David Friedman rebutted by Mike Huben and Steve Hendricks.

From: mrh@centerline.com (Mike Huben)
Newsgroups: alt.politics.libertarian
Subject: Re: What *is* the deal with Libertarians anyway?
Date: 19 Mar 1993 23:16:36 GMT
Message-ID: <1odk8k$c89@armory.centerline.com>
References: <C43o4G.B19@encore.com> <1oapdt$ngt@armory.centerline.com> <DDFr-190393123346@law-mac-10.uchicago.edu>

In article <DDFr-190393123346@law-mac-10.uchicago.edu> DDFr@Midway.UChicago.Edu 
(David Friedman) writes:
> > No, we should prefer a system where the marginal return on investment for
> > public goods is equal to the marginal return on investment for non-public
> > goods.  That way we maximize overall return on investment. (Mike Huben)
> 
> You are assuming that such a system is an option.

Pardon, but you make similar assumptions for your anarchistic system.

> If we had a wise and
> benevolent dictator, with economic efficiency his only objective (what I
> like to call a bureaucrat god) running the system, the result would indeed
> be as you describe. But although we have a reasonably coherent theory of
> how markets can equalize the marginal return to investment (and everything
> else) across private goods, we have no adequate grounds, so far as I know,
> for believing that there exist any political institutions that produce the
> result you want.

There are no adequate grounds, so far as I know for believing that there exist
any free-market institutions that could maintain a libertarian anarchy in the
face of predation from outside or from re-integrating into a system like our
current one.

But to answer your question directly, democracy is the marketplace in which
public goods are bought and sold.  This is not just a slogan or a metaphor:
voters make decisions what to purchase.  The different public goods compete
against each other and against the voters' desire to retain their money for
private goods.  And the less public a good is, the less likely voters will
want others to benefit more than they do from it.

> I am coming in in the middle of the discussion, so it is possible I am
> being unfair to you, but it looks as though you are simply assuming we can
> build political institutions to produce any results we like, whereas we are
> stuck with the results that markets produce. It seems to me more reasonable
> to apply the same sort of assumptions (individual rationality, self
> interest, etc.) to political markets as to ordinary markets, and see what
> the result is. I don't think it is likely to be the sort of optimal
> government behavior you describe.

Individual self interest and rationality apply equally well to the purchase of
public goods in a democracy.  I will vote for a public good if it is profitable
for me: ie it costs me a dollar for more than a dollar's benefit to me.

> > There is a finite, limited supply of radio/television frequencies.  You can
ot
> > create another.  However, as many printing presses and copying machines as a
re
> > desired can be created.  That's why the former ought to be distributed as a
> > public good and the latter ought to be distributed as a non-public good.
> 
> I do not see any connection here at all. A "public good," as the term is
> used in economics, is a good such that the producer (or owner) cannot
> control who consumes it; some also include in the definition zero marginal
> cost on the margin of number of users. Examples are a radio broadcast
> (although control might be possible at high cost--real categories are less
> black and white than theoretical ones) or an idea (ditto--as in
> intellectual property law). That has nothing to do with things existing in
> fixed supply. Indeed the standard argument (as in your discussion of
> smallpox inoculation) is precisely that public goods are underproduced by
> the private market--an issue that does not arise for goods that are not
> produced at all.

I believe I am using terms in confusing ways (probably my fault, due to
ignorance of proper usage.)

I view natural resources (such as the RF spectrum, land, and some others)
as publicly owned property, whose rental (by some competitive system) ought to
finance the public goods of economics.  I claim these as publicly owned property
because I know of no claim to ownership of them based on anything with more
validity than "I was here first" or "I will fight to maintain my exclusive
ownership."

> Your description of radio frequencies applies just as well to land. But
> land fits just fine into ordinary economic analysis, perfectly efficient
> market outcomes, etc. Economic theory provides good, although not (in my
> view) conclusive arguments for using governments to produce real public
> goods, but not for using it to control goods in fixed supply.

Allow me to clarify.  Public ownership of natural resources without any further
public control than competitive rental is what I am proposing.  I think that
this notion will also fit just fine into ordinary economic analysis, perfectly
efficient market outcomes, etc.

> On a slight tangent, consider that the sum total of energy (including the
> energy of mass) is fixed, as is the number of baryons. Does it follow that
> all physical objects (made mostly of baryons), and all matter and energy,
> ought to be controlled by government?

Yes.  However, under my system, the great supply would depress the price
sufficiently that the practical result would be that there was no cost.

This system has the practical benefit that it allows novel use of natural
resources (such as sea floor, moon, or other exploitation) without risk of
grotesque giveaways and grants as have traditionally occurred with things
like the colonization of the new world, railroad rights of way, etc.
It could also replace eminent domain, by making public and private entities
able to bid against a collection of renters simultaneously for a site.

> > This discussion has caused me to revise one of my ideas: capitalism for
> > production, socialism for distribution.  The revised version is "capitalism
> > for production, socialism for ownership and purchase (or direct production)
> > of public goods".  I'll trust you to understand the first clause.  The secon
d
> > refers to ownership of natural resources such as the RF spectrum, land,
> > minerals, etc. and purchase of public goods such as some research, defense,
> > legal system, regulation, etc.
> 
> With regard to the "socialism for distribution" idea, my initial comments
> apply--why do you believe political institutions will give you (at low
> cost) a distribution you prefer to that produced by the market?

History.  The market has never yet produced funding for a good territorial
defense (necessary for its own property system), nor eradicated a disease
like smallpox for example.  We can move on from there to fuzzier and fuzzier
public goods.

