Tuesday, November 30, 2010

If You Tax Something, You Get Less of It

From the New York Post:

"The underground tobacco market is spreading like a fast-growing cancer in the wake of tax hikes that make New York cigarettes the most expensive in the nation -- and it's costing the state tens of millions a month in lost tax revenue.

Illegal cigarettes are pouring into neighborhood bodegas by the truckload from neighboring Indian reservations, lower-tax states in the South and even as far away as China. Government data show that New York state is being smoked out of as much as $20 million a month from all these illegal cigarette purchases -- an estimated 7.3 million packs a month sold off the state tax radar.

Sales of taxed cigarettes have plummeted 27 percent since July, when state lawmakers raised the excise tax to $4.35 a pack on top of the city's tax of $1.50, making the average price of Marlboros here $11.60, with some shops charging as much as $14. About 30 million packs are being sold legally each month -- down from 41 million packs a month before July.

The plunge far exceeds tobacco-control experts' predictions that sales would fall 8 to 10 percent, indicating that smokers are finding other means to get their nicotine fix."

MP: Economic lessons to be learned here:

1. Taxes are always distortionary because people can change their behavior to avoid the tax.  (The only exception: a "head tax," which cannot be avoided.)  Elected officials almost always underestimate the ability of taxpayers to change their behavior to avoid taxes, and the New York cigarette tax example is no exception  - experts predicted a 8-10% reduction in sales vs. the actual 27% decline.  

2. In any discussion about taxes, we have to distinguish between "tax rates" and "tax revenues," especially when we talk about "increasing or decreasing taxes," with the assumption being that increases (decreases) in tax rates and increases (decreases) in tax revenues automatically happen together.  In the case of cigarettes in New York the "tax increase" in rates resulted in a "tax decrease" in revenues because of what happened to the "tax base" (the amount of activity subject to the tax).  In this case (as often happens), the increase in tax rates on cigarette caused the tax base (amount of cigarettes subject to state taxes) to shrink so significantly, that there was a decrease in tax revenue. 

The same outcome often happens, whether the tax increase is on income, dividends, capital gains or retail sales.  See a good overview here of "tax rates" and "tax revenues" by Thomas Sowell on a recent episode of "The Kudlow Report."

HT: Craig Newmark via Lee Coppock.

91 Comments:

At 11/30/2010 10:42 PM, Blogger W.E. Heasley said...

You mean to say excessive tax creates/expands subterranean economies spawned by tax avoidance? Go figure!

Wonder what set of brilliant economists supported such an excessive tax?

There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen. - Frédéric Bastiat

 
At 11/30/2010 11:30 PM, Blogger Ironman said...

If anyone wants to put themselves in the shoes of a hypothetical bootlegger, or their customers, here's the tool where you can do it for New York state!

 
At 11/30/2010 11:40 PM, Blogger QT said...

"tobacco-control experts' predictions that sales would fall 8to 10 percent, indicating that smokers are finding other means to get their nicotine fix"

oh...and this was really about lowering consumption for the good of consumers? who's kidding who?

kudos to those sinful New Yorkers.

 
At 12/01/2010 5:26 AM, Blogger bob wright said...

I wonder if "tobacco-control experts" continue to stand in the middle of the road when a car is approaching or do they move out of the way?

 
At 12/01/2010 7:38 AM, Blogger juandos said...

'when state lawmakers raised the excise tax to $4.35 a pack on top of the city's tax of $1.50, making the average price of Marlboros here $11.60'...

Hmmm, its obvious that these lawmakers hate the children, especially poor children...

 
At 12/01/2010 9:16 AM, Blogger James Fraasch said...

What about taxes on Real Estate? It seems to me that it would at most be a delayed effect since someone cant change their home to move someone else except after a period of time.

James

 
At 12/01/2010 9:52 AM, Blogger Hydra said...

To be fair, shouldn;t this read "If You Tax Something, You Get Less of It, Even if the
Costs far Exceed the Benefits" ?

 
At 12/01/2010 9:55 AM, Blogger Hydra said...

Where does this tell us the Laffer curve for taxes bends?

 
At 12/01/2010 10:15 AM, Blogger juandos said...

"Where does this tell us the Laffer curve for taxes bends?"...

Let Arthur Laffer explain it replete with examples...

 
At 12/01/2010 10:58 AM, Blogger morganovich said...

this is hauser's law.

US tax revenues always revert to about 19% of GDP regardless of the tax rate. this happens time and time again.

but we do get noticeably better growth with lower taxes, so it's 19% of a bigger pie with lower taxes.

set a 19% flat tax from $1+, no exceptions/deductions, and walk away. what's so difficult about that?

great article by hauser:

http://online.wsj.com/article/SB10001424052748703514904575602943209741952.html

 
At 12/01/2010 11:09 AM, Blogger Hydra said...

Juandos, we went there before. Laffer explains nothing, and ends with a bunch of mealymouthisms.

My question was what evidence does this example give, concerning the Laffer curve?

 
At 12/01/2010 11:13 AM, Blogger Hydra said...

but we do get noticeably better growth with lower taxes, so it's 19% of a bigger pie with lower taxes.

=================================

I believe this is true, but it is my understanding that the evidence is not all that great, there being so many other factors to consider.


Also, this assumes the pie is ALWAYS bigger, and an individuals piece of it is bigger, neither of which is necessarily true.

 
At 12/01/2010 11:29 AM, Blogger jcarroll1948 said...

The NY tax on cigarettes brings up an interesting question: What is a reasonable/good law? The NT tax rate on cig's is unreasonable, and honest, reasonable, generally tax paying citizens are avoiding it; technically becoming criminals. I think a reasonable/good law is one that requires behavior that a reasonable/good citizen would exhibit without the law. Example of a reasonable/good law is the one outlawing murder; a reasonable/good citizen does not commit murder (thereby following the law), but he would not commit murder even without the law. Excessive taxes are examples of unreasonable/not good laws, where reasonable/good citizens knowingly commit the crimes of avoiding the laws.

 
At 12/01/2010 12:28 PM, Blogger VangelV said...

This shows that some individuals will always take the risk and step up to help consumers when governments pass stupid laws or increase taxes by enough to make smuggling profitable. Smokers can thank the underground economy for saving them a few bucks and remember the stupidity of politicians next time they go to the polls.

 
At 12/01/2010 12:36 PM, Blogger juandos said...

"Laffer explains nothing, and ends with a bunch of mealymouthisms"...

Well hydra that only applies to those who's grasp of basic English and basic economics is less than nil sir...

My condolences to you...

 
At 12/01/2010 1:05 PM, Blogger Benjamin said...

If yo tax something, you get less of it--so why do we not tax religion?
Economically speaking, the whole religious community is parasitical. Hypocritical too, but that is besides the poinbt....

 
At 12/01/2010 1:10 PM, Blogger morganovich said...

hydra-

the way to test the effects of tax cuts on growth is to look at the 5 years before and after a tax cut of increase. read hauser's article. this is precisely what he does.

the "progressive obfuscation committee" that likes to claim there is no long term relationship between tax rates and growth does so by pointing to the 1800's and early 1900's when growth was high (and so were taxes) and comparing them to our lower growth lower tax present.

this is obfuscation because it's a totally meaningless comparison. far too many other things change over that period.

i don't see how you get to a "pie is always bigger" inference. that is not necessary for low taxes to be preferable. what one can say with strong conviction is that growth will be higher (or contraction less severe) with lower taxes.

 
At 12/01/2010 1:15 PM, Blogger morganovich said...

james-

"What about taxes on Real Estate? It seems to me that it would at most be a delayed effect since someone cant change their home to move someone else except after a period of time."

all else equal, a rise in real estate taxes will drop the value of the real estate itself.

thus, if you jack up the tax rate, the value on which you pay taxes drops.

then it's just an elasticity equation.

but that only takes into account existing homes. higher taxes also discourage new construction, so you will get fewer units to tax in the future than you would have had.

you can always pop collections up for a year or 2 by raising rates, but they always adjust again and leave you where you were in % terms and worse off that you would be in revenues after a few years.

 
At 12/01/2010 1:36 PM, Blogger Junkyard_hawg1985 said...

"Where does this tell us the Laffer curve for taxes bends?"

Hydra, I don't think this example really tells us where the Laffer Curve bends. It simply confirms that when one jurisdiction has a lower tax rate than another that a person has access to, the lower tax jurisdiction gets more business and the high tax area less. In this case, people are able to drive elsewhere to buy cigarettes. While New York lost tax revenue, neighboring states increased tax revenue.

Like individuals, companies are able to move their headquarters based on corporate tax rates.

Exit Question: If America has the second highest corporate tax rate among developed economies, what impact would a reduction in corporate tax rates have on corporate tax revenues, income tax revenues, and jobs in America?

 
At 12/01/2010 3:08 PM, Blogger Hydra said...

Hydra, I don't think this example really tells us where the Laffer Curve bends. It simply confirms that when one jurisdiction has a lower tax rate than another that a person has access to, the lower tax jurisdiction gets more business and the high tax area less.

================================

I dunno. The tool Ironman cited suggests something more subtle than that. Something about elasticity.

I keep asking the Laffer curve question because those that promote lower taxes ALWAYS think it will result in enough growth to offset the revenue loss - eventually.

It is as if there is no lower bound to the curve.

Morganovich seems to point to a number like 19%, as a flat tax. I think places with flat taxes are considerably higher than that. But atleast that is something; a point of departure.



Morganovich:

the "progressive obfuscation committee" that likes to claim there is no long term relationship between tax rates and growth

Basically, I agree with you, I think there is obfuscation on both sides. Progressives seem to think there is no relationship,and conservatives think it is stronger than we can actually prove.


Juandos: You ever have anything to add bysides gratuitous insults? The article you cited has a bunch of stuff in it, but nothing that sets bounds on the problem, only adds more variables and more uncertainty.

 
At 12/01/2010 3:25 PM, Blogger VangelV said...

I keep asking the Laffer curve question because those that promote lower taxes ALWAYS think it will result in enough growth to offset the revenue loss - eventually.

When the city increases taxes on cigarettes the profits will flow to the entrepreneurs who step in and meet the consumers' needs for reasonably priced products. If taxes are removed the money lost to the black market will go to the city instead and its revenues will go up. Obviously there is a limit because if taxes are dropped below a certain amount there won't be enough extra sales to make up for the loss. But that limit is probably quite low in comparison to where the tax rates stand today.

 
At 12/01/2010 3:27 PM, Blogger Hydra said...

It is a pretty simple question, really. At what lower tax limit would conservatives generally agree that lowering taxes will not increase tax revenues in a reasonable amount of time, say eight years?

The next question is at what higher tax limit will progrssives/liberals generally agree that raising taxes reduces tax revenues and increases black markets?

