WASHINGTON — Media analysts sounded an increasingly gloomy note today following news that a full-scale outbreak of civil war in Iraq had been averted. “The prospects for regime change in Washington seem increasingly remote,” said one senior White House reporter who spoke on condition of anonymity.
Hah! Read the whole thing.
Sean Lynch has an interesting discussion at Catallarchy in a post called Connecting The Political Circle. He puts quite a few words into discussing the differences, and similarities, between libertarians (aka anarcho-capitalists) and anarchists (aka anarcho-syndicalists) and socialists.
It’s occurred to me that the main difference between libertarians or anarcho capitalists and socialists or communists is beliefs about what is likely/possible rather than what is desirable. I think the main reason anarchists say anarcho-capitalists are “not anarchists” is that they think anarcho-capitalists just want to eliminate government and want/expect the existing corporations to stay as they are, with the end result being that the corporations become the new government (hence calling us not-anarchists).
I think the last sentence is clearly how Libertarians are perceived. It is, in fact, one of my primary issues, as has been evident in the discussion between Doug Mataconis and I here on The Liberty Papers (see this, this and this for examples). Yes, I believe in individual rights and liberties and the power of markets, I detest the idea of “positive freedoms”, and agree with much else that libertarians believe in. But, I’m not a libertarian, and rarely describe myself as being one. Then it is usually because I’m closer to that position than anything else. The thing I think that libertarians and anarcho-capitalists basically lose sight of is that all concentrations of power are destructive to individual liberty, whether they are formal governments, or not.
Speaking of collusion, this brings up another issue that keeps people on the socialist side of the fence: monopolies. We’re all taught in school that artificial monopolies (i.e. those that are created intentionally by monopolists) can be created and sustained, that they harm the consumer, and that they must be broken up or controlled by government. In school, these were simply called “monopolies” and natural or state monopolies simply weren’t addressed. In actuality, it’s not hard to show that historical monopolies have always failed except when the state has intervened to support them, and that even where natural monopolies persist, they do not harm the consumer (at least not more than a state monopoly) and advances in technology eventually make them competitive anyway.
I think there’s some important thoughts in here, one of which Sean sort of glosses over. First, I agree that artificial, legal and natural monopolies are not permanent things. Second, I agree that government intervention does much more harm than good. In my opinion, the anti-trust lawsuit against Microsoft actually helped to sustain the monopoly they currently have over consumer operating systems and the desktop office suite markets, rather than breaking it up. If nothing else, it convinced people that they had to buy Microsoft products because they were the only viable product. It also convinced competitors to come to terms with Microsoft in a way that favored MS when the government failed to do anything meaningful (from their perspective). Probably the most important thought is downplayed, in a deprecatory sort of fashion. And that is that non-government monopolies hurt consumers. Of course they aren’t worse for consumers than legal monopolies, but that doesn’t mean that Microsoft being able to artificially control scarcity in the office suite market is good for consumers.
So, what does all this make me? I’m clearly neither a socialist nor an anarcho-syndicalist. But, my perspective on corporations, monopolies and concentrations of power seems incompatible with libertarians, conservatives and anarcho-capitalists. I usually describe myself as a rational anarchist. I believe in the sovereignty and responsibility of the individual, and oppose the concentration of power aimed at coercing the individual. I think that is, ultimately, the disconnect between libertarians and I.
Update: A thought struck me, and I think it’s one worth exploring, on this whole issue of libertarians, corporations and monopolies. I think that what is happening is that libertarians are stepping over a line that they should reconsider. They go from defending the market against government intrusion to defending the actual entities within the market that are the proximate cause of the desired intrusion. While government intervention and/or intrusion into the market is something we don’t desire and should actively work against, that doesn’t mean that the target of the intrusion, Microsoft for example, is something good that needs to be defended. In fact, neither Microsoft nor Wal-Mart are shining examples free market practices to hold up to the world. We have a tendency to defend the target of the government intervention, which is a mistake.
I’d say this fits in well with our current education discussion.
“Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves.”
William Pitt (1759-1806) British Prime Minister (1783-1801, 1804-06) during the French Revolutionary and Napoleonic wars.
The current paradigm in this country is that education for our children is provided by public institutions, paid for with tax money. Not only that, but that education by institutions controlled, either directly or indirectly, by the state is mandatory for all children through the end of high school. I’m positive that some of you will point out to me that children can be educated by home schooling or private schools and thus my claim is wrong. I’m not wrong, but I’ll come back to that in a moment. This is a situation that, in the world of business, we would call a monopoly.
