London's Burning (and not with boredom!)

Why has almost nothing been done to stave off the rampant destruction in London? The answer clearly lies in the fact that governments are not punished for failing to defend us. While the government has been entrusted with protecting the people's property, it will not be liable to pay for the damages that have been done. Essentially, the government has very little incentive to deploy its forces barring massive public support for the measure. It is afraid of deploying the military because it is afraid of the negative public reactions that will result from such a massive display of force, especially since giving the army discretionary power will inevitably lead to abuses that go unpunished (which is partially what triggered most of these riots: look up Mark Duggan for more on that).

Instead of trusting in the government's wisdom and benevolence in dealing with crime, why can't we hire private companies to insure our property against these threats? It is because the government has monopolized the use of force within its domain (especially in the UK, where all gun ownership is illegal). Insurance companies would only be able to provide such protection and reimburse us the full amount of the damage done if they were given the power to use force to catch these criminals. As a pacifist who wants to see coercion reduced to a minimum, I wonder why protection can't be provided by the market...it's clear that monopoly government hasn't done the job all that well.

It seems obvious to me that voluntary association with insurance companies could easily replace our current justice system. Each of us would hire these insurance companies to provide two services that would fill the gap. First of all, we would hire an insurance company that would guarantee to pay us for any damages done by criminals against our property: if such were the case, that company would do everything in its power to ensure our protection, and if any damages were done, they would do everything they could to catch that criminal and force him to pay those damages. How would that criminal have an obligation to pay? This is where the second aspect of these insurance companies comes into play.

To prevent a person from being seen as an outlaw by the community, to prevent a person from being socially ostracized and strangled from all social interactions, that person (even if s/he did not have property) would have to have an insurance company guarantee that it would pay any damages that that person inflicted on others. The entire motivation to commit crimes would be removed under such a system because crime would be nearly impossible, successful criminals would almost always be caught, and after being caught, these criminals would become uninsurable, which would basically force them to live as outlaws unless they submitted themselves to severely strict regulations (such as house arrest).

Since the cost of these damages would be put onto private companies that were subject to competition, our protectors would have economic motivations to protect us, and they would ensure that we were actually safe from rampant destruction. In addition, criminals would be able to voluntarily choose their penal colonies.

For more on this, check out Robert Murphy's Chaos Theory: http://mises.org/books/chaostheory.pdf

http://www.youtube.com/watch?v=V0_Jd_MzGCw

The Power of Myth

Many people have perpetuated false conceptions of history to satisfy the fancies of their particular wills, and it has often led to destruction and tyranny. Marxists and Fascists were able to stay in power for so long in spite of their destructiveness and inefficiency because they painted a false image of the past and the outside world. The people were fooled into believing that their lives could never get better, that all progress and development stemmed from the wisdom and benevolence of their rulers. The North Korean state, for example, despite its overwhelming poverty, remains relatively stable because the people do not know about the outside world at all; for all they know, Kim Jong-Il scored a 38 under par during an 18 hole golf game, with 5 holes in one to boot.

If we can paint an accurate picture of the past, however, we can begin to see the course that humanity will take. Historically, if a society could clearly define and protect its property rights, it would experience tremendous growth and economic stability. As the resulting prosperity brought development and technological advances, the world became more and more interconnected; the new challenges and opportunities presented by cross-cultural interaction ultimately came from the prosperity which had originated in the societies that had been able to achieve peaceful cooperation at the local or regional levels. Men of merit and virtue slowly began to keep a larger percentage of the good they contributed to society, and more impressive technological advances resulted from this gradual but steady maximization of incentive and motivation, so much so that the internet has at this point allowed instant communication between everybody in the world.

But some might ask, why has so much destruction and poverty remained during this alleged progression to an ideal world? Hitler, Stalin, and Mao wreaked havoc, how can we say that prosperity and peaceful cooperation will win out? The short answer is natural selection. The society which allows consensual interaction to choose which ventures fail and which succeed, which allows evolution to take its course, will also be the society that wins the most converts (for those who are religious and object to evolution, let me just say that the Church has always accepted evolution as long as it did not deny predestination; the Church may have disliked Charles Darwin's anti-teleological theories of evolution, but he did not invent the term or concept; in fact, even Charles Darwin's grandfather, Erasmus Darwin, wrote about evolution, so Charles' contributions are hardly original). Even though terrible totalitarianism is in our collective memory, I think it is logical to say that the USA won the Cold War because of its ability to reward and encourage successful businesses and meritorious people (at least in comparison to the Soviets). After all, "God's plans twist at times, but always end up in the greater good." Even if dictators can fool their people for a time with false accounts of the past and the outside world, the truth always penetrates the artificial barriers that men construct. No amount of human effort will be able to completely suppress the historical truths, although it can definitely stymie the process.

