David D Friedman failed me for the first time

I was browsing the Machinery of Freedom. He thinks only charity and local defense associations have a good chance of working. Irritatingly, charity is the more developed, implying that he relies most heavily on it. At the end of his national defense section, he says this:

“In such a situation I would not try to abolish that last vestige of government. I do not like paying taxes, but I would rather pay them to Washington than to Moscow—the rates are lower. I would still regard the government as a criminal organization, but one which was, by a freak of fate, temporarily useful. It would be like a gang of bandits who, while occasionally robbing the villages in their territory, served to keep off other and more rapacious gangs. I do not approve of any government, but I will tolerate one so long as the only other choice is another, worse government. Meanwhile, I would do my best to develop voluntary institutions that might eventually take over the business of defense. That is precisely what I meant when I said, near the beginning of this book, that I thought all government functions were divided into two classes—those we could do away with today and those we hope to be able to do away with tomorrow.”

This is dissapointing, although honest.

The free rider problem needs more work. We can brag about lighthouses all we want, but we are going to continue getting our butts kicked on these issues if we don’t have good answers to national defense and meteorites.

I started this thread a while ago. If you want to respond to it, do so here. I identify two main ways you can provide a pure public good. The first is like DDF’s voluntary local defense agencies. I think it can be made very plausible if we keep the analysis on the individual level instead of fast forwarding to a scenario in which the public good has already been half solved. The second is more… probabilistic? I need critiques.

Back to the drawing board guys!

Mises was a minarchist. Everyone has flaws or disagreements. Still doesn’t mean that he’s not one of my favorite libertarians.

What’s wrong with voluntary defense associations? “Gun Nuts” and other surviavlist types would probably be the first defense against a foreign invasion. Not to mention the fact that companies and people that thrive under the current model will probably not want to have arbitrary restrictions imposed on them by what they regard as criminals. Maybe they’ll pay a small extra premium to their PDA’s to provide defense against an external agressor. Consider it a premium on a freak event, like an earthquake.

Think about it, the PDA’s could form associations themselves to pool resources and buy SAMs and Stinger missiles, along with antitank weapons (they know they’ll be the first to go if a statist monopoly gets installed). Users of PDAs would probably not be adamant to pay a small extra for foreign defense, so they’ll pay to PDA’s that belong to this military association. The association could also sponsor a rapid reaction force, to serve as a first line of defense while the hordes of patriots rush to begin guerrilla operations against the aggressor.

Remember this is a libertarian society. There’s no restriction on buying landmines and anti-air missiles at the corner shop.

What is the problem with “the free rider”? That someone can get a benefit without paying? So what? Or that no one will pay into something because they all wish to be a free rider? Then the people have decided that the costs outweigh the benefits, and yet again, so what?

There are situations other than lighthouses that show the free rider problem isn’t an issue. From charities to private roads to open source software to donations towards a common cause.

Something similar to the PDA issue happened with my family years ago. Back in the days of the breakup of Yugoslavia, everyone wanted their family members and friends to be safe. Everyone wanted their hometowns to be spared. I know that people from these countries who were now living in Canada, were donating swaths of their own money to the causes. Even if their money didn’t defend their own village or loved ones, they would hope someone else’s would. They knew that they stood a better chance if they just donated more of their time and effort. They could only hope that others would do the same. Some people did more than hoped for, others did less. Essentially, the fact that people knew there were free riders didn’t stop them from trying to help.

If an asteroid were to hit the Earth, I’d be donating my time and effort to stop it, and I’m pretty sure most people around me would be willing to do it as well.

Anyways, I’m not entirely sure what the quote from D. Friedman has to do with the free rider problem. I’m just guessing it’s PDAs.

I don’t find the “free rider problem” so interesting, in that I don’t find it a problem. The concept of market failure is much more interesting to me.

The free rider problem needs more work. We can brag about lighthouses all we want, but we are going to continue getting our butts kicked on these issues if we don’t have good answers to national defense and meteorites.

I started this thread a while ago. If you want to respond to it, do so here. I identify two main ways you can provide a pure public good. The first is like DDF’s voluntary local defense agencies. I think it can be made very plausible if we keep the analysis on the individual level instead of fast forwarding to a scenario in which the public good has already been half solved. The second is more… probabilistic? I need critiques.

I thought your solution was pretty clever, fwiw. I don’t know that it would work, but I’d certainly leave it on a table as a possibility.

