Lawsuits are not free. Even in free markets, lawsuits are likely to be costly.
Now, since the opportunity cost of taking a fraud to court frequently exceeds the opportunity cost of accepting the loss, in the absence of regulation, won’t there be an abundance of petty fraud?
Or is anyone here going to argue that under Anarchism, you could sue someone for under $20?
Say that you defraud me out of $5. I’m not going to sue you over it, because it’s not worth it. As a result, there is an incentive in anarchism to commit fraud up until the point that the opportunity cost of accepting the loss exceeds the opportunity cost of suing.
The risk of fraud is always present. Consumers are wary. Overcoming risk-aversion is one of the most difficult tasks of businesses. It’s what makes low-cost brands so strong. Who would trust a product this cheap if there wasn’t a name brand on it?
It’s a violation of the non-aggression principle and it’s an economic loss that stems from deception, not chance.
A lot of people trust non-brand name products that are cheap, because they’re irrational. My mother frequently brings home products that she found that were “on sale.” Often, they’re crap, especially when they’re food. The fact that they are consistently crap hasn’t stopped her from purchasing them.
There is a psychological explanation for this: “buyer’s remorse.”
Also, even if people followed what you just said, then that would lead to economic inefficiency in the pareto sense, as people would end up avoiding cheap goods that were perfectly OK and spend more on brand names, just because of snake oil salesmen.
You lost me there, how is someone being agressed against if someone sells them a ‘Rolex’ for $20 and they honestly believe that they are buying the real deal?
How’s that fraud though?
There is a certain amount of truth to the saying ‘you get what you pay for’.
Well clearly, if someone sells a fake watch that they misrepresent as the genuine article, it’s fraud. Just because most people would realize that you couldn’t possibly buy a Rolex for that price doesn’t make it any less of a fraud. And fraud is aggression.
i’m assuming by fraud you mean misrepresentation. for what it’s worth, here in australia to pursue a consumer claim for misrepresentation requires quite a bit of paperwork with the dept of consumer affairs (dept of fair trading). these state government bodies seek to mediate claims, but if there is no reconciliation between the parties, it’s off to the civil courts. try doing that on the cheap!
for $5 you ain’t going anywhere, either now or in an hypothetical anarchical future. try screaming, at least you’ll get it off your chest. there is probably a moral hazard argument to be had here, too. were the nanny-state not around, people would wise up more. a little bit more circumspection in business dealings mightn’t be a bad thing.
I understand what fraud is, hence the example, what I don’t understand is how you guys are equating fraud with aggression.
I think I more associate aggression with coercion like ‘buy this magazine or I shoot this dog’ or ‘buy my protection to make sure bad things don’t happen’ instead of ‘I got this real good deal on a Rolex that my girlfriend’s uncle asked me to sell so he can pay for his cancer treatment’.
“Aggression” in this context is defined as any act that violates the natural rights of another. It doesn’t necessarily involve physical violence or the threat of physical violence. Theft and fraud are both examples of aggression.
He says he’ll give you a rolex for $20. If it’s not a rolex, he’s violated a contract.
It isn’t. I just explained how branding isn’t a solution, because people will still tend to buy cheap non-brand name products. And even if they mostly only bought brand name products, that’s pareto inefficiency.
As a general principle, avoiding products which are surprisingly cheap is a good way for an individual to avoid fraud. But, as noted above, whether or not every individual did or did not follow that course of action, either way there is a problem: Either mass amounts of fraud or people only buy expensive goods.
Wait, wait, are you actually agreeing with the idea of proactively going after fraud as a criminal offense?
Because that’s one thing I was going to bring up: The government can go after such people. One good example is the FTC going after Kevin Trudeau.
OK, so if I don’t pay my phone-bill, I haven’t aggressed against anyone?
Again, I get the impression that if I had used an example of a large firm being defrauded by Tiny Tim, some of you guys would all be enraged at how the firm had been so unjustly wronged.
you may enlist rolex to go after the bad guy. they’ve very interested in pursuing counterfeiters, both the little and big fish. the amount they spend on goodwill makes prosecution of counterfeiters worthwhile. as for your redress as a fraud victim, your chances are zip, both under the current codes, and the hypothetical, anarchic-future scenario. be thankful you’re not in present-day europe, where even purchasers of knock-offs have been prosecuted, along with the vendors. (there’s assumed to be complicity between the parties). anyway some of those fake rolex’ keep pretty good time, probably a good deal for $20!
d****on’t get too excited. when i say it’s off to the civil courts for redress, it’s out of your pocket. not joe taxpayer’s. bottom line, the absence of government would make no difference. small claims are likely to be written off to experience.
