more a fraud because Government/bankers deceive people into the believe that the value of money is naturally decreasing, and they're really doing everything they can to secure inflation at 2% a year pace (which they say is practically NOTHING while healthy!). The more I read about the financial mechanisms, the more this sounds like lies.

Howland:

>What I find amazing is that I have been consistant in this and you have repeatedly disagreed with me.< Really? Can you show me one particular case of something you said that I disagreed with, that I now am agreeing with? Just one case. Come on.

>Now you state that what I’ve been saying all along is just restating your theory on a justification for trade mark.< No, just your latest particular comment. The rest, as I recall, were too vague or imprecisely worded or bad examples.

>I’m in awe.< Aw, shucks.

>“Can you provide one simple concrete example that you think is the clearest, best, easiest case of fraud in this respect?”

How about the three I gave, including your own example of selling apples? Are they (including yours) still insufficient to exemplify a deliberate lie in order to leverage some third party’s reputation (apples, Sony, MacDonald’s)?< Hmm, lying about apples ... is a way to leverage ... a third party's reputation? Vas...? Curt, I am not sure if you are confused or not, but you sure are confusing me! :)

>I’m sorry, Mr. Kinsella, do you actually read what I write?< How would I know?

Anyway, this is not really that relevant, is it?

> Not only did I state clearly the example that in an honest banking situation maintaining a fractional reserve works just fine so long as depositors have no expectation of 100% reserve, I also gave the example of _Mary Poppins_ where the bankers tell the children up front that their money will be loaned out and therefore not be kept in 100% reserve.< Ah. You were the Mary Poppins guy. ... Okay. So... Okay, what?

>I have long had the impression that you and I just don’t get along. It has nothing to do with principles, we agree on every substantive practical point, but something about how I use the English language causes you to respond in such a way < Oh, it could be that I am just refusing to agree with a vaguely or imprecisely worded statemetn. I don'tknow. Since I hardly remember which poster you are, it can't be that we don't get along. You seem like a perfectly sweet libertarian to me.

>(I of course cannot know how you feel since I am not a mind reader) that frustrates me utterly. < Oh, I see. I try to write precisely--if you'll read my comments closely you'll see I'm usually making a narrow point (when I'm not being funny). 'k?

>What I read of your words informs me that the frustration is mutual,< ? no, not at all.

> since I cannot write in agreement with you without your reply being one of contradiction and challenge.<

Can you give me a particular example of where you believe I disagreed with something you said for trivial reasons even though I really agreed w/ the substance of it? Give me just one example, and I’ll try to show you what my reply meant.

Xellos July 19, 2006 at 8:00 am

–”Fortunately, with seller feedback and services like Paypal, issues like fraud are dealt with without the need of any government intervention.”

I would disagree. Ebay doesn’t seem to care about entire categories of fraud, because they get their auction fees from them. An example of this is anime bootleg DVDs. It is disturbingly simple to find two or four disc sets of “import” DVDs that are region zero with chinese and english subtitles (major flags for bootlegged goods). In fact, it’s actually a lot more difficult to find legitimate anime DVDs than to find bootlegs. Yet Ebay will not act on any complaints against these auctions. They get their fee, they don’t care beyond that, and sadly feedback ratings are worthless because people either a) are ignorant of the whole “if it looks too good to be true it probably is” proverb or b) don’t care cause they saved a few bucks, and give bootleggers great ratings.

And don’t get me started on Paypal…

Brent Nelson July 19, 2006 at 8:46 am

Hmm. So a fractional reserve bank is about as legitimate as a Ponzi scheme? That is, they each should technically be legal, but the participants should know by its nature that there may be a less than satisfactory outcome, so buyer beware? Harsh.

Casey Khan July 19, 2006 at 9:51 am

In furthering the Kinsella argument that FR banking is not necessarily fraud, particularly in a true free market, could we say that it is no different than when real estate property values change.

Couldn’t we have a case [assuming anarchocapitalism] where landowner Fred lets the general public know he owns a nuclear bomb on his property. Fred never threatens anyone with the bomb nor does the bomb emit any kind of radiation. Now neighbors Joe, Frank, and Tom are all pissed because market indications on their land have all now plummeted from indications prior to Fred’s nuclear announcement. It turns out Fred happens to be lying about the bomb he does not actually have. Are the neighbors a victim of Kinsella’s definition of fraud? This example clearly does not involve a rights violation as understood under the nonagression principle.