That said, having read about 2/3 of that thread (it’s long), I’ve always kind of felt like many of the people who were arguing with you that there is no such thing as a free-rider problem. I share some of their thoughts, but for me, it’s a bit more mathematical than that. I’m now going to try to explain that in terms that aren’t so mathematical because I haven’t really worked out all the details: how’s that sound? :wink:

I think the part that has always been missing for me when the “free rider problem” is discussed is that it seems to usually be structured in an artificially restricted way whose restriction blocks what I think would be the “solution” in real life. Basically, the problem is always stated as if everyone is simultaneously approached for their “contribution” to the earth’s meteor prevention fund and that they have no idea what other people have chosen; in reality, I think what happens is that there are unequal cost/benefit ratios amongst the different people and those cost/benefit ratios are constantly changing as other people pony up.

To take an illustrative example, let’s say that John originally intends to be a freeloader: he’s dirt poor, and in his calculation he has $2 that he can spare or he’s going to die anyway (from malnutrition or something). But then he sees reliable information that the defense fund is $1 short, and everyone else has been asked and no one has volunteered another $1. His calculation at that point - and of course I’m assuming perfect information and several other unrealistic things for clarity’s sake - is that he spends $1 and lives, or zero and dies. His rational move at that point is to pay the $1.

In reality, think of it like this: as more money is contributed, the marginal value of each additional dollar goes up, because it increases the probability that the defense will be provided. Much like your construction, I think you need to take probability into account since my construction above about perfect information is not going to hold. Each person more or less is constantly calculating the likelihood that the good will get provided, the marginal change in that likelihood that their contribution will make, and the benefit to them if the good is provided vs the price if it isn’t. Each person will have a little optimization problem to solve. Additionally, each person’s little optimization problem will be changing as other people contribute. Some people will stay out at first, but as the number gets closer, the marginal benefit to them gets better, they will kick in. Some people will kick in once, and then as the numbers gets closer, they will kick in again: it may have only made sense to kick in 10 grand the first time, because the total was so far away that the probability of the good being provided was low that any additional money was only changing that probability slightly. As the total gets higher, the odds of that good get higher and thus make a better bet.

IOW: I think “free rider problems” just self-organize away because of the economic logic of each person constantly calculating their cost/benefit ratio in a probabilistic way. I think that’s kind of where I break from you: you fear that everyone’s calculation is “I might as well assume that the good will be provided by others so I can get it for free” and thus no one will pay. In reality, though, no one will realistically calculate the odds of that good being provided without their help as 100%.

I also think you did one of your sparrers a slight disservice when they made reference to people thinking about what other people will do: in fact, people are great at simulating other people. It’s really not that hard: you pretend you are them, and you ask “what would I do in this situation?” There is a regression then: if I want to predict what you will do in situation A, and I think that what you will do depends on what others will do (why wouldn’t I think this? MY decision is going to be based on what you are going to do, so when I simulate you mentally, I’m going to conclude that your decision will depend on what others’ will do), then I’ll think that you’ll simulate them to figure out what to do, and they’ll simulate everyone else, etc. Our mental machinery is actually up to this task in an instinctive way. Most people will not be thinking “I’m not paying a nickel, I’d rather the meteor hit me then to survive without my nickel when I didn’t have to give up my nickel”, so most people won’t assume that others will be thinking that. Most people will be thinking “it’s really important to stop this fucking meteorite, I really don’t want my children to die, and while it certainly would be better if I could pay less than my fair share, mostly I just don’t want to get ripped off and paid more than my fair share by too much, although if it comes right down to it I’ll pay what it takes to save my children.” And they’ll think other people will think the same thing. Our brains are good at this kind of calculus, it’s ingrained in us from the hunter-gatherer days: the ability to calculate optimal plays in repeated prisoner’s dilemma games. So we’ll assume that others more or less just want to pay their fair share, and they’ll do the calculus that says that “fair share” is an evolutionarily stable strategy (this is is just another aspect of the calculation chosen by natural selection above), and they will choose the ESS.

Now, of course everyone won’t do that. Some will calculate “fair share” differently, and evolutionary psychology says they’ll tend to define “fair share” in a way that is generally favorable to them. That said, this alone will move things along at a good clip, and then once substantial progress towards the fee needed has been made, the increased marginal utility for the rest will start to kick in.

I guess the short version is: the process of providing a “public good” (and paying for it) is a process, and it is in the dynamics of that process that the self-organizing solution to the provision of that “public good” forms. You miss that if you don’t treat it as a dynamic process but rather some static calculation.

“Mises was a minarchist.”

No, he wasn’t.

I won’t debate you on this. Prove me wrong. If I’m wrong, I’d be happier off. I’d love to see that he isn’t.

“I won’t debate you on this.”

