That's a good point. I've never thought of that.

I think we should gather as much information as possible
now so that we can use it to help FSP achieve our goal.

Secede? Umm...I think the precedent against that was set about 150 years ago, quite bloodily. As for the constitution, our current govt. seems to bear only a remote connection to it.

You're right that active resistance by the state govt. can probably help reduce the impact of the federal govt. Some. But ID/addresses/paper trails are not mandated by the states. ie think of all the banking laws like "Know Your Customer" - they are all federal. SSN is federal. Requirement to withhold employees income is federal. etc.

There will be less busts if the local cops don't participate. So they'll just send in a lot more DEA and BATF agents (they're in on the big busts already).

I'm not saying a free state can't do anything. There are some ways it can increase freedom for its citizens, and some ways it can help them fight the feds. But all the worst stuff is federal. And if a state denies federal jurisdiction...they got no chance.

You don't seem to be talking about the actual USA here, but about some romantic ideal of some similar country. To be frank, you're in libertarian la-la land.

So there would be companies that were like banks, but not, like PayPal. They wouldn't be FDIC insured...No paper trail would mean everything is essentially invisible to the government...The biggest threat would be an audit by a government agent, but where would they go if the business in question doesn't have an address? A branch office? ...

Let me repeat this. There are laws which keep this from happening, and they are federal. Banks aren't FDIC insured because they want to be, its because there are federal laws defining what it means to be a bank, and federal regulations. What PayPal can do is severely limited by banking laws. You cannot just start providing banking services in the US. Its illegal. Being in a free state doesn't make it any less illegal.

Tell me how the feds are going to have any trouble tracking down a restaurant. Or any other of the vast majority of businesses which depend on a fixed location. How does taking over a state government make the paper trail disappear? Part of that paper trail is *federal* forms. They don't need to find the hub of a business. They find one branch, and if the branch doesn't tell them where its hub is, they treat it as a separate entity, check its tax status, and if its an evader, confiscate all its physical assets and arrest its employees.

You can operate an illegal business right now. A few do. But not many, because its easy to get caught. If its so easy, why isn't everyone doing it? Ok, so it will be a little easier to stay underground in a free state. So there will be a few more of them. But I don't see how a free state dramatically changes the forces that keep people in the aboveground economy.

Fortunately there is a law stating the government cannot deploy military troops for use on domestic soil.

In your imaginary country, perhaps. Here in the USA, the war on drugs violated that law, and the war on terrorism has continued in the same direction. And the law clearly does not apply to secession, as the Civil War precedent demonstrates.

If the whole economy were invisible, where would the DEA and BATF go? And why would they go, if they were never called in by local law enforcement?

Tell me how you make a restaurant invisible? If the law says every business has to file tax forms, than the IRS just goes building to building, checking to see if businesses are legal, and confiscating the assets of those that aren't.

The DEA and BATF don't have to be called in by locals. Sometimes they are, sometimes they operate independently. If the locals aren't on their side, they would operate entirely independently. Its not like there is some law which says federal agencies can't butt in unless asked by the locals. The locals have no choice about yielding jurisdiction.

Why not? What pressure can the federal government impose, really? Their guns, used to enforce their edicts, are currently in the hands of cooperative local police.

Put this comment in a little bubble coming out of the mouth of a corpse in a civil war grave, and you can see how much sense it makes. Arguing optimistically is one thing, but you should at least be on an optimistic version of the same planet! You seriously think that police have anywhere near the firepower of the united states military, which spends more money than the next 20 countries in the world combined? Think about the National Guard.

Are the feds likely to invade a state lightly? Of course not. Are they likely to invade one which tries to secede (explicitly or implicitly)? Hell, yeah!

What does all this invisible economy stuff have to do with a free state, anyway? Why isn't it happening now? I think you can make a good argument that slowly, over time, the invisible economy will grow, and we see it happening now (ie buying over the internet reducing state income taxes). But to think it will be fast or dramatic (a la _Lodge of Wayfaring Men_) is foolishly idealistic, and I don't see how it is connected with a free state at all.

The premise was to imagine that the state government of NH had been successfully taken over by the libertarians...I agree the premise itself is kind of a long shot

I don't think that's a long shot. What I find unbelievable is your assumptions about the rules governing the rest of the country.

PayPal accepts and holds money, and transfers it on request...PayPal is effectively a bank that is not a bank. Joe down the street can accept your money, under a numbered account, and keep it under guard for you

PayPal is an example of what you can do without being a bank. I'm not saying that you can't perform any financial services without being a bank. But there are severe limitations, a lot of things PayPal is not allowed to do. This puts it at a competitive disadvantage relative to real banks, which is why we all don't just use PayPal.

Banks need to have good reputations to indicate they won't abscond with your money. Joe may disappear someday with our cash. The tasks of hiding from the government and displaying reputation seem almost diametrically opposed. This doesn't mean its impossible, but its yet another barrier making it difficult for black-market banks to compete.

This isn't a restaurant, this is a dinner party for a bunch of my friends.
So a fed poses as a customer and pays for the dinner (like a drug bust). Case closed. This ain't the movies, G, you don't get rid of cops with a one-liner.

The laws that define corporations are on the state level. It is possible that under a libertarian run state government there simply wouldn't be corporations

Businesses generally don't just operate in one state. They buy supplies or sell products to other states. Most supplies for most businesses, for example, are bought on credit. You may be able to find out-of-state businesses that will deal with your "individuals", but it will be harder. They'll have to pay for goods upfront. This is yet another factor which puts the black market at a competitive disadvantage.

