Humankind is poised on the brink of an evolutionary leap. In the last few decades, we have become increasingly aware of the source of our inner peace and enrichment. Depending on our personal background, we express this great discovery differently. The practical, down-to-earth individuals among us "take responsibility for our lives" as described in Wayne W. Dyer's Your Erroneous Zones. Those of us with a metaphysical outlook "create our own reality" as Shirley MacLaine did in Out on a Limb. The spiritual among us know that "the kingdom of God is within" and follow The Road Less Traveled (M. Scott Peck). Sometimes we simply "find ourselves" through the power of love as Richard Bach did in The Bridge Across Forever. Ultimately, our inner harmony and abundance depend on how we react to our outer world.

The creation of peace and plenty in our outer world, however, frequently seems hopelessly beyond our control. In the past century, we've supported widespread social reform. Nevertheless, people are still starving in a world capable of feeding all. In our own country, homelessness and poverty are on the rise. Violence is no longer limited to overseas wars: our streets, even our schools, are no longer safe. The environment that nurtures us is ravaged and raped.

When we acknowledge how our reactions contribute to our inner state, we gain control. Our helplessness dissolves when we stop blaming others for feelings we create. In our outer world, the same rules apply. Today, as a society, as a nation, as a collective consciousness, "we" once again feel helpless, blaming selfish others for the world's woes. Our nation's laws, reflecting a composite of our individual beliefs, attempt to control selfish others at gunpoint, if necessary. Striving for a better world by focusing on others instead of ourselves totally misses the mark. When others resist the choices we have made for them, conflicts escalate and voraciously consume resources. A warring world is a poor one.

Attempting to control others, even for their own good, has other undesirable effects. People who are able to create intimacy in their personal relationships know that you can't hurry love. Trying to control or manipulate those close to us creates resentment and anger. Attempting to control others in our city, state, nation, and world is just as destructive to the universal love we want the world to manifest. Forcing people to be more "unselfish" creates animosity instead of good will. Trying to control selfish others is a cure worse than the disease.

We reap as we sow. In trying to control others, we find ourselves controlled. We point fingers at the dictators, the Communists, the politicians, and the international cartels. We are blithely unaware that our desire to control selfish others creates and sustains them. Like a stone thrown in a quiet pond, our desire to control our neighbors ripples outward, affecting the political course of our community, state, nation, and world. Yet we know not what we do. We attempt to bend our neighbors to our will, sincere in our belief that we are benevolently protecting the world from their folly and short-sightedness. We seek control to create peace and prosperity, not realizing that this is the very means by which war and poverty are propagated. In fighting for our dream without awareness, we become the instruments of its destruction.

If we could only see the pattern! In seeking to control others, we behave as we once did as children, exchanging our dime for five pennies, all the while believing that we were enriching ourselves. When a concerned adult tried to enlighten us, we first refused to believe the truth. Once awareness dawned, we could no longer be fooled, nor was laborious deliberation necessary for every transaction. Once we understood how to count money, we automatically knew if we benefited from such a trade.

Similarly, when the fact and folly of controlling others first come to our attention, we're surprised and full of denial. I certainly was! When we care about the state of our world, however, we don't stop there. I trust you are concerned enough to persevere and to consider seriously the shift in consciousness this book proposes.

Once we have the courage to accept responsibility for our part of the problem, we automatically become part of the solution, independent of what others do. We honor their non-aggressive choices (even if they are self-ish) and stop trying to control them. In doing so, we dismantle their most effective means of controlling us.

Others only ignite the flames of war and poverty. We feed the flames or starve them. Not understanding their nature, we've fanned the sparks instead of smothering them. Not understanding our contribution to the raging inferno, we despair that a world full of selfish others could ever experience universal har-mony and abundance.

Nothing could be further from the truth! Widespread peace and plenty can be created within our lifetime. When we understand how to stop fueling the flames of war and poverty, we can manifest our dream.

The essential psychological requirement of a free society is the willingness on the part of the individual to accept responsibility for his life.

- Edith Packer, clinical psychologist

...collectively held unconscious beliefs shape the world's institutions, and are at the root of institutionalized oppression and inequity....By deliberately changing the internal image of reality, people can change the world.

- Willis Harman, PATHS TO PEACE

...whatsoever a man soweth, that shall he also reap.

- THE HOLY BIBLE, Galatians 6:7 

We are each one of us responsible for every war because of the aggressiveness of our own lives... And only when we realize... that you and I are responsible... for all the misery throughout the entire world, because we have contributed to it in our daily lives... only then will we act.

- J. Krishnamurti, FREEDOM FROM THE KNOWN

The truth will set you free-but first it will make you damn mad...

- M. Scott Peck, author of THE ROAD LESS TRAVELED

We are not liberated until we liberate others. So long as we need to control other people, however benign our motives, we are captive to that need. In giving them freedom, we free ourselves.

- Marilyn Ferguson, THE AQUARIAN CONSPIRACY

The Principle of Non-Aggression

As children relating to others, we learned a great deal about creating peace and prosperity. Most of us can remember Mom or Dad prying us apart from a playmate after we came to blows. "Who started it?" often determined who received the most severe punishment. Even at a tender age, we could see that if no one hit first, no fight was possible. We contributed to keeping the peace by making sure we did not deliver that first blow. This approach frequently required controlling our reactions to others. No longer did we feed them knuckle sandwiches just because their clothes were "weird." We refrained from using our weaker playmates and siblings as personal punching bags. We became tolerant of the harmless actions and attributes of others. This tolerance extended to the property of our playmates as well. Taking or damaging their toys without their permission counted as "starting it." Lying to or about them also set the stage for mortal combat. Consequently, our commitment to keeping the peace required us not only to be tolerant, but also to be honest with others and to respect property that was legitimately theirs. We refrained from threatening "first strike" force, theft, and fraud. This was our first step in bringing peace to our own tiny corner of the galaxy.

The second step was just as important. If we struck others, took their toys, or lied about them, we tried to repair the damage we had done. We replaced the damaged toy out of our meager allowance, perhaps purchasing one just a little better to make up for the distress we had caused. We advised those who had heard our lies that we had misinformed them. We carried books for the playmate whose arm we had bruised. By restoring the balance that we had upset, we hoped to diffuse the tension our actions had generated. Our program for peace, therefore, had two parts: (1) honesty, tolerance, and respect toward others and their property (i.e., refraining from threatening first-strike force, theft, or fraud); and (2) repairing any damage we had caused. We will refer to this dual approach of honoring our neighbor's choice and righting our wrongs as the practice of "non-aggression."

As we became adults, our playmates became our neighbors. The degree of tranquillity in our community depended on how many of us practiced the principles of non-aggression learned in childhood. Property values tended to parallel the peace. Where theft and fighting were rampant, property values plummeted. We learned that prosperity is possible only when aggression is the exception, not the rule. Our immediate experience suggests that the way to a peaceful and prosperous world is to practice non-aggression and to encourage others to do the same.

On a one-to-one basis, we do exactly that. We would never steal from our next door neighbor, whom we'll generically refer to as "George." As adults, we feel no more entitled to his car and money than we did to his toys when we were kids. We practice non-aggression by respecting property that is legitimately his. Maybe George likes to wear things we wouldn't be caught dead in, but we wouldn't take a swing at him just because he doesn't conform to our standards. We practice non-aggression by being tolerant. If George doesn't contribute to our favorite charity, we wouldn't tell him his donation was going elsewhere just to get it. We practice non-aggression when we deal honestly. If we accidentally damaged George's property or person, we'd make it right again. We practice non-aggression by repairing any damage that we have caused.

We wouldn't join or hire a gang of our neighbors who wanted to steal from George, hurt him physically, or deceive him. If George had an encounter with such a gang, he would probably retaliate, perhaps with a gang of his own. The cycle could repeat itself indefinitely. Aggression begets aggression, and those in-volved alternate as victims and aggressors. "Starting it" is a prescription for neighborhood warfare, with a loss of both peace and prosperity. We practice non-aggression by saying "no" when others ask us to use aggression against another individual or group. Because we practice non-aggression naturally when dealing with our neighbors, it seems that selfish others must be responsible for aggression and the war and poverty it begets.

Knowing Ourselves

Before we absolve ourselves of responsibility for the world's woes, let us look more closely. In the 1960s, Stanley Milgram at Yale University conducted a series of studies to determine if gentle, considerate, everyday people could be persuaded not forced to hurt their fellow human beings. In one study, the scientist-experimenter strapped himself in a chair that was supposed to deliver electrical shocks of increasing severity to be administered to him by a naive volunteer. Whenever the scientist failed to learn a series of word pairs properly, the volunteer was supposed to shock him, using a higher voltage each time. A male experimenter went "undercover" and pretended to be a second volunteer.

