I've long suspected that there is a problem with the evolution of street cleaning in a free market. Imagine a shopping district which tends to become cluttered with rubbish, making the area less attractive to shoppers. Suppose that if all the shop keepers banded together and contributed to hiring street cleaning services for the area then there would be a net benefit in terms of extra visitors that would lead to extra profits that are greater than the cost of the cleaners by some small margin. Now the problem is that if one of the shop-keepers does not want to join the scheme then what can be done? The other shop keepers can not force him to join in. Now the shop keeper that won't pay causes all sorts of problems: 1. it means that the others will have to pay more and the cost benefit equation may no longer work. 2. Other shop keepers may get angry and say "well if he's not paying then why should I". The system may all too easily fail or not get off the ground in the first place.
I've just read "Economics in one lesson" by Henry Haslitt and noted that on page 69, "street cleaners" is included in a list of "public officeholders whose services are really needed", so maybe Mr Hazlitt agrees.
I also remember that there were examples in "The selfish gene" by Richard Dawkins where he shows how certain groups of animals behave sub-optimally (with respect to avoiding predation) because the "optimal" behavior can not evolve due to problems almost identical to the street cleaner problem.
So my question is this: Do Austrians acknowledge that there are a variety of "services" or "institutions" that are of benefit to society that will not evolve naturally from a free market that should rightly be set-up by a government? Is there a list somewhere that most austrians would agree upon? For example police? teachers? street cleaners? "a legal system"? infrastructure builders (road/rail)?
What Went Wrong with Economics
The root of your argument appears to be a discomfort in making judgments, as demonstrated by your many commitment issues regarding contracts. Perhaps a compromise can be achieved by, when in an Anarcho-Capitalist society, voluntarily ceding your cognitive functions to a third party. I am sure there are many who would be happy to take on a PHD full-time. You then voluntarily recieve a parental figure and we can avoid being forcefully drawn into your lifestyle choice. Win-win? I mean this as a completely serious/workable solution to your problem.
nirgrahamUK: https://mises.org/journals/rae/pdf/rae9_2_3.pdf - the myth of the natural monopoly.
https://mises.org/journals/rae/pdf/rae9_2_3.pdf - the myth of the natural monopoly.
Very interesting article... thinking about the article and other things, I would suggest that there seem to be three mechanisms for"private" utility provision:
I had better explain my newly invented term "wrapper private companies" (there is probably a better term but I don't know it) Having a choice of wrapper companies is rather like wanting to buy a bag of coal when there is only one coal mine and one coal mining company. The government want to enforce a tiny bit of competition in to this monopoly scenario so they say "lets have a variety of companies acting as middle men between the mine and the customer". One will wrap the coal in paper bags, the other will sell it in plastic ones, and another may insist you bring your own recycled containers. Obviously the price and quality difference between the companies will be very small because they all have to buy from the same source and getting the coal out of the ground is by far the most expensive component of the final selling price. So when some people here have said "I can switch providers with an email!", what they actually mean is they can switch wrapper companies.
So with scenario 1&2 I maintain that it is still very difficult to properly switch providers.
Scenario 3 is something I confess I had not given much thought to and had assumed was unreasonable. I suspect that the difficulty of getting scenario 3 to work is highly dependent on the utility. I guess it depends very much on the physical characteristics of the utility. For example if the utility comes down *thin low voltage, or fibre optic wires* then that is a lot easier to arrange than a utility that comes down *large pipes*. Now from the discussions about private roads, I found it was extremely informative to hear from you all about the types of places around the world where private roads existed. And what I'd like to do now is ask for any examples of scenario 3 working around the world. I would dearly love to hear what comes up. Is there anywhere on earth today where scenario 3 exists for water or sewage disposal? gas? electricity? are they in the countryside? cities? up mountains? Only for very large consumers like factories? Please tell.
I just had another thought in relation to an earlier question about the definition of a utility... maybe it should be defined as:
A resource where it is impractical to arrange to have the supplier of that resource different to that of your neighbor.
If its difficult, then you are forced to agree with your neighbor (or perhaps go without, or perhaps get the resource through some extremely clumsy and expensive mechanism)... and I know how you anarchists hate to have to agree with your neighbors!
Another thought... about the "scenario 3" from my last post. If scenario 3 is practical and profitable for latecoming companies then presumably governments throughout the world must be being continually pestered by requests from utility providers to provide alternative utilities. Presumably some governments somewhere will have said "ok, go ahead" perhaps just in one or two towns as a trial. Surely Mrs Thatcher would have said "ok, go ahead" if she were asked. She'd have loved that sort of thing. And yet I can't think of any town in the UK with doubled up water/gas/electricity provision. Maybe that's just ignorance on my part. Please correct me if I'm wrong.
