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David D Friedman failed me for the first time

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Sieben Posted: Tue, Oct 5 2010 10:31 PM

I was browsing the Machinery of Freedom. He thinks only charity and local defense associations have a good chance of working. Irritatingly, charity is the more developed, implying that he relies most heavily on it. At the end of his national defense section, he says this:

"In such a situation I would not try to abolish that last vestige of government. I do not like paying taxes, but I would rather pay them to Washington than to Moscow—the rates are lower. I would still regard the government as a criminal organization, but one which was, by a freak of fate, temporarily useful. It would be like a gang of bandits who, while occasionally robbing the villages in their territory, served to keep off other and more rapacious gangs. I do not approve of any government, but I will tolerate one so long as the only other choice is another, worse government. Meanwhile, I would do my best to develop voluntary institutions that might eventually take over the business of defense. That is precisely what I meant when I said, near the beginning of this book, that I thought all government functions were divided into two classes—those we could do away with today and those we hope to be able to do away with tomorrow."

This is dissapointing, although honest.

The free rider problem needs more work. We can brag about lighthouses all we want, but we are going to continue getting our butts kicked on these issues if we don't have good answers to national defense and meteorites.

I started this thread a while ago. If you want to respond to it, do so here. I identify two main ways you can provide a pure public good. The first is like DDF's voluntary local defense agencies. I think it can be made very plausible if we keep the analysis on the individual level instead of fast forwarding to a scenario in which the public good has already been half solved. The second is more... probabilistic? I need critiques.

Back to the drawing board guys!

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Mises was a minarchist. Everyone has flaws or disagreements. Still doesn't mean that he's not one of my favorite libertarians.

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DMI1 replied on Tue, Oct 5 2010 10:48 PM

What's wrong with voluntary defense associations? "Gun Nuts" and other surviavlist types would probably be the first defense against a foreign invasion. Not to mention the fact that companies and people that thrive under the current model will probably not want to have arbitrary restrictions imposed on them by what they regard as criminals. Maybe they'll pay a small extra premium to their PDA's to provide defense against an external agressor. Consider it a premium on a freak event, like an earthquake.

Think about it, the PDA's could form associations themselves to pool resources and buy SAMs and Stinger missiles, along with antitank weapons (they know they'll be the first to go if a statist monopoly gets installed). Users of PDAs would probably not be adamant to pay a small extra for foreign defense, so they'll pay to PDA's that belong to this military association. The association could also sponsor a rapid reaction force, to serve as a first line of defense while the hordes of patriots rush to begin guerrilla operations against the aggressor. 

Remember this is a libertarian society. There's no restriction on buying landmines and anti-air missiles at the corner shop.

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Giant_Joe replied on Tue, Oct 5 2010 11:15 PM

The free rider problem needs more work. We can brag about lighthouses all we want, but we are going to continue getting our butts kicked on these issues if we don't have good answers to national defense and meteorites.

What is the problem with "the free rider"? That someone can get a benefit without paying? So what? Or that no one will pay into something because they all wish to be a free rider? Then the people have decided that the costs outweigh the benefits, and yet again, so what?

There are situations other than lighthouses that show the free rider problem isn't an issue. From charities to private roads to open source software to donations towards a common cause.

Something similar to the PDA issue happened with my family years ago. Back in the days of the breakup of Yugoslavia, everyone wanted their family members and friends to be safe. Everyone wanted their hometowns to be spared. I know that people from these countries who were now living in Canada, were donating swaths of their own money to the causes. Even if their money didn't defend their own village or loved ones, they would hope someone else's would. They knew that they stood a better chance if they just donated more of their time and effort. They could only hope that others would do the same. Some people did more than hoped for, others did less. Essentially, the fact that people knew there were free riders didn't stop them from trying to help.

If an asteroid were to hit the Earth, I'd be donating my time and effort to stop it, and I'm pretty sure most people around me would be willing to do it as well.

Anyways, I'm not entirely sure what the quote from D. Friedman has to do with the free rider problem. I'm just guessing it's PDAs.

I don't find the "free rider problem" so interesting, in that I don't find it a problem. The concept of market failure is much more interesting to me.

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The free rider problem needs more work. We can brag about lighthouses all we want, but we are going to continue getting our butts kicked on these issues if we don't have good answers to national defense and meteorites.

I started this thread a while ago. If you want to respond to it, do so here. I identify two main ways you can provide a pure public good. The first is like DDF's voluntary local defense agencies. I think it can be made very plausible if we keep the analysis on the individual level instead of fast forwarding to a scenario in which the public good has already been half solved. The second is more... probabilistic? I need critiques.

I thought your solution was pretty clever, fwiw. I don't *know* that it would work, but I'd certainly leave it on a table as a possibility.

That said, having read about 2/3 of that thread (it's long), I've always kind of felt like many of the people who were arguing with you that there is no such thing as a free-rider problem. I share some of their thoughts, but for me, it's a bit more mathematical than that. I'm now going to try to explain that in terms that aren't so mathematical because I haven't really worked out all the details: how's that sound? ;-)

I think the part that has always been missing for me when the "free rider problem" is discussed is that it seems to usually be structured in an artificially restricted way whose restriction blocks what I think would be the "solution" in real life. Basically, the problem is always stated as if everyone is simultaneously approached for their "contribution" to the earth's meteor prevention fund and that they have no idea what other people have chosen; in reality, I think what happens is that there are unequal cost/benefit ratios amongst the different people and those cost/benefit ratios are constantly changing as other people pony up.

To take an illustrative example, let's say that John originally intends to be a freeloader: he's dirt poor, and in his calculation he has $2 that he can spare or he's going to die anyway (from malnutrition or something). But then he sees reliable information that the defense fund is $1 short, and everyone else has been asked and no one has volunteered another $1. His calculation at that point - and of course I'm assuming perfect information and several other unrealistic things for clarity's sake - is that he spends $1 and lives, or zero and dies. His rational move at that point is to pay the $1.