> I can well
> believe that there is some distribution (indeed many distributions) you
> prefer to the outcome of market equilibrium, but what makes you think
> political equilibrium will generate one such?

History once again.  We've 200 years of working political equilibrium for the
production of public goods in this nation.  We have never had an example of
a purely market equilibrium production of goods: what makes you think you
would prefer that without an example?

> And how do you intend to keep
> down the cost of people working to be on the receiving instead of the
> paying end of government transfers in a society where all distribution is
> the result of political action?

You see this every day in political discussion: close tax breaks for the rich,
damn welfare queens, etc.  People's jealousy that others might receive more
benefit than they do will work to keep government aimed at public goods.

> One of the attractive things about the
> market is that the main way of working to be on the receiving end of income
> is to produce things--the equivalent in political action is lobbying.

That's not a close parallel.  For example, you might just as well say that
the way to be on the receiving end of income in the market is to bribe
purchasing agents.

Democracy (or even representative democracy) is not the same as the
bureaucracy you posit as the alternative (in the beginning of your response.)
The way to be on the receiving end, both in the market and in politics,
is to make wise investment decisions for what goods to produce.  I will be
equally well off if I invest privately one dollar and receive back two as
if I am taxed one dollar and save two because of public goods produced.

Mike Huben

"Any sufficiently advanced technology is indistinguishable from magic."
(Clarke's Third Law.)  Arthur C. Clarke

(Like politics and economics. :-)

From: mrh@centerline.com (Mike Huben)
Newsgroups: alt.politics.libertarian
Subject: Re: What *is* the deal with Libertarians anyway?
Date: 25 Mar 1993 23:07:18 GMT
Message-ID: <1otdv6$krb@armory.centerline.com>
References: <DDFr-190393123346@law-mac-10.uchicago.edu> <1odk8k$c89@armory.centerline.com> <DDFr-220393160206@law-mac-10.uchicago.edu>

In article <DDFr-220393160206@law-mac-10.uchicago.edu> DDFr@Midway.UChicago.Edu 
(David Friedman) writes:
>In article <1odk8k$c89@armory.centerline.com>, mrh@centerline.com (Mike
>Huben) wrote:
>
> > > You are assuming that such a system is an option. (DF)
>> 
>> Pardon, but you make similar assumptions for your anarchistic system. (MH)
>
>On the contrary, I spent a fair chunk of a book (part II of Machinery of
>Freedom) trying to analyze how such a system would work--as distinct from
>how I would want it to work. My conclusions may well be wrong, but they are
>conclusions, not assumptions.

Without even a badly working example to point at, you are still making the
assumption that a libertarian anarchy is an option.  No matter how many
conclusions you come to, the proof is in the pudding.  In several thousand
years of history, there hasn't been an even temporarily successful libertarian
anarchy.  This doesn't prove it impossible, but you are starting with the
assumption that it is possible in the face of a total lack of evidence.

Why not dispense with quibbling over this rhetorical point?

>> But to answer your question directly, democracy is the marketplace in which
>> public goods are bought and sold.  This is not just a slogan or a metaphor:
>> voters make decisions what to purchase.  The different public goods compete
>> against each other and against the voters' desire to retain their money for
>> private goods.  And the less public a good is, the less likely voters will
>> want others to benefit more than they do from it. (MH)
>> 
>...> 
>
>> Individual self interest and rationality apply equally well to the purchase o
f
>> public goods in a democracy.  I will vote for a public good if it is profitab
le
>> for me: ie it costs me a dollar for more than a dollar's benefit to me. (MH)
>> 
>
>The problem with this is information costs and the incentive structure of
>democratic voting. When I spend resources evaluating a consumer good, say a
>car, I do so knowing that my decision will determine which good I get. When
>I spend resources evaluating government policy, an inherently more
>difficult and expensive job to do well, I do so knowing that my vote will
>change the probability of the outcome I vote for by something on the order
>of one part in a hundred million. So I have almost zero incentive to be a
>well informed voter. Hence the  model of democracy you are describing leads
>to essentially random government behavior--whatever policies most appeal to
>people who have no incentive to know which policies are best will win.
>
>Actual democracy probably works better than that, for a variety of reasons,

So do real publicly owned corporations, whose board members are elected
almost democratically.  (While this analogy is not too close, your model
above would predict that corporations which don't have a controlling number of
shares owned by a tiny clique would also display essentially random behavior.)

Choices for public policies have to be better than "whatever policies most
appeal to people who have no incentive to know which policies are best",
because bad policies are singled out by opponents as targets, and become
the focus of what information does get to voters.

Because of this process of group evaluation, individual voters can afford
to spend less time evaluating policies for at least two reasons: SOMEBODY
will make a stink about bad policies, and they are not reduplicating the
efforts of each other 100 million times over as you do in your purchase of
consumer goods.  They allow pundits, politicians, bureaucrats, etc. to
screen the ideas and compete for their favor.

>but still very much worse than the market works for private goods.

Depends on your measure.  Let's take a private good like gambling.
The customer generally loses money in exchange for, presumeably, pleasure.
If voters derive some such subjective value from government (perhaps from
repression of minorities, for example :-(), how are you going to measure
whether it "works" better or worse?

>Whether
>enough worse so that we should prefer private to public production of pure
>public goods is an interesting argument.

Quite.

>On another topic ...
>
>> I view natural resources (such as the RF spectrum, land, and some others)
>> as publicly owned property, whose rental (by some competitive system) ought to
>> finance the public goods of economics.  I claim these as publicly owned property
>> because I know of no claim to ownership of them based on anything with more
>> validity than "I was here first" or "I will fight to maintain my exclusive
>> ownership."
>...  Public ownership of natural resources without any further
>> public control than competitive rental is what I am proposing.  I think that
>> this notion will also fit just fine into ordinary economic analysis, perfectly
>> efficient market outcomes, etc. (MH)
>
>In fact, it is a variant of the single tax proposal made famous by Henry
>George in the 19th century; in his other policies I believe George was
>basically a laissez-faire economist.