If you resolve that, at least you put some boundaries on the issue. Then you can work on, "OK how long are you willing to wait for the growth to happen, to get X increase in Revenue?"

Oh, that's right. government is too big, we don't need more revenue.

 
At 12/01/2010 3:44 PM, Blogger Junkyard_hawg1985 said...

Hydra,

I believe the Laffer curve bends down somewhere between 20% and 30%.

A couple of additional comments:

1) Our progressive tax system is terrible at optimizing tax revenue. On one hand, you have almost half the population paying 0% income tax, while incrimental tax rates of 40% await the top earners. This is a lose-lose scenario for tax collection.

2) While Laffer focuses on tax rates, I think the real key is the overall level of government spending. This year the government (fed, state, local) spent over 40% of GDP from a combination of taxation (taxes), borrowing (bonds), and stealing (monetizing debt). I don't think the level of taxation is as important as the level of government spending. Since we are on the wrong side of the Laffer curve, additional government spending is an economic depressant. The failure of 3 economic "stimulus" plans support this.

 
At 12/01/2010 3:54 PM, Blogger VangelV said...

Basically, I agree with you, I think there is obfuscation on both sides. Progressives seem to think there is no relationship,and conservatives think it is stronger than we can actually prove.

The problem is not that we can't prove it but the blatant lies being told to try and discredit the idea. One is the whole issue of very high taxes in the 18th and 19th century. Well, if you look at the size of government you find that its take of the total economic activity was extremely low, which means that taxes were much lower than the progressives claim.

And what both the left and right keep forgetting is that when you pass a law it does not mean that the law will have the expected effect. For example, high tariffs may be seen to protect some industries and high taxes may be seen to discourage some activities that the meddlers to not approve of. But that is not the case when smugglers are capable of bringing in cheaper goods that consumers want and the tariff/tax collection system is bypassed.

 
At 12/01/2010 4:15 PM, Blogger VangelV said...

It is a pretty simple question, really. At what lower tax limit would conservatives generally agree that lowering taxes will not increase tax revenues in a reasonable amount of time, say eight years?

Libertarians would argue that the question is actually a bit different than what the conservatives or progressives would say that it is. They would point out that whether you steal a little bit or a lot you are still stealing. And that if you don't have the moral authority to steal from your neighbour than finding two or three others to agree that you should 'tax' him (which is what you substitute for the word steal) will not give you the moral authority either.

The problem for individuals is not just how much the government taxes but how much it actually spends. The thugs who control the government have had a great party over the past few decades and have caused spending to explode. Now the country is drowning in debt and the unfunded liabilities are growing exponentially. The math no longer works and there is no way for the system to remain solvent unless the size of government is cut by at least 70%. The faster you get moving on that side the faster the real economy can recover.

If you resolve that, at least you put some boundaries on the issue. Then you can work on, "OK how long are you willing to wait for the growth to happen, to get X increase in Revenue?"

Oh, that's right. government is too big, we don't need more revenue.


Your ignorance is showing again. You are damned right that government is too big. The faster it defaults the better. Leave the taxpayers alone and stop trying to justify looting by pretending that it does more good than harm.

 
At 12/01/2010 4:16 PM, Blogger juandos said...

"Oh, that's right. government is too big, we don't need more revenue"...

You didn't indicate which government...

City? County? State? Federal?

It makes a difference...

BTW 'if' you're talking federal then please show me the part in the Constitution that mandates the following: Catalog of Federal Domestic Assistance

Still there is some good news to be had: Pelosi’s Global Warming Panel gets the axe

 
At 12/01/2010 4:40 PM, Blogger Junkyard_hawg1985 said...

Hydra,

Since I answered your question, please answer mine.

How much do you believe annual GDP growth is depressed by a tax rate of 40% vs. 20%?

 
At 12/01/2010 7:26 PM, Blogger morganovich said...

i tend to resist the "taxes are all bad and theft" argument.

there are legitimate uses for taxes and legitimate authority for collecting them. certain basic services make us all better off.

imagine a country without police or courts. would there be growth or freedom? i doubt it. you'd spend a great deal of time and treasure defending yourself and your property. a body of known and predictable law and courts to adjudicate it yield enormous advantages.

a military capable of protecting our borders is likewise a huge common good.

i am the first to say that we have vastly overstepped the bounds of what is either needed or beneficial, but to oppose taxation and government altogether seems to me to be a net loss of liberty, not a gain.

if we were all free to kill and steal as we please, you might have more "freedom" but could you use it? would you ever be safe? you'd have less liberty. the ceding of some freedom to gain more liberty is both a rational and ethical act.

i'd be careful with the "all taxes are theft" argument. absent some government with the ability to fund itself, we'd all be much worse off.

 
At 12/01/2010 8:21 PM, Blogger Ron H. said...

"Still there is some good news to be had: Pelosi’s Global Warming Panel gets the axe"

juandos, That's the best news I've heard all day! Thanks for the tip. I missed that one.

 
At 12/01/2010 8:38 PM, Blogger Ron H. said...

This comment has been removed by the author.

 
At 12/02/2010 8:34 AM, Blogger James Fraasch said...

Morganovich,

You echo my thoughts exactly. My concern for property taxes is that the effects are not immediate (like the cigar tax) and therefore many taxpayers do not make adjustments until it is too late.

Here in my town we passed a 10% increase in property taxes in June, people are now getting calls from their mortgage companies that they need to get their escrow all in balance again. This is going to be $50-100/month adjustment and is going to crush people on fixed income.

If school directors and taxpayers would see/know the eventual impact this would have had I wonder if it would have gone through. But because of the delay I think some might blame the coming exodus on whatever new "shock" there might be to the system instead of this increase.

Unfortunately, only time will tell.

Thanks.

 
At 12/02/2010 9:32 AM, Blogger VangelV said...

there are legitimate uses for taxes and legitimate authority for collecting them. certain basic services make us all better off.

You are assuming that basic services that were in demand by consumers of those services could not be delivered by a market system so we need thugs to force us to give up some of our income and wealth to provide them by using a monopoly. But there is no way to support that assumption because markets can deliver all services better and cheaper than a government monopoly.

imagine a country without police or courts.

Who said that you would not have security and courts in a free society? Would you tolerate a security service having its people hide in washrooms searching for adults that want to have sex with one another? Or spending a huge amount of money, labour, and other resources on setting up speed traps looking for more revenues? If you look at most polls and most assessments you will find that citizens are already pissed off at police because they no longer even choose to investigate many crimes even as they spend huge amounts of resources in activities that citizens have no desire in being done. Our local cops no longer spend much in the way of resources investigating property crimes or even incidents of domestic violence. Private security does much better because it only responds to actual demand by the people who are paying for it.

would there be growth or freedom? i doubt it. you'd spend a great deal of time and treasure defending yourself and your property.

Have you ever lived in a large condominium complex? Security is not very expensive when it is focused on doing things that actually improve security and stay away from non-value-added activities.

a body of known and predictable law and courts to adjudicate it yield enormous advantages.

Yes it does, which is why we have so much waste today. In the current environment there is no individual who is aware of all of the laws that regulate daily life or does not violate some of those laws each and every day unknowingly or knowingly. I suggest that your problem is one of ignorance of legal history. I would do some reading if I were you and educate myself on the issue. A good start would be to look at:

http://www.daviddfriedman.com/The_Machinery_of_Freedom_.pdf

Go to the section, POLICE, COURTS, AND LAWS—ON THE MARKET, and read. After this there are hundreds of book on the issue of legal history that would help you discover the error of your ways.

 
At 12/02/2010 9:37 AM, Blogger VangelV said...

Morganovich

The link was too long. Try
http://tinyurl.com/2dna8sv instead.

When you get done with that you might want to look to Stringham's collection of writing on the subject by going to:

http://tinyurl.com/2b8uwt

 
At 12/02/2010 9:57 AM, Blogger VangelV said...

a military capable of protecting our borders is likewise a huge common good.

Actually, a standing army is a dependency that most countries cannot afford. Just look at the damage that the military-industrial complex has done to the US taxpayer and you see exactly what the libertarians are talking about. Before the US adopted a standing army most land was acquired by negotiation with natives. After it was obtained by genocide as people who hated Indians were given the authority to deal with them and control them. It was only a standing army that allowed presidential imperial ambitions to be made into policy.

Your military stopped being an instrument of defense a long time ago and is now predominantly an instrument that helps the ruling elite to meddle in the affairs of other nations. Why do you want to pay for that when the country is bankrupt? Do you really like spending billions of dollars to build infrastructure in Iraq and Afghanistan while there is a huge deficit and taxes on the productive class are as high as they are?

i am the first to say that we have vastly overstepped the bounds of what is either needed or beneficial, but to oppose taxation and government altogether seems to me to be a net loss of liberty, not a gain.

But you can't support this with any facts or logic. I have never argued against people getting together and deciding to form associations that will be funded out of fees. I am arguing against having a central bureaucracy that collects taxes and decides how they are to be used.

Look at the school example. Do you really think that parents in a neighbourhood would allow their schools to be run down and not teach effectively if they were allowed to control the local schools? Or to use Friedman's example of the benefits of a decentralized police force.

Friedman writes, "Decentralization is equally important for the police force. A major complaint, especially in ghetto areas, is that the police do not protect the residents and are not there to protect the residents, that they are an occupying army sent by City Hall to protect the property of the rich and influential. Local police, hired and paid by local governments, would do their job or lose their jobs. And the job would be easier because the local residents would view police as their employees and protectors, not as their enemies."

As I said, you have not thought much about the matter and assume that what we were taught in our state run schools is factual and represents a complete picture of reality.

 
At 12/02/2010 10:05 AM, Blogger VangelV said...

if we were all free to kill and steal as we please, you might have more "freedom" but could you use it? would you ever be safe? you'd have less liberty. the ceding of some freedom to gain more liberty is both a rational and ethical act.

I argue for the rule of law. You argue for the rule of the ruler. There is a difference.

You seem to be ignorant of the fact that as the government run civil courts have broken down a private arbitration system has sprung up the job that is demanded by companies engaged in large commercial transactions. You also seem to be ignorant of the failures of your criminal courts where prosecutors use the system to gain convictions rather than try to bring justice. Judges and prosecutors who make errors are protected by the government run monopoly and face little in the way of punishment even when they are guilty of serious misconduct. That would never happen in a competitive privately run justice system.

i'd be careful with the "all taxes are theft" argument. absent some government with the ability to fund itself, we'd all be much worse off.

Nonsense. That is the statist line that we have been fed since we were little kids even though the evidence shows that the opposite is true. As I said, you need a better education.