Do individuals have a ‘right’ to the subjective valuations of others in the market? No. Likewise with the case of fractional reserve banking, do individuals have a right to the current subjective market valuation of their individual money holdings when the ‘free bank’ prints more money? I guess in the case of the unknowing depositor, I can see how he may deserve to recieve back his ‘irregular deposit.’ However in the case of the knowingly agreed fractional reserve depositors, I am unconvinced they have been aggressed. They justly deserve whatever it is the market can yield them at the time they redeem the deposit.

Mike Sproul July 19, 2006 at 9:55 am

Stephan Kinsella:

“Um, I think the idea is that in a private society we would have, say, gold money. Ther are no paper dollars. First there is real money, e.g. gold. Then paper banknotes that are basically claims to actual gold stored in the bank could circulate and become popular. FRB would occur when you give a FRB your gold and they give you a note with a right to redeem that much gold, and they then loan out some of your gold to others.”

OK, so start with gold money. A bank accepts 100 oz. of gold and issues 100 paper receipts (“dollars”) in exchange. Then the bank prints 200 more paper dollars and lends them to a farmer, getting a lien on the the farm as collateral. If you’re right and the new money was inflationary, and a paper dollar ever started to trade for less than one ounce, then people would return their dollars to the bank demanding one ounce. The bank is capable of redeeming all 300 paper dollars, either by selling the IOU for 200 ounces, or by selling the IOU directly for 200 of its own paper dollars, etc. At no point in this process will the dollar drop below 1 ounce–no inflation, no fraud, and no nonsense. There is no simultaneous claim of 300 paper dollars to only 100 ounces of gold. The last 200 paper dollars are a claim to the farm. In effect, the farm has been coined into money.

Stephan Kinsella July 19, 2006 at 10:04 am

Sproul:

This thread is primarily about whether FRB is fraudulent, *even if* it is economic nonsense–not whether FRB is bad economics or not.

Now, in your example above, you are not clear on waht the “paper dollars” mean when the bank prints 200 of them and uses them to pay a farmer for a lien on his land (and a future title transfer of his gold, presumably). What is a paper dollar, exactly, in this example? Does it pretend to be a warehouse receipt to 200 oz. of gold in the bank’s vaults?

Yancey Ward July 19, 2006 at 10:24 am

I have often been puzzled that many anarcho-capitalists want fractional reserve banking in a free society to be outlawed.

Curt Howland July 19, 2006 at 11:20 am

Mr. Kinsella, “Hmm, lying about apples … is a way to leverage … a third party’s reputation? Vas…?

In your example of the apples, the buyer had an expectation that “apples” would be edible. The seller utilized this expectation, created by the buyers previous experience with prior third parties, to perpetrate the fraud that these apples _also_ were edible. It’s your example, I thought you would be aware of what you had been talking about.

“Really? Can you show me one particular case of something you said that I disagreed with, that I now am agreeing with? Just one case. Come on.”

This is what I was referring to when I said that your replies to me are loaded with contradiction and challenge.

Several months ago, I said that it was prosecutable for someone to utilize a name or other “trade mark” fraudulently. You said it was not, that there is no basis for “reputation” or trademark, that I have no basis for bringing charges against someone who knowingly and deliberately uses my name, my trademark, my production, passing it off as their own, because that person has not specifically harmed me, regardless of their abuse of others using my reputation as exemplified in your own example of selling “apples” that are inedible.

Now I read that you are claiming a Libertarian basis for trademark, directly contradicting what you said in that discussion.

I can only hope that it was something I said which changed your mind.

Mike Sproul July 19, 2006 at 11:33 am

Stephan Kinsella

“What is a paper dollar, exactly, in this example? Does it pretend to be a warehouse receipt to 200 oz. of gold in the bank’s vaults?”

A paper dollar would be a claim that is normally redeemable at the bank for 1 oz., but which everyone recognizes is backed by a mixture of silver and farmland. It’s the value of the bank’s assets that matter to the customers, not whether those assets happen to be physical silver or not. As long as all parties agree to the deal, there is no fraud, no inflation, etc.

Stephan Kinsella July 19, 2006 at 11:33 am

Howland: “Mr. Kinsella, “Hmm, lying about apples … is a way to leverage … a third party’s reputation? Vas…?