I don't necessarily feel that this is the ONLY just philosophical basis for
taxation: just one that libertarians cannot rebut.

>A couple of problems arise. To begin with, rental requires an ongoing
>bureaucracy...

Bureacracy doesn't seem to be much of a problem in the enormous private
rental industry.

>...makes long run investments by the renters difficult, and means
>that the government instead of the market is deciding how the property is
>bundled--which of the rights associated with ownership of land, for
>example, I get when I rent land. One would think that your proposal would
>be dominated by the alternative of simply auctioning off the property once
>and for all instead of renting--which, of course, is what was done with
>land prior to the 1861 homesteading act, and to some extent thereafter. On
>your basis, I would think the ownership of land in the U.S. is perfectly
>legitimate--it was almost all claimed by the government initially, then
>sold either for a lump sum or in exchange for homesteaders meeting certain
>government specified conditions.

All these objections and observations cab be met by a system of property tax.
Property tax is essentially the rental fee: it is determined partly by the
market.  The bundling is determined by the market (much like subletting).
As you claim, I consider almost all land distribution in the US legitimate
because it was auctioned/sold/exchanged by the US.  However, unlike you, I
consider the US to be the ultimate owner: the US did not sell off the
sovreignty rights with that property.  Thus, taxation is legitimate.

>One of your comments later suggests that you are trying to avoid cases
>where the property is transferred for less than its competitive value. But
>you cannot simulteneously do that and, as you argue later, use the past 200
>years as the evidence that your proposals are workable--what happened to
>government land in the past is some evidence of what will happen, whether
>it is rented or sold, in the future.

The fact that I'd like to minimize transfers of property at below market
value does not mean that such transfers don't fit into my ideas: they
may well be accomplishing a public good as a side effect.  For example, the
Homesteading Act.

>A second problem is that separating the "site value" of land (and other
>natural resources) from the value produced by human action is a non-trivial
>problem. Consider, for example, exploration for minerals. The value is the
>sum of site value plus privately generated information.

Funny, mineral rights are often valued separately from land.  That's not
difficult at all.  But there is no need to tax mineral rights if you simply
make an extractive tax on the minerals.

When I've had my house appraised, the appraisal is broken down into many
categories, including the value of the unimproved land.  This doesn't seem
like a large problem to me.

>A third problem, at least for the Georgist program of replacing all other
>taxes with the single tax (in his version on the site value of land, with
>the tax absorbing all of the rent), is that the total rental value of
>unproduced property in the U.S. is almost certainly much less than total
>government expenditure. I think my rough estimate in Machinery of Freedom
>was 3-5% of GNP.

3-5% of the GNP is probably alot more than most minarchists believe would be
necessary.  For example, New Hampshire has a large per-capita tax burden
based primarily on property taxes, but no income taxes.

>> This system has the practical benefit that it allows novel use of natural
>> resources (such as sea floor, moon, or other exploitation) without risk of
>> grotesque giveaways and grants as have traditionally occurred with things
>> like the colonization of the new world, railroad rights of way, etc.
>> It could also replace eminent domain, by making public and private entities
>> able to bid against a collection of renters simultaneously for a site. (MH)
>
>At the cost of making difficult or impossible any long run investment in
>land, since in your system I only have a short run lease (long run leases
>would get you back to the holdout problems that are normally used to defend
>eminent domain).

Long run leases could have clauses specifying when bidding could be reopened
earlier: for example at 50% over current rental, with buyout of your
"improvements".  However, I think property taxes, extractive taxes and
eminent domain are simpler to apply.

>> > With regard to the "socialism for distribution" idea, my initial comments
>> > apply--why do you believe political institutions will give you (at low
>> > cost) a distribution you prefer to that produced by the market? (DF)
>> 
>> History.  The market has never yet produced funding for a good territorial
>> defense (necessary for its own property system), nor eradicated a disease
>> like smallpox for example.  We can move on from there to fuzzier and fuzzier
>> public goods. (M.H.)
>
>I was talking about the distribution of income, not your previous arguments
>re production of public goods.

Public goods are income.  If you had to buy them privately, they would cost
you money.  The eradication of smallpox has saved everybody (on average) an
amount of money that they would need to spend either on vaccines, on treatment,
or on funeral costs.  Redistributing income through production of public goods
is rare in the market, and usually goes in the other direction, production
of negative public goods.

>I think you are missing my point, which was
>that if government is in the redistribution business, it easily can and
>well may redistribute in the opposite of the direction you prefer.

The market is already distributing in a direction I do not prefer.
Now perhaps I'm swallowing the spider to catch the fly, but the current
government is redistributing in a direction I prefer to that of the market.

>> > I can well
>> > believe that there is some distribution (indeed many distributions) you
>> > prefer to the outcome of market equilibrium, but what makes you think
>> > political equilibrium will generate one such? (DF)
>> 
>> History once again.  We've 200 years of working political equilibrium for the
>> production of public goods in this nation.  We have never had an example of
>> a purely market equilibrium production of goods: what makes you think you
>> would prefer that without an example? (MH)
>
>We do indeed have 200 years of data here, and much more elsewhere. It
>includes massive redistributions from lower to higher income people--the
>heavily subsidized state university system and the present agriculture
>program would be U.S. examples...