 
At 12/02/2010 12:48 PM, Blogger morganovich said...

vangel-

you make a whole bunch of specious claims and logical fallacies in your numerous responses.

they basically break down to:

basing costs on a a system that already has law (like your condo example) where of course the cost to the condo is low because there are real police outside. if there were not, it would not be nearly so cheap. you'd live in a walled compound with guards armed to the teeth with military weapons and need to take them with you when you went out.

or semantics about rule of law and rulers. the law cannot defend or enforce itself. someone must have the authority to do so. this cannot be a private function. what are we going to do, subscribe to legal systems? what if i refuse? what if i sign up then refuse to abide by it's rulings? a legal system without the ability to compel compliance is no legal system at all.

you claim knowledge of legal history, but seem to be just spouting fantasy and ignorance.

or straw man attacks on arguments i never made like speed traps or that the current legal system is perfect and correct. you just find examples and use ad absurdum augments to attempt to define my position as one i never took. this is a cheap rhetorical trick and a sign of a very limited mind. you can do better.

your arguments about a standing army are particularly bad in this regard. i'm not talking about foreign adventurism nor a military anything like the size of what we have. just a deterrent force. lots of countries have done quite well with such forces.

or a bizzare set of philosophical grandstanding with no evidence at all.

"hat is the statist line that we have been fed since we were little kids even though the evidence shows that the opposite is true."

what evidence is that you pompous liar? somolia? darfur? chechnia? russia? great evidence you have. can you seriously argue that we would be better off with no government at all? if so, there are numerous places to which you could emigrate and join in the great freedom and prosperity miracle you seem to believe in.

you love to toss out accusations of anyone who disagrees with you being stupid and uneducated. you do this to cover up the fact that you cannot think clearly and are making arguments that are incoherent, lack evidence, and that rely on rhetorical dodges and straw men. grow up.

 
At 12/02/2010 12:57 PM, Blogger morganovich said...

oh, and your "arbitration" example is just stupid.

many contracts require arbitration, and i am all for that. nothing is "disrupting" that. you can use it if you want to. i use such clauses in contracts all the time.

but it only works because it is backed up by courts that will support the process.

even "binding arbitration" has no teeth without courts to back it up.

if you and i go through arbitration and they find that i owe you money, what will you or your arbitrator do if i say "that's nice, i'm not paying"?

at that point you need a real court that can garnish assets or otherwise compel compliance.

otherwise, why would the unscrupulous even bother to listen? your "judgment" would be worthless.

and that's just civil. criminal poses a whole new pile of issues. shall we have private courts for criminal offenses? who would you trust to run them?

 
At 12/02/2010 4:57 PM, Blogger VangelV said...

basing costs on a a system that already has law (like your condo example) where of course the cost to the condo is low because there are real police outside. if there were not, it would not be nearly so cheap. you'd live in a walled compound with guards armed to the teeth with military weapons and need to take them with you when you went out.

No police ever patrolled the property to ensure that people and their property were protected. We employed about 70 to protect five buildings that were worth more than $1 billion and the city's second largest parking structure that was full of many very expensive vehicles. This was in an area that had massive numbers of people go through and included many vandals, beggars, and drunks.

We found that there was little use in depending on the police to do anything. Sadly, many of the lower level buildings not too far from us found out the hard way. Crime was significantly higher because they cold not afford the same level of protection. Police only showed up to take statements long after crimes had taken place because thieves found it easier to hit ares that were not protected as well.

or semantics about rule of law and rulers. the law cannot defend or enforce itself. someone must have the authority to do so. this cannot be a private function. what are we going to do, subscribe to legal systems? what if i refuse? what if i sign up then refuse to abide by it's rulings? a legal system without the ability to compel compliance is no legal system at all.

You are ignorant of the facts again. When government has a monopoly on security there is no incentive to do a great job because protection is not the highest priority. The police get paid by the government, which has its own agenda, not the citizens that need that protection.

And as I pointed out, we already have a legal system that has no ability to compel compliance in the commercial arbitration system. It works perfectly fine. Your ignorance is not my problem; it is yours.

you claim knowledge of legal history, but seem to be just spouting fantasy and ignorance.

I cited two texts that have hundreds of citations supporting my view. All you have is the statist propaganda and emotion. Try reading the references first and then we can have an intelligent two way debate.

 
At 12/02/2010 5:02 PM, Blogger VangelV said...

or straw man attacks on arguments i never made like speed traps or that the current legal system is perfect and correct. you just find examples and use ad absurdum augments to attempt to define my position as one i never took. this is a cheap rhetorical trick and a sign of a very limited mind. you can do better.

Speed traps, washroom stings, and other useless activities are the natural outcome of the system that you support. The fact that you cannot see it or refuse to acknowledge it is your problem, not mine.

Try reading up on the subject and stay away from unsupported emotional arguments.

your arguments about a standing army are particularly bad in this regard. i'm not talking about foreign adventurism nor a military anything like the size of what we have. just a deterrent force. lots of countries have done quite well with such forces.

But once you have a standing army its bureaucracy begins to find something to do to expand its functions, not stand around as a deterrent. Your country spends more on a military than the next 50 countries combined yet you are protected by two large oceans, two friendly neighbouring territories and do not have a natural enemy.

Your military accounts for the biggest part of your budget today and is the primary reason why your finances have been destroyed.

 
At 12/02/2010 5:05 PM, Blogger VangelV said...

what evidence is that you pompous liar? somolia?...

Let us stop there. Somalia is a perfect example. From the CIA we learn that, ""Despite the seeming anarchy, Somalia's service sector has managed to survive and grow. Telecommunication firms provide wireless services in most major cities and offer the lowest international call rates on the continent. In the absence of a formal banking sector, money exchange services have sprouted throughout the country, handling between $500 million and $1 billion in remittances annually. Mogadishu's main market offers a variety of goods from food to the newest electronic gadgets. Hotels continue to operate, and militias provide security."

Murphy explains it better than I could.

http://mises.org/daily/1855

 
At 12/02/2010 8:56 PM, Blogger VangelV said...

you love to toss out accusations of anyone who disagrees with you being stupid and uneducated. you do this to cover up the fact that you cannot think clearly and are making arguments that are incoherent, lack evidence, and that rely on rhetorical dodges and straw men. grow up.

I can think very clearly and use facts and logic to back up my arguments. You lack the knowledge necessary to understand that the notion of a limited government is very Utopian because we can never find angels to rule us and stick to the limits that they were supposed to be constrained by. The US is a perfect example. It began with the Articles of Confederation but shortly after the ink dried there was a quite coup in which the Federalists concentrated what was supposed to be limited power to the central government in Washington, a city that was modeled after Rome. Immediately after the ink on the Constitution had tried that the Federalists began to talk about what was implied in the document and appointed judges to limit the power of the states and individuals. Eventually Lincoln created the modern nation state by using great violence to stop the states from leaving the Union that they created and had the right to live. Since then a succession of judges have allowed Congress and the President to take on powers that cannot be found in the Constitution and the US has slowly turned into a police state where citizens are little more than sheep.

You are now ruled by a political elite that remains regardless of which party is in power and live off the efforts of the productive class, which is getting smaller and smaller. Thanks to apologists and flatterers like you Americans have become little more than serfs.

 
At 12/02/2010 9:01 PM, Blogger VangelV said...

many contracts require arbitration, and i am all for that. nothing is "disrupting" that. you can use it if you want to. i use such clauses in contracts all the time.

but it only works because it is backed up by courts that will support the process.


No. It works because a company that does not comply will not be able to get others to sign a contract with it. The arbitration system exists because the government court system has failed.

even "binding arbitration" has no teeth without courts to back it up.

if you and i go through arbitration and they find that i owe you money, what will you or your arbitrator do if i say "that's nice, i'm not paying"?


Arbitration is common between established large companies. If they lose there is no way to avoid the judgment without losing a hard earned reputation. You don't see the situation properly because you have no reputation to protect, which means that anyone who does business with you in the hope that you will agree with an impartial arbitrator is not very wise.

 
At 12/02/2010 9:26 PM, Blogger VangelV said...

and that's just civil. criminal poses a whole new pile of issues. shall we have private courts for criminal offenses? who would you trust to run them?

There is no big problem with having a system of private courts decide criminal offenses. We use English Law as the basis of our legal system. If you know about its history you will find that criminal law cases used to be handled by professional judges without direction from the state. That makes sense because victims are individuals, not the state. Initially the system was predominantly concerned with compensation, not punishment. It does a family no good if the person who robbed them was thrown in jail if they lose suffer due to the theft. Again, the courts had no power to compel compliance but in the case where someone avoided judgment he would be declared an outlaw and as an outlaw became vulnerable to anyone going after him.

You might try reading Bruno Leoni on the history of Common Law.

 
At 12/03/2010 9:24 AM, Blogger morganovich said...

vangel-

once more you seem totally unable to separate ideas like "limited government" from "the government we have". can you think abstractly at all? your logic is full of bad assumptions, straw man augments, unsupported assumption, and flat out lies. you accuse me of utopian thinking in order to hide that fact that you are the one engaging in it.

your "arbitration" argument is an excellent example. arbitration IS a part of our system. we use it for a variety of reasons. but it cannot exist as a stand alone. your, if they don't follow the rules, we'll just kick them out of the club idea is just naive. they'll buy the club.

what will you do when i put all the local arbitrators on retainer so that they never find against me? to whom will you complain then? just as in your condo security example, you are assuming that all the benefits of the existing system will persist when the system goes away. they won't. ultimately, law comes down to who can and cannot use force and violate property rights in the name of other law.

your private judges example suffers from all the same problems. so i'll buy them too and now i can kill and steal. to whom will you complain?

and will you give these judges the ability to use force to compel my compliance? what force? will they have their own police and army to make me behave? haven't you just installed the equivalent of a feudal lord?

i'm not arguing that our system is perfect nor that we cannot improve it enormously, but there must be basic law to provide sanctity of person and property. that law must be backed up by the credible use of force. how else would you anchor it? vigilantism and shunning are not real options. both cause more problems that they solve.

you seem to be thinking only in one dimension. it's not enough to determine who is culpable at law. law must be enforced as well, or it's just so much coffee table chit chat. ask the UN. who will wield the stick in your system and what stick will that be? how will they not become massive corrupt as the private systems did in so many colonial situations?

and can you seriously trot out somolia as a success story? you just cut and past the top line from wikipedia. have you BEEN to somolia? do you have any idea what it's like? if you'd even bothered to read the rest of the article you googled, you'd see that the the somali government puts GDP per capita at $333 and 65% with 43% of the population living on $1 a day or less. 80% of the population are nomadic herders etc. is this your great dream of liberty? you have got to be kidding me.

it is guys like you who discredit the libertarian cause by taking it to ludicrous extremes and arguing that a hell hole like somalia is a success story of small government.

you are not a libertarian, you are some sort of anarcho-capitalist ideologue with little grounding in reality who fails to see, just as the marxists did, that the system he proposes is even mope prone to abuse and degeneration than the one you propose to replace with it.

