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Comment by snitko | Hacker News Reader

I wonder. I wonder. I live in Russia and I have 2-3 very good providers on the block constantly competing with each other and offering better connection and prices. They would show up on time and connect you very fast. They fix things quickly (in my government maintained house, the basement once became filled with water after the rain, and the wires were damaged. Even though it wasn't their fault, the ISP came and fixed it the same day). I pay about $120 a year for my internet. It's faster than anything I saw when in the US. And that's in Russia, that authoritarian backward country. Do you know why I pay so little? That's because we have the free-est goddamn ISP market, government hasn't been interfering with it (it's starting to, though). Everything I see government touches is of low quality, whereas everything that's good in my country is private enterprise.

And yet, you claim free market fails. Dear american internet users. The only reason you have what you have - shitty speeds and near monopolies - is BECAUSE you have government sticking its nose where it shouldn't (I'd say, it shouldn't stick its nose anywhere, but that's another story). Comcast is the second largest lobbyist in Washington. And still you want to fix the problem by introducing more of the same, that is more regulation and more government, whereas the only way to fix things is to not allow governmental interference in the first place. You can't blame evil Comcast. Why? Because if not them, someone else would lobby and win. If you can lobby, you have to or you're gone.

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Do you know why I pay so little? That's because we have the free-est goddamn ISP market

Yes, but also the communist architecture. Those buildings are easier to wire and the way they're managed makes it easier to get a permit. It's the same in Poland, if you live in one of those atrocious apartment blocks[1], you'll have a pick of three, or even seven various ISPs but move to the suburbs and it's suddenly either the national telekom or some crappy wireless.

Deregulation would probably help Americans living in densely populated areas but not so much in the sprawl. And having a garden is almost a birthright. Ironically, it's the Americans in the big cities who favour regulation, and Americans outside of them who don't.

[1] http://www.michaeltotten.com/images/Communist%20Blocks%20Geo...

I live in the suburbs. Suburbs and especially new buildings in suburbs are best connected.

> Ironically, it's the Americans in the big cities who favour regulation, and Americans outside of them who don't.

Not quite, they just favour different regulation.

> Deregulation would probably help Americans living in densely populated areas but not so much in the sprawl.

Perhaps that would convince some people to de-sprawl?

> Do you know why I pay so little? That's because we have the free-est goddamn ISP market

This is a little imprecise; "free" and "free of governmental interference" are not the same thing. More likely it is because you have a _competitive_ ISP market. That might in turn be because of how free your market is, but in order to really know we'd have to know how your area solved the problems that led city governments to grant monopolies in the first place.

>"free" and "free of governmental interference" are not the same thing.

Since "free" in this context means absence of coercion against extant or would-be competitors, and since government regulatory efforts are a source of such anti-competitive coercion, unless one is concerned with firms sending hit squads against each other (which would more rightly be considered "crime"), the distinction isn't particularly useful.

Are you suggesting the only possible forms of anti-competitive coercion are government regulation or hit squads?

If it is voluntary it is not coercive. You can always not deal with your competition on unfair terms. In what circumstance could a 3rd party non-violent entity coerce you? The biggest one I can think of is "buying you out" but that is still either voluntary, in that the owners agree on the buyout, or it is a buyout of a publicly traded company, and I can't even get started on how non-free market the stock market is, but even then you elected to sell ownership in a public marketplace voluntarily and took that risk.

>In what circumstance could a 3rd party non-violent entity coerce you?

Predatory pricing. Buying up necessary capital. Paying other companies to not deal with you (Suppliers, Retailers, Advertisers etc.)

All completely voluntary, and these are just off the top of my head.

>Predatory pricing.

Offering a lower price to consumers than your competition is not coercion against a competitor.

>Buying up necessary capital.

Offering a higher price to suppliers than your competition is not coercion against a competitor.

>Paying other companies to not deal with you

Entering into exclusive deals with other firms is not coercion against a competitor.

> Offering a lower price to consumers than your competition is not coercion against a competitor.

It is if you are offering a price lower than your costs which you offset by cash from earlier deals, which the new upstart cannot do. When the new upstart is bankrupt you push the price higher, because now there's no competition anymore. That's the reason such stunts are forbidden (at least in civilized countries).

And when you go bankrupt because you're unable to run your business, you'd consider that completely voluntary?

How is it not voluntary? I started it. I knew upfront I could fail. Has anyone else forced me to fail?

Once you start the company, you are subject to market pressures, and when another company can manipulate those pressures, they can manipulate you.

Indeed, even your decision of whether to start the company is influenced by the same market pressures.

If you can't profit off an enterprise, then there is not enough demand to justify your existance. If the market leader is going to undercut you to drive you out of business to then jack up prices to exploit consumers, assuming no artificial barriers to entering the market occur (mostly legal exploitation) or the price to entry is not too high, then as soon as they up their rates they reopen territory for competitors to arise.

In the end, if the market leader is constantly crushing competitors through undercutting to maintain their position, they are not really exploiting their customers at a monopoly and its a market win. It is still competition - the leader just moves to eliminate competition (which would piss off shareholders or anyone in general with a long term outlook on the company) rather than compete against it. As long as they cannot stop competition (and in a voluntary fair system, they cannot) then they have to deal with it one way or another.

How do ISPs gain the rights to dig up the streets in Russia?

Don't know about Russia, but in Romania they didn't dig (or at least not until recently). Most of the ISPs would run their cables between utility poles, trees and buildings directly. This created messes like [1] and [2], but it was cheap. I think back in 2012 Parliament passed a law forcing all ISPs and cable companies to bury the cables.

1 - http://s.wsj.net/media/050710pow14_J_20100506172349.jpg

2 - http://farm7.static.flickr.com/6142/6205357944_8056b01e05_m....

Regulation serves the public when it ensures a level playing field. Through the law, protection of property rights, a fair and impartial judicial system, the right to petition your government, etc.

