liberal or libertarian

[shanek]

My grandmother would get so upset at the freeloaders,

And rightfully so. She would be entirely justified persuing compensation from them. But there's what you can achieve, and what you can't. Even the biggest companies all the time just overlook unpaid or underpaid invoices etc. simply because the amount of the debt isn't worth the hassle and expense of going to collect it. It just isn't worth the bother, and would only interfere with their ability to deliver the service and make a profit.

Also, it's obvious that it wouldn't have had to be $100 if everyone did pitch in. Sort of like a built-in price mark-up, like retailers have to pass on to consumers because of theft, bad debts, etc.

That's absolutely correct. Realistically, she selected a price so that the system could continue despite the fact that there were those she could never get the payment from. Corporations do this exact thing all the time. As you pointed out, whenever you buy something at a store, you're paying just a tiny bit more for it than you would if there were no shoplifters. It's unfortunate, but it's the most efficient way of dealing with it.

This whole thing was an eye-opener to me; I was probably 12 or so. No one was going to build the tower for them, so they did it themselves (without trying to lock up those who didn't help).

And good for them. It worked.

I imagine their biggest hurdles were FCC and local government regulations.

 

[shanek]

Claus, I am extremely confused by these questions.

It's Claus who is confused, as usual. "[W]hy do companies bother to pursue people who don't pay for their goods?" As I just pointed out, a lot of times, they don't. They just eat the cost because it isn't worth trying to collect it. But the paying customers are still getting a service they want at a price they are agreeable to pay.

The problem with that scenario sounds more like the tendancy for governments to always go for the lowest bidder, rather than weighing in other factors.

Well, also, government bids are usually exclusive. If someone bids on the building of a road, for example, they're usually the only one building that road, and they have no real incentive to get it done in a timely or efficient manner. They've been working on making our local highway here 4 lanes for over 15 years now. And they say next year they'll finally have the first 4-mile stretch done! (Of course, they've been saying this for the last 5 years...)

Here's my idea: have two companies build the road, each starting at opposite ends of the stretch to be completed next. Select a point in the middle that represents half the work (so it would take into account terrain etc.). Have them start making the road. If they meet in the middle, they each get an equal share of the value of the contract; straight 50-50. But if one makes it to the midpoint first, they get to keep going, and they may end up with 60% of the contract if they've performed 60% of the workload. That gives them the incentive to get it done fast.

But what's the point of fast if it's not done right? So we have the second phase. After the first phase is completed, the inspectors go in and find everything that's wrong. Everything that one company did wrong is fixed by the other company and that part of the contract is awarded to them. So they have an incentive to get it done fast, to get more of the contract, and an incentive to get it done right, lest they lose a portion of the contract they just worked so hard to gain. Competition makes for a more efficient system. It's far from perfect, but the best I can think of within the limitations of the government road system.

Of course, this way there'd be no way for politicians to hand out favors to their favorite road builders, so that's probably why it'll never happen.

(And, of course, it'll never be as efficient as if it were a free market corporation making the roads, where every delay means lost profits.)

Claus also says that this company "won a lot of contracts;" well, in my experience that usually happens when they have political connections. Again, hardly an environment conducive to the factors that make the free market efficient.

In any event, using an example of government contracts as a reason why the free market is inefficient is just plain intellectual dishonesty. And it's not like nobody in the free market has ever hired a cleanup crew. Private companies clean up office buildings all the time, and do it well.

 

[CFLarsen]

I agree with Shane that it would have been absolutely stupid for the community to have said, "We'd love more channels, and really ARE sick of only Lawrence Welk and Hee-Haw, but some people will freeload, so let's not bother."

It would be more akin to a group of investors saying, "Gee, other companies experience an annual 5% rate of bad debts...so we might as well not even start our company." Don't you agree that that would be extremely stupid?

You try to stop payment on anything, and see what happens.

The problem with that scenario sounds more like the tendancy for governments to always go for the lowest bidder, rather than weighing in other factors. I'll bet if Donald Trump shopped around to find a maintenance firm for his buildings, this problem wouldn't have happened.

Or he would have fired the firm, rightfully and promptly, a la Shane and the waste management company.