“In your example of the apples, the buyer had an expectation that “apples” would be edible. The seller utilized this expectation, created by the buyers previous experience with prior third parties, to perpetrate the fraud that these apples _also_ were edible.”

Here’s how I view it (as I’ve explained several times, and linked to a more detailed discussion of it in my contract theory article): the buyer transfers title to his payment (gold whatever) *conditional on* his “receiving (good) apples”.

So if the seller takes the gold in exchange for bad apples, the seller is now in possession of gold that the title has not transfered (b/c the condition was not triggered). so he got the money as a sort of theft-by-trick.

“It’s your example, I thought you would be aware of what you had been talking about.”

Sure.

“”Really? Can you show me one particular case of something you said that I disagreed with, that I now am agreeing with? Just one case. Come on.”

“This is what I was referring to when I said that your replies to me are loaded with contradiction and challenge.

“Several months ago, I said that it was prosecutable for someone to utilize a name or other “trade mark” fraudulently. You said it was not, that there is no basis for “reputation” or trademark, that I have no basis for bringing charges against someone who knowingly and deliberately uses my name, my trademark, my production, passing it off as their own, because that person has not specifically harmed me,”

Yes, and I stand by this. Can’t you see the differences?

First, my apple argument above has nothing to do with reputation.

Second, as i have stated many times, if a seller misrepresents the source of the goods he is selling, he may well be defrauding *his customer*. However, he is NOT “defrauding” or harming (in any libertarianly-recognizable way) the third party whose trademark he is using. For example if you sell me your own home brew beer and label it “Coors” then you are defrauding ME, but you are not defrauding or aggressing against Coors.

“Now I read that you are claiming a Libertarian basis for trademark, directly contradicting what you said in that discussion.”

NO, not at all. I think you are not seeing the distinctions that are being made here.

Curt Howland July 19, 2006 at 12:46 pm

Mr. Kinsella, “Can’t you see the differences?”

No, I cannot. Reputation is reputation is reputation. I don’t care if it’s apples, MacDonald’s, Sony or the name Stephen Kinsella. If someone uses those names, labels, pictures, references, deliberately in order to commit fraud against a buyer by leveraging their reputation, it’s all the same to me.

“I think you are not seeing the distinctions that are being made here.”

And I think the distinctions you are trying to make are arbitrary and futile. Oh, and not the least of which hellishly confusing and frustrating.

If there is any rationalization for Trademark that you agree with, you are allowing that it is reasonable for a third party not involved with the fraudulent transaction to take action. Your asserting that I may not sue, and then that there is a justification for trademark and therefore I may sue, is just impossibly confusing.

I am choosing to be confused rather than blame you for being a hypocrite. I don’t believe for a moment that YOU think you’re being hypocritical. What confuses me most of all is that when I hold it up to your eyes in as plain and obvious a fashion as it is possible for me to do so, you still deny that the contradiction exists.

Person July 19, 2006 at 12:55 pm

Curt, I think you’re starting to experience what I feel whenever I try to communicate with Stephan. (Well, or with you, but I want to focus on the positive here.)

Stephan Kinsella July 19, 2006 at 1:03 pm

Person–Howland is not being a gadfly, I don’t think. He just is confused by my distinctions and for some reason not able to or unwilling to look at this coherently.

Howland — look. I have all along, for years, said trademark can be justified as a type of fraud perpetrated on the buyers, by the seller falsely representing his identity. I pointed this out early in this thread and never hid it. I have been very clear all along my basis for this: that it is a type of fraud by the seller on the buyer. But it does not imply a right to reputation, and indeed I have consistently written about this too.

If you want to imagine some “reputation” aspect is involved in a given case of fraud, and then generalize by saying, “well that shows there is a right to reputation,” you are just confused. THis just does not follow. Are you saying this? I have no idea, because I asked you to clarify/elaborate but you failed to do so.

If you can’t understand why saying A can defraud B does not imply a right to a reputation, I can’t help you. If you can’t see this is a pure non sequitur by you, what do you want me to say? You keep meandering around saying I said something earlier to your earlier statemetn contrary to what i’m saying now, but when I ask you to point it out, you don’t, so I don’t know what you mean. I believe I could show you how and why you are reading the wrong things into what I say, and making the wrong implications, if you will carefully and coherently try to re-state your position. If not, not, fine by me, you can stay confused on this topic if you wish.

