Towards Consensual Governance

This is the title of the final chapter of Fred Folvary’s book, “Public Goods and Private Communities.”  I have covered the basic aspects of his theories here and here.  In this post, I will outline his summary and offer some closing thoughts of my own regarding this idea.

As mentioned in my previous post, Foldvary offers several case studies that demonstrate aspects of the possibility of private provision of public services.  No one example offers a complete picture – each example offers a reality of one or a few aspects of the theory. 

One point that he mentioned in several of the case studies was that, in order for people to implement their version of private community, existing regulations had to be swept aside in some manner.  It was the government sector’s rules that ensured the monopoly of the government sector. 

The example of Walt Disney World [WDW] in Orlando is illustrative:

Having obtained the land, Disney now needed self-government to fulfill his vision for WDW as a proprietary community.  On 15 November, 1965, Disney representatives met government officials at Orlando to discuss zoning and other laws, Disney’s commitment being contingent on reaching an agreement…. The circuit court approved the request for a separate drainage district….

The Reedy Creek Drainage District (RCDD) was formed in May 1966 under Chapter 298 of the Florida code…enabling WDW as landowner to control the environment and construction…. In 1967, Florida enacted Chapter 67-764 (House Bill No. 486) for the benefit of the Walt Disney Corporation…. The new law…‘abrogated nearly all state laws’ concerning building and development.

Foldvary suggests that the rules of the game must be changed.  He cites Buchanan, suggesting that changes below the (small “c”) constitutional level (whether this consists of electing better politicians or changing the laws) will be inadequate, because these will be “thwarted by the incentives that lead to dysfunctional outcomes.”

Such constitutional rules include: (1) those which prescribe the governance structure, (2) those which prescribe the behavior of the members, and (3) those which prescribe the powers of the organization.

Constitutional reform begins with an awareness of the meta-constitution, the ethical framework in which the constitution itself is created.  This ethical basis cannot itself be an agreement, since it sets the foundation for agreements.  This ethic was derived in Chapter 5 as what Locke called a ‘law of nature’, based on the premises of human independence and equality.  Such a fundamental change is not impossible.  Historical examples abound, including the American revolution and movements such as the abolition of slavery and equal rights for women.

Foldvary recognizes that the ethics of the people must be addressed if fundamental change, in the form of three amendments to a constitution, is to be enacted.  He looks to Locke for the basis:

The first, regarding the behavior of the citizenry, could be the codification of the Lockeian universal ethic: Any act which does not coercively harm others shall not be restricted, any state interest notwithstanding.

The second fundamental amendment regards the power of the state:

It would eliminate the taxation of individuals and firms by all levels of government, eliminating the mining of private wealth.

Foldvary goes on to describe the necessity of individual secession as the ultimate check on a government not following the rules, moving on to a third structural reform:

…one that would permit entry and exit into the government business itself, underpricing the cartel.  It would permit any person or organization having a title to land to withdraw the site from any government jurisdiction and create its own governance….an exit option helps maintain the post-constitutional enforcement of constitutional rules.

Foldvary concludes:

The theory presented in Chapters 1 to 8 presents the proposition that territorial public goods generate rents, and, if an organization has ownership rights to the sites on which rents arise, the rents reveal the demand for the goods and provide the means to pay for them.

The primary hypothesis – that incentives for personal gain do not in general induce private agents to provide the public goods that the people in the service domain effectively demand, because there is no way to induce individual users to each pay for a portion of the good – has been rejected…. Since the issue is the feasibility of private provision, the existence of the case study communities is sufficient to reject the hypothesis of market failure.

It seems to me that Foldvary has done a very good service with this idea as represented in this book.  He takes the best feature of the system of land value tax as proposed by Henry George, while eliminating the worst (i.e. where land should be common property), thereby developing it into a fully voluntary possibility, one that can be disciplined by the market.