Regulation harms the public when it thwarts those democratic institutions. By protecting incumbents, limiting liability, forcing litigants into arbitration, hiding important information, etc.

Some things only government can provide well. Clean air, fire fighters, standards. Matters of public safety and health really shouldn't be (wholly) privatized, because profit motive is in direct opposition to the public good.

Maybe some day government can provide good (enough) internet service. Perhaps after the technology and rate of change settle down. But not today.

Why is it that only government can provide some things well? Can you prove it both logically and empirically?

Some goods and services are dominated by up-front costs. That makes usage-based billing economically harmful by discouraging usage of a use-it-or-lose-it resource that has already been paid for. It also makes competition extremely inefficient because each competitor has to duplicate the high up-front cost of e.g. building a last mile network. The result when left to private enterprise is generally a monopoly that charges monopoly rents for access to the resource, and in cases where there is competition (e.g. because two existing monopoly markets merged through technological change, as with telephone and cable) the competition is highly inefficient because each competitor has to duplicate each other's costs. And if competition exists then the competitors are essentially required to engage in some form of explicit or implicit collusion to not lower prices, since in a market dominated by up-front costs each competitor can always gain revenue by lowering prices to gain customers, until the competitor responds in kind ultimately causing all providers to be unable to recover their up-front costs.

Having the government pay for such resources (as with roads) with tax dollars and then providing free access to the public is massively more efficient than private enterprise, because you eliminate the incentive for rent-seeking and economically harmful usage-based billing and for that matter eliminate all the overhead of billing, marketing, collections, denying access to non-subscribers, etc. But the only way to do this is if the resource can be funded in some other way, specifically through taxation.

Having the government pay for such resources (as with roads) ... is massively more efficient than private enterprise

Good point that needs repeating, thank you.

I agree with business management guru Peter Drucker when he states that waste is immoral.

I support the most efficient solutions for a context, whether its collectivism, competition, cooperatives, lotteries, various kinds of auctions, whatever.

Whenever a better solution is found, I will support that. Because, you know, things change.

Another thing: you have a problem with private monopolies, but when a government runs some business, like building roads - it's somehow fine? With a private enterprise, even if it is a monopoly, I still have a choice: I can stop paying and not use the service. Can I stop paying to the government?

When a democratic government makes decisions, everyone gets an equal share in that choice. If the road gets built, it's because most people agree it will benefit them.

When private enterprise makes decisions, those with more money get more choice. If a road gets built, it's because those with money agree it will benefit them.

If a democracy starts letting the rich have more say, then it needs to be strengthened to resist them, not weakened so they can do as they please.

When a democratic government makes decisions, everyone gets an equal share in that choice.

Isn't this an assumption? Perhaps if the system were such that every issue were up to a nation-wide popular vote, the statement would be true...not that such a system is a good idea.

Some votes are worth infinitely more than others. That is to say, many votes are worth nothing. If you vote for the opposition party in a district that is 75% supportive of the incumbent party, your vote doesn't matter. It will (hopefully) be counted, but no one will take your opinion into account.

The other assumption is that majority rule is something worth working towards. Everyone wants government power to work for them. Problem is, it's a power that can't really be controlled. You might get your way this election cycle, but that same power could be used against you when the uneducated reactionaries rise up next time around.

I'm not going to deny that many existing democracies have been weakened, or were conceived too weak in the first place. My point is that the solution is to fix the democracy, not abolish the only thing that has any limiting power on the rich to exert their will.

> you have a problem with private monopolies, but when a government runs some business, like building roads - it's somehow fine?

The theory of free market capitalism presupposes competitive pressure as a check on the power of market participants. A monopoly has no such competition, allowing it to be abusive and reactionary.

There is no such expectation of competition with governments. The check on the government's power comes from the political system. Checks and balances and the four boxes of liberty. It is completely possible for this to fail too, but when that happens the efficiency of telecommunications provisioning is the least of your worries.

> With a private enterprise, even if it is a monopoly, I still have a choice: I can stop paying and not use the service. Can I stop paying to the government?

Of course you can. You can move to another country, or another planet. It's becoming about as practical as not having internet service.

> economically harmful usage-based billing and for that matter eliminate all the overhead of billing, marketing, collections, denying access to non-subscribers

So are you saying that feeding the whole IRS is LESS expensive than having an automated billing system that could track who is subscribed and who can enter a certain road? Because if it's not more effective, then, by the same token, why don't we also fund air travel with taxation? Too expensive to check tickets and deny access to free riders. It's better to just let everyone fly for free. Hell, you can say anything is more effective when funded by taxation. But that doesn't make it true. I don't understand why do I have to subsidize someone who uses roads everyday, while I use it once a week, for example. It's like as if I had to pay the same price for 1 airline ticket as the other person paid for 10. And while it may be a burden for a company to deploy a billing system, with government the burden is on the consumer: I have to fill all those tax forms and make sure everything is correct (or pay an accountant) - talking about some economically harmful activity, I don't like it when someone conscripts me to be a part-time accountant.

Your claims that government provided services are better because their production is more effective is not proven. Show me the exact mechanism. Show me how is it cheaper for everyone and not just for some? Can you demonstrate that the money spend on running the IRS is actually less than private enterprises would spend on the billing system? If you can't do it, then your words shall be called a speculation, not proof.

> So are you saying that feeding the whole IRS is LESS expensive than having an automated billing system that could track who is subscribed and who can enter a certain road?

The IRS is not a relevant cost because deciding not to have municipal fiber doesn't cause the IRS to go away. You have to pay for it regardless, unless your proposal is to have no taxes.

> Because if it's not more effective, then, by the same token, why don't we also fund air travel with taxation?

Because air travel has a significant unit cost. You have to pay for fuel, pilots and flight and ground crews, significantly increased maintenance of aircraft, etc. Moreover, governments have often subsidized the up-front costs of air travel, like airports and planes.

> I don't understand why do I have to subsidize someone who uses roads everyday, while I use it once a week, for example.