How exactly do you think it’s possible to have a Free Market without protections against fraud? It’s one of the three things necessary along with protections against theft and coercion.
I don’t know how proactive you could really be, you have either defrauded someone or you haven’t. Intent to defraud seems a little iffy in my book.
Oh, and fraud is almost certainly a civil matter to be resolved between the two parties involved and not a criminal matter where the State is the one seeking restitution.
You have ‘aggressed’ against the owners of the phone company.
So in some way it’s fine to commit fraud against an impersonal entity such as the phone company in your universe? I guess it’s not the act of fraud that’s wrong but the intent, if it’s a wealth redistribution scheme (steal from the rich firm to give to poor Tiny Tim) then it’s just a form of guerrilla welfare huh.
You, my friend, have a seriously broken moral compass.
What’s your point? That petty fraud will run rampant and the streets will be filled with wild fake rolex dealers if there is no leviathan to prevent it?
Like I said earlier, grasping at straws.
Talk about deception.
Petty fraud is not a significant economic loss, certainly not enough of one to just come out and call it a plain economic loss.
They’re crap to you. Not to her.
I suggest you buy your own food, mooch.
Fuck Pareto.
As an Italian economist, let me inform you that Italian economists really suck.
who says these cheap and cheerful shoppers are irrational? you? regardless of gratuitous value judgements, the fact that these products consistently sell is all the justification that’s required. you sound high maintenance! but importantly you forget that although the products may not be branded, the hosting retail outlet has got its reputation on the line. anyway, i see this all as a red herring, unless you can point out where the fraud is?
Some people here seem to be confused as to what fraud is. Fraud is a crime and involves deception for personal gain. It is theft by deception. It is more than a simple contract violation, which is not necessarily fraud. The key distinguishing feature of fraud is deception.
Personally I doubt that under Anarchism you’ll be able to sue anybody at all…
Let me remember that frauds are long-running and really dangerous only when governments become accomplices: the average con-man is usually run out of town or caught after a short time. But large scams (like Parmalat or the Argentinian bonds) will only burst when they reach a critical mass, too large even for governments to handle, and even then suing will not solve anything since government will step in “to tutelate the meek” and turn the lawsuit into yet another scam. Just ask who sued Parmalat on both sides of the Atlantic.
Whereas being dishonest is not a violation of natural law or the non-aggression axiom, using deceit to convince a person to buy something he/she might not otherwise have bought is clearly fraud and a violation of the non-aggression axiom.
If you sell me a fake Rolex for $20, but don’t tell me “it’s a Rolex,” then you have not aggressed against me. I have assumed it was a Rolex, and it is my own fault.
But if you sell me a fake Rolex for $20 and tell me “this is a Rolex,” then you have committed a crime, for I gave you money in exchange for something I did not receive, i.e. a real Rolex. In other words, the seller has committed theft, which is clearly aggression.
Yes, actually. And I think the 19th century, with the rampant use of adulterants, is evidence to support it.
Not significant? You mean, sometimes fraud is OK if it’s really, really small?
They’re irrational, even by their own subjective standards, because they regret making the purchase afterwards, after realizing they overvaluated the item up to the point of sale.
Isn’t that exactly what you were implying with your Tiny Tim vs. Big Firm statement?
Which is it, right or wrong for Tiny Tim to defraud the Big Firm… Or is it wrong to defraud and wrong to defend the rights of Big Business?
Still not fraud…
What’s that got to do with anything that has been discussed anyway? You really aren’t even making a point here.
If someone regrets their pruchase after they and the seller came to an agreement, that at the time was beneficial to both parties, and the buyer goes home and realizes that they didn’t get exactly what they expected – or were acting irrationally when they purchased the item – what does this have to do with the seller? If the seller’s nice they might refund the money in the hopes of keeping them as a future customer but that’s as far as their responsibility in the matter goes.
What are you proposing here that the seller interviews the potential buyer to ensure they are both a rational individual and that they fully understand what they are purchasing. Or perhaps the state needs to step in and protect irrational people from themselves.
As I posted in another discussion on another site – marginal utility accounts for 99.999% of all economic valuations while the 0.001% accounts for the people who are truly irrational actors – or something to that effect…It made much more sense in its original context.
I’m starting to get the opinion that you are displacing your irrationality onto your mother’s ‘crap’ purchases.