Ultimately, the payment by the landowner is directly tied to that item that most directly benefits from community goods – the land.  Good streets, lighting, recreational facilities, security, etc.  Several such cooperatives can contract together for other services – broader security issues, for example.

Foldvary’s concept ties incentive for the entity providing the services to meet market desires at prices that offer value to the customers.  It offers the possibility for dissatisfied customers to withdraw consent – by not paying for services, joining a different cooperative, or moving without an exit liability and without requiring permission.

It allows for community pressure to be used as the means to motivate non-payers and free-riders to pay.  Not force, but peer-pressure. 

Folvary’s work deserves wider discussion and dissemination within the dialogue of the free-market, libertarian community.  I hope to have done my small part in this.

Hotels and Consensual Government

I am continuing through the book “Public Goods and Private Communities,” by Fred Foldvary.  In this book, Foldvary examines and develops private, contractual means to secure and deliver what many consider to be “collective goods.”

Foldvary distinguishes the contractual community from the sovereign community:

In a contractual community, a member enters into a contract with the other free agents, and the contract provides for the ability of a member to withdraw.

In a sovereign community, unless individuals are legally independently sovereign, the membership is not contractual, since the sovereign agency may impose laws upon the member without his explicit agreement.

He identifies the litmus test for a true, contractual community:

Only when the right of individual, personal secession is constitutionally acknowledged is the membership contractual.

The member must always hold the right to personally secede.  Not to secede only with a sovereign’s permission; not to secede only for a good reason; not to secede only if he has a new place to go; not to secede only after paying an exit tax; but to secede when and if he chooses with no obligations remaining or imposed beyond that which was explicitly agree to initially..

He calls out Paul Samuelson, in his view of the delivery of collective goods:

The proposition by Samuelson and others that provision of collective goods requires government overlooks…the fact that governance can be accomplished by the contractual means as well as by an imposed political process.

As noted in my earlier post on this book, Foldvary argues that the world need not be as simplistic as Samuelson suggests, and in fact is not as simplistic as this – there are many examples of contractual communities that can be looked at as models or templates, presenting concrete examples subject to further practical development.

Foldvary notes the work of Spencer Heath, and his main work, “Citadel, Market and Altar,” appearing shortly after Samuelson’s work noted above.  This work, not surprisingly (given the viewpoints), did not attract the same academic attention.

…Heath wrote that the value of public services is manifested as the rent ‘which attaches to exclusive locations in proportion to benefits received by or at those locations.’ 

In other words, the better the services, the higher the potential rent.

This central idea he obtained from Henry George….But…Heath turned George’s political paradigm on its head.  Whereas George regarded the landowner qua landowner as a passive receiver of rent which he has no part in creating, to Heath the landowner as an entrepreneur has the potential of becoming a ‘producer of and restorer of land values.’

Heath saw this in this an entrepreneurial possibility, where the landowner had the opportunity to increase his rent and therefore his profits by becoming a more efficient provider of more valued services.

…Heath adds, ‘the balance of the rent not required for [public services] will be the clear earnings of the proprietors who have administered and supervised the enterprise.’

Heath offers as an example, the hotel:

‘In a modern hotel community…the pattern is plain.  It is an organized community with such services in common as policing, water, drainage, heat, light and power, communications and transportation, even educational and recreational facilities such as libraries, musical and literary entertainment, swimming pools, gardens and gold courses, with courteous services by the community officers and employees.’

Courteous services…by the department of water and power.  That is a novel concept.

Unlike sovereign governance, proprietary administration is subject to a market discipline.  As Heath put it, ‘the slightest neglect of the public interest or lapse in the form of corruption or oppression would itself penalize them by decline in rents and values.’

Spencer Heath MacCallum carries further the work of his grandfather:

‘The hotel has its public and private areas, corridors for streets, and a lobby for its town square.  In the lobby is the municipal park with its sculpture, fountains, and plantings… its public transportation system, as it happens, operates vertically instead of horizontally.’

