Hibbert.pa@XEROX.COM (08/15/86)
{Steve Walton's excerpts will be shown in quotes.}
"I just had an interesting discussion with ... a libertarian
[who] admits that he sees no practical way to move the US to a
libertarian society at present."
I also see no practical way to move TO a libertarian society. That
doesn't keep me from working to move it TOWARD such a system. The
most important part of that is convincing people that it would be a
better system both morally and in its effects on people's way of life.
"The classic example of a public good is national defense.
Everyone who lives in the US benefits from its existence, even
if they contribute nothing to it. Thus, every individual
would decide to contribute nothing to national defense,
because he gets its benefits whether he does or not."
I don't see how it follows that absolutely no one would contribute.
I'll argue with that conclusion if you'll show the line of deduction
in more detail. The usual argument is that some people wouldn't
contribute and would unfairly benefit. My response is that you have
no right to fair treatment at the expense of forcing someone else to
provide it for you. Many libertarians are strong on defense issues,
and they seem perfectly willing to try to convince the rest of us that
the danger is as pressing as they say. They are quite hopefull that
people (or corporations in search of good press) would voluntarily
contribute to support an armed force which wouldn't need to be more
than a fraction the size of our current Department of War.
"Do libertarians deny the existence of public goods? If yes,
they had better have some damn good ideas about how to defend
us from Soviet ICBM's in the absence of mandatory taxes for
national defense."
I don't deny that there are actions that benefit people who haven't
contributed to providing them. I argue that the fact that you benefit
from someone's actions gives the performer no claim on you. The claim
that some beneficial effect wouldn't arise unless you are allowed to
coerce some people is also unconvincing.
("mandatory taxes" seems redundant. "voluntary taxes", mentioned by
other contributors to the discussion, seems self-contradictory. Why
would you refer to something voluntary as a "tax"?)
"Capitalism can only function in a given
market if all of the following conditions hold:
(1) Free (as in no-cost) entry and exit from the
market.
(2) Multiple competitors
(3) The market price of a good accurately reflects its
cost.
(4) Buyers have all the information they need to
assess the value of a good.
What you are thinking of is called "perfect competition". The
assumptions about perfect competition are useful in economics in the
same way that ideal points and lines are useful in low-level study of
math, and perfect springs and frictionless surfaces are usefull in
introductory Physics. Modern economists have much more sophisticated
models available to them, which they use to reason about what happens
when the ideal (simplifying) conditions don't hold. The speed with
which a market responds to changes decreases with increases in cost of
entry and exit. When information is scarce, people pay money for it,
and reason about how much it is worth to find out more.
Your third point is as someone else pointed out, a result in perfect
competition. It is not expected to hold in more complicated models.
The reason for this is that perfect competition assumes that markets
will "stabilize." In more realistic models it is admitted that
conditions constantly change, and that markets never reach the stable
point. The function of an entrepeneur in these models is to find the
places where the market hasn't stabilized and exploit them to generate
profits, at the same time moving the market closer toward some
market-clearing point.
"There exist natural monopolies, such as electric power, where
the largest producer is always the most efficient and can thus
drive all competitors out of business."
This claim has been made many times. Please show why you believe it.
The fact that the government has forbidden competition in some fields
is not proof that it must be done. Some early simple models of
competition showed that what you describe might be possible. More
sophisticated models show that it is very unlikely. Few modern
economists continue to believe in natural monopolies. I'd be
interested if you could find support for this without using some gross
simplifying assumptions. I suspect you'll find only unsubstantiated
claims similar to yours.
"Government intervenes with such things as product testing, to
ensure that buyers know that a manufacturer's claims are
correct; such claims are often difficult to verify without
access to a large, well-equipped laboratory. Do libertarians
have a solution to these very real problems? "
Yes, organizations like Consumer Reports and Underwriter's Labs will
be formed when consumers want more information. Some consumers will
decide that the information isn't worth its price and will do without.
No one will be forced to pay for information they didn't want. Some
people will regret their choices. I am willing to argue further about
how the integrity of these private firms should compare to that of
government agencies.
"Can you lay out a plan for the conversion of the United
States into a libertarian society?"
As I pointed out at the beginning of this article, I don't see such a
plan as a necessary first step. Untill more people become convinced
that that conversion is right, it won't be possible to implement it.
As more people agree that it is, they will work to come up with such a
plan. (As one wag put it, "even if I could change the world to be
just the way I want it tomorrow morning, they'd change it all back by
Wednesday.") For an example of one plan for doing away with the
Social Security system without putting people who depended on its
claims out in the cold, see Peter J. Ferrara's book "Social Security:
Averting the Crisis." It's available from the Cato Institute, which
is headquartered in Washington D.C. They probably have some shorter
discussions of the ideas available. Write and tell them you're
interested in Ferrara's ideas about phasing out Social Security.
Chris
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