*** The official market and government thread ***

[Renton]

If by we you mean people with resources to protect themselves, you're right, but the point is to provide the same for everyone. The people with the means to protect themselves have zero incentive to provide the service to others for free, for crimes that don't directly affect them. A LOT falls under the category not-directly-affecting-me, and it isn't even what actually affects, it's what's perceived to affect.

The state police forces are not effectively protecting citizens, yet at extreme financial cost. This egalitarian view of public service is pure fiction. Governments impoverish all people, especially the poor, to cover the costs of the services they provide. The private sector would do police much more cheaply and effectively, because it would have to in order to remain competitive in the market.

The free-rider problem is a problem to be sure, but the unseen of this is that the poor would be much more financially better off in the absence of a nanny state that heavily taxes their income and consumption. Thus, they would be much more well-positioned to afford security. The market for security would likewise attempt to court consumers who can't afford premium police protection. Providers would market their services to the lower-income bracket consumers just like they do with every other service in the economy.

A big problem with most (if not all) public services is that they attempt to guarantee a high standard of quality to all without accounting responsibly for the costs of such provision. There are no prices to provide an expend-or-conserve feedback mechanism so the service inevitably gets squandered by all, quality suffers, and eventually people have to do without it. This can be seen most clearly with universal healthcare systems, but it applies to police forces as well.

[CoccoBill]

The state police forces are not effectively protecting citizens, yet at extreme financial cost. This egalitarian view of public service is pure fiction. Governments impoverish all people, especially the poor, to cover the costs of the services they provide. The private sector would do police much more cheaply and effectively, because it would have to in order to remain competitive in the market.

I don't see any proof of any of this. Are you absolutely certain you're not mistaking implementation flaws in your reference system for inherent flaws in any system? Either way, I didn't say anything about effectiveness, I see safety as a basic inviolable right and I don't see it guaranteed by the market.

The default state of a community is no government. Some sort of central governance model has tended to pop up in every society throughout history, and there's a reason for it. There's a governance model in the nuclear family, not every member has the same say in things. This extends out to family, to neighborhood, to city, region, nation. In every one of them there's a governance hierarchy. You can find one in every company, soccer team and online poker community. Why? Because things go rapidly to hell if there isn't one.

Government is the governance model for a nation-sized blob of people. Saying that things would be better without one and things would just work out is an extraordinary claim, which require extraordinary proof. I haven't seen any yet. Are free markets effective? Sure. Are they just and equal? From what I've seen hell no.

The free-rider problem is a problem to be sure, but the unseen of this is that the poor would be much more financially better off in the absence of a nanny state that heavily taxes their income and consumption. Thus, they would be much more well-positioned to afford security. The market for security would likewise attempt to court consumers who can't afford premium police protection. Providers would market their services to the lower-income bracket consumers just like they do with every other service in the economy.

You're making many assumptions. I'll give you a free market solution to problem P could be a single digit, maybe in some cases 2-digit % cheaper than the public sector equivalent, but I don't think that automatically follows that everyone can suddenly afford everything. Second, you're assuming every possible P makes a valid business case, everything that people need is profitable to produce. Entrepreneurs would fill every single market segment instantaneously with innovative, cost-effective and eco-friendly products and services, it's just that they can't be arsed now because government. I don't buy it.

A big problem with most (if not all) public services is that they attempt to guarantee a high standard of quality to all without accounting responsibly for the costs of such provision. There are no prices to provide an expend-or-conserve feedback mechanism so the service inevitably gets squandered by all, quality suffers, and eventually people have to do without it. This can be seen most clearly with universal healthcare systems, but it applies to police forces as well.

These are clear implementation errors in your reference system, fixed by a simple policy change, aren't they?

[Renton]

I don't see any proof of any of this. Are you absolutely certain you're not mistaking implementation flaws in your reference system for inherent flaws in any system? Either way, I didn't say anything about effectiveness, I see safety as a basic inviolable right and I don't see it guaranteed by the market.

Look at the tax burdens of socialist nations for proof. Look at their inflating currencies. You can't effectively distribute scarce resources which have alternative uses without allowing people to bid for the resources to serve their own subjective needs and desires. It is well-intentioned to speak of inviolable rights, but it cannot be denied that safety can only be provided though the use of scarce resources which have alternative uses. How many police officers is enough to guarantee safety for 300 million people? One million? Two million? Clearly if we had 100 million police officers, then that'd be better than two million. What amount of safety must be guaranteed? What murder rate is acceptable?

States are incapable of making these value judgments. Not because they are stupid or evil or anything like that. Only participants in trade are capable of ascribing value to the resources at their disposal. But states are in a perpetual battle against basic economics. States aren't interested building wealth, they're only interested in staying elected and established.

