Spot The Fallacies!

In the comment thread to my Turtles post below, Platypus concentrated more economic fallacies into a shorter space than I thought possible. Let's take each fallacy one at a time.

[A] government program actually will receive more scrutiny from more divergent parties than individuals’ purchasing decisions. When you bought your last car, how many people got to vote on your decision? How many even had a chance to comment?

It's instructive that Platypus chose car purchasing as an analogy to voting, because that is precisely the same analogy David Friedman used in his Booknotes interview with Brian Lamb:

So it isn't specific to our system. I mean, I think the same problems would exist with England or France or Germany or whatever, that if you think about ordinary democracy, the problem is rational ignorance. The problem is that an individual voter would have to know a great deal to do a good job of deciding who should be Congressman or President, knowing that great deal would take him a lot of time and effort. The individual voter gets no payoff other than whatever his own feeling of having done his duty is from that time and effort, and thus, most people don't do it.

Let me give you an analogy that I find striking. Suppose the way we bought automobiles was you create a group of 10,000 people and you say, "Alright. In two weeks, we're going to have an election. Whichever model of car wins, you all get one." In that system, you would not spend the next two weekends test driving because you would say to yourself, "With 10,000 people out there, even if I figure out what's the right car for me, which is going to take quite a lot of time and effort, reading Consumer Reports, test driving and so forth, my vote is very unlikely to decide it. I'm going to get what the rest of them want anyway." So none of us are going to make much effort to figure out what car we want and we'll get whatever car we happen to have seen an ad for recently, something of that sort.

Well, same thing in the political system, except the number is much larger than 10,000. And I think that's really an inherent problem, and you may or may not be -- people can argue about whether there are some things that have to be done that way. But I think even if you believe there are some things that have to be done by the political system, you should assume they will then be done badly, because I don't think we have good mechanisms for getting political systems to work.

Moving on to Platypus's next point:

Government might not be as responsive to distant or non-economic or conflicting concerns as we’d like, but (at least in a democracy/republic) it’s designed so it can collect and focus those concerns.

Yet as Will noted a while ago, Social Choice theorists such as Kenneth Arrow have demonstrated the "impossibility of constructing an unambiguous 'will of the people' through voting mechanisms (different voting mechanisms give different results and none is the 'right' result)." Contra Platypus, you can't just aggregate individual preferences and hope to form a collective choice. There is no such thing.

Platypus then goes back in time to 1960, when Pigouvian taxes were all the rage:

It can even do so through the market, by levying fees or granting incentives to correct for hidden externalities or other distortions, but it’s something the market cannot do by itself.

Well, it ain't 1960 anymore. Ronald Coase showed that, in fact, the market--i.e. the individual actors within a market--can indeed deal with and correct externalities by itself, and that government interference in the presence of Coasian bargaining does more to distort optimal outcomes than had the government done nothing at all. The relevent question is not externalities, but transaction costs. And we can't just assume that the many public goods problems associated with state action are easier to solve than the private problems the intervention was meant to address.

Price and convenience will always crowd out other concerns, and the aggregate of a million consumers bowing to price pressure in make a single purchase decision apiece is not the same as a million voters expressing multiple concerns through the political process.

Price and convenience will always crowd out other concerns? What other concerns? Concerns that people aren't willing to pay for? If people don't care enough to pay for these other concerns, why should we care that they don't care?

But Platypus is quite right that millions of consumers making a single purchase decision each is not the same as millions of voters expressing multiple concerns through the political process. In the first case, each person pays for what they get and gets what they pay for. In the second case, many pay for what they don't get and get what they don't pay for. Why Platypus thinks the second mechanism is self-evidently superior to the first befuddles me.

So, to recap, Platypus ignored or was not aware of: rational voter ignorance, Arrow’s impossibility theorem, and the superiority of the Coase theorem to the outdated Pigouvian approach.

Can anyone spot any other fallacies here?

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nmg asked : 'What happens to

nmg asked :
'What happens to people who can't afford to buy security services? Can I enslave them or hunt them for sport?'
Yes, I presume you have heard of Darfur? An unarmed people can be oppressed without limit. If one studies history, it is clear that such oppression usually arrives quite swiftly after one group has decisive military superiority over another group.
The moral is simple : don't ever let yourself become deprived of the means of retaliation or self-defence.
On the bright side, defence is usually vastly superior to offence, provided the technology level is not too disimilar. Note that FedGov is spending $200 billion a year, to hold down about 20 thousand dissidents in Iraq. All the money in the world, would not suffice to hold down 1 million dissidents, armed with modern weapons. Think about it!

