Question Regarding Political Philosophy

[LoneStarBuckeye]

I'll give you a quarter for "epistomological."  That's a mouthful.  I don't understand your final paragraph, however, unless you meant to use "former" where you used "latter," and vice-versa.  If you mean what I think you meant, I agree entirely.

I think I understand now (as I did when I replied originally) that your fundamental axiom is that the world is comprised of persons who all act independently and in what they perceive to be their own best interest.  From that starting point, you attempt to draw all sorts of conclusions about everything from governments to free markets to private property rights to child labor.  

You have obviously thought about this much more than have I.  My only point in response is that the system that you posit (i.e., a chaotic, distributed system with 6 billion independent actors) is unbelievably complex and that no one can draw any reasonable conclusions about its behavior (at either a macro or micro scale) without making grossly simplifying assumptions.  This is what happens in any field of study when one wishes to analyze a complex system.  For example, this happens in economics all the time.  The question is whether, in simplifying the system under study, you render your results meaningless.  In engineering, one can often calculate a bound on the error introduced by simplifying assumptions.  In fields like economics, I don't think that is generally possible.

Here's an example of what I mean.  Your statement:

"My point is that out of all kinds of market the relationships based on strict private property ownership and self-ownership of one's body will lead to the fastest increase in wealth for all people because it is conducive to the development of division of labor, most efficient utilisation of available resources towards satisfaction of the most urgently felt needs of the people."

does not follow directly from your thesis and, I'm sure, depends on simplifying assumptions.  So, the real question is what are those assumptions, does the conclusion follow given the assumptions, and how do the assumptions affect the legitimacy of the conclusion?

- JNOV

[wrag]

Yo Miko some thoughts here......

Might be worth it to cover the means of / or method where by wrong doing and wrong doers would / could be dealt with

As to your expression of child parent relationship, I have to say that such a relationship, or something very like it, was in effect when I was a child.  The parent/parents brought the child/children into the world and had to expend resources to care for the child.  This is an extremely simplified explanation.  One must add in many emotional parts as well as practical things to get the correct picture of the parent child relationship.

I also have to say that a child had very few rights!  As so few children truly understood those rights.  The rights came to the child, as they were earned / understood.  The parent usually extended these rights to the child in the afore said manner.

A simplistic example would be the house key.  A child did not receive a key to the family dwelling unless the child understood the importance of protecting / not losing that key, and how to use that key.  It helped teach responsibility to the child.  It helped the child learn to think through things and to retain information.  It further gave the child a sense of self worth and self respect to achieve a higher level of responsibility.  On the flip side there were added incentives in that failure could bring punishment.  That punishment was seldom anything close to severe.  Except perhaps in the child's eyes.  Perhaps something like No TV or some such a thing.  And the I thought I could trust you thing.  And the well you're gonna have to work at this some more until you can show your capable of handling the responsibility thing.

Oh Well just some thoughts.  Much of what I put forward here is probably kinda old school and not politically correct now.

Dang LOL to much thinking before the proper infusion of caffeine
 

I'm not exactly a libertarian due to a struggle with some of the concepts.  Yet I find myself in agreement with and even applauding many of the concepts.

Guess I was brought up with the basic concepts expressed in the following......

"Liberty means responsibility. That is why most men dread it."
George Bernard Shaw (1856-1950)
Anglo-Irish playwright, critic

"The ultimate result of shielding men from the effects of
folly, is to fill the world with fools."
Herbert Spencer (1820-1903)
English philosopher

"The generality of men are naturally apt to be swayed by fear
rather than reverence, and to refrain from evil rather because
of the punishment that it brings than because of its own
foulness."
Aristotle (384-322 bc)
Greek philosopher

"Necessity is the plea for every infringement of human
freedom. It is the argument of tyrants; it is the creed of
slaves." William Pitt English politician, prime minister.

"It will be found an unjust and unwise jealousy, to deprive a
man of his natural liberty upon a supposition that he may
abuse it."
Oliver Cromwell (1599-1658)
lord protector of England

OOPS got kinda long winded here sorry .....

[crowMAW]

Originally posted by miko2d
In short, a parent is entitled to make decisions on behalf of a child. A perent can certainly send a child to work on the family farm or factory rather than let him or his siblings starve.

I agree with that statement up to the point where it is understood that the parent is making rational decisions in the best interest of the child.  I admit that begs the question: what defines the best interest of the child.

Certainly starving is not in the best interest of the child.  However, is forced labor the only method to achieve that goal?  What are some other alternatives?  Not creating a fetus or allowing the fetus to come to term if you cannot afford to feed it may be alternatives. Giving the child up for adoption may be another.

Originally posted by miko2d
I would not call a child a slave of his parents because that word has a pretty specific meaning.

