|Fun With Public Goods
Author: No Trust PM
A short economic exercise and belated response to Tiefling. This essay is effectively chapter 3 of A Dead Letter. Chapter 2-clarification. Chapter 1 Revised.Rated: Fiction T - English - Chapters: 2 - Words: 2,872 - Reviews: 15 - Updated: 11-22-04 - Published: 11-19-04 - id: 1763381
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Don't worry about the problems of definition too much. I mostly use government and state interchangeably but sometimes it is useful to distinguish between them. It is important in libertarian circles, however, to realize that when 'anarchy' is discussed it's not of the Starbucks-torching, bomb throwing variety.
One thing I don't get is why you advocate strict constitutionalism instead of anarcho-capitalism. You acknowledge that ancap would be superior to minarchism (indeed the correct word) no? You may say that ancap is unlikely to happen; true, but so is minarchism. I'd venture to say that one is really no more likely to happen than the other. So why sacrifice principle?
And, one thing you'll never have to worry about is offending me or hurting my feelings. It just ain't gonna happen. If you see me suggest that you've done any such thing you can be absolutely certain that I'm just being facetious. Let the gloves come off any time you feel like it. I can take it.
Actually, Ayn Rand was opposed to anarcho-capitalism and preferred a nightwatchman state. Personally, I don't like that woman or her creepy followers (though she herself had some redeeming features), and I never have.
I don't really consider myself an idealist (I'm a mild materialist if anything at all). I believe anarchy is the best arrangement given any default level of morality. If humans are basically good they don't need government; if they're basically bad you need to keep them the hell away from positions of power. My political outlook is the result of taking the proverb, "An armed society is a polite society" to its logical conclusion.
Praxeological Economics From The Ground Up
Humans are atomistic, anarchistic animals; this is to say that the human being is primarily concerned with its own benefit, and can only perceive other human beings through the impressions they make upon its life. Humans are concerned primarily with surviving—and after this, thriving. To thrive is to maximize the acquisition of what one desires and minimize the occurrence of what one finds undesirable. Desires cannot be examined in terms of rationality; they precede rational judgment and are in fact the metric by which actions are determined to be rational or irrational. When Objectivists say that most people are irrational, they are — whether they realize it or not — stating only that most people behave in ways that they would not behave, given their values (in the case of hardcore Objectivists, emulating Rand as closely as possible). When Mr. Spock states that some human's suggestion is illogical, what he is really saying is that the course of action suggested does not suit his valuations, and what he imagines the valuations of others ought to be.
Humans live in a world of scarce resources. It takes time and energy to harvest sustenance for their bodies and to build shelter from the elements. Humans are not particularly strong. They are not particularly fast. Their senses are mediocre. They have no claws and their teeth are not very useful as weapons. But what humans do have, are opposable thumbs and the brains to put them to use. Humans make tools that make their tasks easier. With even primitive weapons, humans are more likely to survive a hunt, and harvest more food from it. With tools such as primitive knives, they are able to put dead animals to more efficient use.
But hunting and gathering is an inefficient way to live; herding is far more efficient in that less time and energy is spent on acquiring sustenance, and agriculture is more efficient than nomadic herding.
Humans could just go around killing each other ala Hobbes; but they are pragmatic critters, and violence is dangerous. Where humans judge the danger of violent conflict to outweigh the potential benefits, assuming they do not simply part ways, they will instead cooperate for mutual benefit. Over several generations specialization will take place; some humans concentrate on farming, some concentrate on making tools to make farming easier and more efficient, some concentrate on harvesting resources, some concentrate on making tools for harvesting resources, etc. Individuals perform those tasks that yield them the highest returns; the most wealth. Social order evolves spontaneously out of each individual's desire to better his own lot. Somewhere along the way, a commodity (say, gold) becomes valued not only for its own properties, but for its widespread use purely as a medium of exchange — in other words, money. Money allows for theretofore unheard of economic diversification — the wonders of art, philosophy, science, fine craftsmanship, and so on — because it allows for precise economic calculations that are impossible under a barter system.
In higher level economies, there are tools specialized towards the use of making other tools (and tools to make those tools). These, among other things that are not immediately consumed, are called higher order goods, or capital goods. Hence capitalism. Capitalism could in a sense be defined as 'the use of tools'; thus to the extent that man thrives it is due to capitalism. Man is a capitalist animal.
Man is also a social animal, and is so precisely because of his atomistic nature. It is because he exists for his own sake that he cooperates with other men in society; the extent to which men cooperate with each other is determined by how much they perceive they have to gain from doing so. Only the principle of private ownership of property guarantees that humans can pursue their disparate individual goals, utilizing scarce resources and limited time and human energy, while living and working in close enough proximity to one another to create a prosperous exchange economy. Private property is the mother of civilization.
Calculation Argument Revisited
"The subjective valuation of one individual is not directly comparable with the subjective valuation of others. It only becomes so as an exchange value arising from the interplay of the subjective valuations of all who take part in buying and selling." —Ludwig von Mises, "Socialism"
Prices for goods and services arise on the market of interpersonal exchanges. The price for a commodity is essentially a compromise between its seller, who desires maximum profit, and its buyer, who desires minimum expenditure. The price is eventually determined at that amount of money (or other goods) which the seller values more highly than the commodity for sale but which the buyer still values less than what he seeks to purchase. In the aggregate, these collective forces which give rise to general price of a commodity are termed supply and demand. Supply in great excess of demand drives prices down, high demand relative to short supply drive prices up.