In reality, think of it like this: as more money is contributed, the *marginal* value of each additional dollar goes up, because it increases the probability that the defense will be provided. Much like your construction, I think you need to take probability into account since my construction above about perfect information is not going to hold. Each person more or less is constantly calculating the likelihood that the good will get provided, the marginal change in that likelihood that their contribution will make, and the benefit to them if the good is provided vs the price if it isn't. Each person will have a little optimization problem to solve. Additionally, each person's little optimization problem will be changing as other people contribute. Some people will stay out at first, but as the number gets closer, the marginal benefit to them gets better, they will kick in. Some people will kick in once, and then as the numbers gets closer, they will kick in again: it may have only made sense to kick in 10 grand the first time, because the total was so far away that the probability of the good being provided was low that any additional money was only changing that probability slightly. As the total gets higher, the odds of that good get higher and thus make a better bet.

IOW: I think "free rider problems" just self-organize away because of the economic logic of each person constantly calculating their cost/benefit ratio in a probabilistic way. I think that's kind of where I break from you: you fear that everyone's calculation is "I might as well assume that the good will be provided by others so I can get it for free" and thus no one will pay. In reality, though, no one will realistically calculate the odds of that good being provided without their help as 100%.

I also think you did one of your sparrers a slight disservice when they made reference to people thinking about what other people will do: in fact, people are great at simulating other people. It's really not that hard: you pretend you are them, and you ask "what would I do in this situation?" There is a regression then: if I want to predict what you will do in situation A, and I think that what you will do depends on what others will do (why wouldn't I think this? *MY* decision is going to be based on what you are going to do, so when I simulate you mentally, I'm going to conclude that your decision will depend on what others' will do), then I'll think that you'll simulate them to figure out what to do, and they'll simulate everyone else, etc. Our mental machinery is actually up to this task in an instinctive way. Most people will not be thinking "I'm not paying a nickel, I'd rather the meteor hit me then to survive without my nickel when I didn't have to give up my nickel", so most people won't assume that others will be thinking that. Most people will be thinking "it's really important to stop this fucking meteorite, I really don't want my children to die, and while it certainly would be better if I could pay less than my fair share, mostly I just don't want to get ripped off and paid more than my fair share by too much, although if it comes right down to it I'll pay what it takes to save my children." And they'll think other people will think the same thing. Our brains are good at this kind of calculus, it's ingrained in us from the hunter-gatherer days: the ability to calculate optimal plays in repeated prisoner's dilemma games. So we'll assume that others more or less just want to pay their fair share, and they'll do the calculus that says that "fair share" is an evolutionarily stable strategy (this is is just another aspect of the calculation chosen by natural selection above), and they will choose the ESS.

Now, of course *everyone* won't do that. Some will calculate "fair share" differently, and evolutionary psychology says they'll tend to define "fair share" in a way that is generally favorable to them. That said, this alone will move things along at a good clip, and then once substantial progress towards the fee needed has been made, the increased marginal utility for the rest will start to kick in.

I guess the short version is: the process of providing a "public good" (and paying for it) is a *process*, and it is in the dynamics of that process that the self-organizing solution to the provision of that "public good" forms. You miss that if you don't treat it as a dynamic process but rather some static calculation.

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Conza88 replied on Tue, Oct 5 2010 11:48 PM

"Mises was a minarchist."

No, he wasn't.

Ron Paul is for self-government when compared to the Constitution. He's an anarcho-capitalist. Proof.
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I won't debate you on this. Prove me wrong. If I'm wrong, I'd be happier off. I'd love to see that he isn't.

Freedom has always been the only route to progress.

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Conza88 replied on Wed, Oct 6 2010 12:23 AM

"I won't debate you on this."

Because you'd 'lose'.

"Prove me wrong."

How about instead of shifting the burden of proof, you take 5 seconds to do a search with the relevent keywords and see what turns up. If that doesn't prove informative, let us know and I'll do the exact same thing... because I don't know how many times I've had to paste the same sources / quotes & explanation on here.

Ron Paul is for self-government when compared to the Constitution. He's an anarcho-capitalist. Proof.
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Fine, I WILL. 

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Conza88 replied on Wed, Oct 6 2010 12:40 AM

Rightio, well I'ma post them up anyway to help you out...

Hoppe:

Rothbard's anarchism was not the sort of anarchism that his teacher and mentor Mises had rejected as hopelessly naive, of course. "The anarchists," Mises had written,

contend that a social order in which nobody enjoys privileges at the expense of his fellow-citizens could exist without any compulsion and coercion for the prevention of action detrimental to society. . . . The anarchists overlook the undeniable fact that some people are either too narrow-minded or too weak to adjust themselves spontaneously to the conditions of social life. . . . An anarchistic society would be exposed to the mercy of every individual. Society cannot exist if the majority is not ready to hinder, by the application or threat of violent action, minorities from destroying the social order.[10]

     Indeed, Rothbard wholeheartedly agreed with Mises that without resort to compulsion, the existence of society would be endangered and that behind the rules of conduct whose observance is necessary to assure peaceful human cooperation must stand the threat to force if the whole edifice of society is not to be continually at the mercy of any one of its members. One must be in a position to compel a person who will not respect the lives, health, personal freedom, or private property of others to acquiesce in the rules of life in society.[11]

     Inspired in particular by the nineteenth-century American anarchist political theorists Lysander Spooner and Benjamin Tucker and the Belgian economist Gustave de Molinari, from the outset Rothbard's anarchism took it for granted that there will always be murderers, thieves, thugs, con artists, etc., and that life in society would be impossible if they were not punished by physical force. As a reflection of this fundamental realism—anti-utopianism—of his private-property anarchism, Rothbard, unlike most contemporary political philosophers, accorded central importance to the subject of punishment. For him, private property and the right to physical defense were inseparable. No one can be said to be the owner of something if he is not permitted to defend his property by physical violence against possible invaders and invasions. "Would," Rothbard asked, "somebody be allowed to 'take the law into his own hands'? Would the victim, or a friend of the victim, be allowed to exact justice personally on the criminal?" and he answered, "of course, Yes, since all rights of punishment derive from the victim's right of self-defense" (p. 90). Hence, the question is not whether or not evil and aggression exist, but how to deal with its existence justly and efficiently, and it is only in the answer to this question that Rothbard reaches conclusions which qualify him as an anarchist.

.........