Nor would I...except in the case where the parents purpose in creating the child is to create a source of free labor.  Unfortunately, this does happen where there is no disincentive in place to prevent it...ie child labor laws.

I think that the line from laborer as a participant in the family commune to slave is very thin.  As soon as the child's wages are used to subsidized the parent's consumption of goods that have no benefit to the family unit--ie cigarettes, liquor, etc--then they are clearly a slave.  If the parent earns a profit from the child's labors, then they have become a slave.  I defend that last comment by reminding you that we are considering the family as a communal economic unit and as such all profits should be shared.  Also recall that the adults can choose not to enter into a situation where they must care for children, where as children have no choice but to depend upon adults for survival for a period of time.

Originally posted by miko2d

Rights, liberty and the Rule of Law.

 Here is a quote but read the whole post to understand the concepts of domain and rights that I use.

I agree with your assessment of the nature of rights...where applied to adults.  I think I would agree with the bulk of your quoted passage if the word "child" were supplanted with the word "fetus"...which I think was where you were going since the next paragraph speaks of abortion.

Where we would diverge is with the concept that if the parent agrees to allow others to claim a right, then it is OK.  Again, I would argue that the agreement must be in the child's best interest.  Simply because a parent agrees to sell a child into prostitution does not make that an optimal decision.  It may be optimal for the parent, as they receive the compensation.  But it is far from optimal for the child.  A worse scenario would be a parent who would sell a child for slaughter...again there are sickos out there who would  enter into such a contract if it were not illegal to do so.  If laws were constructed where a child only has those rights given by the parent and the parent can give those rights to another person, then that type of behavior is not only possible, but likely.

I am a minarchist.  I believe that by being a member of a society that I am better able to defend my rights by using the collective power of the society...and in order to codify the rights and organize the collective power of society I recognize that a government is an efficient method of performing that function. As such, I do believe that some rights are automatically given to all members of a society simply by being born into it...and in return the society is perpetuated by the addition of new generations.  The question is...what rights are automatic?  Certainly, we as a society have decided that life after birth is a right.  Protection from sexual exploitation prior to an age where informed consent can be realized is another.  And, in our society of the USA, not being forced into slavery is another right...which includes using children as labor for the family unit.

I think even anarchists who support a purely "free market" society would agree that they have a right to live, have informed control over decisions they make, and have the right not to be bound into slavery.

BTW, do you ever hang out on FreeMarket.net?

[miko2d]

LoneStarBuckeye: I'll give you a quarter for "epistomological."  That's a mouthful.

 Epistemology is the science on the nature of knowlege. How do we know things, what kind of knowlege is valid, what can be known, etc. Metodology may sometimes serve as a synonym.
 Combined with ontology - the science on what categories have independent existence (does "virtue" exist or an abstract triangle), those come handy in discussing any philosophical and sociological matters.
 I commute over 3 hours a day, so I once bought a set of philosophy lectures at http://www.teach12.com just to get an idea what are they (philosophers) are talking about.

I don't understand your final paragraph, however, unless you meant to use "former" where you used "latter," and vice-versa.

 Yes, thank you, I've edited that.

You have obviously thought about this much more than have I.

  Not as much me as several dozens of genius-level scholars starting with late scholastics through scotis philisophers trough Adam Smith and culminating in Ludwig von Mises and his followers.
 I am just a student and popularizer.

My only point in response is that the system that you posit (i.e., a chaotic, distributed system with 6 billion independent actors) is unbelievably complex and that no one can draw any reasonable conclusions about its behavior (at either a macro or micro scale) without making grossly simplifying assumptions.

 That is exactly the statement that the scholars starting with Adam Smith through Austrian School have set to dispell.
 Along with the more dangerous view that the economic system can be grasped and thus planned by a human reason - which is the underlying foundation of all socialist policies.

 There are very few basic axioms on the operation of the human mind that are known a-priori. How do we know those axions? Simple - each one of us has a mind that he/she can intimately examine.
 From those a set of theorems was developed that produced very specific and reasonable conclusions about how an unbelievably complex system (which cannot even theoretically be grasped by a human mind) operates. Though the system is not chaotic in the least but operating under a very few very basic principles.

 Which correspond to reality because the operation of society is also based on the properties of the human mind.

 The conclusions that can be achieved are not the same kind as those the natural sciences are used to. You cannot get an exact prediction how a certain individual will act. If it could be done, that would contradict to the basic claim that humans have an ability to make choices - free will.
 But a whole range of conclusions and assertions on what would happen - and even greater range of assertions on what cannot possibly happen - can be produced.
 Quite enough to predict and expain the effects and failures of the interventions into the free market.
 Like that increase in supply will cause market price to drop. Or that artificially fixing the price below the market-clearing price will cause a reduced suppy and shortage - which is probably the opposite to what the price-fixers tried to achieve.

