From: Technotranscendence (neptune@mars.superlink.net)
Date: Sun Aug 11 2002 - 18:35:18 MDT
On Sunday, August 11, 2002 4:46 PM Charlie Stross charlie@antipope.org
wrote:
> I'm probably not going to be able to keep up with this
> thread -- it's grown far too large and bloated, and I've
> got mild RSI and deadlines to hit. However ...
That understandable, though I hope you'll at least continue to scan some
of the comments on this thread.
>> Let's
>> bear in mind that provision of security is labour-intensive, and
almost
>> by definition out of the financial reach of the poor. Let's also bear
in
>> mind that a level economic playing field requires, as a starting
point,
>> that property rights are equally enforcable. This is a problem, isn't
>> it?
>>
>> ### Point 1 in my government function list - protection from
ELEMENTS. Large
>> corporations, very wealthy landowners can distort the legal system to
their
>> advantage. If this is prevented, property rights of the poorest will
be
>> safe.
>
> What "property rights"?
I don't completely agree with Rafal here. I'm a strict libertarian, so
what follows will no doubt be different than his version of political
economy...
> The majority of the world's population today live OUTSIDE
> the organised and quantified system of property to which
> we assign rights.
Actually, who is this "we"? In strict absolute property rights terms --
relying on such thinkers as Rothbard, Hoppe, and George H. Smith --
property rights are not based on a formal system of government
recognition. No doubt this helps out and the fact that some people,
especially in Third World countries, live under regimes that do not
recognize their property rights is very harmful to economic growth and
coordination. (Hernando de Soto has written much on this subject. You
might want to check out his _The Mystery of Capital: Why Capitalism
Triumphs in the West and Fails Everywhere Else_.)
> Consider
> illiterate peasant farmers living on the land and scratching a
> living. Their involvement in the formal economy may be zero, but
they're
> still eating even though they don't 'own' the land they work --
insofar
> as they don't have pieces of paper to say they're entitled to it, or
> receive any money for what they grow, or spend any money for the
extras
> they acquire.
Confusing property rights with legal titles is not a good idea.
Property is something that arises without government -- just like money
and language. Granted, later on, government influences both. We now
have legal titles for many things we own and money, sadly, is tightly
controlled by the government. In many countries, language is also so
controlled. (Note: we have legal titles for many things, but not all.
For example, in the US, there're titles for cars and homes. There are
other acceptable means of proving ownership for certain things, such as
credit card and cash receipts. However, not every last item one owns
has even this level of legal backing. For example, I've bought stuff
off street vendors and even friends for which I have no receipt. I've
received gifts too, for which, again, I'd have no way of proving are
mine in terms of some piece of paper. At best, I might be able to bring
a witness to court in my ownership were ever questioned. Do I own,
e.g., the watch I wear -- which was a gift from a friend given a couple
of years ago? Most people would say yes and if someone forcibly took it
from me, most people would think I was robbed. Also, if I were to sell
it, most people would agree, I hope, that I had a right to sell it.)
> There's a rather interesting, albeit superficial, interview with
> Teodor Shanin in the August 3rd issue of New Scientist. Shanin is a
> "peasantologist" -- he studies the economics and sociology of
peasants.
> His most interesting assertion is that the informal economy is
actually
> so large that roughly 75% of the planet's population rely on it for
their
> very survival.
As above, I think informal transactions and informal property applies
even in advanced economies. (In fact, one reason for titles is usually
government control or taxation. Surely, it's not the only reason, but
even in advanced economies, there are large, informal sectors. In the
US, there is, e.g., the illegal drug economy and that's just one,
extreme example of how economic activity can go on despite the
government not recognizing and even tryint to overthrow property rights.
(Here, the rights of people to own and, therefore, trade in illegal
drugs.))
> "There was no economic explanation for how the majority
> of the population [in Africa] survived. They didn't own land. They
didn't
> seem to have any assets. According to conventional economics they
should
> have died of hunger long ago, but they survived.
This depends on what is meant by "conventional economics." I don't
subscribe to mainstream Keynesian or neoclassical economics, though I
see no reason why these two schools -- or there outgrowths, such as New
Keynesianism -- can't deal with this. In the Austrian school, there is
no problem with dealing with informal economies. (E.g., de Soto, an
Austrian, has spent much of his life studying informal economies. See
also his _The Other Path: The Invisible Revolution in the Third World_.)
> To understand this,
> researchers looked at how these people actually lived ... their way of
> life was completely the opposite of how a human being in an industrial
> society survives. They didn't have a job, pension, steady place to
work of
> regular flow of income.
Actually, I know quite a few people who survive just this way in the
US -- and they aren't necessarily the poorest either.:)
> Families held a range of occupations from farming
> and selling in the market to doing odd jobs or handicrafts.