Oh, no, it doesn't happen that way: When the task is outsources, they make a very specific list of things that need to be accomplished. The companies then promise to do that (or they won't get the job). It wasn't just price.

 

[CFLarsen]

It's Claus who is confused, as usual. "[W]hy do companies bother to pursue people who don't pay for their goods?" As I just pointed out, a lot of times, they don't. They just eat the cost because it isn't worth trying to collect it. But the paying customers are still getting a service they want at a price they are agreeable to pay.

Hey, I'd love to see a list of the companies that allow people to get away with not paying for their goods!

Well, also, government bids are usually exclusive. If someone bids on the building of a road, for example, they're usually the only one building that road, and they have no real incentive to get it done in a timely or efficient manner. They've been working on making our local highway here 4 lanes for over 15 years now. And they say next year they'll finally have the first 4-mile stretch done! (Of course, they've been saying this for the last 5 years...)

Read my example, and stop being the fool.

Claus also says that this company "won a lot of contracts;" well, in my experience that usually happens when they have political connections. Again, hardly an environment conducive to the factors that make the free market efficient.

Let me, once again, educate you on the world outside Bumblef*ck, NC: Denmark is one of the countries in the world where corruption literally doesn't exist. ISS won a lot of contracts because they - on paper - could compete. Unfortunately, they were not able to do the job properly after all.

In any event, using an example of government contracts as a reason why the free market is inefficient is just plain intellectual dishonesty. And it's not like nobody in the free market has ever hired a cleanup crew. Private companies clean up office buildings all the time, and do it well.

I gave you an example that showed you wrong. Ignore it at will.

 

[Earthborn]

Originally posted by Snide
Now Earthborn did argue from incredulity once it was understood that it's easier in my suburban negihborhood and your backroads to handle more garbage trucks:

Maybe. But it's not an argument against the possibility of a free market solution, but an argument against the scheme Shanek imagines. Another free market solution might be possible, even though I cannot imagine what it would look like.

She eventually seemed to like the cost of $7/month using your/our way

I am however comparing my entire municipal taxes with the price Shanek pays for his private garbage collection service, so it could be that I'm still getting a better deal.

Originally posted by Shanek
It's kind of like what Randi said at TAM3 about debunking Geller: if you show people one way to bend a spoon, and then Geller does it a different way, people go, "Well, what about that way?" (snip) They never seem to make the connection that if they can be fooled by a spoon being bent one way, they can be fooled other ways.

I happen to think that Randi is far too secretative about the explanations for tricks as well. If he wants people to become educated, he should be telling all the tricks.

Is there a sort of Magician's code among libertarians that forbids you from revealing all the wonderful solutions the free market is going to provide? Are people supposed to just believe that it will, or are they allowed to question whether it will provide solutions in specific situations?

Why is the default position government intervention?

There is a simple answer to that: because that's how the things you are arguing should be privatised are organised today. You are the one who argues for change, so you are the one who should provide the evidence that changing it will make it better and not make it worse.

I think there are a lot of people who have no real complaints about how the government does many things, so it is your job to convince them that change is worth the effort.

If it truly is as they say, that we need government to provide services the free market can't or won't deliver, shouldn't we at least give the free market a chance before we go imposing government on everybody?

Sounds lovely, but we simply don't have that option. Some things you want to see changed are already imposed by the government on everybody. We cannot go back in time and give the free market a chance before government, we'll have to start from reality as it exists today.

Which is worse: providing a service and making enough money to keep it going, and having a few people freeload, or forcing everyone to pay for the service whether they use it or not?

Some services are used by everyone, even if they don't specifically want to. If you throw garbage on the street or a canal in Amsterdam, then sooner or later it is going to be cleaned up whether you want to or not. Whether the person who threw it there can be traced and whether s/he has paid or not. And if the person cannot be traced, it still has to be paid by someone. I think the fairest way to do that is by spreading the costs over everyone.

Here's my idea: have two companies build the road, each starting at opposite ends of the stretch to be completed next.