Your statement: ... does not follow directly from your thesis and, I'm sure, depends on simplifying assumptions.

 There are no simplifying assumpions except the usual "other things being equal". We are talking about a purely theoretical science - like math, not a natural one based on measurements and approximations, experiments and observations.
 The statement I gave about optimality of the free market based on private property is the conclusion. I did not present a proof here.


wrag: Might be worth it to cover the means of / or method where by wrong doing and wrong doers would / could be dealt with

 You mean in a non-coercive state or a stateless society? People would do private provisions for defence based on their knowlege of local conditions, personal estimation of perceived risks and cost, etc. They would buy locks and bars, dogs and alarms, form patrols, contract private security companies and purchase private insurance services - which insurers would probably become the largest providers/contractors of security services. Pretty much all the things that people are doing now despite the existence of the government law-enforement. One could even say to the large degree because of the government law-enforcement and other policies. If not for War on Drugs, faulty urban planning and social engeneering, there would be much safer environment and less need for protection.
 Anyway, the number of personnel and the amount of money involved in private security greatly exceeds that of the government law-enforcement.
 There are serious books on that topic but I have not read them yet.

 I have some views on parent/children that some may find interesting outside political/economic content which I will probably discuss some other time.

 miko

[wrag]

Hmmmm forced labor?

You don't work you don't eat?  Does that seems like forced labor?

Has anyone posting lived as a street person?  Or been in a situation where they had to live like a street person?  No job and little of a, or very bleary, future?  Always hungry and wanting something to eat?

From my experience far too many seem to think they can imagine terrible situations.  YOU CAN NOT!  You may believe this as untrue.  I guarantee you when and if the time actually comes you will realize the imagining you did comes NO WHERE NEAR the reality.  The emotions you actually feel can not be felt imagining.  The thoughts that run through your mind are colored by those emotions and affected by those emotions and again can not be truly imagined.

IMHO there are some BOTTOM line things being avoided or not even discussed here.

Nicey nice, goody good is ok as far as it goes.............

However there have been times in history when things were far different and there could be times in the future when things become far different.

Also in some countries or area's of our world people are just barely getting by.

Should things become very very bad for many people what we are discussing becomes much less important then the survival of the individual and then the family unit.  Who would you want at your side?  A family member intent on the survival of YOUR family or ....

As too the parent child relationship IMHO the one currently being presented (the PC one) has very little to do with family.  And from my perception is angled more toward the STATE becoming the ultimate parent.  This to me is very chilling!  Some individual is going to decide a child's fate without the intimate knowledge a parent would have.  Without the attachment that a parent would have.

We saw some of this type of thing with Hitlers' Third Reich.

As to socialism ... the NAZI's were socialist.  One of the differences between the NAZI's and the communist was ownership.  The communist required the state own everything and the NAZI's didn't care who owned what as long as they had full control over it.

IMHO too many people fail to understand what is truly important due to their own lack of experience.

IMHO this colors much of what they try to do for our society.  Sadly it seems they begin from a unrealistic viewpoint and proceed.

There are many good people in the world.  There are many bad people in the world.  Each of us must choose which we shall be.  To ourselves and our fellow humans.

OK nuff said .... gettin windy again .......

[crowMAW]

Originally posted by miko2d
Education is an investment. As with any investment, it only makes sense if it brings fruit in excess of the cost. Education pays if it makes a person more productive so that the cost would be covered. If that is the case, it would be easy to secure a loan or some other kind of financing as it would be for any other venture.
 We would see much more of such financing if the government did not make it illegal and did not divert enourmous amounts of resources from private economy, driving the real interest rates up.

Aside from potential increased productivity, I think there is one other logical reason for government to provide education or require children to attend school.

I believe that one of the legitimate roles for government is to reduce transaction costs.  While Ronald Coase was not around to lecture the Founding Fathers, it is apparent that they did have an idea of the concept of transaction costs and their effect on trade.  They gave the US government power to set a standard of weights & measures, the power to create a postal system and the power to build roads.  Why?  

In a pure "free market" I could say that I am selling a pound of butter...of course I am using my own weight system and in that system my pound of butter only weighs 15oz.  Without the government setting a standard of 16oz = 1lb, the buyer of my butter would have no legal remedy to show that I cheated him out of 1oz of butter.  It would have been caveat emptor.  That would cause buyers to purchase and bring their own scales to learn if my definition of pound meets their own...thereby increasing the cost of the transaction.  Transaction costs are losses to the economic system...they add no value at all.