In tracing through all the

In tracing through all the previous turtle posts, I came across the discussion of private security and conflict resolution between two different security firms, and I have a question for the hard-core an-cap enthusiasts.

What happens to people who can't afford to buy security services? Can I enslave them or hunt them for sport?

nmg

The latter doesn't seem that

The latter doesn't seem that persuasive to me, though perhaps it does to others.

The effect of homogeneity may well be true, but how significant the effect is I don't know. From what I can tell, the medieval Icelanders were a pretty contentious lot.

It's been much more pleasant communicating with you lately, Jeff.

Scott Scheule asked "Why is

Scott Scheule asked "Why is that ironic?"

I was referring to Jonathan Wilde's post where he said

How much does the enacting of tariffs cost for an industry? How much do consumers lose, and how much do companies gain?

He was talking about legislation for concentrated gains and diffuse losses, but any system which prohibits such things would also work against anti-pollution laws which have diffuse gains and concentrated losses. It's impossible for people to cut e.g. air pollution to an acceptable level by mutual agreement, because anyone not party to the agreement could come along and cut their costs by using cheap but polluting processes. Individuals cutting their own emissions benefit very little; everyone else in the area affected are "free riders". The only way such things can actually work is via injunctions, "social contracts" or other coercive measures which cover everyone.

And they do work. The improvements in LA basin air (despite an explosion in the number of vehicles!) are undeniable. People are not going to give these things up.

I think an-cap is the ideal, for areas where it can work. Inherent commons and systems with free riders like clean air and water are not such areas. I'd like a much more libertarian system, but I recognize that "a foolish consistency is the hobgoblin of small minds".

(My source has links to the permalinks in this discussion, but they are not showing in the preview.  I am trying to give proper cites, but you won't let me.)

I'd say something here, but

I'd say something here, but Mr. Monotreme made every point better than I could have.

I find it less than fair of Ghertner to cite a 23-page paper in support of a point about externalities without regard to exactly which element is applicable; that appears to be more of an attempt to obfuscate. Regardless, a "pricing system with liablity for damage" is grossly inappropriate for a society which values human beings as individuals; if someone's externalities result in me losing my life no amount of moneycan make me whole, and anyone's activities which have a high likelihood of harming me without my advance consent should be subject to criminal penalties for negligence or even recklessness. There are other standards (standards for maximum damage, balance of benefits from improved standard of living vs. de minimis risk to health or other interests) but no market is ever going to value those things.

Since I was first introduced to Libertarian thinking, it has always seemed to have an unhealthy (and ridiculously unrealistic) emphasis on torts and litigation. The way such things would work out in real life is that people get tired of suffering damages and start getting injunctions instead. Ghertner thinks that current regulation is too severe, yet the likely outcome of his proposal is flat prohibitions imposed by the courts. The irony is complete.

Why is that ironic?

Why is that ironic?

Platypus, Isn’t [ignoring

Platypus,

Isn’t [ignoring strength of preference] equally true (or untrue) of markets? It doesn’t matter much whether environmental friendliness accounts for 1% or 20% of my car-buying preference if that preference is overwhelmed by price either way. In my very first post in the Turtles thread I was going to draw a parallel with the voters who cast 5% of the votes for a minority party but get 0% of the representation, but I figured I’d covered enough ground already. Whether we’re talking about elections or markets, secondary preferences sometimes get underrepresented…but that doesn’t mean they cease to matter.

Fair enough of a criticism. Let's look at why it is underwhelmed by price. If--like in your example--20% of your car buying preference is made up of environmental friendliness, yet the environmentally friendly automobiles cost 30% more than a non-enviro friendly auto, you will no doubt not purchase said auto. The company prices it at a 30% premium because they have forecasted that this will maximize profit through an optimization of turnover and profit margin. But this 30% premium tells us a lot about how much it cost the car manufacturer to produce this specific model of more efficient automobile.
In that sense, you are weighing how much you value this efficiency, with your productivity and how much it costs to be manufactured. In that sense, it is not that the market ignores your strength of preference, it is that you exercise your strength of preference at the given level of resource allocation.