Curt Howland July 19, 2006 at 1:09 pm

Person, hardly “starting”. My very first discussion with Mr. Kinsella had me frothing at the mouth and screaming at my keyboard. Indeed several discussions between you and I have been vigorous, but the anonymity of your screen name helps greatly. “It’s nothing personal” is a literal fact.

Mr. Kinsella does not have the benefit of my imagination filling in the blanks. His obvious accomplishments mean I cannot dismiss him as a mutant maple tree who’s learned to type only recently. That’s extreme, but I hope you get the idea. :^)

Person July 19, 2006 at 1:13 pm

Stephan_Kinsella: You seem to use the “gadfly” smear as a substitute for thought. You would do well to learn the meaning of the words you use. A “gadfly” is a “persistent or irritating critic; a nuisance”. One way to be persistent or irritating is to constantly point out blatant contraditions in your ideas and your constant pretence of not understanding that, so the fact that someone is a “gadfly” does not suffice as reason to ignore them.

I have said, over, and over, that your use of the argument “IP is invalid because information isn’t scarce” is irrelevant an confused. People don’t fight over information; they fight over its use in physical objects. There is conflict in this dimension, ergo it is the domain of property rights. I have explained this to you multiple times and multiple ways, yet you still appeal to information’s non-scarcity as if it were ironclad proof of the invalidity of IP.

You need to be honest with yourself and for once in your life, admit when you are wrong. I’m sorry that I made it too difficult to dig up personal information on me; you’ll unfortunately have to focus on my ideas instead.

Curt Howland July 19, 2006 at 1:18 pm

Mr. Kinsella, I never said “a right to reputation”. I said fraud. The deliberate use of my name to leverage whatever it is my name means to some hapless buyer, who is thereby harmed.

I believe this to be actionable and you don’t. If you were able to leave it at that, I would be happy to disagree and walk away. But you can’t.

Trademark is nothing else. It is reputation. If there is any basis what so ever for “trademark” at any level, then you are allowing that reputation has meaning.

In fact, what good is it to missrepresent if there is no benefit to be gained? Why say “apples” if what you’re really selling is sludge, unless there is benefit in missrepresenting it, in leveraging the reputation of “apples” as held by the buyer?

Replace “apples” with “MacDonald’s”, it makes no difference. Either there is something there to leverage, some purpose to “trademark”, some benefit for the perpetrator of the fraud, or there is not. You cannot say there is, and at the same time that there is not, which is all I see you doing.

Stephan Kinsella July 19, 2006 at 1:20 pm

Howland: “Person, hardly “starting”. My very first discussion with Mr. Kinsella had me frothing at the mouth and screaming at my keyboard.”

Hey–this is not my wife is it? Cin–is that you?

“Indeed several discussions between you and I have been vigorous, but the anonymity of your screen name helps greatly. “It’s nothing personal” is a literal fact.”

“Mr. Kinsella does not have the benefit of my imagination filling in the blanks. His obvious accomplishments mean I cannot dismiss him as a mutant maple tree who’s learned to type only recently. That’s extreme, but I hope you get the idea. :^)”

Could you repeat the question?

Person: “Stephan_Kinsella: You seem to use the “gadfly” smear as a substitute for thought.”

No; just an explanation for why I sometimes stop taking some people seriously. Not saying you fall in this category all the time; I vaguely recall having formed that impression some times in the past.

“You would do well to learn the meaning of the words you use. A “gadfly” is a “persistent or irritating critic; a nuisance”. One way to be persistent or irritating is to constantly point out blatant contraditions in your ideas and your constant pretence of not understanding that, so the fact that someone is a “gadfly” does not suffice as reason to ignore them.”

Ask serious question or make serious points in serious ways, without sophistry or attitude, and maybe you’ll make some headway.

“I have said, over, and over, that your use of the argument “IP is invalid because information isn’t scarce” is irrelevant an confused.”

I seem to recall this.

“People don’t fight over information; they fight over its use in physical objects.”

Uh, yeah, this is actually my criticism of IP. That it amounts to assigning property rights in pre-owned physical objects to latecomers merely because they thought of a recipe.

“There is conflict in this dimension, ergo it is the domain of property rights.”

Er… right. And I have explained that as a libertarian, I believe such conflict should be solved by assgning property rights in the object in question, to the one with a better claim to it; and that this is the person who, ceteris paribus, possessed it first as between the competing claimants. I.e., the Lockean homesteading approach. And that to grant IP rights would mean an exception to this rule. And I also pointed out that this is really what all crime, socialism, statism, amounts to: deviations from the libertarian propery-assigning rule; so to that extent IP is similar to all these other non-libertarian systems.