If we can paint an accurate picture of the past, we will show the world that much progress results from emancipation and freedom from coercion and aggression, and that this progress is inevitable over the long term. Whichever society can achieve this improvement, at whatever scale, will achieve so much influence that other societies will imitate them and adapt to the future. Expanding on Schopenhauer's biological idealism, the truth coincides with the way of thinking that will benefit people the most (this essentially inspired the pragmatic conception that we should accept whatever works as a conditional truth, until a different theory is proven to be more effective). While teaching about the truthful historical injustices may not seem beneficial, while learning about the Holocaust shakes our confidence in the morality of humankind, a lack of meditation on the past will simply lead to repetition of past mistakes and further abuses of power. Obviously nothing will be able to capture the whole truth (especially because the truth is always expanding), but if we take a pragmatic approach we can assume that the truthful movements will win out.

The Role of the Centralization of Banking Power in Increasing the Severity of Panics

The banking panics of the Gilded Age were caused by the vast power of New York City banks to control the economy through control of the money and credit supply. These were symptoms of the National Banking System that had existed since the Civil War. Due to federal legislation, interior banks could only earn interest on their reserves by depositing them with larger national banks in New York City. When planting season arrived and the farmers needed credit, the interior banks would rely on the New York City banks to return their deposits and provide them with liquidity. This gave the New York City banks power over a large percent of the nation's capital, which gave them the opportunity to exert tremendous influence over the stock market and play speculative games for profit. During panics, these irresponsible investments would come to light, and the New York City banks would be unable to provide money to the interior banks. This would cause a contraction of the money supply throughout the whole country, which would decrease employment, prices, and investment. The rigid gold standard made these panics even worse because it did not allow for sufficient expansion of the money supply during times when the demand for credit was high. Nevertheless, there were many methods of providing liquidity during crises which effectively reduced the severity of these panics. The US Treasury, for example, would buy bonds back early and make deposits to shore up the reserves of shaky financial institutions. In addition, the actions of the New York Clearing House (NYCH) strongly affected the severity of the banking panics of the Gilded Age. The movements for banking reform in the early 1900s were strongly motivated by the need for a more elastic currency, but the reform movement did not attack the gold standard for constricting the money supply, and it did not attack the National Banking System for centralizing banking power in New York. Mainly spearheaded by big bankers, the reform movement instead fought for centralized coordination of banking power to create this much needed elasticity, and the Federal Reserve System replaced the National Banking System in 1913. Pooling gold and reserves in a central bank would reduce transactions costs, make it easier to expand and contract the money supply in reaction to the market, and create a system which was not biased against interior banks, but it would also lead to uniformity in the economy rather than diversity and centralized control of the economic fate of the nation.

The National Banking System had already increased the severity of the panics of the Gilded Age by concentrating banking power in New York City, yet the banking reform movement further centralized banking power by enacting the Federal Reserve System. In the National Banking system, rural banks had to keep their reserves in city banks if they wanted to earn interest, and city banks had to keep their reserves in New York City banks in order to earn interest. The New York bankers would use the interior banks' deposits to invest in the stock market, attempting to use their massive power over other people's money to affect market trends for speculative profit. If the New York banks had over-invested and could not meet the volatile credit demands of the interior banks, there was the danger of a panic. Louis Brandeis demonized JP Morgan and the New York Money Trust, claiming that “a main cause of these large fortunes is the huge toll taken by those who control the avenues to capital and to investors.” Brandeis recognized that the bankers in New York were using their control of credit for personal gain, and he endorsed legislation to make their activities and profits transparent to the public. Brandeis encouraged states to act as their own banks in order to cut out the middlemen, but government intervention would actually increase the power of the Money Trust. Some have argued that the Money Trust was quite incapable of controlling competition through their management of credit before the Federal Reserve System, and that the banking reform movement was the big bankers' reaction to the decentralization of power which was the trend after the mergers of 1901.¹

