Gresham's Law and the footballer

Bad money drives out good, says Gresham’s Law supposedly. Except that it doesn’t. Bad money only drives out good if the state imposes legal tender laws that stop the market from operating properly.

In a free market coins have a purchasing power that’s related to the quantity and fineness of their metallic content. When the state starts to “clip” coins, by reducing their size or by reducing the fineness of the metal, the natural market response is to value such coins less than unclipped ones. Market forces will lead to a coin that’s been clipped by 5% having 5% less purchasing power. The state then attempts to get round this by enforcing legal tender laws that try to enforce equal value on coins that don’t have the same physical attributes.

Naturally there is a market response to this legal tender law too. Once the existence of the clipped coins becomes known people start to pay close attention to their money. If a South African bus driver asks you for a rand for a ticket, you’re not going to hand over a Kruggerrand are you? No, you're going to hand over a "clipped" rand. The bad money circulates and the good money is hoarded and thus driven out of circulation. The market responds to the state's intervention.

In a free society the same principles would operate when it comes to freedom of speech.

I remember my first trip to the US. At a shop checkout desk there was a newspaper with a headline: “Elvis seen on Moon”. Great I thought: we’ll be getting some new records. The next day it was something like: “Alien spaceship lands in Central Park”. Damn, I’d missed it. But then I started wondering why none of the other papers were carrying these stories. By the third day it was: “Fed plans to stop inflation”. Then I knew it was all a con. The point is this: in a society that allows free speech, the right to be believed has to be earned in the marketplace. And that’s how it should be here and now.

As far as I can see there are only two justifications for restricting free speech.

First, when you agree to such a restriction in a contract. For example, you work for a pharmaceutical company and your contract of employment bans you from giving away trade secrets. If you break that agreement and are fired, you deserve what you got. Besides, that would be a civil matter with there being no question of the state threatening to lock you up.

Secondly, it is legitimate to ban speech that threatens to initiate violence.

Otherwise the right to free speech is absolute. Ultimately these ridiculous injunctions and super-injunctions are designed to protect reputations. But a reputation is what goes on in someone else’s head and it is ludicrous to legislate about people’s thoughts or about the verbal expression of those thoughts. No one else has a property right in your mouth.

Ah, I hear some of you saying: “That would mean that all kinds of scurrilous stories will fill the papers.” Yes it would – for the first week or two. But then we’d quickly learn not to believe everything we read in the press. Some of us are there already – I’m now dubious about reported sightings of Elvis. But once there is a “free for all” in communicating the market will sort it all out. Only those writers and broadcasters that get it right over a long period will be trusted. The rest will be laughed at. And that’s just how it should be.

The state’s legal tender laws were an attempt to steal from the public by forcing them to accept devalued coins. The public reacted by hoarding the sound coins.

The rich and powerful got the state to restrict freedom of speech. And now, with technology and globalisation on its side, the public reacts by demanding that our freedoms be restored.

We need to get rid of state interference in both the production of money and in the production of words. Let the people drive out the bad laws.