Because you're not subsidizing them, you're asking them to subsidize you. It doesn't require fewer road workers to pave the road in front of your house and the weather doesn't stop creating potholes just because you don't drive on it as much. You're asking for there to be a road in front of your house so that you can drive to the beach or call a cab or get on a bus or have an ambulance come to your house and you want to claim the advantages of having that available, when the availability whatsoever is the primary cost, without paying your share of the cost of that availability.

Show me the exact mechanism.

What measure of proof do you require?

PS- AnthonyMouse has been exceedingly gracious and patient with you.

> And yet, you claim free market fails.

Seriously? You have a cheaper/better internet access in Russia compared to the USA and suddenly the Russian (extremely corrupted) political and social model (a modern monarchy of sorts) became a model economy over the US?

PS. I can't find the source, but I've read that in the last Russian elections more than 35% of the population wanted to return back to communism.

Off by a factor of 2, if you are referring to the Presidential elections in Russia, where the communist party candidate received less than 20% of the vote. 35% roughly includes all parties except Putin's. Although I am not sure that voting against Putin (or voting for the communist party, even) is equivalent to voting to return to communism. Were you referring to a poll, or perhaps another election?

Since I can't find the link, I won't disagree on the numbers you're reporting, but seriously the only one who trusts Russian election results must be Putin (and you).

ps. I'm not saying that he wouldn't have won anyway, but I'm sure that the elections in Russia are extremely well guarded.

I'll admit that I gave official election figures, as estimated by Russian election officials. They are at link [0]. Judging by official results, support for the communist party in Russia has not been anywhere near 30% since the 90's. However the Communist Party is Russia's straw man party, it is built to provide a weak counterexample to Putin and distract those who would otherwise support the main liberal opposition. This is fairly obvious whether you go by official results or western polls. I'm not sure why you think I trust the elections though; you seem to think I am arguing in favor of Putin when I am not. I simply don't think that throwing around a figure like "35% of Russians support communism" is a good idea when it is purposefully misleading and there is nothing to back it up.

[0] http://www.parties-and-elections.eu/russia.html

I never said anything about the "Russian model". I simply suggested that where government stays out of the way, you get cheaper and better services. The quality of our internet has nothing to do with our government or social model, but with how free market and free trade work. If you had free market in Telecom industry in the US, you would also enjoy the same quality and prices.

But does the government really stay out of the way? Maybe my view is biased, but I always had the impression that in Russia a lot was about party and influential people connections.

That actually seems like a harder senario to rationalise, that a corrupt oligarchy is providing more competition and better services than a free market.

While Russia does have it's political elites and corruption (Like pretty much every other country) they aren't idiots, they have been on the other side of free markets and there are few there that know it's value.

People say US or EU are not corrupt or are less corrupt. That is a misrepresentation. They are equally corrupt in the higher levels (though they managed to convince people they are not). What happened there is consolidation. Thus if you want get things done, you have to spend more money lobbying at higher levels, because the lower level is scared of consequences. So a consolidation of corruption happened.

In the US when you want to win a court case, you spend money hiring top lawyers. In Russia you buy a judge. Results are the same. Who's to say one way is better than the other? You still need money to win, so how is it fair to the poor? In fact, I think it's incredibly irresponsible and actually immoral to tell the poor the system is fair while it's not.

The question is, which system restricts the free market more. That is very debatable. In some areas Russia's incredibly backwards simply because corruption expenses are higher than the equivalent expenses would be for complying with the regulation in the US. In other areas, it's great. City transportation is great, for instance. We have many private jitney services and they are not expensive, so people use them all the time. Same goes for cab services: you can literally raise hand and get any car at any time of day for much cheaper than in the US. You don't need licences to drive people around (at least nobody enforces that).

So, I'd say, in some areas the US definitely sucks. The quality of life you have in the US is most definitely not thanks to your government, but thanks to your private enterprises.

> In the US when you want to win a court case, you spend money hiring top lawyers. In Russia you buy a judge. Results are the same.

That's an extremely dangerous oversimplification: It's a fact that getting a good lawyer will give you more chances. But buying the judge it's a totally different thing.

Not at all different, if you look at the results. Both in Russia and in the US, if you don't have money, people can threaten and bully you with court, because they know for sure you cannot win.

Your claim is that the process somehow makes a difference. But if the results are the same, then it doesn't. It's like saying that war is NOT murder, because it's being declared by people in Washington wearing suits. Or that taxation is not theft because it's being done by a "legit" three letter agency.

If one of those 2-3 providers bought the others should the government intervene in the free market to stop it?

BTW do they operate their own wires to the building? If not is the owner of the wires allowed to compete in the market, raise prices or deny service?

No. If one of them grew and bought others and provided excellent service no one could outcompete, what's the point to interfere? I'm not against monopolies per se. I'm against monopolies that are created using government power. However, if this new monopolist started providing shitty service, competitors would emerge immediately. Granted the government wouldn't prevent them from emerging by demanding to purchase expensive licences and comply with regulations.

Why do you assume that it would be the growing company with a better offer? Takeovers are more often done with investment/debt.

Would the new competitor you envisage need to run their own?

That's naïve - it would be exceptionally difficult for a new ISP to emerge countrywide even in the a sense of regulation. It's very capital-intensive!

That's very well. Some industries mature and new companies don't enter those industries because they are taken. For example, not many people attempt to go into the soft drinks market. Why? Because there's Coca-Cola and Pepsi. How idiotic would that seem if government started saying things like "we need soft drinks neutrality so every McDonalds is now obligated to sell you both Coca Cola or Pepsi and that new competitor who just entered the market". That wouldn't solve any real problem, as you can imagine. If there is a problem, let consumers decide directly, not government.

>How idiotic would that seem if government started saying things like "we need soft drinks neutrality

Well yeah, that would be a pretty awkward way to encourage competition in the soft drinks market.