However, even in the arena of democracy, these costs still exist. Now, no matter how you go about trying to rectify this, you either stifle production or force people to pay for options that they freely wouldn't.
Further, what incentives will the car manufacturers have to reduce the cost of pollution saving devices if they are guaranteed a payment for having costly devices?

One major difference is that there are some pretty clear ways (e.g. proportional representation or approval voting) to address that problem in the electoral process but not in the marketplace.

See, I would say this is exactly where the problem is. Politicians preach short-term visible benefits while ignoring the long-term and hidden negative side-effects. Further, it is generally for the benefit of their career that they do so.

As for your position on the subject of markets vs. democracy, I shouldn't have said I thought you thought democracy was superior, rather it fills the void that markets can not. That sounds about like what you are saying.

Kain,

democracy does not entirely ignore strength of preference. While each person has only one direct vote, they may garner more votes for their preference through activism, and in that way exchange their time and reputation for more influence upon the outcome of the purchase.

In other words, scare mongering and lobbying?

I'd still say it ignores strength of preference. Maybe not completely, but there is no guarantee that you will be able convince enough people to side with you as strongly as you.

As I pointed out in the

As I pointed out in the other thread, Micha, what you call a fallacy is really a rejection of your misapplication of the theories you name. Using the front page for revenge when you can't get BS accepted as gospel is a new low for the site.

In that system, you would not spend the next two weekends test driving because you would say to yourself, “With 10,000 people out there, even if I figure out what’s the right car for me, which is going to take quite a lot of time and effort, reading Consumer Reports, test driving and so forth, my vote is very unlikely to decide it. I’m going to get what the rest of them want anyway.”

What the example ignores, to its and your detriment, is the fact that some people do nonetheless take on the burden of activism. Go to any town meeting, in any town, to see examples. The vast majority might acquiesce in the excuse for laziness that you provide, but there will be a small percentage who care enough about any particular issue to spend a great deal of their spare time - or perhaps even devote their careers - to fighting for what they believe. The interest is not evenly distributed, but that doesn't mean it's nonexistent.

Social Choice theorists such as Kenneth Arrow have demonstrated the “impossibility of constructing an unambiguous ‘will of the people’ through voting mechanisms

So, according to you, because we can't achieve perfect clarity we should just abandon the process? Please. If you go into a restaurant and you're not perfectly satisfied with anything on the menu, do you just walk out? Again, your application of Arrow's theory is specious.

Ronald Coase showed that, in fact, the market?"i.e. the individual actors within a market?"can indeed deal with and correct externalities by itself, and that government interference in the presence of Coasian bargaining does more to distort optimal outcomes than had the government done nothing at all.

I suggest you re-read Coase, because that's not what he said. A true externality is just that: external, which means that its value is not represented in the market and therefore the market can't or won't do anything about it. Coase's Theorem applies to externalities which have already been internalized in some fashion, and the add-on about "interference" (nice objective term, eh?) is pretty much just your own fabrication.

I would point out that there

I would point out that there are situations when Pigouvian taxes would be the superior solution, because of transaction costs.

Past that, it's a more combative tone than I'd use, but if incivility is a wrong, then I'd say Platypus is at least contributorily negligent.

Not to say I don't like having him here. I do.

Another facet of the "will

Another facet of the "will of the people" problem is granularity. We (usually) don't vote on issues---we vote for representatives, and those representatives vote on issues. I may or may not agree with any particular decision my representative makes. Even if we grant that the "will of the people" is reflected accurately in the choice of representatives, there's no guarantee that the particular policies they decide on will reflect the "will of the people" in every case, or even in most cases.

Also, if price and convenience really crowded out all other concerns, I'd just eat this free grocery mailer that was so conveniently delivered to my home today instead of driving to the store and paying $5.00 for a steak.

Brandon, eating paper sounds

Brandon, eating paper sounds like a good idea now, but trust me, you'll regret it on the way out.

Wouldn't that just save a

Wouldn't that just save a step?

I’m not entirely sure how

I’m not entirely sure how either of those factors bears directly on the strength of the analogy. They may be significant, but I can’t see the direct connection.

