What would the free market prices for currently government-run services be?

Economics Economics Questions
1

I’m wondering if any of you have done or know of work that attempts to estimate what the “prices” for the services that government currently fills - roads, police, army, schools, judicial, regulatory (think FDA), social safety nets (provided by some sort of insurance in a free market most likely), etc. - would be in an AnCap society?

I realize that any such estimate would be filled with assumptions that could change the answer and even more, the answer begs for proper “units” of price. More or less, what I’m thinking of is in today’s dollars, pricing them next to services that are currently provided by the free market. And to eliminate complicated questions of supply and demand, just assume that we’re talking about the cost of providing these services. IOW, in a free market, per person, how would the cost of providing roads (which includes all elements of operating those roads, e.g. billing and other admin, security (“highway patrol”) , maintenance, insurance, etc) be in an AnCap society compared to, say, the current cost of providing Cable TV (or food, or phone service, or clothing, or housing, etc)? What about asking the same question of government-provided schooling, or It’s close enough for these purposes to assume that these services are provided to everyone, so that “per person” really just becomes a total cost.

Mostly this is intellectual curiousity for me… I find myself chafing at handing over 35% of my paycheck every month and asking, not philosophically but viscerally, what am I getting for all that money? How much would it really cost me if you just made those functions free market and optional overnight? Well I’d pay for the roads somehow: I need those. I wonder what I’d be thinking about my “street bill”? Would I hate it more than I hate my current cable bill (about 2% of my takehome pay)? What about my basic protection bill, how much is that really going to be? Will it be kind of cheap like an alarm company is, or will they either include or subcontract out so much work like “judicial” functions (resolving disputes, etc) that the price will be a lot higher than a security firm? How many other services is the government providing that I’m failing to account for (putting aside other obvious things that I wouldn’t pay for in a free market, e.g. the ATF, INS, IRS, DHS).

I’m not trying to bring up a philosophical point; I really just want to have a realistic feel for how much things will cost, for my imagination’s sake (I am slowly, slowly trying to write some “AnCap” fiction and I want to be at least somewhat believable when I talk about prices etc). I believe neither a statist that would try to say that they’d cost just as much or more (hah!), nor the overly optimistic idealist who would have us believe that lack of state would create a near-utopia. What is a realistic dfference in costs for things in an AnCap society, apart from moral, ethical or philosophical questions?

2

Things would be cheaper, better and changing much faster.

Saying something more specific is essentially impossible, which is kinda the point of economics.

3

Well, sigh, that’s exactly what I wasn’t looking for… anyone else?

4

You’re asking a question without an answer. Would you prefer if someone lied to you? We have a couple very effective liars here, I am sure one of them would be willing to oblige.

5

I guess if there was some service or product which was privatized or made legal somewhere or at sometime, you could see how dramatically the price would drop when the market is made free. But you couldn’t use that to get an accurate market price.

6

If you dont get anything from AE, get this: The future is always uncertain.

To just randomly come up with prices to things that are not currently available to us is just plain,err, dumb (for lack of a better word)

7

Oh, come on: estimates are possible. I mean, it’s not going to cost zero, right? And as AnCaps we can estimate that it will cost less than it currently costs. So there, we’ve bracketed the cost.

But in either case, I’ll take the chorus of responses about how dumb the question is as a consensus that I should climb back into lurker mode.

8

estimates are possible. one can draw a nice graph and draw two points and say," according to this graph, the standard of living will grow by 50% if society transitioned itself to an anarchist society"… but such a thing is absurd because the world is not fixed that that, it is always changing,human’s value scales are always adjusting etc. Like people already said, there is no answer to your question. It is like asking, “How many houses will there be in an anarchist society?” or “how many new companies will emerge?”

9

“estimates are possible. one can draw a nice graph and draw two points and say,” according to this graph, the standard of living will grow by 50% if society transitioned itself to an anarchist society"… but such a thing is absurd because the world is not fixed that that, it is always changing,human’s value scales are always adjusting etc. Like people already said, there is no answer to your question. It is like asking, “How many houses will there be in an anarchist society?” or “how many new companies will emerge?”"

Honestly, I think you all are thinking too deeply about this. This isn’t a philosophical or macroeconomic question, it’s a micro-economic one.

I may not have emphasized this, but all I was looking for was some sort of believable guesstimate that would work in a fiction story set in a more or less AnCap society. I have this weird obsession - weird, apparently, because I really don’t see much evidence of an interest in it amongst the people here - with trying to imagine what an AnCap society would actually be like on a day to day basis, rather than arguing the philosophy, morality, etc.

It still seems to me that if you want to get people on board, you have to be able to paint a realistic vision of what it’s going to be like, both the good, the bad, and everything in between. Simply shrieking at them how morally wrong or stupid they are isn’t going to work or, more rationally, trying to rationally argue it is, in my experience, not enough. There’s an “imagination” component that is essential, and for whatever reason, the “anarchy is disorder!” meme has a tenacious grip on that imagination. Hand wavy arguments that “everyone will be so much better” may be correct but don’t really tickle that imagination circuit. My working hypothesis is that to the extent that one can illustrate AnCap society in a quotidian, day-to-day way, showing that no, chaos does not follow but neither does utopia, e.g. it’s kind of annoying dealing with utility providers now and there’s no reason to think that dealing witht he “highway utility” etc is going to be any better than that (but still better than dealing with the government, particularly in terms of price/value) is more likely to paint a realistic picture that people can imagine.