(Yow-- I went to the NYS College of Agriculture and Life Sciences at Cornell,
with agricultural majors.  How did you know?  Two points!  :-)

As you say below, "it is far from clear what the net is even in the U.S.
at present", including these two programs, which I have defended here in the
past.  If you want, I'll dig those up and repost them.  (Sorry, I haven't
written my book yet.  :-)

>... and the tax supported elite of much of the
>third world would be a modern foreign examples. There is some
>redistribution the other way as well--the poor also have votes to sell--but
>it is far from clear what the net is even in the U.S. at present, and I
>think it is pretty clear that over time and space the average tendency of
>government is to redistribute from the poor and powerless to their
>"betters."

Hey, I'll grant that ours is the worst form of government, except for all the
others.

The vast majority of other governments have not had anything resembling the
democratic institutions of the US.  I'm hardly surprised that either of us
despises their results.  I cordially invite you to test libertarianism in
one of those other nations, where they have more to gain.

However, I think the poor and powerless have a much better shot here than
they would under a libertarian anarchy (before it degenerated into something
else.)

>On your general issue, my argument is of two forms. First the theoretical
>argument for why the market works well for private goods, less well for
>public goods, and why government production works badly for both.

I will buy your statement for the market, but I think government production
of public goods is better than the markets.  I suspect that your arguments
undercount the deterrent effect of the government on the market production
of negative public goods.

>Second
>the empirical evidence of comparing the market and the political process as
>they function around us, and in other times and places. On the second
>argument, it is worth noting that the American poor are relatively much
>worse off (compared to the rest of the population) in police protection and
>education, both produced by government, than in food, clothing, or even
>housing, privately produced although subject to some regulation.

Food, clothing, and housing are strongly government subsidized for the poor.
Their abundance may be more due to their perception by government and private
charities as necessities for life, while the other two might be considered
less necessary.  They just may not be comparable for this purpose.

In addition, we might argue that one product of the market is segregation,
which allows denial of equal public services.

>> > And how do you intend to keep
>> > down the cost of people working to be on the receiving instead of the
>> > paying end of government transfers in a society where all distribution is
>> > the result of political action?
>> 
>> You see this every day in political discussion: close tax breaks for the rich
,
>> damn welfare queens, etc.  People's jealousy that others might receive more
>> benefit than they do will work to keep government aimed at public goods.
>
>One of the costs arising from people's desire to be on the receiving end is
>the present rate of illegitimacy, very nearly unparalleled in any other
>society at any time (modern Sweden may be the one counterexample)--in a
>system where illegitimacy is subsidized substantially.

Sheesh.  Coincidence is not cause: I'm shocked to see something like this
from someone of your caliber.  Between great societal changes due to birth
control, increase of women with their own incomes and careers, and a host of
other factors, you're bringing up that hoary old welfare queen bit?

>A second is the very
>large cost of calculating taxes, and organizing activity to minimize taxes.

My wife and I have a tax accountant because we have 2 housemates that we
rent to.  We pay less than 1/2% of our income for that service.  Getting the
stuff together takes less than a day's work for one of us: about 1/5% of our
working hours.  Since we pay close to a total of 30% in taxes, this isn't a
big cost.  My mother pays more in care for her one cat.

>A third is the large amount spent by many different organizations trying to
>influence government in their favor.

Compare this to the marketing and advertising expenses of industry.  It's
piddly.

>Note again that your whole argument assumes zero information cost for
>voters.

It no more assumes zero information cost than market theory does.  Advertising
costs passed on to me, time wasted by ads, time wasted trying to find the
real information about products hidden beneath marketing camouflage, Consumer
Reports and other basic information cost me a heck of a lot more than any
political information does.

>Do you really think that "political discussion: close tax breaks
>for the rich, damn welfare queens, etc." represents anything close to a
>realistic discussion of what is really happening--as realistic, say, as the
>same people's discussion of cars or sports teams? 

Yup.  Commercial marketing is designed to take people as far from realism
as possible, to encourage them to spend more than they need.  Politics has
similar aims for unreality.

>And so far as keeping government aimed at the production of public
>goods--is it really your impression that the present system does that? Are
>high wheat prices a public good? Expensive haircuts? Expensive mail
>delivery? Some of the things government does, most notably national
>defense, are plausibly viewed as production of public goods, but unless
>"public goods" includes goods where any significant fraction of the value
>is public (and which will therefore be somewhat underproduced on the
>market) most of government activity is not included.

I include the latter (where a significant fraction is public.)

Our government could be aimed better at the production of public goods.
However, I feel it already is better aimed than the free market could be.
Tossing off a few non-public goods isn't an argument worthy of you.

Mike Huben

"Historians will have to face the fact that natural selection determined the
evolution of cultures in the same manner as it did that of species."
Konrad Lorenz in "On Agression" 1966.

Economists too.  :-)

From: mrh@centerline.com (Mike Huben)
Newsgroups: alt.politics.libertarian
Subject: Re: What *is* the deal with Libertarians anyway?
Date: 30 Mar 1993 16:26:55 GMT
Message-ID: <1p9scf$8ku@armory.centerline.com>
References: <DDFr-220393160206@law-mac-10.uchicago.edu> <1otdv6$krb@armory.centerline.com> <DDFr-260393135905@law-mac-24.uchicago.edu>

In article <DDFr-260393135905@law-mac-24.uchicago.edu> DDFr@Midway.UChicago.Edu 
(David Friedman) writes:
>On most of this argument I have made my points, and see no reason to keep
>going. There are however a few exceptions:
>
>"Without even a badly working example to point at, you are still making the
>assumption that a libertarian anarchy is an option." (Mike Huben)
>
>Actually, I have a well working example of something very close to
>libertarian anarchy to point at, as you would know if you had read my book.