 
At 12/03/2010 9:39 AM, Blogger VangelV said...

once more you seem totally unable to separate ideas like "limited government" from "the government we have". can you think abstractly at all? your logic is full of bad assumptions, straw man augments, unsupported assumption, and flat out lies. you accuse me of utopian thinking in order to hide that fact that you are the one engaging in it.

Ah, the irony. What we have is a person who believes in a Utopian concept like 'limited government' but is accusing others of not thinking clearly. For the record, I often use the term limited government but I do not for one minute believe that it is possible to have limited government because, unlike you, I understand how human nature works.

The trouble in the real world is that power is not given up lightly by those that hold it. In fact the opposite is true. People that have power tend to accumulate more of it by using their position to support others who would transfer even more power to them. This is why we have seen such a massive growth in government in the United States, which was supposed to have a limited government that was constrained by a written Constitution.

If you add up total government spending in the US you find that it is around 40%, giving the US government a impact in the economy than supposedly communist China. By pandering to power all you do is ensure that it keeps growing further and further from your Utopian ideal.

 
At 12/03/2010 9:49 AM, Blogger VangelV said...

your "arbitration" argument is an excellent example. arbitration IS a part of our system. we use it for a variety of reasons. but it cannot exist as a stand alone. your, if they don't follow the rules, we'll just kick them out of the club idea is just naive. they'll buy the club.

Your ignorance is showing. Arbitration is as large as it is because the government run court system does not work very well. It does not need and does not rely on the government to succeed because people who take part in commercial transactions for a living need to protect their reputations and will pay damages that were specified by the arbitrators.

what will you do when i put all the local arbitrators on retainer so that they never find against me? to whom will you complain then? just as in your condo security example, you are assuming that all the benefits of the existing system will persist when the system goes away. they won't. ultimately, law comes down to who can and cannot use force and violate property rights in the name of other law.

I guess that you never read any of the material that I provided. The arbitration business is very competitive and those that are seen to be biased will not be chosen by a counterparty. Given the desire to stay in business companies that provide arbitration services will ensure that they fire any who are compromised.

You might try to read the Stringham book. It shows how in the first, unregulated stock markets the government encouraged losing players not to pay up because it considered stock trading gambling. Yet, there were very few cases where a party did not take delivery of a losing purchase. The reason was obvious. Once you broke your word nobody would do business with you.

your private judges example suffers from all the same problems. so i'll buy them too and now i can kill and steal. to whom will you complain?

I guess that you have never actually read anything about the history of law. Private judges who were corrupt would risk losing their livelihood and reputations. They would also become liable for their misconduct and would be ruined if found out. The incentives for them to determine what is truly just was certainly higher than the incentives in our modern monopoly system where politics and political ambition play a much bigger role.

 
At 12/03/2010 9:59 AM, Blogger VangelV said...

and will you give these judges the ability to use force to compel my compliance? what force? will they have their own police and army to make me behave? haven't you just installed the equivalent of a feudal lord?

Easy. A judge can declare anyone who rejects a verdict to be an outlaw. Society is not kind to outlaws and anyone would have the right to capture or kill you for a reward. And when you have a competitive system that has justice as its main goal you do not have the equivalent of a feudal lord, who has rights and privileges that others do not have.

i'm not arguing that our system is perfect nor that we cannot improve it enormously, but there must be basic law to provide sanctity of person and property. that law must be backed up by the credible use of force. how else would you anchor it? vigilantism and shunning are not real options. both cause more problems that they solve.

I agree that there has to be law. I simply point out that justice does not require a state run monopoly. In fact, the evidence shows that a monopoly system is not concerned with justice and does not care about victims in the way that competitive private courts did.

you seem to be thinking only in one dimension. it's not enough to determine who is culpable at law. law must be enforced as well, or it's just so much coffee table chit chat. ask the UN. who will wield the stick in your system and what stick will that be? how will they not become massive corrupt as the private systems did in so many colonial situations?

The UN? The UN is a corrupt political institution so it has not role to play in the administration of justice.

As I pointed out on a number of other occasions, enforcement was not a big problem because judges had the power to declare those that did not comply with the court decisions outlaws. If the court's decision was truly just those outlaws would be brought to justice.

and can you seriously trot out somolia as a success story? you just cut and past the top line from wikipedia. have you BEEN to somolia? do you have any idea what it's like? if you'd even bothered to read the rest of the article you googled, you'd see that the the somali government puts GDP per capita at $333 and 65% with 43% of the population living on $1 a day or less. 80% of the population are nomadic herders etc. is this your great dream of liberty? you have got to be kidding me.

You don't read well. As the CIA pointed out, life in Somalia improved after the corrupt government fell. That does not make it a great place to live but it does make it a better place than when the government was in charge. Of course things would improve if the UN stopped trying to bring in a new corrupt government to do its bidding and stopped paying people to kill Somalis that want no central government and prefer the tribal system.

 
At 12/03/2010 10:18 AM, Blogger VangelV said...

it is guys like you who discredit the libertarian cause by taking it to ludicrous extremes and arguing that a hell hole like somalia is a success story of small government.

Stop trying to spin and lie. I did not say that Somalia is a great success story and that we should all move there. What I said is that life for ordinary Somalis improved when the corrupt government fell.

Life expectancy improved from 46.0 years to 48.5 years. Immunization rates (measles) for one-year-old children went from 30% to 40%. Immunization rates (TB) for one-year-old children went from 31% to 50%. The number of physicians per 100,000 went from 3.4 to 4. The number of infants with low birth weight dropped from 16% to 0.3l%. The infant mortality rate (per 1,000) fell from 152 to 115. Access to sanitation increased from 18% to 26%. The percentage of the population with access to at least one health facility went from 28% tp 54.8%. And the population living in extreme poverty (<$1perday)fell from 60% to 43.2%.

These are real facts that come from the UNDP, CIA World Factbook, World Bank, and WHO. They show that Somalia IMPROVED after Mohamed Siad Barre's regime was overthrown.

And if you had actually done any reading about law, you would know that the Somalis have a well developed system of customary law.

you are not a libertarian, you are some sort of anarcho-capitalist ideologue with little grounding in reality who fails to see, just as the marxists did, that the system he proposes is even mope prone to abuse and degeneration than the one you propose to replace with it.

You are clearly ignorant of the issues that you argue about. That does not qualify you to judge anyone. Try learning first and then we can get back to a real debate.

 
At 12/03/2010 12:30 PM, Blogger jcarroll1948 said...

Holy cow! Talk about abusing the comment section of the blog. Dr Perry, recommend you institute a 250, or so, word limit on comments. Anyone who cannot express a thought(s) with reasonable brevity should start their own blog.

 
At 12/03/2010 1:54 PM, Blogger Ron H. said...

This comment has been removed by the author.

 
At 12/03/2010 2:04 PM, Blogger Ron H. said...

"Dr Perry, recommend you institute a 250, or so, word limit on comments. Anyone who cannot express a thought(s) with reasonable brevity should start their own blog."

On the other hand, anyone who has a problem with long comments should probably start their own blog, and impose whatever limits and restrictions they choose.

 
At 12/03/2010 2:57 PM, Blogger morganovich said...

vangel-

you are missing the point here deeply. do you really think that outlaws and vigilante justice meted out by unrepresentative judges and the populace at large are an answer to anything? that is not a basis for law on a large scale.

let's say i am a big bank, like BofA. i decide to seize all the assets in my care and invest them offshore in countries that have rule of law backed by credible government. what are you going to do? declare me outlaw? so what?
i have a trillion dollars and a private army. i'll laugh at you. you may not do business with me, but the rest of the world will. african dictators never seem to have any trouble finding places to keep the wealth they steal, do they?

this was my point about the UN (which you completely missed). my point was not that the UN was good or useful, but rather that it was beholden to special interests and totally toothless. like the "outlaw" court you propose, all it can really do is say "stop or i'll say stop again, or maybe i wont play with you." few actually care.

what will your court do to me at BofA? nothing. i'll be richer than you are. i can seize and hold territory if i wish or i can leave altogether. then what will you do? to whom will you appeal?

your "outlaws" will become an insurgency. you'll be in a constant state or war with all these "non people" who now have little incentive not to go to war with you.

what will you do with the drug and mafia gangs that rise? hunt them down with vigilante hordes? you be the drain in which all this international refuse collects.

what will you do with a hostile foreign power?

it is you who are failing utterly on understanding human nature. you seem to think that human nature applies to law and government, but not to human relations. that is the height of naivete.

how is recommending fewer and better laws to maintain basic security and rule of law pandering to power? that's a ludicrous statement. you are just jousting with straw men again.

you are blinding yourself with some utopian vision about a world in which we all get along and reputations are the only thing we care about. you cannot run a criminal system that way, nor can you do business beyond the very clubby arenas like trading. not everyone thinks that way.

i understand intensely the usefulness of reputation despite your unfounded and inaccurate claims to the contrary, but i also understand its limitations which you clearly do not.

in the recent real estate bust, what happens if millions of home owners refuse to pay or be foreclosed upon? many would happily yield reputation to keep their house. will you declare them all outlaw? millions and millions of them? jail and sheriffs provide a very significant stick here. your "reputation damage" is just not going to work the same way, particularly as it cannot modulate well.

it's really your only penalty. you wind up treating murder and playing the stereo too loud the same way. it's much too blunt a tool.

 
At 12/03/2010 3:00 PM, Blogger morganovich said...

the main reason somalia improved is that foreign goods could get in, particularly food and medicine. it is you who are spinning and lying. you compare local rule to ruthless despotism and pretend that says anything about small government and basic law. do you ever get tired of accusing others of that which you yourself are doing?

somalia would be better off still with a basic set of laws and regulations. nothing fancy, just basic rule of law. as it is, the "private law" you love is already devolving into warlordism.

and the "customary law" you cite is backed by warlords and guns. sure, it's a system to fall back on, but certainly not one an outsider can use. part of the custom is "steal from foreigners".

you have obviously never tried to do business in the horn.

the systems are not as you describe them. they are tribal, corrupt, and utterly discriminatory. they are also woeful at dealing with cross tribal issues.

rights of the in group are defended and no one else's recognized.

perhaps instead of constantly accusing others of a need to get an education, you should get one yourself and stop parroting wikipedia and masquerading as an expert. you have no idea what you are talking about.

all your arguments fail when you ask "so who has the stick"? shunning is not enough. such has never worked. it rapidly divides a society (see salem etc). it cannot deal with outside forces and internal insurgency.

you imagine a world as stable as this one but without the laws, but that is not the world you would get. absent a governmental monopoly on violence, you're going to get a great deal more of it.

