Your one premium was divided into 365 equal parts. 1 part provides coverage for 1 day. Read it in the contract. Even if you’re right and I have to return the whole premium (looks like you’ll have to use force to get it back from me), I still prefer that over paying the huge payout that I was supposed to. I’m retiring anyways, or perhaps I’m moving to another part of the world where nobody knows me, so who cares? Anyways, we’re just butting heads here, so no need to continue on this point.
No, I wouldn’t. I might accept a penalty, should it be small enough (perhaps 1 to 3 months rent). For example, I currently lease a car, but to cancel it means I would have to pay some payments as penalty. I accepted that when I leased the car. These are strawman arguments, since the world does not behave this way currently, and even if such a contract existed and was broken, it would be up to the market to decide the appropriate damages. I do accept that judges can strike out or modify certain parts of a contract if they are vastly unproportionate. This doesn’t mean that enforcement can’t or shouldn’t ever happen.
Doesn’t this example answer itself, whether or not we enforce damages for non-performance of contracts?
Interesting, I’m going to check it out. I noticed that Rothbard defends the payment of interest, whereas you would say that the extra $100 is simply a promise, right?
Anyways, I would like to get this thread back on track. The topic we’ve been discussing for the past couple of pages deserves a thread all on its own.
This article appears to support HOAs as they currently operate:
“Now, consider the homeowners association (HOA). … Now, I’m not saying that some residents will not suffer the occasional annoyance as HOA trustees hold the color pallet against your mailbox to verify the hue of the stain which you applied … Other than showing excessive exuberance at times, the HOAs are typically indicted in the press when the singular property owner wants to turn his front yard into a memorial for the flag, replete with search lights and a continually repeating sample of Taps. What’s worse, the property owner knowingly agreed to such restrictions prior to purchasing the property. The homeowner,attempting to trample on the agreement, is hailed as the last defender of Lady Liberty herself, while the HOA, defending its contract with all homeowners, is perceived as evil incarnate.”
Personally, I find it disconcerting, because I’d be happier if there was a decidedly unlibertarian flaw in the HOA model, but so far I don’t see one.
I think there are limits to an HOAs power which governments have, but which an HOA could not legitimately have. For example, you could not contract to pay 30% of income tax and have that automatically transfer to your children. The children never entered into that contract, so why should they be liable for it?
There is a way around that limit for the HOA. They could just contract with the property “owner” upon purchase and stipulate that he must pay a tax in proportion with the resident’s income. It’s up to him on how to collect it (he can simply make it a condition of continuing to live in his adobe). If agreed by the property owner upon time of purchase, then it is voluntary. If agreed by the residents of the home, then it is voluntary (after all, the owner can always change his mind on the terms and conditions of living in his own house!)
I don’t think a competitive world would ever get this bad, but it does seem like there is no libertarian defence against abusive HOAs that foreclose against their owners for small debt arrears. (Merlin: There are surely ways for the HOA to make the agreement based on property and stronger than your “promises”). I would love for there to be one, though.
The transfer of ownership theory is interesting; I haven’t thought of it in that way before. If there are clauses on the use of the property after the transfer has been made, then the property hasn’t truly been transferred as the old party still has a claim on it. Thanks for mentioning that, guys.
My question then, is what if HOAs fully embrace this theory? What if instead of selling property, they simply sell the right to live in the property, subject to their terms and conditions. If you voluntarily accept that then you don’t own full rights to the property, but merely the right to live there, then is this still unlibertarian?
How about the common property owned jointly by the HOA members, such as the sidewalks and streets? Let’s say that the rules stipulate that you will not be allowed to enter the common property unless you abide by all the rules and regulations. You will essentially be under house arrest. Would you also consider this libertarian or unlibertarian?
If you voluntarily accept that then you don’t own full rights to the property, but merely the right to live there, then is this still unlibertarian?
Not at all, they can ask for you to circumcise your every male children, eat you cat, ‘lend’ your wife to your neighbors ever Wednesday for what libertarians are concerned. What the market will take is their only issue.
How about the common property owned jointly by the HOA members, such as the sidewalks and streets? Let’s say that the rules stipulate that you will not be allowed to enter the common property unless you abide by all the rules and regulations. You will essentially be under house arrest. Would you also consider this libertarian or unlibertarian?
Fully libertarian. Of course, a guy with a modicum of brains would cancel the contra immediately and tell its kindly neighbors to screw off. And such a HOA would go bankrupt within months. But in theory, sure they can let your starve to death.
This seems to demonstrate that the HOA is essentially private socialism. While it would not violate the non-agression principle if entered into voluntarily, it is inherently economically inefficient.
Wouldn’t this “private socialism critique” apply to every market entity comprised of more than one person, including a company with a single hot dog stand as its asset and ownership shared between three brothers?
This seems to demonstrate that the HOA is essentially private socialism. While it would not violate the non-agression principle if entered into voluntarily, it is inherently economically inefficient.
Why? Socialism entails centralised control over the means of production and the abolition of private ownership (and thus pricing) with respect to them. Merely selling a limited bundle of rights is not ‘socialism’, it merely means ownership will be joint.
