I stated at the outset that I was representating Stigler’s position, not one that I necessarily believed.
Furthermore, the value you place on your own counterarguments might be vulnerable to the endowment effect. Just saying.
I consider the fact that market forces have not curbed political interference to be an example of market failure. If Statism exists, then markets have failed.
If you don’t believe so, then you should remain content with our current social arrangement, since it is the outcome of interactions among rational individuals (a key point from Stigler). If it is suboptimal according to standards of economic efficiency, then one must look for where rational behavior goes wrong.
You are entitled to your soundbites and slogans. But really you are just a fan of the nirvana fallacy, and your penchant for anti-realism (EMH anyone?) is going to lead you into absurdity time and again.
since it is the outcome of interactions among rational individuals (a key point from Stigler).
Its the outcome of ignorant and/or evil rational individuals. The existence of teachers and moral educators, and their learned students, demonstrates that such ills can be combated.
I didn’t get back to you really, StrangeLoop. It’s basically the equivalent of eating food in a POW camp. I’ll take the food if I can get it, but I’d rather not be there to start with
Apparently the attention seeking and self-promotion which followed was off the record.
Hey, we need to cut him some slack on that front…
my posts are hard to resist responding to
You would think he would know when to quit though. He hasn’t been able to articulate a sound argument, his own or that of others, thus far. Bowing out was probably the smartest thing he could do, considering that he hadn’t been able to make a dent with all his time invested (there is a market failure).
Maybe I have been here too long, but these drive by posters who appeal to authority, but have the shallowest understanding of the concepts they parrot never seem to improve much in quality. We still have to educate the same sort of folks, over and over again.
Whether or not I produced a “sound argument” I’ll leave for individuals to judge; your blanket statement is worthless to me.
To substantiate your point (give it a try), show me how I have demonstrated a “shallow understanding” of Stigler’s argument.
Given rational behavior (which is what we have), we have arrived at the social institutions we have. Now, as a determinist, I accept fatalistic resignation to that; I recognize that libertarian propaganda, from me or you, is almost entirely negligible. I believe that only lowering the cost of rebellion (or gradualist transition or whatever) could be effective. From a theoretical standpoint, I could imagine a dozen more economically efficient worlds in a matter of seconds, but Stigler is squashing your utopian hopes: only when those measures are cost-justified will the policies be adopted.
I think the key idea is this. Little note: while I do believe in something that you people call ‘natural rights’, I won’t use them in this post. I’m going to stick to positive statements. Furthermore; I’m going to use neo classical lingo.
The fundamental problem/gap (imo) is the difference between an institutions as such and micro level behavior. We can concede the fact (without any problem) that people are utility maximizing actors, who behave rationally within any kind of events. So we’re talking homo oeconomics all the way here. But even on that assumption, the theory set forth doesn’t follow.
The reason is that there is an unjustified jump being made from what is efficient an efficient institution to what is the efficient out come of that institution. There is a difference. Let me start with the second one.
The efficient outcome of an institution - per neo classical analysis - is what is the out come of rational individuals pursuing their self interest within the frame work of that institution. So the efficient out come of USA democracy is the out come with the high tariffs. Given the institutional framewor we leave it, it’s efficient to have tariffs, because that is the stable out come from people weighing costs and benefits within those particular rules of the game.
We ‘know’ however that tariffs and all are bad. (Even neoclassicals agree with this, so no sense in explaining why.) How can we reconcile these 2 kinds of efficiencies. Well; very easy, by introducing the concept of the efficiency of an institution as such, which is distinctive from the efficient outcome of an institution. The efficiency of an institution as such is the level of externalities, encouraging irrational or ignorant behavior, etc. An institution - ‘the rules of the game’ - that promote less of this concepts is an efficient institution, an institution that does more of it, is an inefficient institution. Note that I’m not being normative here: just saying that encouraging irrationality is inefficient. It’s true that on a micro level it can be efficient to have a lack of knowledge to a certain extend, but an institution that encourages ignorant behavior - the costs and benefits people face, etc. - is what we can call an inefficient institution. In other terms: an institution that fosters economic rules that are widely considered to be inefficient is an inefficient institution by extenso. Because democracy (as a meta-rule, as an institution) fosters a lot of inefficient particular rules, it’s an inefficient mechanism. Note: this doesn’t mean that within the rules of democracy this isn’t the efficient outcome from the institution as a whole. However; compared to other decision making mechanisms regarding the rules people have to obey, it’s an inefficient institution.
The fact that it’s ‘still around’ doesn’t ‘prove’ it’s inefficiency or efficiency. It only proves it’s efficiency in maintaining itself, which is not the same. You smuggle in a normative statement when you say: ‘well, it’s been a long time, so this institution must be efficient!’ This doesn’t follow; it only proves that it’s efficient in maintaining itself.