The increased power of the federal government over banking which came with the passage of the Federal Reserve Act simply increased the power of the big banks, since they could control legislation most easily at the federal level. The big bankers had most strongly supported the Aldrich Bill, which proposed the creation of a National Reserve Association run by bankers to issue the country's currency, set interest rates, and centrally regulate the whole country's money supply. Since the Aldrich Bill had given bankers the responsibility of choosing the managers of the central bank, it evoked much public criticism, and the Glass-Owen Bill would ultimately pass as the Federal Reserve Act under Wilson. While the Glass-Owen Bill gave more control of the Federal Reserve System to political appointees, it was similar to the Aldrich Bill in that it still created a central bank to coordinate the nation's access to credit, and "in certain spots even the language of the two bills was identical." The power of New York bankers had begun to decrease after the 1890s, and the banking reform effort which created the Federal Reserve System was meant to offset the decentralization of banking power. In fact, the Glass-Own Bill centralized banking power even further than the Aldrich Bill had proposed to, enacting national rather than regional control. Aldrich though that the Glass-Owen Bill would “be the first and most important step toward changing our form of government from a democracy to an autocracy,” making it clear that the Federal Reserve Board would determine the entire nation's livelihood. Ben Bernanke agreed with Milton Friedman's assessment that the Federal Reserve Board's irresponsible decisions in setting the interest rate exacerbated the Great Depression, and he promised it would never happen again, but why didn't he criticize the structural issues which give so much monopolistic power to one governing board, how can he vouch for the future chairmen? While the Federal Reserve Act would dismantle the National Banking System's pyramidal structure and level interest rates to the benefit of the South and West, its greatest advantage would be its ability to expand and contract the money supply based on the needs of the market. It would be impossible for the central planners to detect the needs of the market, however, because nobody, not even elected experts, can predict the future, and the flexibility and adaptability of money markets under free banking is preferable to the minor reduction in transactions costs achieved under central banking.²

While it would be easier to control the money supply under the Federal Reserve System, there were already a variety of methods which had provided for monetary expansion during crises. Clearing houses emerged as a simple way for banks to clear checks but they soon began to take on the functions of a lender of last resort. The panic of 1873 was solved quickly because the New York banks had pooled their reserves in the NYCH and had sufficient access to money and credit. The panics of 1884 and 1890 (I know what you're saying: what panics?) were ameliorated by the use of clearing house loan certificates, which acted as an internal currency for bankers and freed up money for public circulation. Benjamin Tucker's Liberty, a contemporary magazine, had recognized that these clearing house certificates were so effective because they had increased the money supply with currency that was not redeemable in gold. These certificates were not allowed to circulate among the public because the federal government would levy a ten percent tax on these notes and indirectly prohibit them. While Brandeis recognized that the federal government was taxing private and state bank notes out of existence, he did not consider the malicious effect this had on restricting credit when it was in high demand. In addition to the reserve pooling and the loan certificates of the clearing house, elasticity was also provided by the US Treasury, which “would often shift gold and currency to different regions” in order to provide credit where it was needed the most. During the Panic of 1907, Roosevelt's Treasury would provide credit to banks without any guidelines about how to spend it, using public money to insulate the bankers from their monetary mismanagement. The actions of the clearing houses and the US Treasury in expanding the money supply determined the severity of the panics of the Gilded Age, and the failure of the NYCH in ameliorating the Panic of 1907 can be seen as the catalyst which drove the banking establishment to clamor for a public lender of last resort.³

The devastating Panic of 1907 was so destructive because the NYCH, the traditional lender of last resort, refused to save the Knickerbocker Trust. There had not been a clearing house for the trusts, even though they carried out many of the same functions as banks, and the NYCH did not want to take responsibility for this one. The closure of Mercantile Bank, which had occurred due to a failed attempt to corner the market on United Copper Company stock, caused the subsequent failure of other banks which endangered the liquidity of Knickerbocker Trust. Even though there were adequate reserves, the NYCH had suspended cash payments to depositors for three weeks, and this only drove to worsen the panic. In addition, the NYCH refused to use loan certificates to increase the supply of credit during this severe crisis. The Knickerbocker Trust was finally saved when JP Morgan personally provided a loan, using its securities and assets as collateral. With the support of US Treasury deposits, Morgan was able to pool enough money to shore up the Knickerbocker Trust and prevent further bank runs and failures. The refusal of the NYCH to cooperate with the banks and expand the money supply increased the severity of the panic to such an extent that people began to look to the government to provide clearing house services for the banking industry.⁴

