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Industrial Townships -- A What If? Question

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Mr Jones Posted: Mon, Aug 25 2008 4:50 AM

First of all -- let me describe a situation I'm sure you're all very familiar with:

Near my hometown (in the UK) is a mid-sized community where the majority of residents are claiming state benefits, addicted to drugs and alcohol, and engage in criminal activities. This town was built for one purpose: to house the workers of the steel plant next door. Of course, the steel plant is no longer there, and at the time of its closing down there were no employment opportunities in the area.

I should add that I am not implying any wrongdoing by anybody -- that means both the steel plant and the workers (although, as we all know, the government is never exempt from such accusations) -- and I ask that those of you who reply to adhere to strict impartiality. That said; I am interested to find out your answer to a very broad and general 'what if?' question.

Anarchists/minarchists/libertarians: what if this had occurred in your prescribed society? If you wish, you could also address the following subjects in relation to this hypothetical situation: welfare, drug laws and crime.

Finally, I am not a troll looking for an argument by telling a boo-hoo story. This is a serious question - please treat it as such.

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Mr Jones replied on Mon, Aug 25 2008 10:54 AM

Byzantine:

Dearie me, how WOULD people act when they're not paid with other people's money to be lazy and violent?  It's a mystery, a conundrum, a puzzlement.  It's probably best such difficult questions be left to the professionals in government and university.

I have been studying Austrian economics for the past few months and I absolutely love what I have understood. However, there are still many different things that I have not yet able to fully understand.

You are a rude, snobbish, sarcastic, condescending know-it-all, and I hope that you reap the full -- invariably negative -- consequences of your disgusting manner.

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Mr Jones replied on Mon, Aug 25 2008 11:03 AM

Moderators -- please lock/delete this thread. Thank you.

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Inquisitor replied on Mon, Aug 25 2008 11:16 AM

I think you're taking this way too personally. The OP does not clearly convey what your question is. I can have the thread closed, but if you want to take the opportunity to re-phrase your question more clearly so that it may elicit more helpful answers, why not do that?

 

 

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Stranger replied on Mon, Aug 25 2008 11:48 AM

I don't understand what the problem is. When a location is no longer economically viable, it should be abandoned.

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krazy kaju replied on Mon, Aug 25 2008 12:01 PM

Considering that there would be no welfare in a libertarian society, the people in this industrial township would have to find some alternate means to survive. They'd either have to move somewhere there are jobs, start their own businesses, or make the township some kind of communal society that lives off the land. There are actually plenty of cases where ex-convicts and the like band together into communities and help each other in a commune-like society. Libertarianism itself isn't against collective society, it's against collectivism being imposed on those who don't want it.

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Mr Jones replied on Mon, Aug 25 2008 12:15 PM

Inquisitor:

I think you're taking this way too personally. The OP does not clearly convey what your question is. I can have the thread closed, but if you want to take the opportunity to re-phrase your question more clearly so that it may elicit more helpful answers, why not do that?

I am entitled to take being ridiculed personally.

You may be right about my post. However, I hope you are not implying that I somehow provolked this kind of attitude. As if, had I not goaded this creature out of its hovel, I would have not been met with unpleasantness. Is this your implication?

You can leave the thread open -- please excuse my reaction to this imbecile -- I simply get very angry when spoken down to by anyone. Not sure why.

Stranger:

I don't understand what the problem is. When a location is no longer economically viable, it should be abandoned.

I like this answer. Do you think that it is precisely welfare programmes that caused communities such as this one not to relocate?

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Stranger replied on Mon, Aug 25 2008 12:18 PM

Mr Jones:

I like this answer. Do you think that it is precisely welfare programmes that caused communities such as this one not to relocate?

Welfare income would certainly make it economically viable to live there.

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Mr Jones replied on Mon, Aug 25 2008 12:18 PM

krazy kaju:

Considering that there would be no welfare in a libertarian society

Perhaps if the government did not have a monopoly on welfare, companies would feel compelled to provide an optional or compulsary welfare scheme for their employees?

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Stranger replied on Mon, Aug 25 2008 12:21 PM

Mr Jones:

krazy kaju:

Considering that there would be no welfare in a libertarian society

Perhaps if the government did not have a monopoly on welfare, companies would feel compelled to provide an optional or compulsary welfare scheme for their employees?

Would employees accept diminished salaries in exchange for having welfare benefits?

Most likely the town would simply be abandoned, and the people who moved into such towns would build only short-term structures expecting them to be risky assets.