I'll address this at the end of my note.

>> When I've had my house appraised, the appraisal is broken down into many
>> categories, including the value of the unimproved land.  This doesn't seem
>> like a large problem to me.(Mike Huben)
>
>What makes you think the breakdown applied by your appraiser has anything
>much to do with the real economic categories?

Since the appraisal is a free-market institution used by (relatively) free
market institutions like banks to decide whether or not to make loans, most
libertarians might concede the point.  Personally, I think it is a rather
superficial test.  Do you have some particular reason to think that process
is divorced from economic realities?

>Do you think that someone
>appraising agricultural land can and does distinguish between the value of
>a certain amount of area (room plus sunlight) and the value of the present
>condition of the soil?

Yes.  I was a member of the Cornell University Soil Judging Team (briefly.)
Condition of soil and its capability for producing crops and the expenses
involved in growing crops is a far more accurate science than economics.

>How about separating out the unproduced value of
>iron ore in situ from the produced value of the knowledge that it is there?

Simply done.  It's called an extraction tax.  If the extraction tax is
predictable, the market will perform the subtraction in its valuation, and
other taxes can be piggybacked on that valuation.

>> 3-5% of the GNP is probably alot more than most minarchists believe would be
>> necessary. 
>
>It's 3-5% more than I believe is necessary. My impression from your posting
>was that it was less than you believe is necessary, but I could be wrong.

I suspect more is necessary: however I was attempting to justify ONE source
of income for government on philosophical grounds, the one I consider
clearest and most convincing to libertarians.  I can probably think of
others.

If we consider a public good such as territorial defense, the amount needed
is variable: we need to be able to match or exceed the demands placed by
would-be aggressors.  I would assume that there is abundant historical
evidence of such needs in excess of 3-5% of the GNP of man nations.

>> The market is already distributing in a direction I do not prefer.
>> Now perhaps I'm swallowing the spider to catch the fly, but the current
>> government is redistributing in a direction I prefer to that of the market.
>
>How do you know? I just read a draft article in which someone tried to
>calculate the redistributional effect of social security. Including the
>effect of income on mortality converts it from transferring down the income
>scale to slightly transferring up--and I suspect the effect would be larger
>if you included age of entry to the labor force. Social Security is much
>bigger than AFDC and the like.

Why is it that your jaw isn't hitting the floor when you see a political
redistribution approaching so closely to what free market insurance, retirement,
etc. supposedly would do?  How do you explain it?

There are at least two types of redistribution I like.  First, redistribution
to the young for development, and to the old for retirement.  Second,
redistribution for "safety net" purposes.  Neither has ever been adequately
met by the market: large percentages have always been neglected.  I think that
smaller percentages are neglected under current institutions.

>> >One of the costs arising from people's desire to be on the receiving end is
>> >the present rate of illegitimacy, very nearly unparalleled in any other
>> >society at any time (modern Sweden may be the one counterexample)--in a
>> >system where illegitimacy is subsidized substantially. (Me)
>> 
>> Sheesh.  Coincidence is not cause: I'm shocked to see something like this
>> from someone of your caliber.  Between great societal changes due to birth
>> control, increase of women with their own incomes and careers, and a host of
>> other factors, you're bringing up that hoary old welfare queen bit?
>
>While it has gone up somewhat in the general population for some of the
>reasons you mention (birth control probably cuts in the opposite direction,
>since it reduces the chance of unwanted pregnancy)...

Sheesh once again.  Guessing which way birth control cuts is NOT obvious.
While it may prevent unwanted pregancies, it may also make less durable
relationships by increasing the availability of sex outside of marriage.

>... the big rise has been
>at the bottom of the income distribution, where welfare has drastically
>decreased the cost of having illegitimate children. The point is not that
>welfare queens are getting rich having children but that unmarried young
>women who would like to have both sex and babies to cuddle are more likely
>to act on that desire when you transfer most of the pecuniary cost to
>someone else.

The pecuniary cost of the sex?  :-)  I'll let that slide.  However, you're
neglecting to consider the elasticity of demand for babies among women.
If it is rather inelastic, then the increase might be largely attributable
to changing patterns of marriage, which might well be due to technological
factors such as birth control, greater availability of work for women,
fashions, etc.

>> >Note again that your whole argument assumes zero information cost for
>> >voters. (Me)
>> 
>> It no more assumes zero information cost than market theory does.  Advertising
>> costs passed on to me, time wasted by ads, time wasted trying to find the
>> real information about products hidden beneath marketing camouflage, Consumer
>> Reports and other basic information cost me a heck of a lot more than any
>> political information does. (MH)
>
>You're missing my point. Information in your head about what you should buy
>is a private good for you, so you produce it; information in your head
>about how you should vote is a public good for the society, so you do not
>produce it, or produce very little. The problem is not how much voters spend
>getting information but how little information it is in their interest to get.

A true public good is a private good for me as well, because I benefit from
it too.  If I am taxed a dollar for production of public goods, it is as
much in my interest to optimize my return in public goods as it is to optimize
my return on a private investment of that dollar.  Not only that, but because
sharing information about the best public goods is to my benefit (unlike most
private goods, where such sharing is likely to result in competitive
disadvantage), there can be a lower cost for production and distribution of
information about public goods.

Rational ignorance re political issues could well be based on entirely
different principles than the one you propose: for example, it could be
based on the fact that some forms of group decision making can produce
reliable, consistent, and good decisions in a stochastic manner, as opposed
to individual decisions which, like any other handicrafted art, are quite
difficult to qualitatively measure.  The market is one such process:
representative democracy is another.  Recently, I was involved in another
widely used by corporations: QFD.