However, they do say things like: "You can't temporarily drop your prices just to wipe out competition." and "You can't agree on prices with Pepsi to avoid price competition" which work pretty well to keep that market competitive.

There's no evidence predatory pricing is effective. It's fear mongering.

Suppose you have company A trying to outprice company B, which is a much smaller company. If company A wants to drop its prices, it can't just drop prices on just the number of products equivalent to the market share of B, it has to drop prices on the whole line of products of its own. Even if it succeeds in defeating company B, it has to make sure it will make up for the losses in the future. And who's to guarantee another company C isn't going to use the situation, knowing full well company A cannot afford another round of predatory pricing? Therefore, for company A it's much less riskier to compete with B on the market by doing honest things, rather than cheating with predatory pricing and hoping company C will not come to crush it.

>it has to drop prices on the whole line of products of its own.

Why?

>And who's to guarantee another company C isn't going to use the situation, knowing full well company A cannot afford another round of predatory pricing?

The competitiveness of a market depends on the costs of entering it. If the amount of capital needed to enter the market is significant, new entrants willing to risk that much will be much less frequent.

Predatory pricing allows monopolies to artificially raise those costs, simply by amassing a reserve of cash. Indeed, the real problem is not company B being defeated, but company B never even trying because the returns just aren't enough to justify the inflated entry cost. Company C never gets a chance.

> Why?

Suppose you produce socks and another company does the same and tries to compete. You produce 1 million socks a month and another company only 10 thousand. You obviously can't just drop prices on 10 thousands socks of yours, because that would still allow your competitor to stay in business - since there is demand for the rest of 990k of socks at your high price, your competitor would simply grab another 10k of your socks market share and then you'll only be able to sell 980k at your high price and not 990k. You actually have to drop prices on all 1 million socks of yours, which is going to be pretty damn detrimental to your profits.

> The competitiveness of a market depends on the costs of entering it.

What's there to prevent a rich investor from entering the market and competing? Google had no problem competing with Apple on the smartphone market, it seems. The goal is not to allow anyone with no money to compete. The goal is to allow to compete companies who have sufficient resources to do so. That's what the competition is about.

> You produce 1 million socks a month and another company only 10 thousand. You obviously can't just drop prices on 10 thousands socks of yours, because that would still allow your competitor to stay in business

Except that with internet access, you can do exactly that. Any new competitor is going to have to choose to wire up a particular set of neighbourhoods with a particular 10 thousand customers in, and they're going to need a decent proportion of people in those neighbourhoods to sign up in order to make a profit. You can easily cut prices just for customers served by your smaller competitor whilst leaving them the same for everyone else - it doesn't matter that there's still demand elsewhere, because your competitor doesn't have infrastructure elsewhere.

Very good example of a difficult problem. The answer to it is not government. I always challenge myself and others with this: if you had a problem for which government seems like a very reasonable answer, can you design a better solution?

And indeed, you can. In this example you have to realize that what government is selling to consumers is the service of preventing eventual rise in prices after the competition is weeded out. If, as a consumer, I am worried about such predatory pricing as in your example, what is to prevent me from signing a contract with a company which specifically states "you are not allowed to raise the price"? Then this contract can be enforced by whichever private court and protection agency I hired (how this would work is a matter of a separate post, but I recommend reading "The Machinery Of Freedom" by David D. Friedman on that subject).

However, I don't really think you'd need that contract. What would really happen is that many companies would have infrastructure in many places (as is the case in my country) or you would have alternative connections (as, again, is the case in my country with a 4g operator Yota). Or you would have willing rich investors if they see that opportunity exists to disrupt the market. Finally, people may move and stop using the service if they dislike it.

There are all sorts of opportunities. Government is just one solution with a very high cost indeed: you have many people die in bloody wars which are run for your tax money and on your behalf (as is the case with both of our countries, I suppose). And no, however you wanted it, with government you can't have only the good things and none of the bad ones. It's logically impossible, because for a politician the economic incentives are always in the wrong place.

>Then this contract can be enforced by whichever private court and protection agency I hired

And how they will enforce this contract? If it involves the threat of violence, how is it better than government? If it doesn't, how does it enforce your contract against the threat of violence?

>It's logically impossible, because for a politician the economic incentives are always in the wrong place.

Can you elaborate on this? I would say democracy is the only structure we know of which has shown itself able to limit concentration of power.

>And how they will enforce this contract? If it involves the threat of violence, how is it better than government? If it doesn't, how does it enforce your contract against the threat of violence?

I would recommend, again, watching David Friedman's talk on the "Machinery Of Freedom", it's on Youtube. He's got excellent examples and explanations. It's 20 mins and totally worth it. In short. on the difference on it from government violence: when a contract is signed with by me and some entity, we both agree that out conflicts are going to be solved in such and such manner and in such and such courts. That is, if there is going to be some violence involved, we both know it from the beginning. With government, neither me, nor the company signed any contract with the government. The government just comes and starts interfering when it pleases.

>Can you elaborate on this? I would say democracy is the only structure we know of which has shown itself able to limit concentration of power.

You cannot know whether a politician is truly a good guy or if he's lying to you. The only way to know that is to give him power first. Notice how different the situation is with a businessman: a businessman should first produce something and convince you his product is good before you give him your money. If the product gets worse over time, everybody stops buying it and he goes out of business the next moment. Not so with a politician, who knows he's going to keep getting his salary at the very least, and hopefully bribes, for the next 4 years. A politician knows very well that his voters will keep paying taxes, whether or not they like what he does. That is because if they stop paying, they risk getting in trouble and will possibly go to jail. A businessman doesn't have that luxury. He cannot force you to pay, he can only convince you by offering something you genuinely want to buy. Of course a businessman can also lie to you, but unlike a politician, his lies is more easily discovered and you have the option to stop paying him immediately.

And so, the incentives for a politician are in the wrong place. If you can show me an exact mechanism how to reliably elect politicians who would ignore those incentives and do good instead of those incentives offering them a much more profitable thing to do, then I would gladly accept that. But simply saying “we should elect good people” is not a mechanism. It is an intention, and intentions are not results.

