Rod Long replies to my “Why I Am Not a Left-Libertarian”:
Bryan’s response focuses on the ways in which free markets would solve
the problems I point to if they were really problems. But the whole
point of my position is that we don’t have a free market!
Left-libertarians have pointed out in detail the ways in which the
housing and labour markets, for example, are skewed in ologopolistic
and oligopsonistic directions respectively.
Reply: I’m well-aware that markets aren’t entirely free. But the deviations from the free market that Rod highlights wouldn’t cause the problems he laments. Go to any micro textbook. Even a government-created monopolist still has a clear incentive to cut prices when its costs fall, and raise prices when its costs go up.
The fact that workers can shirk, that tenants can be delinquent, etc.,
is beside the point. We already know upfront that each party to a
contract can potentially screw over the other. The point is that, given that context, the contracts are then skewed to favour one side.
Re-read Rod’s original post. At minimum, it sounds like he thinks that shirking workers and delinquent tenants are barely worth mentioning. Still, I’ll accept Rod’s concession, then ask: Isn’t there a connection between the “screwing” and the “skewing”? I say that’s the heart of what’s going on: Firms, landlords, and employers offer skewed contracts to make it harder for customers, tenants, and workers to screw them. And most customers, tenants, and workers happily accept these contracts because they sensibly prefer lower prices, lower rents, and higher wages to formal equality.
Rod’s third point:
Yes, there are various regulations that purport to help the weaker
party to the contract; but left-libertarians have argued in detail that
those regulations in practice actually tend to help the stronger party
instead. Maybe we’re right about that and maybe we’re wrong, but as far
as I know, Bryan hasn’t addressed those arguments, and we can hardly be
expected to pretend we haven’t made them.
Frankly, the left-libertarian arguments to this effect that I’ve personally heard are so poorly reasoned I’ve seen no point in responding or reading further. But I respect Rod Long. If he wants to prove my blanket dismissal wrong, I’m happy to listen. My challenge for him: Tell me how tenant protection laws actually benefit the average landlord. But note: The mere existence of negative side effects for tenants is not enough to prove Rod’s case. Neither does the mere existence of some landlords who benefit.
READER COMMENTS
Jason
Sep 22 2010 at 4:03pm
By creating a barrier for new landlords to enter the market.
Michael Wiebe
Sep 22 2010 at 4:31pm
It seems the fundamental issue is determining the net effect of the various government interventions. That is, do interventions benefit landlords and employers at the expense of tenants and workers? Or is it vice versa?
Sam
Sep 22 2010 at 5:05pm
@Michael – or do the interventions create a deadweight loss so large that both sides suffer an expense?
Rod fails to add another example to his three: homebuyers with mortgages rarely get to write their mortgage contracts or even negotiate elements of them.
swh
Sep 22 2010 at 5:32pm
I am quite surprised that Rod Long’s writing has garnered so much attention here. His thinking is so disconnected from market/legal reality as to be meaningless. Risk allocation in contracts is often the dominant issue affecting the consideration paid. To allow for negotiated (unskewed) contract writing in consumer/retail transactions – and the consequence custom risk valuation – would most certainly price the contracted service beyond the ability/desire of the market to pay. To require some governed “unskewed” (who decides those terms?) contract would have the same result. Whether they know it or not, we (the consumer) wants to be skewed.
Hyena
Sep 23 2010 at 2:27am
These are adhesions and often neither party actually knows what they contain or if they are legal. This is especially true when the person offering the contract is merely a representative.
Before insisting that consumers prefer something, shouldn’t we first establish that consumers are aware of its existence? Likewise, before we argue that the reason for the terms is to keep customers from “screwing” someone, shouldn’t we first find out what the common contract terms are and whether they actually work to that effect?
Dave Schuler
Sep 23 2010 at 10:30am
The “shirking”/”screwing” stuff reminds me of a Soviet era joke: we pretend to work and they pretend to pay us.
Tom
Sep 23 2010 at 12:43pm
Tenants have the benefit of the housing laws, while the landlord have virually no benefit in writing the lease. Housing court judges rarely care what is in the lease even if there is no conflict with the state’s housing laws.
Jason, as a landlord, I still have to deal with the issues any new landlord has to deal with. There are no barriers of entry, unless you call actually owning a property a barrier.
BTW, does anyone else have a problem with ‘left-libertarian’? The two groups seem to be mutually exclusive.
James Briggs
Sep 25 2010 at 5:39pm
My thoughts:
http://0welcometo1984.wordpress.com/2010/09/24/385/#more-385
The summary: Long’s argument makes sense if people see the kind of contracts he describes as inferior goods, which is a reasonable enough assumption because they are low-quality and it’s possible to make higher-quality ones. We no doubt do have more recourse these days compared to an hundred years ago because we can afford it now.
Roderick T. Long
Sep 30 2010 at 7:35pm
My reply:
http://aaeblog.com/2010/09/30/how-inequality-shapes-our-lives-part-3
Roderick T. Long
Oct 1 2010 at 7:03pm
swh
Why are you treating “negotiated” and “unskewed” as equivalents? Make the relevant markets competitive and the standardised contracts will become unskewed pretty damn quick.
David Schuler,
Indeed. Oligopsonistic labour markets have many of the same characteristics, albeit to a lesser degree, as a Soviet economy. Suppressing market competition crates incentival and informational perversities, for both managers and workers.
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