Natural monopolies are a synonym for club goods. Club goods are goods which are rivalrous but excludable. Because of its excludability, club goods do not suffer from the free rider problem. Anyone can exclude the free rider form enjoying the good.
A method to protect natural monopolies from unfairly raising its prices or limit its supply is the consumer cooperative method and the contract method.
Consumer cooperatives are firms operated and controlled by consumers. Let us say that the utility company is controlled by the same consumers who use electricity. Because consumers control them, they have an incentive to not gouge their prices.
Another method to prevent price gouging is called option contracts. The consumer contract with the utility company to set a price ceiling with their energy prices. Many other anarcho-capitalists also suggest that option contracts can regulate private road tolls.
If nonconsenting individuals can have the option to not pay any taxes, then the usual opinion is that national defense will be underproduced. This is not always the case.
If money is provided by coercion instead of free choice, national defense will not be frugally provided. There will be waste because consumers do not have the freedom to join a tax protest in response to lavish defense expenditure.
Voluntarily provided national defense will almost always outweigh its free rider problems. Payments extracted from coercion are horribly inefficient at funding any good or service.
The free market even can have mechanisms to minimize the free rider problem. For example, people can boycott or ostracize the free riders. This creates an incentive for free riders to pay for national defense.
Another way to minimize the free rider problem is by insurance companies. Insurance companies will have the incentive for national defense. The Myth of National Defense also mentions how insurance companies can provide defense.
The above claims summarize all my arguments against natural monopolies and the free rider problem.
Your post represents a common trend I have noticed on internet forums. You do not further advance the conversation or even your own point of view, but rather piece by piece attempt to address any perceived differences or disagreements in my post from your point of view, and then systematically explain why I am wrong in each itemized quote of the original post. One would to infer, to validate your position as right.
It is quite clear you fail to do so, even giving me as many generous opportunities for me to return the favor, ie. “it worked for me.” or “state is evil by definition” but that is not the cause of my response here.
I think it would be more beneficial to resist the urge to assume a defensive stance, and try and maintain a positive discourse in the increase of understanding and spread of knowledge when possible. An example would be of your posts where you say, abolishing the income tax is not realistic, just saying. End Post. So what is realistic? What furthers your ideas constructively? I must admit I am all too often reminded why I generally shy away from this form of discussion, and it’s just unfortunate. I mean these boards are on mises.org if it’s going to work it should be here. I feel foolish for writing this as I’m bracing for the defensive attack to come, but I just wanted to end with that thought.
Just finished this paper, really amazing and very helpful stuff. I love how he explores all the perceived natural monopolies in history to basically assert there has never been a genuine “natural monopoly” in history that was not created in some extent by government intervention. Thanks again for the link, very good stuff.
AE is not restricted to Mises. Most of us here are heavily influenced by Hoppe, Rothbard and Long. All 3 are anarchists.
So when you asked about natural monopolies, I answered you with a free market position that is consistent with the Austrian view. When you went to national defense, the modern AE view tends towards private defense (user pays).
I realize, Ron Paul being an elected politician makes this all very confusing because he is for no-income tax, but that passage from his book is not entirely precise either. Paul also opposes tariffs, because a tax on imports is also a tax on exports. He’s a free trader. You can find this in many of his speeches on trade.
So while you might not appreciate the sentiment of the anarchist Austrians, we’re being 100% honest and sincere with you. There is no moral high ground to get rid of one tax, without getting rid of all taxes. That is to say, all taxes are immoral. So if you don’t want a moral argument for your friends, then you will have to look for a utilitarian one.
The Austrian perspective on utilitarianism favours a free market. That is to say that the state doesn’t do things better than the market because there is no competition, and thus the prices derived for security are not valid, and the resources are confiscated not earned. So even from a utilitarian-Austrian perspective, it is hard to make the case for national defense as provided by the state.
I hope you’re not turned off. But you’ve stepped through the looking glass and we’re not in Kansas anymore.
How you choose to argue with your friends is your call. As another poster pointed out, if you go the minarchist route, it will be exceptionally hard for you to defend some state intervention or service provision while rejecting others. Particularly if your audience is very intelligent, which I think you already indicated.
I agree with word for word everything you said, as well as both your examples of moral and utilitarianism arguments. The intellectual arguments have already been won, there is no doubt about that. Free-market ideas are the way to go. In my personal practical experience, however, I find it less than effective to fully embrace all elements of an ideal, when attempting to convey the concept that government isn’t the be all and end all, that most citizens were raised to believe.
You are even right that it is getting exceptionally hard to defend some state while rejecting others, as well as it being a bit hypocritcal to be sure. It’s just frustrating on my end, to not be able to get otherwise brilliant people to see the inefficiencies as well as assaults on personal liberty that comes with an expansive government that I do. And I have employed both arguments, to which they readily agree, but dismiss the idea as simply being too impractical and unlikely to occur to really matter. At which point the conversation then turns into an attempt to find some practical ideas to help lessen the power of the state while keeping it within the realistic realm of possibilites.