The scientist did not actually receive any shocks; he was only pretending. The naive volunteers did not know this, because each of them had received a very real, low-voltage test shock as a demonstration. When the shocks reached a third of the maximum level, the scientist cried out that he could take no more and the experiment should end. The undercover volunteer tried to convince the real one that the experiment should continue. However, in every one of the 20 tests, the naive volunteers refused to keep shocking the experimenter. Apparently, the average person could not be convinced by a peer to force the scientist to continue against his will. (1)

In another study, however, the results were very different. The two experimenters switched places so that the scientist stood beside the naive volunteer and shocks were administered to the undercover one. When the "victim" cried out at one-third the maximum voltage, only 20% of the naive volunteers withdrew from the experiment. The others, at the insistence of the scientist, continued. At two-thirds maximum voltage, the victim cried out that he had a heart problem and feared for his life. Another 15% of the naive volunteers refused to continue, even though the scientist claimed that the shocks weren't severe enough to cause permanent damage. A full 65% of the volunteers continued to shock the victim even after he made no other sounds. Because the victim was hidden in a nearby room, some of the volunteers feared he might be unconscious and were extremely concerned for his safety. Yet, at the insistence of the scientist, they continued to shock him until they had administered the highest voltage three full times! (2)

The scientist didn't need to force the volunteers at gunpoint; only verbal commands were required. Even when the volunteers feared for the safety, even the life, of the victim, they were willing to proceed as long as an authority figure, but not a peer, urged them to.

When the naive volunteers were interviewed afterward, certain trends emerged. The 20% who refused to continue as soon as the victim wanted to quit felt that they were responsible for shocking him. Administering the shocks was acceptable only if the victim agreed to it. They obviously believed in honoring their neighbor's choice_regardless of what anyone else told them to do. Those who continued shocking the victim were more likely to place the responsibility for his pain on the shoulders of the scientist or the victim himself for being a slow learner. Yet they surrendered their responsibility only when an authority figure, the scientist (second study), not a peer (first study), urged them to. A typical comment made by the volunteers was "I was just doing what I was told." (3) Similar statements have been made by those who executed Jews in the Nazi concentration camps in World War II or massacred women and children at My Lai in Vietnam.

We defer to authority figures because they are supposed to know more than we do. If a mistake is made, it's easy to lay the blame at their feet. Ultimately, however, we are responsible for choosing the authority figure we defer to. Choosing to defer to one who urges aggression against others still puts the responsibility on us.

Each of us would like to believe that we would be in the small group that refused to be persuaded by the authority figure to go on shocking the victim. When Milgram surveyed people who were unaware of the results to predict where they would stop, none believed they would go past two-thirds of maximum shock. (4) Clearly, what we believe we would do and what we actually would do are quite different.

We believe that we consistently practice non-aggression and that selfish others must be responsible for war and poverty. Milgram's studies teach us that our words and actions don't always match and that we can be unaware of this discrepancy. If we truly wish to help our world, we must first identify ways in which we may be causing the problem. Let us examine an instance of common, everyday aggression and see how we respond.

How We Violate the Principle of Non-Aggression Daily Without Even Realizing It!

If we decided we wanted a new neighborhood park, how would we go about getting one? We could call together other individuals who want the same thing and could raise enough money to own and operate the park through donations, by selling stock in a corporation set up for that purpose, or through other voluntary means. If those who did not participate in the fundraising effort decide later to use the park, we might require them to pay an entry fee. Obviously, we would be relating voluntarily and non-aggressively with our neighbors. If George didn't want to be involved as either a contributor or a park visitor, we would honor his choice.

Of course, another way we could proceed would be to vote for a tax to purchase and maintain the park. If a large enough gang of our neighbors voted for it, George's hard-earned dollars would be used for a park he didn't want and wouldn't use. If he refused to pay what our gang dictated, law enforcement agents, acting on behalf of the winning voters, would extract the tax, at gunpoint, if necessary. If he resisted too vehemently, George might even get killed in the scuffle.

Wouldn't we be using a gang called "government" to steal from George? Wouldn't we be the first ones to turn guns on a neighbor who hadn't defrauded or stolen from us? Wouldn't George eventually retaliate by getting government to turn its guns on us for projects that he prefers but we want nothing to do with? Wouldn't we alternate as victims and aggressors, as minorities and majorities? Wouldn't we just be taking turns directing the law enforcement agents toward each other?

Through taxation, pacifists are forced at gunpoint to pay for killing machines; vegetarians are forced at gunpoint to subsidize grazing land for cattle; nonsmokers are forced at gunpoint to support both the production of tobacco and the research to counter its impact on health. These minorities are the victims, not the initiators of aggression. Their only crime is not agreeing with the priorities of the majority. Taxation appears to be more than theft; it is intolerance for the preferences and even the moral viewpoints of our neighbors. Through taxation we forcibly impose our will on others in an attempt to control theirchoices.

As individuals, we may not support taxation and other forms of aggression-through-government. However, the composite of our separate views, as reflected in our laws, indicates that as a nation, as a society, as a collective consciousness, we believe that aggression serves us. As we'll see in the next few chapters, just the opposite is true. Aggression creates poverty and strife in our city, state, and nation just as surely as it does in our neighborhood.

How could it be otherwise? Aggression could hardly produce peace and plenty simply because we use it as a gang instead of as individuals. Using the same means brings us the same ends. It's as plain as the nose on our face and just as difficult to see! Only by looking at what is reflected back to us can we observe it.

Indeed, taxation and other forms of aggression-through-government are so taken for granted in our culture that one of our most popular sayings is that "nothing is certain except death and taxes." Yet slavery was once as universal. Taxation is thought to be indispensable to civilization today, just as slavery once was. Advocates of taxation claim that since most people pay assigned taxes before the guns show up, they have implicitly agreed to it as the price of living in "society." Most slaves obeyed their master before he got out the whip, yet we would hardly argue that this constituted agreement to their servitude. Today, we have an enlightened perspective on slavery, just as one day we will have an enlightened perspective on taxes and other forms of aggression we now think of as "the only way."

Just as our ancestors rationalized slavery, we've created the illusion that taxation is legitimate. Like the volunteers who continued to shock the victim at the insistence of the scientist, we feel our actions are justified, perhaps even noble. We believe that we can create a world of peace and plenty if we are given a free hand to force those selfish others to do things our way. We feel taxation is indispensable for certain necessities (e.g., defense, clean air and water, helping the poor, etc.). Instead, as the following chapters illustrate, aggression in any form only hurts others and ourselves. We reap as we have sown.

In Part II (Forgive Us Our Trespasses: How We Create Poverty in a World of Plenty), we'll see how our well-meaning aggression has created poverty, compromised our health, destroyed our environment, and fostered monopolies and cartels that manipulate us. Special interests chuckle at our naivete as they use our fears of selfish others to pit us against each other for their benefit. In trying to control others, we find ourselves controlled.

Having seen the folly of using aggression ourselves, Part III (As We Forgive Those Who Trespass Against Us: How We Create Strife in a World of Harmony) details a better way to deal with those who trespass against us. This "other piece of the puzzle" gives us power to create peace and plenty in our communities, our nation, and the world. First, however, we must take responsibility for the acts of aggression that we unwittingly commit. Like the volunteers who refused to shock the victim at the whim of the authority figure, we too must first honor our neighbor's choice. Only when we are innocent of aggression can we deal effectively with those who are guilty of it.

Aggression hides in our culture under many names. Taxation is only an example, but one of the most widespread and uneconomical. If this concept seems incredible to you, consider the shift in awareness that it implies. Are we like children, accepting five pennies for our dime?

Thou shalt not kill... Thou shalt not steal. Thou shalt not bear false witness against thy neighbor. Thou shalt not covet...anything that is thy neighbor's.

- THE HOLY BIBLE, Exodus 20:13-17

Men have the right to use physical force only in retaliation and only against those who initiate its use. The ethical problem is simple and clear-cut: it is the difference between murder and self-defense.

- Ayn Rand, author of ATLAS SHRUGGED

He must make full restitution for his wrong, add one-fifth to it and give it to the person that he has wronged.

- THE HOLY BIBLE, Numbers 5:7

 ...civilization means, above all, an unwillingness to inflict unnecessary pain... those of us who heedlessly accept the commands of authority cannot yet claim to be civilized men.

- Harold J. Laski, THE DANGERS OF OBEDIENCE

In growing up, the normal individual has learned to check the expression of aggressive impulses. But the culture has failed, almost entirely, in inculcating internal controls on actions that have their origin in authority. For this reason, the latter constitutes a far greater danger to human survival.

- Stanley Milgram, OBEDIENCE TO AUTHORITY

In matters of conscience, the law of the majority has no place.

- Mahatma Gandhi, father of modern non-violent resistance.

How does something immoral, when done privately, become moral when it is done collectively? Furthermore, does legality establish morality? Slavery was legal; apartheid is legal; Stalinist, Nazi, and Maoist purges were legal. Clearly, the fact of legality does not justify these crimes. Legality, alone, cannot be the talisman of moral people.

- Walter Williams, ALL IT TAKES IS GUTS

A society that robs an individual of the product of his effort... is not strictly speaking a society, but a mob held together by institutionalized gang rule.

- Ayn Rand, THE VIRTUE OF SELFISHNESS

...while men usually recognize criminal acts when they are committed by an individual in the name of his own interest, they often fail to recognize the very same acts for what they are when they are committed by some large gang in the name of "social justice" or the "common good."