What's the alternative? Having no politicians and having only the market. On the market, you can decide to buy or stop buying things immediately with your own money.

>I would recommend, again, watching David Friedman's talk on the "Machinery Of Freedom"

I will try and watch this when I get chance.

>on the difference on it from government violence: when a contract is signed with by me and some entity, we both agree that out conflicts are going to be solved in such and such manner and in such and such courts. That is, if there is going to be some violence involved, we both know it from the beginning.

So you have some entity with the power to enforce contracts by violence? What incentive do they have to do that instead of simply mugging you? A democratic government has to care about elections. A private company has no such concerns.

>If you can show me an exact mechanism how to reliably elect politicians who would ignore those incentives and do good instead of those incentives offering them a much more profitable thing to do, then I would gladly accept that.

Well first of all, you're assuming that I mean representative democracy, rather than direct democracy. The system I've been thinking of recently tries to combine the best of both: Ostensibly direct democracy, where people can delegate their voting privileges to a representative, and change that delegation at any time.

> On the market, you can decide to buy or stop buying things immediately with your own money.

Indeed, so in a completely capitalist system, your freedom is contingent on the amount of capital you have. Personally, I think some freedoms should be guaranteed regardless of wealth.

>So you have some entity with the power to enforce contracts by violence? What incentive do they have to do that instead of simply mugging you? A democratic government has to care about elections. A private company has no such concerns.

Of course, it's the first reaction to say "but your private protection agencies are going to turn into de-facto governments". If you think long enough about it, you understand that they won't. Violence is never profitable unless somebody else pays for it (as with the government). Private protection agencies are in the business to make money long term, just like every other business. And that is only possible if you produce something people truly want.

So, two things as incentives to not rob you. 1. Your future business - if they rob you they, obviously, aren't going to get your business in the future. 2. Competition. Those two things government doesn't have to worry about! You always pay and there's no competition.

>Ostensibly direct democracy, where people can delegate their voting privileges to a representative, and change that delegation at any time

It's better, but it's still worse than the free market with no government, because you still have to pay taxes. You cannot just say "no, no, thank you, but I prefer to keep my money and not use these and these services or fund these wars". You still have to give politicians power first. And you still use government power to make other people pay for what the majority considers a good idea. I think this principle of majority is rather insane. A simple test: if tomorrow the majority decided to shoot all redheads, if you followed your principle, you'd have to agree.

>Indeed, so in a completely capitalist system, your freedom is contingent on the amount of capital you have. Personally, I think some freedoms should be guaranteed regardless of wealth.

When you have a democracy, you're still paying for it. Nothing is free. When you say "some freedoms should be guaranteed" you probably mean "some services", which is different. Freedom is not the product of someone else's labor. It simply is inaction, when you don't tell other people how to live their lives and how to spend their money. I may or may not agree that healthcare should be available to everyone at no cost, but you have no moral right to come and take my money to pay for something you consider to be good. You may, however, convince me to give you money and I may do it.

>Violence is never profitable unless somebody else pays for it

Well yeah, your victims pay for it. My point is that there's no inherent incentive for a private entity capable of violent coercion to use it for the benefit of anyone but itself. A truly democratic government has an incentive to use it to benefit at least a majority of people.

>I think this principle of majority is rather insane.

It's not perfect, but I think it's the only way we can make fair decisions about how to share limited resources.

In theory Capitalism distributes the most to those who provide the most, which sounds great. In practice those with more resources are more able to provide utility in future, so the distribution ends up being very unequal.

(EDIT: One solution might be a free market + enforced wealth redistribution at a rate based on the level of inequality. I think this would actually be much better at encouraging people to actually produce new utility constantly, instead of rent-seeking.)

>A simple test: if tomorrow the majority decided to shoot all redheads, if you followed your principle, you'd have to agree.

And you think a society that would pass such a vote would be any kinder in a free market? If a majority of people actively want redheads to be killed, then your supposed protection agencies would be happy to oblige.

And even without violence, the majority needs only to deny them work and they would starve to death, or at best live in ghettos.

> When you say "some freedoms should be guaranteed" you probably mean "some services", which is different.

No, my whole point is that access to services is a form of freedom. The freedom to eat. The freedom to learn. The freedom to be healed. If these things are contingent on labour, then they are lesser freedoms.

In a world with limited resources, some freedoms will always be curtailed. The question is which ones are the most important? I think the freedom to eat is more important than the freedom to decide how a portion of the utility you provide is shared.

I was tempted to reply, because I think you've made some points I can understand, but object to. And some others I believe you simply misunderstood.

> Well yeah, your victims pay for it.

That's not what I meant. I meant that when a country starts a war, it's not politicians who pay for it. Citizens pay for wars with their taxes. Politicians simply sell them a war, while not investing any money of their own. In fact, what happens is, politicians make money, because there are companies who benefit from wars (oil, military equip and tech), so they lobby politicians. If politicians or companies had to pay for wars out of their own profits, there would be no wars.

> In theory Capitalism distributes the most to those who provide the most, which sounds great.

That's a misunderstanding. A rich person can only spend that much for himself (even then, by buying things, he actually creates jobs). He then has to invest into something he believes to be sustainable. Thus, I see businessmen as ultimate redistributors. They proved on the market they're good at handling money, thus they deserve to have more of them. Politicians only proved they can manipulate public opinion and you are entrusting them your own and someone else's tax money. I don't think it's a good idea at all.

> And you think a society that would pass such a vote would be any kinder in a free market

Yes, because in a free market the redheads would be able to legally invest money of their own to protect themselves from other people, who wish to kill them. With government, since it has the monopoly on protection and laws, no such thing would be possible. In other words, in a completely free market minorities are able to put a price tag on them being discriminated against, while when you have government, they would actually be paying for their own discrimination. Gay people have been paying taxes just like everyone else, yet until some point, it was even illegal to be gay, not even talking about marriage.