The default state of a community is no government. Some sort of central governance model has tended to pop up in every society throughout history, and there's a reason for it. There's a governance model in the nuclear family, not every member has the same say in things. This extends out to family, to neighborhood, to city, region, nation. In every one of them there's a governance hierarchy. You can find one in every company, soccer team and online poker community. Why? Because things go rapidly to hell if there isn't one.

Government is the governance model for a nation-sized blob of people. Saying that things would be better without one and things would just work out is an extraordinary claim, which require extraordinary proof. I haven't seen any yet. Are free markets effective? Sure. Are they just and equal? From what I've seen hell no.

The issue isn't the governing, it's the coercion. Corporations have management, but they don't force people to work for them, they don't expropriate people, and they don't incarcerate or kill people who resist. In a stateless society there would leaders and probably would be government-like entities, but it wouldn't be anything like the protection rackets which exist in the present. I am not particularly interested in continuing this line of discussion because I believe most of the police stuff we've been discussing wouldn't require an extremely radical decentralization of power in order to implement.

You're making many assumptions. I'll give you a free market solution to problem P could be a single digit, maybe in some cases 2-digit % cheaper than the public sector equivalent, but I don't think that automatically follows that everyone can suddenly afford everything. Second, you're assuming every possible P makes a valid business case, everything that people need is profitable to produce. Entrepreneurs would fill every single market segment instantaneously with innovative, cost-effective and eco-friendly products and services, it's just that they can't be arsed now because government. I don't buy it.

1) Your numbers are arbitrary, free market solutions could easily be 10 (edited for hyperbole) times cheaper than their state-based predecessors, in time. Markets have a way of increasing productivity exponentially. It's very difficult to know how much governments waste because of the subjective nature of value, though.

2) Everything people value is profitable to produce, otherwise it is not valued is it? Give me an example of one thing that people value that couldn't be produced by the free market. As for government blocking a million and a half profitable business ideas from existing, yes, it absolutely does. Thankfully governments tend to only retard economic development, usually. I consider capitalism to be kind of like the grass that grows through the crack in the asphalt, against all odds. The thing is, all of the principles of markets are in evidence whether a state intervenes or not, states only distort the incentive structure.

These are clear implementation errors in your reference system, fixed by a simple policy change, aren't they?

It is inherent in any system that attempts to provide something very scarce and costly, i.e. healthcare, to all people for free. Yes, you can ration out the care with policy, but as I explained above, you run into major issues with this because you can't know the value of anything without the feedback that comes with prices and bidders. Yes some policies will be more effective than others, but without prices there is little incentive to conserve, and even less incentive to innovate. Standards of service will be arbitrary without feedback from paying consumers, and without competition with other providers. The policy can only be so effective without the incentive structure for efficiency and innovation in place.

[CoccoBill]

Look at the tax burdens of socialist nations for proof. Look at their inflating currencies. You can't effectively distribute scarce resources which have alternative uses without allowing people to bid for the resources to serve their own subjective needs and desires. It is well-intentioned to speak of inviolable rights, but it cannot be denied that safety can only be provided though the use of scarce resources which have alternative uses. How many police officers is enough to guarantee safety for 300 million people? One million? Two million? Clearly if we had 100 million police officers, then that'd be better than two million. What amount of safety must be guaranteed? What murder rate is acceptable?

States are incapable of making these value judgments. Not because they are stupid or evil or anything like that. Only participants in trade are capable of ascribing value to the resources at their disposal. But states are in a perpetual battle against basic economics. States aren't interested building wealth, they're only interested in staying elected and established.

Sorry it took a while to respond, had to digest a couple things for a bit.

How do tax burdens and inflating currencies of socialist nations (which ones do you mean?) prove that we're talking about an inherent, not an implementation flaw? The adequate/sufficient/correct level of police officers I already mentioned in another reply to wuf, it should be based on risk management, continuous evaluation and adjustments. If I had to choose between an efficient government and an egalitarian one, it'd be an easy choice.

The issue isn't the governing, it's the coercion. Corporations have management, but they don't force people to work for them, they don't expropriate people, and they don't incarcerate or kill people who resist. In a stateless society there would leaders and probably would be government-like entities, but it wouldn't be anything like the protection rackets which exist in the present. I am not particularly interested in continuing this line of discussion because I believe most of the police stuff we've been discussing wouldn't require an extremely radical decentralization of power in order to implement.

As long as humans are involved, there will be coercion and condensation of power, unless checks are in place. The only exception again being a benevolent dictatorship I suppose.

