Monday, December 03, 2007

How to Think Like A Statist

I tell you, being an advocate for sound economics is not easy. Despite the fact that the free market can provide a million billion empirical examples that it is a superior engine of progress for civilization – generating wealth, improving technology, and promoting peaceful interaction among otherwise opposing groups of the human family – its really shocking to see the tenacity with which Statists will cling to their fantasies that we need the State to provide a firm foundation for society.

The State is a contradiction. It is violence. It is theft. It claims it exists to protect ordinary people from violence and theft, but fundamentally, it exists by these two things. But I digress.

As I’ve thought about it, I’ve come to realize that there are two bedrock principles upon which Statists will base 99% of their arguments. They are as follows:

First…As an economic principle, monopoly is more efficient than competition. Free competition among different suppliers of goods and services does NOT lead to innovation, greater output, higher quality, and lower prices. Instead, a competitive marketplace leads to a severe restriction of goods, affordable only to the super-rich, while ordinary people, "the poor", go without.

Empirically, this is laughable. Yet, it’s the argument they like to use when arguing that without a State, people on the lowest rung of the economic ladder would then be vulnerable to predation by robbers, murderers, rapists, and other thugs. They fail to explain what exactly is so magical about the provision of security that it is exempt from the basic laws of economics. Yet, that is what they believe. And their solution to protecting these people from theft and violence is to establish a monopoly organization for these services which derives its revenues by theft and threats of violence for not paying extortionary "protection money".

The second principle of Statists is that they believe – really, truly believe – that nobody (except for the Statist who happens to be speaking) actually WANTS roads…but it takes far-seeing politicians to force us to have them. If we all had our way, we’d run outside right now, rip up the pavement in front of our homes and businesses and throw the rubble in a ditch somewhere. We’d all prefer to ride horses to work through 10 foot high snowdrifts, because…well…. I’m not sure why. But we need politicians who know better than us that it would be better to have roads and cars, because ordinary people just don’t get it.

So, the argument goes, because roads lead to improved logistical possibilities for an economy, we need the State to steal half our incomes, tell us where we can smoke, interfere with our medical decisions, and wage war on dark-skinner non-Christians in third world countries halfway around the world. Without the State doing these things, we’ll all be trapped in our homes, unable to get food and supplies to live. To question the need for the State because it promotes some of the most horrendous things humankind is capable of, is to advocate the abolition of all material prosperity and return to living in caves or mud huts.

This, too, is completely absurd. The intellectual failing here is that, like the monopoly argument above, they fail to understand the most basic mechanics of how markets work. They ask, "who will pay to have a road built?", or some variant on the question about how scarce resources get allocated in an economy. It never occurs to them to rephrase the question and substitute something else for "roads". Who pays for that McDonald’s to be built? Who pays to have those cell phone towers built? The entrepreneur, that’s who. Someone who surveys the current structure of the economy, and assesses a need for certain goods or services in a certain area, and then marshals the needed resources to implement his vision.

In both cases, the Statist fails to grasp basic economic principles, and his entire worldview is informed by the outmoded and false assumptions of socialism. It is an error made by many people, so it’s not completely unexpected. But it can be tiring sometimes having to run over the same old, worn out arguments.


Blogger Kangalanatolian said...

There are certain exceptions to the efficiency rule of the free market.
Power distribution
government itself
local roads

to a lesser degree landline telephones and/or other hardwired services, though some duplication might be possible.

If the public "owns" the mechanical equipment and contracts the servicing of it, a semblance of free market can be achieved, though it still requires a local monopoly to work best.

2:07 PM  
Blogger Libertarian Jason said...

Power distribution has been a complete failure as a regulated "natural monopoly". Getting "cost plus" hasd virtually eliminated all incentives to innovate.

Sewer and water... I fail to see why those need to be socialized.

And what about "government itself"?

And what is it with you people and the roads?? Local property owners have every incetive in the world to establish roads for transport. I fail to see the magic element that prevents ordinary economic law from governing.

I won't even comment on the telecom point... The fact that landlines are becoming increasingly irrelevant these days, I'm not sure how that is even worth considering.

Finally... If "the public" (which is a clever way to avoid saying "the State") owns the infrastructure and then contracts its use...that is economic fascism.... Socializing the costs, privatizing the profits.

3:44 PM  
Anonymous tvfoh said...

I am for free enterprise. I would like to point out the Lincon Highway project as an example of private enterprise not being able to create a road that was needed at the time. it did take government to do that.

my two cents.
The View From Out Here

7:19 PM  
Blogger Libertarian Jason said...

And why was that?

1:01 PM  
Blogger Kangalanatolian said...

Sewers: Can you imagine 3 different sewer companies trying to drain the same area? What a nightmare!

Phones: Cell phones compete well, but landlines(comcast, etc) will be a disaster with overlapping wiring to each house.

Local roads must be put in after sewers and buried services, but before many residences, to be cost efficient.
Schools are another matter entirely, as they could be privatised completely, and added later. The same with parks or anything else that doesn't require you to rip up the street.

2:15 PM  
Blogger Dr. T said...

Statists don't understand that complex entities are self-organizing. They don't need an organizer. Further, self-organizing complex entities are productive, reproductive, and generative of more complex entities themselves. Organized entities can do none of these things.

5:25 PM  
Blogger Dr. T said...

What government-imposed regulations prevented them from finishing on time -- that's what I would like to know. The government likes to do this sort of thing: "privatize" something, but not really, and then set up the private sector to fail, so they can "prove" that the market fails and we need the government.

11:36 PM  
Blogger Libertarian Jason said...

Kang -

No offense, but that sewer example makes no sense. Why on earth would three sewers be built on the same spot?

And again.. landlines are becoming increasingly irrelevant these days, so I fail to see your point. Besides, all the government protected monopoly of landlines has done has created special interest that has incentive to see that all competing technologies are prevented from being "allowed". Case in point... Satellite radio could have been made available to the public 10 or 20 years before it finally was. The reason was that those with vested interest in "radio" (ie. traditional broadcasters) lobbied to have this technology regulated so heavily as to prevent it from becoming a viable business service. Even today, satellite radio (XM and Sirius) are so hampered by government regulation, its amazing to me that they are in business.

The point is...even if you buy into the whole "natural monopoly government regulated" argument... you are essentially eliminating all incentive for providers of such services to try and economize on resources, to innovate better service models, or to even allow competing technologies to have a chance at developing.

10:18 AM  
Blogger David_Z said...

If the state stops providing sewers, real estate developers will simply start providing them on all new construction, because nobody in their right mind would buy a subdivided lot without sewer connection. Likewise, roads are implemented during the development stage, the costs of which are then capitalized. An excellent volume on the subject is "The Voluntary City," which is full of detailed, empirical evidence suggesting that our crackpot libertarian theories actually have worked successfully in the past.

5:31 PM  

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