"Here we go again. (HT: Kinsella)

"How far would Mises push the principle of secession, of self-determination? Down to a single village, he states; but would he press beyond even that? He calls the right of self-determination not of nations, “but rather the right of self-determination of the inhabitants of every territory large enough to form an independent administrative unit.” But how about self-determination for the ultimate unit, for each individual? Allowing each individual to remain where he lives and yet secede from the State is tantamount to anarchism, and yet Mises comes very close to anarchism, blocked only by practical technical considerations:

If it were in any way possible to grant this right of self-determination to every individual person, it would have to be done. This is impracticable only because of compelling technical considerations, which make it necessary that the right of self-determination be restricted to the will of the majority of the inhabitants of areas large enough to count as territorial units in the administration of the country.

That Mises, at least in theory, believed in the right of individual secession and therefore came close to anarchism can also be seen in his description of liberalism, that “it forces no one against his will into the structure of the State.” - MNR


Liberalism
pp. 109-10:

The right of self-determination in regard to the question of membership in a state thus means: whenever the inhabitants of a particular territory, whether it be a single village, a whole district, or a series of adjacent districts, make it known, by a freely conducted plebiscite, that they no longer wish to remain united to the state to which they belong at the time, but wish either to form an independent state or to attach themselves to some other state, their wishes are to be respected and complied with. This is the only feasible and effective way of preventing revolutions and civil and international wars. … However, the right of self-determination of which we speak is not the right of self-determination of nations, but rather the right of self-determination of the inhabitants of every territory large enough to form an independent administrative unit. If it were in any way possible to grant this right of self-determination to every individual person, it would have to be done."

..........

AEN: Was Mises better than the classical liberals on the question of the state?

HOPPE: Mises thought it was necessary to have an institution that suppresses those people who cannot behave appropriately in society, people who are a danger because they steal and murder. He calls this institution government.

But he has a unique idea of how government should work. To check its power, every group and every individual, if possible, must have the right to secede from the territory of the state. He called this the right of self determination, not of nations as the League of Nations said, but of villages, districts, and groups of any size. In Liberalism and Nation, State, and Economy, he elevates secession to a central principle of classical liberalism. If it were possible to grant this right of self-determination to every individual person, he says, it would have to be done. Thus the democratic state becomes, for Mises, a voluntary organization.

AEN: Yet you have been a strong critic of democracy.

HOPPE: Yes, as that term is usually understood. But under Mises's unique definition of democracy, the term means self rule or self government in its most literal sense. All organizations in society, including government, should be the result of voluntary interactions.

In a sense you can say that Mises was a near anarchist. If he stopped short of affirming the right of individual secession, it was only because of what he regarded as technical grounds. In modern democracy, we exalt the method of majority rule as the means of electing the rulers of a compulsory monopoly of taxation.

Mises frequently made an analogy between voting and the marketplace. But he was quite aware that voting in the marketplace means voting with your own property. The weight of your vote is in accord with your value productivity. In the political arena, you do not vote with your property; you vote concerning the property of everyone, including your own. People do not have votes according to their value productivity.

AEN: Yet Mises attacks anarchism in no uncertain terms.

HOPPE: His targets here are left-utopians. He attacks their theory that man is good enough not to need an organized defense against the enemies of civilization. But this is not what the private-property anarchist believes. Of course, murderers and thieves exist. There needs to be an institution that keeps these people at bay. Mises calls this institution government, while people who want no state at all point out that all essential defensive services can be better performed by firms in the market. We can call these firms government if we want to.

So I recon it'd be more accurate to kind of call him a "philosophical anarchist" like Albert J. Nock, as opposed to a minarchist or supporter of "government" because he is far better than the classical liberals or other minarchists today.. who don't advocate individual or even anything close to village secession at all.

Ron Paul is for self-government when compared to the Constitution. He's an anarcho-capitalist. Proof.
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So he just never called himself that or consider the notion ? He reminds me of how Ron Paul tends not to come out and say it. It makes sense. Mises seems to at least come as close as you can to being anarchist. My only misunderstanding is simply this:

Didn't Mises talk to Rothbard when he was theorizing market anarchy? I mean Rothbard was advocating it in the 50s, and wrote about it in the 60's. Mises died in 1973. Wouldn't they be talking to each other about it? 

This is the first time I've heard that term, philosophical anarchist. "Though philosophical anarchism does not necessarily imply any action or desire for the elimination of the State, philosophical anarchists do not believe that they have an obligation or duty to obey the State, or conversely, that the State has a right to command."

This does not really make sense to me. Listing Ghandi and Thoreau? They fought the state in more then just words.

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In other words, you are still buying the meteorite fallacy.

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Lost me there, and google provides no answers. 

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@ Sieben

He's still pushing that bogus meteor scenario that Friedman invented.

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Conza88 replied on Wed, Oct 6 2010 1:18 AM

"So he just never called himself that or consider the notion ? He reminds me of how Ron Paul tends not to come out and say it. It makes sense. Mises seems to at least come as close as you can to being anarchist."

Well back then "anarchist" was closely related to all things socialist.. Rothbard hadn't written all that he later did [although he had the ideas & conception). He himself wrote a paper "Are Libertarians 'Anarchists', under a pseudonym in the 50's.. which was unpublished, I gather because he later changed his mind and decided to essentially take over the label / accept it, as opposed to reject it. Adding the qualifer of anarcho-capitalism to make it clearer. Elaborated at length in this discussion.

David Gordon:

"In the 1951 article, he says that anarchist movements of the past tended to be collectivist; further, there isn't a fixed meaning for the term. For these reasons, he at that time preferred to find a different word for his own political doctrine. On this point, he later changed his mind and didn't have problems in calling himself an anarchist."
 

"Didn't Mises talk to Rothbard when he was theorizing market anarchy? I mean Rothbard was advocating it in the 50s, and wrote about it in the 60's. Mises died in 1973. Wouldn't they be talking to each other about it? "

In the 50's it didn't have that label, 1973 - For A New Liberty, 1982 - Ethics of Liberty. Around 1972 + you have Rothbard making the case.

Also:

AEN: What were your thoughts on Mises's review of MES when it appeared in the New Individualist Review?

MNR: I liked it, but he didn't say much about the book. I would have preferred him to go into more depth.

AEN: Was he bothered by some of your corrections and of his theories?