In economics, a monopoly (from the Greek monos, one + polein, to sell) is defined as a persistent market situation where there is only one provider of a particular kind of product or service. Monopolies are characterized by a lack of economic competition for the good or service that they provide, a lack of viable substitute goods, as well as high barriers to entry for potential competitors on the market.
The public education system is actually a coercive or state monopoly, which means that means of force (or in this case, the threat of force) is used to coerce the consumer to adhere to the monopoly and to prevent competition. In the United States (as in most Western nations) the consumer (the student and his parents) have no choice, they must attend school. And the school must be accredited by the state. Thus only schools which the state approves can exist and do business. If you believe that the public education system is not coercive, imagine trying to tell your local school board that your child is not going to attend their schools, nor any other accredited school, be it public or private, but that you, as the parent, will take personal responsibility to ensure that your child is appropriately educated. I would suggest that the next thing that will happen is that you will receive a court order to have your child attend school. If you refuse that order then you will be arrested and child placed in protective custody.
The basis for doing this is that all children should be educated to a certain minimum standard in order to be competitive in society after childhood and able to function as adults. So far, so good and a concept I can agree with. The concept is further extended to declare that education is a sure and certain means to combat poverty, crime and tyranny. Yet again, I won’t argue. In fact, just the opposite, I agree wholeheartedly. Now we get to the meat of the matter, and where I diverge from the publicly held conventional wisdom. The argument that favors gathering tax money from me and funding public schools that your child must attend (or an equivalent “private” institution) is that the aforementioned reasons for education and benefits to the society and the individual means that the state should intervene to ensure the positive outcome desired.
I disagree with this position for two reasons. The first is the obvious position of a libertarian. Coercion by the state is wrong. But there’s another reason, and I believe this one is more compelling for those who are not necessarily as likely to believe state coercion is always wrong as I am. The reason is simple really. The state’s coercive monopoly in education is a worse choice for promoting the goals we enumerated in the prior paragraph:
The problem is not so much the consumer (students and parents) in a monopoly, as it is the monopolistic entity. The monopoly has no incentive to innovate, improve efficiency, or lower cost. The reason for this is that there is no competition. At the risk of this not being fully understood, I’m not going to go into the details of why this is so. Earlier I linked to a Wikipedia article on monopolies that explains the phenomenon quite well. It should be obvious, once you recognize this, that it is not the wealthy and privileged who are hurt by such a situation, but rather the poor and unprivileged since competition drives innovation (better products), efficiency (products delivered more effectively), higher quality (differentiates the product) and lower prices. The answer provided to monopoly by the socialist (or statist to use libertarian parlance) is government intervention and/or control.
By looking at the telecom market in the United States we can understand that state intervention distorts the market. During the years that AT&T was a state enforced monopoly telephone service was provided at a certain basic level to all who would pay the price (not all that high) that AT&T charged for that service. But there were no additional services (voice mail, call waiting, caller ID, multiple lines and much more). Today, I pay little more (I pay less after adjusting for inflation) for my residential phone line in a competitive market than I did for my phone line in a monopoly, yet the services I get are much better than I did then. And that service is ubiquitous because we all see the value in it, thus we are willing to pay a reasonable price for that service. By 1970 a natural monopoly existed in the United States in the automobile market. The “Big 3” auto manufacturers (GM, Chrysler, Ford) sold somewhere on the order of 85% of all cars sold in the USA. Low quality, high price and lack of innovation was an accepted fact in the automobile market. Today, with a dozen or so manufacturers competing in the US auto market, that situation is changed. The large increase in cost is due to a combination of much better features than previously available and government safety and environmental regulations (i.e. distortion of the market by government intervention).
Would anyone reasonably suggest that we return to the days of the AT&T or “Big 3” auto manufacturers monopolies? Of course not, we see the benefits to us for products that are nearly universally in demand. We see the fact that we can exert control over the market for these products and we see that the suppliers are working to attract our business with innovation, quality, price, features, efficiency, etc.