I could be wrong, but it's my impression that crime is lower in homogeneous societies, because people are less likely to hurt or steal from others they consider as being like themselves. Maybe I'll try to find something to substantiate that, if it's considered important. As for ease of travel...

Ease of travel, for example, I would think would be a reason to expect a more stable private law system – if people can travel more easily, then there will be more competition amongst private law producers to produce an attractive regime to keep citizens where they are.

I think that effect would be pretty attenuated, and competition sort of implies separate jurisdictions which would create new difficulties. On the other hand, I'm pretty sure criminals would benefit greatly from being able to go somewhere that they're not recognized and won't be remembered, etc. As the area that must be searched increases, so does the difficulty of pursuit and investigation; every cop would love it if criminals stayed in the same neighborhood where their crimes were committed. Overall, I think ease of travel would benefit criminals far more than their (potential) victims or pursuers.

I'm not entirely sure how

I'm not entirely sure how either of those factors bears directly on the strength of the analogy. They may be significant, but I can't see the direct connection.

Ease of travel, for example, I would think would be a reason to expect a more stable private law system -- if people can travel more easily, then there will be more competition amongst private law producers to produce an attractive regime to keep citizens where they are.

It is worth pointing out, I believe, that the Icelandic system lasted for 300 years.

However, it's very temporal distance from the present is reason to be skeptical of direct comparison. The issue is, like most of the interesting ones, complex.

Ironically, it is situations

Ironically, it is situations like industrial air pollution which are among the best examples of concentrated benefits and dispersed costs.

I find it less than fair of

I find it less than fair of Ghertner to cite a 23-page paper in support of a point about externalities without regard to exactly which element is applicable; that appears to be more of an attempt to obfuscate.

It might be an attempt to obfuscate if it were an obscure paper in an obscure journal. But seeing as the paper linked is the most widely cited article in the history of the economics literature and legal literature, written by a Nobel prize winner, I see it as an attempt to elucidate rather than obfuscate. Especially against someone making the same arguments that were made over 30 years ago which the paper essentially invalidated.

Regardless, a “pricing system with liablity for damage” is grossly inappropriate for a society which values human beings as individuals; if someone’s externalities result in me losing my life no amount of moneycan make me whole, and anyone’s activities which have a high likelihood of harming me without my advance consent should be subject to criminal penalties for negligence or even recklessness. There are other standards (standards for maximum damage, balance of benefits from improved standard of living vs. de minimis risk to health or other interests) but no market is ever going to value those things.

That's a noble thought, and an inspiring end to pursue. Yet, it avoids all discussion of the means. Sure, we might desire to make human beings priceless - ends in and of themselves, which no libertarian would disagree with tempermentally - but no legal institutions created by man have ever achieved this goal. The alternative to a free market isn't a lack of market; it's a political market. Government is not a neutral arbiter, nor a wise philosopher-king. Government actors, in their nature, are basically the same as non-government actors. They are simply beholden to different incentives due to the power they wield. If no market values life and safety - a dubious conclusion to begin with - then the same holds for politcal markets as well. If no market values those things, then no democratic voting method will either.

Since I was first introduced to Libertarian thinking, it has always seemed to have an unhealthy (and ridiculously unrealistic) emphasis on torts and litigation. The way such things would work out in real life is that people get tired of suffering damages and start getting injunctions instead. Ghertner thinks that current regulation is too severe, yet the likely outcome of his proposal is flat prohibitions imposed by the courts. The irony is complete.

And conversely, whenever I argue with people with non-libertarian thinking, I am always amazed at the unhealthy (and ridiculously unrealistic) emphasis on legislation. Legislation is easily dominated by special interests as it falls prey to the focal benefits/dispersed costs dynamics of monopolistic legal systems. Torts and litigation also have their weaknesses, but on the whole, they are generally, though not always, a better method of conflict resolution than legislation. Of course, I prefer contracts as the best method.

