Economics Questions

Re: Natural monopoly on land

Niccolò — Wed, 09 Jan 2008 02:12:16 GMT

Nathyn:
Locke's argument is irrational. Georgism is inconsistent for the reasons Rothbard himself has pointed out. Rothbard's lack of noting Locke's Georgism is either dishonest or ignorant.

Rothbard always talked about how Locke's theory was flawed, as all initiators of a general theory tend to be. I'm not certain what specifics he went into, but I do know that he denied the Lockean proviso.

Re: Natural monopoly on land

Niccolò — Wed, 09 Jan 2008 02:10:37 GMT

Nathyn:

No, I said in my post that price equilibriums are determined by interactions between marginal demand and marginal supply -- the latter is affected by competition.

Supply is only affected by the amount of production occuring. You could perceivably have many firms entering a competitive market producing the same supply as a "non-competitive" market with only one firm.

I still want the name of your Economics professor, just so I can e-mail your school and inform them of his incompetance as a teacher.

Nathyn:
How is competition irrelevant? The number of firms are themselves what make up aggregate supply.

For one, competition is not what makes up aggregate supply. What economists mean by competition is not merely the number of firms in an industry, it's the dynamic interaction between them. Second, again, aggregate supply only means the amount of product created. One can not say that it is only possible for a large quantity of firms in an industry to reach greatest possibly supply.

Nathyn:
I find it absolutely absurd that you can claim competition is irrelevant to price, while moaning about "government monopolies".

The difference is that government monopolies are enforced through the state and thus not applicable to market pressures. Even a monopoly obtained through the free market is subject to market pressures.

Re: Natural monopoly on land

macsnafu — Tue, 08 Jan 2008 19:02:16 GMT

Nathyn:

[Locke's argument is irrational. Georgism is inconsistent for the reasons Rothbard himself has pointed out. Rothbard's lack of noting Locke's Georgism is either dishonest or ignorant.

Is it impossible to mix your labor with the land without the premise of God? Of course it isn't. Therefore, his basic idea of homesteading is not irrational, and does not depend upon theology. His provisos, on the other hand, depend upon the theological argument for support, and are otherwise unsupported.

Re: Natural monopoly on land

Nathyn — Mon, 07 Jan 2008 20:34:23 GMT

macsnafu:
Nathyn:

Ah, yes--John Locke. Didn't we already have a long thread on this at Anti-state.com?

Locke made theological assertions about God granting the earth to all mankind, and he did have his "provisos", but neither of these are properly justified or proven, they're merely assertions. Take those out, and your left with what Rothbard was basically saying. Locke's idea of mixing labor with land to acquire it is independent of his theological assertions and provisos.

How can you "take out" a premise of Locke's and then claim that such an argument is still Lockean?

Because part of Locke's premise stands on its own, independent of its other parts. You've apparently read the original material by Locke, as I have.

Is it not clear that one part does not depend upon the other part? It is to me.

It doesn't. Locke's entire argument begins with the assumption of Christianity being true and work from there. If you actually read "Two Treatises" you'll see how extremely laced with theology his argument is, invoking God from the very beginning and citing scripture all throughout.

macsnafu:

For Christians including Locke, religious ideas like "God exists" are core axioms of belief that you can't simply ignore are integral aspects of their beliefs.

It would be me like me saying, "If you take away praxeology, Austrian economics is mainstream."

Editing your post while I'm responding to the original? A recipe for confusion.

I do it frequently, because I admit I tend to hit the post button before properly proofreading and also, when I do proofread, improvements to my articles tend to pop in my head.

macsnafu:

If Locke's argument absolutely depended upon God granting land to all mankind in common, then the whole argument becomes irrational. But as I said, only parts of it depend upon his theological assertions. The other parts ARE rational, independent arguments that stand on their own without the theological assertions. And if Rothbard dealt with Locke's provisos, that's hardly sloppy, but does exactly what you're asking to be done.

Locke's argument is irrational. Georgism is inconsistent for the reasons Rothbard himself has pointed out. Rothbard's lack of noting Locke's Georgism is either dishonest or ignorant.

Re: Natural monopoly on land

macsnafu — Mon, 07 Jan 2008 20:09:51 GMT

Nathyn:

Ah, yes--John Locke. Didn't we already have a long thread on this at Anti-state.com?

Locke made theological assertions about God granting the earth to all mankind, and he did have his "provisos", but neither of these are properly justified or proven, they're merely assertions. Take those out, and your left with what Rothbard was basically saying. Locke's idea of mixing labor with land to acquire it is independent of his theological assertions and provisos.

How can you "take out" a premise of Locke's and then claim that such an argument is still Lockean?

Because part of Locke's premise stands on its own, independent of its other parts. You've apparently read the original material by Locke, as I have.

Is it not clear that one part does not depend upon the other part? It is to me.