MNR: I don't know because he never said. Mises and I had only two friendly arguments. One was on monopoly theory where he wound up calling me a Schmollerite. Although nobody else in the seminar realized it, that was the ultimate insult for an Austrian. The other argument was on his utilitarian refutation of government intervention. I argued that government officials can maximize their own well-being through economic interventionism, if not those of the public. He in turn argued that those kind of politicians wouldn't survive popular vote, thus changing the terms of debate.

AEN: Mrs. Mises seems to think you had foreign-policy differences with Mises.

MNR: In all the years I attended his seminar and was with him, he never talked about foreign policy. If he was an interventionist on foreign affairs, I never knew it. This is a violation of Rothbard's law, which is that people tend to specialize in what they are worst at. Henry George, for example, is great on everything but land, so therefore he writes about land 90% of the time. Friedman is great except on money, so he concentrates on money. Mises, however, and Kirzner too, always did what they were best at.

"This is the first time I've heard that term, philosophical anarchist." "This does not really make sense to me. Listing Ghandi and Thoreau?"

Of similarity to Nock, that's what he called himself. I wasn't referring to the wiki which lists them. Anyway, it's not too clear, because Nock uses the word anarchist etc to describe himself:

"Likewise, also, when occasion required that I should label myself with reference to particular social theories or doctrines, the same decent respect for accuracy led me to describe myself as an anarchist, an individualist, and a single-taxer."
....
"The single tax impressed me as the most equitable and convenient way of paying the cost of such matters as can be done better collectively than individually. As a matter of natural right it seemed to me that as individually created values should belong to the individual, so socially created values should belong to society, and that the single tax was the best method of securing both the individual and society in the full enjoyment of their respective rights. To the best of my knowledge these two propositions have never been successfully controverted. There were other considerations, too, which made the single tax seem the best of all fiscal systems, but it is unnecessary to recount them here.

Probably I ought to add that I never entered on any crusade for these beliefs or sought to persuade anyone into accepting them. Education is as much a matter of time as of anything else, perhaps more, and I was well aware that anything like a general realization of this philosophy is a matter of very long time indeed."

But again, didn't quite get there - i.e single tax.. and his opinion of no need to crusade etc, is probably similar to Herbert Spencers conception and that of Walter Block's about society slowly advancing socially [probably haven't charachterised that right]. In any case, Mises was probably much closer - but this is where the radicalness and worth part comes in, Mises didn't violate Rothbard's law... and neither did Nock. All you hear from Nock is how evil the state is.. it's one of the first books I read, real radical - and I never really got the impression he wasn't fully there.

Ron Paul is for self-government when compared to the Constitution. He's an anarcho-capitalist. Proof.
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Sieben replied on Wed, Oct 6 2010 8:13 AM

@Giant Joe

You must understand that the case for charity is psychological. Also consider that empirical provision of public goods will be subject to confirmation bias - i.e. we're not going to hear about all the times provision of public goods failed. Democracy fails to provide a public good every day, but we seldom talk about that.

You are right that human emotions may play a very significant role, but I'd prefer to show that narrowly self interested agents would be able to solve a free rider problem, because that's the worst case scenario, so if that works then anarchy always works.

@Caley

I don't understand what the fallacy is. I have never read an economist who did not call public goods a "problem".

@Alternatives Considered

Thank you for your thoughtful response. I think the problem with your analysis is that you don't include that people consider what everyone else would do. So, if the poor dude with $2 were the *last* person on earth who could help, and he was the only shot for humanity's survival, he would do it. On the other hand, if there are 100 people left who can contribute, he might think "hmm well I'll just leave it up to them and save my $1".

If EVERYONE thinks this way, then the public good fails to be provided. But the crucial thing to realize is that people don't want to free ride, they want to free ride given that the good is provided. So you can offer them a contract which binds them to this game plan. It has value because their current plan is precarious, and they might wind up being stuck with the bill anyway since they might not be able to free ride.

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DD5 replied on Wed, Oct 6 2010 8:52 AM

Sieben:
If EVERYONE thinks this way, then the public good fails to be provided.

That sounds really wrong to me.   The spontaneous economic order that arises does not depend on some lack of ignorance.  You're just asserting that things like Defense are different.

Besides Friedman may be engaging in a fallacy here.  He simply asserts that the US-Soviet conflict persists once the US government is dissolved.  But does he make the case for why it should persist in the first place absent a US central government?

Also, even granting the hypothetical persistence of some foreign threat, its nature changes as soon as the US becomes free and there is no longer a central bureaucracy.  

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Sieben replied on Wed, Oct 6 2010 8:59 AM

DD5:
That sounds really wrong to me.   The spontaneous economic order that arises does not depend on some lack of ignorance.  You're just asserting that things like Defense are different.
The argument is not that people are ignorant. In fact, it assumes everyone calculates rationally in their own self interest.

DD5:
Also, even granting the hypothetical persistence of some foreign threat, its nature changes as soon as the US becomes free and there is no longer a central bureaucracy.
Some parts of it change. Others don't. Regardless, I'm trying to handle the general case of public goods rather than just national defense.

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DD5 replied on Wed, Oct 6 2010 9:21 AM

Sieben:
The argument is not that people are ignorant. In fact, it assumes everyone calculates rationally in their own self interest.

You said: "If EVERYONE thinks this way, then the public good fails to be provided."  

So are you saying that if EVERYONE didn't think this way, there is still a failure to provide the good?

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MaikU replied on Wed, Oct 6 2010 9:37 AM

If I correctly understand this topic...:

One can only be sure about himself. For example, I am sure that I wouldn't ignore some world catastrophy or other threat to me and my family, so that I can be able to live longer and maybe my children and their children etc.

I am not the other people so one can ever be sure about other peoples' actions. If you want safety, you can't rely on other peoples' generosity.

 

I don't know if this makes sense.

"Dude... Roderick Long is the most anarchisty anarchist that has ever anarchisted!" - Evilsceptic

(english is not my native language, sorry for grammar.)

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The Government doesn't have an answer for a meteor either, so what's the fuss?

If a Government has need for meteor defense they will turn to the private sector for a solution.  But then they'll waste a lot of time and money trying to tell the private sector how or what the solution should be.