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Mr Jones replied on Mon, Aug 25 2008 12:29 PM

Stranger:

Would employees accept diminished salaries in exchange for having welfare benefits?

Who can say?

But if you are asking me personally, then I can provide you with an answer. Given the industrial township situation, I would certainly accept a diminished salary in exchange for having welfare (is this not the same as what I already do? albeit begrudgingly). I would consider it insurance -- a safety net just incase the steel plant shuts down and I have insufficient savings for relocation.

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krazy kaju replied on Mon, Aug 25 2008 12:31 PM

Mr Jones:

Perhaps if the government did not have a monopoly on welfare, companies would feel compelled to provide an optional or compulsary welfare scheme for their employees?


Churches, self-help groups, and the like would probably provide some form of welfare. As I already stated, there are numerous organizations for those who cannot find jobs (i.e. ex-cons, ex-addicts) that allows them to form a community and support each other. Now imagine how many more jobs there would be without minimum wages, unions, regulations, and taxation. There certainly would be some kind of minimal private welfare, but it would not be needed.

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Stranger replied on Mon, Aug 25 2008 12:35 PM

Mr Jones:

Stranger:

Would employees accept diminished salaries in exchange for having welfare benefits?

Who can say?

But if you are asking me personally, then I can provide you with an answer. Given the industrial township situation, I would certainly accept a diminished salary in exchange for having welfare (is this not the same as what I already do? albeit begrudgingly). I would consider it insurance -- a safety net just incase the steel plant shuts down and I have insufficient savings for relocation.

You're reintroducing socialism through corporations. Now maybe you wouldn't mind having welfare insurance from your employer, but every other employee must also want that or else the company cannot make it work.

And your choice also doesn't make any sense. You claim that you might not have enough savings and this is why you need the insurance, but if instead you accepted a higher salary you could build up your savings and thus have no need for insurance.

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krazy kaju replied on Mon, Aug 25 2008 12:39 PM

Unemployment insurance agencies might form in response to demand. The extent of the insurance could depend on how much you pay, the stability of your job and job market, etc.

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Stranger replied on Mon, Aug 25 2008 12:41 PM

krazy kaju:

Unemployment insurance agencies might form in response to demand. The extent of the insurance could depend on how much you pay, the stability of your job and job market, etc.

That is not possible. You cannot insure against an event that you determine.

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krazy kaju replied on Mon, Aug 25 2008 12:52 PM

Stranger:
That is not possible. You cannot insure against an event that you determine.


Are you saying that no business can ever go bankrupt or move to another location in a free market?

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Stranger replied on Mon, Aug 25 2008 12:54 PM

krazy kaju:

Stranger:
That is not possible. You cannot insure against an event that you determine.


Are you saying that no business can ever go bankrupt or move to another location in a free market?

Sure it can, but your actions determine that.

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krazy kaju replied on Mon, Aug 25 2008 12:59 PM

So a single individual worker can save a company consisting of dozens, hundreds, or even thousands of workers from going under?

I can see Mr. Jones's point about unemployment benefits. If there really was a demand for a safety net "just in case," people could purchase unemployment insurance. This would be far superior to statist welfare considering that no insurance company would want a lingering member who cannot find work and therefore is leeching off of other customers. It would probably include a get-back-to-work program of some kind.

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In Canada, we pay mandatory unemployment insurance, but they take the surplus each year (it is hard to claim, hard to live off) and roll it into general revenue, and have been for quite some time.  It's infuriating, because you know that if there is mass joblessness, the first thing they will do, is raise the rate and claim that the fund is underfunded, when in fact it has been looted for nearly a decade.

 

"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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Mr Jones replied on Mon, Aug 25 2008 1:15 PM

Stranger:

You're reintroducing socialism through corporations. Now maybe you wouldn't mind having welfare insurance from your employer, but every other employee must also want that or else the company cannot make it work.

And your choice also doesn't make any sense. You claim that you might not have enough savings and this is why you need the insurance, but if instead you accepted a higher salary you could build up your savings and thus have no need for insurance.

The welfare insurance could only be optional. Even if this scheme were compulsary for every employee, I would still have the option to leave.

The choice that you are talking about, though, is different to the one that I am talking about. You seem to think that you would have $10 taken from your salary, and after twelve months you would be entitled to $120 of welfare money. If this were the case, why would anybody take insurance out on anything?

Byzantine:

Let this thread be a reminder to everyone never to venture on the Information Superhighway without helmet, elbow pads, life jacket, ear muffs, woolen mittens, and distress whistle.