The entire organization of a hotel is based on contract, some explicit, some tacit.  Employee agreements, guest agreements, and articles of incorporation: these would constitute the constitution of the hotel and define the law.  Such is the root of contract law: not to be found in a search of law regarding contract, but in the medieval ‘law’ which contracting parties bring into existence by their agreement.

It is clear that the agreements and contractual structures governing guests and employees of a hotel do not address every issue taken on under the term “government” as understood today.  For this reason, Foldvary develops several case studies, broadening the concept with actual examples of contractually-based communities.

The second half of Foldvary’s book constitutes these case studies, casting the net farther and wider than the example of the hotel. For these, I will quote extensively from his summary of each study:

Walt Disney World was selected as an example of a proprietary community.  Although typical of resorts and hotels, its autonomous legal status makes it a prime case study for the commercial provision of collective goods.

Arden Village was chosen as a prime example of a community financing its collective goods from site rents on privately owned land.  It also demonstrates a high degree of voluntary activity.

Fort Ellsworth is an example of a condominium, a common type of contractual community which provides a limited range of goods, and implements the economic principles of funding them from rent.

The Reston Association is an example of a large civic association, resembling a sovereign town, demonstrating that such large-scale operations can be run as contractual communities.

Finally, the St. Louis ‘private places’ show how neighborhoods within a metropolitan area have associations which own the streets and utilities, providing protection and a sense of community.

Together the case studies demonstrate the feasibility of contractual governance and the provision of civic goods under different conditions, each being an example of a more general type of community.

I may write further on this general topic from the case studies.  However, my purpose is not to cover the book in its entirety, but to present his work as a model for contractually organized communities.   For me, the key takeaways include the idea that the relationships are voluntary and that the structure can be disciplined by market forces via profit and loss.  I can imagine associations of many small groups coming together for certain needs (broader defense, for example), and remaining independent for others (streets, community parks, etc.).

I find Foldvary’s work to offer real food for thought, worthy of consideration in the dialogue of voluntary governance with the individual in control of his agreements and relationships.  Whether or not I write further regarding the book, I will at some point offer another post on this topic, summarizing my views on the possibilities.

And for those who say there is no example today of a society governed purely by voluntary means, I will now offer the hotel as my counter.

The Market Provision of Social Services

The Market Provision of Social Services

The title of this post is taken from the book “Public Goods and Private Communities: The Market Provision of Social Services,” by Fred Foldvary.

Who is Fred Foldvary?

Fred Emanuel Foldvary (born May 11, 1946) is a lecturer in economics at Santa Clara University, California, and a research fellow at The Independent Institute. He is also a commentator and senior editor for the online journal The Progress Report and an associate editor of the online journal Econ Journal Watch. He lives in Berkeley, California.

In his PhD dissertation (George Mason University, 1992), "Public Goods and Private Communities", he applied the theory of Public goods and Industrial organization to refute the concept of market failure, including case studies of several types of private communities. His research interests include ethics, governance, land economics and public finance.

His support of geoanarchism (a kind of Georgist economics) and his advocacy of civil liberties, anarchy and free markets have gained him a place of high visibility in the geolibertarian movement. [1] In 2000, he ran for Congress in California's 9th District as a Libertarian. [2] He received 3.3% of the total vote to finish third among the four candidates on the ballot.

One of the things I hope to discover as I further my reading of Foldvary’s volume is to what extent Foldvary associates with at least some aspects of what is attributed to “Georgist economics.” 

In his publication Progress and Poverty [Henry] George argued that: "We must make land common property."[4] Although this could be done by nationalizing land and then leasing it to private parties, George preferred taxing unimproved land value. A land value tax would not overly penalize those who had already bought and improved land, and would also be less disruptive and controversial in a country where land titles have already been granted.

By the term “taxing unimproved property,” it is meant to tax all land as if it was unimproved – unlike the typical real-estate property tax of today, which taxes both land and improvements.  In other words, the economic benefits of the improvement would belong to the property owner, while the economic benefits of the improvement in land value would belong to the state to spend or otherwise distribute.