“I have explained this to you multiple times and multiple ways, yet you still appeal to information’s non-scarcity as if it were ironclad proof of the invalidity of IP.”

Information’s non-scarcity shows that it is just not the kind of thing we assign property rights in. Quite right. Yet you want to anyway. You do it by taking my rights in my objects and giving part of them to the innovator. I call that theft.

“You need to be honest with yourself and for once in your life, admit when you are wrong.”

I am honestly wrong.

“I’m sorry that I made it too difficult to dig up personal information on me; you’ll unfortunately have to focus on my ideas instead.”

Darn you!

Manuel Lora July 19, 2006 at 1:28 pm

I should be able to use my property in whatever manner I wish. Thus, I can write “Microsoft” and sell some CDs. But this would not be aggression against Microsoft. It would only be fraud against those who buy CDs from me.

Stephan Kinsella July 19, 2006 at 1:33 pm

Howland: “Mr. Kinsella, I never said “a right to reputation”. I said fraud. The deliberate use of my name to leverage whatever it is my name means to some hapless buyer, who is thereby harmed.”

“I believe this to be actionable and you don’t.”

You think if you deliberately use your name this is “actionable” “fraud”? Or are you saying if I use your name to defraud someone, then it is actionable?

I of course think that if I obtain property from someoen by means of a misrepresentation (such as, a misrepresentation as to who I am, if that is material), sure, that can be a case of fraud. Why do you think I ever denied this? Seriously?

“Trademark is nothing else. It is reputation.”

Well, that is imprecise language and use of metaphor that is prone to misunderstanding. A trademark is a mark associated with a given product or service. As i explain in my article on IP, “A trademark is a word, phrase, symbol, or design used to identify the source of goods or services sold, and to distinguish them from the goods or services of others. For example, the Coca-Cola ® mark and the design that appears on their soft drink cans identifies them as products of that company, distinguishing them from competitors such as Pepsi®.”

So it is just not true that “trademark is reputation.” The concepts are related, perhaps, but it’s a false equation.

I have explained that trademark in its current form is not justifiable because it gives a right to the trademark owner, which does imply a right in one’s reputation, in a sense. I stated that a version of trademark could be justified but only if the rihgt to sue is the right of the deceived customer. This analysis does not at all rest on the notion that “trademark is reputation” or that there is a right to reputation.

I honestly am not sure what you think we disagree on. Why don’t you try to clarify?

“If there is any basis what so ever for “trademark” at any level, then you are allowing that reputation has meaning.”

? I never said reputation “has no meaning”. What are you talking about?

“In fact, what good is it to missrepresent if there is no benefit to be gained? Why say “apples” if what you’re really selling is sludge, unless there is benefit in missrepresenting it, in leveraging the reputation of “apples” as held by the buyer?”

Sure, there is a *reason* people commit fraud–to obtain others’ property when they otherwise coudln’t (because they konw they don’t have the real means to pay for it–this is “why” they misrepresent that they do). Sure, they commit fraud to gain a benefit. And your point is—?

“Replace “apples” with “MacDonald’s”, it makes no difference. Either there is something there to leverage, some purpose to “trademark”, some benefit for the perpetrator of the fraud, or there is not.”

Right, a McD’s has an easier time getting customers because of the reputation it’s built up. Sure. So? This is why people do knockoffs. I erect a fake McD’s b/c it would get more customers than if I set up “Curt’s hamburgers”. And the victims are the customers who believe they are buying a genuine McD’s burger. McD is not the victim.

Anyway I gave almost the same hamburger example in my IP article. I have no idea what you are getting frustrated about, other than maybe an inability on your part to coherently and precisely state your views.

“You cannot say there is, and at the same time that there is not, which is all I see you doing.”

What? I have never denied there is such a thing as reputation. What in the world are you jabbering about?

Curt Howland July 19, 2006 at 1:39 pm

Actually, this “July 19, 2006 01:20 PM” brings in how Mr. Kinsella and I both agree and disagree.

I can own a cube, I cannot own “cube” the mathematical construct. It would be like the person who invented the idea of the atom claiming property ownership of all atoms, or a filter company owning all rights to “fresh air”. So while the physical object(s) are scarce and ownable, the ideas around them are not.