1) Your numbers are arbitrary, free market solutions could easily be 10 (edited for hyperbole) times cheaper than their state-based predecessors, in time. Markets have a way of increasing productivity exponentially. It's very difficult to know how much governments waste because of the subjective nature of value, though.

2) Everything people value is profitable to produce, otherwise it is not valued is it? Give me an example of one thing that people value that couldn't be produced by the free market. As for government blocking a million and a half profitable business ideas from existing, yes, it absolutely does. Thankfully governments tend to only retard economic development, usually. I consider capitalism to be kind of like the grass that grows through the crack in the asphalt, against all odds. The thing is, all of the principles of markets are in evidence whether a state intervenes or not, states only distort the incentive structure.

1) Yes they are, but I see no reason why public solutions could not be cheaper also. A government of 1 person is still a government, it doesn't need to be a monstrous behemoth. I'll concede that overall free market solutions come out cheaper, yes.

2) Value assigned on something by people is not tied to its production costs. Nothing guarantees the free market will solve all problems, just the ones with customers with adequate purchasing power. There's e.g. plenty of endemic diseases in africa that no one's rushing to create drugs for, since there's no market potential compared to the research costs.

It is inherent in any system that attempts to provide something very scarce and costly, i.e. healthcare, to all people for free. Yes, you can ration out the care with policy, but as I explained above, you run into major issues with this because you can't know the value of anything without the feedback that comes with prices and bidders. Yes some policies will be more effective than others, but without prices there is little incentive to conserve, and even less incentive to innovate. Standards of service will be arbitrary without feedback from paying consumers, and without competition with other providers. The policy can only be so effective without the incentive structure for efficiency and innovation in place.

I think the optimum solution for healthcare would be somewhere between the all-free-market and all-government solutions. Here for example we have both a flourishing private healthcare system (mostly used by corporations) and a decent public healthcare. Anyone can use the public side, just walk in, pay a fixed fee (say $30 or so), and most tests and procedures are covered by that. If you need a prescription, you get something like 40-100% rebate depending on a few factors. If e.g. queues at your public dentist are full, you get a voucher to use at a private one. Funny thing is, you hear a lot of stories about shitty service at the private clinics and great service at public ones, but these depend a lot on the area you're in.

[Renton]

Sorry it took a while to respond, had to digest a couple things for a bit.

How do tax burdens and inflating currencies of socialist nations (which ones do you mean?) prove that we're talking about an inherent, not an implementation flaw? The adequate/sufficient/correct level of police officers I already mentioned in another reply to wuf, it should be based on risk management, continuous evaluation and adjustments. If I had to choose between an efficient government and an egalitarian one, it'd be an easy choice.



As long as humans are involved, there will be coercion and condensation of power, unless checks are in place. The only exception again being a benevolent dictatorship I suppose.



1) Yes they are, but I see no reason why public solutions could not be cheaper also. A government of 1 person is still a government, it doesn't need to be a monstrous behemoth. I'll concede that overall free market solutions come out cheaper, yes.

2) Value assigned on something by people is not tied to its production costs. Nothing guarantees the free market will solve all problems, just the ones with customers with adequate purchasing power. There's e.g. plenty of endemic diseases in africa that no one's rushing to create drugs for, since there's no market potential compared to the research costs.



I think the optimum solution for healthcare would be somewhere between the all-free-market and all-government solutions. Here for example we have both a flourishing private healthcare system (mostly used by corporations) and a decent public healthcare. Anyone can use the public side, just walk in, pay a fixed fee (say $30 or so), and most tests and procedures are covered by that. If you need a prescription, you get something like 40-100% rebate depending on a few factors. If e.g. queues at your public dentist are full, you get a voucher to use at a private one. Funny thing is, you hear a lot of stories about shitty service at the private clinics and great service at public ones, but these depend a lot on the area you're in.

No time to point by point, i'll just say a few short bits:

1) Even the socialist success story nations like Norway and Australia have massive amounts of taxation. Proponents of socialism would say that the value the citizens of these countries get for the taxes they pay is worth it, but its really impossible to know that for two main reasons. First, we don't know how that money would have been recapitalized had the people the right to use it according to their desires. This is basic broken window fallacy stuff. Second, we don't know the value of the services provided by the government because it is impossible to know that without prices.

2) Government has to be a monstrous behemoth. There is overwhelming empirical evidence of this fact, and theory can explain it quite well by analyzing the warped incentive structure of politicians and their bureaucracies.