Because you’d ‘lose’.

“Prove me wrong.”

How about instead of shifting the burden of proof, you take 5 seconds to do a search with the relevent keywords and see what turns up. If that doesn’t prove informative, let us know and I’ll do the exact same thing… because I don’t know how many times I’ve had to paste the same sources / quotes & explanation on here.

Fine, I WILL.

Rightio, well I’ma post them up anyway to help you out…

Hoppe:

Rothbard’s anarchism was not the sort of anarchism that his teacher and mentor Mises had rejected as hopelessly naive, of course. “The anarchists,” Mises had written,

contend that a social order in which nobody enjoys privileges at the expense of his fellow-citizens could exist without any compulsion and coercion for the prevention of action detrimental to society. . . . The anarchists overlook the undeniable fact that some people are either too narrow-minded or too weak to adjust themselves spontaneously to the conditions of social life. . . . An anarchistic society would be exposed to the mercy of every individual. Society cannot exist if the majority is not ready to hinder, by the application or threat of violent action, minorities from destroying the social order.[10]

Indeed, Rothbard wholeheartedly agreed with Mises that without resort to compulsion, the existence of society would be endangered and that behind the rules of conduct whose observance is necessary to assure peaceful human cooperation must stand the threat to force if the whole edifice of society is not to be continually at the mercy of any one of its members. One must be in a position to compel a person who will not respect the lives, health, personal freedom, or private property of others to acquiesce in the rules of life in society.[11]

Inspired in particular by the nineteenth-century American anarchist political theorists Lysander Spooner and Benjamin Tucker and the Belgian economist Gustave de Molinari, from the outset Rothbard’s anarchism took it for granted that there will always be murderers, thieves, thugs, con artists, etc., and that life in society would be impossible if they were not punished by physical force. As a reflection of this fundamental realism—anti-utopianism—of his private-property anarchism, Rothbard, unlike most contemporary political philosophers, accorded central importance to the subject of punishment. For him, private property and the right to physical defense were inseparable. No one can be said to be the owner of something if he is not permitted to defend his property by physical violence against possible invaders and invasions. “Would,” Rothbard asked, “somebody be allowed to ‘take the law into his own hands’? Would the victim, or a friend of the victim, be allowed to exact justice personally on the criminal?” and he answered, “of course, Yes, since all rights of punishment derive from the victim’s right of self-defense” (p. 90). Hence, the question is not whether or not evil and aggression exist, but how to deal with its existence justly and efficiently, and it is only in the answer to this question that Rothbard reaches conclusions which qualify him as an anarchist.

"Here we go again. (HT: Kinsella)

"How far would Mises push the principle of secession, of self-determination? Down to a single village, he states; but would he press beyond even that? He calls the right of self-determination not of nations, “but rather the right of self-determination of the inhabitants of every territory large enough to form an independent administrative unit.” But how about self-determination for the ultimate unit, for each individual? Allowing each individual to remain where he lives and yet secede from the State is tantamount to anarchism, and yet Mises comes very close to anarchism, blocked only by practical technical considerations:

If it were in any way possible to grant this right of self-determination to every individual person, it would have to be done. This is impracticable only because of compelling technical considerations, which make it necessary that the right of self-determination be restricted to the will of the majority of the inhabitants of areas large enough to count as territorial units in the administration of the country.

That Mises, at least in theory, believed in the right of individual secession and therefore came close to anarchism can also be seen in his description of liberalism, that “it forces no one against his will into the structure of the State.” - MNR

Liberalism pp. 109-10:

The right of self-determination in regard to the question of membership in a state thus means: whenever the inhabitants of a particular territory, whether it be a single village, a whole district, or a series of adjacent districts, make it known, by a freely conducted plebiscite, that they no longer wish to remain united to the state to which they belong at the time, but wish either to form an independent state or to attach themselves to some other state, their wishes are to be respected and complied with. This is the only feasible and effective way of preventing revolutions and civil and international wars. … However, the right of self-determination of which we speak is not the right of self-determination of nations, but rather the right of self-determination of the inhabitants of every territory large enough to form an independent administrative unit. If it were in any way possible to grant this right of self-determination to every individual person, it would have to be done."

AEN: Was Mises better than the classical liberals on the question of the state?

HOPPE: Mises thought it was necessary to have an institution that suppresses those people who cannot behave appropriately in society, people who are a danger because they steal and murder. He calls this institution government.

