Comment by dragontamer | Hacker News Reader

Comment by dragontamer | Hacker News Reader

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Proven by thought experiment. If you don't like thought experiments, then pay me no mind.

Perfectly theoretical free markets, with perfectly educated populations with 100% perfectly rational beings will be unable to solve the externality problem. http://en.wikipedia.org/wiki/Externality

It is known and proven. Do not give me a "Well, we'll figure it out later" bull... tell me how a free market is supposed to resolve an externality (which by its very definition is unresolvable by free markets).

Perfectly rational and greedy actors will always offload their costs onto unwilling parties. It is the job of the government to ensure that costs align up with the actors who create those costs.

If that is too theoretical for you, imagine two cities. "City Upstream" and "City Downstream" both are on the same river. City Upstream begins flushing their sewage into the river, and so City Downstream is no longer able to drink the water.

Solve this issue using only rational actors in the free market. The "Government" solution, is to have the Federal Government create Water Treatment plants, and then force "City Upstream" to use them. Afterwards, you tax both cities to pay for the treatment plants.

Your turn. Come up with a free market solution without the use of a central government or centralized 3rd party. Assume both cities are perfectly rational and perfectly selfish, as is common in these economic problems.

Good luck coming up with a solution. But if you're like any other libertarian who I've issued this challenge to, you'll probably run away.

Great question. So, in this example, City Downstream is the one interested in clean water and City Upstream couldn't care less.

What happens without a government? City Downstream chips in for a bunch of guys to go up there and beat the shit out of the owners of that factory. Let's assume a scenario in which all citizens of City Upstream work for that factory, so they all want to keep their jobs and so they all chip in for a bunch of guys to protect them (or a company hires those guys on their behalf). Now, those guys meet up. Are they going to fight? Highly unlikely, because it is in their personal self interest to resolve this conflict peacefully AND collect the money from the people who hired them. What are they gonna do? They're gonna compare the balance of power. If it's equal then they're gonna settle for the solution that satisfies both equally. If City Downstream, which obviously is concerned with its health more than City Upstream workers are concerned with keeping their job, hires more tough guys, the balance of power would be in its favor and thus you can expect more drastic measures to be agreed upon. Then remember, we talked about an edge case, when all citizens of City Upstream work at a factory. However, that is very unlikely. Thus it may turn out to be that one factory would be up against the whole city.

Of course in reality, no one would actually hire tough guys, but rather such conflicts would be resolved through more civilized private protection agencies and courts. The central question is who outbids whom and to what degree. And the answer is that if the majority of people want something enough to pay for it, it will always outbid the minority, however rich this minority is.

You don't need no government to solve externality problems. All you need is to stop thinking that some magical entity, simply because you can vote for it, is able to resolve issues that are truly complicated.

"Private Protection Agencies and Courts" are a government. The two cities have set up a court system and a standing police force to resolve the issue. Just because you're using Libertarian words to describe a government doesn't change the fact that a "Private Protection Agency" is a glorified police institution.

FYI, a little global perspective. What happens in "the real world" is that your country loses its rivers and millions die to sewage born illnesses.

http://www.spiegel.de/international/world/dead-rivers-and-ra...

Go fantasize about private protection agencies and courts that don't exist and preach it to the 3rd world. Neither exist in India and millions die to this very problem I've been describing.

Perhaps if you stopped believing in pure theoretical fairy tales (wtf? Private Protection Agencies? They don't even exist.) and looked at real world problems, you'd know.

The Ganges river has 2 Million people ritually bathing in it every day due to Hindu tradition. It has over 400 Million living by it as a potential source of drinking water... and it carries some 80% of the Indian untreated sewage.

Tell me, how long will it take for a "Private Protection Agency" and "Court System" to stand up automatically in those Indian villages? People don't even understand the concept of pollution. The reality is, "City Downstream" may not even know that "City Upstream" is the cause of their problems.

India's government isn't powerful enough to create a solution. The current situation, is as "free market" as it gets. Lets see how long before someone comes up with a solution, or for your fairy tail "private courts" to be set up.

Yes, NGRBA was set up in 2009 to fix the problem. The "Free Market" had over 20 years to solve this pollution problem. Guess what? Externalities can't be solved by the free market. At very least, not before the 20+ years it takes to convince a government bureaucracy that there is a problem.

The completely anarcho-capitalist solution is that someone owns the river. If you want to dump into that river, then you have to deal with the owner; if you want to take from the river, then you have to deal with the owner. The owner would have a vested interest in keeping the water clean for people buying the water coming out of the river.

I'm not saying there aren't externalities to free markets, I think there are. I just don't think government is any better at dealing with them than markets. Friedman always says it better:

http://www.youtube.com/watch?v=VHFIbfUi5rw

You do realize that your "Anarcho-capitalist" solution describes the EPA's history. Precisely the moment when the US Government declared ownership of the Mississippi River, and all federal lands under its protection.

http://www.law.cornell.edu/uscode/text/33/652

http://en.wikipedia.org/wiki/Mississippi_National_River_and_...

Your solution is really called "internalizing the externality", and a near hundred-year-old analysis can be found in Coase's Theorem. http://en.wikipedia.org/wiki/Coase_theorem

Your solution requires "some entity" to create the concept of ownership, and then sell pieces of the shared resource to other people. You ensure that an owner exists for every part of the river, and then you get an economically optimal solution.