>You seem to understand the public good problem when it leads to
>conclusions you like, but not when it leads to conclusions (rational
>ignorance re political issues) that you do not like.

I'll make a deal with you: discontinue such ad-hominems, and I'll discontinue
my "Sheesh" exclamations.

>> "Historians will have to face the fact that natural selection determined the
>> evolution of cultures in the same manner as it did that of species."
>> Konrad Lorenz in "On Aggression" 1966.
>
>Much as I admire Lorenz, I do not think he is entirely right. One culture
>sometimes conquers another, gaining territory (and usually  population) in
>much the same way as a better adapted species. But a culture can also
>conquer another by conversion, which has more to do with how persuasive it
>is than with how well it works--consider the example of Christianity's
>conquest of the Roman Empire.

Actually, there are extremely close analogues in evolution.  You can find
literally dozens of mechanisms and hundreds of examples in works concerning
selfish genes, such as those of Robert Trivers.  For example, viral
transmission of genes between bacteria.

>One can, of course, make Lorentz's point trivially true by defining a
>"superior" meme as one that better survives in the environment of human
>society--including memes for religions that promote missionary work. But I
>do not think that reading gives the conclusion you want.

Actually, that's exactly my point, and ties in well with Triver's work.
Extremely harmful genes can build up in a population despite their drawbacks,
simply because they can outcompete benign or beneficial genes during
reproduction.  The analogies to statism and anarchy are clear: whether they
hold true is the point of our discussion.

That's one of the reasons why I don't think libertarian anarchy is an option:
I don't think it can compete as well as statism or other solutions.

>"Without even a badly working example to point at, you are still making the
>assumption that a libertarian anarchy is an option." (Mike Huben)
>
>Actually, I have a well working example of something very close to
>libertarian anarchy to point at, as you would know if you had read my book.

Yes, I haven't read your book yet.  Thanks to Roger Collins and Glen Raphael
(private mail) for thumbnail descriptions of your arguments.  In my quest for
a superficial initial rebuttal, I went to the public library, and looked in
Encyclopedia Americana (the Brittanica volume was missing) at the article
by Harvard's Einar Haugen about Iceland.  

 [8/16/96: this attribution was mistaken.  The actual author was Hallberg
Hallmundsson.  Having read the book later, my argument still stands.  Mike Huben] 

It said:

"During the 12th century, wealth and power began to accumulate in the hands
of a few chiefs, and by 1220, six prominant families ruled the entire country.
It was the internecine power struggle among these families, shrewdly exploited
by King Haakon IV of Norway, that finally brought the old republic to an end."

This statement and the rest of the article illustrate a variety of possible
reasons why a libertarian anarchy is not an option.  I'll grant your point
that you do have an example.  Now the question is what conditions are required
to make it work.

The most notable, and the one that stands out in my mind most (as an
evolutionary biologist) is that it was an island culture.  Like island
organisms, it's extremely common for island cultures to have bizarre
adaptations (presumably due to founder effect, the small scope of competition,
and rapid drift in small populations among other things) that are extremely
disadvantageous when brought into contact with new species.  That's why so
many island cultures and species have gone extinct or endangered so rapidly
and VERY rarely become established outside of their island.

The putative long stability of the society is not apparent to me either:
it may well have been collapsing since it's inception or since its saturation
of its environment (albeit at a slow rate.)  The slow rate of collapse may
well have been due to an assortment of factors such as the linear nature of
inhabited Iceland, extreme lack of natural resources suitable for territorial
defense (beyond fish and wool, the rest of the economy was mostly subsistance
farming), the fact that the technology for subjugation (metals, boats)
were available only by expensive trade with other nations, and the extreme
technological, cultural, and economic homogeneity.  None of these conditions
holds anywhere today: I would thus expect a rapid degeneration of libertarian
anarchy back into statism.

By the way, I'll be happy to buy and read a copy of your book if you'll also
provide me with references to the critiques, rebuttals, and counter-rebuttals
that you consider most salient.  That would be a useful thing to post here
anyhow.

Mike Huben

"An Atheist is a man who has no invisible means of support."
					     [Bishop] Fulton Sheen

From: steveh@thor.isc-br.com (Steve Hendricks)
Newsgroups: alt.politics.libertarian
Subject: Re: 19th Century Capitalism
Summary: Public education impacted both eco devlmnt and eco equality
Message-ID: <1993Apr7.224418.12277@isc-br.isc-br.com>
Date: 7 Apr 93 22:44:18 GMT
References: <1pskieINN1jg@srvr1.engin.umich.edu> <schwarze-070493052153@anise.bio.caltech.edu> <DDFr-070493131200@law-mac-33.uchicago.edu>

In article <DDFr-070493131200@law-mac-33.uchicago.edu> DDFr@Midway.UChicago.Edu 
(David Friedman) writes:
>In article <schwarze-070493052153@anise.bio.caltech.edu>,
>schwarze@starbase1.caltech.edu (Erich Schwarz) wrote:

>> For instance, does the American government have an obligation to
>> ensure equality of opportunity for five-year-old children born into its
>> jurisdiction?  If not, what prevents a gradual collapse of the U.S. into
>> oligarchy, as the children of rich parents obtain a better upbringing and
>> education from the "free market"? 
>
>Such a collapse does not seem to have happened in the nineteenth century,
>when relevant forms of government intervention were pretty close to
>non-existent. One thing that prevents it is summed up in the phrase
>"shirt-sleeves to shirt-sleeves in three generations." It may be easier for
>rich people to provide their children with education, but harder to provide
>them with motivation.

