Libertarian Economics

John K Clark (
Sat, 20 Sep 1997 11:28:49 -0700 (PDT)


On Sat, 20 Sep 1997 Joao Pedro <> Wrote:

>Why don't people kill each others? Because there is a law against it,
>make murder legal and you will see people killing each others.

I don't think that's the only reason people don't kill people, it certainly
isn't in my case, but nobody is suggesting murder be made legal.

>Why has civilization lasted? IMHO, because there are laws, there is
>a judicial system to prevent anarchy,

First of all I don't want to prevent anarchy, second of all, anarchy does not
mean no laws, it just means no state. Laws would be privately produced,
private money making arbitration agencies would replace the judicial system,
and Private Protection Agencies (PPA) would replace the police.

>in anarchy everyone would do what they want

Not quite, but it does mean that in things that are really important to you,
like not getting killed, you can have much more influence than just one man one vote.

>What if some corporation doesn't make enough mistakes to fall,

Then it won't fall. It has always mystified me why so many people think
competence is a cold heartless vice that should be punished and incompetence
a warm human virtue that should be rewarded.

>it will eventualy take control of the market

In other words people will be allowed to do what they're best at.
How horrible.

>and then we will all suffer.

If it's a free market then the company can not get the government to send in
its thugs to put its competition out of business, so the only way it can take
control of the market is to produce a good product cheaper than anybody else
can. How horrible.

>In a free-market, there will be the ones who are better than other
>at their business, what if this persons are a lot better?

Then they will produce a product that is a lot better and a lot cheaper than
anybody else can. How horrible.

>They'll control everything in their area.


>DuPont, one, if not the, largest producer of CFCs had knowledge of
>the destructive effects of CFCs on the ozone but prevented this from
>being known. There are several sources claiming this.

And there are several sources claiming that UFO abductions, astrology,
Bigfoot, and crying statues of the virgin Mary are real.

CFC- ozone chemistry in the upper atmosphere is extremely complex, even with
today's super computers it's not entirely clear what's going on, I don't see
how DuPont could have known about it years ago. The tobacco industry would
have been a much better example for your purposes.

>Governments are owned by corporations

That's not true, but I sure wish it was.

>The free market of cities in America has also created many poor

Poor compared to other Americans, rich compared to most of the other people
of the world.

>A corporation with a monopoly status will have the better research
>facilities, the better marketing experts,

Would you be satisfied if the big corporation promised to use only obsolete
instruments in poor repair in its research facility, to immediately fire any
employee who wins the Nobel prize, and refuse to hire any scientist who
graduated from collage, except for barber and clown?

>it will even have the best criminals to take care of their opposition!

Corporations are very far from being moral paragons, but in the criminality
business they're small time. If you added up all the bad things that
corporations have done from the beginning of time it would amount to little
more than mischief compared to the monstrous evil governments have
perpetrated this century alone.

>If a corporation reaches monopoly in a no-rules world, it won't lose
>easily and we will all suffer.

The only monopoly that is dangerous is the very biggest one, government.
The only successful cartels in history are the ones that have government

Your company and mine produce all the steel made in the world. We make a good
profit now, but we want more, so we get together and triple our prices.
Now we each make a huge profit on each ton of steel we sell, so we would both
want to make lots and lots of steel. However, because the price of steel is
now very high demand is down, so part of our sinister plot must be an
agreement to limit production. The higher the price gets, the greater is the
temptation to secretly cheat on the agreement and produce more steel than was
agreed to and that would kill the cartel.

There are even more problems for our poor cartel. Now that the price of steel
is sky high and the profits are huge, other companies will want to get in on
the act and start making steel. Also, consumers of steel will not want to
shell out all that money for steel and will start looking for replacement
materials like wood or plastic or aluminum or composite fiber.

OK I will admit that one type of monopoly, called a "natural monopoly" would
work in a free market, but they don't bother me. In a few, very rare
instances, the most efficient size of a factory is so big that there is only
room for one, the best example is aluminum production. A larger steel mill is
not more efficient than a smaller one, it's just bigger, but for physical
reasons that's not true for an aluminum plant, the bigger the better.

However even a natural monopoly is limited to what it can do. If they raise
prices too high a competitor with a smaller factory will step in. The small
factory is not as efficient as the big one, but by accepting a smaller profit
margin they can still charge less for aluminum than the big company. And of
course, there is always the competition from other materials.

This logic did not phase the US government when in it's infinite wisdom it
decided to break up Alcoa Aluminum.
What dreadful crime had Alcoa committed?
The government said it had kept competitors out.
What dastardly method did Alcoa use to do this?
The government said Alcoa used the most advanced technology available to
produce Aluminum that was just too cheap for competitors to match.

I wish I was joking about this, but I am not. If you can't beat them in the
market place, lobby the government to send in their goons to destroy your

>if small shops go broke, the supermarkets will be able to put the
>prices they want

Then the small shops will come back, but if they're good I don't see why they
ever left. Being small is no excuse for being stupid and going broke,
it can be an advantage, but only if you're smart.

I manufacture 99% of the worlds widgets, you make 1% . I want to drive you
out of business, so I figure I'll lower my price until you go broke and then
I can jack them up to anything I want. So now you louse money on each widget
you sell, the trouble is I do too. I have 99 times as much money as you do,
but I'm lousing it 99 times faster. Even worse, because the price is very low
the demand for widgets is huge, and if prices are to remain low I must build
more factories and increase production. I'm lousing money faster and faster,
meanwhile you just temporally halt production in your small factory and wait
for me to go broke. It won't be a long wait.

>The rules and regulations prevent the market from employing people?
>I can't believe that.

Believe it. If your services to me are only worth 4$ an hour and the
government says that because of the minimum wage I must pay you 5$ an hour
then I simply will not hire you, unless I want to give you charity.
I have nothing against charity, but it doesn't create wealth and certainly
won't eliminate poverty.

>One last thing, extropy is the opposite of entropy. Our goal is to
>fight entropy or disorder and yet you defend complete disorder in
>the economy.

Huh? Who said anything about complete disorder in the economy?

John K Clark

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