Should there be sufficient time for a technical solution, which there probably wouldn't be, odds are the Government would screw it up.  The state has a nifty way of doing that.

When speaking of the long term investment to create a technical solution to a problem, not everyone is required to pay.  Just because not everyone pays doesn't mean no one pays.  There would be a market for meteor defense, just as there would be for foreign state or criminal defense, if there wasn't a monopoly in place for such services.  Insurance would be available, and probably would be at a very reasonable premium in the case of meteor defense.

Note: Blasting a meteor to bits could still create a debris field.  The meteor defense would cover the technology to eliminate the larger threat of an extinction level event plus damages caused by all of the bits and pieces destroying property at the local level.  Fools who wouldn't pay the small premium would still live, but lose their property.

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I don't understand what the fallacy is. I have never read an economist who did not call public goods a "problem".

Have you forgotten the last thread you made talking on the meteor scenario where I completely picked it apart?  Now you are back again saying the exact same thing and saying that "we" don't have any answers.  "We" don't have a problem with the answers.  You do.

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Sieben:
"In such a situation I would not try to abolish that last vestige of government. I do not like paying taxes, but I would rather pay them to Washington than to Moscow—the rates are lower. I would still regard the government as a criminal organization, but one which was, by a freak of fate, temporarily useful. It would be like a gang of bandits who, while occasionally robbing the villages in their territory, served to keep off other and more rapacious gangs. I do not approve of any government, but I will tolerate one so long as the only other choice is another, worse government. Meanwhile, I would do my best to develop voluntary institutions that might eventually take over the business of defense. That is precisely what I meant when I said, near the beginning of this book, that I thought all government functions were divided into two classes—those we could do away with today and those we hope to be able to do away with tomorrow."

This is dissapointing, although honest.

How has David Friedman failed you? I don't understand.

Sieben:
The free rider problem needs more work. We can brag about lighthouses all we want, but we are going to continue getting our butts kicked on these issues if we don't have good answers to national defense and meteorites.

I think it's incredibly pessimistic to claim that humans won't act cooperatively to save ourselves from a preventable disaster (e.g., meteorite, global warming, etc.). The "free rider" problem, while true insofar as humans can be simplified as self-interested rational agents, doesn't adequately capture the full details (e.g., social norms, moral values, etc.). One person might "free ride," but many others might feel the pangs of conscience.

Furthermore, The Myth of National Defense is a book you need to read (although, I've always liked Rothbard's succint criticism: if there is no nation with no central command, what exactly will a foreign aggressor take over?). But, principally, a private alternative to "national defense" would, prima facie, be superior: consider how our monopolistic agency externalizes costs, commits domestic transgressions of liberty, aggresses against foreign nations, etc.

On the issue of public goods, you and I will agree that this is an economic and philosophic problem that needs to be carefully investigated and worked through; however, you're dealing with Austrians here, too, and they don't even believe in public goods! But, to answer your concerns: democratic politics introduces many more public-good problems, and that should help you sleep at night (for instance, informed voting is a public good, hence it is underproduced). David Friedman's textbook Price Theory: an Intermediate Text explores public goods very well.

"I'm not a fan of Murray Rothbard." -- David D. Friedman

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On the other hand, if there are 100 people left who can contribute, he might think "hmm well I'll just leave it up to them and save my $1".

If EVERYONE thinks this way, then the public good fails to be provided.

Hmm, in my opinion I already dealt with these: you are falsely assuming that people will think deterministically, rather than probabilistically. The first guy won't think the way you suggest, he will instead say "if I choose not to pay the dollar, there must be some probability that *no one* else will pay the dollar (because *I* have made that choice and I assume that other people are more or less like me, not only a relatively rational assumption but more than that one that has been bred into us by natural selection), so my expected value in that case is some probability that nothing happens, and another probability that I and everyone I care about dies; if I choose to pay the dollar, I know for a fact I am out a dollar and I and everyone I know lives." The calculation is trivial, since almost any nonzero probability that no one else will pay the dollar makes the expected value of the second option far better than that of the first.

And again, the problem gets even better if you consider it a process. Each person is not making a single binary decision; they are making a series of binary decisions, one at each moment in time. Part of this scenario must be a stipulation that the money has to be found by a certain *time*, enough time to build whatever it is that will save us from the meteor. With a year to go before that deadline, people will naturally calculate the odds that others will pay for the public good higher. As time goes on, however, and the deadline approaches, the probability that others will pay for it without you kicking in goes in, and eventually crosses the line where the expected value of "contribute" is higher than that of "freeload". In this particular case, sure, if there's still a year to go the dude might not pitch in his dollar hoping that someone else will, but if it's gone a year and there's now 5 minutes to go and it still hasn't been paid for it, he is much more likely to do so.

Probability, and process. If you ignore these, you are artificially constraining the problem in a way that the resultant answer doesn't offer much insight.

[All that said: I still like the idea of thinking about more proactive ways to "solve" the problem ala your probabilistic contract. It's promising. I just don't think you should try to justify it in terms of an artificially setup problem that falsely suggests that the magnitude of the problem is larger than it really is.]

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Sieben replied on Wed, Oct 6 2010 2:58 PM

@DD5

Right if everyone didn't think this way, the public good could be provided. But it is in the rational, narrow self interest of people to try to free ride.

@KC Farmer

The government can solve this problem because it entirely bears the costs and benefits of the "public good". I.e. it becomes a "private" good for them.

@Kaley

No, all you guys did was say "maybe national defense is not a pure public good", to which i replied "I don't care. I'm considering the case of pure public goods". There was also some nonsense about charity, which is all well and good, but does not concern me.

@Strangeloop

DDF "failed me" because I had been in the habit of relying on him for strong arguments for anarchism.

Again, charity is extra-topical for me. I'll argue the charity case when I get desperate.

I've read Hoppe and Rothbard on large scale defense. They make a lot of good points, but really just gloss over the free rider problem.

I agree that good government is itself a public good in a democracy. Its kind of funny - there aren't any reasons why people would all of the sudden vote for public goods in an election when they wouldn't sign a dominant assurance contract in the market...