Bankers understood that severe panics could be avoided if the money supply could expand and contract based on the needs of the market. The National Banking System had caused such a concentration of money in the hands of New York bankers that the entire economy of the nation was reliant on the cash reserves in New York, which fluctuated radically based on the stock market trends. This inextricably tied the fate of the interior banks to the fate of the New York banks. Essentially, such a large amount of resources were under the control of so few banks that failure became an impossible option for the larger banks and trusts. In light of the centralized coordination of so much money, certain institutions became so large and essential that only the government could provide the guarantee that the bankers were looking for. A Federal Reserve System could be beneficial because it would be easier to expand and contract the money supply when necessary, but the fate of America's economy would be completely reliant on the wisdom of the Federal Reserve Board's decisions. These central planners would need to be able to predict future market trends in order to know exactly when to expand and contract the money supply for the benefit of the public interest. If the interest rates were set too low during periods of over-investment, a recession would be caused by the liquidation of these bad investments, and if the interest rates were set too high during recessions, there would not be enough credit to maintain price levels and employment. The Federal Reserve System, which mandates that the whole country's interest rate is to be set by one monopolistic governing board, does not allow for individual choice or secession, and this is a problem because the fear of losing customers to competition is the most effective check on irresponsible management. Without competition, public oversight is the only method of ensuring that the central planners are at least trying to act in the public interest, but the Fed's activities are not even transparent to the public! Even if we gain the right to audit the Fed, this will be insufficient because the uniformity of policy and the lack of diverse experimentation will still remain, and this deprives us from essential information which allows us to understand what is in our interest. In conjunction with the US Treasury, clearing houses were already providing the liquidity that was needed to protect the nation from panics and recessions. This kept the panics of the Gilded Age contained and small in comparison to later recessions. To solve the remaining elasticity problems, the reform should have focused on eliminating the ten percent tax on private and state-chartered bank notes to increase the flexibility of the money supply. In addition, the gold standard should have been lifted to allow money to be created with any sort of asset as collateral. Instead, big bankers guided reform to increase rather than decrease the centralization of banking power, and reliance on fewer and fewer banking institutions would lead to even more severe recessions and depressions.⁵

1Robert F. Bruner and Sean D. Carr, The Panic of 1907: Lessons Learned from the Market's Perfect Storm (Hoboken: John Wiley and Sons, Inc., 2007), p. 58; Elmus Wicker, Banking Panics of the Gilded Age (Cambridge: Cambridge University Press, 2000), p. 120; Louis Brandeis, Other People's Money; Gabriel Kolko, The Triumph of Conservatism: A Reinterpretation of American History, 1900-1916 (London: The Free Press of Glencoe, 1963), p. 146.

2Bruner and Carr, The Panic of 1907, p. 58; Brandeis, Other People's Money; E.W. Kemmerer, “Some Public Aspects of the Aldrich Plan of Banking Reform,” Journal of Political Economy (December 1911); Kolko, The Triumph of Conservatism, p. 251-3, 247, 244, 248; Kemmerer, “Aldrich Plan,” Journal of Political Economy.

3Wicker, Banking Panics of the Gilded Age, p. 16, 34, Bruner and Carr, The Panic of 1907, p. 107; “A Panic and its Lessons,” Liberty (December 1907), p. 9-10; Brandeis, Other People's Money; Wicker, Banking Panics of the Gilded Age, p. 115, Bruner and Carr, The Panic of 1907, p. 58-9, Kolko, The Triumph of Conservatism, p. 154; “A Panic and its Lessons,” Liberty, p. 9-10.

4Bruner and Carr, The Panic of 1907, p. 71-3, Wicker, Banking Panics of the Gilded Age, p. 84, Bruner and Carr, The Panic of 1907, p. 90-1, Wicker, Banking Panics of the Gilded Age, p. 111-3.

5William B. Greene, Mutual Banking.

