With economies of scale, a government based monopoly on security could supply security more cheaply.
I think i have a decent response but would like to strenghten it
Two questions:
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Does your definition of “security” include gathering intelligence and the sort against/from other countries?
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Assuming I choose the free market approach, does the United States (my apologies for the point of view if you’re not from the US) still have a ton of military bases across the world or would it be like a reset button?
“With economies of scale, a government based monopoly on postage delivery could supply mail more cheaply.”
Beyond absurd.
What Must Be Done
[Lecture given at “The Bankruptcy of American Politics” conference, sponsored by the Mises Institute and held in Newport Beach, California; January 24-25, 1997. An audio version of this talk is available here.]
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Protection is also possible without a State. This should be absolutely obvious, but in an age of statist obfuscation and confusion, it is increasingly necessary to emphasize this elementary and yet as we will see, very dangerous insight. The decisive step in diverting human history from its natural course - the original sin of mankind, so to speak - occurs with the monopolization of the provision of protection, defense, security, and order: the monopolization of these tasks by a single one of these initially numerous protectors at the exclusion of all others. A protection monopoly exists once a single agency or a single person can effectively insist that everyone on a given territory must exclusively come to him for justice and protection. That is, that no one can rely exclusively or solely on self-defense, or attach himself for protection to somebody else. Once this monopoly is reached, then funding of this protector is no longer entirely voluntary, but in part becomes compulsory.
And, as standard Austrian economics predicts, once there is no longer free entry into the business of property protection, or any other business for that matter, the price of protection will rise, and the quality of protection will fall. The monopolist will become increasingly less of a protector of our property, and increasingly more a protection racket, or even a systematic exploiter of property owners. He will become an aggressor against and a destroyer of the people and their property that he was initially supposed to protect.
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Also more particulary:
Anarchy and Economies of Scale - Robert Murphy (http://mises.org/media/1465)
Very nice Conza. Listening to the Murphy audio now
If monopoly (i.e. one firm) was the most efficient outcome, it would exist on a free market.
Not so sure how that would work out in an argument, depending on who you are arguing with. I would revise your response to “if state monopolies were efficient, they would exist in a free-market”. This could lead into whether the state itself is legitimate, and challenge the efficiency of the state in of itself, in anything, let alone the economy.
Natural monopolies on certain goods like sugar or on newer products might actually exist for a given amount of time, but in the free-market eventually people would out-compete the previous natural monopoly into obscurity. Not all companies would also necessarily be sucessful, & sometimes temporarily, natural monopolies would emerge out of previous market failures (until market sucesses eventually de-throne).
IMO, I think the term natural monopoly would be better described / argued as temporal monopolies, as the word “natural” might trick people into thinking that you are arguing for the validity of monopolies themselves & think you are excusing their prescenece de-facto in a free-market.
It’s an incomplete argument. The economies of scale may very well apply, but it is not the only factor determining price, and may not even be a major factor. For instance, people say that socialized health care would be cheaper because hospitals don’t have to deal with various insurance companies and insurance plans, everyone pays in to the same pot, etc. Of course, increased demand for health care services, lack of innovation and similar issues push the cost of health care up, and we should expect that, on net, these costs will be greater than whatever savings are supposedly gained.
So, sure, maybe a single firm supplying security for the entire American continent would enjoy the benefits of economies of scale that no private firm could hope to manage, but what about the lack of price information available to the government and the public choice problem? These are going to vastly outweigh any gains from economies of scale.
I think the point some people are missing is that there exist not just economies, but also diseconomies of scale.
Moreover, the only way to reach an optimum point between the two is for a free market to operate. Governments will most often experience diseconomies of scale when they centralise too much, or take on too many services, or expand one service too much, like the NHS. One of the reasons the NHS has such high overhead costs is because it is so difficult to manage such a large organisation. These are all diseconomies of scale, and, if anything, the ability of a government to expand something, without knowing (or frankly caring) when it is feasible to stop, is a powerful argument against it.
It already does. It is called US government.
I’m confused… Government, by definition, negates a free market… It cannot, therefore, exist “on a free market.” Am I missing something?
That doesn’t mean it isn’t a natural outgrowth of the market (if not protected against). If it weren’t a natural outgrowth of a market not protecting against statism, there would have been one free market in the history of the world (Iceland does not count, look further into it. There were local monopolies on force.)
some people believe, that every human interaction is a synonym for a free-market… just sayin’
States exist because a bunch of farmers who couldn’t talk to each other or organize got taken over by barbarians. All industrialized governments are residual from agricultural days. Simply because free peoples failed to solve the collective action problem of defense does not mean they will continue to do so indefinitely and under increasingly beneficient circumstances.
^ THat’s my position as well
You are missing that the government is simply the private defence agency that outcompeted all others. It did not always exist.
If it’s a “defense” agency, then why does it aggress against those who have not initiated force (e.g. tax evaders)? That seems more like an offense agency.
I think the implication that is it has out-competed all other competition partially due to it’s use of coercion against all other competitors, & partially because it keeps giving a reason for those who are coerced to keep coming back to using it’s services (i.e. a mobster setting a shopkeeper’s place on fire & then offering protection for an allotted sum to prevent such ‘accidents’ from occurring again).