Back to course 'ECON104: Principles of Austrian Economics II'

Topic outline

  • Unit 8: Security and Defense

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    In unit 8 you are challenged to think about security and defense in terms of spontaneous emergent order. Can they emerge in a market? Why and why not? We focus on the work of Hans-Hermann Hoppe and discuss the Hobbesian myth and the positive case for security as a private good. We question whether governments should have a monopoly on security and defense and explore other possible alternatives to this question.

    Completing this unit should take you approximately 2 hours.

    • Students must
      Mark as done
      Upon successful completion of this unit, you will be able to:
      • describe how security and defense can be considered a good and why a government monopoly on any good, including defense, leads to higher prices, reduced quantity, and restricted variety for consumers;
      • explain the Hobbesian myth;
      • evaluate the positive case for the privatization of security and defense; and
      • explain how the privatization of security would lead to a better product for consumers.

    • 8.1: Lecture

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        Lecture Page
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        Monopolies are usually bad for consumers. For example, AT&T was highly profitable as a legal monopoly in the 1970s, and in 1984, the company was broken up into seven regional telephone carriers due to government intervention. The breakup gave consumers access to more choices and lower prices.

        Should the government have a monopoly on security? The challenge for citizens is the balance between security from those who do us harm and security from government agencies like the NSA, which has the right under the Patriot Act to check an individual's emails and phone messages. There is a case to be made for the privatization of security and defense. Watch this lecture to understand why it would be better for consumers if security and defense were privatized.

        Topics covered include:

        • Hobbesian myth
        • Consequences of a government monopoly on defense • Arguments in favor of privatizing security and defense services

        Key points:

        • A monopoly in security is bad for consumers
        • Private security is not only possible but will be far better for consumers
        • The Hobbesian myth: In the state of nature, a permanent “underproduction” of security would prevail
        • Constitutions don't fulfill their role in limiting governments because the government itself interprets and enforces the constitution

    • 8.2: Discussion

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        Discussion Page
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        Since you have watched the video lecture for unit 8, it's time to watch Saifedean moderate a discussion on the unit's theme by addressing questions asked by your fellow classmates. As you watch the discussion unfold, take notes to help you retain information. Make sure you watch the entire discussion seminar video; otherwise, you may skip over important points. To get the best learning experience and mastery of the major concepts covered in this unit, you'll want to watch all videos in their entirety.

        Topics discussed include:

        1. Existential crisis and how humans react
        2. Rivalry and excludability in public goods
        3. How gun ownership relates to private defense
        4. Security and Defence under different political and economic systems