It looks like the thread is coming to a consensus that - setting moral considerations aside - neither governments or markets are perfect, and that one has to be evaluated versus the other to determine the best policy. Most of us on this blog agree with this sentiment. But that statement is merely scratching the surface. Costs and benefits of the market and governments have to be evaluated. The field of economics that has done the most research into this is public choice economics - what I consider to be the economics of violent action. How much does the enacting of tariffs cost for an industry? How much do consumers lose, and how much do companies gain? How informed are voters in the political marketplace compared to consumers in the free market? How much of the benefits of wise decision-making do voters capture compared to consumers? How much of the costs of poor decision-making do voters capture compared to consumers? What sorts of incentives do companies have to support anti-monopolistic legislation? Does anti-monoplistic legislation have the effect intended? Do central planners have the ability to rationally allocate resources? Once regulation is in place, how much does it cost for the regulatee to become the regulator? How many lives does legislation that supposes to "make all life precious" cost? How can the preferences of millions of unique individuals be best accounted for in the choices that our institutions provide? If market firms are, to an approximation, modeled as profit-maximizers, how can political parties be modeled? Etc.

Most of us at this blog - having studied the economics of the political marketplace - believe that the free market and civil society is preferable to the government in nearly all situations. Now, I'm open to arguments against my beliefs, and to any of questions in the previous paragraph; I once did not hold the same beliefs I am supporting in this comment. But digging up obselete arguments and avoiding all discussion of the political marketplace is not something that sways me.

Again, nmg, this is a longer

Again, nmg, this is a longer debate than I wish to have at the moment.

I'm not going to answer anything because I don't want to spark any rebuttals. I'd be happy to talk later though.

So, Scott, you're saying

So, Scott, you're saying that in the an-cap world, the poor who can afford protection services must live in fear?

I'm quite sympathetic to the an-cap view but I do wonder how to solve this problem. If you can't afford protection, you are completley at the mercy of those who have more guns? They can steal from you or enslave you with impunity?

How does totally privatized security and law provide protection to those who can't afford it? There must be a mechanism for this or an-cap starts to look far less palatable. Is there a Chapter in Machinery of Freedom that addressed this?

nmg

I have a few comments in

I have a few comments in rebuttal to Platypus:

1. In using government to correct for externalities, there is no way to objectively measure utility. How do you know that government officials are providing enough correction for said externality, such that the benefits and costs weigh out? And just as importantly how do we account for changing technologies, incentives, preferences and measure cost-effectiveness using the democratic model?

2. With a representative republic, a bundling problem occurs. This means that basically, you vote on candidates not issues. Candidate A may have Positions 1, 2 and 3, where Candidate B may have !1, !2 and !3. You, on the other hand may have positions 1, !2 and !3, so you pick candidate B. However, you still hold position 1, and Candidate B holds the opposite position of yours. This is a very simple example. Most candidates hold hundreds of public policy positions and most of those positions are not ones with binary answers, but shades of gray.

3. Democracy ignores strength of preference. If we took your car buying example, including the purchaser the power to vote on this car. Who has the strongest preference? By far the purchaser of the vehicle. In the choice by democracy example, 1000 people may be given the vote of what one person picks, but in that the actual owner of the vehicle may have a preference of say 1000 "utils" towards the outcome of the choice, but everyone else may get 0.1 utils out of it. In this, 99.9 of the utils gained are from the other voters where 1000 are gained from the owner. If the voters pick a different car than the owner would have, the decision is a net -900.1 utils. Further, they have already weighed the cars available with needs such as number of passengers, price of gasoline, practicality of the vehicle, reliability, their own budgetary concerns, etc. Given that, why should anyone but the purchaser of the car be given the decision making power?

I'm probably considered a

I'm probably considered a "hard-core an-cap enthusiast" but I'm hesitant to answer nmg's question and divert the entire thread. I'm still waiting for Micha's rebuttal after all.

And Dave, I can't help but think you're missing the forest for the trees, so far as Platypus' response goes. He is not arguing that democratic decision making is perfect -- so pointing out that it is not perfect, while true, is not going to disprove anything he has said.

To me, these two: [A]

To me, these two:

[A] government program actually will receive more scrutiny from more divergent parties than individuals’ purchasing decisions.

Price and convenience will always crowd out other concerns, and the aggregate of a million consumers bowing to price pressure in make a single purchase decision apiece is not the same as a million voters expressing multiple concerns through the political process.

Sounded like he was saying that the political decision making process was superior to the market decision making process.

Taken in context, I think

Taken in context, I think what he was saying was that the two processes are significantly different, not necessarily inferior or superior to one another.

I don't know, the

I don't know, the externalities thing specifically (in context) sounded like he was saying that the political process takes over where the market fails.