There are three categories of transaction costs...one of which is search and information costs.  Education reduces search and information costs.  If I cannot read, then I must find someone who I trust to read for me so that I can collect the information necessary for me to decide to enter into a transaction.  If I cannot read then I cannot learn of a seller's availability by reading an advertisement.

Both the consumer and the seller are damaged by increased transaction costs.  As such, aggregate transaction costs are an externality that is born by all in society and as such their reduction is a public good.

[miko2d]

wrag: Hmmmm forced labor?
You don't work you don't eat?  Does that seems like forced labor?

 I'd say not. If someone's parents chose to have a child they cannot feed, it's not anyone elses fault or responcibility.
 But we were mostly discussing the opposite here - forced exclusion from labor by wage laws, licensure and trade restrictions.


crowMAW: I believe that one of the legitimate roles for government is to reduce transaction costs...

 First, the free market can and did provide a solution more efficiently than the government - including in the area of standartisation and even conflict resolution.

 Second, the government does not only provide those solutions less efficiently, it often drives the transaction costs up.

 Examples:
 Replacement of the gold standard with free-floating fiat currencies. That makes it much more difficult and risky to conduct international trade and investment, which reduces the division of labor and thus productivity.

 The cost of airfare and telephone communications fell drastically and usage exploded after the government partially deregulated airlines and telecoms and let competition take its course.

Both the consumer and the seller are damaged by increased transaction costs. As such, aggregate transaction costs are an externality that is born by all in society and as such their reduction is a public good.

 The very concept of externality is considered bogus by Austrian school and really represents the imperfectly defined property rights and government intervention.
 But even in the conventional economics I doubt that increased - or rather not reduced - transaction costs would count as an externality.
 It costs to standardise. Once the benefits outweight costs, people standardise. Otherwise standardisation is counter-productive.

 What about the metric system? How many americans know how many grains are in an ounce or pounds per ton? How many know how many feet are per mile - whichever one of the few we use? What about quarts per barrel?
 Doesn't seem to cause that much trouble.

They gave the US government power to set a standard of weights & measures, the power to create a postal system

  Imperial power grab. They forcefully shut down much less expensive private mail delivery systems like the one created by Lysander Spooner.
 Then they used the monopoly on mail to introduce censorship, by making it a crime to send certain things through the mail they did not like.
 People went to jail for sending medical information related to contraception/birth control through the mail. Newspaper editors were prosecuted for printing articles about birth control since the newspapers were delivered through the mail.

and the power to build roads. Why?

 Private turnpikes, private railroads were built in US and over the world. The answer is the same - power grab by the government, providing contracts and land for supporters.

If I cannot read, then I must find someone who I trust to read for me...

 Which may be your cheapest alternative. You only need to pay when/if you need something read or translated from a foreign langauge.
 If you do it too often, you may save money in the long run by investing into education.

If I cannot read then I cannot learn of a seller's availability by reading an advertisement.

 If advertiser targeted you, he would come up with a format you would be able to perceive, right?
 
 miko

[Montezuma]

Originally posted by Munkii
Okay this doesn't have much to do with the topic, but I'll respond anyways.  I'm majoring in Accounting/Finance, so I have plenty of classes in that area.   Philosophy and Politics are favorite subjects, and I enjoy the debates (notice I said debates, not flamewars) that can come about from discussing them.

Liberal arts is an important part of a university education, otherwise you might as well go to a trade school.

[Montezuma]

Originally posted by crowMAW
Both the consumer and the seller are damaged by increased transaction costs.  As such, aggregate transaction costs are an externality that is born by all in society and as such their reduction is a public good.

In Miko-world, things like public goods, externalities, and market failure do not exist.

[mietla]

Originally posted by Montezuma
Liberal arts...

what is Liberal arts?

[crowMAW]

Originally posted by miko2d
Examples:
 Replacement of the gold standard with free-floating fiat currencies. That makes it much more difficult and risky to conduct international trade and investment, which reduces the division of labor and thus productivity.

 The cost of airfare and telephone communications fell drastically and usage exploded after the government partially deregulated airlines and telecoms and let competition take its course.

I'm not seeing as how those three examples are transaction cost related.  Note I did not include Constitutional power of the Federal government to mint coin.  It was not an exclusive right back then.  Many states minted and the standard was gold.

There are some pro's and con's to the gold standard.  But that is a different conversation.

Airline and telecommunication regulation also did not have a basis in reducing transaction costs.

Both the consumer and the seller are damaged by increased transaction costs. As such, aggregate transaction costs are an externality that is born by all in society and as such their reduction is a public good.

Originally posted by miko2d
The very concept of externality is considered bogus by Austrian school and really represents the imperfectly defined property rights and government intervention.

