Security for you and your family's persons, property and liberty from intrusion by those not respecting them is a basic consideration of everyday life. Fear of thugs, thieves and shysters instinctively initiate social cooperation amongst those individuals who seek peaceful cooperation in a society. There has always been and always will be "bad guys" who just won't play by the rules of a society, and not all of them are politicians. The question of who enforces the rules and who adjudicates disputes between individuals is integral in the formation of a society. The best way to provide security is through free-market competition.
The fact that bad guys exist does not de-facto mean that a legal monopoly on the use force within a geographical territory will provide superior security for society compared to a system that allows for competition. Even people who believe that the free market can provide for every need and almost every want often make an exception for security. The free market provides food, shelter, cars, health care, entertainment and retirement income planning better than the state, so then why not security? One must also ask: If a monopolistic system (supposedly) works so well for security, then why not for other goods and services as well?
I'm old enough to remember people say that the Post Office could only be run by the state, and starting a business that would compete with it delivering packages was a crazy idea. In this day and age of UPS, FedEx and e-mails, the obsolete nature of the U.S. Post Office has been exposed almost universally. That monopolies result in increasing prices and decreasing quality and service while competition tends to decrease prices and offer increasing levels of quality and service is a sound economic principle. It does not matter if the monopoly is run by the state or a private concern for this principle to apply. However, only the state can legally restrict competition with the use of force.
Bill Gates cannot have Steve Jobs shot, but George Bush can have, well, I guess pretty much anybody he damn well pleases, shot or thrown in jail. These state powers are justified as being necessary for our security, but we are not any safer. If there are no alternatives to the protector, then there is no one to protect you from the protector. Competition leads to cooperation while monopoly leads to tyranny. Sound economic principles should be applied to dealing with the bad guys if we really want to improve security as well as promote liberty.
The state monopolistic security system inherently seeks to expand the geographical territory of its jurisdiction while a competitive market security system inherently seeks to protect specific persons and property. The boundaries to authority for the state are geographically based while in the free-market they are private property based. Thus strategically the state is offense-oriented and the free-market is defense-oriented in their approaches. Further, the state security system has an aggressive tendency to create security risks faster than they are diffused, both foreign and domestic. A free-market system of security would not create a Drug War against its own customers or a War on Terrorism/Global Democracy Crusade or whatever the Perpetual War For Perpetual Peace state policy is called today. The state will create new enemies faster than it deals with old enemies either through incompetence or design.
The economic principles concerning monopoly and competition apply on all scales, but it is useful to consider home grown bad guys and foreign bad guys separately. There is little argument as to whether the local police, county sheriff, state police or FBI can protect your property better than a professional firm whose funding depends on their success. They obviously can't. Today rich guys hire protection agencies to protect their property and poor guys buy pistols and form mutual security relationships with as many adjoining neighbors as will agree to cooperate because the state fails to provide a comfortable level of security. State police agencies protect state property and primarily serve out punishment to those who challenge their authority. That is, they provide "law enforcement," not protection or real security. When your responsibility is to protect everyone and everything, you really aren't protecting anyone or anything except yourself and your own. That's what the state does. Then it shows up its failures as reasons to give it more money and power.
Can you imagine a private security firm that would provide statistics that show an increase in how often your house was robbed, your wife was raped and your children were molested while they were responsible for protecting you as reason for giving them more money and greater control over your personal life? Yet the state does that and is applauded by the sycophantic media lulling the herd to sleep while the thunder rolls over.
Competition between banks, grocery stores, shoe manufacturers, car dealers and real estate salesmen does not result in violent means to resolve disputes. Competition between security companies would be based on profit and loss, market share and customer satisfaction, not constant battles between gangs as statists suggest. Conflict resolution by violence is always more costly than negotiation, even if the firm itself wishes to resort to unaccepted (outlaw) practices. The market would punish a poorly managed security firm by reducing its client base to the most risky and costly clients, while investors would also lose interest relative to its superior competition. Such a security firm would fail quickly in the free-market unless it had an exclusive contract to enforce the edicts of a monopoly system of justice, like the state.
Arbitration of disputes is also commonly believed to require a monopoly. But reputable adjudication services would again outperform disreputable firms. The market cannot eliminate the costs of crime, but it can minimize them and provide incentives to cooperate peacefully. The backlog of court cases in the existing state adjudication system is already causing the growth of private alternatives such as arbitrators and conflict resolution services. This industry would expand and multiply if the monopoly on dictated justice was broken up in favor of competition, thus allowing a system to rediscover natural law justice in our society.