As startling as this might sound to some more sheltered readers, this is
what people do to either get ahead or keep from declining when they
don't have other paths to rise up. I know many families in the US,
e.g., where people will try out other occupations and even do crafts to
make money. I also know people who supplement their incomes, meager or
not, by holding other, often transitory jobs such as doing car repairs
or handiman work. I do not think such activities are somehow alien to
economics. Certainly, they are not alien to Austrian economic theory, a
large part of which is centered on how people discover such
opportunities for profit. (See the work of Israel Kirzner, for
instance. And yes, even mere survival is profit when judged against the
alternative. "Profit" here simply means bettering a condition -- which
in a decling state could just mean making ends meet or even just making
them almost meet as opposed to miss each other by light years.)
> Their aim
> was survival rather than the maximisation of profit. Rather than earn
> wages, labour was used within family enterprises or shared out among
the
> village. Researches discovered the same way of life in Latin America,
> in south Asia -- even in Italy."
This sort of activity goes on far and wide, though it's hardly an
argument against the private production of security. As I mentioned in
an earlier email, this is one way people can get together and do things
they couldn't do alone -- or would just find harder to do alone. In
this way, such people could team up to form a neighborhood watch or even
just pool their money together to hire a protection agency under
anarchocapitalism.
> Here's the kicker: what WE value is not what THEY value, because for
the
> most part an attempt to drag them into the formal economy actually
IMPAIRS
> their ability to stay alive. And so, any attempt to deal with the
problem
> of how to look after the poor is contingent on a way of enabling them
to
> stop being poor (without starving to death in the process).
Part of the problem here is that becoming a member of the formal economy
imposes lots of other costs, including paying taxes and facing
government regulations. The guy who rents out an illegal apartment on
the cheap, e.g., once he shifts that asset over to the legal economy,
now faces government inspections and tenants using the law against him
for whatever reason as well as a higher tax rate. The worker making
money "under the table" going for a legal job might make more money, but
then find himself paying taxes and having other deductions made.
Instead of being paid cash, he might then be paid with a check and have
other costs associated with that, such as having to go to the bank to
cash it (yes, this is a cost) or using a checkcashing service that
charges a fee.
As you can see, many of these costs are imposed by government
interferences. The solution should be quite obvious: remove the
interferences. There's a huge economic literature on the ill effects of
such interventions.
> It's a big headache. And no, I'm not suggesting that living like
peasants
> is a good thing: quite the opposite. But reciting Austrian School
economic
> nostrums isn't going to deal with the basic problem that they're
utterly
> inappropriate to people who aren't in the economy in the first place.
See above. Again, the Austrian school of economics does not limit
itself to the formal economy -- and considerations of informal and even
premoney economies are peppered throughout it. (See, e.g., Carl
Menger's works. He founded the school in the late 19th century.) You
are perhaps confusing Austrian economis with mainstream economics here.
>> ### Lawyers are expensive because of monopolies limiting
>> access to the profession (the bar associations), courts are
>> slow because they are not
>> private, and this does make it more expensive.
>
> "Any profession is a conspiracy against the laity" -- George Bernard
> Shaw. On the other hand, properly administered professional bodies
police
> the standards of their own membership. If they don't, you risk ending
up
> with a lawyer who is cheap but incapable of arguing their way out of a
> cardboard box. So there are arguments in favour of professionalisation
> of the practice of law, as well as against it. Life's generally like
that,
> and I tend to find ideology a poor fit for the real world.
Actually, the way a free market in professionals usually regulates the
professionals is through competition. Yes, there will be bad
professionals -- just as there are with governmnet back occupational
licensing -- but this is kept to a minimum since customers for
professionals' services will not have any legal barriers to competition.
Also, there's no reason private ratings agencies wouldn't form, similar
to, say, Underwriters' Laboratories or _Consumer Reports_. And word of
mouth still works, the last time I checked. (You might want to check
out Young's _The Rule of Experts_, a sadly out of print demolition of
occupational licensing written in the later 1980s.)
As for ideology, anyone who believes a free market is a cure all is a
fool, but anyone who thinks that current regulations and interventions
work better than a free market is a bigger... Well, you get my point.
One need not be a utopian to accept a better way.
> If adults are not vaccinated against polio it is OUR problem. You
really
> need to read up on epidemiology. (It's about the clearest possible
> example of a common good issue in the world today.) I'll also add
that, as
> a matter of taste and personal opinion, I find the idea of _not_
providing
> antibiotics to people in need who can benefit from them, as a matter
of
> course, revolting. To quote J. P. Morgan, "The first thing is
character.
> Before money or property or anything else. Money cannot buy it."
Making
> sure that avoidable deaths are avoided is, in my world, a matter of
> character.