Well, it is not like the Austrians were perfect...even FA Hayek admitted he made a mistake in some of his Socialist Debate arguments. Plus, the Austrians tended to poopoo Keynesian Theory, which is still the cornerstone of macro theory today.  Keynes was not perfect either, but it does not mean that his theories are complete crap. [See my next post...I don't think the Austrian school excludes the concept of externalities]

Externalities exist.  They may exist because of imperfectly defined property rights, but that does not remove their existences.

Unfortunately, without government interference, there is not an efficient way of mitigating negative externalities.  Government can attempt to more clearly define property rights and allow individuals to claim remuneration from individual producers of negative externalities.  Or it can attempt to mitigate negative externalities in the aggregate.

For example, I do not value cigarette smoke at all.  To me the negative value each time I am forced to breathe cigarette smoke is $50...for prolonged exposure (more than a minute) it is $1000.  Now, in a pure anarchist "free market" society, I would have to attempt to extract the negative value each time with each individual smoker that happens along my path.  What happens if the smoker does not have the money available to compensate me for having to bear the cost of his smoke?  I would have to litigate each time.  That is not very efficient at all.

Government instead collects a tax as aggregate mitigation and creates regulations so as to give me places where I can be assured that I will not have to bear the cost of someone elses cigarette smoke production.  In turn smokers are allowed some areas where they may produce cigarette smoke without fear that I will hit them up for money to compensate me for having to breathe their smoke.

Originally posted by miko2d
But even in the conventional economics I doubt that increased - or rather not reduced - transaction costs would count as an externality.

Sure they are...ever hear of network externalities?  They are directly related to transactions.

Originally posted by miko2d
It costs to standardise. Once the benefits outweight costs, people standardise. Otherwise standardisation is counter-productive.

 What about the metric system? How many americans know how many grains are in an ounce or pounds per ton? How many know how many feet are per mile - whichever one of the few we use? What about quarts per barrel?
 Doesn't seem to cause that much trouble.

Ah...you are missing the point of why a government sets a standard.  Anyone can set a standard.  I can set one.  You can set one.  The Europeans can set one.  The US can set one.  

Look at my example again.  I say I'm selling a pound of butter...I've set my standard to be 15oz=1lb.  The buyer believes that 16oz=1lb.  If the government has set a standard of 16oz=1lb, then I am guilty of committing fraud and the buyer has legal recourse.  If there is no government set standard, the only way that the buyer is protected is by measuring the weight of the butter against a scale that the buyer understands.  The latter is an increased transaction cost.

What is the cost of setting a weight standard?  Whatever the cost of the legislative or executive body selecting and publishing the standard.  

What is the cost of not setting a weight standard?  The aggregate cost of weighing time of all consumers buying items sold by weight + the aggregate cost of all consumers buying/storing/transporting scales + the aggregate lost potential sales from consumers not having scales when desired.

If you try to only look at individual benefits exceeding individual costs, aggregate optimality will not be achieved and there will be a net loss to the economic system.  Basically, it is like drag keeping a system from reaching the frontier of the production possibility curve.

Originally posted by miko2d

They gave the US government power to set a standard of weights & measures, the power to create a postal system

  Imperial power grab. They forcefully shut down much less expensive private mail delivery systems like the one created by Lysander Spooner.
 Then they used the monopoly on mail to introduce censorship, by making it a crime to send certain things through the mail they did not like.
 People went to jail for sending medical information related to contraception/birth control through the mail. Newspaper editors were prosecuted for printing articles about birth control since the newspapers were delivered through the mail. [/B]

Well, those actions were constitutionally challenged and eventually they were shown to be unconstitutional.  The Constitution does not give monopoly rights to the USPS...and as such we do have private competitors, ie UPS, FedEx, DHL, etc.

BTW, the only private postal services up until Spooner had very limited routes and were not real competition for the USPS.  Before Spooner, all real postal service in the American Colonies and US were state sponsored...either British, Colony, State, or Federal sponsored.  Spooner's postal service did not show up until 50 years after the US Constitution was completed...so it is not like Ben Franklin as the first Postmaster General of the confederated colonies in 1775 supplanted Spooner...it did supplant the British sponsored service though.

Originally posted by miko2d

and the power to build roads. Why?

 Private turnpikes, private railroads were built in US and over the world. The answer is the same - power grab by the government, providing contracts and land for supporters.[/B]

Again, the Constitution does not give the US government monopoly over roads.  My subdivision has private roads.  I drive on a private road every few months called Roebling Road Raceway.  If you wish to make a turnpike...go ahead...buy the land, pave it, and charge folks to drive on it.  I'd only suggest you build it in a place where there is not a cheaper alternative to your road.