Regardless, an established monarch would have no problem providing some public goods. He might not provide any aesthetic public goods, but would certainly defend the country as his private property. Whatever he does with his citizens, or livestock, he will not let them be slaughtered.

I've heard DDF talk about public goods, and he essentially argues that some aspect of them can be made private (lighthouses bundled with port fees), provided alongside goods with negative cost of production (radio, advertisments) etc. But a really pure public good is never taken head on. I had searched desperately for one of these rock and roll anarchists who smash on every other issue to deliver some crucial insight into this problem, but no luck.

Being familiar with the cases for charity/emotion/dominant assurance contracts, I tried to take a stab at a unique solution on a previous thread.

2) Competition among free riders. Everyone wants to be a free rider. But everyone also wants the defense to go through. So people are not interested in being free riders, they want to be free riders GIVEN that the service will be provided.

So lets say 90% of the population is needed to pitch in for some defense. Given that the defense is provided, everyone has a 10% chance of being a free rider. This means that they will accept a contract that binds them to this expected contribution. So at a certain date, you role a d10 and pay if its 2-10. Alternatively they could just agree to pay 90% of the cost up front... whatever risk aversity.

However, this is still a contract that, on average, binds the signer to pay. Why not slam the door and try to be a free rider? Because as stipulated, everyone wants to be a free rider and have the service provided. Signing the contract does not diminish the person's chance of becoming a free rider. It is in fact beneficial to them because they increase the chances of the services being provided.

In order to prevent hardcore free riders from waiting till the last minute to sign the contract, the number of signers might be kept secret. Alternatively, the threshold for it to go through might be set at 99.9% of the population, diminishing the chances to be a true free rider to practically zero, which can be outweighed by some psychic or real benefit to providing defense.

In fact, in the above example, the defense won't even work unless everyone signs the contract... so the first signers are not at any particular risk. A clever contract might offer better odds to people based on the order in which they sign up, facilitating faster organization of promises2pay.

@Alternatives Considered

People weigh probabilities to make determinsitic decisions. But it is exactly the changing probability of outcomes that I try to use to get people to sign my contract.

The first guy won't think the way you suggest, he will instead say "if I choose not to pay the dollar, there must be some probability that *no one* else will pay the dollar (because *I* have made that choice and I assume that other people are more or less like me, not only a relatively rational assumption but more than that one that has been bred into us by natural selection), so my expected value in that case is some probability that nothing happens, and another probability that I and everyone I care about dies; if I choose to pay the dollar, I know for a fact I am out a dollar and I and everyone I know lives." The calculation is trivial, since almost any nonzero probability that no one else will pay the dollar makes the expected value of the second option far better than that of the first.
Its true that as the benefit of the public good increases you can produce it more easily. 

As time goes on, however, and the deadline approaches, the probability that others will pay for it without you kicking in goes in, and eventually crosses the line where the expected value of "contribute" is higher than that of "freeload". In this particular case, sure, if there's still a year to go the dude might not pitch in his dollar hoping that someone else will, but if it's gone a year and there's now 5 minutes to go and it still hasn't been paid for it, he is much more likely to do so.
It may be true that he is more likely to do so, but he still might take the option of being a free rider. The "wait till the last minute" game is basically a test of who has the most guts. Additionally, the "last possible second" might not be the most efficient thing to do, so even if we can provide the public good in this way the statists can still turn around and accuse us of being inefficient. So my contract idea is an attempt to accelerate the final decision for who gets to be a free rider to t=0, so whoever provides the public good can do it under certain economic conditions with as much time as possible.

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DD5 replied on Wed, Oct 6 2010 3:07 PM

Sieben:
Right if everyone didn't think this way, the public good could be provided

So this means you attribute ignorance or some degree of it to the failure to provide the good.

So my previous response to you still holds.  You want another try at it?  But try next time not to contradict yourself.

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The government has not solved the problem of meteor defense.

When you say that government bears the cost, don't you really mean the taxpayers.  These are individuals who are compelled to pay for something they might not even want.  The government will then contract a company or several companies to come up with a solution.  The cost of a solution will be bloated based on government incompetence, and passed on to the taxpayer.  The government will utilize their typical political B.S., and the solution that may have worked may not work at all.  The cost of this so called "public good" will be much higher, and the solution will be less efficient than any voluntarily funded, private venture.

Makes you wonder whether there really is such a thing as a "public good".

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There is no way around the fact that when you are offered this deal, you are being asked to pay for something that might be provided anyway if you just shut your door. Because the free rider option is available to everyone, they'll all try to take it, and defense will suffer.

Why do you make the assumption that this is what people will do?

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I. Ryan replied on Wed, Oct 6 2010 3:48 PM

StrangeLoop:

The "free rider" problem, while true insofar as humans can be simplified as self-interested rational agents, doesn't adequately capture the full details (e.g., social norms, moral values, etc.). One person might "free ride," but many others might feel the pangs of conscience.

If there is a "free rider" problem which applies to those scenaries, how did our conscience develop to nevertheless overcome it? If there is a free rider problem, it should apply not only to "economic activity", but also to how we evolved, unless it has a specific limitation.

So what is that limitation?

If I wrote it more than a few weeks ago, I probably hate it by now.

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No, all you guys did was say "maybe national defense is not a pure public good", to which i replied "I don't care. I'm considering the case of pure public goods". There was also some nonsense about charity, which is all well and good, but does not concern me.

You obviously forgot 100% and need to reread that thread.  In any case, there is no "we" about having problems solving it.  The meteor scenario is simply bogus.  The sooner Friedman fanatics accept that and get over it the sooner something worthwhile can be discussed.

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Sieben replied on Wed, Oct 6 2010 5:09 PM

DD5:

So this means you attribute ignorance or some degree of it to the failure to provide the good.

So my previous response to you still holds.  You want another try at it?  But try next time not to contradict yourself.

No, I'm not arguing that "what if people are stupid". I'm arguing that if everyone acts in their own narrow self interest, they will all try to go for the free rider position. Get the benefit of the public good without paying. If they all try to free ride, or "think like this", the public good will fail to be provided. As I said before, it is rational to try and free ride.

K.C. Farmer:
The government has not solved the problem of meteor defense.
Why not? They'd just build a giant laser with all their stolen loot.