However, the term “taxing” suggests coercion in the relationship.  I don’t believe Foldvary envisions this as a system to be administered by a coercive state agent:

The real world distinction is not community organization versus lack of organization, but what kind of governance or organization an enterprise or a community has, for example consensual governance versus imposed governance.

It is this bent of Foldvary’s – that the relationships must be consensual – and that I could envision the entire process (from street-sweeping all the way up to the big bogeyman of national defense) as being formed in the free market by enterprises driven and disciplined by profit and loss that I chose to look into his work in more detail: a form of homeowners association, acting independent of other like organizations for certain matters and cooperating with other similar organizations for others.

Beyond Greed and Scarcity, by Bernard Lietaer

I have posted the following at The Daily Bell: http://thedailybell.com/3434/Austrian-Economics-and-Religion

Following is taken from an interview with Bernard Lietaer in June, 1997. The interview can be found at:

http://www.yesmagazine.org/issues/money-print-your-own/beyond-greed-and-scarcity

Where a quote is attributed to “Sarah,” she is the interviewer.

BL: …we can produce more than enough food to feed everybody, and there is definitely enough work for everybody in the world, but there is clearly not enough money to pay for it all. The scarcity is in our national currencies.

BM: I think this is a novel idea. I wonder why every two-bit dictator in Africa hasn’t thought of this: print enough money and scarcity will disappear. Why should the starving suffer if the only thing standing between them and a hot meal is a printing press? I think this has never been tried anywhere.

BL: Information technologies increasingly allow us to attain very good economic growth without increases in employment.

BM: Haven't we heard this line with every advancement of technology? The telegraph put the pony express out of business. Was that the end? Employment went downhill from there? Do we really have unemployment today because of Amazon and EBay?

BL: A study done by The International Metalworkers Federation in Geneva predicts that within the next 30 years, 2 or 3 percent of the world's population will be able to produce everything we need on the planet. Even if they're off by a factor of 10, we'd still have a question of what 80 percent of humanity will do.

BM: Of course, we could each work 3 days per year and vacation for the remaining 362 – we could just job-share, thus ensuring employment for all, while at the same time achieving tremendous time for leisure.

What a wonderful life this would be; I hope The International Metalworkers Federation in Geneva is correct about this.

But if this is a problem for BL, we cold simply require that every individual can only eat food that he produces himself. That will ensure everyone is employed.

BL: I believe, however, that complementary local currencies are a lot better suited to developing cooperative, local economies….Every fortnight in the Ariege, in southwestern France, there is a big party. People come to trade not only cheeses, fruits, and cakes as in the normal market days, but also hours of plumbing, haircuts, sailing or English lessons. Only local currencies accepted!

BM: If this is cooperative (voluntary), I am all for it. I guess this proves that even a fruitcake this nutty can have its uses: perhaps a re-gift, or a doorstop.

BL: Local currency creates work, and I make a distinction between work and jobs. A job is what you do for a living; work is what you do because you like to do it.

BM: WHAT?

BL: For example, in France you find people offering guitar lessons and requesting lessons in German. Neither would pay in French francs.

BM: Why not?

Sarah: So you're suggesting that scarcity needn't be a guiding principle of our economic system. But isn't scarcity absolutely fundamental to economics, especially in a world of limited resources?

BL: My analysis of this question is based on the work of Carl Gustav Jung because he is the only one with a theoretical framework for collective psychology, and money is fundamentally a phenomenon of collective psychology.

BM: No, money is fundamentally a phenomenon of the desire to divide labor. Without the division of labor, we can all go back to scraping our existence from the earth every day. Is this what BL is getting at? I can’t wait to find out.

BL: Now let's apply this framework to a well-documented phenomenon - the repression of the Great Mother archetype. The Great Mother archetype was very important in the Western world from the dawn of prehistory throughout the pre-Indo-European time periods, as it still is in many traditional cultures today.