Complex economic calculation must be reduced to units of money, and a socialist entity cannot reliably mimic the phenomenon of money. Money exists in so-called 'socialist' countries to the extent that the socialist entity (i.e. the government) is inactive. The phenomenon of money is a product of mutually voluntary exchange. Under a system of institutional coercion, there may be currency, but it serves no real purpose as money.
Money has no real use outside of mutually voluntary exchange. A businessman's income is decided by how well he satisfies the preferences of those who consume the products he offers. A laborer's income is decided by how well he satisfies the businessman's desire for efficient labor. Etc. However, the income of a coercive institution is derived not from how efficiently it satisfies consumer preference, but from how effectively and believably it threatens violence against those that do not work for its sake.
While this coercive entity, i.e. state, may indeed desire to satisfy consumer preferences if only to keep its livestock content with their lot, it lacks the dispersed knowledge of consumer preferences revealed by an accurate price system based on mutually voluntary exchanges. Such a system can only exist to the extent that the state refrains from intervening or outright controlling the means of production and distribution of goods and services.
Tiefling and Public Goods
In mainstream economics a commodity whose provider can control who benefits from it directly is termed a private good; while a commodity whose provider can not control who benefits from it directly is termed a public good. Most commodities are private goods; farmers, car mechanics, masseuses, retailers, etc. can pretty easily restrict the benefit of their goods and services to those who offer them compensation in mutually beneficial trade. A good example of public goods are radio and television; it is impossible to control who tunes into your broadcast frequency. People thus have an incentive to free ride — the service will be provided or not, whether or not they pay for it. Radio and television overcome this difficulty by bundling public goods with private goods: advertising slots.
I myself am somewhat sympathetic to the view popular among some Austrian economists that there really is no such thing as a public good, but I won't go into that here.
In her essay addressing my objection to taxation (the url of which can be located in my endnotes) Tiefling writes:
"Even if you don't care about your fellow man at all, it is to your own advantage to contribute to a system which provides for people in need, because you yourself might someday be one of those people."
I can appreciate a clever sneak attack upon my character more than most people would, but this just goes too far.! At any rate, Tiefling would be standing on much firmer ground were she arguing that I, as an individual, would be better off (according to what she imagines my values to be) if I were to engage in voluntary charity. But she is not.
One of anarchist John T. Kennedy's most provocative insights is that government itself is a public goods problem. And since government services are public goods, I have absolutely no incentive to pay for a social safety net (aside from the fear of imprisonment). I have a material incentive to pay as little in taxes as possible because I will benefit from government programs — or not — regardless of whether and how much I pay. My evasions will not in themselves destroy the welfare state so it will still be there for me to take advantage of should it ever suit me to do so. Tiefling might argue that if everyone behaved in this way, the welfare state would break down, thus leaving everyone without the cherished safety net; but the fact is that whether or not anyone else dodges taxes is entirely independent of whether or not I do (especially since tax evasion is not a wise thing to boast about in public).
I would be willing to go so far as to say that the only instances we truly see of public goods problems arise out of government programs. In fact, most of the services Tiefling lists — health care, education, etc. — would not even be considered to be public goods by serious economists (even in the positivist mainstream).
It's true for example that the education of a given individual might have positive effects on individuals far removed from where and how that individual was educated, but the direct benefit of the education still goes to that particular individual. School administrators can exclude non-payers from their services if they so desire, just like any business. And the positive externalities of education are as indirect as the positive externalities of, say, opening a donut shop. Sure, a donut shop will, if set up and run correctly, make a community a little wealthier by providing more material goods to select from, but that does not make donuts a public good. However, to deal specifically with Tiefling's assertions that everyone benefits from well-educated neighbors, business associates, employees, and employers, and that thus the State ought provide education I will take the risk of resorting to argumentum ad absurdum: at the most fundamental level, we all benefit from good breeding, therefore by Tiefling's logic, the State ought to control reproduction. I rest my case.
Finally, Tiefling's notion that government institutions come equipped with 'checks and balances' that market forces lack is puzzling to me. I'm curious in particular as to how Tiefling formulates the belief that government-run schools are less likely to brainwash students than corporate-run schools. Surely, that the vast majority of people in first world countries — almost all of them products of government-run public education — favor ever increasing amounts of socialist interventionism and welfare statism is a product of consumerist propaganda, rather than social engineering on the part of benevolent government-employed educators.
But just to make the general praxeological argument, once again: Coercively funded institutions are run the way the coercers wish to run them, because they don't have to worry about providing a service people are actually willing to pay for; they just have to count on people preferring the loss of a slice of their paycheck to severe legal penalties. Market institutions, on the other hand, come with the only checks and balances that are ever truly seen within the scope human action: profit motive and the all-important right to walk away.
!Yes, I'm being facetious again.
Tiefling's essay (close spaces, replace !'s with equal signs, damnable FP):
w w w.fiction press .com/read.php?storyid!1372787&chapter!20
1) I was going to make this a chapter of A Dead Letter, but I was having severe technical difficulties.
2) Minor revisions have been made.
3) You fuckers win. I don't care if you swear anymore.