So, this has to be done through a federal court to be effective

Why is this a problem? Evasion of federal tax is a federal crime.

And keep in mind it's only the word of the agent against the businessman, since there's little or no paper evidence

Who needs paper evidence when you have a warehouse full of widgets that don't exist on anyone's books? We may not know who owns 'em, but those widgets are going straight to govt. auction.

Your description is just so naive. Have you read about the civil asset forfeiture laws we have? You don't need to prove that an individual has done anything! The property is considered to have committed a crime, and confiscated. To get it back, the owner has to launch a case to prove that its his and legal - and in this context, they'd then nail him for tax evasion. Most people are just going to stay legal and avoid the trouble.

If you examine these forces, I think you will see that they are 99.99% local. How many federal FBI, DEA, and BATF agents are there compared to the number of local and state police? There simply aren't enough federal agents in the state to impose the force you're talking about without the cooperation of local law enforcement.

Umm...99.99% is off by several orders of magnitude. Again, you seem to be on a different planet. Let's see:

There are approximately 1 million state and local law enforcement employees (perhaps a little more, that's a 2000 stat and my other stats are 2003)
10K DEA
27K FBI
5K BATF
4K USPS Inspectors
5K US Marshals
3K IRS Criminal Investigations

So that's 54K already, which is over 5%, and I'm sure I missed some. Rather more than your 0.01% estimate. Its true that there are more local law enforcement. That's because most crimes are minor: speeding, robbery, whatever. This doesn't change the fact that if some state starts trying to commit a large number of federal crimes (like tax evasion), there are tens of thousands of feds available to go nab 'em. They can concentrate their manpower on the recalcitrant state to make an example out of them - and doesn't that seem likely?

Note that there being many more local cops doesn't indicate that the feds rely on the locals. It might just indicate that the jobs the locals do (write tickets) happen far more often and so require more labor than what the feds do (big drug busts).

Also note that the US military is ~1.4M people - more than NH. A substantial portion of these are National Guard, who operate domestically. (You may have seen them at the airports after 9/11).

Taxes are the lifeblood of the government. If they need more personnel to collect them, they'll hire more. Why not? Its a profitable investment.

I think you are making the classic economic analysis mistake: you are assuming a static system, rather than the equilibrium of a dynamic system. Thus your model of the result of changing one factor does not take into account other changes.

In this case, you seem to assume that the feds would let a state get away with seriously obstructing their ability to extort from the populace. That seems almost inconceivable to me. Not only is taxation their livelihood, but it sets a precedent that could enable the whole country to get free. The mafia may control a big territory, but if you try to resist them in even one little town, they're gonna start blowing people away. That's the reality of how power works.

NH has about 0.5% of the population of the country. Linear extrapolation suggests that they have 5000 state and local law enforcement officers. The federal government has over 50,000. Thus if NH becomes a problem, the feds can assign as many feds to NH as there were cops.

Even if they didn't have enough people, do you really think that they wouldn't hire them? Get real!

You can shoot the first IRS agent and bury him in the woods. The next one is gonna have a posse of Marshals with him. You shoot them, they'll declare a state of emergency and send in the National Guard.

You might get away with avoiding taxes for a few years if the state eliminates some paperwork. The feds will just pass federal laws mandating whatever they need. Action, reaction.

The only reason the federal government, as inefficient as it is, gets all the money is because the citizens make it so easy
it is in the interest of the citizens to make it as difficult as possible for the federal government to take their money

Notice the combinaton of these statements : citizens don't want to cooperate, but they do anyway. They do because its in each persons rational self-interest to do so. Citizens make it easy because the men with the guns make it the best things for citizens to do. I don't see why that will change dramatically just because there is a free state. It will change a little, sure. But just like its in most people's interest to report their income, it will be in most businesses interest to report theirs.

Think of economies of scale: any business with significant operations outside NH needs to be aboveground. So only small local businesses can be in the black market. It will be much easier to establish a reputation for aboveground, national firms. It will be easier to get bank loans (you have the banks of the entire country to go to). You can hire temp employees from Manpower. Above-ground consultants can consult for any firm in the country, black-market consultants have to consult with black-market firms. The list goes on and on and on.

Everyone is part of a global network of trade that relies on reputation. Sad though it is, that reputation is connected to legality. Duck out of that system, hide from it, and you incur huge economic costs.

Yeah, if they can serve as swing votes, then the congressman will have some federal influence.

Given that defense is an inefficient, pork-filled money-waster, it seems unfair to not count it as part of federal outlays :). But more importantly, remember that the question is not how much gross money is spent, but how much money is wasted (gross money spent times some inefficiency factor). My claim was about the inefficiency factor, not the gross. The lower the factor, the less room for improvement is available. When I talked about states being "smaller", I meant in terms of population and geography.

I've read statistics like: in Montana, which has some federal land and some state land, logging roads on state land cost 1/10th as much to build per mile as on federal land. State land makes a modest profit on logging, federal land loses money.

Just from basic economic theory, I find it hard to believe that state governments are less efficient than the federal government. Your kids go to the schools those taxes pay for. You drive on the roads, hike in the parks, etc. Its not great feedback, but its a lot more feedback than exists at the federal level.

I could be wrong, I have not studied state vs. federal govt in detail. But I don't think stats on gross size are so relevant. State and local governments provide genuine services (building highways, running schools) that people value. I think that is much less true of the feds.

($1.5 trillion / 300 billion people) [my emphasis]

Watch where you're throwin' those billions around, k?