 
At 12/03/2010 3:07 PM, Blogger morganovich said...

BTW-

if you want a great example of how well your "private judges" will work based on their reputations, have a look at the credit rating agencies.

all those arguments "should" have applied there, but instead, they were bought wholesale by those who paid for the service.

 
At 12/03/2010 3:36 PM, Blogger VangelV said...

Holy cow! Talk about abusing the comment section of the blog. Dr Perry, recommend you institute a 250, or so, word limit on comments. Anyone who cannot express a thought(s) with reasonable brevity should start their own blog.

How do you express a thought of a complex subject in 250 words without being superficial? How do you support that thought if you don't have enough words to support it with reference and with examples from the references cited because you know that most people will never look at the references because they have no interest in actually learning something that would push them outside of their comfort zone?

 
At 12/03/2010 3:50 PM, Blogger VangelV said...

you are missing the point here deeply. do you really think that outlaws and vigilante justice meted out by unrepresentative judges and the populace at large are an answer to anything? that is not a basis for law on a large scale.

Your answer is embedded in your comment above. There is no way to have effective courts when you have a centrally controlled system that imposes its will over a large scale. And I have never argued for unrepresentative judges. That is what you are supporting. Private law would actually have judges that are far more answerable to the community than what you have in the system today. Judges that are not competent or show bias would not get any business in a competitive environment.

let's say i am a big bank, like BofA. i decide to seize all the assets in my care and invest them offshore in countries that have rule of law backed by credible government. what are you going to do? declare me outlaw? so what?

You should be free to do what you want with your own capital. But if you look at the real world rather than your imagined one, you will see that investors prefer jurisdictions that have less regulation and less taxes than those that have more.

Of course, BofA cannot 'seize' anything. It can only use the capital it owns to invest in what it thinks is best for its shareholders.

i have a trillion dollars and a private army. i'll laugh at you. you may not do business with me, but the rest of the world will. african dictators never seem to have any trouble finding places to keep the wealth they steal, do they?

Really? You mean that the rest of the world will do business with a country that steals? Try telling Mugabe and Chavez that tall tale. In the real world countries that steal from investors find out that investors will not send their money there.

 
At 12/03/2010 4:25 PM, Blogger VangelV said...

this was my point about the UN (which you completely missed). my point was not that the UN was good or useful, but rather that it was beholden to special interests and totally toothless. like the "outlaw" court you propose, all it can really do is say "stop or i'll say stop again, or maybe i wont play with you." few actually care.

But it is you who is missing the point. All political organizations are biased and 'beholden to special interests.' That is why you should not trust political organization or depend on it to deliver justice.

what will your court do to me at BofA? nothing. i'll be richer than you are. i can seize and hold territory if i wish or i can leave altogether. then what will you do? to whom will you appeal?

But you can't do anything of the kind. First there is no single actor that can control BofA. Anyone attempting to steal the capital would be out very quickly because there are others who want to get the top job by being heroic. Second, BofA has loans as deposits. If it leaves the country the judges would simply have the loans paid to the people that were ripped off and BofA would find that its theft did not yield very much.

Your imaginary world is one in which people are sheep and would not be vigilant enough to protect their capital. Everyone would be deluded by a false sense of security and become a victim to some nefarious individual. But in a competitive system where there is no overseer things do not work that way. Investors would not trust what management said. They would insist on evidence that things are going well by looking at something that can't be faked. Dividends are a perfect example. Before there was an SEC investors demanded that companies paid a very high yield that would be three to four times what treasuries would yield. A Bernie Madoff would never have a chance because his scheme would be exposed quite early in the game and there would not be an SEC to protect his scheme.

As I wrote, you are stuck in a Utopian fantasy world that is not reflected in the reality in which we find ourselves.

 
At 12/03/2010 5:07 PM, Blogger morganovich said...

v-

you are mistaking poor maintenance of a machine with a bad machine.

i will not argue that our current system has been allowed to become unwieldy and poorly optimized, but that does not obviate the concept of a rights based legal system backed up by a government monopoly on violence.

your argument about banks and investments is totally untrue. investors prefer less regulation TO A POINT but require certain minimums or else they walk away from the system entirely. by your logic, the banks of somalia and russia ought to be thriving. but they aren't because there is not enough law.

you also completely fail to answer the question, which is what will you do when i run off with the money. mugabe has no trouble funneling money to switzerland and from there to invest in what he likes. our firms will not invest in his country, but one he has the money, he can invest all over the world. when B of A does the same thing, they will have the same opportunities. what will your "reputation driven arbitration system do then"?

you still do not understand my UN example (or you are being willfully disingenuous). my point is that they, just like your private courts, lack enforcement capability. because of this, they cannot provide rule of law, just public comment.

your ideas about "no one at Bof A could do that are just silly. you don't think the top 10 officers could do that before anyone could stop it? perhaps they don't get all the money, but they could walk with much of it. who cares who wants to run it after that? any big hedge fund could do this easily, then move to another state to live in happy retirement.

how would you know what was being done with your capital until it was too late?

now i have billions to protect myself. you have no monopoly on authority or on violence. what are you going to do?

you have no police or military.

you also seem to argue that your system will avoid corruption. it has no advantages in this respect relative to democratically installed judges. it would be run by those who pay the most and beholden to them for funding, just as moodys was/is.

how is it you can be so cynical about democratic institutions and yet so credulous of the probity of the same people running a private system?

all you'd wind up with is bought justice for those who were powerful and wealthy.

who is going to pay for your criminal courts and their enforcement? how will you stop that from being corrupt? take a look at the "private" courts that have existed in colonized countries. they were far more corrupt and unjust than those we have today.

you keep taking some Utopian ideal and trying to pretend it's the real world. you'll wind up with afghanistan, not a functional state.

 
At 12/03/2010 5:15 PM, Blogger VangelV said...

your "outlaws" will become an insurgency. you'll be in a constant state or war with all these "non people" who now have little incentive not to go to war with you.

Again you write without thinking or knowledge. Outlaws are those who did not obey customary law. They have no support from society because it is society that creates that customary law. I suggest that you do some reading so that you can shed your ignorance.

what will you do with the drug and mafia gangs that rise? hunt them down with vigilante hordes? you be the drain in which all this international refuse collects.

Now your ignorance is fully exposed. The mob gets its strength from laws that provide it with a huge margins by selling products that governments have made illegal. It makes a big profit on selling drugs, running prostitution rings, gambling establishments, or smuggling alcohol and cigarettes, because the government does not allow honest providers of those goods to compete with it without breaking the law. The Mob simply fills a societal need because people do want to use drugs, drink and smoke without taking out a mortgage, use the services of call girl, or gamble without being harassed. It built Vegas because people wanted to gamble legally. It introduced the world to Jazz by using black musicians in its brothels. It integrated the races in those brothels as men had the choice of Asian, Caucasian, African or Indian women depending on their preference at the time. And if you were black, had the money and could afford the price then you could also have sex with a white or Asian woman if you so chose. The Mob dominated the gay bar scene because it protected patrons from raids by police. It did not care about false morality and societal hangups because its driving force was profit. And society is better for it.

The ball is in your court. Try reading up a bit on the subject before you expose any more of your ignorance.

 
At 12/03/2010 5:26 PM, Blogger VangelV said...

what will you do with a hostile foreign power?

Defeat it. What would you do? Become a slave to a standing army?

it is you who are failing utterly on understanding human nature. you seem to think that human nature applies to law and government, but not to human relations. that is the height of naivete.

Where have I ever said that? It is you who expect men to be ruled by Angels who will respect the limits placed on their power and prevent government from growing. Frankly, I can't think anything more Utopian than the concept of a 'limited government,' particularly when you are talking about anything bigger than a city state.

how is recommending fewer and better laws to maintain basic security and rule of law pandering to power? that's a ludicrous statement. you are just jousting with straw men again.

You are saying that it is perfectly moral for the state to use force to take tribute from productive individuals that it uses to fund its projects and wars. That is pandering to power.

you are blinding yourself with some utopian vision about a world in which we all get along and reputations are the only thing we care about. you cannot run a criminal system that way, nor can you do business beyond the very clubby arenas like trading. not everyone thinks that way.

You do not read well. I know that we do not all get along and that we are not all angels. That is why I oppose the concentration of power that you are cheering. And not only can I run a criminal system in the way that I described but if you understood the history of law you would know that criminal systems were run that way before the state stepped in to grab power over it.

i understand intensely the usefulness of reputation despite your unfounded and inaccurate claims to the contrary, but i also understand its limitations which you clearly do not.

If you understood you would not be making the stupid claims that you made above. If you did, you would know that the need to stay in business binds parties to the arbitration decisions. Once they violate those decisions they would not be able to make a living any longer because others would not deal with a cheat and a liar who does not keep his promises.

 
At 12/03/2010 5:30 PM, Blogger VangelV said...

in the recent real estate bust, what happens if millions of home owners refuse to pay or be foreclosed upon? many would happily yield reputation to keep their house. will you declare them all outlaw? millions and millions of them? jail and sheriffs provide a very significant stick here. your "reputation damage" is just not going to work the same way, particularly as it cannot modulate well.

You are missing the point. In a free market system where there was no monopoly over the monetary system to issue liquidity there would be no housing bubble to begin with.

Your preferred system created the misery that would make people abandon their reputation in desperation and cause them to be liars and cheats.

Your scenario cannot happen in a free market system that I advocate. It only happens when there is a central power to distort the markets.

it's really your only penalty. you wind up treating murder and playing the stereo too loud the same way. it's much too blunt a tool.

Your ignorance is showing again. Try reading a bit about law before you make a fool of yourself.

 
At 12/03/2010 5:44 PM, Blogger VangelV said...

the main reason somalia improved is that foreign goods could get in, particularly food and medicine. it is you who are spinning and lying. you compare local rule to ruthless despotism and pretend that says anything about small government and basic law. do you ever get tired of accusing others of that which you yourself are doing?

No. It improved because the central power of that tyrannized the country was overthrown. Read the CIA factbook again. Somalia's agricultural and telecommunication sectors improved much faster than those of its neighbours and are better performing than its neigbours. That has nothing to do with access to food and medicine but to an economy that is not being controlled and overtaxed by a tyrant.

somalia would be better off still with a basic set of laws and regulations. nothing fancy, just basic rule of law. as it is, the "private law" you love is already devolving into warlordism.