It may. That's not the same

It may. That's not the same thing as saying market decisions are inferior to democratic decisions -- it's saying that the two may complement each other.

Scott, I'm not sure what

Scott,

I'm not sure what rebuttal you are waiting for, but none is forthcoming. I said my piece, and nothing that has so far been said in response is interesting or persuasive enough to deserve a rebuttal. If Platypus chooses to ignore or reject three basic foundations of modern political economy, I'm not going to waste my time trying to convince him otherwise. My effort is better spent elsewhere.

My mistake. That's also a

My mistake. That's also a perfectly valid response.

Well then, nmg, so far as your anarchism question goes. I'd point out first and foremost, Utopia is not an option. It may be true that there will be people who cannot protect themselves without the state.

But with the state, it is also true that there are people who will not be protected. What we have is two imperfect systems. Given what I know of public choice theory, specifically the notion of concentrated interests vs. dispersed interests, I believe the less imperfect option is anarchy.

Past that, I'm not willing to get into any extended debate. I've found such threads generally convince no one. I can recommend a few books on privatized law though, if you'd like to know more about the anarcho-capitalist argument.

With regard to nmg's

With regard to nmg's question: enslaving someone or hunting him (assuming some injury) is a violation of his rights. Of course rights are in no way reified in ancap. Still, the notion of human rights will exist (it does already) and it is highly likely that there will be an agency willing to take the case "on spec", as it were, for a piece of the settlement. This is no different than the current situation, where the poor do have access to the civil law system, not because they have lawyers retained.

What sort of cases can you expect lawyers to take up on the behalf of clients who cannot pay anything except shares of the settlement? It must be cases with high expected payout - that is:
(a) "large" crimes in terms of monetary punishment
(b) crimes with clear perpetrators and victims
(c) cases which are clearly crimes
I think all three of these apply to your specific examples, but they apply widely to many sorts of crimes. Where they don't apply is, for example, when you've had something stolen but you don't know who did it. The expected value of such a case is probably negative; hence, you would have to pay someone to take it on. Thus the truly dirt poor will not be well-protected against many forms of property crime, especially petty theft engaged in anonymously by other poor people.

It is worth pointing out in this context, however, the truly modest sums that are currently spent by the state for crime prevention. I've looked at this before and America in 1998 spent something like $10/month per capita on police, prisons, and courts. (See http://unruled.blogspot.com/2002_06_23_unruled_archive.html#78209759 for how I calced that.) Just about anyone can afford that. You may think that a big fraction of what the state does is the criminal justice system, but it isn't.

"In that system, you would

"In that system, you would not spend the next two weekends test driving because you would say to yourself, “With 10,000 people out there, even if I figure out what’s the right car for me, which is going to take quite a lot of time and effort, reading Consumer Reports, test driving and so forth, my vote is very unlikely to decide it. I’m going to get what the rest of them want anyway.”

What the example ignores, to its and your detriment, is the fact that some people do nonetheless take on the burden of activism. Go to any town meeting, in any town, to see examples. The vast majority might acquiesce in the excuse for laziness that you provide, but there will be a small percentage who care enough about any particular issue to spend a great deal of their spare time - or perhaps even devote their careers - to fighting for what they believe. The interest is not evenly distributed, but that doesn’t mean it’s nonexistent."

Platypus, allow me to rework the example, with your point in place.

In two weeks, ten thousand people are going to be making a joint purchase of ten thousand identical cars. Some of them live in areas where a wood stove is the only way to keep out the bitterly cold, deep snowdrifts outside. Some of them live in cities that enjoy an almost perpetual summer. Many of them enjoy pleasure riding lazily through the countryside. Some of them live for speed. A few of them are deeply offended by the bulky, boxy form of the SUVs that those who have to bear through harsh winters prefer. Others despise the material desires of those who prefer to drive convertibles in the heat. A couple hate those damned leaf tourists, driving on the highway at 17 miles an hour ooohing and aaahing at the reds and yellows when the people behind them would really much rather be getting to work right now. Several of them are worried that the daredevils might run them off the road if they were granted a bigger engine, and a few reformed drivers are afraid that they might not be able to resist the urge to speed in a car built for racing.