- Jarrett Wollstein, SOCIETY WITHOUT COERCION

...we are living in a sick Society filled with people who would not directly steal from their neighbor but who are willing to demand that the government do it for them.

- William L. Comer, AVOIDING THE HIGH COST OF DYING (AND MANY OTHER FINANCIAL DILEMMAS)

...the moral and the practical are not in conflict, provided one knows what is, in fact, moral.

- Nathaniel Branden, JUDGMENT DAY

To determine whether we shortchange ourselves by choosing taxation and other forms of aggression as a means to our ends, we must understand what wealth is and where it comes from.

We usually equate money with wealth, but they are really very different things. Imagine a person stranded on a desert island without food, water, shelter, or medicine, but with a billion dollars in gold coin. Is this person wealthy?

Hardly! Food, water, shelter, and medicine prerequisites for physical survival are true wealth. Money is valuable only if it can be exchanged for something of value, such as goods or services. Money is only a measure of how much of the available wealth a person has access to. If no wealth is available, money is worthless.

Just how much wealth is available? Imagine the total wealth in the world 2000 years ago. Did even the richest of the ancients have access to antibiotics, anesthetics, or surgery when their children had appendicitis? Could their entertainers give them the same quality, selection, and special effects that are now available on television? Could they find out about events on the other side of the globe a few minutes after they occurred? Could they "reach out and touch" family members who had migrated to faraway lands? Could they visit their distant relatives after a few hours in the "friendly skies"?

Even the wealthiest of the ancients did not have many things we take for granted. A greater number of people than ever before now enjoy a

lifestyle that our ancestors could not even imagine. Our wealth has increased greatly.

Where did we get all this wealth? The earth certainly did not get an additional endowment of natural resources between ancient times and the present. Instead, we discovered new ways to use existing resources. Coal, oil, and natural gas give us an unprecedented amount of power. We transmit this power over electrical wires and send communications via satellite. The antibiotics produced by fungi have been harnessed to fight infectious bacteria that invade our bodies. We stimulate our immune system with vaccines so that the ancient plagues have all but vanished. Artificial wings fly us all over the globe. Mass production, assembly lines, and robotics help to replicate the wealth-creating ideas. The new wealth allows creation of still greater wealth. For example, the energy trapped in fossil fuels lets us create new metal alloys that require higher smelting temperatures than wood can provide. One idea leads to the next.

We see that specific ideas on better uses for existing resources and the replication of these ideas are the real source of wealth. Natural resources are like seeds that grow into wealth when they are nurtured and developed by individuals acting alone or in concert. For example, oil was once considered a nuisance that contaminated good farmland. Not until enterprising individuals discovered how to pump, refine, and use it did oil turn into "black gold." Even water must be "developed" (drawn from a stream, well, or reservoir) before it can quench our thirst.

The amount of wealth a country produces does not depend primarily on its endowment of natural resource "seeds." Japan has almost no mineral wealth, while Mexico is well endowed, yet the Japanese are certainly more affluent than the Mexicans.1 Similarly, North Korea is poorer than South Korea. (2) East Germany created much less wealth than West Germany before reunification in 1990.2,3 Obviously, resource endowment is not the primary factor that determines a country's wealth. Population density cannot be the dominating factor either: both Japan and West Germany have a greater population density than their poorer neighbors Mexico and East Germany. (3)

When we consider that resources will one day be mined from planets other than the earth, that matter and energy are totally interchangeable, and that basic chemical elements can be transmuted, we realize that resource seeds are so abundant that they do not impose practical limitations on the creation of wealth at all. Even if our fossil fuels should be foolishly exhausted, for example, energy is abundantly available in each and every atom if only we knew as we one day will how to tap it safely. Even if we foolishly devastated our home world by unsound environmental management, a universe of other planets are available to us when we learn as we one day will how to reach them. Human resources, our "how to" ideas, and the replication of these ideas, determine how much available wealth there is at any one time. Since human creativity appears unbounded, the amount of wealth possible is virtually infinite! Truly we live in a "no limit" world!

The realization that resources do not limit the creation of wealth is a liberating one. Our country's wealth does not depend on the happenstance of its geographical boundaries, but on the self-determined thoughts and creativity of its populace. We create our world.

What secrets do the countries that enjoy great wealth possess? How are their popula-tions different? As this book will demonstrate, cultures with a strong belief in the practice of non-aggression, individually and collectively, enjoy the highest level of peace and prosperity.

The United States has historically fostered a strong cultural belief in non-aggression in both collective and individual interactions. As we'll see in the next few chapters, this belief made the United States the wealthiest nation on earth. Unfortunately, while we continue to abhor aggression perpetrated by individuals, our belief that aggression is an effective way to deal with each other on a more collective (i.e., group-to-group) basis is growing. Most often, this aggression is sanctioned by the authority of the majority and implemented through government. Aggression-through-government is the primary reason our country is experiencing a decline in the rate of wealth creation.

We've seen how wealth is created by individuals, working alone or as part of a team. New ideas are implemented or reproduced. Our imaginary neighbor, George, for example, may work in a factory where he makes chairs. The factory owner gets the lumber from a tree farmer who planted and harvested the trees. These three individuals create new wealth in the form of chairs. They share the resulting wealth by exchanging it for money. They then trade their money for the wealth (food, clothing, etc.) that others have created.

Wealth belongs to its creators. All three individuals helped to create the chairs. Without their effort, the new wealth would not exist. When dealing with other individuals, we instinctively recognize this fact and act on it. We would never dream of going to George's house with a gun to steal the wealth he has created. He'd retaliate and we would take turns being victims and aggressors. With continual "warfare," a jungle-like atmosphere would pervade our neighborhood, and property values would plummet as wealth was consumed in the struggle. Effort would be directed at making war instead of wealth. Enlightened self-interest gives us strong incentives to practice non-aggression individually.

If we personally steal from George, we create havoc in our neighborhood. Nevertheless, we believe we can avoid this outcome if the government enforcement agents, acting on our behalf, perform the identical action. We believe the act of stealing is ennobled if the authority of the majority deems it to be for "the common good." As we'll see in the next few chapters, the laws of cause and effect still apply. The consequences of aggression are the same, whether perpetrated by an individual or a group. When groups of neighbors ask their government to steal from other groups of neighbors, we take turns being majorities and minorities, victims and aggressors. A jungle-like atmosphere prevails as effort is directed toward making war instead of wealth. Enlightened self-interest directs us toward the practice of non-aggression collectively if we would only realize it!

The Marketplace Ecosystem

The founders of our country recognized the importance of non-aggression. They realized that the "marketplace" was really an invisible interactive network of voluntary exchanges that take place among people in their communities, states, and nations. The marketplace has many similarities to nature's rainforest and oceanic ecosystems. Left to their own devices, the marketplace and the earth's ecosystems are self-regulating. Neither requires our forceful intervention to establish a holistic balance in which a diversity of complimentary niches can evolve. Aggression in the marketplace or destruction in a natural ecosystem upsets this balance. Some of the niches are destroyed along with their occupants. Diversity is lost.

The "free market" is the name given to describe the marketplace ecosystem when it is free from aggression. In the 1800s, our country came closest to this ideal. As a consequence, penniless immigrants flocked to our nation to make a better life for themselves and their loved ones. America became known as the "land of opportunity" and the richest nation on earth. Wealth was the natural by-product of a marketplace ecosystem free from aggression. As detailed in Chapter 19 (The Communist Threat is All in Our Minds), democracies tend to have less aggression than the Communist ones. This is why North Korea and East Germany, before unification, created much less wealth than their "free world" counterparts. (2,3)

Even in the early days of the United States, the marketplace ecosystem was not entirely free from aggression, however. If a drug company sold untested products or if doctors misrepresented their training, the distraught consumers or their survivors had minimal recourse. Some forms of aggression, notably fraud, were widely practiced by individuals.

Our ancestors knew how to practice non-aggression themselves. What they did not know was the most effective way to deal with those who aggressed against them. Consequently, this aggression persisted. Eventually, people began to believe that freedom from aggression was an unattainable ideal because selfish others were always ready, willing, and able to take advantage of their neighbors. They adopted the belief that the aggressors enjoyed "too much freedom." People instructed their government to strike first and use aggression to prevent aggression. Their motto became "do unto others before they do unto you." To fight the "evil" of aggression, they became aggressors themselves, with consequences more terrible than those they sought to prevent. Let's see exactly how this happened in our own land of opportunity.

...most real wealth originates in individual minds in unpredictable and uncontrollable ways.

- George Gilder, WEALTH AND POVERTY

...Amnesty International's listing of human rights abuses shows a definite pattern where those nations with the least respect for human rights are also the poorest. By contrast, those with the greatest respect for human rights tend to be the richest.

- Walter Williams, ALL IT TAKES IS GUTS

...the free market is a society in which all exchange voluntarily. It may most easily be conceived as a situation in which no one aggresses against person or property.

- Murray Rothbard, POWER AND THE MARKET

The trouble with people isn't their ignorance-it's the number of things they know that just ain't so.