The reason government offers public alternatives to private postal service and private turnpikes is to assure access.  If I own a private road then I can deny access to whom ever I please.  Worst case scenario would be a private road that two competing companies use to carry goods to buyers.  One company buys the road and then denies access to vehicles carrying the goods of the other company.  The second company now must build a road or take alternate and longer routes.  The net effect is higher aggregate transaction costs.  And if the 2nd company goes out of business because it cannot compete given its higher transport costs, then the first company would be able to capture monopoly profits.  Both the higher transaction costs and the monopoly situation are non optimal.

It is the same deal for postal services...USPS provides guaranteed access.

Originally posted by miko2d

If I cannot read, then I must find someone who I trust to read for me...

 Which may be your cheapest alternative. You only need to pay when/if you need something read or translated from a foreign langauge.
 If you do it too often, you may save money in the long run by investing into education.

If I cannot read then I cannot learn of a seller's availability by reading an advertisement.

 If advertiser targeted you, he would come up with a format you would be able to perceive, right?
 [/B]

Again...you are only looking at the cost-benefit from an individual perspective and not in the aggregate.  You have to total up all those individual costs plus the lost opportunity costs for sellers in the case where buyers forgo a purchase because they are not enabled to make the transaction.  Plus when considering information transfer, you must consider the leveraging advantage as the number of individuals with a common communication path increases.  IE, consider a telephone...if I have the only one then it is pretty useless.  If there are two then the utility goes up...the more telephones available for me to call the higher the utility.  If you optimize individual benefits only, you miss the maximum aggregate utility possible.

[Montezuma]

Originally posted by mietla
what is Liberal arts?

www.dictionary.com

liberal arts
pl.n.

1.  Academic disciplines, such as languages, literature, history, philosophy, mathematics, and science, that provide information of general cultural concern: “The term ‘liberal arts’ connotes a certain elevation above utilitarian concerns. Yet liberal education is intensely useful” (George F. Will).
2.  The disciplines comprising the trivium and quadrivium.

[crowMAW]

Originally posted by miko2d
The very concept of externality is considered bogus by Austrian school and really represents the imperfectly defined property rights and government intervention.

After some sleep and pulling out some of my old econ books (one of Rothbard's on pollution), I had one other comment on this...

I don't think the Austrian school considers the concept of externalities as bogus at all.  Rothbard clearly indicates they exist.  The Austrians only limit the application of externalities to property invasion and provable personal casualty.

The bugger for externalities always has been pollution.  When you have multiple sources and multiple victims the transaction costs of clearing each externality individually becomes very high.  To depend soley on torts to eliminate free riders in the pollution example is extremely inefficient.

[miko2d]

Montezuma: In Miko-world, things like public goods, externalities, and market failure do not exist.

 True - those are just terms to fool people.

 In my word any number of people can band together to own and manage common property on any principles they choose - democratic one-man-one-vote, shareholding, or entrust it to a leader.
 In our world "public property" is something extorted from me for management of which I can cast a futile vote.

 As I've mentioned, there is a huge body of work explaining how externalities are just poorly defined property rights.
 It is government that allows pollution of the public rivers or private land. In my world it would be illegal to invade someone else's property. So you can pollute all you want in your parcel of land or river but once you spill over into another property, you violate law and no government can give you permission to continue "for common good".

 As for market failure, under free market there will always be failures bacause loss is just the other side of the profit - an informational process that transfers ownership to entrepreneurs who correctly predict public needs.
 What politicians call "market failure" is when their desired do not correspond to the public desires reflected by market.


crowMAW: I'm not seeing as how those three examples are transaction cost related.

 1. You have to protect yourself against the currency fluctuation risk - buy insurance, hedge, etc. - something you would not do with gold standard.
 That increases transaction costs for international trade and so inhibits division of labor.

 2. If you pay more for a plane ticket of a phone conversation, it is more expensive to do business - discover opportunities, make contracts, etc. It would seem to me the best example of a transaction cost, so now I wonder wjhat do you mean by "tansaction cost".


Plus, the Austrians tended to poopoo Keynesian Theory, which is still the cornerstone of macro theory today. Keynes was not perfect either, but it does not mean that his theories are complete crap.