K.C. Farmer:
When you say that government bears the cost, don't you really mean the taxpayers.  These are individuals who are compelled to pay for something they might not even want.  The government will then contract a company or several companies to come up with a solution.  The cost of a solution will be bloated based on government incompetence, and passed on to the taxpayer.  The government will utilize their typical political B.S., and the solution that may have worked may not work at all.  The cost of this so called "public good" will be much higher, and the solution will be less efficient than any voluntarily funded, private venture.
Yes yes of course, but this is assuming the private sector could raise the capital to fund it at all.

Giant Joe:

Why do you make the assumption that this is what people will do?

Because its the worst case scenario. If everyone is narrowly self interested this will happen. As others have pointed out, charity or emotion might spur them to defend the earth, but I'd prefer not to rely on this argument because it is circumstantial.

Caley McKibben:
You obviously forgot 100% and need to reread that thread.
Looking back on it, you just kind of say that people will ignore the free rider option because they want the benefits of the public good. But even if they can profit from providing it, a priori they can profit even more by free riding if the good would be provided anyway.

Caley McKibben:
In any case, there is no "we" about having problems solving it.
Exactly. The individual nature of markets is what makes large scale non-excludable goods so difficult.

Caley McKibben:
The meteor scenario is simply bogus.
Really? You haven't explained why. I have a public goods problem with my friends all the time. We could do our homework early so no one has to scramble at the last minute, except everyone wants to free ride off everyone else's homework, so I wait untill its almost too late, do the homework, and usually one or two of them will free ride off what I've done. The only reason the public good gets provided is because it is partially private, and its provision is not the most efficient solution (although you can argue that it is since our communication costs are prohibitive, which is another argument against markets providing public goods).

Caley McKibben:
The sooner Friedman fanatics accept that and get over it the sooner something worthwhile can be discussed.
By all means, find another thread...

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http://mises.org/Community/forums/p/18652/353238.aspx#353238

Everyone needs to read this.  I debunk Friedman's meteor scenario.

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Clayton replied on Thu, Oct 7 2010 1:54 PM

After taking a long, circuitous journey through the labyrinths of libertarian ideas, I not only agree with Friedman here, I would state it more strongly. We should not wish to abolish government outright, even though government is an obvious evil. That is, it is immoral to attempt to overthrow government outright. I just watched the original Wall Street movie (saw it before seeing Wall Street: Money Never Sleeps) and it is filled with many insightful quotes. One of the most insightful is when Bud Fox confronts Gordon Gekko.

Bud Fox: Why do you need to wreck this company? 

Bud Fox: Why do you need to wreck this company?
Gordon Gekko: Because it's WRECKABLE, all right? 

Governments exist because people are governable. Now, this is entirely different than saying we ought not to explain all the reasons that humanity - individually and collectively - would be much better off without any government at all, even for national defense. As Henry Thoreau says at the beginning of Civil Disobedience, "'That government is best which governs not at all'; and when men are prepared for it, that will be the kind of government which they will have." [Emphasis added]

Also, I think that human social relationships in the small are sufficiently fuzzy that we can't always clearly delineate between coercion and cooperation. You can apply an acidic individualism to derive a pretty sharp definition but even that breaks down if we zoom into the level of a parent caring for a child (I hardly think that bodily taking a sick child who expresses verbal disagreement to the doctor against his or her wishes counts as coercion). You can start applying customary arguments to circumvent this but then you've just cracked the door open to rationalizations for coercion in special circumstances and you've moved the standard of definition of coercion away from rationalistic individualism (ala Rothbard) to something more fuzzy, i.e. having to take into account all the tangled complexities and quirks of human nature.

As much as our hidden rulers would like to apply this sort of reasoning to the type of coercion practiced by their thugs in the IRS, Federal Reserve and the Pentagon, it clearly doesn't apply. So, scale matters and would likely matter more in a natural order law society than it does in our modern, statist law society.

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The free rider problem needs more work. We can brag about lighthouses all we want, but we are going to continue getting our butts kicked on these issues if we don't have good answers to national defense and meteorites.

Are you familiar with de Jasay's work on public goods? He has written atleast four books that deal with the issue. BTW, Bryan Caplan argues that national defense doesn't really fit the definition of a public good. The argument can be found here.

"I cannot prove, but am prepared to affirm, that if you take care of clarity in reasoning, most good causes will take care of themselves, while some bad ones are taken care of as a matter of course." -Anthony de Jasay

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@Clayton

Very interesting post.  Althought I do agree that a gradual, piecemeal approach to dismantling government is more practical because people would be more ready to accept it than a sudden abolotion, there are pitfalls to that approach.

First, Rothbard's invocation of Garrison's view that (paraphrasing) "We don't expect slavery to be abolished tomorrow, but that it ought to we shall always contend."  I do think we need to be "extremists" because that is the kind of passion and clarity of message that will be required actually accomplish a meaningful reduction in government exploitation.  It's hard for me to believe that we could ever be at risk of having "too little" government.

More importantly, though, although I do agree there are some functions of government that are pretty innocuous in the big scheme of things, it seems to me that the events of the 20th century have proved that it's too potentially dangerous of a tool to keep alive.  The U.S. Government of the early 19th century seemed fairly innocuous, but it was able to steadily grow over the years into the most exploitative orgainzation in the world.  Like Freddy Krueger, I don't think we can rest easy until it's dead dead DEAD, because we've seen small governments grow into big governments, and we've seen what big governments are capable of.  I think if we're ever in the position to deliver the coup-de-grace and hammer the nails into government's coffin and we fail to do so, we are doing our descendents a disservice.  If we fail to relegate government to the ash heap of history, joining slavery, divine right of kings, prohibitions on women owning land, and hopefully soon, war, we or our children will eventually come to regret not doing so.

I don't expect to see any of this happen in my lifetime, but I don't see the value in taking a lukewarm approach or showing mercy to any government institution if we were ever in such a position.  I (speaking for myself) would even accept some temporary economic dislocation if that's the price it would take to get that accomplished.

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Caley McKibbin:
http://mises.org/Community/forums/p/18652/353238.aspx#353238

Everyone needs to read this.  I debunk Friedman's meteor scenario.

Very well done.