But WHO declares ownership? WHO enforces this ownership? If you believe in "private protection agencies" and "private courts", it is obvious that ownership of "The River" should be settled in the "private courts".

Eventually, you start building an entity functions exactly like the current US Government (except you use Libertarian friendly words to describe it). So please, describe to me a technique that isn't currently being used by the US Government to solve the problem of Externalities. Otherwise, you end up just describing our current Governing philosophy.

That's fine. I don't care about convincing you. I care about convincing people who have the same perspective on individual freedom that I do that are reading this thread.

I guess if there's no convincing you, then your open-mindedness claim dies with this discussion.

Toodle-oo.

Your solution was valid. The problem is, you didn't realize that the US Government already is doing what you're describing.

You're calling me close minded, when YOU are the one walking away from this conversation. As I said, you gave a valid solution, but this solution you're talking about requires a Government.

But if you don't feel like discussing it... sure, c ya later. I will say that this is the first time someone has called me "close minded" for calling their solution analogous to one of the most economically stable solutions known.

I appreciate you haggling over the definition of government. The difference between a government and a private entity in this situation is that the government can force you to pay taxes to pay for this river management whether you interact with the river or not, or else you get imprisoned. On the other hand, if you don't want to interact with the private owner of the river, then you don't have to. The world is round; go the other way. The river is only so long; go around it. The river is on the surface of the planet; fly above it.

Now, I have NOT said that I subscribe to a full-on anarcho-capitalist system; I mainly understand the theory behind it, and think that it makes the best theory ON WHICH TO BASE A PRACTICAL SYSTEM OF GOVERNMENT. I do think government is needed for some things. I'm a huge fan of our original form of government in the US, namely federalism — though I'd have some cuts I'd make there too.

And I mainly felt like leaving this conversation because you seemingly try to insist that I don't know what I'm talking about. I do know what I'm talking about. Just because you don't agree with me, or you feel you've thought about this more than me doesn't make it so.

Did you even watch the video of Milton Friedman on market failures? He left it open at the end to say there are times where government might be best, but you cannot immediately and automatically say that government is better — which is exactly what the progressive movement in this country tends to claim.

If you and I agree that pure theoretical forms of government have flaws, then we are in agreement.

This subthread started because someone disagreed with the following words: "Furthermore, it has been proven that ALL pure systems are imperfect."

I hold no qualms against Anarcho-capitalism, especially today as deregulation laws are beginning to show promise (New Jersey has some deregulation laws that seem to improve upon utilities like power and gas). It is when a purist comes up, and claims that it is the solution to all problems that I become a bit antsy.

Sometimes, Deregualtion is the key to solving problems. Other times, we need regulation. Pick and choose the philosophy for the situation, there is no silver bullet.

Glad we could find common ground here.

What about my distinction in your definition of government? You seemed so adamant about the fact that a private owner and our current government are the same, effectively. I thought I gave a reasonable response to that claim. You didn't continue that line of debate in your response, though.

Remember your world history. The East India Company was a publicly held stock by merchants and aristocrats. They were completely unrelated to the crown. That didn't change the fact that they were the de facto rulers of India (complete with a standing army and navy)

http://en.wikipedia.org/wiki/East_India_Company

Companies can become Governments rather quickly. The difference between Companies and Governments is that there is none. The US Government is simply one of the largest companies created on this land.

The US Government has also claimed monopoly privileges on armies and police force. Within the lands that the US Government owns, no other groups of people can organize an army. Basically, Companies and Governments are all the same thing. They are a collection of people, attempting to work together for some abstract purpose.

Besides, the US Government has adopted anarcho-capitalism before. Calvin Coolidge's quote: "Perhaps one of the most important accomplishments of my administration has been minding my own business."

I'd say, Calvin Coolidge probably did more for the Anarcho-capitalist cause than any thought experiment revolving around an Anarcho-capitalist utopia. A heavy pusher of deregulation and a "Hands Off" approach to governing.

Certainly, Calvin Coolidge was less oppresive to the American population than the East India Trading Company was to the Indians.

I guess in practice I don't disagree with you, if your definition of government is "anything that can fully oppress you". Sure, our government is an organization that has the ability to take away our self-claimed rights. The whole point that our founding fathers set out to achieve was to give government so little power, and to check the power it did get, so as to allow people to live free of government coercion. But no, people decided along the way that we needed to make government bigger, and here we are.

I have yet to understand where you're going with this. If companies inevitably become so powerful that they become governments, then letting the sitting government regulate them is inconsequential; takeover is inevitable! Let's just all eat worms and die!

No. I think the original thinking during the age of reason makes more sense to me. I think that the people truly hold the power, and as long as we don't give up our inalienable rights to governments (in whatever form they exist), and be sure to always question and hold suspect the people we put into the collective positions of power, then we'll be ok.

Don't forget that the limited liability that we give corporations is a government-granted right. That's one of the major reasons we have issues with large companies.

(I'm not going to get into a debate about Coolidge. I think he was a great President, truly the last of his kind — though even he had his moments of growing government.)

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