Monday, December 27, 2010

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.

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:


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:

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.


  1. Hi Bug
    Just a quickie: I found an interesting read re these very issues by a bloke called Molyneux.

    Hope you like this.

    PS: I am writing "fiction" stories (short stories PLUS one conspiracy thriller) as my contribution to awake the masses -- hopefully they are thought-provoking. But as I have ESL, I would like to engage some proofreaders. If you would be interested, pls be so kind to send me a pm at leonardo.pisano57[at]

  2. Leonardo

    I am flattered that you would ask, but will pass. First, I have read your work and it seems clear enough for me. That you believe it to be otherwise suggests I probably won't add much value. Additionally, time, time, time. Not enough of it in a day.

    I wish you well. Your contributions will be invaluable.