BM: Wait a minute, I am afraid I know where this is going….

BL: But this archetype has been violently repressed in the West for at least 5,000 years….

BM: Does he mean the “archetype” of scraping a daily existence, being attacked by beasts, foraging for food, with a life expectancy of what, exactly? And, while a trivial point to some (but rather important to 99.9% of the 7 billion people on this plant): exactly what was the population on earth that was supported by such an “archetype”?

BL: So it should come as no surprise that in Victorian times - at the apex of the repression of the Great Mother - a Scottish schoolmaster named Adam Smith noticed a lot of greed and scarcity around him and assumed that was how all "civilized" societies worked.

Sarah: Wow! So if greed and scarcity are the shadows, what does the Great Mother archetype herself represent in terms of economics?

BL: Let's first distinguish between the Goddess, who represented all aspects of the Divine, and the Great Mother, who specifically symbolizes planet Earth - fertility, nature, the flow of abundance in all aspects of life. Someone who has assimilated the Great Mother archetype trusts in the abundance of the universe. It's when you lack trust that you want a big bank account.

BM: I will mimic Sarah here…WOOOWWWW. Where to begin? It appears all we have to do is believe in the Goddess and the Great Mother, and we will be free of scarcity and want. We won’t need a big bank account.

Memehunter, I will gladly relieve you of your bank account. Again, I can have my lawyer draft an agreement on Monday.

BL: We can, however, design a monetary system that does the opposite; it actually creates long-term thinking through what is called a "demurrage charge." The demurrage charge is a concept developed by Silvio Gesell about a century ago. His idea was that money is a public good - like the telephone or bus transport - and that we should charge a small fee for using it. In other words, we create a negative rather than a positive interest rate.

BM: How does the spending of wealth create long term thinking? Long term thinking results in saving, not spending.

How is money a “public good”? This belief is enough, even without all of the other nutty ideas in this interview, to cause me to call Bernard a monetary crank.

Sarah: Has this ever been tried?

BL: There are only three periods I have found: classical Egypt; about three centuries in the European Middle Ages, and a few years in the 1930s.

In ancient Egypt, when you stored grain, you would receive a token, which was exchangeable and became a type of currency. If you returned a year later with 10 tokens, you would only get nine tokens worth of grain, because rats and spoilage would have reduced the quantities, and because the guards at the storage facility had to be paid. So that amounted to a demurrage charge.

BM: This isn’t demurrage; this is a charge for spoilage and payment of the guards. Bernard should understand his own words before he speaks.

BL: In Europe during the Middle Ages - the 10th to 13th centuries - local currencies were issued by local lords, and then periodically recalled and reissued with a tax collected in the process…. Practically all the cathedrals were built during this time period. If you think about what is required as investment for a small town to build a cathedral, it's extraordinary.

BM: I do often think about how such cathedrals were built in a time when the general population was otherwise in great want of food and shelter. Now I know – their lords stole the money from them.

Bernard does not address the example of the 1930s. I will assume it was in Austria as suggested by Anthony Migchels on 01/07/12 07:44 AM. I have already addressed this, but will do so again here for completeness: In a crisis (as an important aside, one brought on by the state) the strangest things can become... popular.

Land Value Tax

http://thedailybell.com/2873/Telegraph-Discovers-Cancerous-Debt-Levels


I find the discussion of "Land Value Tax" quite entertaining.

I have commented before that, if developed in a voluntary manner, this method of providing for certain services is preferable to me as compared to the evils of an income tax, for example.

The discussion of the idea of "owning" land (at least in the discussion with Adam on one side, and DB / Danforth on the other) as almost irrelevant - like how many angels can dance on the head of a pin - if I understand the different viewpoints properly:

All seem to agree that the individual(s) occupying the space has rights of use and disposal. This would certainly include the right to enter into ONLY voluntary means of procuring (even so-called "common") services or otherwise encumbering the land. As Adam has pointed out, he does not advocate forcing a non-payer off of his property, nor does he advocate a tax (to me meaning an involuntary contract / payment) of any kind.