The more they care, the louder they cry. Their cries influence others, who may change the car they vote for, either in the direction of the preferences of those who cry or away from the activists' preferred choice. Some of the activists research the issues deeply, and temper their cries with dialogue between competing preferences. Some of them just cry louder in response to argumentation, or just don't care enough about other people to become activist about satisfying the preferences of others. And some of them just cry because they like the sound of their own voice, or the sense of superiority it gives them, or because it satiates the desires of those who like to listen to their cries. After two weeks have past, a car is chosen. What are the chances that it meets the preferences of woodsmen, city dwellers, daredevils and soccer moms all? What are the chances that the car satisfies ANY of them? What are the chances that the activists, on average, improve the voting process? And what are the chances that each individual's lack of satisfaction with the car thus purchased is blamed on everyone else who voted against them?

The relevant question is not whether markets work perfectly. The relevant question is whether markets work better than government. Look at the scenario above. Even assuming that bargaining is possible, it is unlikely that everyone is going to be happy with the choice. It even seems likely that, depending upon how evenly spread these preferences are, no one is going to be happy. Worse, these preferences aren't uniformly strong. As you mentioned, some have stronger preferences then others. They take it upon themselves to agitate and try to convince others of the rightness of the activists' personal choice. And some people are activists because of a preference for activism, and not because they care or, more importantly, *understand* which choice would be better for the 10,000 individuals who are about to be paying for the same car. Add in complications like differences in income, add in differences in taxes paid towards this 'joint purchase', and things get even more messy, and seemingly less likely to work out well. On the other hand, this blog has discussed a great deal the benefits of freer markets in the short, medium, and long time horizon.

Contra Dave Peterson point #3, democracy does not entirely ignore strength of preference. While each person has only one direct vote, they may garner more votes for their preference through activism, and in that way exchange their time and reputation for more influence upon the outcome of the purchase. But is this really better than the free market's method for demonstrating preference? I don't know of any good theoretical reasons to believe that these activists and non-activists, when placed in the confines of the bundling problem caused by our form of government, will do better than in a market unencrusted with regulations that are much easier to create than to destroy, and much easier to wallow in than to adjust for a better outcome. Dave's #2 point rightly asks that question. Do you know of any reasons to think that, placed in the confines of our political market, these 10,000 individuals will do better than in a relatively freer market? If so, please enlighten me. If not, please at least note that you heard the questions, and were unable, instead of unwilling, to answer them.

Dave, those are three

Dave, those are three excellent points. Being pressed for time (unlike some thread starters I actually contribute to the economy) I'll address just one right now, but the others are great food for thought as well. It has to do with this:

Democracy ignores strength of preference.

Isn't this equally true (or untrue) of markets? It doesn't matter much whether environmental friendliness accounts for 1% or 20% of my car-buying preference if that preference is overwhelmed by price either way. In my very first post in the Turtles thread I was going to draw a parallel with the voters who cast 5% of the votes for a minority party but get 0% of the representation, but I figured I'd covered enough ground already. Whether we're talking about elections or markets, secondary preferences sometimes get underrepresented...but that doesn't mean they cease to matter. One major difference is that there are some pretty clear ways (e.g. proportional representation or approval voting) to address that problem in the electoral process but not in the marketplace.

With regard to the question of whether I claimed that governments are superior to markets, my position is actually somewhere between the two attributed to me. The two are certainly different, and I believe government might be superior in some cases but certainly not overall. If I had to pick just one it would probably be markets (which shouldn't be the surprise that it probably is) but I don't. I prefer to have both hammers and screwdrivers (and a bunch of other things) in my toolbox instead of just one, and I think a system in which the two complement one another is far superior to either alone.

Lastly, for Kian:

The relevant question is not whether markets work perfectly.

...nor is it whether government works perfectly - the impossible standard which Micha was trying to apply. You're absolutely correct that the real question is whether markets work better than government, but with a twist. The question shouldn't be asked just once, and cannot be answered just once, but must be asked and answered again and again and again for each circumstance. Most of the time the answer will be that markets do work better, but I seem to be in the minority believing that it's not all the time.

If Platypus chooses to

If Platypus chooses to ignore or reject three basic foundations of modern political economy

What I reject is not the theories themselves but your misapplication of them, and trying to portray the situation otherwise is starkly dishonest no matter how many insults you throw in as garnish. Grow up.

the impossible standard

the impossible standard which Micha was trying to apply

Excuse me?

