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Monday, March 10, 2008

market failure vs. government failure

Susan Hogarth wrote:
SH) there could not possibly be any unintended consequences of making pollution a major revenue source for the state. (SH
Nice try.  Unfortunately, the theory of government failure says just that governments TEND to suffer certain failures, whereas the theory of market failure demonstrates that markets CANNOT AVOID certain failures -- like the pollution negative externalities that pretty much everybody but you knows are inevitable if regulated only by torts.
Sorry, but you've picked precisely the worst possible place and time in all of human history to peddle the theory that systematic government failure is more inevitable and more ruinous than systematic market failure in the area of environmental negative externalities.  You're asking for a complete overturning of how this polity -- uniquely successful in all of human history -- provides for its common defense and secures its members' right to life, liberty, and property.
According to the three leading indices of freedom, only 13 nations (out of almost 200) are currently more free than America. America's constitutional republican framework has been by far the most successful in human history. It has been increasing personal and civil liberties almost monotonically for two centuries, and we are among the most economically free nations in the world, with a per-capita GDP exceeded only by Norway and Luxembourg. Our 300 million people live and work in a continent-wide nation with a $13 trillion economy built on a twenty-first century technological infrastructure. By contrast, anarcholibertarians can merely wave toward a couple of medieval island nations with populations and population densities four orders of magnitude less than those of modern industrialized states. As great as America is, we have detailed, redundant, and current empirical evidence backing up the mainstream findings of modern economic science about how market-oriented reforms within the statist framework can make America even more free and even more prosperous. Anarcholibertarians have nothing of the kind to support their moralizing a priori claim that America would be a better place if we completely dismantled our system of rights protection in favor of a promise by liberty-lovers to set a good example of aggression abstinence.

It would be untenable to deny that history provides many examples of situations in which there was no functioning monopoly on force-initiation over a significant region for a significant period of time, for any non-embarrassing standard of significance. I've never heard of a single case in the entire history of organized crime across hundreds of cities in scores of nations over multiple decades in which the unregulated market for protection behaved remotely like what is predicted by anarcholibertarian theory. This track record becomes even more dismal if you include all the cases in history in which there have been regions lacking effective sovereignty by a central authority. This amounts to an empirical falsification of the anarcholibertarian theory of protection markets that by the standards of social science is spectacularly conclusive.

Every single episode in which there wasn't a monopoly on force-initiation over a region becomes a test case for anarcholibertarianism. Despite the literally hundreds of such test cases, the only purported successes advanced for the theory involve a few thousand pre-industrial farmers sprinkled sparsely across medieval Iceland and the frontier of colonial Pennsylvania. In contrast to how even bastard forms of minarchism have been so spectacularly successful compared to all other significant social experiments, the track record of anarcholibertarianism is simply embarrassing.