- Mark Twain, American humorist and novelist

The previous chapter explained how wealth is created by individuals acting alone or in concert while working at an occupation or job. Wealth is virtually infinite, yet we commonly hear that the means to that end- jobs- are limited. Let's examine how this seeming contradiction has been created by aggression -through-government.

The Marketplace Ecosystem: Honoring Our Neighbor's Choice

In the early days of our country, new immigrants were at a disadvantage in the established marketplace ecosystem. Usually, they couldn't speak English. Their customs were different and disquieting. Frequently, they were unskilled and could produce little wealth. Employers had little incentive to hire them. The immigrants decided to change that.

The immigrants created a niche for themselves in the marketplace ecosystem by offering employers who would take a chance on them a greater-than-usual share of the jointly created wealth. By helping their employer, they also helped themselves. Instead of paying for expensive schooling to learn new skills, they got on-the-job training by accepting, for a time, lower wages than the experienced, American-born workers. Once they learned the language, trade, and customs, they could create much more wealth than before. The immigrants were either given a greater share of the jointly created wealth by their employers, or they took their experience and moved on. Sometimes they opened their own shop, sometimes they went to an employer with greater appreciation for their newfound expertise. Some eventually became quite wealthy. In offering to serve their first employers well, they ultimately served themselves.

Young Americans sometimes use the same technique to get that important first job. For example, as an undergraduate, I worked in the laboratories of various scientists after class. Sometimes there was a little pay involved, sometimes course credit, sometimes no visible compensation at all. The scientists who hired me really didn't have a job to give, so like the immigrants, I created my job, my niche in the marketplace ecosystem, by offering them a better deal than any of my classmates would even consider.

My peers thought I was crazy working for "slave wages." A few years later, they changed their minds. The experience I gained, plus the recommendations of my mentors, turned out to be quite valuable. These intangibles gave me an edge over those with comparable formal education when I applied for more advanced positions. Offering my first employers a good deal resulted in later employers offering me a good deal. Letting myself be "exploited" was one of the smartest career moves I ever made.

The balance of the marketplace ecosystem evolves naturally. Workers without experience who are willing to create a low-wage job can gain the necessary experience and skills to create more wealth. Almost everyone is able to create some wealth, so everyone can find a starting niche. As expertise evolves, so does the niche- one way or the other. In serving their first employer well, unskilled workers serve themselves.

Usually, an employer will reward workers as their capacity to create more wealth increases. By providing an improved work space, more benefits, and/or increased wages, employers provide positive feedback, appealing to the employees' own self-interest to create even greater wealth. More wealth creation means more profit for the employer and the employee to split. By helping each other, they help themselves. Both serve their own interest best by making sure that their partner in creating wealth is taken care of.

Unenlightened employers who don't reward their workers for increased productivity lose them to employers who do. Employers who choose employees on the basis of color or sex or anything other than ability to create wealth find that their shop creates less wealth than it could. Less wealth means less profit for the employer and employee to share. Lower profits provide the employers with negative feedback. Discrimination on any basis other than productivity is costly. Employers reap as they sow.

We can observe this "yin-yang," or balance, of the ecosystem within the marketplace right in our own community. Our fictitious neighbor George decides to hire a neighborhood youth, Elaine, to paint his house because of her willingness to work for a very nominal sum.

Elaine created a job by giving her employer a better deal than the other teens in the neighborhood. Had Elaine not made such an offer, George would have let the house go unpainted for another few years. The creation of wealth in the form of a well-kept house would have been delayed. By offering to serve George well, Elaine also helped beautify her neighborhood. In the process, Elaine helped herself as well.

In the fall, Elaine asked George to put in a good word for her with the corner grocer. As a result of George's glowing recommendation, Elaine was hired instead of other youths with no one to vouch for them. The following summer, Elaine's references from the grocer helped her get a temporary job with a nearby factory. When Elaine graduated from high school, she was offered a well-paying job by a local banker. Elaine was chosen because her former employers could vouch for her conscientious performance. Her friends, who had mocked her as she worked for a "pittance," were rejected because they had no experience. By serving her employers well, Elaine also served herself.

Aggression Disrupts the Marketplace Ecosystem

We'd never dream of putting a gun to George's head and threatening him if he didn't pay Elaine more than what they had jointly agreed on. After all, our neighbors know better than we do what will work for them. Pointing a gun at George would probably end any feeling of camaraderie we might have shared in the past. There's something about looking down the barrel of a gun that isn't consistent with "loving our neighbor." George is likely to call his local sheriff and have us arrested or make sure that he retaliates with sufficient force to prevent us from threatening him again. In trying to control George, we might very well find ourselves controlled.

Even if we successfully intimidated George, he might decide not to hire Elaine, rather than pay her more than he wished to. Without George's recommendation, Elaine might never get the grocery job. Without experience at the grocer's, Elaine might not be picked to work at the factory. Without these part-time jobs, Elaine would not have the experience so valued by the bank. Our attempt to protect Elaine from George's exploitation by using aggression would probably backfire and hurt the person we most wish to help.

The marketplace ecosystem operates in our neighborhood if we let it work its magic. We wisely refrain from threatening our neighbors when they are interacting and contracting with each other without using force or fraud. The individuals, after all, know their situation better than we do.

Exactly the same principles apply in the national work force, but somehow we see it differently. We view low wages as evidence of employer "stinginess" instead of schooling with pay for the unskilled. We try to correct the behavior of these selfish others by voting to force employers to pay a minimum wage- at gunpoint, if necessary. Through our government, we become aggressors, the first party to threaten violence. Our aggression yields the same results on a national scale as it does in our neighborhood.

For example, in the chair factory where George works, employees are paid at different levels ($4 or $5 per hour) depending on their experience. If the minimum wage is raised to $5 per hour, several things could happen.

If the employer pays the least experienced people $5 per hour, he will have to raise the price of the chairs. The people who were earning $5 will probably complain because they are being paid the same wage as the novices. The employer will have to give them a raise too. The price of the chairs goes even higher. Fewer people can now afford to buy the chairs, so the factory will cut back production. Workers will be laid off; the least experienced will be the first to go. Instead of earning $4 per hour, some of the inexperienced workers will be unemployed, while others will be making $5 per hour.

Some employers will be able to replace the unskilled workers with machines that cost $4.50 per hour instead of the $5 now mandated by law. The workers from the factory that makes the new machines are very skilled and already make well above the minimum wage. They now have extra orders for machines, so their factory must hire more skilled labor. At the chair factory, some of the more experienced workers make $5 per hour, while some of the unskilled workers are unemployed and make nothing. The machine factory hires more skilled labor.

Other employers might simply eliminate part or all of the job that the people earning $4 per hour once did. Maybe their job was to paint the chairs; now finishing is left to the buyer. More unskilled employees are laid off.

Some employers will not be able to use any of these options. There may be no substitute for the unskilled labor and no way to raise prices without losing too many customers. To comply with the law, these employers may cut back on other employee benefits, such as health insurance, vacation time, etc. The unskilled workers make $5 per hour, but lose some benefits that may have been worth more to them than the wage increase.

If none of these options are available, employers may have to forgo some of their profits. To avoid cutting their profits, these employers may close their factories and either retire or switch to a business that needs only skilled workers. In either case, the employees will be laid off. The skilled workers will have an easier time becoming employed again, because they are needed in places such as the machine factory that is expanding because of the demand for labor-saving devices. The unskilled workers will find themselves in less demand and will have more difficulty.

Each employer will react differently to the minimum wage increase, but the result is always the same. Fewer inexperienced employees will have a job. Instead of making $4 per hour, some will make $5 per hour, and others will make nothing. The best of the low-paid workers get a raise, but the most disadvantaged are forbidden to create what wealth they can.

If we support minimum wage laws, we destroy jobs, especially those that would have gone to the unskilled or disadvantaged. By using aggression, we limit wealth by destroying the jobs that create it. No wonder welfare to the newly unemployed increases when the mandated minimum wage goes up! (1)

The Poor Get Poorer: Discrimination Against the Disadvantaged

Because minimum wage laws hurt the disadvantaged the most, they are frequentlyused to "legalize" discrimination. In South Africa, white unions lobby for minimum wages (called "rate-for-the-job") in order to "reserve" particular jobs for whites.(2) If the unskilled blacks are forbidden by law to negotiate a training wage, they can never gain entry into these professions and are effectively barred by law from creating wealth in those occupations.

The same thing happens in the United States. Minimum wage laws hurt the very people they are supposed to help. Many disadvantaged workers are black; the most unskilled blacks are, of course, the young. As the percentage of jobs covered by minimum wage laws has increased (Figure 3.1A), black teenage unemployment has increased much more than white unemployment (Figure 3.1B). What is particularly distressing is that black teenage unemployment was almost identical to white unemployment before the 1950s! By trying to help the disadvantaged with aggression, we've hurt them more than the selfish employers ever did!