Of course this assumes that the exact specifications and design of the road has already been worked out (which is probably already half the work). It also assumes that the point that constitutes half of the construction work can be reasonably estimated even though there maybe millions of factors to acount for, some of them unforseeable. It will probably take many years before both companies agree on the midpoint and with every unforseeable setback they might demand to renegotiate. Further it assumes that there are companies who would willingly accept such a contract that makes the money they'll make in the end so uncertain.

Also, since the companies will have to negotiate intensively anyway, they will have a huge incentive to collude and try to screw the government as much as it can. In the Netherlands we had the Bouwfraude (Building-Fraud) scandal where construction companies colluded against the government to make it pay as much as possible. The construction companies should have competed against eachother for lucrative government contracts, but instead they worked together to keep prices for the government ridiculously high.

But otherwise, great plan.

 

[Bjorn]

companies colluded against the government to make it pay as much as possible. The construction companies should have competed against eachother for lucrative government contracts, but instead they worked together to keep prices for the government ridiculously high.

Collusion never works, I've been told.

 

[Darat]

Collusion never works, I've been told.

Well it certainly shouldn't be illegal, after all why can't a group of people (or companies) get together and decide to run a cartel...?

 

[Ian Osborne]

Well it certainly shouldn't be illegal, after all why can't a group of people (or companies) get together and decide to run a cartel...?

hey, that's a point. With all Government interference removed from commerce, there's nothing at all to stop those two roadbuilders getting their corporate heads together and fleecing the Government. In fact, given the unlikely nature of the scenario, they'd be fools not to...

 

[Bjorn]

hey, that's a point. With all Government interference removed from commerce, there's nothing at all to stop those two roadbuilders getting their corporate heads together and fleecing the Government. In fact, given the unlikely nature of the scenario, they'd be fools not to...

- or libertarians?

 

[Snide]

You try to stop payment on anything, and see what happens.

If I refuse payment long enough, they'll write it off. I have lawyers as clients who refuse to ever pay us, and we never get the money.

I still don't understand your point, anyway. I'll restate mine: My grandmother's group didn't like freeloaders, but they didn't go after them, either, except to hopefully recruit them for subsequent years. Retailers may "go after" bad debts, but eventually, through bankruptcy or just ignoring third party collections, the retailers stop hounding them, and just write it off as a bad debts expense in their books. They budget each year for x% amount of their sales to never get paid.

Maybe you need to type slower for me to understand.

Oh, no, it doesn't happen that way: When the task is outsources, they make a very specific list of things that need to be accomplished. The companies then promise to do that (or they won't get the job). It wasn't just price.

Yeah, I was using a hypo that I'd seen in things like public school systems making improvements in facilities; always going with the lowest bidder. Shane's explanation is much better. You can't expect good results when there's no competition for the job.

Maybe that wasn't the scenario in your anecdote either, but although I don't see eye to eye with Shane all the time, I tend to agree that one incidence of the public sector doing a better job than a private firm, who got the contract in an open-bidding process, is more an anomaly than the norm.

 

[Snide]

Maybe. But it's not an argument against the possibility of a free market solution, but an argument against the scheme Shanek imagines.

No, I understand that, and I was trying to be fair. Taken literally, one of your posts was an argument from credulity, but my point was that on the whole, you really weren't saying, "It can't be done because I don't see how!" Rather, I took your posts to say that, "I don't see how this can be, and here's my set of references and experiences...please explain." I didn't think you were moving any goalposts, either. For the most part, you were just asking questions.

 

[Snide]

I am however comparing my entire municipal taxes with the price Shanek pays for his private garbage collection service, so it could be that I'm still getting a better deal.

I understood that too. I brought it up not to say that you were conceding anything, but rather to defend any claims that people were ganging up on Shane. I thought you were being quite reasonable, and used that small, quasi-concession as an example.

 

[Snide]

Some things you want to see changed are already imposed by the government on everybody. We cannot go back in time and give the free market a chance before government, we'll have to start from reality as it exists today.

But you can elect new officials who are in favor of more privatization.

In America, the airlines and airwaves used to be heavily regulated, but under two "liberal" presidents (ironic, huh?), they became deregulated. (Not entirely, but do you see my point?)