For Christians including Locke, religious ideas like "God exists" are core axioms of belief that you can't simply ignore are integral aspects of their beliefs.

It would be me like me saying, "If you take away praxeology, Austrian economics is mainstream."

Editing your post while I'm responding to the original? A recipe for confusion.

If Locke's argument absolutely depended upon God granting land to all mankind in common, then the whole argument becomes irrational. But as I said, only parts of it depend upon his theological assertions. The other parts ARE rational, independent arguments that stand on their own without the theological assertions. And if Rothbard dealt with Locke's provisos, that's hardly sloppy, but does exactly what you're asking to be done.

Re: Natural monopoly on land

Nathyn — Mon, 07 Jan 2008 19:51:43 GMT

Morty:
Where exactly did I say anything about the perfect competition model?

You said "competition always exists."

That's misleading. Varying degrees of competition exist. Less competition = higher profit margins at the expense of the consumer surplus.

Morty:
Variations in firm sizes, to my understanding, would be a result of the struggle between efficiency from economies of scale and the inefficiency of not having internal markets (large firms can suffer from the same problems of knowledge that the government faces to some extent). Profit margins, nay profits themselves, are the result of misallocation of resources in the economy - the areas with less than optimal resources will experience high profits.

No disagreements here. I just thought you seemed to be appealing to the idea of perfect competition -- that's all.

macsnafu:
Nathyn:

In the main Classical Liberal work on homesteading, John Locke's Two Treatises of Government, he says that God gave the Earth to all mankind in common (Locke was a Christian who lived before Darwin and, unlike most Classical Liberals, he relies largely on a theological reasoning). His idea of "homesteading" is limited in the same sense as Georgism. A specific exception he makes to the appropriation of land is wells, which he says belong to the community:

Secondly, he argued for homesteading based upon the assumption that there is "enough and as good left in common for others."

Ah, yes--John Locke. Didn't we already have a long thread on this at Anti-state.com?

Locke made theological assertions about God granting the earth to all mankind, and he did have his "provisos", but neither of these are properly justified or proven, they're merely assertions. Take those out, and your left with what Rothbard was basically saying. Locke's idea of mixing labor with land to acquire it is independent of his theological assertions and provisos.

How can you "take out" a premise of Locke's and then claim that such an argument is still Lockean?

If Rothbard disagreed with Locke, he should note that. Invoking a false claim of agreement is sloppy.

For Christians including Locke, religious ideas like "God exists" are core axioms of belief that you can't simply ignore are integral aspects of their beliefs.

It would be me like me saying, "If you take away praxeology, Austrian economics is mainstream."

Re: Natural monopoly on land

macsnafu — Mon, 07 Jan 2008 19:45:03 GMT

Nathyn:

In the main Classical Liberal work on homesteading, John Locke's Two Treatises of Government, he says that God gave the Earth to all mankind in common (Locke was a Christian who lived before Darwin and, unlike most Classical Liberals, he relies largely on a theological reasoning). His idea of "homesteading" is limited in the same sense as Georgism. A specific exception he makes to the appropriation of land is wells, which he says belong to the community:

Secondly, he argued for homesteading based upon the assumption that there is "enough and as good left in common for others."

Ah, yes--John Locke. Didn't we already have a long thread on this at Anti-state.com?

Locke made theological assertions about God granting the earth to all mankind, and he did have his "provisos", but neither of these are properly justified or proven, they're merely assertions. Take those out, and your left with what Rothbard was basically saying. Locke's idea of mixing labor with land to acquire it is independent of his theological assertions and provisos.

Re: Natural monopoly on land

Stranger — Sun, 06 Jan 2008 17:51:29 GMT

Nathyn:

And what is bad about forbidding other producers from increasing the supply of goods? You just said that the number of firms producing goods doesn't matter. As such, it shouldn't really matter if the government says, "Only this one firm can produce this good and no others."
After all, as you said above, it's marginal demand which drives price, not competition. The government forbids competition but it doesn't impact marginal demand, at least not through public enterprise, anyway.

If the government says that only one firm may produce goods, that firm may not be the most efficient and productive producer, and thus the supply of goods will logically be less than it would be without the monopoly. Marginal demand is irrelevant to this.

The non sequitur of "natural monopoly" is that it tries to make this true for the reverse situation, where one firm is so productive that it can produce the whole supply, lowering prices to such an an extent that other firms cannot turn a profit from increasing the supply any further. Evidently that is a very good situation for consumers, and if this super-productive firm is forbidden from producing because a less productive firm has a monopoly, consumers lose out.

Re: Natural monopoly on land

Inquisitor — Sun, 06 Jan 2008 15:44:01 GMT

I don't follow how you can homestead the "gifts of nature."
Perhaps you're going by a Rothbardian definition of "homesteading," which amounts to, "Take whatever you can as quickly as possible, then defend it with force."
However, the Classical Liberal definition of homesteading put forth by John Locke involves mixing labor with land. The mere appropriation of land by itself is not "homesteading."