Anyways, thanks for the reply libertystudent, you as always, make some very great points.
Patience is the tough one. You will find what works for you. I found it was important to tone down my approach or I risked alienating folks (family!).
The failure is not in your ideas or understanding. It’s that the world isn’t particularly receptive to them right now, but even that is changing, because I have seen in 2 years that things have become much, much easier. It will progresively become easier to have these conversations with your associates as time goes on.
Yes. There is no need to explain why I am right if I can explain why you are wrong. But notice that don’t defeat strawman’s, misquote you, or commit any of the many other fallacies.
You make a claim, and I refute it. You gotta be careful with the hasty generalizations.
That’s exactly the point I was trying to make. Sorry for coming off as an A hole.
I’m sure your argue with much more difficult people during your lifetime.
I could have linked to that article too. But then it wouldn’t have been my own point of view?
This is true. Butmy attempt was mostly to make Robert realize that his position on “realistic solutions” would be easily defeated.
I have no proof, but I maintain that RP is a closet an-cap. But anything to further “the cause”.
You’re more harsh than I am.
One problem with the minarchist route is that it has led us to where we are now. In reality, the courts, the police, and [whatever the third “must” of minarchism is] have all been high-jacked by special interests. Anarcho-capitalism may be “unrealistic”, but we know that minarchy has failed.
The problem isn’t you; the problem is that some people are simply evil. Look at Bernanke, he got a 1590 on the SAT, but he’s a liar and evil.
Daniel answered your first comment with “realistic” included due to you said it as well. Your sentence, “Let’s be realistic about that for a moment,” sounded a bit arrogant to me with a wave of the hand to dismiss somebody without intellectual consideration. But I understand the reaction, but perception can lead to misleading conclusions, so, I try not to become too offended or else I’ll never get anywhere.[:D]
Thanks! I feel like I’m channeling Stef Molyneux sometimes. I know he’s controversial, but he does a good job of framing his arguments. Why worry about statistical arguments in favor of this or that? Just let someone know that their solution to a problem involves mass theft, and ask them why that’s ok. It usually works. The vast majority of people are vehemently opposed to violence. Show them the violence of the state and plant that seed of doubt.
Edit: Robert, sorry if we took your thread off the tracks. ; )
I’m near the end of chapter 10 of Man, Economy and State. Rothbard goes over all possible angles of these kinds of arguments. He explains why, on the free market, it is impossible to conceptually distinguish between a monopoly price and a competitive price. You should give it a read.
There is a profound quote from the film The Matrix that helps deal with such a situation. Before the ruling board of elders, the military commander turns to Morpheus and says “damn it Morpheus, not everyone believes what you believe.” Morpheus replies: “my beliefs do not require them to.”
Sorry to bump/hijack a thread, but I had a small question about monopolies and didn’t want to create an entire new thread.
In a discussion somebody mentioned a reason they were against total deregulation was because of monopolies. I mentioned how they wouldn’t really exist in the current sense without the government allowing them to. He asked about businesses that require high initial investment (and can therefore “break the laws of supply and demand by controlling the supply”) He gave the example of AT&T in the 80’s and how they owned most of the phonelines in the US and nobody else could come in b/c of the startup cost with little guarantee of success.
I’m sort of new to all this and was confused by his response. I was wondering if anybody could either address it, or point me to a paper or something.
Well how did AT&T have such high initial investments? This isn’t a free market unbridled by the government and any company that lays it’s foundation even before an AT&T could get to such a point had to paddle through numerous upon numerous government regulations. Sometimes it’s about knowing the game and getting to a certain point and the government is on the company’s side merely because the company knows how to play the game better than other company’s. So to pick out any business in this socialist culture of government intervention and try to simplify the event hasn’t weeded through the mess enough. I would start small and ask to see how AT&T got started and to see all of its’ interactions with the government, to know of the regulations, and to see it’s historical interaction with other businesses. It’s probably too complicated for the other person to do all this, which is exactly the point. They probably don’t know everything that actually happened.
its a ridiculous argument, assume that there is some wonder product that it costs terrific sums of capital to get off the ground, and scrooge mcduck is the only individual rich enough to possibly invest.
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so , scrooge shouldnt be allowed to make the investment…, and so then no-one invests… surely even a ‘monopoly’ product is better than none of that product at all.
even though there is no such industry that requires such high capital investment that is unapproachable by others, since entrepeneurs can get investment from capitalists who have money to invest. so the competition for such an entrepeneur who makes a deal to get big dollar investment backing is some other similar entrepeneur with a similar pool of capitalists to make deals with. competition .
Good reply, but my comment was more along the lines that sometimes we can (and perhaps, should) make our case with patience. A diversity of approaches and tactics are strengths.