But he has a unique idea of how government should work. To check its power, every group and every individual, if possible, must have the right to secede from the territory of the state. He called this the right of self determination, not of nations as the League of Nations said, but of villages, districts, and groups of any size. In Liberalism and Nation, State, and Economy, he elevates secession to a central principle of classical liberalism. If it were possible to grant this right of self-determination to every individual person, he says, it would have to be done. Thus the democratic state becomes, for Mises, a voluntary organization.

AEN: Yet you have been a strong critic of democracy.

HOPPE: Yes, as that term is usually understood. But under Mises’s unique definition of democracy, the term means self rule or self government in its most literal sense. All organizations in society, including government, should be the result of voluntary interactions.

In a sense you can say that Mises was a near anarchist. If he stopped short of affirming the right of individual secession, it was only because of what he regarded as technical grounds. In modern democracy, we exalt the method of majority rule as the means of electing the rulers of a compulsory monopoly of taxation.

Mises frequently made an analogy between voting and the marketplace. But he was quite aware that voting in the marketplace means voting with your own property. The weight of your vote is in accord with your value productivity. In the political arena, you do not vote with your property; you vote concerning the property of everyone, including your own. People do not have votes according to their value productivity.

AEN: Yet Mises attacks anarchism in no uncertain terms.

HOPPE: His targets here are left-utopians. He attacks their theory that man is good enough not to need an organized defense against the enemies of civilization. But this is not what the private-property anarchist believes. Of course, murderers and thieves exist. There needs to be an institution that keeps these people at bay. Mises calls this institution government, while people who want no state at all point out that all essential defensive services can be better performed by firms in the market. We can call these firms government if we want to.

So I recon it’d be more accurate to kind of call him a “philosophical anarchist” like Albert J. Nock, as opposed to a minarchist or supporter of “government” because he is far better than the classical liberals or other minarchists today.. who don’t advocate individual or even anything close to village secession at all.

So he just never called himself that or consider the notion ? He reminds me of how Ron Paul tends not to come out and say it. It makes sense. Mises seems to at least come as close as you can to being anarchist. My only misunderstanding is simply this:

Didn’t Mises talk to Rothbard when he was theorizing market anarchy? I mean Rothbard was advocating it in the 50s, and wrote about it in the 60’s. Mises died in 1973. Wouldn’t they be talking to each other about it?

This is the first time I’ve heard that term, philosophical anarchist. “Though philosophical anarchism does not necessarily imply any action or desire for the elimination of the State, philosophical anarchists do not believe that they have an obligation or duty to obey the State, or conversely, that the State has a right to command.”

This does not really make sense to me. Listing Ghandi and Thoreau? They fought the state in more then just words.

In other words, you are still buying the meteorite fallacy.

Lost me there, and google provides no answers.

@ Sieben

He’s still pushing that bogus meteor scenario that Friedman invented.

“So he just never called himself that or consider the notion ? He reminds me of how Ron Paul tends not to come out and say it. It makes sense. Mises seems to at least come as close as you can to being anarchist.”

Well back then “anarchist” was closely related to all things socialist.. Rothbard hadn’t written all that he later did [although he had the ideas & conception). He himself wrote a paper "Are Libertarians 'Anarchists’, under a pseudonym in the 50’s.. which was unpublished, I gather because he later changed his mind and decided to essentially take over the label / accept it, as opposed to reject it. Adding the qualifer of anarcho-capitalism to make it clearer. Elaborated at length in this discussion.

David Gordon:

“In the 1951 article, he says that anarchist movements of the past tended to be collectivist; further, there isn’t a fixed meaning for the term. For these reasons, he at that time preferred to find a different word for his own political doctrine. On this point, he later changed his mind and didn’t have problems in calling himself an anarchist.”

"Didn’t Mises talk to Rothbard when he was theorizing market anarchy? I mean Rothbard was advocating it in the 50s, and wrote about it in the 60’s. Mises died in 1973. Wouldn’t they be talking to each other about it? "

In the 50’s it didn’t have that label, 1973 - For A New Liberty, 1982 - Ethics of Liberty. Around 1972 + you have Rothbard making the case.

Also:

AEN: What were your thoughts on Mises’s review of MES when it appeared in the New Individualist Review?

MNR: I liked it, but he didn’t say much about the book. I would have preferred him to go into more depth.

AEN: Was he bothered by some of your corrections and of his theories?

MNR: I don’t know because he never said. Mises and I had only two friendly arguments. One was on monopoly theory where he wound up calling me a Schmollerite. Although nobody else in the seminar realized it, that was the ultimate insult for an Austrian. The other argument was on his utilitarian refutation of government intervention. I argued that government officials can maximize their own well-being through economic interventionism, if not those of the public. He in turn argued that those kind of politicians wouldn’t survive popular vote, thus changing the terms of debate.

