Hello Everyone,
As you can see, I am new here and have been perusing the wonderful informational resources that are present here for some time. I come with two questions that I haven't seen answered yet (I have tried searching). I understand free-market proponents are against government regulation and intervention, so I'd like to ask for an answer to the following two:
1) Fractional Reserve Banking - How would this work in a free-market society? Would there be regulation against it, would it be out-lawed, would it be allowed? Would it eventually subside on its own as more and more people realize it is nothing more than a ponzi scheme? If the banks were to regulate themselves, surely they would opt to create money where there was none?
..and
2) Environmental regulations - I'm specifically referring to employers in the oil industry, or paints, or in other places where rather harmful chemicals are created. If there were no regulation as to how they can treat or handle the chemicals, how can anyone be certain they are being disposed of propely and not just dumped in someone's backyard? I know BP springs to mind in the Gulf, but there's other places as well which do a lot of "illegal" dumping, how would a non-regulatory market prevent this?
Any input is greatly appreciated!
Welcome!
You've certainly come to the right place. (Or one of them anyway. Maybe I'm biased, but this is certainly a great resource). I would check out the Mises Wiki first...
Free banking
That article is pretty far along, plus you'll find a number of great resources in the links section. Also do a search on Mises.org for that term as well.
As for environment, the short answer is property rights. If property is all privately owned, any damage to someone else's property (e.g. dumping directly, or dumping that indirectly damages, such as flowing down a river) would be a tort, subject to retribution. Check out:
"Environmental Preservation: A Matter of Property"
"Austrians on the Environment"
"An Austrian Theory of Environmental Economics"
"A Primer on Natural Resources and the Environment"
"Environmentalism Without Government"
"Privatizing Climate Policy"
That ought to get you started. I'll add some more if I think of them
John, thank you for those great links.
I always find it amazing how such seemingly complex issues can be resolved with such brilliantly simple logic that we are all so fond of. There is just one small caveat to what has been written and perhaps you can help me understand it.
Consider a scenario where I have an industrial plant and choose to dump toxic chemicals into the ground because I own this piece of land. Later, when I choose to sell this property, the buyer finds the land is corroded, perhaps unable to grow crops, or at the least - presents unsanitary conditions or water quality to the present owner. Logic dictates that I could sue the previous owner, but for what? If no regulations existed during his time on this property, no legal action can be taken for his actions.
I'm sure my logic is at fault somewhere but I cannot see it. Not a single person on this planet will own a specific piece of land until the end of time, so it stands to reason that at one point in time, his misuse of this land will be the burden of another.
The Gulf of Mexico is not owned by anyone. So, BP is not violating any property nor do they owe anyone anything. Except maybe coastal fisheries if those were affected.
Your reasoning may be factual, but this is hardly favourable by anybody, and certainly not benificial to anyone but BP. This is where free-markets get ther bad name. They come in (BP), wreak havoc, and then move onto other places that haven't been plundered yet.
So I'm trying to find a counter-argument of why this is not so in an idealogically perfect free market society.
If this were the norm, in time - there would not be much land left that was not polluted since there would be no inclination or deterrant to do otherwise for companies like BP and others.
I hope people are not suggesting I go and dump all my toxic stuff anywhere I wish, as long as the land doesn't belong to someone?
A market is not some foreign object. It can't "come in" and do anything. "Free market" does not get a bad name from anything that happens. It gets its bad name from socialists labelling every single bad thing that happens in the world as "free market". Changing what specifically happens will only change the specific context of the negative connotation.
Anyway, environmental regulations are not intended to protect the environment. Otherwise we would not have marginally free garbage disposal. They are a bone thrown to anti-business fanatics trying to disguise their socialism as concern for the environment.
1) Fractional reserve banking used to work just fine in a free market. Banks and other lenders, or anyone else who manipulates the quantity of money and available credit, will always cheat the system. This cannot be avoided. It is the free market itself that reins in the degree of money manipulation. In earlier times, if a bank could not cover its bets in the event of a run, it would fail, and its owners would have to liquidate everything to cover depositors, with no bankruptcy protection. With today's government oversight and FDIC guarantees, banks at all levels are overextended, even after-- especially after-- the onset of the current crisis. Regulation and oversight do nothing whatsoever to keep banks honest, especially when the laws are written by the banking lobby.
2) The mention of BP brings to mind just how government regulation encourages such disasters. The entire incident occurred because oil companies are severely restricted from drilling on land or in shallower water. If a similar spill happened nearer to the coast, it could have been cleaned up much more quickly and without the widespread disaster. Regulations forced BP to seek new sources of oil in such hazardous areas. Of course, the government and the state sycophants see this as a case of too little regulation, assuring that there will be bigger disasters to come.
zdrux: Consider a scenario where I have an industrial plant and choose to dump toxic chemicals into the ground because I own this piece of land. Later, when I choose to sell this property, the buyer finds the land is corroded, perhaps unable to grow crops, or at the least - presents unsanitary conditions or water quality to the present owner. Logic dictates that I could sue the previous owner, but for what? If no regulations existed during his time on this property, no legal action can be taken for his actions. I'm sure my logic is at fault somewhere but I cannot see it. Not a single person on this planet will own a specific piece of land until the end of time, so it stands to reason that at one point in time, his misuse of this land will be the burden of another.
Your concern is actually addressed with an actual real world example here:
Caley McKibbin:The Gulf of Mexico is not owned by anyone. So, BP is not violating any property nor do they owe anyone anything. Except maybe coastal fisheries if those were affected.
False.
Federal property is a chimera.
Caley McKibbin:Federal property is a chimera.
Is that supposed to be some kind of refutation to the fact that you were wrong?
Can you point to someone and say that one person owns a specific part of federal land? Nope
Phaedros:Can you point to someone and say that one person owns a specific part of federal land? Nope
And?
That means it's not really owned by anyone. I think Aristotle argued that common property, "federal property" which is ostensibly owned by "the people", being owned by everyone is in effect owned by no one.
Tell that to BP and all the other companies making lease payments.
Is asking a question begging the question supposed to be worth answering?
What are you talking about? You said "The Gulf of Mexico is not owned by anyone. So, BP is not violating any property..." I posted a video that truthfully states that the BP oil spill occured in "federally owned water and in a sea bed that is leased from the federal government"...basically proving your claim about ownership to be false.
And your response was a nonsense metaphor about federal property being a chimera. I'm not even sure what that is supposed to mean. Again, if that was supposed to be some kind of refutation to the proof that you were wrong in your claim, then it didn't do a good job. I have no idea how simply pointing that out is a "begging the question." Honestly if you want to take the devil's advocate role that seems to have been vacated recently and get into some kind of philosophical discussion about how "there is no such thing as government" and therefore it can't own anything, or that Aristotle said that "federal property" is something owned by "the people" and being owned by everyone is in effect owned by no one...then make your case and have fun with that.
But the truth of the matter is BP had to make lease payments to the federal government to be there, and if they didn't make those payments they would be forced out of the area for violation of property rights.
Couple videos on the environment question: