Hypothetical

Economics Economics Questions
1

I realise that this isn’t going to be a very popular topic but here goes anyway.

The year is 2020 and all the governments across the world have successfully been abolished, for the sake of the argument let’s say anarchism is working fine (I don’t think it would, but that’s not the point). However, a few years before that when government was still around NASA spotted an asteroid heading towards the earth, expected to hit in 2021, they develop the technology to destroy it before it hits the earth, only to be closed down before they can start building the missiles or whatever to destroy it.

So the asteroid comes within the range that it could be destroyed and it is destined to hit the earth within a year or so. How does the “anarchist society” deal with this?

Just a quick note, before all of you start saying that this idea is unrealistic, I’m well aware of that. But as has already been pointed out, this sort of good (destroying the asteroid) is possibly the best example of a public good there is, because consumption is almost completely non excludable and non rivalrous. One implication of this is that saying “well, let the asteroid hit the earth, it’s no big deal and it’s worth it for the other gains to society” does not really address the issue because the inability to provide such public goods is necessary for any economy.

EDIT:

Two more things I’d like to say.

First, I’m not really interested in one line responses, perhaps you don’t really think this is as much of a problem as I do but I’d still like to see some sort of well thought out responses. If this post only attracts responses such as “typical statist drivel” or “the price system” I’ll ask one of the moderators to close it down.

The second point is a clarification of what I’m asking for. I understand the market is a creative process and I understand that it’s not feasible for me to ask for a detailed description of exactly how it would happen. But, I do expect some sort of elaboration of the mechanisms of how a “stateless society” would go about dealing with these sorts of things and how they would relate to the provision of such goods by the state. The post below for example says “non-profit asteroid destruction fund”, but this is precisely the sort of thing I don’t think would be tenable because of collective action problems.

2

Non-profit asteroid destruction fund.

3

Putting ‘(word you are interested in) + mises’ in google is a wonderful thing Giles. The link from the first result was bad, so I pulled it out for us. Here is another.

Also, it is on you as a statist to justify your violence. My government has dozens of agencies to “combat homelessness” and the problem persists, because government itself is to blame.

4

Pretty much.

This is just another variation of the “free rider problem” which isn’t a problem at all.

5

You are assuming that NASA is more efficient at doing this than a company developed in a free-market. The same NASA which is taking over forty years to put another man on the moon [and that is an understatement]. If NASA did cease to exist, I’m not sure why that technology would not be sold at price in the free-market, given that it is unlikely that any government institution would not be eliminated without first extracting the “good assets”.

6

First things first, I don’t really think that government is to blame for asteroids, but perhaps that’s just me. I don’t think either of those links gave the answer I wanted, indeed, to some extent both gave exactly the sort of answer I was trying to avoid. The former Raimondo piece didn’t say much other than that such projects as asteroid destruction are liable to create rent seeking problems, the government can’t stop muggings and that if an asteroid strikes the government will round the rest of us up and kill or enslave us. I used this particular example because it is such an apt description of a public good, and yes I don’t deny that any public good is likely to create rent seeking problems. Of course, it’s more than reasonable to say that some public goods shouldn’t be provided because the good brought about by their provision would be mitigated against by said rent seeking problems. But I must say, I’m a little but bemused as to why we should stop looking to destroy asteroids because some shady characters might make some money from it.

As for muggings and concentration camps, I think the latter is just rhetoric used to score a political point and the former is irrelevant. Of course the government can stop all muggings, that was never an issue. The issue is whether the type of good provided is done better by markets or governments and since there are big differences between asteroid destruction and crime prevention I don’t think the analogy holds (not that I think crime prevention shouldn’t be provided by government).

By the way, I’m not trying to justify anything. I’m trying to get an answer to the question “what mechanisms would allow for such a good to be provided” given that it is clearly in high demand.

If you don’t think that an asteroid smashing into the earth is much of a problem at all then I really don’t know what to say to you. But if you really do think that then I’m not sure there’s not much point discussing the issue.

No, I’m saying that the free market, for better or for worse, would never have put a man on the moon. Look, if you believe that the free market could somehow coordinate the consumers of asteroid destruction and provide the good in question, then by all means elaborate. But simply saying the free market is better strikes me as a bit intellectually lazy. What I’m saying is that I’m doubtful that a company on the free market could do this, they’d have no reference to economic calculation and buyers would have no incentive to purchase the good in question. When you consider the heterogeneity of consumers of asteroid production, the external effects and the sheer amount of money involved such a solution looks untenable.

7

It seems like you hold the opinion that without a paternalistic shepard (the state), humanity would just wander around aimlessly, unable to voluntarily cooperate towards common interests. Look at the huge voluntary outpourings of support for the tsunami victims, Darfur, Katrina, the Haitian Earthquake. I don’t see how this problem wouldn’t be able to be solved without government intervention.

8

If you’ve already dismissed the answer – what’s the point in the question? Are you asking something you perceive will have anarchists squirming so that you can ‘ride in’ and not only demean them, but tell them what they ought to think in the first place?

If the Earth was faced with an asteroid or whatever and enough people were horrified by it then they would act. They might co-ordinate launching all of the world’s former nuclear stockpiles at the incoming rock, or they might devise a more ingenious method of deflecting or destroying it, because they can.

OR

They’ll panic, mis-allocate resources, priorities and the asteroid will sculpt a new continent or pulverise an old one. Humans will suffer and chickens will inherit the earth probably. Such is the way of nature.

I suspect that the free-market solution will be not only more cost-effective, but will have a greater chance of success than some NASA monstrosity.

9

Strawman Giles. Should I even read the rest? You are the one with one palm up and the other hand holding a gun. It is on you to prove your approach superior. There has been plenty written debunking “public goods theories”.

10

This is both to yourself and the poster before you. Let me be quite clear, I don’t think you guys have a satisfactory to this question or those similar to it. But my intention was never to get you “squirming” so that I can “demean” you and tell you what you ought to think. When I say I want a certain sort of answer what I’m saying is that this topic was put in the Economics Questions section for a reason, I’d like to see some sort of discussion about incentives and knowledge that I’ve not yet seen, and this is why you’ve not managed to change my mind (which I’d be open to, by the way).

Maybe you’re right and the market will develop technology that allows companies to shoot down the asteroid for less than the cost of a Big Mac, but I don’t think that’s happening any time soon.

Jackson LaRose, you’re correct in that I think that government is necessary for social cooperation, in fact, I believe that governments are one of the mechanisms that society has developed (wrong word, but forget that for now) to allow cooperation. If you wish to disagree, go ahead and answer the question posed in the OP with reference to incentives and knowledge, because this is just an example of a situation where I believe that cooperation will be better achieved by government than by the market (or other voluntary social institutions).

As for Darfur, Haiti and other examples of private charity, yes, you have a point there. I don’t deny that people can sometimes come together for causes that might not benefit their own “selfish” interests. However, I think that in this case collective action problems would plague any attempt at private, voluntary cooperation. Let me put some numbers on this, let’s say that it would cost 10 billion USD to deflect an asteroid, and that for whatever reason the organization only allowed contributions of $10 (just for the sake of the example). For any of the 1 billion donors required, they would consider their donation so small as to be inconsequential, for any person they’d be better of not donating because their donation wouldn’t really help with the provision of the good but it would make them worse off financially.

Of course, this can either be overcome by a feeling of moral obligation, exclusion or compulsion. Exclusion is impossible, compulsion gets us back to my answer and I’m just not sure enough people would feel the moral obligation to donate that money, much less in the face of such heterogeneity and uncertainty.

E. R. Olevetto, that comment was actually intended to be a joke, so my apologies if you felt it was inappropriate. You can choose to read the rest if you like, I’d like to think that anarchists are willing to take challenges seriously, but if you feel your time isn’t worth it, by all mean stop posting. As for “public goods” being debunked, care to link to an example? And I don’t mean Hoppe’s travesty, that was one of the worst bits of scholarship I’ve ever seen. My approach has been demonstrated to be feasible, you may think that the moon landings were a massive waste of resources (most people would disagree), I’m undecided on the issue, but it’s proof that the government can coordinate large amounts of resources to execute large scale operations such as asteroid destruction. If this empirical example doesn’t convince you, then pick up Olson’s The Logic of Collective Action. For the record, I’m not really trying to prove anything, and indeed, what I’m asking for is a comparison between government provision and market, or voluntary, provision on economic grounds, a comparison that hasn’t been very forthcoming.

11

Just a joke huh? I could never tell because you have a bad habit of creating logical fallacies. I honestly have no intention to make time for or spend money on Olson’s book and assume it isn’t free online. IF you can cut the BS, I will listen to substantiated criticism of Höppe’s paper (or perhaps this one from Block will migrate us away from your slightly pathological hypo).

Your error here is comparing plucking rocks from the moon to being faced with mass extinction. I would hardly consider this proof of anything besides that government can amass large amounts of money by way of its theft and pedagoguery, money which would not likely have been spent by this group of people.

12

Why would people be less likely to give when they themselves are threatened? If anything, people would have a greater incentive to give.

13

But in the case of an apocalyptic asteroid, it would directly benefit their “selfish” interests. If the choice is donate or die, people will donate. Look at taxes for example.. The vast majority of people voluntarily give up their money, because the alternative is prison time. The government doesn’t force your brain to move the pen across your 1040 form, you do it because you prefer non-incarceration to the amount of money you had to shell out.

14

Would option clauses be unable to solve that, like collecting pledges, so when enough people sign up for payment the contract comes to force?

15

Not only that, but assumably the wealthiest people in the world would have incentives to give as well. If the hypothetical cost of deflecting an asteroid was just $10 billion, Bill Gates might just fork up the money himself.

16

Maybe you’re right; the market couldn’t handle a problem like this. But isn’t it simply the nirvana fallacy to assume that government could? After all, government too is a public good, and faces its own collective action problems.

Moreover, if you’re looking for an answer to the question “To what extent can collective action problems be solved voluntarily?” then you’re probably not going to find one. This issue is an ongoing research program at the intersection of game theory and public goods theory. We know that the extreme positions (“public goods can never be provided privately” and “there are no collective action problems”) are false. The task now is to narrow down the answers and figure out which middle position is correct.

17

The point of my post was this:

  • Some people would be willing to put forth resources voluntarily towards stopping the asteroid.
  • Some people wouldn’t be willing to put forth resources towards stopping the asteroid.
  • All the resources are put together and worked with (possibly through multiple efforts) to stop the asteroid.
  • The asteroid is stopped.
  • People benefit from this, including the ones who didn’t pay to realize this benefit.

Those people who didn’t pay are the “free rider problem” which I said isn’t a problem at all. What guarantee is there that people wouldn’t donate to this cause? What guarantee is there that forced taxation and a government run program to prevent the asteroid collision will be successful, or even better than a voluntary approach?

It’s up to you to prove that the state is more effective and desirable in this situation.

18

Obviously when an imminent danger exists, everyone has the incentive to cooperate with everyone. That is why military alliances work.

Of course it will the biggest capitalists who will be able to put up the capital to mount an anti-asteroid operation. They have no reason not to.

19

Another point to keep in mind is that these hypothetical scenarios always use some example where it’s manifestly obvious that consumers demand the good in question (e.g. asteroid protection, law, etc).

This is important because it transforms the issue from an economic problem into a technological one. In the case of normal goods (e.g. chairs), government cannot produce efficiently because, absent the price system, it has no way of knowing how to efficiently allocate resources. But in the asteroid example, it is assumed that there is universal consumer demand. Given this assumption, the problem is merely technological: how to blow up an asteroid. These hypothetical scenarios only work where the economic problem is solved by assumption.

For more, see Leeson and Skarbek arguing that foreign aid can only solve technological, and not economic, problems.

20

Sage, thanks for your thoughtful response, I’ll read the Leeson and Skarbek paper in due time.

Your point about the chairs gets to what I was trying to convey earlier, the production of asteroid destruction doesn’t require much specific “knowledge of time and place” so to speak, so perhaps it’s not unreasonable to assume that the government could do this in a way that the market couldn’t, much like the moon landings. It is this lack of knowledge that, as you pointed out, is conveyed by the price system that makes government production infeasible or inefficient, it doesn’t know how to allocate resources. But I think it’s fairly safe to assume that in the case of asteroid destruction (or the production of security, if you think the analogy holds like I do) that people really do desire this good. Moreover, because of the uncertainty involves in potential losses and because of the one-off nature of the production of this good, economic calculation would be highly difficult even for market actors. So, whilst perhaps in part it is a technological question by assumption, there is also comparative institutional analysis to be done between the production of this good by government and production of this good by private firms.

On a similar note, I don’t think I am committing the Nirvana fallacy, precisely because the government has already been able to pull off such a stunt and because I think the incentives are there for government production of “asteroid destruction”. Just as much as there was positive utility in landing a man on the moon in the form of a country, department or even individual claiming responsibility, so people would like to take credit for “saving the earth”.

For the record, I agree with the rest of your post on collective action problems and public goods, I was merely trying to find out how people felt about government providing this particular public good.

To use a phrase that I think is thrown around far too much, I think you’re only looking at the seen. Yes, it’s possible for public goods to provided voluntarily, I’ve never denied that. But I think it’s also silly to argue there aren’t any goods that are not provided because of the free rider problem. Of course, if you read Ostrom’s work you’ll see that there are plenty of cases in which people have been able to voluntarily overcome such problems and provide public goods, but there are specific conditions necessary to realise this, and they aren’t always present.

Once again, to say this is to misconceive the whole problem. Look at the numerical example I provided earlier, for any given individual the choice isn’t between death and donating, it’s between being slightly better or slightly worse off and living or dying depends on the actions of other people. In the case where many billions of USD are required to provide the necessary good, my $20 won’t do much good. So why bother donating?