Authority's Sacrifice of the Individual

Kobayashi Masaki's films criticized the cruelty of unchecked power. They show that authorities usually force the people to compromise their morals and sacrifice a part of themselves for the benefit of a greater organization or cause. The authorities use coercive tactics such as beating and kidnapping to carry out their masters' orders and to advance their own positions. These leaders merely need to maintain a pristine reputation among their superiors in order to keep their positions, and these superiors were typically far removed from the situation and aloof, making them unresponsive to the plight of the people. In his ten hour World War II epic The Human Condition, Kobayashi portrays a man named Kaji who is trying to bring justice into managing the workers. The military gives Kaji command of a portion of workers in an ore mine because he had written that production would increase if the workers were given better working conditions and a role in the decision-making process. If the managers negotiated with the workers rationally and treated them reasonably, there would be increased motivation and morale among the workers which would manifest itself in increased production. Kaji has difficulty putting his theory into practice because he is given command of a work unit composed of enslaved prisoners of war, and no amount of rational negotiation would allow them to forget their captivity. When Kaji is forced to witness the execution of some prisoners of war who were falsely accused of attempting to escape, he realizes that he cannot sit idly by while such injustice is carried out. His vocal opposition to the execution soon turns into a loud protest from the other prisoners of war, and fear causes the authorities to stop the execution. Kaji is forced into military service and can only hope that men will have their freedom soon.

Kobayashi criticized authority for suppressing people's individual decisions, adding that forcing individuals to go against their inclinations actually damages an organization. In Samurai Rebellion, for example, a strong samurai revolts and kills many of his master's soldiers because his master kidnaps his son's wife, suppressing their “beautiful love” that he would defend at any cost. In Seppuku, a lord does not permit a samurai a few days rest before committing suicide, and as a result his father gets revenge by defiling the lord's honor and defeating many of his men. Incurring the people's wrath by suppressing their freedom and forcing them to act against their inclinations proved to be damaging to these samurai lords, who were severely damaged by revolts against their cruel leadership. In The Human Condition, Kaji admits that better food and better living quarters would motivate the workers, but says that treating them like slaves and profiting off of their labor crushes their spirit more. Even though the Japanese give women to the prisoners of war to satisfy their bodily lust and to give them an incentive to work, this does not prevent them from attempting escapes, since freedom is what they truly desire. Beatings and executions only increase their desire to escape from this work, and “no matter what, they'll manage to escape” if they want to. When Kaji becomes a prisoner of war himself at a Soviet labor camp, he admits that “socialism is better than fascism,” but he still has reason to criticize the Soviets for treating individuals poorly in the interest of the higher organization. Even though the Soviets are responsive to prisoner complaints and try to stop beatings, they still direct orders from the top down and do not rationally negotiate with the prisoners to make policy. While the Soviets say that they must destroy human lives out of necessity, Kaji cannot condone any act of exploitation because it “forms a breeding ground of distrust that can't be wiped out.” Even though the Soviets believe that forcing conformity on the group is necessary for their survival, Kaji believes that suppressing an individual's morality is wrong in every situation because of the resentment it engenders, which ultimately damages morale and decreases productivity.

Kaji's inability to cope with his positions of authority shows that Kobayashi has a pessimistic view on whether the cruel authorities can simply be replaced with good men. While many of the leaders recognize Kaji's passion and put him into positions of authority, Kaji is unable to fulfill the role because it requires him to enforce orders from above that he typically does not agree with. His friend tries to convince him that accepting a leadership role in the government would allow him to “lead the sheep to greener pastures,” but he cannot keep his position or move up because he would have to defend the unjust actions of his superiors to do so. No good men would be able to tolerate the “conflict between work and self” that comes with a position of authority. In other words, the system is such that only cruel men who can enforce orders that are against their morals flourish in positions of power.

In Kobayashi's films, the only method of combating unjust authorities is to expose their misdeeds and compromise the security of their positions, but the higher authorities are typically so far removed from the situation that they are unwilling to expose any misconduct under them. In Samurai Rebellion, when the main character shows insubordination, the lord fears what would happen “if the other clans hear” of his breach of etiquette. While other samurai agree that the kidnapping is intolerable, they still follow the tyrannical ruler's directives because of his power, which is so absolute that they would not dare to try “pushing their thoughts through.” The main character cannot expose the lord's cruelty on his own because people were not free to leave the domain to possibly appeal to the Tokugawa in Edo. In Seppuku, the main character puts a lord and his samurai to shame and damages the lord's reputation among his own men, but this does not compromise the lord's position because he is backed by the power of the distant central authority. With the Tokugawa emblem symbolically looming in the background, the lord is able to keep the entire shameful incident secret from his peers and masters, so his position of authority is secure and there is no check to his cruelty.