But it does have laws. And it is not devolving into 'warlordism.' Somalia has a tribal system in which members of one group do not like to be ruled by outsiders. The only time there is conflict is when one group tries to aggress against the others as is the case with the current UN sponsored operations where the UN and US have chosen a side to rule everyone.

and the "customary law" you cite is backed by warlords and guns. sure, it's a system to fall back on, but certainly not one an outsider can use. part of the custom is "steal from foreigners".

What a moron you are. Why don't you read the damned book, which was written by a Dutch lawyer who lived in Somalia and married into a Somali clan? He describes exactly how the system works and how it actually controls the behaviour of people who would break the law. Victims are compensated and clans act as insurers for their members. Anyone who keeps breaking the law would be expelled and would automatically become an outlaw because Somali society does not accept anyone not insured by his clan and will not deal with him commercially or socially.

Reading is a good thing. It will help teach you learn things that you are ignorant of even when you think that you know what is going on. You might try it.

 
At 12/03/2010 7:32 PM, Blogger morganovich said...

vangel-

it has occurred to me how to easily demolish this ludicrous system of privatized arbitration courts of yours in a way that even you will be able to understand.

it all comes down to "who pays"? the courts (both civil and criminal) are a private entity and run for profit.

so who pays for them? it must be the users.

you then go on to expect them to treat big corporations (their best customers) the same as they do tiny users? this will never happen. does microsoft treat you the same way they treat dell? no.

but this is a minor problem compared to what will happen with your criminal courts.

you have two choices: voluntary subscription and payment or forced participation. if participation is forced, then you have just created another government (and one that is despotic, not representative) that is taxing citizens. as this sounds anathema to you, i presume you will not choose this option.

so you are left with voluntary subscription. so what will you do with those who fail to subscribe? a great many people might find such an idea attractive. they have no legal standing in your community. they need not respect your laws at all nor your property.

how will you deal with their presence? if they do not respect your control of property, you cannot keep them out without using violence, which they may be happier to use than you are. if you can keep them out using violence, oopsie, you are a despotic government again ruling the unwilling through force of arms.

if you let them wander as they please, you'll have no order.

if you ignore the basic human rights of those who do not subscribe, then you are behaving in a totalitarian fashion. if you respect their rights, then you are giving them the benefit of your system without the costs and will encourage people to free ride and will find yourself unable to disciple them. neither is a good choice.

this is why some government with the ability to back law with violence always evolves. people who are and people who are not bound by law cannot coexist comfortably.

the system you propose will result in exactly what you claim it is to circumvent.

there were lots of people who did not want to sign on to the US constitution. we used force to compel them of kill them. ask the apache or the cheyenne what they think of "voluntary participation".

but they were attacking us and our interests or just had things (like land) that we wanted, just as non subscribers would to your "voluntary" system and your system might want what they thought was theirs.

so do you want to force the indians to join or fight them because they will not? coexisting in the same space with people hostile to your system isn't going to work.

in this way, you will wind up acting as a government no matter what you do and voluntary will rapidly become compulsory.

you are getting us mired in details to try to get around the fact that your entire proposition is fundamentally flawed. you wind up protecting fewer rights and with a system more prone to corruption and nepotism.

so tell me, how do your private courts avoid being a government while still maintaining order?

who will impose violence upon those who attack you or violate your property?

who will pay them and have authority over their actions? how is that not a government as well?

 
At 12/04/2010 1:20 PM, Blogger jcarroll1948 said...

Ron H and Vangel. Points well taken. Vangel, however, have you thought of including an executive summary. I am an experienced technical writer and have authored many lengthy reports; all included an executive summary. If the higher ups and anyone else reading the report wanted to delve deeper into any key point, they could and did dig deeper in the body of the report.

 
At 12/05/2010 3:30 PM, Blogger VangelV said...

i will not argue that our current system has been allowed to become unwieldy and poorly optimized, but that does not obviate the concept of a rights based legal system backed up by a government monopoly on violence.

But as I wrote before, a monopoly is not very good at delivering services because given its position it does not have the incentive to do a great job. Given the lack of accountability the legal system will deteriorate and will not provide the services that it should. That is exactly why we have the terrible court system today. You have victims not being compensated or protected, judges who use their positions to force social engineering, and prosecutors who care much more about convictions than about justice.

your argument about banks and investments is totally untrue. investors prefer less regulation TO A POINT but require certain minimums or else they walk away from the system entirely. by your logic, the banks of somalia and russia ought to be thriving. but they aren't because there is not enough law.

It is you who is wrong. Investors prefer safety, which is why they have put up with regulations that promised that safety. But as we know, those promises did not turn out too well for investors, consumers, producers, or taxpayers.

But there is law in Somalia and lending does take place. The reason why you are not aware of it is because that lending takes place at the local level and is not driven by a banking sector that uses its privileged position to transfer wealth from depositors and consumers to benefit its owners.

There certainly is a great deal of regulation and law in Russia and a intrusive state to enforce them. If there is a failure in Russia it is a failure of state regulation and statutory law, not a free market system. There certainly was regulation in the US but it did not prevent the massive fraud from taking place during the housing bubble. It did not stop Madoff from carrying out his scam. In fact, it helped him by giving him support and the cover of legitimacy as private analysts were trying to blow the whistle. We saw the same thing with Enron, WorldCom and a number of other institutions. While the private investors got it right and blew the whistle early in the game the companies were able to use the cover provided by the SEC to claim that there was nothing wrong.

 
At 12/05/2010 3:41 PM, Blogger VangelV said...

you also completely fail to answer the question, which is what will you do when i run off with the money.

You can't get the money.

mugabe has no trouble funneling money to switzerland and from there to invest in what he likes.

You confuse a system that allows for a monopoly on power with one that does not. Mugabe can do what he does only because he has monopoly power over the citizens of his country. His actions are not possible in a competitive system where power is decentralized.

our firms will not invest in his country, but one he has the money, he can invest all over the world.

You are confused again. If we do not invest with him he can't steal the money. That is what would happen in a system where there is competition. The money will flow to those who are offering the best long term return, not to fly by night operators or thugs.

when B of A does the same thing, they will have the same opportunities.

But there is BofA. And BofA has no money. Its deposits have already been lent out. Those loans are the assets of BofA so if BofA management tries to leave the country it cannot take those loans with it. It certainly will not be able to force borrowers to pay it instead of the rightful owners so there is no real problem.

what will your "reputation driven arbitration system do then"?

Nothing. As I said, your example is a bad one and nothing will happen or needs to happen.

You need to try to live in the real world, not in your made up Utopia where monopoly on power leads to good things for those that are ruled by it.

 
At 12/05/2010 3:51 PM, Blogger VangelV said...

you also seem to argue that your system will avoid corruption.

No, I am arguing that competition will limit corruption.

it has no advantages in this respect relative to democratically installed judges.

Of course it does. A judge in the system that I advocate would not be able to be an activist. His/Her role would be limited to interpreting disputes. In the system that advocate 51% of the cast votes would not give a certain group looking for handouts the ability to make the rest pay.

it would be run by those who pay the most and beholden to them for funding, just as moodys was/is.

Moody's is a failure of the system that granted oligopoly protection to a set of privileged companies. Its actions would not have been permitted in a competitive system because it would have been liable to the people who paid for its services and those that relied on its word.

how is it you can be so cynical about democratic institutions and yet so credulous of the probity of the same people running a private system?

Easy. A decentralized system where there is competition beats one where you have monopoly on power.

all you'd wind up with is bought justice for those who were powerful and wealthy.

Read your history. That is not what has happened. And read the book I cited about customary law. It does not happen. Again, things are not as you imagine them to be.

who is going to pay for your criminal courts and their enforcement?

The users. Just as they do now. But in my system they would have a much bigger say about the quality of services they get. Those cops who hide in bathrooms would not be tolerated. Neither would the speed traps and all those activities that focus on victimless crimes.

how will you stop that from being corrupt? take a look at the "private" courts that have existed in colonized countries. they were far more corrupt and unjust than those we have today.

Actually, they were not.

you keep taking some Utopian ideal and trying to pretend it's the real world. you'll wind up with afghanistan, not a functional state.

As I pointed out above, there is nothing more Utopian than believing that those who have a monopoly on power would use it to benefit you or that they would keep the system limited. Try living in the real world.

 
At 12/05/2010 5:06 PM, Blogger VangelV said...

it all comes down to "who pays"? the courts (both civil and criminal) are a private entity and run for profit.

so who pays for them? it must be the users.


Of course it is the users. If you want insurance you have to pay for that insurance.

you then go on to expect them to treat big corporations (their best customers) the same as they do tiny users? this will never happen. does microsoft treat you the same way they treat dell? no.

But that is what actually happens. Look at how auto insurance companies treat claims. They can't afford to treat individual customers worse than their competitors because they will lose business to those competitors. And as I pointed out before, history shows that biased courts do not stay in business for very long because they have to be agreed upon by both sides.

but this is a minor problem compared to what will happen with your criminal courts.

you have two choices: voluntary subscription and payment or forced participation. if participation is forced, then you have just created another government (and one that is despotic, not representative) that is taxing citizens. as this sounds anathema to you, i presume you will not choose this option.


Customs law is very clear. All members of a clan, tribe, or community must have some type of insurance when dealing with others. That insurance specifies the courts that are acceptable. In such a court the victim is compensated for his/her loss and the payment is made by either the individual who committed the crime or his insurer. If there is no payment than nobody will deal with the individuals who are members of that clan, tribe or community.

You are trying to deal with examples that have already been dispensed of. Try shedding your ignorance by learning something rather than arguing for a monopoly system that you know is corrupt and is not interested in justice.

so you are left with voluntary subscription. so what will you do with those who fail to subscribe? a great many people might find such an idea attractive. they have no legal standing in your community. they need not respect your laws at all nor your property.

Correct. If you have nobody to vouch for you people will not deal with you. That is the reason why there were so many voluntary associations to lubricate social and commercial interactions. Counter-parties find it a lot easier to pull the trigger on an interaction when they know that there is someone institution to bear the cost if things are not what they seem and some type of fraud is involved. That institution ensures that its members behave and has every incentive to be self policing because without its reputation its members will find themselves unable to make a living.

 
At 12/05/2010 5:17 PM, Blogger VangelV said...

how will you deal with their presence? if they do not respect your control of property, you cannot keep them out without using violence, which they may be happier to use than you are. if you can keep them out using violence, oopsie, you are a despotic government again ruling the unwilling through force of arms.

if you let them wander as they please, you'll have no order.


You are confused. Communities have every right to reject those that do not respect their property. You have no right to trespass on the property of others so you will be asked to leave. If you do not, then the individuals on whose property you are trespassing or their representatives have every right to use force to eject you.

if you ignore the basic human rights of those who do not subscribe, then you are behaving in a totalitarian fashion.