You certainly make a lot of insulting accusations for someone who claims to be sensitive to such things.

The question shouldn’t be

The question shouldn’t be asked just once, and cannot be answered just once, but must be asked and answered again and again and again for each circumstance.

Actually no. Economically speaking, we should ask the question until the costs of asking the question equal the expected benefits of having an answer. Asking questions is not costless, after all. If, if, the answer becomes a foregone conclusion, it scarcely makes any sense to continue to ask it.

Micha: You certainly make a

Micha:

You certainly make a lot of insulting accusations for someone who claims to be sensitive to such things.

I'm not the one who started this thread for the express purpose of insulting someone, Micha. As I already pointed out, the impossible standard is the only way your invocation of Arrow is applicable. Until you come down from your high horse long enough to rationalize that mention some other way, I will continue to interpret it in the most straightforward manner.

Scott:

Economically speaking, we should ask the question until the costs of asking the question equal the expected benefits of having an answer.

Fair enough. I stand corrected.

OK, I found one source, but

OK, I found one source, but it's not exactly clear-cut. For example:

A second objection is that the rich (or powerful) could commit crimes with impunity, since nobody would be able to enforce judgment against them. Where power is sufficiently concentrated this might be true; this was one of the problems which led to the eventual breakdown of the Icelandic legal system in the thirteenth century.

...and, in conclusion...

It is difficult to draw any conclusion from the Icelandic experience concerning the viability of systems of private enforcement in the twentieth century. Even if Icelandic institutions worked well then, they might not work in a larger and more interdependent society. And whether the Icelandic institutions did work well is a matter of controversy; the sagas are perceived by many as portraying an essentially violent and unjust society. tormented by constant feuding.

Add in the fact that Iceland's population was not only small but abnormally homogeneous, the relative difficulty of travel, etc., and it doesn't seem like a particularly convincing argument for what results such a system might yield in a modern society. I'll keep looking, though.

Scott: thanks. David: I'd

Scott: thanks.

David: I'd never heard of that, and will look into it. How did that really work out? I can imagine several possible outcomes, most of them rather unpleasant. Do you know of a good source for further info?

Platypus, In Iceland several

Platypus,

In Iceland several hundred years ago, the way protection was afforded to the "less affluent" (we'd consider even the wealthiest in that society poor nowadays!) sold their tort claims to those better able to prosecute the claim. I'd suspect something similar in some future ancap society. In fact I'd hazard the guess that there would be professionals that specialized in finding poor people with legitimate claims and prosecuting their cases on their behalf!

Hm, something got mangled.

Hm, something got mangled. I meant to say "Even if they overcome the first..."

Fixed it.

Fixed it.

Also, the poor could form

Also, the poor could form defensive cooperatives to protect themselves.

The same people are likely to be poor are also likely to lack mental or social abilities. Even if they overcome the first, to think of forming an alliance and second, to maintain one, how many unarmed poor people do you think can stand against even one rich kid with an automatic weapon?

if you’re so incompetent that you can’t afford to hire protection, why would you be worth enslaving?

What does competence have to do with slavery? Many of the uses to which slaves have historically been put did not require any kind of competence. A sex slave, for example, doesn't even require a mind. Should the mentally challenged in your world be left to such conditions unless they can help themselves? Or should they rely on charity from the same sort of people who would say what you just did?

I’m quite sympathetic to

I’m quite sympathetic to the an-cap view but I do wonder how to solve this problem. If you can’t afford protection, you are completley at the mercy of those who have more guns?

I don't really see that it's a problem. What about those who can't afford food, or shelter, or medical care? Law and order are scare goods just like these, and they don't come for free. Why should somebody who doesn't contribute enough to society to pay for its upkeep be guaranteed all the benefits of living in society?

You may say that everybody should be protected from violence anyway, and there may be merit to that. But if you give somebody something he hasn't earned, that's charity. And I think that voluntary charity is the only morally acceptable way to provide the basic necessities of life--including protection from crime--to those who can't afford them.

Also, the poor could form defensive cooperatives to protect themselves.

They can steal from you or enslave you with impunity?

If you're so poor, what's there to steal? And if you're so incompetent that you can't afford to hire protection, why would you be worth enslaving?