There's an easy way to do this with most infectious diseases: people can
donate to get the poor volunarily vaccinated. It's not like vaccines
cost $1 billion US per person and only a huge bloated welfare state
knows how to stick a needle in someone. If it were necessary, then how
did humans make it by the saber tooth tigers and such without government
there to hold their hands?
>> ### Having a child is always voluntary. If you
>> know you don't want to abort,
>> use good contraception, or don't have sex.
>
> Does the word "rape" exist in your vocabulary?
I don't know how Rafal will react to this, but you wrote "Having a
child may be involuntary, to the extent that it may be unwelcome and
unplanned but the parents have ethical qualms over abortion."
Certianly, rape could fall under that, but it seems to me, but so could
non-rape situations, such as consensual sex without contraceptives. I'm
not sure of the %ages here, but until someone presents them, I don't
believe most "unwelcome and unplanned" children are the result of rape.
If they are, then one solution is to teach women, in general, how to
defend themselves and to foster a culture of self-defense such that they
will not be passive victims in rape or life.
>> Am I right in thinking that what you _really_ mean is that people
should
>> show some intention of paying for their own healthcare before they
receive
>> any?
>>
>> ### Exactly!
>
> In that case, we have a fundamental disagreement over core human
values. (See
> "character", above.) No further discussion seems possible.
Not necessarily. If you believe something should be provided by the
government for moral reasons, wouldn't you also want to make sure that
your intentions match the results of such provision? If they didn't,
would you be willing to rethink maybe not your morality, but part of
it -- the part that says this stuff should be forcibly provided? And if
you do, you might still conclude you'd like to see every last person
with healthcare and then you could work for a private, profit or no,
means of provided it that might work much better.
> > Er, in the world I live in there is not -- and never has been -- any
such
> > thing as a free market. They tend to slide into disequilibrium very
> > rapidly,
> > and local circumstances prevent people from moving where the work is
as
> > easily as theory would dictate that they should.
> >
> > ### Yes, you are absolutely right. Functions 1, and 2 serve mainly
to
> > protect the free market, by preserving a large number of players
> > (elimination of ELEMENTS), and preventing distortions of information
flows.
> > Protect the free market, and almost everything will be fine.
>
> Disagree. In my world, the free market accounts for about 25% of the
actual
> survival-related activity of human beings, and it doesn't satisfy all
the
> requirements even of the minority that participates in it.
This is only by your idiosyncratic defintion of the market as the formal
economy. I prefer a definition that maps much more closely to reality.
The market is basically the nexus of all voluntary exchanges, be they
informal or formal, based on goods or services with clearly defined
legal titles and heavily worded and long negotiated contracts in highly
organized settings or two people making a deal based on a handshake or
even two people just exchanging two goods or services and never seeing
each other again. (And one of those goods does not have to be money.
It could be the farmer who exchanges grain for a part for his tractor or
the man who gives a chicken to the doctor for fixing his broken leg.)
> Don't get me wrong: if I believed in human perfection I'd probably be
a
> libertarian myself. A world full of rational actors who always make
the
> best choices for themselves would be _great_. All conflicts could be
> managed, all resource allocation headaches ironed out, there'd be no
need
> for irrational social organisations such as religions or parliaments
> (and that roaring outside my window is a queue of wide-bodied
four-engined
> pigs on final approach into Edinburgh Airport). In practice, which is
what
> I'm talking about, we *can't* assume a free market that is protected
from
> distorted information flows, or that even works all the time. In
practice,
> there will always be a need for oversight, and problems with
regulators
> taking envelopes full of used notes or post-resignation seats on the
boards
> of the regulatees -- regulatory capture is the big enemy of the
real-world
> market, and freeing the market from regulation is like burning down
the
> house in order to deal with the mice in the wainscoting.
Libertarianism, contrary to the popular misconception, does not rely on
perfect people populating society. In fact, it's based on real world
perceptions of human nature, and especially of the nature of government
and of economics. For example, free markets give incentives that
override the natural tendency of most humans to do as little as
possible. If humans were angels in this respect, there would probably
be no need of such incentives. (This is over and above that free
markets also allow people to discover profit opportunities. Often in
these discussions, this very important role played by markets is
overlooked. It's extremely important because regulated markets and
planned economies destroy incentives for such discovery and even the
means of making them. For more on this, see the early works of F. A.
Hayek (e.g., "The Use of Knowledge in Society" at
http://www.virtualschool.edu/mon/Economics/HayekUseOfKnowledge.html) and
the works of more recent Hayekian economists, such as Steven Horwitz and
Estaben Thomsen.)
Cheers!
Dan
http://uweb.superlink.net/neptune/
See "Macroeconomics for the Real World" at:
http://uweb.superlink.net/neptune/Macro.html
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