Scenario 3 is predicated on lack of non voluntary governments, if thats what you meant by proper.
twistedbydsign99: Scenario 3 is predicated on lack of non voluntary governments, if thats what you meant by proper.
By "proper" competition I mean having a choice of suppliers, not just a choice of "wrappers".
mickanomics:By "proper" competition I mean having a choice of suppliers
If the market cannot support choices naturally, you are actually diminishing choices by forcing them artificially.
Tom DiLorenzo's talk at ASC 2009 was on competition myths. You should watch it.
http://www.youtube.com/watch?v=mwH8unDcdMY
liberty student: If the market cannot support choices naturally, you are actually diminishing choices by forcing them artificially.
I was not saying that the forcing of wrapper companies was a good idea - I just observed that it has happened. Mrs thatcher introduced a lot of them.
liberty student: Tom DiLorenzo's talk at ASC 2009 was on competition myths. You should watch it. http://www.youtube.com/watch?v=mwH8unDcdMY
I had already watched it, and IIRC I agreed with much of it. Its over an hour long - was there some particular point you wanted to draw my attention to?
mickanomics:I was not saying that the forcing of wrapper companies was a good idea - I just observed that it has happened. Mrs thatcher introduced a lot of them.
Then they aren't private.
mickanomics:I had already watched it, and IIRC I agreed with much of it.
There is hope for you yet.
liberty student: mickanomics:Mrs thatcher introduced a lot of them. Then they aren't private.
mickanomics:Mrs thatcher introduced a lot of them.
When I say "introduced" I meant, enacted legislation that allowed them to come in to existence. They are private companiues. EDF energy for example.
mickanomics:When I say "introduced" I meant, enacted legislation that allowed them to come in to existence.
That's still not private.
Private firms can exist without the state. Licensed firms are not private. They are created by the state, because a license is permission to do something NOT LEGAL. That's why if you do something that requires a license, without a license, it is punishable under law. It is ILLEGAL.
EDF is just an energy rate arbitrage agency, right? Would it be possible in a market where there was no monopoly on energy provision? Probably not, because it would be redundant, right?
Like tax accounting, it is an artificial industry and/or market.
Austrians do not handle competition that way. For them what is germane is not some fixed or even variable number of suppliers (ultimately each market will have its own structural demands) but the threat of competition, be it by opening up a new store, introducing a new product or outright corporate takeover (the latter being hampered presently by legislation.) All firms are prone to the latter.
Freedom of markets is positively correlated with the degree of evolution in any society...
liberty student: That's still not private.
You may be right, I'm not sure, but coming back to the three mechanisms for"private" utility provision, I can only envision 1,2 and 3. 1&2 suffer from many of the defects (use of force etc) of government provided utilities and according to you number 2 is't even private. So the crunch issue for the anarchists looking for a solution is to see if 3 is viable. If people post messages giving examples of places in the world where there is true multiple choice of sewerage systems for neighbors in the same street then I may have to reconsider my position, but for now I maintain that 3 is hard to do.
mickanomics: If people post messages giving examples of places in the world where there is true multiple choice of sewerage systems for neighbors in the same street then I may have to reconsider my position, but for now I maintain that 3 is hard to do.
I've got a septic system. My immediate neighbors do as well, but across the street they are hooked up to the sewer system.
Jon Irenicus: Austrians do not handle competition that way. For them what is germane is not some fixed or even variable number of suppliers (ultimately each market will have its own structural demands) but the threat of competition,
Austrians do not handle competition that way. For them what is germane is not some fixed or even variable number of suppliers (ultimately each market will have its own structural demands) but the threat of competition,
Imagine in an anarchist state, a single water/sewerage company services a large town. The company was very efficient and cheap (compared to other suppliers in other cities) but then the company comes under new evil greedy management. They run everything in the same way but charge 50% extra just because they can. Please describe what happens next and how market forces lead to the townfolk getting cheaper water again.
Stolz25: mickanomics: If people post messages giving examples of places in the world where there is true multiple choice of sewerage systems for neighbors in the same street then I may have to reconsider my position, but for now I maintain that 3 is hard to do. I've got a septic system. My immediate neighbors do as well, but across the street they are hooked up to the sewer system.
Ok.... and I think many government based systems do (or at least could) let you opt out and do it yourself. But for most people, and especially in cities, this is either not an option at all or would come under the heading of "extremely clumsy and expensive mechanism" as per my earlier post.