The inexperienced are not the only victims. The elderly and handicapped are adversely affected as well. This was vividly brought home to me in the mid-1980s while renovating low-income housing in the city of Kalamazoo. A young, unskilled man, who was partially disabled, had been watching our progress and asked if he could do some cleaning and yard work for $2 per hour. He was willing to accept such low wages because he could walk to the work site. He also hoped I might be able to give him a recommendation so others would "give him a chance." I explained to him that minimum wage laws prevented me from hiring him for anything less than $3.35. We both knew that I could hire an able-bodied person at that rate who would do more work per hour. We both would have been satisfied to settle on $2 per hour, but we were forbidden by law from doing so. Had we gone ahead, government enforcement agents could have "fined" me (i.e., taken my created wealth) at gunpoint, if necessary.

Why shouldn't this young man have been able to make his own choices? He viewed working for $2 per hour in the same way I had viewed working in the laboratory- as a stepping stone to something better. Surely he could decide what a particular job was worth to him. By supporting minimum wage laws, we've condemned many of the disadvantaged to life "on the dole." Being dependent on others is surely more "degrading" than starting at the bottom and working one's way up!

When we use aggression to control the marketplace ecosystem with minimum wage laws or other mandated "benefits," we set in motion a destructive chain reaction. Instead of providing the disadvantaged with a better financial base, we prevent them from obtaining what they need most: on-the-job training in the art of creating wealth. Because they cannot work, they cannot get ahead. They cannot entice a reluctant or prejudiced employer into giving them an opportunity to show their worth when they cannot offer such employers a better deal.

The Rich Get Richer With Our Help!

If minimum wage laws so obviously hurt those they were intended to help, why do our legislatures keep passing them? Do minimum wage laws benefit someone else with power and influence? Of course they do!

With minimum wage laws, the skilled and educated no longer have to compete with the ambitious disadvantaged workers who are rising through the ranks. Only those who can afford to pay for training can get hired when the disadvantaged are forbidden from creating training jobs for themselves. When fewer skilled people are available, the experienced workers can command higher wages. Unions frequently lobby for minimum wage laws because such laws favor their skilled membership at the expense of unskilled workers, the handicapped, and minorities. (3)

Does this mean that the unions are full of selfish others who need to be put in their place? Not at all! Those who propose minimum wage laws know we have supported aggression in the past when we thought it was for the common good. Perhaps the last time we used aggression, union members were the victims.

Unions and other special interest groups that desire minimum wage laws do not use aggression themselves. Like the proverbial serpent in the Garden of Eden, they tempt us to practice aggression against our neighbors for their benefit. They only kindle the flames of poverty and strife- we control the final outcome. We fan the flame when we direct our government enforcement agents to carry out their wishes. We could choose differently. We could say "No!" to those who advocate minimum wages, just as Adam and Eve could have said "No!" to the serpent. Without our consent, the unions (and the serpent) are powerless. The choice- and responsibility belongs to us.

A Lose-Lose Situation

Usually we agree to the aggression of minimum wage laws because we believe in a win-lose world, where wealth and jobs are limited, where gain can be had only at another's expense. When our choice is between winning and losing, aggression appears to be a useful tool. We don't notice that our aggression is limiting wealth and jobs because we take these limitations as a given. Our beliefs become self-fulfilling prophecies.

For this reason, the gains that the skilled worker makes when minimum wage laws disenfranchise the disadvantaged are largely an illusion. People who lobby for minimum wage laws, who enforce them, or who are unemployed because of them produce no wealth. Their activities create no new goods or services. The world as a whole is poorer, and so are we. Our money cannot purchase whatdoes not exist, any more than it could in our desert island example from Chapter 2 (Wealth Is Unlimited!). In a world producing less wealth than it could, we are proportionately deprived. Because the lobbyists, enforcement agents, and unemployed produce no new wealth, part of what we create goes to support them. In trying to control others, we find ourselves controlled.

Wealth is only the smallest part of the price we pay, however. We've encouraged the disadvantaged to think of their plight as someone else's fault rather than a condition best rectified by their own efforts. By supporting minimum wage laws, we've taught the disadvantaged to turn the law enforcement agents on those still employed to feed, clothe, and shelter them. We take turns being victims and aggressors, minorities and majorities. Instead of taking responsibility for our choices and letting others do the same, we point fingers at each other. Self-improvement becomes equated with turning the guns of government on others, begetting "war" as we struggle for control of the enforcement agents. Our belief that selfish others are the problem has turned into a self-fulfilling prophecy.

By ignoring the voluntary choices of the individuals involved, we presume that we know what is best for them. On the average, however, individuals make better choices for themselves than we can by making a uniform choice for everyone. Some employees prefer to accept a lower hourly wage in return for more benefits, better working conditions, more flexible hours, proximity to work, congenial colleagues, etc. On the average, individuals know better than we how to choose the best combination of wages and benefits for their particular situation and temperament. With minimum wage laws, we decrease further the limited choices available to the disadvantaged.

The Easy Way Out

We have a choice. We can just say "No!" to the aggression of minimum wage laws and smother the flame of poverty and strife kindled by special interests. No detailed evaluation of the law or the proponents' motives is necessary. When we find that our enforcement agents will be directed against those who are interacting voluntarily with each other without deceit or violence, we know that poverty and strife will follow. The means and ends are intimately related. Nationwide aggression is every bit as destructive as neighborhood aggression is.

Many people believe that minimum wage laws and other legal restrictions on employer-employee bargaining helped to eradicate the deplorable working conditions that existed during the Industrial Revolution. They fear that doing away with minimum wage laws could recreate this dire situation. In fact, just the opposite is true.

Nineteenth-century workers and their families had to choose between a dangerous, uncertain, and backbreaking existence on their small farms or long hours and low pay in crowded, poorly maintained factories. The creation of wealth was so inefficient in those times that almost every waking moment was spent in creating enough wealth to barely survive. The majority of the choices available to our ancestors would look barbaric by today's standards. Our modern, efficient production of life's necessities has enabled us to work 40-hour weeks, dispense with child labor, and support those who create no wealth at all. These choices were not realistic options for most people until the latter half of this century. If we continue to decrease wealth production with increases in minimum wages and other forms of aggression, we will find ourselves faced with these harsh choices once again.

Without minimum wage laws, what will prevent employers from colluding to pay only slave wages to workers, even when they learn to create more wealth? The natural balance of the marketplace ecosystem keeps employers' greed in check automatically by simply allowing them to reap as they sow. If it didn't, employers would be able to pay low wages to workers even when they had experience! Because employers voluntarily pay more than 90% of the workers who are 24-65 years of age more than the minimum wage, (4) the marketplace ecosystem is obviously regulating the marketplace well without aggression.

Without minimum wage laws, young, inexperienced, or disadvantaged workers could create niches (jobs) for themselves in the marketplace ecosystem by offering employers a greater share of the jointly created wealth in return for training and experience. Since everyone can create some wealth, everyone could be employed. Instead of exploiting disadvantaged workers, this win-win arrangement lets them create some wealth, prove themselves, and obtain a recommendation. Instead of using their limited resources for expensive schooling, they are paid to get both training and experience!

Most job seekers find that the first question a prospective employer wants answered is "How much experience do you have?" Employers know that past performance is the best barometer of future success. In many cases, on-the-job training is more valuable than education of any kind. Without the aggression of minimum wage laws, this opportunity would be within everyone's reach.

After becoming proficient, employees could seek higher wages, another employer, or businesses of their own. Few people stay where they start. Most employee performance improves with experience. Low-paying jobs are most often a beginning, not a dead end. The self-regulating marketplace ecosystem protects the efficient worker by providing other options. These opportunities make it difficult for employers to exploit their employees.

An example of this type of regulation occurred after the Civil War. Many Southern landowners didn't want to have anything to do with the newly freed blacks. However, wealth creation on their plantations was much more profitable with hired hands than without them. Blacks offered to work for less than whites would, making plantation owners choose between their prejudice and their pocketbook. Many chose to hire blacks to maximize their creation of wealth.

At first, the landowners tried to collude to pay the blacks as little as possible. Even though such action was perfectly legal, the marketplace ecosystem foiled such plans with its self-regulating magic. A few landowners soon found that if they paid the best workers a little bit more than everyone else did, they had their pick of the skilled blacks. Experienced workers created more wealth for the plantation than unskilled ones, so profits increased. Landowners who paid low wages were alarmed to see their best workers leaving to work for these more enlightened employers. They either offered higher wages or found themselves without help.5 Even whites with deep prejudices found themselves persuaded by their pocketbook to treat their black hired hands better than they wanted to. Exploitation of newly emancipated slaves was limited by the employers' own greed. They were still able to discriminate (and many still did) but they paid dearly for it. By allowing them to reap as they sowed, the marketplace ecosystem taught them the hazards of exploitation and discrimination.

Blacks dissatisfied with working for landowners had other options as well. They migrated to Northern factories, opened their own shops, or simply offered their skills to the community as plumbers, electricians, etc. The marketplace ecosystem protected blacks from exploitation by the variety of niches (jobs) through which they could create wealth. As blacks began to gain respect and affluence, however, these avenues for creating wealth were closed to them by our well-meaning aggression, as described in the next chapter.

Every 10% increase in minimum wage makes the worker 2% worse off because companies must offset increased cost with reductions in other parts of the "payment bundle" such as hours, bonuses, etc.

- Albert Wessels, MINIMUM WAGES: ARE WORKERS REALLY BETTER OFF?