Your exposition of classical liberal defence of homesteading was a wonderful distraction. However, you specifically mentioned that the difference between Rothbard's theory and theirs was that it lacked a labour-mixing component. That is utter nonsense. The classical liberals were rightly challenged on their view of how homesteading occurs (and the 'good and enough' view has been demolished since). Rothbard's reference to Locke in MES was perfectly appropriate, given that Locke was indeed one of the first authors to fully develop the notions of homesteading and self-ownership.

Also, your comment to Morty is irrelevant - where did he evoke 'perfect competition'?

Re: Natural monopoly on land

Morty — Sun, 06 Jan 2008 15:41:55 GMT

Where exactly did I say anything about the perfect competition model?

Variations in firm sizes, to my understanding, would be a result of the struggle between efficiency from economies of scale and the inefficiency of not having internal markets (large firms can suffer from the same problems of knowledge that the government faces to some extent). Profit margins, nay profits themselves, are the result of misallocation of resources in the economy - the areas with less than optimal resources will experience high profits.

Re: Natural monopoly on land

Nathyn — Sun, 06 Jan 2008 08:13:29 GMT

Morty:
In a free market, competition always exists, whether manifested in a multitude of actual firms actively competing for market share or simply the threat of entrepenuers entering an industry which is producing inefficiently or has abnormally high profits. Free market monopolies can only exist if they are so efficient and have such a small profit margin that all competitors are driven out of business and all potential competitors have no openings to produce better/cheaper. Those types of "monopolies" are the type which are a benefit to everyone.

Morty, the assumption of "perfect competition" isn't held even by Austrian economists.

Because if you refuse to acknowledge the existence of varying degrees of competition, you don't really have any solid grounds upon which to explain the variations in firm sizes, profit margins, etc..

Re: Natural monopoly on land

libertarian — Sun, 06 Jan 2008 07:22:14 GMT

You just said that the number of firms producing goods doesn't matter. As such, it shouldn't really matter if the government says, "Only this one firm can produce this good and no others.

The minimax algorithm: Entrepreneurs are maximizing gain and consumers are maximizing gain. Consumers are choosing the firm that make them have maximising gain. Miscellaneous firms then maximize profit by changing their good to have one competitive advantage so consumers would value their good at the top. If the barriers to entry is not infinite then the number of firms does not affect quality of the commidity. Proof: Entrepreneurs have the incentive to start a new competing firm if one firm charges monopoly prices. If there is a possible improvement, then the incentive to start a business is greater. Conversely, entrepreneurs have to have an innovative idea so the firm can gain profit. Firms that produce better products produce more competition. Consumers search for the firms that have better products. This is equivalent to a maximizing function (metaheuristic). Even if one firm occupies 100% of the market, it is still not a monopoly. Price only depends on the supply and demand. If one firm produces 99% of the commidity and the other 100 produce the rest 1%, it would not result in increased price if supply equals demand (i.e. equilibrium). Competition between landlords.

Re: Natural monopoly on land

Morty — Sun, 06 Jan 2008 07:17:34 GMT

In a free market, competition always exists, whether manifested in a multitude of actual firms actively competing for market share or simply the threat of entrepenuers entering an industry which is producing inefficiently or has abnormally high profits. Free market monopolies can only exist if they are so efficient and have such a small profit margin that all competitors are driven out of business and all potential competitors have no openings to produce better/cheaper. Those types of "monopolies" are the type which are a benefit to everyone.

Re: Natural monopoly on land

Nathyn — Sun, 06 Jan 2008 06:03:59 GMT

Stranger:

As you admit yourself in your incoherent post, it is marginal demand, not competition, that determines price equilibriums.

No, I said in my post that price equilibriums are determined by interactions between marginal demand and marginal supply -- the latter is affected by competition.

Stranger:

The number of firms producing the supply is irrelevant.

How is competition irrelevant? The number of firms are themselves what make up aggregate supply.

I find it absolutely absurd that you can claim competition is irrelevant to price, while moaning about "government monopolies".

Stranger:

The reason that government is inefficient is because it forbids other producers from increasing the supply of goods. A firm cannot do this, no matter its size.

And what is bad about forbidding other producers from increasing the supply of goods? You just said that the number of firms producing goods doesn't matter. As such, it shouldn't really matter if the government says, "Only this one firm can produce this good and no others."

After all, as you said above, it's marginal demand which drives price, not competition. The government forbids competition but it doesn't impact marginal demand, at least not through public enterprise, anyway.

Re: Natural monopoly on land

Stranger — Sun, 06 Jan 2008 05:48:51 GMT

As you admit yourself in your incoherent post, it is marginal demand, not competition, that determines price equilibriums. The number of firms producing the supply is irrelevant.

The reason that government is inefficient is because it forbids other producers from increasing the supply of goods. A firm cannot do this, no matter its size.