>No, my whole point is that access to services is a form of freedom

Very well. Even by your definition then, when government takes a portion of my money as tax for the services I don't use or disagree with (like wars) it takes away my freedom to use other services I consider good.

The crucial distinction is force. Government is force that is abused because it's so centralized. Government is telling other people what they can or cannot do, how they can or cannot spend their money and what services they can or cannot use. It doesn't matter what you consider freedom to be. With government some may indeed get a little more "freedom", but always at the expense of someone else and always with people in the government benefiting most from their position. I'm simply against this redistribution, because it is based on a system that is inherently unfair and broken. No, it cannot be fixed.

> That's not what I meant.

I think you've misunderstood my question then. I never mentioned wars. I'm asking why these entities with the power to violently coerce others would operate friendly protection agencies, instead of simply stealing from everyone around them?

I consider this a pretty obvious and fundamental flaw with anarcho-capitalism, and I've never heard a coherent argument against it, so I'd really appreciate an answer here.

> He then has to invest into something he believes to be sustainable.

Which works pretty well in our current situation where you have a bunch of regulations in place to stop them abusing that power. They can't use violence. They can't lie to consumers. They can't make dangerous products. They can't abuse their workers. You only have to look at developing countries to see how companies operate outside these restrictions.

> Thus, I see businessmen as ultimate redistributors.

Except nothing gets redistributed. They invest, and unless they fail, they get even more money back. And after a certain point, they can even leave the investment to other people. Then you have a bunch of rich people doing nothing, but enjoying the majority of the wealth. Their investments may slowly improve life for the poor, but the massive inequalities remain.

> Yes, because in a free market the redheads would be able to legally invest money of their own to protect themselves from other people, who wish to kill them.

Yet again, assuming they have any money. If your hypothetical society hates redheads to the point of wanting them dead, then I would expect them to be incredibly poor, since their ability to participate in the market would be extremely limited.

> With government some may indeed get a little more "freedom", but always at the expense of someone else

Freedoms always come at the expense of other freedoms. Freedom from slavery means limiting the freedom to keep slaves, but I think most people are happy with that. There will always be trade-offs, the question is how we decide which freedoms are more important than others.

Can you explain why you think the freedom to decide how the last 10% of your income gets spent is more important than the freedom to eat?

> No, it cannot be fixed.

Why not? I have already suggested the solution (direct democracy) and your only objection is that it allows the majority to abuse the minority, but you haven't explained how capitalism fixes that.

>I think you've misunderstood my question then. I never mentioned wars. I'm asking why these entities with the power to violently coerce others would operate friendly protection agencies, instead of simply stealing from everyone around them? I consider this a pretty obvious and fundamental flaw with anarcho-capitalism.

So the first thing to understand here is that monopolies and cartels can't exist without government protection for a long time (if you look at every case of a monopoly/cartel careful enough, you'll see some government involvement). When some company introduces a new, revolutionary technology (Microsoft or Apple both being examples) they may capture the market for a while, but not for long. Government didn't order Google to compete on the smartphone market. It happened because it was profitable to do so.

Now back to protection agencies. Suppose I'm an evil protection agency that wants to force everyone to pay, just like a government would. Alright. I send everyone an extortion notice and suggest that if they don't pay, we come and take money + fines (for our extra effort) by force and if they resist - we imprison them. People, being free and not brainwashed as they are, wouldn't see us as a protection agency anymore, but as an extortion agency. They wouldn't have any illusions about us being nice and kind. Therefore, there would arise a demand for another protection agency, that would offer protection from the evil agency. Naturally, people would rather pay the second protection agency, as it doesn't demand pay, but offers a service, therefore presenting itself like a legitimate business. The other protection agency would quickly lose its market share and wouldn't be able to finance its extortion, not even talking about any kind of war with the second agency. In the case in which the two agencies form an extortion cartel, it is not difficult to imagine a third firm emerging. And so on.

Therefore, competition is the key. Free market always serves the customer.

>Then you have a bunch of rich people doing nothing, but enjoying the majority of the wealth

You have to be precise here. What does enjoying the wealth mean? If they buy stuff, they create jobs. If they don't buy, but hoard, they are not enjoying the wealth in any way. Every time an evil businessman tries to enjoy his wealth, he creates jobs. And the more he enjoys, the more jobs are created. That's inevitable.

>Yet again, assuming they have any money. If your hypothetical society hates redheads to the point of wanting them dead, then I would expect them to be incredibly poor, since their ability to participate in the market would be extremely limited.

Now let's look at this comparison fairly. We talk about two societies, one with no state and one with a state, both hate redheads. Now if the majority in a society with a state hates redheads, wouldn't they pass laws that would restrict redheads from escaping the poverty? You'd think that. So redheads wouldn't have any money either. Worse even, in a society with a state if it's not the rest of the 90% that hate redheads, but say, only 70%, they can still pass a law that says "redheads cannot be hired for more than $1 an hour". Then, even those who have nothing against redheads will not be able to hire them, whereas in a stateless society they would.

>Can you explain why you think the freedom to decide how the last 10% of your income gets spent is more important than the freedom to eat?

I think it's very important to communicate one sound principle, with which I hope you might agree sometime: you can't do good by forcing other people to do it (that is, by using the money you stole from them). If I had nothing to eat tonight, do you think it's okay if I go and rob you? If you don't think it's ok, why do you believe it's okay for the government to do the same on my behalf? How is it more humane or fair to you? If anything, I'm not going to ask you to fill any forms, so it's gonna save you some time.

> So the first thing to understand here is that monopolies and cartels can't exist without government protection for a long time

And what do you think a government is? They're monopolies on violence that have existed for a long time in an otherwise free market. If demand for an alternative was enough to defeat a protection racket monopoly, then surely the same argument would apply to governments? Is there any argument you can make for why governments haven't been out-competed, that couldn't equally well apply to a private protection agency?