Beyond his criticism of unchecked authority, Kobayashi explores methods of self-management of the lower classes in The Human Condition. When Kaji is given charge of a group of miners, he lets them choose leaders among themselves who will take part in the decision-making process. Allowing the workers to choose their own representatives is the first step that Kaji takes to introduce democracy and self-rule within his work unit. The Soviets also use this strategy, employing a Japanese representative to convey their orders so that the workers will feel as if the leaders are responsive to their concerns, which will boost their morale and productivity. When Kaji is promoted to private first class and is given control of a military unit, his compassion and concern toward the recruits led one of them say that “we feel safer with you here.” This shows that humane treatment and decision-making through dialogue and negotiation boosts the workers' spirits to a significant extent. In addition, when one of the characters says that “punishment should be per regulations,” Kobayashi is saying that arbitrary punishment is disruptive and disheartening when it is at the authorities' own discretion and the predetermined procedures and rules are unclear.

These films emphasize the irrationality of absolute authority and unchecked power. Kobayashi goes so far as to claim that any action which forces an individual to go against his morals or inclinations is wrong since it involves suffering and resentment which is significant to that individual. This violation of free will can only be eliminated if the authorities' directives are optional. Under coercive monopolies, threatening the leader's position by exposing his misdeeds and ruining his reputation among his peers and superiors is the only way to make authorities do the right thing. Even this is shown to be ineffective because the decision-makers are typically far off or disconnected from the actual situation at the local level. All of this destroys the workers' spirits and causes them to engage in protest and sabotage, which radically decreases efficiency. Kaji attempts to solve this problem and unleash the productive potential of the workers by granting them elements of self-governance, but the effectiveness of these reforms cannot be measured due to the fact that Kaji would quickly lose his positions of power as a result of moral indignation toward a peer or superior. Kaji is never able to experience Japan's transformation into “a country...where men are free,” although his hope for such freedom is never extinguished.

Humans' Inherently Self-Interested Perspectives

Many of the works of Kurosawa Akira convey the idea that humans have an inability to see the world objectively. Due to the fact that humans can only discern truth from their own biased perspectives, they act in self-interested ways whether they are actually trying to or not. As a result, Kurosawa seems to believe that people expend all of their energy to protect their own positions and increase their own power. In the first place, humans tend to act selfishly because they feel as if it is the only way to get ahead in this competitive world, but they would even act this way if they were attempting to do good because they are inherently delusional. Our goals and moral values are self-defined by the judgments that stem from our own individual perspectives, so people in positions of authority will inevitably use their power in self-interested ways, whether they are actually trying to act in the public interest or not. This causes Kurosawa to question the justice of unchecked authority, seeing that it inevitably leads to selfish abuses of power.

First of all, Kurosawa is quite pessimistic about the righteousness of humans. In Rashomon, for example, one of the characters says that "everyone is selfish and dishonest, making excuses." Kurosawa does not seem hopeful that humans can escape from this selfishness. When a samurai in Ran decides to split up his fief among his sons, hoping that they'll rule together cooperatively, one of the sons says that trusting "in our undying fidelity is nothing but madness and senility." As the sons proceed to fight one another to gain power over the whole realm, it is clear that this selfishness stems from the belief that one's position of power is always in jeopardy. As a result, one must secure one's power at all costs to pre-empt the ambitious usurpers. In Throne of Blood, for example, the samurai's wife convinces him that he must kill his close friend to prevent him from seizing power. She paints a portrait of the world in which "parents will kill children and children their parents to advance themselves in this world," and as a result the samurai kills his dearest ally.