Now, you can argue as to whether that's a good result, which is fine. But to say free market can't be given a chance means you're just not detaching yourself enough from the default government position (or perhaps you're living under quite a tryanny!).

So come on! Use your imagination! Dare to dream! Workers of the world unite!! Ummm, wait a second...

 

[CFLarsen]

If I refuse payment long enough, they'll write it off. I have lawyers as clients who refuse to ever pay us, and we never get the money.

I still don't understand your point, anyway. I'll restate mine: My grandmother's group didn't like freeloaders, but they didn't go after them, either, except to hopefully recruit them for subsequent years. Retailers may "go after" bad debts, but eventually, through bankruptcy or just ignoring third party collections, the retailers stop hounding them, and just write it off as a bad debts expense in their books. They budget each year for x% amount of their sales to never get paid.

I'm not saying that people always pay - far from it. But you can't keep doing that, you'll end up deep in debt. In a society as the American, where everything hinges on credit cards, you're going to have a hard time living it up for long. At some point, the hammer is going to fall: You've just cheated too many people.

Yeah, I was using a hypo that I'd seen in things like public school systems making improvements in facilities; always going with the lowest bidder. Shane's explanation is much better. You can't expect good results when there's no competition for the job.

Maybe that wasn't the scenario in your anecdote either, but although I don't see eye to eye with Shane all the time, I tend to agree that one incidence of the public sector doing a better job than a private firm, who got the contract in an open-bidding process, is more an anomaly than the norm.

That is the conventional wisdom, yes. Unfortunately, the public sector is often far more efficient than the private sector. Why? Because service is not just about the bottom line - making a profit.

 

[shanek]

Maybe. But it's not an argument against the possibility of a free market solution, but an argument against the scheme Shanek imagines.

It was an example, Earthborn. There are tons of ways that the free market could find a solution, and there are people there with way more business sense and creativity than I who can come up with them.

I watched an entire strip mall near our office go from cleared-out land to open and running in under three months. The most amazing thing to me was how they built it: they have these pre-fabricated walls, bricks already laid out with rebars sticking out, that they brought in on flatbeds. They trucked in a bunch of those and the walls of the building were up in no time.

How they managed to figure out all of that, I'll never know. But some smart apple saw that he could make some money by mass producing pieces of buildings to sell to builders so that they don't spend as much time with on site construction. That in and of itself saves money; mass producing the pieces saves even more because of economies of scale. I'm sure whoever came up with that idea is very, very rich.

Now, imagine if the government had said, "Oh, well, there's only one way you can make a building and so we're going to make our codes mandate that way." Let's say we're discussing that here, and you challenge me to find a way to build a building more efficiently. I wouldn't have been able to do it. But does that mean that you would be right? No! The free market would be still robbed of the opportunity to innovate and create a tremendous amount of wealth for the people. You would justify that merely by your own incredulity.

If I could think about how every single thing in the market could work more efficiently, I'd be out there implementing them and becoming very rich.

Another free market solution might be possible, even though I cannot imagine what it would look like.

But it's not possible as long as the government insists on its monopoly.

I am however comparing my entire municipal taxes with the price Shanek pays for his private garbage collection service, so it could be that I'm still getting a better deal.

How many people are being forced to pay for that service who don't use it?

Besides, we're in two completely different locations and situations. I'm sure prices vary, even among the free market providers.

Is there a sort of Magician's code among libertarians that forbids you from revealing all the wonderful solutions the free market is going to provide?

No; we just don't know them. And as I pointed out, we don't have to. All we have to do is point out that in virtually every case where we can find a good comparison between the two, the free market has been found to work so much better. It's track record is miles above government. A great video detailing this is "John Stossel Goes to Washington," where he compares things like government welfare to private charity, government airports to private airports, government roads to private roads, etc. Do a Google search and you'll probably come up with it.

There is a simple answer to that: because that's how the things you are arguing should be privatised are organised today. You are the one who argues for change, so you are the one who should provide the evidence that changing it will make it better and not make it worse.