Yet also scarce are the bearing oilers made by the McCoy manufacturing company. In order for something to have the words “The Real McCoy” on it, to be represented as a McCoy bearing oiler, it must in fact be a real McCoy. Claiming that one is, when it is not, is fraud. It seems like ownership of an idea, but it’s not.

Just like someone named MacDonald can open a restaurant and call it “MacDonald’s” without there being any fraud involved, someone else can utilize the name “MacDonald’s” to deliberately defraud the buyer by leveraging the meaning of “MacDonald’s” that that buyer attaches to that name.

Killing someone can be a crime, and killing someone can be perfectly legitimate. The difference is motive, reason, purpose. It is reason, motive, purpose that create fraud.

Curt Howland July 19, 2006 at 1:48 pm

Mr. Kinsella, I’m sorry that we’re talking past each other. It’s also clear, since you continue to ask me to clarify, that you haven’t yet realized I’ve been constantly clarifying to no effect.

“I of course think that if I obtain property from someoen by means of a misrepresentation (such as, a misrepresentation as to who I am, if that is material), sure, that can be a case of fraud. Why do you think I ever denied this? Seriously?”

You have repeatedly stated that it is not actionable, that I may not sue someone for deliberately and fraudulently using my name/trademark. You have been very consistant about this, claiming that since I am not the buyer I have not been harmed, and therefore have no standing what so ever.

This is a contradiction with your statement that there is some basis for trademark. Do You Understand?

Stephan Kinsella July 19, 2006 at 1:53 pm

Curt: “I can own a cube, I cannot own “cube” the mathematical construct.”

Well, right, not only that, in sense, there ARE no “cubes”.

“It would be like the person who invented the idea of the atom claiming property ownership of all atoms, or a filter company owning all rights to “fresh air”. So while the physical object(s) are scarce and ownable, the ideas around them are not.”

Yes.

“Yet also scarce are the bearing oilers made by the McCoy manufacturing company. In order for something to have the words “The Real McCoy” on it, to be represented as a McCoy bearing oiler, it must in fact be a real McCoy.”

Sure. Otherwise it coudl be fraud. COULD be, not necessarily is.

Let me give you an example. Suppose I want a Louis Vuitton purse. It costs $1000. Or, I can buy a knockoff for $20. So I buy the knockoff. I *want* it to be falsely labeled. Am I defrauded? No. Who is defrauded? No one. Whose rights are violated? No one’s. Only LV’s–and only if there is a right to reputation, which there is not.

Arguably, people who see me with the purse are deceived into thinking I have an expensive purse. I am in a sense lying to them. But is this fraud? No. Mere lying is not fraud.

NEXT!

“Claiming that one is, when it is not, is fraud.”

Sure. If I sell you el-cheapo screwws w/ McCoy on them to make you think they really come from McCoy, I am defrauding you.

“Just like someone named MacDonald can open a restaurant and call it “MacDonald’s” without there being any fraud involved, someone else can utilize the name “MacDonald’s” to deliberately defraud the buyer by leveraging the meaning of “MacDonald’s” that that buyer attaches to that name.”

Sure. Fine. It’s all context related.

“Killing someone can be a crime, and killing someone can be perfectly legitimate. The difference is motive, reason, purpose.”

And consent. Did you have consent of the killee.

Manuel Lora July 19, 2006 at 1:58 pm

Killing someone can be a crime, and killing someone can be perfectly legitimate. The difference is motive, reason, purpose. It is reason, motive, purpose that create fraud.

I have a problem with that statement. If that were true, then hate crimes, would be somehow worse than crimes commited with other motives or reasons other than racism, etc. A killing is a crime not because of what the killer was thinking or what he wanted to accomplish, but because it was an unconsented-to use of force against a body owner. This is aggression.

It doesn’t matter the motivation (pyschology deals with that). What matters is that there has been a victim.

Stephan Kinsella July 19, 2006 at 1:59 pm

Curt: “Mr. Kinsella, I’m sorry that we’re talking past each other. It’s also clear, since you continue to ask me to clarify, that you haven’t yet realized I’ve been constantly clarifying to no effect.”

Right. Look. I often insist on precision at an early state, even if it takes time and sidetracks,because in my experience failure to do so can allow imprecision to sneak in and be used at a later stage to arrive at incorrect conclusions. So I’ve been trying to force you to speak precisely, to ask the question properly, or coherently, etc, to avoid any ambiguity.