AEN: Mrs. Mises seems to think you had foreign-policy differences with Mises.

MNR: In all the years I attended his seminar and was with him, he never talked about foreign policy. If he was an interventionist on foreign affairs, I never knew it. This is a violation of Rothbard’s law, which is that people tend to specialize in what they are worst at. Henry George, for example, is great on everything but land, so therefore he writes about land 90% of the time. Friedman is great except on money, so he concentrates on money. Mises, however, and Kirzner too, always did what they were best at.

“This is the first time I’ve heard that term, philosophical anarchist.” “This does not really make sense to me. Listing Ghandi and Thoreau?”

Of similarity to Nock, that’s what he called himself. I wasn’t referring to the wiki which lists them. Anyway, it’s not too clear, because Nock uses the word anarchist etc to describe himself:

“Likewise, also, when occasion required that I should label myself with reference to particular social theories or doctrines, the same decent respect for accuracy led me to describe myself as an anarchist, an individualist, and a single-taxer.”

"The single tax impressed me as the most equitable and convenient way of paying the cost of such matters as can be done better collectively than individually. As a matter of natural right it seemed to me that as individually created values should belong to the individual, so socially created values should belong to society, and that the single tax was the best method of securing both the individual and society in the full enjoyment of their respective rights. To the best of my knowledge these two propositions have never been successfully controverted. There were other considerations, too, which made the single tax seem the best of all fiscal systems, but it is unnecessary to recount them here.

Probably I ought to add that I never entered on any crusade for these beliefs or sought to persuade anyone into accepting them. Education is as much a matter of time as of anything else, perhaps more, and I was well aware that anything like a general realization of this philosophy is a matter of very long time indeed."

But again, didn’t quite get there - i.e single tax.. and his opinion of no need to crusade etc, is probably similar to Herbert Spencers conception and that of Walter Block’s about society slowly advancing socially [probably haven’t charachterised that right]. In any case, Mises was probably much closer - but this is where the radicalness and worth part comes in, Mises didn’t violate Rothbard’s law… and neither did Nock. All you hear from Nock is how evil the state is.. it’s one of the first books I read, real radical - and I never really got the impression he wasn’t fully there.

@Giant Joe

You must understand that the case for charity is psychological. Also consider that empirical provision of public goods will be subject to confirmation bias - i.e. we’re not going to hear about all the times provision of public goods failed. Democracy fails to provide a public good every day, but we seldom talk about that.

You are right that human emotions may play a very significant role, but I’d prefer to show that narrowly self interested agents would be able to solve a free rider problem, because that’s the worst case scenario, so if that works then anarchy always works.

@Caley

I don’t understand what the fallacy is. I have never read an economist who did not call public goods a “problem”.

@Alternatives Considered

Thank you for your thoughtful response. I think the problem with your analysis is that you don’t include that people consider what everyone else would do. So, if the poor dude with $2 were the last person on earth who could help, and he was the only shot for humanity’s survival, he would do it. On the other hand, if there are 100 people left who can contribute, he might think “hmm well I’ll just leave it up to them and save my $1”.

If EVERYONE thinks this way, then the public good fails to be provided. But the crucial thing to realize is that people don’t want to free ride, they want to free ride given that the good is provided. So you can offer them a contract which binds them to this game plan. It has value because their current plan is precarious, and they might wind up being stuck with the bill anyway since they might not be able to free ride.

That sounds really wrong to me. The spontaneous economic order that arises does not depend on some lack of ignorance. You’re just asserting that things like Defense are different.

Besides Friedman may be engaging in a fallacy here. He simply asserts that the US-Soviet conflict persists once the US government is dissolved. But does he make the case for why it should persist in the first place absent a US central government?

Also, even granting the hypothetical persistence of some foreign threat, its nature changes as soon as the US becomes free and there is no longer a central bureaucracy.

The argument is not that people are ignorant. In fact, it assumes everyone calculates rationally in their own self interest.

Some parts of it change. Others don’t. Regardless, I’m trying to handle the general case of public goods rather than just national defense.

You said: “If EVERYONE thinks this way, then the public good fails to be provided.”

So are you saying that if EVERYONE didn’t think this way, there is still a failure to provide the good?

If I correctly understand this topic…:

One can only be sure about himself. For example, I am sure that I wouldn’t ignore some world catastrophy or other threat to me and my family, so that I can be able to live longer and maybe my children and their children etc.

I am not the other people so one can ever be sure about other peoples’ actions. If you want safety, you can’t rely on other peoples’ generosity.

I don’t know if this makes sense.