As I said, nobody has the right to force others to deal with him if they do not wish to. There is nothing totalitarian about refusing to take reckless risks.

if you respect their rights, then you are giving them the benefit of your system without the costs and will encourage people to free ride and will find yourself unable to disciple them. neither is a good choice.

But I am not giving them any benefits. There is a huge cost attached to not being a member of a community or association that will insure your actions so most people will choose membership. If they do not and choose to be outsiders then they will have to deal only with those individuals who are willing to overlook the deficiency but that means tougher conditions.

 
At 12/05/2010 5:25 PM, Blogger VangelV said...

this is why some government with the ability to back law with violence always evolves. people who are and people who are not bound by law cannot coexist comfortably.

If you are trying to argue that government is formed when some thugs take over and establish rule over others I will not argue. Government is clearly the rule of thugs who will do all they can to keep absolute control over the rest of society.

My argument is that voluntary associations and competition work much better and the evidence supports my claims.

the system you propose will result in exactly what you claim it is to circumvent.

What I am trying to prevent is the rule of thugs who have a monopoly on the use of force, which is the system that you are promoting.

there were lots of people who did not want to sign on to the US constitution. we used force to compel them of kill them. ask the apache or the cheyenne what they think of "voluntary participation".

That is your argument? Thugs will try to kill you so you better consent to being their slave and consign your children and their children to slavery also? Sorry but some of us have testicles and are not as accepting of serfdom as you are.

but they were attacking us and our interests or just had things (like land) that we wanted, just as non subscribers would to your "voluntary" system and your system might want what they thought was theirs.

What are you talking about?

so do you want to force the indians to join or fight them because they will not? coexisting in the same space with people hostile to your system isn't going to work.

Wow. You are just as ignorant of your own history as you are of economics, law or philosophy. There was no Indian problem until after the US obtained a standing army. Most of the land in the East was actually purchased from them in voluntary transactions.

 
At 12/05/2010 5:27 PM, Blogger VangelV said...

you are getting us mired in details to try to get around the fact that your entire proposition is fundamentally flawed. you wind up protecting fewer rights and with a system more prone to corruption and nepotism.

You are mired not in details but in ignorance.

so tell me, how do your private courts avoid being a government while still maintaining order?

Read your history and find out. I gave you lots of references but you are just as ignorant as ever.

who will impose violence upon those who attack you or violate your property?

I will. So will those in my community who have agreed to protect each other and the security forces that we pay to do that job.

who will pay them and have authority over their actions? how is that not a government as well?

The customers will pay them and will have authority over their actions. If you do not like the job done by one security firm you just hire another.

 
At 12/06/2010 10:11 AM, Blogger morganovich said...

v-

you are just trying to mire us in details again to escape the fundamental in defensibility of your argument.

of course Bof A could get the money. they are holding it for you. they give your money to other people all the time. it's called lending and trading. if you think that, freed from fear of criminal prosecution, they could not use that to steal your money, then you are hopeless naive.

 
At 12/06/2010 10:28 AM, Blogger morganovich said...

then you go on to pretty much prove my point for me.

your "voluntary subscription" to law idea is ludicrously flawed. you can "choose not to deal with others" in terms of signing a contract, and shrink and limit your economy and increase contract costs, but not around rights.

if i wander into "vangeltown" and don't subscribe, what will you do? can you steal from me? what will you do if i steal from you? do you have police that can arrest me? you have to make a choice and either grant me rights as a human, in which case i will not care about your law because i get the advantages anyway, or you will treat me as a non person, making you an ugly totalitarian thug.

what right do you have to do decide my human rights? your whole system is fundamentally based on ignoring inalienable human rights. in this way, you create a brutal fiat system in which individuals have no real protection from their rights as they all come from government, not personhood.

you have set your system up as a king. it is far less free, just, or defensible than a rights based system.

"there was no indian problem before a standing army"? ask the Iroquois. you are such a lying blowhard vangel and poorly informed to boot. you make stuff up and pretend to have proven things through absent and irrelevant references. there is nothing behind your bluster.

you do not appear to be able to think at all.

you are proposing the creating of a gang that will seize and hold territory and resources while defending it's members and doing what it pleases to those who refuse to join and you are calling it "freedom". it's nothing of the sort. you are setting up a feudalistic war. there is ZERO history to back up your claim.

you have provided no evidence of any kind.

you will have ad hoc violence perpetrated against outsiders and no overarching structure of rights to prevent outrages.

how will you deal with the system in the next town that may differ from yours in important ways? you'll essentially be at war all the time and wind up a small, isolated group unable to live interact with others.

failure to create a monopoly on violence will lead to a great deal more violence and far less ability to reign it in. this is eminently clear if you compare nations with a capable central government to those with weak central systems and strong private/local law. lebanon, pakistan, the afghans, and much of africa come to mind.

congratulations, you have invented afghanistan. nice work.

 
At 12/06/2010 10:39 AM, Blogger morganovich said...

"You have no right to trespass on the property of others so you will be asked to leave. If you do not, then the individuals on whose property you are trespassing or their representatives have every right to use force to eject you."

ahh, but who says it's your property? sure, you do, but what if i claim otherwise? you are making the same argument that was used to kill and displace indigenous people all over the world.

you show up with your new court and take what is theirs while claiming that yours is the "correct" system.

your whole argument is self defeating. can you not see this?

if you can tell others that your system is the correct one to determine whose property is whose and you do so by ignoring their system which yields a different answer, then you are totalitarian thug and a hypocrite.

you demand respect for your system, but do not grant it to other systems.

what is the basis of your claim to moral superiority?

you say "mine" they say "ours" and now what will you do?

it ultimately comes down to force of arms.

so you're a thug, and ethical failure, and a hypocrite to boot.

there's no avoiding that once you run into another system. you posit the need for competing systems, but have no solution for what to do when they disagree.

if their validity accrues from contract and participation, then none have any claim to superiority and you get deadlock and war with each side feeling legally justified in using force to compel the other.

what a lovely system you propose.

can you really not see this flaw? i am left wondering if you can think at all.

 
At 12/06/2010 10:41 PM, Blogger VangelV said...

of course Bof A could get the money. they are holding it for you. they give your money to other people all the time. it's called lending and trading. if you think that, freed from fear of criminal prosecution, they could not use that to steal your money, then you are hopeless naive.

You have no clue how banking works. Your deposit is not held by BofA but is lent out. The assets for BofA are the loans, which are payable at some other time to the bank. If the bank management skips down the borrowers will still have to return the money to the institution, not management.

Now you could argue that management could try a scam and not lend any money out to borrowers but in that case the depositors would be very and investors would become very suspicious because there would be questions of why the bank was not lending. They would know because competitors with the bank would tell depositors and advise them to bring funds to them. (Not to mention the fact that investors, who would not be getting the dividends that they expected, would rise up and fire management.) In either case there would be little chance of management getting much to steal because depositors would pull their funds and move them to a trustworthy source.

You are under the impression that depositors and investors would trust blindly and that competitors would not point out the problem to either. But that is not the way the real world works.

 
At 12/07/2010 12:05 AM, Blogger VangelV said...

ahh, but who says it's your property? sure, you do, but what if i claim otherwise? you are making the same argument that was used to kill and displace indigenous people all over the world.

Why do you choose to remain ignorant when history shows us exactly how this would be established? How do you think that property was registered when there was no government to do the job?

The Not So Wild, Wild West: Property Rights on the Frontier

what is the basis of your claim to moral superiority?

I do not justify theft as you do? Mine is not the morality of thugs and serfs as yous is.

it ultimately comes down to force of arms.

But it hasn't. As I said, property rights were determined by homesteading and registration took place without a government. Individuals who wanted to make a better life created formal and informal institutions that increased cooperation and reduced conflict. Try reading the book that I referenced above. It would help you shed your ignorance and allow you to understand how things worked and could work.

 
At 12/07/2010 12:06 AM, Blogger VangelV said...

can you really not see this flaw? i am left wondering if you can think at all.

You are ignorant of law and history so you are hardly in a position to form a valid judgment. Try doing a bit of reading so that you can understand the issues.

 
At 12/07/2010 10:49 AM, Blogger morganovich said...

vangel-

seriously, can you think at all?

homesteading? your example is as wrong as it is irrelevant. that was driven by both force of arms (relative to the indigenous) and by the backing of US law in the even of disputes.

without the actual backing of the US as final arbiter, it would never have worked. someone had to manage disagreement (and they did). your ability to google something and then totally misunderstand it amazes me.

 
At 12/07/2010 10:59 AM, Blogger morganovich said...

and can you not see the obvious hole in having multiple legal systems at once?

just the transaction costs would destroy you (to say nothing of all the rights and justice that would be abrogated).

every time you drive on a road or enter a store or visit a friend, you will need to not only determine what legal system they are in, but verify that they are paid up and still a member in good standing. travel will become a total crap shoot. you might be in 3 different systems just driving home.

every single person you even consider interacting with and every place you ever visit will need to be vetted in real time, as they might have left the legal system they used to have for a new one.

you will never have any idea where you stand.

such is the height of idiocy. it would be impossible to sustain even simple contracts predictably. (unless you want to start to compel adherence, at which point you are just an autocratic government)

so long as i am free to leave a legal system, how can you ever trust a contract you sign with me? i can pull out of the system later, and you will have NO rights.

you cannot compel me to stay without being an autocrat.

would you ever lend money under such a system? the minute i was facing BK, i'd just jump legal systems and eliminate my mortgage. legal systems that allow me to do so will crop up and compete for my business.

the system you propose is totally unworkable. just a simple fender bender could involve 3 jurisdictions. (yours, mine, the property owner's)

you are mistaking the desirability to negotiate first with a system in which it is the only option.

lacking ultimate enforcement, the BATNAS moves considerably in a negotiation. it is the threat of court that leads to so many settlements.

i am seriously left wondering if you are capable of abstract thought at all.

 
At 12/07/2010 11:03 AM, Blogger VangelV said...

homesteading? your example is as wrong as it is irrelevant. that was driven by both force of arms (relative to the indigenous) and by the backing of US law in the even of disputes.

Yes, homesteading. That is exactly how property is established initially.

without the actual backing of the US as final arbiter, it would never have worked. someone had to manage disagreement (and they did). your ability to google something and then totally misunderstand it amazes me.

I just gave you a reference that made it clear that there was no requirement for backing from the government. When people first went out past the boundary of control they established institutions that would recognize their property rights and formed associations that would protect those same rights. By the time the government got there those institutions were already working and keeping order.

Why don't you do some reading? Why don't you look at riparian water rights, which were developed from common law or even prior appropriation water rights, which developed in the West without any input from the US government.