You'd do a much better job communicating ideas if you left out the "Friedman fanatics" sort of verbiage.

"When you're young you worry about people stealing your ideas, when you're old you worry that they won't." - David Friedman
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Clayton replied on Thu, Oct 7 2010 4:36 PM

@Mises Pieces: While I'm at it, let me bend your brain a little further. The most famous quote from Wall Street always gets truncated in popular media to "Greed... is good" (until I watched the movie, that's the only thing I knew about it, is that Gordon Gekko thinks greed is good). Turns out, he's making a much more subtle point:

The point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind. And greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the USA. Thank you very much. 

What Gekko is describing is human action. He's calling it "greed" but what he's really talking about is the calculated application of means to achieve ends which are valued by an individual (maybe Oliver Stone would never put it in that Misesean language, but I think that's what he was using "greed" to denote). If we take this idea seriously, then the fastest route to the destruction of the State is the unedited evolutionary process itself. The Machiavellians are their own antidote.

Let me throw in one last thought that has been fermenting in the recesses of my brain. Hans Hoppe describes the nuclear family as a privatization of the costs of reproduction (where in tribal culture, the costs of reproduction were shared more or less equally, regardless of who actually fathered the children). Extending this idea, cuckoldry can be thought of as a form of fraud. The genetic consequences of cuckoldry are immense and evolutionary psychologists have explained a great deal of human behavior (especially male behavior, such as insane male possessiveness of females) by pointing out that we are not the descendants of men who were cuckolded. We are the descendants of men who cuckolded other men or of men who made sure they didn't get cuckolded by other men.

Translating this line of thought back to the political realm, what is a man who doesn't work and has 6 or 7 kids with his girlfriend on welfare but a cuckolder? He is using the resources of other men to propagate his own genes. The solutions for cuckoldry which evolution has selected are brutal: jealous male rage, killing and neglect of step-children (by both males and females), and so on. The progeny of the human species will not be of those who worked as tax-slaves their whole lives to raise and feed one child of their own, if that, while expending the remainder of their efforts feeding the children of welfare dads and putting the children of government bureaucrats through Harvard. Our descendants will be of those men who defended their resources from expropriation by other men and dedicated those resources to the propagation of their own genes, or expropriated other men through political means to propagate their own genes. In other words, from Darwin's point of view, the "good guys" really are going to finish last. The half-life of Western welfarism is going to be very small. To me, this conclusion seems inescapable.

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@Clayton

Very interesting... I've been accustomed to viewing humanity as being evolutionary stasic, but I definitely see your point.  Makes you wonder whether the movie Idiocracy isn't a somewhat realistic vision of the future.

You seem to have a pretty deterministic attitude about it.  Do you feel this fate was always inevitable for man since the day he diverged from the apes?  If not, when do you think we went off track?  If there's nothing that we can do about it, is it best to just have a beer and stop worrying about it?

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Sieben replied on Thu, Oct 7 2010 6:35 PM

Err, the only thing Caley did in the other thread was to show that public goods have a private component to them, and that individuals can profit from providing the public good. This says nothing about the actual group dynamic because people don't simply seek out profit, they are profit maximizing, which is why the free rider option is so attractive.

He also seems to forget that I'm actually advocating a rational solution to the problem... its the "just logistics" he's talking about, which is actually the whole subject of debate - under which conditions are the logistics solvable.

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Clayton replied on Thu, Oct 7 2010 8:06 PM

Very interesting... I've been accustomed to viewing humanity as being evolutionary stasic, but I definitely see your point.

Read the book Why Beautiful People Have More Daughters... it will knock your socks off. We are on the cusp of a revolution in the social sciences.

Makes you wonder whether the movie Idiocracy isn't a somewhat realistic vision of the future.

Or maybe the opposite. Who do you think modern Russians are the descendants of? Those smart enough to tow the Soviet party line outwardly while doing "whatever it took" (i.e. trading on the black market, getting into the nomenklatura, cooperation with organized crime, etc.) to keep themselves and their children fed. Those without any sexual moral compunctions (having a lot of kids, as I understand it, was frowned upon but the State couldn't keep track of that if you were sleeping around with lots of women and having lots of illegitimate kids). You get the idea. Three generations may not be enough to make a marked difference but who knows? Those are the evolutionary pressures which the Soviet regime created. Evolution acts against anything that inhibits reproduction. VHEMT is doomed to a perpetually short membership roster. We are not the descendants of people who thought having kids was a bad idea.

You seem to have a pretty deterministic attitude about it. Do you feel this fate was always inevitable for man since the day he diverged from the apes?

No, I'm not a determinist. Human culture can overcome maladaptive behavior selected by past evolution. The example I like to use is rape - the reproductive advantages of forcible copulation in the ancestral environment should be obvious... "whatever it takes." Yet, despite the reproductive advantages that rapists enjoy(ed, abortion kind of changes that), women are not frequently raped. Whatever the explanation for this (harmonious division of labor, male-female protection bonds, etc.), we are not simply consigned to fate by our evolutionary past.

If not, when do you think we went off track? If there's nothing that we can do about it, is it best to just have a beer and stop worrying about it?

I think there's not a lot we can do about it. LvMI is doing the single best thing I can think of. It would be nice if we could get a modern Machiavelli, someone with credibility, who really understands the intricate workings of the modern elites and willing to set it to down for everyone to understand. All we have today are bloviating academics, the ridiculously optimistic nouveau riche (like you see interviewed on these business news programs all the time), and then the criminal insiders who aren't about to say a word about what really makes the world go round.

The other thing that I think doesn't get mentioned enough on LvMI and LRC, is that probably the best way for the "little guy" to really sock it to the regimists is just go out and do everything we can to earn money. Build capital. The more capital we each build, the harder life is for the anti-capitalist pigs in their Olympian ivory towers. Capital is economic decision-making power and the more of it each individual builds, the more decision-making power is being wrested from the grasping hands of our would-be emperors. I would like to see more emphasis from LvMI on this point. Go start a business! Peddle things over Craigslist! Do whatever it takes to make a profit and build your little capitalist empire! Be a Godfather, rule your domain. Don't fight the powers that be, they're too well defended. If they outlaw your current line of work, just do something else instead. Never let them slow you down.

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