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Regime uncertainty disincentivizes private provision of public goods

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Wheylous Posted: Mon, Oct 29 2012 11:04 AM

I am considering writing this article. I am not sure I've seen this spelled out before.

Essentially, when the government produces a good, a private producer faces an enormous risk in deciding to provide it as well because his competition is granted a relatively unlimited amount of resources through taxation. Hence, private businesses are not really interested in competing with the government in the provision of roads. Combined with the fact that people are already forced to pay for them, private roads have no reason to see the light of day.

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Isn't "regime uncertainty" about being afraid your property will be stolen, not about your profits being uncertain?

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Wheylous replied on Mon, Oct 29 2012 11:15 AM

According to the Mises Wiki,

Regime uncertainty is a concept developed by Robert Higgs, that describes uncertainty of investors in their private property rights in their capital and the income it yields because of government action.

Now, they might be being sloppy in their wording, but I like this definition :P

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Wheylous replied on Mon, Oct 29 2012 11:18 AM

I went into the source text and found that the definition in the Mises Wiki is a direct quote (more or less):

 

To narrow the concept of business confidence, I adopt the interpretation
that businesspeople may be more or less “uncertain about the regime,” by
which I mean, distressed that investors’ private property rights in their capital
and the income it yields will be attenuated further by government action
 
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One can parse it this way:

Regime uncertainty is a concept developed by Robert Higgs, that describes uncertainty of investors in their private property rights in (their capital and the income it yields) because of government action.

Basically, the investors are afraid the government will steal both their capital and the income it yields.

I guess your reading is:

Regime uncertainty is a concept developed by Robert Higgs, that describes uncertainty of investors in (their private property rights in their capital) and (the income it yields) because of government action.

For some reason I think my reading is more in line with the usual use of the term :)

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Tex2002ans replied on Mon, Oct 29 2012 12:03 PM
Sounds more to me like you want to write about "crowding out," not "regime uncertainty." Regime uncertainty deals more with the uncertainty of which regulations or taxes will be put in the place in the future. For example, you would be less likely to invest in a long term project such as a coal power plant if the government may or may not put a large tax, or cap and trade on it within the next x years. I would recommend listening to the speeches in the Higgs section on Mises.
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Neodoxy replied on Mon, Oct 29 2012 12:23 PM

From everything that I understand surrounding regime uncertainty Wheylous' has it right. It's not crowding out because it's not government using resources which the private sector would have otherwise used, rather it's uncertainty revolving around whether or not the government is going to directly compete with the companies themselves, but furthermore even if you classify it as crowding out, it's sill uncertainty surrounding whether or not the phenomenon will occur.

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gotlucky replied on Mon, Oct 29 2012 12:28 PM

@Wheylous

It might be interesting to also examine the USPS. Mail is a guaranteed service, but the USPS is so bad that FedEx, UPS, and DHL can easily compete with it. Also, there are some private roads, but they are few and far between. They might be more common in really wealthy areas, but I don't know for sure.

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Wheylous replied on Mon, Oct 29 2012 12:34 PM

gotlucky - I was thinking of including the USPS in my original post as a service that is just so bad that the private market can compete, but thought that for clarity and brevity I could leave it as is :P

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gotlucky replied on Mon, Oct 29 2012 12:40 PM

So I guess there are some interesting questions about roads: Why don't citizens just fill in the pot holes themselves? Why don't they hire others to do so? Are there laws preventing this from happening? The only exceptions are the private roads, but those are not common, even in affluent suburban towns; there might be a dozen in a town of 30,000.

Taxes go to the USPS even if you don't use it, just as taxes go to roads if you don't use them. So what's stopping private companies from competing with the state? Is it laws or is it that road maintainance is costs more? Might be worth looking into that, and it may vary from state to state.

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Wheylous replied on Mon, Oct 29 2012 1:05 PM

Why don't citizens just fill in the pot holes themselves? Why don't they hire others to do so?

Free rider problem. They could do it themselves and pay the full cost, but if they wait for the government, the cost is distributed. Also, if one neighborhood does it and the other waits and the government does it for them, then the first sees it and thinks that next time they aren't as sure that they would want to do it because there is a chance that the government will do it for them.

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gotlucky replied on Mon, Oct 29 2012 1:12 PM

So things would just have to be really bad before someone starts to take action. I remember that story you posted about the Indian who built that road through a mountain.

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Neodoxy replied on Mon, Oct 29 2012 3:50 PM

Relevant to the discussion

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@ Neodoxy

Holy crap! Breaking Bad!

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Neodoxy replied on Mon, Oct 29 2012 9:33 PM

Yea I decided my avatar needed a change and I thought that maybe a character from one of my favorite shows that isn't anime might be appropriate. I wanted to make it Mike since he's my favorite character, but he's not very photogenic.

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Mike got owned by Walter. Shot through the open window of a car...then a crash...then a nice walk down to the water...

You know, that show caused a lot of controversy in the libertarian community when you saw "Ron Paul 2008" in Gale's notes.

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gotlucky replied on Mon, Oct 29 2012 9:41 PM

I really liked the owl...

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But you can't beat Gus, man.

Well, maybe an old guy in a wheelchair with a bell can.

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Neodoxy replied on Mon, Oct 29 2012 9:51 PM

"Mike got owned by Walter. Shot through the open window of a car...then a crash...then a nice walk down to the water..."

................................................ And guess what little punk libertarian just important spoiled plot information revolving one of my favorite characters?

Also, do not insult Mike. He's the biggest badass on the show and isn't an ass like what Walter turns into in season 5.

The owl may come back in future, I'm open for requests

... Or maybe I'll combine the two...

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Oh, so you didn't know that Walter shot Mike in the arm, then Mike drove away, then he it a tree or something, then he crawled out of the car and went down to a river with Walter following, and then Walt said something about how he didn't know something and then Mike said "shut the fuck up Walter and let me die in peace?"

You didn't know that?

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Neodoxy replied on Mon, Oct 29 2012 10:03 PM

If you're asking me if I didn't know whatever you just wrote that I didn't read after the first few words, then no, I probably didn't. I'd watch yourself, so as not to end up like certain characters in the show...

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Oh fuck.

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