David, I'm surprised at you.  (And after your perceptive comment that
definitions don't restrain government, at that.  A rather crucial point
that several of your erstwhile allies don't appear to understand.  But
I digress...)

You're ignoring one extremely "relevant form of government intervention"
in the 19th century.  Beginning in the 1830's the US became the first
nation on earth to "socialize" education in the form of free public schools
for all children. (That the US was the first to socialize
education and the last to provide tax-supported health care is an
interesting historical point.)  

The fact that the US was a nation with a relatively educated and highly
literate workforce in the late 19th and early 20th centuries is one of the
most important keys to its development.  Far more important, in fact, than the 
supposed lack of government intervention in the economy during this
period.

This illustrates, in fact, a major problem with this discussion of 19th
century capitalism.  While focusing on the absence of government 
regulations to protect consumers, it ignores the massive government
intervention in areas that benefitted business development, the most
obvious (but by no means the only) of which was public education.

Note that this does not necessarily attack your comments with regard to
public education at the present time.   I would certainly agree that it
fails in many ways, though I would argue that its failures are sometimes
exaggerated and result from Americans' contemporary willingness to neglect
education (public and private) rather than the fact that schools are 
publicly funded.  But that is another discussion.

Even if one grants that primary and secondary education today are not major
factors in social mobility, it is certainly the case that they were in the
19th century.  Likewise, access to public higher education throughout the
late 19th and early 20th centuries spurred social mobility for millions
of first-generation professionals.  

To ignore the impact of public education in 19th century
America is to ignore the impact of the largest and most relevant of
the "forms of government intervention" during this period.

jsh
--
Steve Hendricks                        |  DOMAIN:  steveh@thor.ISC-BR.COM   
"One thing about data, it sure does cut|  UUCP:    ...!uunet!isc-br!thor!steveh
 the bulls**t." - R. Hofferbert        |  Ma Bell: 509 838-8826

From: steveh@thor.isc-br.com (Steve Hendricks)
Newsgroups: alt.politics.libertarian,soc.history
Subject: Re: 19th Century Capitalism
Summary: Education and infrastructure as examples of government intervention
Message-ID: <1993Apr8.183509.24111@isc-br.isc-br.com>
Date: 8 Apr 93 18:35:09 GMT
References: <DDFr-070493131200@law-mac-33.uchicago.edu> <1993Apr7.224418.12277@isc-br.isc-br.com> <DDFr-080493104117@law-mac-7.uchicago.edu>

In article <DDFr-080493104117@law-mac-7.uchicago.edu> DDFr@Midway.UChicago.Edu (
David Friedman) writes:
>(Steve Hendricks) wrote:
>
>
>> You're ignoring one extremely "relevant form of government intervention"
>> in the 19th century.  Beginning in the 1830's the US became the first
>> nation on earth to "socialize" education in the form of free public schools
>> for all children. (That the US was the first to socialize
>> education and the last to provide tax-supported health care is an
>> interesting historical point.)
>
>The particular question being discussed here is whether, without government
>intervention, we could expect "a gradual collapse of the U.S. into
>oligarchy, as the children of rich parents obtain a better upbringing and
>education from the "free market"?" (Eric Schwartz is being quoted here). I
>do not have figures available back to 1830, but checking expenditure for
>all public schools and GNP in Historical Statistics of the U.S. for about
>1870, the former seems to be about one percent of the latter. Free public
>education in the nineteenth century was almost all by local governments,
>which would tend to reduce the redistributional element. I find it hard to
>believe that a local government program spending one percent of GNP had
>major redistributional effects. This is, of course, a separate issue from
>whether it was important in causing economic growth, which seems to be part
>of the claim Steve is making.

You're correct that I shifted the grounds of the discussion slightly by
introducing the issue of economic growth as well as redistribution.  I'd
claim that both were impacted by public education in the period under
discussion that (for purposes of discussion) I'd call from 1789 - 1930.
The two effects should be more clearly distinguished.  My apologies for
failing to make the point clear in my original comments.

You're also correct that the major role of states and localities in 
financing education undermined some of the redistributional effects, if
not the impacts on economic growth.  For example, the extremely poor
and limited education provided in the South compared to the North and West 
both before and after the Civil War undermined alternatives to the
plantation economy.  (As an aside, it is also the reason that we know
much more about the average northern soldier's view of the war than the
average southerner.  The union troops were more likely to write about
their experiences in letters and diaries.  The southern soldiers were
mainly illiterate.)  The vast differences in the quality of education
became most apparent in WWI.  The fact that an elementary school 
education in the north could not be equated to the same number of years
in a southern school spurred the development of IQ and other standardized
tests for recruits.  It also spurred the development of groups like
the National Education Association to lobby for national scholastic
standards and federal funding. 

It is a separate issue, however, as to whether redistribution was impacted
across class lines within localities. I'll try to return to that issue
in another post.

I'd quarrel with your use of % of GNP as a measure of government 
intervention, but it does raise some interesting questions.  For example,
of total local, state, and federal spending, what proportion in the 
19th century was devoted to education?  I don't have that figure, but
I suspect that (like today) it was among the largest, if not the largest
category of expenditures.  

If so, does that make government in the 19th century highly
"interventionist?"  Obviously not by the % of GNP figure, but of total
government expenditures, it would appear that government action overall 
was focused in an area that (was supposed to) foster economic growth
and equal opportunity.

How about public versus private spending for education?  Again, I don't
have the figures handy, but I think we can assume that throughout the
period public expenditures dwarfed private school funding.  Does that
make the US highly interventionist in this crucial area of spending?