Existing insurance companies would surely have a significant vested interest in helping develop protection for the persons and property that they insure. The finer intricacies of how a complex free-market system for security would evolve in the absence of the state is beyond the capabilities of any planner, which is why central planning doesn't work to begin with. Just as e-mail was not suggested as a replacement for the Post Office because it had not yet been invented, the free-market has an amazing ability to innovate beyond human powers to see future methods.
Many people who could live with a system of individual responsibility for domestic security worry about the lack of service to "poor people" and also consider foreign threats different because of the so-called "free-rider problem." As to the "poor people problem," competition providing goods in any market will tend to offer choices of better quality products at lower prices. This does not mean that the market will not offer low quality products for even lower prices if there is a demand for them, and there always is. Providing a desired product to people who otherwise would not have it is a strength of the free-market system, not a weakness. Pro-bono work for non-clients would also be common if for no other reasons than identifying specific threats who pose a risk to clients and promoting goodwill for the firm.
Do you think that the state's existing centrally controlled security apparatus provides security to poor neighborhoods now? Has it ever? Do you really think it ever will? So how can someone promoting the state security system criticize a free-market system for providing a low quality security product that at least some poor people would be able to afford? Over time, competitive markets tend to increase the supply, quality and product choices of goods to consumers while decreasing the costs at each level of quality. This would also be true for security, and poor people would be better off than they are now.
The next response is typically: OK, private security may work better than the state for local thugs, but how are you going to stop the other aggressive states of the world from conquering the stateless communities one at a time? Considering the existing security from foreign threats, not only is the state inefficient, it is ineffective. After spending trillions of dollars, it could not even stop a small band of privately financed suicidal nuts with sharp blades from causing hundreds of millions of dollars of damage and costing thousands of lives. A $60 handgun in the cockpit would have done the trick. The state says that it can't put a guard on every flight, but the owners of the plane would if the state would butt out. Further, it was the meddling of the state representatives into places they were not invited to begin with that garnered the attention of said suicidal maniacs. Standing armies are an invitation to use them or lose them (ala Madeleine Albright) and thus invasions and occupations are crucial to the survival of the "military-industrial complex."
If we learn any lesson from the inability of the most powerful and well-financed state military in history being unable to control and subdue the seemingly weak, poorer peoples of Southeast Asia and the Middle East, it is that the American people can never be conquered by a foreign state, either. Is any American really so afraid that there is someone both crazy enough and powerful enough to try and invade and occupy North America ? Even Hitler and the Japanese did not have plans to invade America during WW II because private citizens were so well armed and organized, not because they feared the US Army could not be defeated. Americans have become softer since the 1940's, but not that soft. Osama bin Laden certainly has no plans to raise an army and take Florida or New York or even Washington, D.C. Prudential, State Farm and Allstate would do a better job of stopping him if he did.
Paranoia is fostered by the media and state education camps, eh schools, to keep everybody in line supporting the status quo. So what are all those CIA agents, aircraft carriers, bombers and nuclear missiles for now? Oh yea, spreading democracy.
The "free-rider problem" is really a red herring because nobody can determine what the "optimal" amount of defense would be. Usually this "problem" is brought up by those who seek to spend much more on a good or service than can be justified to those it supposedly benefits; like, for instance, for global crusades. The state system of security is currently costing trillions of dollars and increasing at an alarming rate. Do you feel safer today because so much money has been taken by force from "free-riders" to be spent on "defense" for you?
Those who believe that "might makes right" are a constant menace to a free-society, whether they live in your area or halfway across the globe. In the end, the same principles apply to both groups, even if the threats appear distinctly different. The real question is whether the state monopoly or free-market competition is the most efficient and effective means of providing security for the lives, property and liberty of people. It's really not that close of a competition when fearful myths are exposed and the state is seen as the sham that it is.
These ideas are not new, just not very popular in mainstream media. Gustave de Molinari's The Production of Security  was the first modern treatise on the subject in 1849, and it still stands up well as an introduction. An excellent study correcting "Hollywood history" that has been around for over 25 years is An Experiment in Anarcho-Capitalism: The Not So Wild Wild West  by Terry L. Anderson and P. J. Hill. Another example for those who say "show me" try David Friedman's Private Creation and Enforcement of Law: A Historical Case  looking at Iceland in the Middle Ages. A great collection of works was put together recently and edited by H. H. Hoppe in the great book The Myth of National Defense: Essays on the Theory and History of Security Production . Here is the introduction  written by Hoppe.
Paranoia and violent means are not necessary to get peaceful people to cooperate for security or any other mutual benefit. Paranoia and violence destroy peaceful societies from within through the use of a state security system. We must and can do better.