3) The cures to those diseases aren't adequately valued. If sub-saharan Africa weren't a giant financial aid sinkhole, it's people might have developed enough wealth by now that the cures to those diseases would be valued. It is a basic principle of economics that there are more goods to make and services to do than there are resources, labor, and time to make them. Prices and the profit-and-loss system are the best way to determine what gets done and what doesn't. Another broken window fallacy, if everyone in the world weren't being fleeced by their governments, there would probably be a lot more donations to charities meant to cure endemic African diseases. And people would be able to choose which one is doing the most effective work instead of relying on their government's aid program.

4) I doubt your healthcare system is free market if the private doctors are forced to accept government vouchers to provide care.

[CoccoBill]

I'm in a hurry so just a couple quick comments.

1) Even the socialist success story nations like Norway and Australia have massive amounts of taxation. Proponents of socialism would say that the value the citizens of these countries get for the taxes they pay is worth it, but its really impossible to know that for two main reasons.

4) I doubt your healthcare system is free market if the private doctors are forced to accept government vouchers to provide care.

Again you and wuf argue about effectiveness, while my beef is with egalitarianism. Government can be effective enough in providing basic necessities, leave all else to free markets. The CoccoBill Doctrine.

4) The vouchers have a face value which is deducted from the fee the individual private clinic charges. Only clinics that have signed a contract to provide the service accept them.

To the claim that law enforcement reduces crime, it can be counter-claimed that certain effects would be seen. We can put this line of discourse to bed by this point IMO.

One of the nifty things about economics is that the ability for people to afford things improves as markets improve.

Take clothing for example. It's easily an inviolable right. Everybody needs clothing. As things are today and have been for a while, the market has solved this problem.

No it can't, due to the other affecting factors you mentioned.

That may be, but the point is not just to have more people afford it, or generate more overall wealth in the hands of few, but to provide it to everyone.

Re: clothing, I think you have the timeline wrong. Food, clothing, shelter etc were all free market solutions, until civilizations decided they need to be provide certain things for everyone, not just the healthy and able-bodied.

Thanks for the links, I'll check them later.

[wufwugy]

Just pointing out that I appreciate this dialogue.

Again you and wuf argue about effectiveness, while my beef is with egalitarianism. Government can be effective enough in providing basic necessities, leave all else to free markets. The CoccoBill Doctrine.

Effectiveness is the backbone of egalitarian outcomes. The choice isn't between effective policy and egalitarian policy, it's between effective policy and ineffective policy or effectively egalitarian policy and ineffectively egalitarian policy. This sounds like it's just semantics, but it's not. We can't have egalitarian outcomes unless we have effective policy. This dynamic is why we hear economists talk about efficiency so much. To the lay, that sounds like an abstraction unrelated to real-world results, but it's actually what creates the results. Economic rules don't change when governments engage. Renton and I keep talking about effectiveness because the only way to get effective outcomes under government is by adhering to the same principles that do it with markets.

I feel like I'm not explaining this well. Maybe Renton should do it since he's always good at that.

That may be, but the point is not just to have more people afford it, or generate more overall wealth in the hands of few, but to provide it to everyone.

Two things: (1) the line that wealth growth in markets results in too much wealth for a few and too little for the many is a myth. That's something the public talks about and the public believes, but economists don't. Their models and measurements don't behave like that. They'd have to throw intro to economics textbooks in the trash if they started making claims that growth in production or productivity unfairly benefit a few at the expense of many. One small example of this dynamic can be found in savings. Economists measure savings as delayed consumption. The public measures it as, um, I'm not quite sure, but something like hoarding and extraction of wealth from the economy. By the view you expressed, increased savings rates benefit the few at the expense of the many, but economists say otherwise.

(2) Markets are the infrastructure necessary for capital (capital means all productive capacity. Your ability to work is your human capital) to produce. Nobody has discovered economic rules that negate supply and demand. The USSR tried very hard. It stuck to non-market, pro-state egalitarian principles to an incredible degree. It didn't work. Everybody was poor as shit and few got what they needed. Markets have always been the mechanism that most benefits the poor, while government has done the opposite. I guess it could be said the main reason why this is is because the poor have marginal capital and markets are the only places the rules of supply and demand allow them to use that marginal capital to produce greater capital. Government intervention is double trouble on the issue because its regulations raise the costs to those wielding marginal capital (trapping them in poverty), and government is very effective at favoring special interests. There's no better way to entrench megacorporations than with government, and no better way to empower the little guy than with markets.

Re: clothing, I think you have the timeline wrong. Food, clothing, shelter etc were all free market solutions, until civilizations decided they need to be provide certain things for everyone, not just the healthy and able-bodied.

I'm not sure what you're saying here.

To be clear, it's revisionist history to claim that the state has had much of any role in creating abundance in food, clothing, and shelter.