Re: Property and the Law, and is it a priority?

From: Technotranscendence (
Date: Sun Aug 05 2001 - 08:36:10 MDT

On Thursday, August 02, 2001 8:49 AM Mike Lorrey wrote:
>> It would remain to be proven that such taxes actually reflect
>> But even so, the libertarian way of dealing with externalities is through
>> property rights and voluntary agreement -- not through taxes. See, e.g.,
>> Roy Cordato's _Welfare Economics and Externalities in an Open Ended
>> Universe_ and Robert Ellickson's _Order Without Law: How Neighbors Settle
>> Disputes_.
> Ultimately, in the anarcho-capitalist end of the libertarian spectrum,
> you would be correct. However, the only recognizable difference between
> a libertarian government and a libertarian ungoverned territory is that
> you will have to deal with various insurance providers who will mitigate
> this, i.e. only a difference of monopoly versus free market providers of
> externalities mitigation.

Not so. Cordato's arguments apply both to minarchy and anarchy -- in fact,
to any-archy as they are not libertarian arguments per se, but economic
ones. Specifically, he talks about how attempts to improve upon free market
efficiency are doomed. (I don't want to go his whole book and just suggest
you read it, then we can discuss it. This is not to say I agree with every
last sentence in the work. I just think it will require too much effort for
me to type all the things I do find illuminating in this context in here.
Plus, while this is signal to you and I, it's probably noise to most others
on the list.:)

>> (Note for those who don't know what externalities are: They are costs or
>> benefits passed on to others without their consent. Usually, the ones of
>> interest are negative externalities -- i.e., costs passed onto to other
>> without their consent. An example is air pollution. People usually
>> complain about positive externalities. An example is someone beautifying
>> their property. This might provide benefits to his or her neighbors --
>> terms of property value increase, a more esthetically pleasing
>> and the like.)
> In a libertarian context, if, for example, I improve my property, I
> could go to each of my neighbors that would benefit from my
> improvements, and say: "either pay your share of the value of my
> improvement, or sign this waiver of your right to litigate against my
> improvements, or we go to court" (obviously in a more polite manner than
> this).

Actually, the libertarian context -- anarchist or minarchist -- would be
this. If someone changes his or her property, that's his or her business
unless someone else can _prove_ the changes caused them actual physical
externalities. (Obviously, if neighbors want to get along, as Ellickson
argues they often do, especially the longer they live near each other, then
other types of externalities might come into play.) Improvements that cause
pecuniary and other externalities are not the scope of government or of
rights theory per se. (I would argue that the other category here is not
even part of rights theory and, therefore, has nothing to do with rights.)

Only in the case of some other contractual agreements -- such as CCC&Rs in
many private communities existing today -- would anyone have the right to
involve themselves in such disputes. Of course, anyone can sue anyone, BUT
a truly libertarian court system would, in principle, throw out such cases
and the costs of litigation would then be recoverable from those who
_falsely_ litigate.

Also, positive externalities are either norecoverable or else disappear for
other reasons. In the former case, my using a standard, such as the English
language in America, creates positive externalities in the usual sense,
since it creates benefits for others by my sticking to it. I.e., they can
better understand me. Yet I can't charge everyone for my accrual of value
to them. Ditto for using money, peaceable behavior, and the like.

In the latter, I can stop doing the activity that creates value for others
unless they help me out with the cost.

In either case, no one's forcibly taking value away from me, ergo, no rights
are violated. Ergo, there's no case for a suit in a libertarian society.

>> This claim needs a lot more justification than that. How would a
>> find out what really were externalities? (Would it be able to determine
>> this any better than the market? If so, how? If it could do this, I
>> submit, it would be a case for socialism. Not that that's bad in itself,
>> but it makes me think it's not possible.) How would it find out their
>> amount? (If it charged more, it would be aggressing. If it charged
>> then, by your standards, it would be allowing aggression.)
> Well, for example, gasoline makers/sellers would have to pay the cost of
> CO2 mitigation, which they could pass on to their customers however they
> wished:
> a) flat rate per gallon
> b) graduated amount based on the vehicles own consumption and emissions
> Similarly, roads could all be privatized today with remote smartcard
> technology paying tolls to road owners remotely, or simply collected by
> an autoclub / road cooperative based on the vehicle's milage. Vehicles
> which do not provide milage data or billing information get stopped by
> private cops until they provide a billing address and/or insurance
> provider that checks out, and failure to pay results in vehicle
> impoundment.