> If they buy stuff, they create jobs.

In an increasingly post-labour society, this is not necessarily the case. You might buy a machine that eliminates many jobs, and creates far fewer.

> Now if the majority in a society with a state hates redheads, wouldn't they pass laws that would restrict redheads from escaping the poverty?

Of course. I wasn't suggesting otherwise. My point is that there are ways for the majority to hurt the minority in both cases, so it's not an argument against democracy.

> you can't do good by forcing other people to do it

Of course you can. If someone is about to kill someone else, and you stop them, in what way have you not done good? Why is the situation any different when it involves property? If someone is withholding surplus food from a starving man, they are just as much a murderer as if they stabbed them.

> If you don't think it's ok, why do you believe it's okay for the government to do the same on my behalf?

Because the government's actions are approved of by a majority of society.

> How is it more humane or fair to you?

Because in your society, if I have no money, I die. In my society, if I have no money, I survive.

>And what do you think a government is?

It is a monopoly, of course. It clearly demonstrates that monopolies cannot exist without the threat of force, which isn't profitable to do in a free market, where you cannot force people to pay to sustain that force indefinitely.

>In an increasingly post-labour society, this is not necessarily the case. You might buy a machine that eliminates many jobs, and creates far fewer.

Did somebody build that machine? Doesn't that situation incentivize people to learn more sophisticated skills? And if a machine makes some product cheaper, wouldn't the poor benefit the most from it, since they would now be able to afford stuff they couldn't before? Would you like to be rich 200 years ago or lower middle class today?

>Of course. I wasn't suggesting otherwise. My point is that there are ways for the majority to hurt the minority in both cases, so it's not an argument against democracy.

It is an argument against democracy, because I clearly demonstrated to you how in a democracy the minority would be in a much worse situation if the majority of the society hated them. Please re-read it and I'd really like to hear your response to that.

>Because the government's actions are approved of by a majority of society.

So, if the government approved me robbing you directly, you'd be okay with it too?

>Because in your society, if I have no money, I die. In my society, if I have no money, I survive.

That's actually not true. In my society there are friends and relatives. Individuals have responsibility to help others, not some abstract government or society.

> It clearly demonstrates that monopolies cannot exist without the threat of force, which isn't profitable to do in a free market, where you cannot force people to pay to sustain that force indefinitely.

Private protection agencies do have the threat of force though, so they can force people to pay to sustain them. And clearly it must be sustainable, because governments exist.

Or do you think there some magical property of things called "governments" which protects them from the market forces you claim something called a "private protection agency" would be subject to? In what way are they different?

> Did somebody build that machine?

For now. My point is that as capital overtakes labour as the primary factor in production, using jobs as a means of wealth distribution will no longer be effective.

> Doesn't that situation incentivize people to learn more sophisticated skills?

And how will they learn those skills if they have no money?

>Please re-read it and I'd really like to hear your response to that.

You threw out some arbitrary numbers with no real basis. Why does it take 90% of society to harm the minority in a free market but only 70% in state?

The actual difference is that in a democratic state, you need a majority of people to harm a minority. Whereas in a free market, you need a majority of capital. If capital is evenly distributed, then they will be roughly even, but if there is massive inequality, then genocide could easily be committed in a free market with support of only 1% of society.

>So, if the government approved me robbing you directly, you'd be okay with it too?

Why would they come to such a decision? Why would society at large care about you and me in particular? If you mean as part of some wider social program, and I happen to have more wealth than you, then I would be happy to share it.

>That's actually not true. In my society there are friends and relatives. Individuals have responsibility to help others, not some abstract government or society.

Right, and what if they don't have any money to spare either? Or simply don't want to help me? I still die.

>You threw out some arbitrary numbers with no real basis. Why does it take 90% of society to harm the minority in a free market but only 70% in state?

That's not what I did. I gave you examples that with any distribution of opinions in a society, minorities would be worse off with a state. My examples, if you read them carefully, compared two situations with equal variables given. I first looked at what would happen in both societies if 90% hated a minority, then looked at what would happen if only 70% hated a minority, again, in both stateless and statists societies.

> The actual difference is that in a democratic state, you need a majority of people to harm a minority. Whereas in a free market, you need a majority of capital. If capital is evenly distributed, then they will be roughly even, but if there is massive inequality, then genocide could easily be committed in a free market with support of only 1% of society.

That is a misunderstanding of how state works. When there is a government, rich people still control it, not the voters. This is because they can buy election campaigns and control public opinion through the media they own. Then, when politicians are voted in with their help, they get the laws they wish to be passed. Suppose a billionaire wishes to commit a genocide. What do you think is going to be cheaper: directly finance the genocide or influence a public opinion and sponsor a politician who would do it for him using taxpayers money? Of course the former is the cheaper route!

You can say, "but other people would oppose genocide and another politician would try to beat the one who's evil". Well, same would happen in a free market, except with more certainty and less risk: everyone would be able to vote with their own dollars. If one businessman decides to kill 10% of the population who are redheads do you think other businesses, that redheads are customers of, are going to do nothing and allow their profits to be destroyed too? Do you honestly believe that other people, who clearly see this guy is nuts, are going to keep doing business with him knowing he goes and mass murders people using profits he gets?

I'd like to quote Leo Tolstoy once again who more than 100 years ago already understood a very simple and powerful thing: "without Authority there could not be worse violence than that of Authority under existing conditions".

I don't object to focusing on fewer points, since the discussion was getting a bit sprawling, but I would consider my question about private protection agencies to be one of the most important, so I'd like to continue that.

To condense my question: Doesn't the existence of stable governments demonstrate that monopolies on violence are a sustainable business model?

(Indeed, by your own argument, one could conclude that there must be market demand for the existence of current governments, otherwise they would be out-competed?)

>I first looked at what would happen in both societies if 90% hated a minority, then looked at what would happen if only 70% hated a minority, again, in both stateless and statists societies.