If this is so, I guess it doesn't matter to me if Adam says I cannot "own" land, and JD / DB say otherwise. I can use and dispose of my land. I can pass it on to my heirs or anyone else I like - for consideration or not, and without a tax consequence. No one can "force" a tax on me, or use the monopoly power of the state to kick me out. If I find value in the activities of the community, I will likely pay the "land value tax". If I do not choose to pay, the community might use persuasion to get me to pay, maybe publish my name in the paper if I don't, but names can never hurt me... .as the saying goes.

Ingo, on the other hand, has previously advocated and applauded the use of force by the state - even unto death of the "subjects" - in order that the state can preserve its interests. Therefore, in his hands, I would find this concept of "you cannot own land" both deplorable and dangerous.

Unfortunately, in both this world and any likely future world, there are more Ingos than there are Adams.

The Myth of National Defense: Introduction

Yes, another book. This is a compilation of essays on the theory and history of security production, edited by H.H. Hoppe.

One of the more difficult questions to address for the advocate of anarchy is that of national security or national defense. This book appears to be right on topic. My thought is to give some commentary and expand n some of the ideas presented in this work.

In the introduction, Hoppe identifies two of the most widely accepted propositions among political economists and political philosophers:

1) Every monopoly is bad from the viewpoint of consumers, monopoly here meaning exclusive privilege granted to a single producer of a good or service.

2) The production of security must be undertaken by and is the primary function of government.

The two propositions are obviously incompatible. In this, the orthodox view is to take exception to the first proposition. This book will attempt to address that it is the second proposition that should be challenged.

Empirical evidence supports the unorthodox. The 20th century should be proof enough of the horrors unleashed when security is provided by the monopoly state. Certainly, many states are, in fact, aggressors and not defenders.

The orthodox then claim that these disasters are due to the types of governments involved - the absence of democratic government being the culprit. This, however, fails to answer many counter-examples: the American war between the states, for example.

Mises suggests that, in order for a government to fulfill its primary function as a provider of security it must satisfy two conditions: it must be democratically organized, and it must permit unlimited secession in principle.

Where government is a compulsory territorial monopolist of protection and jurisdiction equipped with the power to tax without unanimous consent, any notion of limiting its power and safeguarding life, liberty, and property must be deemed illusory.

Experience certainly bears this out.

Geo-Rent: A Plea to Public Economists, Fred Foldvary

This article can be found in PDF form via a Google search.

I read the article at the encouragement of Ingo Bischoff. I "met" Ingo through our posting at The Daily Bell.

I will offer a brief summary of the article, and a few thoughts. Of course, errors in my summary, if any, are my own.

"The idea is to tax the market value of land, exclusive of the value of improvements."

This is the basic idea of taxation, as presented by Foldvary. The idea is that, through "public" services / expenditures, it is the land value increase that best reflects the ultimate value and efficiency of the "public" improvements. Therefore, it is the land value that should bear the burden of paying for the services. (Here you have my stumbling explanation of Foldvary's eloquently stated idea.)

It is an intriguing idea. Set aside my distaste for any form of taxation (it is theft, after all), the idea of a land value tax has a nice ring. To the extent roads, sidewalks, security (including national defense presumably), public spaces, provide utility, they do so to a given geographic location and inherently make that land underlying the location more valuable.

The tax follows the location, not the person. To the extent an individual feels unfairly taxed (and to the extent that this land value tax replaces all other forms of tax), it is quite easy to avoid paying the tax - sell the property and leave the jurisdiction.

Another possibility comes to mind, however I will admit I have not thought it through....

It would seem that this idea is quite conducive to eliminating (at least greatly reducing) government from the equation. Certainly a private enterprise would be motivated to improve the land value via providing market-demanded benefits in the most cost-efficient means possible.