Why? Socialism entails centralised control over the means of production and the abolition of private ownership (and thus pricing) with respect to them. Merely selling a limited bundle of rights is not ‘socialism’, it merely means ownership will be joint.
I.e. socialism in a limited scale. Yet, unlike the hot dog stand that Z. took as an example, a whole neighborhood would actually find it very difficult to operate. I don’t believe that HOAs in their ‘mutual’ (we all own our neighborhood) would survive the onslaught of ‘feudal’ (single landlord) HOAs.
Why A Mutual HOA is much more socialistic than IBM?
A share company has a very large degree of information of how well its doing: as much as it gets, actually. By simply looking at the price of its shares it can determine whether capital is attracted or not to the company. In such circumstances management has immediate feedback of its performance and can act accordingly.
The company is owned by shareholders, but they relinquish their right to day-to-day manage IBM and retain just the right of exit as their tool of making sure the company is well oiled. Decisions are made by management with 1) the power do to as it pleases, 2) the means to know whether its doing ill or good and 3) the incentive to make sure it does good.
A mutual company, on the other hand, has no feedback at all on how well its doing.
Does profit mean anything when your client are your owners/ not at all! A mutual cannot calculate!
The only feedback the mutual will get is the rent it can charge. But unlike profit, rent mean nothing for a mutual. Its owners gain nothing when rents go up, and neither do they loose anything if they go down. Thus, even if some rudimentary feedback exists, the mutual has no incentive at all to act according to the feedback!
The mutual will be an assembly of guys trying to maximize their subjective values by voting alone. We all know how well that went for socialist countries and Israeli kibbutzim.
A single owner HOA, on the other hand (or a shares HOA, for that matter) has both the means to calculate how well its doing, and the incentive to act*.* As things stand I really see no reason at all why, among two similar HOAs, anyone would chose the Mutual. It is my belief that such HOAs would cease to exist in a fully free market.
At least on my part, I’m talking about a shares-based HOA (a corporation, co-op, comprised of share ownership in the HOA accompanied with an exclusive property lease contract granted by the HOA to the shareholder). The value (desirability) of such shares on the open market would be directly affected by the quality of the management (bylaws, regulations, etc.) of the HOA. If the rules are bizarre, or over the top as judged by the market no one would want to partake in them, hence the value of the shares would go down as everyone tries to sell, with no buyers in sight.
The “mutual” case is somewhat of a strawman. Even the hot dog stand company has a clear share (equity) delineation among the three brothers.
At least on my part, I’m talking about a shares-based HOA (a corporation, co-op, comprised of share ownership in the HOA accompanied with an exclusive property lease contract granted by the HOA to the shareholder). The value (desirability) of such shares on the open market would be directly affected by the quality of the management (bylaws, regulations, etc.) of the HOA. If the rules are bizarre, or over the top as judged by the market no one would want to partake in them, hence the value of the shares would go down as everyone tries to sell, with no buyers in sight.
The “mutual” case is somewhat of a strawman. Even the hot dog stand company has a clear share (equity) delineation among the three brothers.
A co-op is as mutual.
The way I see it (and I believe we agree) is that a HOA will have to be either owned by a single guy, or by share freely traded.
Under such conditions, I believe that everyone would prefer to live in such a HOA (with rules to his liking, of course). There are just too many neighborhood effect of home ownership to be viable, I’m afraid. I myself am surely going to seek some development project house to rent when I move out of my house.
PS: and the mutual is not a straw man to be sure. In the US 55%+ of assets in the insurance market are owner by friggin’ mutual. Most HOAs I know of are mutuals. Modern states are huge mutuals, and nothing else. They are a real thing, unfortunately.
From what I understand, mutuals are when owners and customers are one and the same (?). I don’t fully understand the calculation problems of such a setup, so what you said is something to think about.
Mutuals have survived the market test, since there are so many around, e.g. insurance firms. If mutuals are that successful (“55%+ of assets in the insurance market”), then how can you explain why they are doing so well, despite the calculation problems?
I still have scant knowledge on the working of mutual insurance firms, but their success puzzled me from the very beginning. I can’t provide much elaboration right now, I’ll have to check much more material.
How does selling a limited bundle of rights make it “socialist”? Is renting “socialist”? Are appartment complexes “socialist”? Even if one were to hold to such a premise, what if it were merely held by shareholders?
How does selling a limited bundle of rights make it “socialist”? Is renting “socialist”? Are appartment complexes “socialist”? Even if one were to hold to such a premise, what if it were merely held by shareholders?
My point is that most HOAs I know ff are mutuals, i.e. socialism incarnate. Otherwise I see no problem at all with their operation.
Even if you’re right and I have to return the whole premium (looks like you’ll have to use force to get it back from me), I still prefer that over paying the huge payout that I was supposed to. I’m retiring anyways, or perhaps I’m moving to another part of the world where nobody knows me, so who cares? Anyways, we’re just butting heads here, so no need to continue on this point.