Problem: that's not how our government is supposed to be set up. This is supposed to be a free country, and the economically-ignorant busybodies are violating the Constitution right and left. The free market is in line with the founding principles of this country; government intervention is not. So I say the onus is on the big government to justify what they're doing. What you're saying is an Appeal to Common Practice fallacy.

Sounds lovely, but we simply don't have that option. Some things you want to see changed are already imposed by the government on everybody. We cannot go back in time and give the free market a chance before government, we'll have to start from reality as it exists today.

But as has repeatedly been shown, all we have to do is get the government out of the way and the free market will provide. There are countless examples. Every time, someone has made that very argument; it has never been shown to be at all indicative of reality.

If you throw garbage on the street or a canal in Amsterdam, then sooner or later it is going to be cleaned up whether you want to or not. Whether the person who threw it there can be traced and whether s/he has paid or not. And if the person cannot be traced, it still has to be paid by someone. I think the fairest way to do that is by spreading the costs over everyone.

Funny; John Stossel's latest special, "Myths, Lies, and Nasty Behavior," covers that very issue and shows how the free market has been much better than government at stopping and cleaning up litter. There's one funny shot with him throwing popcorn in the air in a private basketball stadium and saying, "Look! I'm littering!"

Of course this assumes that the exact specifications and design of the road has already been worked out (which is probably already half the work). It also assumes that the point that constitutes half of the construction work can be reasonably estimated even though there maybe millions of factors to acount for, some of them unforseeable. It will probably take many years before both companies agree on the midpoint and with every unforseeable setback they might demand to renegotiate. Further it assumes that there are companies who would willingly accept such a contract that makes the money they'll make in the end so uncertain.

But those details would have to be worked out anyway, even with a single company doing it. I'm not saying there aren't problems; in fact, if you recall, I said the exact opposite. But it's got to be more efficient than taking 15 years to build a 4-mile stretch of road.

Also, since the companies will have to negotiate intensively anyway, they will have a huge incentive to collude and try to screw the government as much as it can. In the Netherlands we had the Bouwfraude (Building-Fraud) scandal where construction companies colluded against the government to make it pay as much as possible.

That wouldn't be possible here, as they wouldn't be the only two companies bidding for the contract. They'd just be the two lowest bidders. The price would then be already agreed upon.

 

[shanek]

Well it certainly shouldn't be illegal, after all why can't a group of people (or companies) get together and decide to run a cartel...?

They can. But it'll only work with government interference.

Let's say you've got an exit off an Interstate that is the only one for 20 miles in either direction. There are two gas stations at that intersection. The owners of the gas station decide to collude and set their price at $3/gallon, thus bilking all of the travellers who have no other choice but to stop there.

Realistically, whenever this kind of thing is tried, it works for about a week or two. Then one of them drops his price to get business from the other. This happens very quickly because they anticipate the other one doing the same thing.

But let's say that doesn't happen, and they keep their prices up. All that does is open the door for someone to come in and undercut their prices. He could sell gas for $2.25/gal and make a killing. He'd have no problem finding investors to put up the money, and as I pointed out above they can build commercial buildings lightning-fast now. He goes into business, undercuts their price, and makes a killing. The other guys now have to either lower their price or go out of business.

What is there to stop this third guy? Only government. He has to get building permits. He has to get a business license. He may have to get a zoning variance. He has to get a license to store hazardous material (the gasoline) on the property. And so on and so on and so on. So there's all these different permits to get from all these different government boards.

So let's say he's in front of his local Board of Commissioners to get their permission to open his own business on his own land (a ridiculous idea in a country that purports to be free). There'll be experts (paid for by the other two guys, but that'll hardly be pointed out too strongly) coming along to say that the area can't take one more gas station, they'll talk about runoff, or ecological ramificaitons, etc. They'll make it so that any politician who votes for the new startup forming will be painted as someone who is greedy and doesn't care about the environment and is in the pocket of big business. So few politicians are going to vote to support the guy, and the ones who do probably won't be reelected.

And the result is, the cartel uses government force to maintain their gouged prices. There's just no other way it can be maintained.