Localities (cities? counties?) could regularly bid out the contract, with a predetermined tax rate and / or the tax rate to be submitted as part of the bid. Assessments would also be preformed by a third party. Basic services could be outlined in an RFP/RFQ process. The possibility of the service provider being kicked out at the end of the contract term (due to poor service or other reasons) would help motivate toward better performance, and bankruptcy does not automatically have to be paid for by the "customers" (as opposed to the tax-payers always being on the hook.

As I said, I haven't thought it all through. But it is an interesting concept.

I thank Ingo Bischoff for writing and advocating a read of this concept.

What about so-called Public Goods? part 2

From the LA Times (and thanks to EPJ, where I first saw the story):

EPJ story: http://www.economicpolicyjournal.com/2010/12/crash-taxes-latest-scam-to-take-your.html


http://www.latimes.com/business/la-fi-crash-tax-20101231,0,7549295,full.story

"One more good reason to drive safely in California: If you cause an accident, you may be on the hook to pay the police and firefighters who show up to help."

Is this an effort toward privatization in California? California, of all states? What wonderful news!

"If insurers don't pay, cities can hire collection agents to seek payment from the motorists involved."

Yes, the ones responsible will be the ones to pay the bill. What a great libertarian solution. And in California, no less.

"Sacramento, with nearly half a million residents, soon could be the largest city in California to do so."

Wait a minute. It is the cities that will charge the fee? This isn't privatization. But, at least it is a user pays system! I guess we shouldn't complain about even the smallest victory.

"'To me, it's an outrage. We're already paying these people — the police department, the fire department, the emergency vehicle drivers — handsome salaries and benefits,' said Lew Uhler, president of the National Tax Limitation Committee. 'Either we stop this kind of nonsense or we should quit paying taxes for these kind of services.'"

Whoa! Paying taxes AND paying a user fee? This can't be right. This must be some kind of joke. Yes? No?

"Local taxpayers shouldn't have to pay for accidents they had no part in creating, said Costa Mesa Fire Battalion Chief Bill Kershaw."

Well, yes. So are the taxes going down to represent the amounts previously paid for such clean-up? It appears not.

It is something to see the cities themselves have discovered the private enterprise business model for such services. But the hapless taxpayer is now paying twice - once for the service, and again for...the service?

Why not a private solution - fee for service. The model is right here. The cost could be included in the insurance premium. Of course, taxes should be reduced as these services are no longer provided by the city.

But that isn't the objective. The only goal is to get more loot. There is no goal to shrink government. But, the cities themselves have shown a possible route to that end.

What about so-called Public Goods?

A question was posed by Leonardo in the comments section of the article linked here. Due to the length of my reply, I am posting it here.

http://bionicmosquito.blogspot.com/2010/12/rise-of-brownianism-one-more-time.html


First, Leonardo's question: "Bionic Mosquito:I value your views. However, I believe we do need a government for strictly infrastructural issues, such as providing a legal framework for honest trade, defence, roads and road maintenance, etc. These issues have value beyond the individual. If for instance street cleaning in a city isn't done, diseases, rodents, etc lurk. If I pay and you as my neighbor don't pay for this cleaning (for instance you want to do it yourself), how can this effectively organized? What if you don't do it? Am I supposed to pay then? I will suffer the negative consequences because you didn't do your part?It wld be interesting to hear your PoV on this."

Following are my thoughts on this:

Leonardo

Thank you for the comment. I will not claim to have an answer to every possible situation. But that is the beauty of the market - so many problems have been solved, so many gifts have been provided that are beyond my ability to produce on my own. This gives me faith (what other word should I use?) that most of not all of these situations can be resolved.

First and foremost, my purpose in being so adamant in the idea of state coercion as opposed to voluntary cooperation is that this is where the battle lies. Once state coercion is allowed a foothold, it cannot be tamed. A monopoly of legalized physical aggression will know no bounds, and will be led by people who find such power enjoyable.