I realize we can’t say for sure what might happen in a fully free market world, but I think we can come up with some realistic scenarios… Just like I couldn’t have told you that VHS would beat Beta, I think that apriori, saying that one of them would win - and picking one for illustration - was viable. Likewise, I don’t know exactly what the free market will do in terms of road service, say, but what I’d like to do is pick a scenario that seems reasonably plausible. It is unlikely, say, that road service would be provided by a single monoloithic company, because competition just doesn’t work that way; it is also, I think, unlikely that each and every stretch of road will be individually owned by the land owner in front of that road, complete with tolls and toll takers, so that you have to pay a toll for each house length you traverse in a subdividion, say (I"m just picking a really silly scenario here). Some simple thinking about the costs/benefits of various business models should be able to come up with some reasonably likely scenarios.

Again, it’s obviously not an exercise that is of particular interest to most, but I guess I find myself a little impatient with the theory and want to picture the reality… And I think a picture of the reality will help a lot with the necessary sales job.

10

Well, some credit the Austrian School of Economics to be the Philosophical School of Econ. But you must realize that Economics is a subject that gets its information using logic. So to say that “this is not a philosophy question, macro question, but a micro question” is quite irrelevant to Economics. Because 1) when we are talking about value scales, uncertainty of the future, time preferences, etc. we are using Praxeology, which to me anyway, is the backbone to Economics. 2) trying to divide Economics as macro and micro is really weird because Economic laws are universal whether you are talking about micro issues like a specific business pricing goods or macro issues like Capital Theory. In an economics sense, our justifications for an anarchist society can basically be summed up like this: We have argued that privatization is always more efficient than any government program, whether it is in building bridges, creating companies, etc. So why is it not safe to say that privatization can be more efficient than governments in law, defense, etc? Clearly, the market has a far better record than governments do. This justification is even something that David Friedman, a Chicagoian type, would make as well. Which if you want a cost/benefit point of view, read his stuff, because that is what he uses.

11

That would be like a North Korean asking how much everything would cost if it weren’t exclusively provided by the Dear Leader. First, let’s discuss the meaning of “everything” and “cost”…

12

First thing you would have to do is look at what you currently use of the government services and from there you can see how much you think you would be charged for that.

Mine is rubbish collection, roads, doctors and hospital services.

What i don’t use that i might at some point, police (although it would take a hell of a lot for me to phone them), fire brigade… a form of national or regional defense.

Because it is socialist you pay for what you do not use, so this distorts the price of what you pay for compared to what you get. So this make it even more difficult to calculate a comparison against. Even if we did know how much it would cost to say collect rubbish, we don’t even currently know how much it costs to collect rubbish with a government to compare it. This means that it is almost impossible to calculate prices as you requested.

If you wanted to calculate prices you could take similar services that are in private market currently and compare them and use some logic to make a guess.

I would say that rubbish collection would cost about £20 a month, but it could be less.

13

“I would say that rubbish collection would cost about £20 a month, but it could be less.”

Actually, since different countries provide different things through government, we do have some points of comparison… Where I live (Seattle), rubbish collection is a private function, and it costs me $17/month, so you’re not far off. I don’t know whether there are price distortions from the government here of course, e.g. while it appears to be a private function, it does not appear that we have a choice of service providers, so there is some sort of government-enforced monopoly at play. And who knows if there is subsidization, the cost of regulation, etc. But still: I think you are pretty spot-on.

I mean, it’s not that hard to think about, right? Rubbish collection isn’t really that complicated: some trucks, some workers, some method of disposal, admin and maintenance, and that’s pretty much it.

Another interesting case like this is that in the US, there is a private organzation called the American Automobile Association whose main service is roadside assistance when your car break down (though they bundle a number of other services into your membership); when I lived in Australia, there was a similar organization, but it was a government entity. It seems like some economics student/researcher would have maybe done a study comparing the relative costs of this type of thing that is private in some countries and public in others. Of course, I realize that calculation of the “costs” can be manipulated according to political taste (we saw/see a lot of this in the healthcare debates), so perhaps there is a point to claiming that this is an impossible task…

Thanks!

14

You also have to consider that a large percentage of individual’s money is currently taken with taxation and spent on services that they do not use. This has to be considered when trying to make such guesses about service prices, if they were private. Said in another way, if I had that £10000 per year that is taken from me in taxation, given today’s current market rates, i could definitely pay for the services that i currently use from government. I would also most likely have a lot left over that I could spend on improving my standard of living or even a more efficient rubbish collector for example.

15

“You also have to consider that a large percentage of individual’s money is currently taken with taxation and spent on services that they do not use. This has to be considered when trying to make such guesses about service prices, if they were private. Said in another way, if I had that £10000 per year that is taken from me in taxation, given today’s current market rates, i could definitely pay for the services that i currently use from government. I would also most likely have a lot left over that I could spend on improving my standard of living or even a more efficient rubbish collector for example.”

I totally get the theory and agree with you. What I’m really trying to ask in this thread is an extension of that question: how much, exactly, would these other services cost me? I get “less”, but “how much less”? Again, I realize there are all sorts of assumptions etc, but I still think a plausible scenario can be concocted. Again, my interest is in the realm of fiction: if you were reading a fiction book set in a (relatively newly changed) AnCap society and you saw discussions about the private provision of these formerly government services, what kinds of prices or scenarios would you nod and go “yeah, that kind of makes practical sense”, and which would cause you to lose suspension of disbelief?

Rubbish services at $20/month are kind of a given, given that in many locales they are provided for that price by private industry, but I think it’s also clear that rubbish services are a very small piece of the pie. I think I can make viable guesses about things like mail delivery, since I know what the government charges and I know something about the private companies nipping at their heels. The harder things for me to imagine are the more nebulous, e.g. Friedman talks about a “private market in laws”, but: how much does that end up “costing” people? It’s a cost that is absorbed by the government now in ways that are much harder to track down than “mail”, and I’d like to have a plausible, realistic scenario in which I know what the cost is (and, of course, that the cost is less than it currently is ;-).