Finally, I'm not sure that spending levels per se tell much of the story
here.  I'll have to shift the topic to make this point, so bear with
me.  One major aspect of government intervention in 19th century America
was the massive land giveaway to railroads to encourage their development.
By ceding one square mile of land on alternate sides of the line to the
railroad, the US made railroads the largest private landowners in the US
in the 19th century.  Yet this "intervention in the economy" does not 
appear in government expenditure data.  My point is that intervention
in the economy is a complex topic that cannot be evaluated either by
looking at total government spending or regulatory activities, alone.

Back to education.  Regardless of how much was spent on public education
in the 19th century, its effect was to educate virtually the entire
population, primarily through government action.  

>
>I believe that West did some work on the effect of public and compulsory
>education in Britain in the 19th century, and concluded that it had no
>observable effect on measures of literacy and the like. Literacy was rising
>throughout the century, and there was no change in the pattern at the point
>when Britain moved to a system of compulsory public schooling. This is from
>memory; I do not have the work in front of me. I do not know if anything
>similar has been done for the U.S. case. 

Interesting.  If you have a more complete citation, I'd be interested n
seeing it.  I suspect, however, that such studies may suffer from a problem
analogous to assessing the impacts of TV viewing; with a massive infusion
of the phenomenon under study it is difficult to determine what might have
happened without it.  In any event, the rough comparison of educational
quality in north versus south would seem to suggest that the impact existed
in the US.

Britain (as well as the rest of Europe) may present a somewhat different
case since public education trailed the development of private schools
by a substantial period.  That was not true in the more "socialistic"
US. 

>
>> 
>> This illustrates, in fact, a major problem with this discussion of 19th
>> century capitalism.  While focusing on the absence of government 
>> regulations to protect consumers, it ignores the massive government
>> intervention in areas that benefitted business development, the most
>> obvious (but by no means the only) of which was public education.
>
>"Massive?" I don't have time to look up the details, but my memory is that
>expenditure by all governments combined stayed under 10% of GNP in the 19th
>century (except, I suppose, during the civil war), and not that much of it
>would fit your description. We are still left, of course, with the issue of
>whether the development was because of or in spite of such intervention as
>occurred.

I should have said "critical" rather than "massive."  My reference was not
to its size in terms of expenditures, but to its effects.  In addition
to the case of railroads, above, I would have cited infrastructure
development going back to the late 18th century -- the Erie Canal, for 
example.  The Cumberland Road, for another.  I'll save a more complete
discussion for another post.

>
>I have to go teach a class--which I suspect you would enjoy. I am calling
>it "Solution Unsatisfactory," and it is about problems for which neither
>market nor political solutions seem adequate. Good for libertarians and
>socialists. We are all too much in the habit of assuming that if we have
>shown that our opponent's solution does not work, the argument is
>over--ours must.

You're right.  I would enjoy it.  As you can probably judge from my posts,
I'm inclined toward a mixture of market-based and democratic structures
for decision-making.  And I would certainly agree that savaging one's
opponents' proposals is insufficient to prove the value of one's own
proposals.

jsh

>
>David Friedman
>Olin Fellow in Law and Economics
>University of Chicago Law School
--
Steve Hendricks                        |  DOMAIN:  steveh@thor.ISC-BR.COM   
"One thing about data, it sure does cut|  UUCP:    ...!uunet!isc-br!thor!steveh
 the bulls**t." - R. Hofferbert        |  Ma Bell: 509 838-8826

Newsgroups: alt.politics.libertarian,soc.history
From: steveh@thor.isc-br.com (Steve Hendricks)
Subject: Re: Education in the 19th century
Message-ID: <1993Apr23.180037.237@isc-br.isc-br.com>
Summary: Public Schooling in the US in 1850 and 1860 
References: <C5v14G.8tA@genie.slhs.udel.edu> <1993Apr22.165930.15470@isc-br.isc-br.com> <1993Apr22.184508.16616@isc-br.isc-br.com>
Date: Fri, 23 Apr 1993 18:00:37 GMT

Some further data on the progress of public schooling in 19th century
America.  (The figures are from Newton Edwards and Herman Richey, 
_The School in the American Social Order_ (1963).)

At one point in this ongoing discussion, David Friedman and I speculated on
the extent to which schools in 19th century America were "public" versus
"private."  I've done a bit of research on the topic and found among other
things that it is a complex and difficult question to answer.  

It does appear, as speculated earlier, that a substantial movement toward
public schooling in the north and west began in the 1830's along with a
number of other "democratic" reforms that accompanied Jackson's election
to the presidency.  What is surprising (to me at least) was the progress
that the movement had made in the period prior to the Civil War.

According to Newton and Richey, over 90% of all students were enrolled
in "public" schools by 1850, though the percentage varied substantially
by state, with the south averaging about 70%.  

By 1850, 70% of the total free population ages 5-15 were enrolled in
school.  By 1860, the percentage had risen to 81%.  (These are probably
overestimates in some states because children were sometimes counted
twice, as enrolled in school in the summer and in the winter.  Likewise,
students over 15 and under 5 were sometimes included in the count.)

In terms of public support for education, the authors report that by
1850, 45% of public school income came from taxes and other public
sources.  By 1860, the public support had risen to 55%.  

I'm still looking for some figures for the post-Civil War period, but 
it does appear that at the beginning of the "laissez-faire" industrial
period in the US, public intervention in education was well advanced.

jsh
--
Steve Hendricks                        |  DOMAIN:  steveh@thor.ISC-BR.COM   
"One thing about data, it sure does cut|  UUCP:    ...!uunet!isc-br!thor!steveh
 the bulls**t." - R. Hofferbert        |  Ma Bell: 509 838-8826