Arnold Kling  

Emergent Nations

Is the Fundamental Attribution... Intellectual Property Absoluti...

From my latest essay:

What [Meir] Kohn points out (in other chapters) is that medieval guilds, which we think of as backward institutions, helped to solve the lemons problem long before government inspection came along. Each guild jealously guarded its reputation. If a member of a guild were caught selling a substandard product, he would lose his status as a guild member, and effectively lose his livelihood. If Mexico City had a "taco guild," then that guild would provide sanitary taco stands with its seal of approval, and you as a consumer could pay the appropriate price for a safe taco.

What you just read is a short excerpt of an essay that is highly condensed to begin with, riffing on the work of William Easterly and Meir Kohn. I think that the research Kohn is doing very important, and he generously shares it on his web site. Check it out.

Kohn appeared at Pete Boettke's GMU workshop earlier this week. I ventured across the river (I live in Maryland) to see him, and it was well worth the costs of gas, parking, and time.

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COMMENTS (8 to date)
Taco Lover writes:

No such guild is needed to signal product quality among Mexico City's taco stands. You'll often see two apparently identical taco stands, side by side. One stand has a long line; the other is practically deserted. Locals know whose tacos make you sick and whose don't. Unforunately this signaling breaks down in areas with a lot of tourists.

David writes:

There was an interesting story in the LA Times yesterday (5/3/06) about the role of SEIU and AFSCME in financing and organizing the May 1 Immigration protest in LA. The local head of one of those unions claimed that in the process of immigrating, Mexicans lost their family and village ties and support and the union could provide a community for the new arrival. This ignores the formal and informal networks that have always existed among immigrant communities. Big labor's new found love of unskilled immigrants is an example of a quasi-governmental effort to weaken private associational bonds.

Mike writes:

The problem with guilds lies in the fact that they were essentially monopolies. While charging a higher price in return for assurance that a product would not be a lemon is justifiable, guilds limited free entry into the market place, thus driving up the price of their goods beyond fair market value. That is one reason why the textile guildsman were so opposed to the mechanization of the textile industry. Handmade textiles were of higher quality than early machine-produced ones. But consumers were unwilling to pay the same inflated price once the guildsman's monopoly was broken.

Consider the modern day guild of doctors. The government and the AMA require that aspiring physicians jump through numeorus hoops in order to be licensed, and in return doctors are able to charge higher prices for routine physicals.
The public benefits by knowing that their physician isn't a quack. But does this knowledge truly justify the high prices that consumers and insurance companies pay? Wouldn't market forces and malpractice lawsuits provide a cheaper solution?

Roger M writes:

Great article! Thanks! I read Meir Kohn’s article on the development of governments in pre-industrial Europe and was glad to see his comments on the religious aspect. He writes that the imperial form of government suited the Catholic faith while the associational fit the Protestant. Your article and Kohn’s show how difficult it is to achieve real, lasting development; it’s not a matter of just giving people money.

N. writes:

Accepting the assumption that nations must emerge on their own, does it necessarily follow that military intervention is mutually exclusive with nation building? I am tempted to say that this essay draws the conclusion that it is.

...I would like a definitive answer or another interpretation before I go around quoting Kling as holding that position.

Arnold Kling writes:

I think you can quote me as a skeptic on nationbuilding. That doesn't mean that I believe in leaving every government intact. It just means that I don't think that you can be very optimistic that you will be able to put something wonderful in its place.

N. writes:

Hmmm... thanks for that. I'd really like to see a short essay dedicated to the economics of intervention at some point... or, maybe, something along the lines of 'an economic theory of just war.'

Jon writes:

What is left out of Arnold's discussions is that guild's were no more private than the Bar Associations or Medical Associations. Their restrictions were often made into laws by the communities in which they operated.

You were forbidden from working in the trade without being part of the guild; this is hardly a government free solution to the problem.

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