And let it be a reminder to you that unsavoury actions can cause undesirable consequences.

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Byzantine:
It would be insurance for business risk, which is not really something that can be underwritten with actuarial methods.

The old-fashioned "community chest" concept is probably more of what would evolve, but even private arrangements like this have a large incentive toward fraud.  You need a really cohesive community with a strong work ethic to keep it solvent.


Wouldn't it be rational to think that unemployment insurance companies would guard against fraud just like auto insurance and health insurance companies?

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Stranger replied on Mon, Aug 25 2008 1:33 PM

krazy kaju:
Wouldn't it be rational to think that unemployment insurance companies would guard against fraud just like auto insurance and health insurance companies?

They would do that by not offering unemployment insurance.

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Mr Jones replied on Mon, Aug 25 2008 1:41 PM

Stranger:

krazy kaju:
Wouldn't it be rational to think that unemployment insurance companies would guard against fraud just like auto insurance and health insurance companies?

They would do that by not offering unemployment insurance.

What if, instead of giving a cash payout, they were able to guarantee the policy holder employment within X amount of time?

Or, another option might be to take a lump sum cash payout. That way pretending to be looking for work would in no way benefit the policy holder.

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Stranger replied on Mon, Aug 25 2008 1:43 PM

Mr Jones:

 

What if, instead of giving a cash payout, they were able to guarantee the policy holder employment within X amount of time?

Or, another option might be to take a lump sum cash payout. That way pretending to be looking for work would in no way benefit the policy holder.

I am not going to reply. Instead you are going to tell us why this business model makes sense from the point of view of the buyer and seller.

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Mr Jones replied on Mon, Aug 25 2008 1:43 PM

Byzantine:
Sorry.

It's never too late for an apology kid. You're forgiven.

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Mr Jones replied on Mon, Aug 25 2008 1:48 PM

Stranger:

Mr Jones:

 

What if, instead of giving a cash payout, they were able to guarantee the policy holder employment within X amount of time?

Or, another option might be to take a lump sum cash payout. That way pretending to be looking for work would in no way benefit the policy holder.

I am not going to reply. Instead you are going to tell us why this business model makes sense from the point of view of the buyer and seller.

First idea:

Buyer -- "if my company goes bust, I will not have to worry about looking for another job."

Seller -- "I will only offer insurance to those individuals who are employed by companies I do not expect to go bust."

Second idea:

Buyer -- "if my company goes bust, I will have much more money to sustain myself until I find another source of income, relative to how much I would have if I had saved"

Seller -- "I will only offer insurance to those individuals who are employed by companies I do not expect to go bust."

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Stranger replied on Mon, Aug 25 2008 2:14 PM

Mr Jones:
Seller -- "I will only offer insurance to those individuals who are employed by companies I do not expect to go bust."

How would an actuary calculate this risk?

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Mr Jones replied on Mon, Aug 25 2008 2:24 PM

Stranger:

Mr Jones:
Seller -- "I will only offer insurance to those individuals who are employed by companies I do not expect to go bust."

How would an actuary calculate this risk?

Surely however they saw fit?

If you are implying that it would be impossible to do so, I am interested to hear your reasons why you think so.

I could be wrong.

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Stranger replied on Mon, Aug 25 2008 2:25 PM

Mr Jones:

 

Surely however they saw fit?

If you are implying that it would be impossible to do so, I am interested to hear your reasons why you think so.

 

That would be speculation, not risk insurance.

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Stranger:

krazy kaju:
Wouldn't it be rational to think that unemployment insurance companies would guard against fraud just like auto insurance and health insurance companies?

They would do that by not offering unemployment insurance.

You're changing the definition to meet your needs.

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No, but I would suggest you took offence from posts less lightly when online. As for your post, I merely wanted clarification.

 

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Kakugo replied on Mon, Aug 25 2008 5:24 PM

How long has this situation been going on? Twenty years? Maybe more? While a deep crisis would of course have followed the steel mill closure, government intervention just made it much longer and more painful. That's it. Also ask yourself what caused the steel mill closure: market fluctuations or something else (been English you know the answer all too well)?

PS: if my post is to be deleted can I at least know what I've done wrong this time? No public debate, just a PM or an email. Thanks.

Together we go unsung... together we go down with our people
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Methinks you need to read Mises on case and class probability and its relation to insurance of this sort.

-Jon

Freedom of markets is positively correlated with the degree of evolution in any society...

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