This is not similarly. Private roads would be a totally different and,
IMHO, much better system. The road owners themselves can then decide who to
let ride on them. Some might, e.g., not require such insurance or have
patrols or care about carbon dioxide emissions.

Others might then ask or sue them for damages IF they can prove their
activity causes harm to them. (The burden of proof would be on the
plaintiff here.) In either case, the matter would be privately solved
without the need of a tax.

> Remember, libertarians society DOES NOT lack coersion, it simply applies
> coersion to those who attempt to initiate it themselves. Self defense is
> justified in all situations.

Actually, except for immediate self-defense, those in a libertarian society
should only use coercion in retaliation. E.g., if you stole my PC, I could
use force to get it you to pay damages. (George H. Smith. 1991. "Justice
Entrepreneurship in a Free Market" in _Atheism, Ayn Rand, and Other
Heresies_ on how such use of force would probably best be regulated under

>> Even if it could overcome these very real knowledge problems, would its
>> incentives be in the direction of actually limiting itself to this and
>> this?
> We obviously cannot hash all of these things out here.

I agree, but this argues in my favor. Why? Individuals in a libertarian
society can come to agreements, as in Ellickson's book (he uses historical
not hypothetical cases). Governments work differently. They must impose a
tax or a regulation from on high. This sort of top down order _might_ be
good for some things -- perhaps enforcing general rules as Hayek would
argue -- but it cannot decide all the little things of everyday life.
That's where people voluntarily working things out does much better.

> Considering the
> level to which insurance providers already deal with these sorts of
> problems day in and out, I don't think this would be all that difficult.

Insurance, to the degree they are not tools of the state, are acting in a
competitive market. (Even at the level of not choosing to use insurance --
through ignorance, inability to pay, or planning around it. Even in the
last case, the planning might be wrong. I mgiht think -- and everyone else
might agree with me -- that I can cover the costs of certain damages, and we
all might totally wrong.) The information they are dealing with is
disequilibrium information that they must discover for themselves. Just
saying that they do this without saying how AND then assuming that
governments will have the same (or better?) information available to them
does not prove your point.

Also, again, if you do think that because a market agent or group of them
can discover or create the necessary information that a government, too, can
do the same, they why not have full blown socialism? After all, if
privately owned firms and individuals can [spontaneously] create a price
system, why not government?

>> The proper way of mitigating _negative_ externalities is through defining
>> property rights and through voluntary agreements. E.g., if my next door
>> neighbor decides to throw a party that will interfere with my sleep, he
>> I can come to an understanding that I'll have some warning and maybe that
>> the music won't go past midnight. (Or he might invite me over. Not all
>> problems are so easily solved, but force should not be the first line of
>> problem solving in these cases.)
> Of course, but this assumes the individual has all voluntary agreements
> ironed out ahead of time,

It does not assume that at all. Just as, in a free market, not all prices
are worked out ahead of time -- no one or group has that knowledge; it does
not exist ex ante! -- but emerge through the process, so do such agreements
and arrangements. I cannot know ahead of time if my neighbor is going to do
something that might disturb me, but I can react to it and he and I can come
to an agreement about what to do without need for taxes or such. (This is
also in the context of living in society, where there are manifold
predictable behaviors already in place that we tacitly agree to. For
example, the convenience store near me works under the assumption that
people won't just take the newspaper and run.:)

In fact, I would argue that using government to take care of these problems
as you would with taxations leads to more problems then it solves because
that view assumes that government can "iron out" these things ahead of time
or spontaneously as they arise -- and all that to everyone's mutual benefit.

> or has the concientiousness to do so through
> their PPL. When individuals go around blithely acting without such
> agreements set, they need to either provide a means to come to an
> agreement, or else deal with force acting in self defense against their
> own initiation of force, imposing externalities on people.

Generally, people do come to such agreements as the need arises. That's why
things like money (see Dowd's _Competition and Finance_ and his other works
on money and banking), markets (See the works of Hayek), and common law (see
Benson's _The Enterprise of Law: Justice Without the State_) evolve -- not
because government agents learned about modern (and flawed) welfare
economics and tried to apply Pareto optimal solutions through taxes.


Daniel Ust
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