The other claim - that it’s an efficient institution, because it has been reached by rational people behaving - is also a non sequitur. It would be true if in some magical past there was the libertarian utopia and that through a series of efficient behavior, this was reached. However; there was never libertopia; from the beginning of on you had certain mechanisms in place that kept themselves in place. They were efficient in doing that, but it doesn’t follow that those are the most efficient mechanisms over all. Again: just because they manage to keep themselves in place (or better: the people acting within those rules) it doesn’t follow that another mechanism couldn’t be more efficient. It only proves that it will have a lot of costs to change, given the status quo.
Here comes in the standard libertarian analysis of ideology. We generally think that ideology keeps the government in its place. If we change the ideology a big part of the costs associated with (social) change is either (1) gone or (2) people are more open to endure them.
So this is sort of my (final) take on it, after given it some thought. Any comments?
Refute my argument, then. You can’t. It is sound. And it demonstrates that yours is not.
There’s nothing more to be done on my part. I’ve explicated your entire argument, and demonstrated that it is not sound. Refute it if you can. Go ahead, it’s a self-contained argument. Everything you need to break it down is there.
You’ve done quite well at adopting Stigler’s argument it appears. I’ve shown that the argument is not sound. Refute my argument.
It’s useless now to restate your argument. Your argument is fully explicated above, and again, demonstrated to be unsound.
I always thought of criminals as merely high time preference individuals, not as irrational actors, in the context of economics. In the context of morality and law however, they’re better treated as irrational (until they demonstrate the ability to cooperate).
Even if the state were able to allocate resources as efficiently as the market (which is demonstrably impossible but okay), it still creates so many moral hazards that in the long run it makes people have higher time preferences themselves. So I think coercive action is explainable in praxeology, it’s just not generally supported as a desirable course of action for the purposes of capital accumulation.
bcyclwutztht, I was addressing liberty student.
I think George Stigler (and me, in my more pessimistic moods) are reversing Marx’s famous dictum: we have tried to change the world, now it is time to understand it.
StrangeLoop, I don’t think you’ve addressed my latest comments about Stiglerian efficiency itself and Stiglerian vs. libertarian efficiency. Can you do so?
Only insofar as any cost would reduce efficiency.
Once again, there is an efficient level of mosquito bites (mitigated, perhaps, by an individual burning citronella candles, but not mitigated with gallons and gallons of insecticide); of course, in the best of all possible worlds, it would be better to never deal with mosquito bites.
The features of the natural world, for me, aren’t being normatively divided; there isn’t “freedom” or “coercion” (à la libertarianism), there are only natural resources to be allocated. Much like crime—if forever expunged—would be economically efficient, so too (in my belief) would the eradication of Statism; however, there is an efficient level of crime, much like there is an efficient level of State aggression.
The emphasis on economic efficiency (as traditionally conceived) is a distraction from the world we have: in our world, strategic rational interaction (the subject of game theory) has developed the social institutions we now have, with payoffs for each individual being maximized. I am asserting, fatalistically, that rational choice will lead us to suboptimal results (i.e., market failure), and that’s the best we can do. While there is a $20 bill lying on the ground, it would cost us $21 to pick it up.
To sum it all up: economics offers us the Panglossian hopes, while game theory tells us why we are stuck in a suboptimal world
Correct, but my point was that aggression cannot therefore raise efficiency – it can only reduce it. This seems to hold true even when one is using Stiglerian efficiency.
Forgive me if this is leading us in a circle, but how can “efficient level of X” be reconciled with Stiglerian efficiency, which seems to be an individualistic concept?
I don’t think that’s necessarily true; State interference could fix market failures like asymmetric information or negative externalities.
Efficiency is what emerges from individuals maximizing their own payoffs. If we believe that rational individuals naturally gravitate toward higher-valued ends, then no opportunities will be left unexploited.
That begs the question – how? (In your view, of course.)
Now you’re defining “efficiency” as an emergent phenomenon, as opposed to the individualistic Stiglerian notion of “efficiency”. This is known as equivocation.
A lot of the arguments here seem to take the form of something like “there are dispersed benefit and concentrated costs, and that makes any sort of bargaining impossible”. Which really just means that transaction costs are too high, or put even more simply, any deal to end government or whatever just isn’t efficient.
That said, and as somebody who is in favour of the state, I still think there’s an issue of credibility. Even if there was room for bargaining, it might not necessarily occur because there is no mechanism by which one side can commit to compensate the other once institutional reform has gone through. In other words, there is institutional path dependency.