Most of the regulations on the books, purporting to be for safety or for some other general good, are actually there at the behest of the big established companies wanting to stop startup competition or drive the little guys out of business. They write the legislation so that they don't have to do that much to comply, or they even get grandfathered so that the regulations don't even apply to them. And it makes it that much harder for new businesses to start up and for competition to drive prices down.

That is the effect that government has. And as long as government has the power to do this, it can never be any other way.

 

[Snide]

I'm not saying that people always pay - far from it. But you can't keep doing that, you'll end up deep in debt. In a society as the American, where everything hinges on credit cards, you're going to have a hard time living it up for long. At some point, the hammer is going to fall: You've just cheated too many people.

Well, maybe I was being obscure. Let's try this again:

Snide: Sure there were freeloaders (it was over the free airwaves after all), but enough caring folks got invovled to collect $100 from enough people each year to have this service.

shanek:And bully for them. It seems to me to be the height of idiocy to say, "We can't provide this service without people freeloading, even if we are making money, so we're not going to do it!"

CFLarsen: Really? Then why do companies bother to pursue people who don't pay for their goods? They make enough money as it is, don't they?

OK, I just don't see the relevancy of your comment. Shane simply pointed out how stupid it would be to NOT undertake a business venture (or community tower-building project) just because of freeloaders, because the freeloaders in fact were not a large enough force to make the idea a money-loser.

How does pointing out what we all know (about how companies go after debtors) negate this? It's a false dichotomy, red herring...and a jab at free enterprise...all at once. (My speculation would be that you saw it as an opening to take a jab at Shane, without really thinking too much about it. If you're honest with yourself, you realize that you do this in vain form time to time. That's not an ad hom; it's just a candid observation. I get on Shane for his style because it hurts his cause. As operator of a very good skeptic's web site, you hurt your cause in this way too.)

The truth is: in a free market, companies go into business knowing they will have bad debts expenses, and they try to recover each one of them, to their best ability, until it becomes more expensive to go after them than not. (Or until bankruptcy claims keep them from doing so)

My grandmother's group knew there would be freeloaders, and they tried to get them to join in the next year, and/or the next year, etc.

That is the conventional wisdom, yes. Unfortunately, the public sector is often far more efficient than the private sector. Why? Because service is not just about the bottom line - making a profit.

You and Shane have gone back and forth on this one enough, so I don't need to add anything. Let's just say I'm somewhere in the middle of you two, leaning towards Shane's side.

 

[CFLarsen]

Snide,

Fine with me.

 

[RandFan]

Unfortunately, the public sector is often far more efficient than the private sector. Why? Because service is not just about the bottom line - making a profit.

It's truly difficult to comprehend such a statement.

Efficiencies are almost always devised by people who seek to make a profit. Their is no natural motivation for Governments to be efficient. On the contrary, there is motivation not to be efficient.

Governmental departments will almost always spend their entire budget because if they don't it means a smaller budget for the next year. So they run out and buy things that are often unnecessary just to protect their budget.

Also, no one is going to get rich in government by being more efficient or productive. In the private sector a person can make a fortune and many, many have by devising efficient means of production or providing service. Mass production was not invented by government. The cotton gin was not invented by government. There are 10's of thousands if not hundreds of thousands of such efficiencies brought about by the private sector.

The "middle man". We B&M about the middle man but in truth the middle man has brought us economies of scale.

And why is efficiency so important to the private sector and not to government? Simple, a business in the private sector that is not efficient will go broke if there is competition. The government simply raises taxes or borrows with out limits to cover expenses. Their is no motivation to curtail spending. If someone suggests that government should be more efficient they are accused of trying to close fire departments, police departments, fire teachers, starve children and take Medicare away from the elderly. Why? Because bureaucrats often cut those items first or it is simply demagoguery. California plays a shell game where they take money for local fire and police and use it in the general fund. If revenue is not high enough to cover costs then the first thing cut is fire and police. It is a gun to the heads of the tax payer to fund pork barrel.

Yes, for many things government can be more efficient. Sadly they often are simply not more efficient.

Edited to add: I didn't read the entire thread and it is entirely possible I'm missing an important point. Though I can't imagine what it is.

 

[Snide]

Snide,

Fine with me.

OK by me too, then. I just don't like being confused.