...a 20 percent increase [in minimum wage] makes approximately 81 percent of South Carolina workers worse off than before the change.

- James Heckman and Guilherme Sedlacek, REPORT OF THE MINIMUM WAGE STUDY COMMISSION

The minimum wage law is one of the major causes of spiraling unemployment among young blacks.

- Walter Williams, THE STATE AGAINST BLACKS

A rising minimum wage broadens the income gap between blacks and whites, leaving black families proportionately further behind than ever.

- Robert Meyer and David Wise, REPORT OF THE MINIMUM WAGE STUDY COMMISSION

Past studies by and large confirm the prediction that higher minimum wages reduce employment opportunities and raise unemployment, particularly for teenagers, minorities, and other low-skilled workers.

- Masanori Hashimoto, MINIMUM WAGES AND ON-THE-JOB TRAINING

...low income workers as a group are the major victims of minimum wage legislation.

- Keith B. Leffler, ECONOMICS OF LEGAL MINIMUM WAGES

...the responsiveness of labor supply to wage changes seems to be greater among the disabled than among the nondisabled...

- Andrew Kohen, REPORT OF THE MINIMUM WAGE STUDY COMMISSION

One of the most serious effects of minimum-wage legislation is the impairment of on-the-job-training for young workers.

- Masanori Hashimoto, MINIMUM WAGES AND ON-THE-JOB TRAINING

...the minimum wage must reduce total income available to all members of society taken as a whole.

- Sherwin Rosen, REPORT OF THE MINIMUM WAGE STUDY COMMISSION

One of the most significant things that I saw in the South-and I saw it everywhere-was the way in which white people were torn between their feelings of race prejudice and their downright economic needs.

- Ray Stannard Baker, Pulitzer Prize journalist and author.

The effectiveness of a competitive market is in no way dependent upon the goodwill or honesty of its transactors.

- Thomas Sowell, THE ECONOMICS OF POLITICS AND RACE: AN INTERNAL PERSPECTIVE

The Marketplace Ecosystem: Honoring Our Neighbor's Choice

In the previous chapter, we learned how the marketplace ecosystem paid higher wages, attracted the best workers, and were rewarded with the positive feedback of profit. Blacks who felt that no employer paid what they were worth often had the option of going into business for themselves as printers, plumbers, carpenters, or stone cutters. (1) Frequently, blacks found this latter route was the most rapid way to affluence. Many immigrants discovered the same thing.

The natural balance of the marketplace ecosystem also determined whether or not new ventures would stay in business. Business people who pleased their customers with better service and/or low prices got referrals and repeat business. Profit was a direct reflection of how well they served their neighbors. If they charged their customers excessively, other entrepreneurs began providing the product for a lower price, voluntarily accepting less profit to attract more customers, and ultimately more profit. Greedy competitors lost consumers. Profit and loss gave the tradespeople feedback that told them when they were- and were not- serving others adequately. Service providers reaped as they sowed. The customers voted daily with their purchasing dollars to supply this feedback. They directly regulated the marketplace ecosystem, keeping it in balance without aggression. The customer was the final authority. The customer was king.

If our fictitious neighbor George thought his employer was exploiting him, George might decide to create wealth by going into business for himself. We'd never dream of stopping George at gunpoint from providing service to willing customers because he hadn't gotten our permission to do so. The business that George and his customers voluntarily agree to transact is up to them. We simply honor our neighbor's choice.

We know that trying to tell George- at gunpoint- what he can and cannot do is likely to destroy any feelings of concern and trust that George may have for us. Brotherly love seems to dissolve when looking down a gun barrel.

Of course, if we "start it," George will probably fight back. Perhaps he'll call the local sheriff and have us arrested. Perhaps he'll retaliate with sufficient force to make us unlikely (or unable) to threaten him again. "Starting it" is a prescription for warfare, whether we're adults or children.

If we prevent George from creating wealth for himself, how would he survive? Chances are that he would feel justified in stealing the wealth we create, perpetuating the conflict between us. Just as our interference with George and his willing customers would wreak havoc with our neighborhood, so would the same actions create animosity and beget poverty in our city, state, and nation.

Aggression Disrupts the Marketplace Ecosystem

Some whites were well aware that as long as the marketplace ecosystem was free from aggression, blacks, immigrants, and other minorities would have the opportunity to better themselves. Therefore, they clamored - successfully - for us to condone the aggression of licensing laws to destroy the small minority businesses.

Licensing laws instructed the government enforcement agents to stop, at gunpoint, if necessary, individuals from providing a service to a willing customer unless they have permission from a licensing board. By requiring high licensing fees, written examinations for manual occupations, and excessive schooling or apprenticeships, licensing boards were able to exclude blacks and other disadvantaged minorities. Blacks were almost entirely forced from the trades, even the specialties in which they had been well represented. U.S. citizenship was frequently required to exclude new immigrants as well. (2)

While minimum wage laws prevented the disadvantaged from getting that first job, licensing laws prevented them from starting their own businesses. Prevented from being an employer or an employee, disadvantaged individuals frequently found themselves unable to legally create wealth for themselves and their loved ones.

In New York City, for example, would-be taxi drivers must purchase a "medallion," or license, before they can legally carry customers. The number of medallions is limited and has not been increased since 1937. A new driver must purchase a medallion from someone who is retiring. In 1986, these medallions were selling for more than $100,000.3 Many people who have a car and would be capable of creating wealth for themselves and their loved ones are forbidden, by law, to do so, because they can't afford the medallion. Those who are prosperous enough to purchase one must charge their customers more to make up for the extra expense. Thus, the first requirement for a successful cab driver in New York City is not pleasing the customer. Having money or the ability to borrow it is more important. Customers are no longer king.

The Poor Get Poorer: Discrimination Against the Disadvantaged

The licensing laws prohibit the disadvantaged from creating wealth by providing cab service even if they have a car, are capabledrivers, and have willing customers. Most of the licensed taxi drivers can make a good living servicing only the better parts of the city. Few venture into the ghetto areas. Consequently, when those too poor to afford a car need to go to the doctor, legal taxi service is usually unavailable. Fortunately, residents able to purchase their own vehicle eventually decided that they would offer such service illegally.

By 1979, these "gypsy" operatives were believed to be more numerous than the number of medallion holders.4 As long as they stayed in the ghetto areas, the government enforcement agents looked the other way. When the gypsy cabs came into the better areas, however, medallion holders insisted that the government enforcement agents prevent the gypsy drivers from servicing customers- at gunpoint, if necessary. (5)

We can learn several important lessons from the New York experience. First, the gypsy drivers were almost exclusively minorities, mostly black and Puerto Rican, (6) yet they were able to create a substantial amount of wealth, even in their impoverished areas, by providing a desperately needed service. When we don't interfere with the marketplace ecosystem, even the ghetto residents are able to create a significant amount of wealth. Second, the licensing requirements excluded the disadvantaged from creating wealth in the better areas of town where more profit was possible.

The aggression of licensing laws simply made the rich richer and the poor poorer. Because many of the poor were minorities, these licensing laws were, in fact, discriminatory. Finally, the customers suffered as well. In the better areas of the city, they paid more for taxi service, because the licensing laws increased the cost of doing business and limited the number of drivers to select from. The would-be customers in the ghetto frequently had no service at all!

Other Examples

The interstate trucking industry is regulated in much the same way as the New York City taxis. The primary criterion for permission to create wealth by moving goods across state lines is the ability to afford the license required by the Interstate Commerce Commission. Voluntary transactions between the trucker and the customer are forbidden, by law, without such approval. Needless to say, minorities and the disadvantaged are under represented in the trucking industry because of these restrictions.7

Licensing laws dealing with day care have severely impaired the ability of women with young families to create wealth. As mothers enter the work force, they select a child-care provider that best suits their standards and their pocketbook. Mothers who have no other marketable skills can create wealth by caring for the children of working mothers. Unfortunately for everyone, these natural child-care providers are often forbidden by law from providing this service, because they cannot afford to remodel their homes to meet licensing restrictions, pay for licensing fees, or deal effectively with the red tape required to get government permission to provide day care. (8)

We've supported this aggression to protect young children from unsafe and unscrupulous day-care providers. Obviously, most parents are better equipped than anyone else to evaluate the quality of care their child receives. Parents who are not competent or interested enough in their child's care to do so usually pose a much greater threat to their children than a sloppy day-care operator could! Our efforts are redundant at best.

At worst, licensing laws harm the very people they are meant to help. Licenses to operate day-care centers are not always easy to get. Some have been denied because the yard was deemed to be several feet too short! One center had to replace its four smoke detectors with a five-detector interconnecting system, at a cost of $2,000. A prospective day-care operator had to remove a wall because the door was 36 inches wide instead of 38! (9)

The women who succeed in upgrading their homes and working their way through the red tape (57 forms in Washington, D.C.) (10) must charge more for their services to make a profit. In North Carolina, 25% of the cost of day care is due to licensing-by-aggression. (11)

Some women, faced with these increased costs, can no longer afford to work outside the home. When they try to create wealth with a home business, licensing laws again hamper them. If they attempt to cut or even braid the hair of willing clients without getting several years of training to obtain a license, law enforcement agents will stop them, at gunpoint, if necessary. (12) In Chicago, hooking up a home computer to one owned by a business is illegal. (13) In Massachusetts, no goods and services can be produced in the home for a business located elsewhere. (14) Even in areas where home businesses are permitted, no employees may be allowed. (15)

Through my years as a landlady, I've watched my low-income tenants struggle with the aggression of licensing laws. Those who take in sewing or operate day care in their apartments live in fear that one day the government will stop them from creating wealth without a license. What callousness to demand that others get our permission before being allowed to put food in their children's mouths and a roof over their heads!

