Arnold Kling  

David Friedman on Consensual Government

Greenspan on Dodd-Frank: Start... What I've Been Reading...

Speaking at the Cato Institute, David Friedman breezed through a number of deep issues concerning the nature of government. The talk itself is only 30 minutes, but you might have to listen multiple times. I was planning to attend, but I wimped out because of the nasty weather.

The question is whether it is possible for people to choose governmental rules by consent, from a range of competing providers. At one point, Friedman does a sort of Modigliani-Miller, and takes the providers out of the picture as a thought experiment. That leaves a need for every individual to come up with bilateral bargains with every other individual. That in turn raises the issue of externalities. My preferred bargain with you may depend on the way bargaining works out between you and someone else or on how it works out among completely different people.

Another point is that the outcome of such bargains is likely to be path dependent. Two different sets of initial conditions can lead to two different bargains.

I find it difficult to think about political theory in terms of, "Starting from no government, do you need to add coercive government, and, if so, how much?" The conceptual problems make my head hurt.

I find it easier to think about the problem in terms of, "Starting from where we are today, how much could we benefit from mechanisms that increase people's ability to use exit, so that they do not have to rely on voice?"

So I think in terms of unbundling, secession, self-directed tax contributions, etc. See the widely-unread Unchecked and Unbalanced.

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CATEGORIES: Political Economy

COMMENTS (8 to date)
Eric writes:

See Friedman's brief "Requirements for anarcho-capitalism to work"-

Daniel Klein writes:

I too prefer that the conversation work from where we are. In other words, that it consider reforms. Talking about reform is talking about the agent's point of view, a pragmatist catch-phrase.

I don't much care for anarchy discussions, because, qua reform, it means changing so many variables at once that the thought experiment is jejune. Talking about how or whether "anarchy would work" is a bit like talking about what the computer industry will be like in the year 2500.

But I like conversations about abolishing this or abolishing that. I think those conversations are often meaning and fruitful, even essential.

While I don't declare myself an anarchist, I'm certainly a serial abolitionist.

david writes:

You would meet a massive amount of resistance achieving unbundling because many of the services currently provided by states are bundled with a redistributive program, so cancelling the service entails direct conflict with the beneficiaries of said redistribution.

The Pareto improvement which suggests itself is to accept the redistribution as an unbundled program whilst privatizing the services, but somehow I can't see that being popular among US libertarians, even if Scandinavia gets away with it. Many libertarians care less about the freedom and more about the marginal tax rate, if forced to choose between the two.

joeftansey writes:

Incremental reform is better achieved outside the system. Economic free zones, tax avoision*, seasteads, secession. It allows you to start with a clean slate from an initial condition inside the system.

*I don't say "evasion" I say "avoision".

Hume writes:

"Starting from where we are today ..."

I would really like to see how this is a morally-meaningul baseline. Rather silly approach.

Michael A. writes:

Arnold, Arnold!
Pay attention, this is your economic subconscious speaking: You are charging too much for your widely unread book Unchecked and Unbalanced ($16.50 for Kindle Edition at Amazon)!!

I'd love to read your tome, for about $9.99

Trust the market, cut the price, reap the profits of accessible rates. It's nothing personal, it's strictly economics.

I believe it is reasonable for many libertarians to focus upon reform, to try to mend the problems of existing states. Reform might succeed. The US might survive for another 500 years.

But I believe it is also reasonable for many libertarians abandon efforts of reform. The US may continue to grow more corrupt in spite of all efforts at reform. The US may weaken and die as did the Roman empire, over a span of 100 or more years. A dark age of institutional collapse may be coming. But we can prepare if some of us embrace this view. Scholarship is needed.

Don Pomeroy writes:

This is why ideas like seasteading and charter cities are so appealing (to me anyway). It may not be completely starting with a blank canvas, but possibly is much easier than unbundling what it took the state hundreds of years to bundle.

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