I propose that we should remove government intervention and control from our “education system” and make it an education market. Given the universal desirability of education I suggest that we will not end up with a less educated population. Parents would be able to afford education for their children due to their reduced tax burdens. Since the market would almost certainly dictate a lower price per year than the current price we pay per student there should be a net economic benefit (the net difference between current cost and market cost). It is almost certain the situation could not be worse than our current situation. I’ve read far too many studies that show that our real literacy rate, as opposed to the high school graduation rate, today is below 80% in the adult population. You can see how the United States literacy rate compares with other countries around the world at upskilled.edu.au. This is despite the fact that all children are now required to attend school until they receive a high school diploma or GED. And most of that illiteracy is concentrated among the poor and unprivileged of our society. If we, as a society, decide that the poor need some assistance to pay for their education then we could certainly provide scholarships and tuition assistance through public and private organizations. And still our total cost for education would be lower than it is today, through the market mechanisms. Not only that, most of the other problems we decry on a regular basis, poor teachers, lack of innovation and so forth, would be dealt with on a competitive basis. A school whose students had poor records after graduation would not attract more students.
An interesting case study is the situation of education in North America prior to the American Revolution. By and large there was no “public education” as we understand the term today. Not only that, the American colonies were 95% agrarian, with a much lower demand for education than our current industrial society transitioning to information society. Yet the colonists had the highest literacy rate in the Western world (which is to say in the entire world), higher even than Great Britain, which was about to launch the Industrial Revolution. Education was recognized as desirable (and thus in demand) and there was a free market for education. This resulted in good quality and low cost. It should also be noted that the United States had one of the highest standards of living by the early 19th century and that the high literacy rate almost certainly contributed to the rise of American political philosophers like Thomas Jefferson, Benjamin Franklin, Alexander Hamilton, Thomas Paine and so on, and ultimately to the American Revolution. The bottom line is that the free market applied to education will be more beneficial to those who most need the education than the current state monopoly.
Update 2/23/2005: Micha Ghertner over at Catallarchy posts on school choice based on policy analysis done by the Georgia Public Policy Foundation. The article clearly supports my position, with real evidence, that the poor and unprivileged would most benefit from an education system freed of government monopoly. Go read it and see what I mean.
Recently, Patri Friedman posted an excerpt from the Copenhagen Consensus over at Catallarchy. He pointed out that economists agree that the removing trade barriers globally is one of the best ways to spend money from a cost/benefit perspective. I commented fairly extensively on that thread, suggesting that free trade really should be ranked #1 on the list, not #3, behind spending on HIV and malnutrition. This is because I believe that free trade will increase wealth, which will, in turn, increase the money available to be spent on problems like HIV and malnutrition.
I’ve also been, concurrently, reading The Undercover Economist: Exposing Why the Rich Are Rich, the Poor Are Poor and Why You Can Never Buy a Decent Used Car! by Tim Harford. I got turned on to the book by another post Patri wrote, actually. In any case, although there are quite a few areas where Harford and I don’t see eye to eye politically, he has written an entertaining book explaining some of the core ideas of economics in a way that most people should be able to understand. In the second to last chapter of the book, which I just finished, he tackles globalization and free trade. There are quite a few myths surrounding globalization, most of which are memes created by special interest groups that appeal to progressives. This is neither the time nor the place, so I won’t get into what a contradiction in terms the label “progressive” actually is. Aside from that, two of the myths that Harford tackles quite well are that international free trade is bad for the environment and bad for the citizens of poor countries. I won’t tackle the issue of free trade being bad for workers in poor countries, that particular myth has been dispelled quite well many times over. I’m going to tackle free trade and environmental issues. I found the discussion surrounding environmental issues particularly enlightening, especially if you combine it with the realities of environmentalism and global warming. You’ll have to actually read the book to get all of the details, I’m not going to quote the whole chapter here. He lays out evidence for the following points, however:
He then goes on to say:
What, really, are we to make of the environmentalist attack on free trade? We’ve seen that the race to the bottom is nonexistent; that polluting industries are still based in rich countries, rather than poor countries; that environmental standards are rising in China, Brazil, and Mexico, the major destinations for foreign investment into poor countries; that protectionist measures such as those on farming, steel, and coal, which sometimes claim environmental justifications in fact are tremendously harmful to the environment; that taxes on transportation fuels are consistent with free trade and much better for the environment than trade restrictions; and that the worst environmental problems, at least of today, are caused by poverty not wealth. The environmentalist movement should be manning the barricades to demand global free trade immediately. One day, perhaps they will.
I wouldn’t hold your breath. The environmental movement is also, for the most part, convinced that managed economies are the solution to the world’s ills. These folks believe in egalitarianism to the nth degree, which will simply result in all of us being equally poor except a privileged few living in privileged splendor. Kind of like the old Soviet Union was.
Environmentalism is sadly out of touch with reality in so many areas that I fail to see how we can possibly take them seriously.