The Rich Get Richer With Our Help!

If the type of licensing laws described above hurt the disadvantaged without providing any consumer benefits, why do our legislatures vote for them? Sometimes home businesses are restricted because of the extra traffic they bring into a residential area. Except for the day-care center, however, none of the above examples creates extra traffic.

Home businesses have low overhead and so provide another avenue for the disadvantaged or part-time worker to create wealth. Because the overhead is low, products are frequently priced lower than similar items manufactured by skilled factory labor, giving consumers an option they wouldn't otherwise have. Although customers are pleased, factory workers are not. Many licensing laws are supported by skilled workers who want to keep the disadvantaged from offering to serve the customer better than they are willing to.(16)

Does this mean that skilled workers or union members are selfish others who deserve our wrath? Not at all! Those who propose licensing laws have seen our willingness to sanction aggression-through-government for "a good cause." Perhaps the last time we used aggression, skilled workers were its victims. In a system of aggression, we simply take turns being winners or losers. Instead of cooperative win-win scenarios, we perpetrate a win-lose game in which we are constantly at each others' throats.

The skilled workers do not use aggression themselves. Like the proverbial serpent in the Garden of Eden, they tempt us to practice aggression against our neighbors for their benefit. They only kindle the flames of poverty and strife. We choose to smother the flame by refusing to direct our government enforcement agents to do their bidding or we fan it with our acquiescence. Without our consent, the skilled workers (and the serpent) are powerless. The choice- and the responsibility- belongs to us.

A Lose-Lose Situation

As in all cases of aggression, everyone loses. As we have already noted, blacks were forbidden to create wealth in their own businesses after the Civil War. Those restrictions left them vulnerable to prejudiced employers. Today, the unskilled mother is similarly discouraged by law from creating wealth through child care or a home business. The would-be truckers and taxi drivers who cannot afford a license cannot work in their chosen profession. Licensing laws, coupled with the minimum wage laws, frequently keep the disadvantaged from ever getting a start. Infinite wealth through innumerable job possibilities is limited and made finite primarily through aggression -through- government.

The Ladder of Affluence (Figure 4.1) illustrates this process. If our parents are on the upper rungs of the Ladder of Affluence, they probably have enough wealth to put us through college or professional training so that our first job is several rungs up on the Ladder. Disadvantaged individuals, however, have to start at the bottom and work their way up. Training jobs at low pay and home businesses are the first rungs of the Ladder.

Minimum wage and licensing laws destroy the lower rungs, giving the disadvantaged less opportunity than ever. Instead of being paid a low wage while getting training and experience, the disadvantaged must pay for training or an expensive license. Instead of having the opportunity to work their way up the Ladder of Affluence, they cannot get started. They are excluded from climbing the Ladder at all! If they wish to survive, they must rely on the charity of others or use aggression to wrest wealth from those legally permitted to create it. How can we claim to care for the disadvantaged if we are willing to put them in this position?

Those who manage to get that first job in spite of these handicaps find that the marketplace ecosystem cannot effectively protect them from exploitation. For example, when licensing laws excluded blacks from the trades, these would-be entrepreneurs swelled the ranks of those seeking employment. Employers had the upper hand when the former slaves were no longer permitted to start their own businesses. By supporting aggression, we put blacks and other disadvantaged groups at the mercy of prejudiced employers. The disadvantaged workers were sacrificed for the benefit of consumers who received no net benefit at all!

Take care of your customers and take care of your people and the market will take care of you.

- Tom Peters and Nancy Austin, A PASSION FOR EXCELLENCE

Wealth comes from successful individual efforts to please one's fellow man... that's what competition is all about: "outpleasing" your competitors to win over the consumers.

- Walter Williams, ALL IT TAKES IS GUTS

DAY CARE LAWS LIMIT PRIVATE-HOME CENTERS THAT PARENTS LIKE BEST. For about 17 years, Susan Suddath kept other parents' children in her home... The state of Maryland... told her she would have to reduce the number of children, or close down... her basement was too low in one place. Almost 6 feet tall herself, Mrs. Suddath assured the inspector she would be the tallest person in the room. But he couldn't bend the law.

- The Wall Street Journal, October 26, 1982

...Northrup cited an Eagle Comptronics Company incident where a group of women, who also were single parents, contracted to assemble electronic components in their homes. The State Labor Department, he said, closed them down under the anti-labor law, so the work is now contracted out of the country and the women, who were supporting themselves and their families, now are on welfare.

- Ithaca Journal, September 11, 1982

The more laws and restrictions there are, the poorer people become.

- Lao-tsu, TAO TE CHING

As aggression is used to limit the creation of wealth by the disadvantaged and to augment the income of the advantaged, the gap between rich and poor widens. Since the disadvantaged create less wealth than they otherwise would, the society as a whole is poorer. Now we can begin to understand why the distribution of wealth is most even in countries with the highest GNP per capita (e.g., Switzerland and the United States). (17) Countries can decrease poverty and uneven wealth distribution by abandoning the aggression that restricts the creation of wealth by the disadvantaged.

Many disadvantaged Europeans immigrated to the United States because aggression-through-government in their homeland forbade them to create wealth for themselves and their loved ones. They wished to go where their children would not have to beg for permission to create wealth. Today, their descendants find themselves in the same trap, which they have helped to create by refusing to honor their neighbor's choice.

This situation is tolerated, even encouraged, by the well-to-do in the belief that widening the gap between themselves and the disadvantaged makes them winners. People in the trades saw their incomes rise as their licensing laws forced blacks out of business after the Civil War. Licensing laws prevent ambitious, unskilled workers from offering customers a better deal than highly paid union members could. Aggression appears to serve these special interest groups well.

However, this gain is largely an illusion as Figure 4.2 shows. When we look closely, we see that aggression is a lose-lose proposition for everyone!

In the absence of aggression, everyone creates goods and services, so that the Wealth Pie and our Piece of it (shading) is as large as it can be for our current level of knowledge.

As licensing laws and minimum wage laws forbid the disadvantaged from creating wealth, the Pie shrinks accordingly. Our Piece (the goods and services our money can buy) is proportionately diminished.

Because those who lobby for and enforce these laws create no new wealth themselves, the Pie shrinks once again, making our Piece smaller as well.

As skilled workers, we may see our Piece of the Pie increase relative to everyone else's with these changes, but the absolute size of our Piece is smaller than it otherwise would have been. We cannot buy wealth that does not exist, no matter how much money we have relative to everyone else. Even with the extra dollars, we have much less purchasing power than we would have had in the absence of aggression.

The enforcement agents who keep the disadvantaged from producing wealth produce none of their own. Consequently, they must take some of ours in the form of taxes. Our diminished Piece shrinks further.

To survive, those who are not legally permitted to create wealth demand that the law enforcement agents take some of ours- at gunpoint, if necessary- as taxes to provide welfare. Our Piece of the Pie shrinks accordingly.

Both the employed and the unemployed battle to control the force of law to gain an advantage. Each group attempts to have the guns of the law enforcement agents pointed at the other, taking turns being victims and aggressors. This is not brotherly love; this is war! The only difference between this war and conventional ones is that both sides take turns "capturing" the only weapon - the government. Because each side occasionally "wins," both have the illusion of gain. The cost of the weaponry of aggression (lobbying, limiting the creation of wealth, supporting those who create no wealth) is so high that both sides lose in the long run.

Hostility is created and wealth is not; other fallout occurs as well. Against the background of chronic unemployment, a belief emerges among the advantaged that some people are simply not competent enough to ensure their own survival. The disadvantaged, trapped by aggression and told that only more aggression-through-government can save them, begin to believe in their own impotence. While one segment of society justifies its aggressive actions on the basis of its own alleged superiority, another segment cringes with loss of self-esteem.

The Easy Way Out

In a society without minimum wage or licensing laws, disadvantaged individuals would not be excluded from creating wealth, as they are today. Opportunity for on-the-job training with pay would be readily available. If employers did not give adequate pay raises to individuals who performed well, the employees would have the option of starting their own businesses, possibly competing with their former employer. In this way, the marketplace ecosystem protects a worker from exploitation.

Approximately 80% of all new jobs are created by small businesses. (18) Destroying small businesses through the aggression of licensing laws is the fastest way to destroy jobs. As small businesses are thwarted, large companies dominate. As jobs are destroyed, employers get the upper hand. As people become even poorer, dependence replaces self-sufficiency.