 They are. I've read The general Theory twice and the guy did not understand the simplest things. Like how someone saving money in his mattress rather than spending or investing it causes increase in investment. There is nothing new in his theories that mercantilists did not say two centuries earlier. He got popular because he told the government that what they were doing anyway - inflating and borrowing - was scientifically sound.
 The foundation of his theory was that inflation and unemplyment was inversely related. So the stagflaion of the 70s wa a theoretical impossibility.
 I could write a dozen pages explaining the most basic, most obvious errors in his "theories". He would contradict himself in one sentense, not just one paragraph. He would be talking about profits ending up being too low (below 2%) to attract investment - and next about the need to nationalise because the capitalists would be making excessive profits.
 He thought that increase in investment would bring down profits, for god's sake.
 I studied Keynes the first time before I discovered the Austrian school - because I was impressed by his foresight in "The Consequences of Peace" - which I did not read yet but trusted someone's summary.
 I found the theory so jumbled that it was impossible to follow and one had to contsantly assume to trust the author - much like with Marx's theory. What a waste that has been.
 Later I've read "The consequences of peace" and discovered all his logic was totally bogus, only his prediction of war "luckily" turned true.
 I believed like a fool that germany was destroyed by reparations based on common knowlege - while reparations were just a small percentage of Germany's GDP and the crisis was a textbook Austrian monetary mismanagement, not fiscal problem at all.

 With austrian school, there has not been a single instance where I had to make a leap of faith - so far, at least.
 Keynes had no idea about epistemology of economics. There is no explanation for the foundation of his assertions.


Sure they are...ever hear of network externalities? They are directly related to transactions.

 If someone benefits from what you are doing without your intent, that does not give you any right to coerce him  to pay you. That's pretty much all about the positive externalities. You may call such benefit "externality" but it does not mean anything should be done about it.
 The negative externalities are state-approved violations of property.

If there is no government set standard, the only way that the buyer is protected is by measuring the weight of the butter against a scale that the buyer understands. The latter is an increased transaction cost.

 Sure. That's why people can create an organisation to manage standards - a government for standards and nothing else. But you are talking about creating a government that would manage standards, which also has the power to confiscate your house or draft your children for slaughter. That's quite a transaction cost too.

the only private postal services up until Spooner had very limited routes

 The routes would have expended if he was allowed to. They wuld not be as extensive as government's but then, if someone choses to live in a faraway location - for some benefit, no doubt, shouldn't he pay his own increased postage fees?

The reason government offers public alternatives to private postal service and private turnpikes is to assure access. If I own a private road then I can deny access to whom ever I please. Worst case scenario would be a private road that two competing companies use to carry goods to buyers. One company buys the road and then denies access to vehicles carrying the goods of the other company.

 I can thinik of a free-market scenario that would not allow that to happen. Who would buy a property next to a road unless the continuity of access to it was contractually guaranteed?
 A developer creating a new town would have drafted teh sale contracts ensuring the perpetual access - or he woudl not sell a single plot.

If there are two then the utility goes up...the more telephones available for me to call the higher the utility. If you optimize individual benefits only, you miss the maximum aggregate utility possible.

 All true. But what does all that have to do with a government? Free market can ensure all that better.


crowMAW: I don't think the Austrian school considers the concept of externalities as bogus at all. Rothbard clearly indicates they exist.

 true, he uses the term "externality" to describe several types phenomena - becasue it is a common term. About some of them nothing should be done economically. The others may be explained without that term and he uses it to facilitate understanding. I am not sure itw as worth in all cases. Mises is more strict with his terminology. It takes getting used to but then avoids confusions.

 miko

[crowMAW]

Originally posted by miko2d

crowMAW: I'm not seeing as how those three examples are transaction cost related.

 1. You have to protect yourself against the currency fluctuation risk - buy insurance, hedge, etc. - something you would not do with gold standard.
 That increases transaction costs for international trade and so inhibits division of labor.

 2. If you pay more for a plane ticket of a phone conversation, it is more expensive to do business - discover opportunities, make contracts, etc. It would seem to me the best example of a transaction cost, so now I wonder wjhat do you mean by "tansaction cost".[/B]

I see, you are using those as examples of where government has increased transaction costs.  I am arguing that a legitimate role for government is to reduce transaction costs.  You've given examples where government has exceeded that legitimate role.  And I agree.  Our current government frequently acts beyond the legitimate role it should play.

Originally posted by miko2d

crowMAW:Sure they are...ever hear of network externalities? They are directly related to transactions.

 If someone benefits from what you are doing without your intent, that does not give you any right to coerce him  to pay you.[/B]

You said that transaction costs should not be considered externalities.  I gave you a clear example of where they can be.  I'm not making any case as to how the externality should be treated.

Originally posted by miko2d

crowMAW:If there is no government set standard, the only way that the buyer is protected is by measuring the weight of the butter against a scale that the buyer understands.[/b]

 Sure. That's why people can create an organisation to manage standards - a government for standards and nothing else.[/B]

Congratulations for realizing that there is at least one legitimate role for government.  The hard question now Miko is for you to define a complete list of the legitimate roles that government should play.  We'll make a minarchist of you yet.

I'd actually like to start another thread on this particular topic as it took me much thought and discussion to develop my list.