So, the battle for ideas lies here. It is not left-right, liberal-conservative, etc. It is not limited government as opposed to fascism or communism. As I said in one of my replies to Mr. Herman, limited government is a useless term. How is it defined? Where is the line drawn? When is the line crossed? The only definition with meaning is that it is something short of unlimited government. But what does this mean? Anything short of state execution upon birth could be considered a limited use of government force. So, I work to drive home this point.

But to your practical questions. What about a legal framework for honest trade? Such mechanisms already exist. Contracts, mutually agreed upon, provide such a framework. Arbitration clauses in these contracts provide methods for private dispute resolution. Such private resolution can be brought to bear in cases of fraud, theft and other violations of private property.

What about enforcement? I imagine if the perpetrator never wanted to do business again, perhaps little can be done. Otherwise, negative publicity and the risk of being ostracized from future employ or other business opportunities can help work wonders. Not every wrong can be made right. It would be true in my world, just as it is true today. I will take my chances in a world where the same entity does not have the power to write the laws, interpret the laws, and adjudicate the laws. It seems to me competition in this area will lead to an overall better result.

What about street sweeping, fire departments, police, etc? Consider the world of insurance. I imagine anything that can be insured against could come under a private market. For those providing medical and life insurance, it is in the insurance company’s interest to ensure streets are adequately clean to prevent disease from spreading. For those providing fire insurance, it would make sense to provide fire services. For those providing insurance to property and life, it would make sense they provide police and investigative services. The costs of each of these types of insurance policies can be born by those who take out the policies. Several insurance companies could set up consortiums to minimize duplicative services.

What of the free rider? Perhaps the fire department doesn’t respond to his fire, or responds but then places a lien on the home for the full cost. The same could be said for police and investigative services.

The developer of a large housing development wanting to maximize the value of the property could include in the covenants certain requirements for property cleanliness. These could be enforced by the other members of the community. Insurance could even be taken out for this (such as is done for auto insurance against an uninsured motorist). He would include sidewalks in the property if he felt the value would be recognized by the market.

National defense starts to get a little tougher. I will start by saying this would be significantly less costly if foreign relations were handled in a friendlier manner, and a lack of worship to the beast that is the state would help ensure this was so. No foreign entanglements. And what of the arms race if the biggest producers of arms were not funded by government? Is not the circle a self-fulfilling one of un-virtue? A bigger club by you requires me to make an even bigger club? I also wonder what role insurance companies could play in this situation as well?

I will say I have not thought through this fully, but I will offer the following:

http://mises.org/daily/1356

This is the introduction written by Hans-Herman Hoppe. The book is “The Myth of National Defense.” There is a link to the book in this introduction. The book is on my reading list, as I have not yet read it I can offer nothing more on this.

Now what if others don’t do their part? As you ask, are YOU then supposed to pay? Again, I will say in my world, outcomes will not be perfect, just as they are not today. There will never be perfect justice. To the extent you are a productive member of society (as I assume you are), I will suggest that in every way you already pay today. You are already paying for slovenly neighbors, you are already paying for those who choose not to work or choose an unhealthy lifestyle. You already pay for many of the things today that you are worried about paying for tomorrow. Less than half the people pay for any of these services anyway. I will assume you are already paying for someone else’s pleasure to not pay.

To compound this, due to the inherent corruption and waste in the monopoly system that is the state, you are probably paying many multiples of what you might pay in a more cooperative society.

So yes, there will likely be some free-riders. They will be far fewer than exist today, and the solutions will be dealt with competitively via the market. Therefore the cost to you will be much lower in my world, I believe.

To the extent you find my comments are helpful, I thank you for your consideration. To the extent they are not, I go back to my earlier statement. I do not have all the answers, and no one can say they do. This is the beauty of the markets and human action. Problems get solved, and new wonders are produced that are far beyond the imagining of any individual or central planner. The same would be true here.