Kurosawa believes that humans cannot leave their selfishness behind because of their inability to see the truth clearly, which leads them to have distorted morals and values. We are lead to believe that every account of the murder in Rashomon is a lie when one of the characters says that "it's human to lie, most of the time we can't even be honest with ourselves." Rather than attempting to see the objective truth, humans "just want to forget the bad stuff and believe in the made up good stuff, it's easier that way." This clearly shows that people choose to conceive the world in ways that are convenient and self-beneficial, whether they are trying to or not. In Ikiru, the main character justifies his meaningless work as a bureaucrat by saying that "I was a mummy for my son." He considered it to be righteous to accumulate money and power for the sake of his son. Maintaining the comfort and security of one's family is one of the primary justifications for acting in ways that are selfish and wrong from an outside perspective. In The Bad Sleep Well, the vice president who was misusing public funds and taking kick-backs was unwilling to step down from his position of power because his family would suffer and have to give up their luxuries if he did. The executive is able to live free from regret because he has such a distorted perspective of righteousness, and these delusions are what allow him to act in ways that are not in the public interest. In Rashomon, when one of the characters ponders whether anyone is good, saying that "maybe goodness is make-believe," Kurosawa questions the entire basis of authority, asking whether there are any righteous actions that are definitely good for the people.

Kurosawa observes that all unchecked authority and unquestioning obedience begets selfishness, evil, and inefficiency. In The Bad Sleep Well, loyalty and devotion to superiors leads executives to kill themselves in the interest of the corporation at large. If they had questioned the authorities, however, they may have realized that their suicides simply protected the power and positions of their bosses to the ultimate detriment of the corporation and society at large. The main character believes that exposing his evil deeds is "the only way he'll ever make up for what he's done." Kurosawa conveys the belief that the only way to keep authorities in check is to open all of their actions to public oversight and scrutiny. In Ikiru, for example, the main character is able to get the park built because the deputy mayor was subject to a public election, and ignoring the request would have looked bad and may have jeopardized his position of power. As the deputy mayor shrugs off the initial request to build a park and instead starts talking about geisha and luxurious entertainment, it is clear that his priorities are selfish rather than selfless.

More specifically, Kurosawa takes a highly critical stace toward government bureaucracy because of the subservience and the deadening mentality that it breeds. The main character's accomplice in The Bad Sleep Well believes that "corruption continues unchecked, and the fat cats brazenly steal public funds" because "a good official never implicates a superior, no matter what the cost." They find it incredible that these officials refuse to hate their superiors even after being "offered up as scapegoats." When one of the officials explains that "unmasking a superior is impossible," the main character believes that "he's not human, the bureaucracy transformed him." Kurosawa conveys the idea that the unthinking subservience engendered by bureaucratic values strips people of their humanity. Even the vice president, who acts so selfishly when dealing with his underlings, is willing to kill himself to protect his boss. Ikiru clearly conveys the theme that bureaucrats have been deadened by their subservient work and are only interested in ensuring their own positions of power. Nobody even thinks to report the section chief when he is absent for an extended period, and everyone is flabbergasted when he asks the deputy mayor to reconsider his position on building a new park. Typically, they give unconditional devotion to their bosses in order to protect their positions in the bureaucracy. Their individual initiative is suppressed, as "doing anything but nothing is radical" according to bureaucratic values. In addition, Kurosawa conveys the idea that bureaucrats are only motivated to advance their own positions of power, as one of the characters says that "only a bureaucrat schemes to replace his boss as soon as he's out." Ultimately, the work deadens their spirits and makes them slow, inactive, and inefficient. This is clearly shown by the run-around given to the group of women, who are continually given new papers to fill out and new offices to go to until they are back where they began without anything accomplished. One of the characters even says that "to clean a garbage can, we need a garbage can of paperwork." The section chief in this film was able to risk his position and question his bosses because he knew that he was going to die soon, and even after his co-workers realize this they cannot change their ways and get something done for the public interest, as they keep giving the public the run-around.

Kurosawa takes a strong stance against authority and against the bureaucracy in particular. First of all, he conveys the idea that our conceptions of the public good are subjective, and that there are no absolute values that the public should be striving to fulfill. Beyond this passing idea, Kurosawa portrays the powerful as completely selfish and motivated by power. He shows that the only checks that prevent abusive authorities are public oversight of their activities and self-government. The ability to criticize our leaders and expose their bad deeds is essential, yet in the bureaucracy loyalty and obedience "to the bitter end" is shown to breed selfish abuses of power.