 

Originally posted by miko2d
But you are talking about creating a government that would manage standards, which also has the power to confiscate your house or draft your children for slaughter. That's quite a transaction cost too.

I think you are making a pretty big leap by thinking that my arguments for a government that can legitimately act as an enabler of reduced transaction costs is also an argument for a government that has a draft!

Originally posted by miko2d

crowMAW:the only private postal services up until Spooner had very limited routes

 The routes would have expended if he was allowed to. They wuld not be as extensive as government's but then, if someone choses to live in a faraway location - for some benefit, no doubt, shouldn't he pay his own increased postage fees?[/B]

Absolutely!  I'm not arguing that the current USPS is perfectly administrated.  I am arguing that the concept of a government sponsored postal service to ensure equal access helps reduce transaction costs and is therefore a legitimate function of government.

BTW, note that the USPS is moving towards graduated rates based on distance.  It used to be that all parcels were charged the same rate just like letters.  That is no longer true.  Eventually, I would expect that graduated rates will be applied to letters as well.

Originally posted by miko2d

crowMAW:The reason government offers public alternatives to private postal service and private turnpikes is to assure access. If I own a private road then I can deny access to whom ever I please.

 I can thinik of a free-market scenario that would not allow that to happen. Who would buy a property next to a road unless the continuity of access to it was contractually guaranteed?
 A developer creating a new town would have drafted teh sale contracts ensuring the perpetual access - or he woudl not sell a single plot. [/B]

That is a pretty big assumption.  Would you ever consider buying a house where you don't actually own the land under it...you own the structure, but not the land.  It happens all the time in areas where land is scarce...Hawaii for example.  When purchasing a scarce resource people will accept very odd conditions.

But to your example...are you suggesting that in a pure "free market" that a land purchaser would have to negotiate a perpetual access contract with every road owner to which that property's driveway connects it to any destination within the road network?  What if I am a road owner in Florida and your property is in California, but you want to use my road a couple times a year?  What incentive do I have to make a contract with you to provide perpetual access?  What happens if I sell the road after I make that contract with you...would you have to renegotiate the contract with the new owner.

You see the complexity of this grows.  And as such creates huge transaction costs.

Now lets really make it complex...

Right now I can get on I-95 and drive straight to Miami non-stop (the entire length of Florida's peninsula).  Now consider if the road was privately owned and different stretches of the road belonged to different owners.  Each transition would require a toll to be paid to the owner.  Suddenly what was a 5-6 hour trip is now increased dependent on the number of toll booths the individual owners decide to build.

Again...transaction costs are increased.

Originally posted by miko2d

crowMAW:If there are two then the utility goes up...the more telephones available for me to call the higher the utility. If you optimize individual benefits only, you miss the maximum aggregate utility possible.

 All true. But what does all that have to do with a government? Free market can ensure all that better.[/B]

You were making the classic mistake that anarchists make by commenting about my example on the benefits of government sponsored education to reduce illiteracy.  Anarchists consider that the by creating individual optimality, then system optimality is achieved.  This is not true.

In the above example of the telephone and communication...lets make that directly comparable to reading.  If I am the only person that can read, then the utility for anything requiring reading is nearly nill.  The more people that can read, the greater the overall utility to the system and the production curve is pushed out closer to the PPC frontier.

Originally posted by miko2d

crowMAW: I don't think the Austrian school considers the concept of externalities as bogus at all. Rothbard clearly indicates they exist.

true, he uses the term "externality" to describe several types phenomena - becasue it is a common term. About some of them nothing should be done economically. The others may be explained without that term and he uses it to facilitate understanding. I am not sure itw as worth in all cases. Mises is more strict with his terminology. It takes getting used to but then avoids confusions.
[/B]

He doesn't just use the term...he describes the concept specifically as it relates to air pollution.  Air pollution specifically, and pollution or enviornmental impacts to development in general have always been one of the most pernicious problems for anarchists to resolve.  See my smoking example from the previous post.  

But here is another example:  I own 100 acres of land and in the middle surrounded by trees is a 10 acre plot where I have a little factory.  I produce waste that I release into the air and into the ground water.  The waste is colorless and odorless but is a carcinogen.  Several of my neighbors have gotten cancer due to my pollution production costing them hundreds of thousands of dollars to treat.  Some want to inspect my property to see if I am the source of the carcinogen.  I refuse because it is in my best interest for me to act optimally for me, which is to hide the fact that I have shoved a cost of my production off onto someone else.  What in an anarchist society would resolve this situation?  It is my property...I can allow whom ever I choose to set foot upon it.  Would the neighbors be allowed to ban together with guns and coerce me to allow them on my property?  How would von Mises solve this?