“I of course think that if I obtain property from someoen by means of a misrepresentation (such as, a misrepresentation as to who I am, if that is material), sure, that can be a case of fraud. Why do you think I ever denied this? Seriously?”

“You have repeatedly stated that it is not actionable, that I may not sue someone for deliberately and fraudulently using my name/trademark.”

Um. You seem smart. Why can you not understand what I have said dozens of times now. A misreprenstation used to get property from A gives A the right to sue me for fraud. If the misrepresentation *concerns a third party C* (e.g., if the misrepresentation is that I am selling you products-of-C when I am not), then C does not get a right to sue me. It is still A.

That is why YOU may not sue someone for using your name. They are not defrauding YOU they are defruading the poeple they are dealing with. I do not insist you agree with me on this, but surely you can see THAT THIS IS WHAT I am claiming. Can you not even see this?

“You have been very consistant about this, claiming that since I am not the buyer I have not been harmed, and therefore have no standing what so ever.

“This is a contradiction with your statement that there is some basis for trademark. Do You Understand?”

No. I have said that the only way to justify trademark is to say that defrauded CUSTOMERS have the right to sue, NOT THE TRADEMARK OWNER. I stated this extremely explicitly in the trademark discussion in my long Against IP article.

Manuel Lora July 19, 2006 at 2:10 pm

This thing has turned into a meta-discussion now, about what people mean by their statements and not about the statements themselves.

Nothing to see here…move along…

Stephan Kinsella July 19, 2006 at 2:16 pm

Manuel:
“‘Killing someone can be a crime, and killing someone can be perfectly legitimate. The difference is motive, reason, purpose. It is reason, motive, purpose that create fraud.’

“I have a problem with that statement. If that were true, then hate crimes, would be somehow worse than crimes commited with other motives or reasons other than racism, etc. A killing is a crime not because of what the killer was thinking or what he wanted to accomplish, but because it was an unconsented-to use of force against a body owner. This is aggression.

“It doesn’t matter the motivation (pyschology deals with that). What matters is that there has been a victim.”

this may be a slight overstatement; see my post
Hate Crime–Intentional Action and Motivations.

scott t June 28, 2009 at 12:10 am

i am unclear about the aggression aspect of what is being called fraud.

if i claim to offer insurance and someone sends me premiums but all the while i never intend to ‘insure’ anything but just spend the cash…that would seem to me to be fraud. title transfer of cash for a (unknown to the insurance purchaser) non-existent insurance service.

but if i put a label on a piece of apparel to trick the buyer into believing that the apparel is a specific brand…that is not fraud but dishonesty because anyone can brand a piece of apparel any way they wish ’cause noone owns letters, colors and shapes.

i dont see aggression anywhere…forcibly taking money for insurance wold seem to be mobbish aggression.

am i misunderstanding something?

Michael November 18, 2011 at 11:54 am

I agree with your article in principle Stephan, except for one thing-I know of no aggression definition that does not involve coercion. It is defined as unprovoked attack. We agree that fraud is wrong, but it does not fit into the definition of aggression if there is no physical force involved. http://dictionary.reference.com/browse/aggression

Stephan Kinsella November 18, 2011 at 1:00 pm

Libertarians oppose aggression, sometimes referred to in shorthand as the initiation of force. That means they are not against force or violence per se–only if it’s initiated, or not consented to.
Likewise, coercion is not always wrong–it can be aggressive, or defensive. http://www.stephankinsella.com/2009/08/the-problem-with-coercion/

If you insist that aggression only means physical attack, then trespass on others’ property (say, breaking into their house when they are not home) is not aggression. In that case we have to classify it as trespass–using someone’s owned resources without their permission. Most people think ti’s conceptually cleaner to treat trespass as a type of aggression–they are both uses of others’ resources without their permission–wehther the body (which would be a type of attack) or owned resources (trespass). in any case, whether you consider property trespass as aggression or not, it is unlibertarian, and fraud is also for the same reason: fraud means you use deception to acquire access to someoen’s property, without their genuine or informed consent. So it’s just a type of trespass. Fraud is just a way of committing trespass, a means of doing it. That’s why I say the best way to think of it is theft (or trespass) by trick. So whatever type of crime trespass or theft is, fraud is just a species of that.

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