 
At 12/07/2010 11:04 AM, Blogger morganovich said...

vangel-

you act as thought either you or the investors have any idea what is being done with their deposits at BofA.

stop grandstanding. you are just making stuff up.

there have been a large number of big thefts from shareholders by banks and all manner of asset managers. you don;t have to take all the assets to take a great deal of money. securities and bond portfolios are very easy to move. it's also easy to make loans to yourself or entities you control. if you think it's difficult to steal money at a bank, you have never worked at one. all you need is a complicit compliance officer.

the instance of such would increase if there were no penalty for it.

that's human nature.

 
At 12/07/2010 11:17 AM, Blogger VangelV said...

and can you not see the obvious hole in having multiple legal systems at once?

You are confused. Nobody is arguing for multiple legal systems. What we are arguing about is competing courts. Law will still be developed by judges who make decisions that are ultimately based on natural rights.

just the transaction costs would destroy you (to say nothing of all the rights and justice that would be abrogated).

You are kidding. Look at what your preferred legal system has done to product costs or to the cost of delivering health care. How can what I propose be anything worse?

every time you drive on a road or enter a store or visit a friend, you will need to not only determine what legal system they are in, but verify that they are paid up and still a member in good standing. travel will become a total crap shoot. you might be in 3 different systems just driving home.

Actually, you do not because there will not be any arbitrary laws that trap individuals as there are now. Private individuals cannot prosecute someone for a rule that is not posted properly and clearly. That is not true today where you have so many rules and regulations that everyone is guilty of breaking many laws every day.

You are assuming that people can prosper by trying to rip off the unsuspecting. But that can't happen because anyone known as unreliable will find no customers willing to deal with him and will be out of business quickly.

 
At 12/07/2010 11:19 AM, Blogger morganovich said...

vangel-

reading the amazon description of a book hardly makes you an expert.

you seem utterly unable to discern the difference between a system which encourages contracts and negotiation first with one in which such is the only option.

read about water rights. contract structure failed there and a great deal of outside enforcement was required to break the deadlocks reached under contract and informal rights.

i am not arguing that contract and negotiation is a good system, but without credible enforcement, it is ineffective.

imagine i live upriver from you. i take more than my share of water. i do not subscribe to your rights system for water.(unless you will play the tyrant and compel me)

i take what i please. you get little. what are you water rights worth? what will you do? invade my property? take it from me? deny my claim? on what basis? why do i need you to approve my ownership of property if you are not a government?

seriously, think this through. you have obviously not considered this at all. it's glaringly obvious.

you presume that all will adhere to your system out of free will, but history and the water wars argue otherwise. read the history of Wyoming.

 
At 12/07/2010 11:21 AM, Blogger VangelV said...

every single person you even consider interacting with and every place you ever visit will need to be vetted in real time, as they might have left the legal system they used to have for a new one.

you will never have any idea where you stand.


You have it totally backwards. It is today that we have so many rules and regulations that all of us are guilty of something. That does not happen in a free society where transactions are voluntary.

such is the height of idiocy. it would be impossible to sustain even simple contracts predictably. (unless you want to start to compel adherence, at which point you are just an autocratic government)

You are confused again. Contracts are easy to write and adhere to because there are no conditions applied by a third party against the will of the participants as is the case today.

It might be better for you to educate yourself by looking at a few of the sources that I cited rather than keep making the illogical arguments that only show your ignorance.

 
At 12/07/2010 11:31 AM, Blogger morganovich said...

"How can what I propose be anything worse?"

easily. by taking what we already have, adding the complexity of multiple courts, and eliminating the enforcement of a court's decisions.

a court is a legal system. what's the point of different courts if they are not different? one law but open to multiple interpretations? that is not one law at all. precedent and procedure will diverge.

your argument here is inherently self defeating. either the courts are all the same, in which case, why bother? or they are different in meaningful ways, in which case you have multiple legal systems. one might strike down a law the other keeps or establish a different precedent or use a different evidentiary standard (preponderance vs reasonable doubt).

there is no such thing as "one law multiple courts". the very existence of multiple courts creates de facto and later de jure different legal systems.

a private individual that does not subscribe to a set of laws can do as he wishes. he can even put up a sign lying about his laws. what will you do? you're on his property and your court has no jurisdiction. you can't sue for fraud. you have no standing.

you don't seem to be thinking this through past a very cursory level.

all your ideas only work if there is an ultimate resort to force and compulsion.

you are looking at one level of the picture and assuming it it the whole.

 
At 12/07/2010 11:36 AM, Blogger morganovich said...

"You have it totally backwards. It is today that we have so many rules and regulations that all of us are guilty of something. That does not happen in a free society where transactions are voluntary. "

you are mistaking to body of law for the structure of government. you try to use the "we have too many laws" augment as a proxy for "government should to be centralized and have a monopoly on violence".

this is not a valid augment, nor would your system be any better. who will create the law for you magic little world? the same people who create it now. why do you think the outcome will be different?

you are making the absurd jump from "private courts" to "a new body of law". your arguments are all against the content of the law, not the structure of the legal system.

so how will your "one law many courts" system do any better?

all you will do is take existing law and make it more complex and less predictable by adding multiple jurisdictions and interpretive systems.

 
At 12/07/2010 11:40 AM, Blogger morganovich said...

"Contracts are easy to write and adhere to because there are no conditions applied by a third party against the will of the participants as is the case today."

but needing a contract for every single action you ever take (and for lots of unpredictable interactions like an auto accident) is totally unwieldy. you cannot have a contract with everyone.

again, you are imagining some magical body of new law that will appear from nowhere, mistaking the contents for the vessel.

your augments all cut toward the content of law, not it's adjudication.

so where will your new law come from?

 
At 12/08/2010 12:39 AM, Blogger VangelV said...

you act as thought either you or the investors have any idea what is being done with their deposits at BofA.

Investors are not the same as depositors.

stop grandstanding. you are just making stuff up.

Note that I am giving the references to support my argument while you keep making simple errors over and over again.

there have been a large number of big thefts from shareholders by banks and all manner of asset managers. you don;t have to take all the assets to take a great deal of money. securities and bond portfolios are very easy to move. it's also easy to make loans to yourself or entities you control. if you think it's difficult to steal money at a bank, you have never worked at one. all you need is a complicit compliance officer.

The deposits are already gone out as loans. They cannot be stolen easily or quickly enough to allow a major fraud to take place. Bonds and stocks are registered in the name of individuals or the institution. Theft is not easy because the securities in question can be voided and new ones issued to the rightful owners. Of course it does not matter what happens because the institution will be forced to make good on the stolen property or risk losing customers.

That is how things work in the real world. People who are not deceived by the illusion of protection from government tend to be skeptical and will ensure that there are ways to protect themselves. Depositors would insist on the institutions having insurance while investors will keep watch on management.

the instance of such would increase if there were no penalty for it.

But there is a penalty.

 
At 12/08/2010 9:27 AM, Blogger VangelV said...

reading the amazon description of a book hardly makes you an expert

Correct. That way you would not keep showing how ignorant you are and would know that your arguments have been discredited by reality.

you seem utterly unable to discern the difference between a system which encourages contracts and negotiation first with one in which such is the only option.

You have no idea what I am talking about. You really should stop and read a bit.

read about water rights. contract structure failed there and a great deal of outside enforcement was required to break the deadlocks reached under contract and informal rights.

No. There was no failure. People have the right to do with their property rights as they wish.

i am not arguing that contract and negotiation is a good system, but without credible enforcement, it is ineffective.

I am not against credible enforcement. I simply point out that government is never credible or useful.

imagine i live upriver from you. i take more than my share of water. i do not subscribe to your rights system for water.(unless you will play the tyrant and compel me)

But under the system that was developed you cannot take more than you are entitled to and I can ask the court for compensation. If you choose not to pay the damages or comply with the court's decision your property will be sold to pay the damages and whatever is left will be returned to you. The new owner will get exactly the same rights that you had before you chose to steal.

i take what i please. you get little. what are you water rights worth? what will you do? invade my property? take it from me? deny my claim? on what basis? why do i need you to approve my ownership of property if you are not a government?

As I wrote before, you are ignorant of law and assume that legislative law is all that matters. I suggest that you look into English Common Law, which is what our system was based on.

seriously, think this through. you have obviously not considered this at all. it's glaringly obvious.

But I have. I began quite ignorant as you are now but decided to educate myself when I began to lose arguments to the libertarians and anarcho-capitalists that I would argue with. Like you, I believed in the Utopian notion of a limited government that stays limited and protects individuals by ensuring that justice is done. The problem is that such a system cannot work in human societies because humans are not Angels and will look after their needs first regardless of what happens to the faceless forgotten man. This is illustrated by the empirical evidence, which shows a huge growth in government and a ruling class of bureaucrats that has lined its pockets by transferring wealth from the taxpayers to its pension plans and bank accounts. We now have thousands of bureaucrats making more than $250,000 in salary and bonuses plus many more that are collecting pensions that pay them over $100,000 per year even though they are still in their 50s and working for the government as contractors or in different jobs for a different level in the bureaucracy.

you presume that all will adhere to your system out of free will, but history and the water wars argue otherwise. read the history of Wyoming.

I see nothing in the history of Wyoming that argues against what I have proposed. It actually shows that the state has intervened to steal from individuals their established water rights and transfer them to the politically connected who had the politicians in their pockets.

 
At 12/08/2010 9:41 AM, Blogger VangelV said...

easily. by taking what we already have, adding the complexity of multiple courts, and eliminating the enforcement of a court's decisions.

You don't know your history. I suggest that you look at English Common Law or customary law to see how things worked before the state took over by elevating statutory law to a dominant position. And while you are at it compare the relative performance of countries that had legal systems that were based on common law with those that used statutory or codified civil law.

a court is a legal system. what's the point of different courts if they are not different? one law but open to multiple interpretations? that is not one law at all. precedent and procedure will diverge.

Who says that there would be a greater likelihood of different interpretations under common law than under the current system? In fact, I would argue the exact opposite. The current system is not concerned with justice but with statute and is far more susceptible to political incentives than a competitive system where judges would primarily be concerned with justice.

 
At 12/08/2010 9:56 AM, Blogger VangelV said...

you are mistaking to body of law for the structure of government. you try to use the "we have too many laws" augment as a proxy for "government should to be centralized and have a monopoly on violence".

this is not a valid augment, nor would your system be any better. who will create the law for you magic little world? the same people who create it now. why do you think the outcome will be different?


Of course it is a valid argument. You confuse statutory law with justice. It isn't. Justice has to be ultimately based on following natural law and the best system is one that is developed by judges making decisions, not by politicians voting on legislation that they have not read.

I have another reference for you. Like Freedman's book, this one is also available for free.

http://tinyurl.com/23hxnn7

Read and educate yourself.

 

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