If small businesses were not stopped at gunpoint from creating goods and services, consumers would have more options and lower prices. No one would need to support enforcement agents, lobbyists, or the unemployed. Available wealth would be increased greatly and everyone's piece of the pie would be correspondingly larger.

If we truly wish to narrow the gap between rich and poor, while increasing the wealth of all, the most effective thing we can do is to say "No!" to the aggression of minimum wage and licensing laws. Instead of interfering in the voluntary transactions of others, we simply honor our neighbor's choice! It's that simple!

What do we do about those who would exploit or discriminate against the disadvantaged? When no physical force, fraud, or theft is involved, we simply let them reap as they sow. Employers who treat their employees poorly will lose them to the many other opportunities available when the marketplace ecosystem is free from the aggression of minimum wage and licensing laws. Employees who stay with an unenlightened employer are either happy where they are or they aren't sure how to make a move. If we want to help them, we can encourage them to apply elsewhere, show them how to improve their skills, or hire them ourselves. Such actions require us to get personally involved with the disadvantaged and to truly show our concern and care. Surely, action of this type bespeaks brotherly love more than pointing guns at selfish employers!

In working with the disadvantaged in this way, I have discovered that they frequently prefer a steady, safe job with low pay to the rigors of job hunting, interviewing, and the uncertainties that come with a new position.Some choose to accept low pay for jobs they are overqualified for in return for a low-stress, supportive environment. Those who really want to get ahead usually know what they need to do.

A common belief in our society is that aggression can be used to rectify destructive social attitudes, such as prejudice and discrimination. Many people supported minimum wage laws because they were supposed to help, rather than hurt, the disadvantaged. As we've seen, such aggression hurts those it was intended to help.

Some licensing laws were supposed to protect the consumer rather than the worker in areas where a mistake can be life-threatening, such as electrical or medical work. In the next chapter, we'll see again that aggression, as usual, harms the very people it is supposed to help.

We've tolerated, even encouraged, the aggression of some licensing laws. We believe that they protect us from selfish others who would otherwise give us low-quality service, especially when a mistake can be deadly. The available evidence, however, suggests that our aggression in the form of licensing laws hurts us, rather than helps. Quality is most often compromised, not improved, by licensing laws.

To understand how this happens, let's review what we know about the impact of licensing laws. Licensing always lowers the number of service providers by imposing extra requirements, such as citizenship, schooling, monetary payments, or apprenticeship for those wishing to create wealth. In the previous chapter, we saw how licensing limited the number of taxi drivers and home child-care providers while increasing the prices charged by those still legally permitted to create wealth in those professions. Studies show that whenever the number of service providers goes down, more people, especially the disadvantaged, either do without the service or do it themselves. For example, when the number of plumbers decreases because of licensing laws, retail sales of plumbing parts go up as people attempt to make their own repairs. Dental hygiene is poorer in states with the most restrictive licensing requirements for dentists, because fewer people can afford regular checkups. For the same reason, the incidence of blindness increases in areas with the most stringent licensing for optometrists. Accidental electrocutions go up when licensing requirements for electricians increase. (1) Licensing laws intended to protect us can- and do- kill.

By limiting availability, licensing laws lower the overall amount of quality service delivered. The negative impact of decreasing availability far outweighs any increase in quality that may occur, as the above studies indicate. Evidently, few people attempt to do work for which they are totally unqualified. Licensing laws prevent many more people who have some qualifications from performing simple services at affordable prices. The observation that licensing laws lower the overall quality of services delivered takes on a very personal meaning when we realize that one of the most highly regulated (licensed) sectors of our economy is the health care network.

For most of us, state-of-the-art knowledge of how to stay well and get well will be the primary factor in determining how long and how well we live. Licensing limits the availability of a service, thereby lowering the overall quality delivered. Thus, we would expect our health care to be of substantially lower quality than it could be in the marketplace ecosystem undisturbed by our aggression. Let's examine two major aspects of health care regulation- licensing of physicians and pharmaceuticals - to see if we have chosen a cure that is worse than the disease.

The Marketplace Ecosystem: Honoring Our Neighbor's Choice

In the mid-1800s, doctors learned their profession in medical schools, by apprenticing with another practitioner, and/or by developing their own therapies. (2) Many individuals limited their practice to specific areas, such as midwifery, preparation of herbal remedies for common ailments, or suture of superficial wounds. This diversity in the training and type of practice encouraged innovation and allowed individuals to patronize the health care provider who seemed best suited to both their needs and their pocketbooks. Good healers were recommended by their clients, while those unable to help their patients soon found themselves shunned. Physicians reaped as they sowed. The patients voted with their dollars, thereby regulating the quality of health care. The customer was king.

Aggression Disrupts the Marketplace Ecosystem
Lowering Quality

As long as health care providers did not lie about their qualifications and past successes, the marketplace ecosystem evolved a natural balance. Some individuals, however, misrepresented their skills to attract patients. By lying about their expertise, they disrupted the marketplace ecosystem with the aggression of fraud. Patients who entrusted themselves to such individuals sometimes risked their very lives.

Americans were in a quandary. They wished to continue to honor their neighbor's choice but didn't know how to deter aggressors. Had they understood the other piece of the puzzle- the power of having aggressors compensate their victims- as described in Chapter 13 (The Other Piece of the Puzzle), the balance of the marketplace ecosystem would have been rapidly restored.

Unfortunately, even today the powerful impact of this second principle of non-aggression is not recognized or understood. In Part III (As We Forgive Those Who Trespass Against Us: How We Create Strife in a World of Harmony), we'll learn more about this principle and how its application would have defused the practice of medical fraud. For now, however, let's focus on the high price Americans paid by choosing to fight aggression by becoming aggressors themselves.

By the early 1900s, every state had agreed to the aggression of physician licensing. To obtain a license, healers had to meet the requirements of the licensing board. Without permission to practice, they would be stopped- at gunpoint, if necessary- from treating patients who still wanted their services. If our neighbors didn't choose as the licensing board did, their choices would no longer be honored, even if the unlicensed healer could cure them! (3) The consumer was no longer king; the licensing boards were.

The licensing boards in each state soon began refusing licenses to health professionals who had not been trained at one of the "approved" medical schools. Only half of the existing medical schools were approved, so most of the others had to close their doors by 1920.4 By 1932, almost half the medical school applicants had to be turned away.5 Those who apprenticed, went to unapproved schools, or developed their own therapies were stopped- at gunpoint, if necessary- from healing.6 As a result, the number of medical doctors per 100,000 people dropped from 157 in 1900 to 125 by 1929. (7) Specialists, such as midwives, were usually forbidden to practice unless they had a full-fledged medical degree. (8)

As medical knowledge expanded, a smaller number of physicians were available to perform an ever-widening range of services, so that the shortage created by licensing became even more pronounced. Just as more people die of electrocution when licensing requirements restrict the number of electricians, the decreased number of physicians in the early part of this century almost certainly resulted in poorer health care, especially for the disadvantaged.9 Until 1970, the physician to population ratio remained below what it had been in the early 1900s!7 By 1985, this figure had risen to 230 per 100,000,10 but the time required for each patient had dramatically increased as well because of a more extensive array of procedures, preventative annual physicals, and more involved diagnostic procedures. Naturally, with more work and fewer physicians, the price of medical care soared.

One measure of the doctor shortage is the average work week, estimated at 60 hours for practicing physicians and 80 hours for those in training. (11) Because of their fewer numbers, physicians today tend to see a whirlwind of patients in their long working hours. A transplant surgeon with whom I was collaborating once asked why I had elected research instead of medicine. My reply, only half-joking, was that I was unable to function competently after 48 hours without sleep. He admitted in all seriousness that one needed such an ability to get through hospital training and to practice in the more demanding specialties such as his own.

Such a long workweek can result in serious oversights. My own mother, in her late fifties, went to her doctor with a small breast lump. The doctor, although aware that five of her relatives had died of cancer, did not even order a mammogram. Embarrassed by the professional brushoff, my mother did not confide in anyone until the tumor was unmistakable - and had just begun to metastasize (spread). A few short years later, my mother drew her last breath.

The saddest part of this story is that it is not unique. My mother's best friend and my own ex-mother-in-law had almost identical experiences and met the same premature fate. Another friend survived a rapidly growing oral cancer only because his dentist insisted on its removal in spite of his physician's advice to "wait and see."

Only heart disease kills more Americans than cancer. (12) Any practicing physician can certainly identify it if he or she takes the time and trouble to investigate. Were the doctors whom my family and friends visited just too harried to provide that care? Is physician overwork causing major medical mistakes?

Some Californians think so. In 1990, they attempted to pass a law stopping the hospital physician- at gunpoint, if necessary- from working longer than 80 hours a week! (13) More aggression is not the answer, however.

Inhibiting Innovation

Shortages and erratic care are only the tip of the proverbial iceberg. Quality care is compromised in ways other than restricting the number of physicians. By determining who can practice, the M.D.-dominated licensing boards define what constitutes legitimate medicine. In 1938, students of homeopathic, osteopathic, and chiropractic medical schools could no longer qualify for licensing as medical doctors.14 Hospitals or medical schools that dared to employ them risked losing their approved status. Since licensing