With no real basis for either conclusion. You just assert that a free market where 70% of people hate redheads would be totally fine, because they can still trade with the remaining 30%. Which says nothing about the far far more important factor of wealth distribution.

>This is because they can buy election campaigns and control public opinion through the media they own. Then, when politicians are voted in with their help, they get the laws they wish to be passed. Suppose a billionaire wishes to commit a genocide. What do you think is going to be cheaper: directly finance the genocide or influence a public opinion and sponsor a politician who would do it for him using taxpayers money? Of course the former is the cheaper route!

(I'm assuming you meant latter?)

If people are apparently so gullible in their political decisions, what makes you think they won't be equally gullible in their financial ones? If it's possible to convince people to vote for genocide, then surely it's equally possible to create market demand for genocide?

>"without Authority there could not be worse violence than that of Authority under existing conditions".

To be honest, this kind of statement just highlights the naivety I see in anarcho-capitalist arguments: "If only there were no tyrants, everything would be better." But in a world with power imbalances, there will always be more tyrants.

Democracy is the only system we have seen which attempts to solve this fundamental problem of power imbalance.

>You obviously can't just drop prices on 10 thousands socks of yours, because that would still allow your competitor to stay in business

Ah sorry, I misunderstood. I thought you were suggesting they'd have to drop prices on a range of different products.

>What's there to prevent a rich investor from entering the market and competing?

The fact that there isn't an infinite supply of rich investors queueing up to disrupt markets. And that there are likely much better investment opportunities than entering an expensive price war just to gain a foothold in a newly competitive market (at which point company C can enter, and reap the same benefits without the inflated upfront costs).

A company selling 1M units isn't threatened by a company selling 10k units. It might be threatened by a company selling 200k units, at which point the numbers are much closer - and there's also more payoff for eating the other company's pie.

In a free market that would not happen. The decline in quality of the very product that the companies are offering would lead to a lower revenue stream for them.

> BECAUSE you have government sticking its nose where it shouldn't (I'd say, it shouldn't stick its nose anywhere, but that's another story). Comcast is the second largest lobbyist in Washington.

Your argument, even though it reads like liberal laissez-faire stuff, actually is: the government is being controlled by corporations.

So, your solution of "stop regulation" is offtopic. Come up with something relevant to your own argument first. Like, hmm, "stop corporations from dictating governance". That'll work.

I actually think it's both ways. Both corporations and government control consumers. That's what it's about. The solution should be such that it is easier to administer it. You can fight numerous evil corporations to no luck. Or you could focus on one entity without which all those evil things wouldn't be possible.

Considering our government created the internet in the first place, I'm not sure that's a long-term winning strategy.

I disagree with that statement. People created internet. As well as built roads and educated children. Individuals do that. The only question is, how are they financed. If those activities are financed using tax money, it's called "government". Then, the question we should ask ourselves, would people still invent awesome things and build roads and educate their children without government funding? Would they, maybe, somehow use the money they don't have to pay as taxes now, to do all of those things?

After all, they use money to do other things all the time, and those other things are not nearly as important for them as roads or education.

> If those activities are financed using tax money, it's called "government".

Taxes don't finance US government expenditure; they create demand for the currency.

> Then, the question we should ask ourselves, would people still invent awesome things and build roads and educate their children without government funding

Government provides the coordination required to accomplish these things. The private sector is notoriously horrible at coordination between competing actors.

> The private sector is notoriously horrible at coordination between competing actors.

This must be why I can never get my luggage handled flying two or more airlines or why I can never use my cellphone in another country connecting to another operator's network. Can you give me some examples where the private sector is actually bad at coordination?

You picked two areas with massive government regulation. So yes, when government acts as the intermediary, the private sector can stop failing at coordination.

Well, you're not exactly correct. Airlines are indeed regulated, but not as much as they were before in the 1970s. After the deregulation of the Airline industry the prices dropped, and service levels increased.

Telecomm, again, is only heavily regulated in the US. In my country it isn't, yet we do enjoy rather low prices and quite a nice service overall. Telecom operators also cooperate without any government intervention: at some point they realized it'd be great to have incoming calls from ALL operators free (they weren't before) and outgoing calls to be of the same price for any phone (they weren't).

>whereas the only way to fix things is to not allow governmental interference in the first place.

But we are past this point. So what is the solution now?

Good question. The solution is not go full retard, it seems, but to stop doing wrong things. Whatever you do, you don't ever introduce new regulation. Don't introduce more opportunities for government bureaucrats to feed from. Because if you do, it's gonna lead to worse and more expensive things for the consumer.

I understand your point, and I don't want to derail this thread into a discussion on language. However, saying that introducing more governmental regulation is going "full retard" (even if the idea behind it is actually true) is reductive and detracts from your point.

This is not an issue of political correctness. Saying "not go full shit-head" falls into the same category. Please treat your opposition with respect, even if you disagree with them.

Oh, ok, sorry. I never realized "retard" is super offensive in that way. It didn't sound like a very strong word to me, so I apologize.

Funny :-)

Guessing, but I think snitko may have actually meant "full retard" in the sense of "retard" meaning to slow down or apply the brakes, rather than meaning "dumb" or "mentally retarded".

"If you find yourself in a hole, stop digging"?

Isn't that the point of digging?

Everything I see government touches is of low quality, whereas everything that's good in my country is private enterprise.

And yet the countries that are consistently in the top 5 or top 10 of most quality-of-life measures are those countries that are social democracies (generally scandanavia and aust/nz/canada), where the government puts its fingers in a lot of pies. If the things that your government touches is bad, then that's a problem with your government, not the awesomeness of the free market.

Out of curiosity, how well do your ISPs cater to rural users? People in urban centres are cheap to service, but spread-out rural users are quite expensive.

In rural areas you pay a lot for initial connection, then usual rates. Or just use radio links (WiMAX and fixed 3G stations are kind of popular where my parents live).

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