This insistence that government be perfect and all other non-governmental efforts that fail are dismissed with "nothiing's perfect." It's not good reasoning.
In case of fire, I'd rather be able to call 911, than try to recruit the neighbors.
Where do libertarians stand on law suit caps?
Where do libertarians stand on law suit caps?
I find this debate (or discussion) fascinating, in part because I agree with most of the basic points each of you make, and do so much more than I see a need to take sides on the (to me, relatively much smaller) points over which you contest.
Markets, though more effective than anything else yet devised, are undoubtedly imperfect. Their history is replete with instances of human folly in which even readily available and significant information concerning economic transactions was simply ignored by otherwise proficient practicioners in the marketplace (from tulip bulbs to internet start-ups). There are undoubtedly some (perhaps very few) gaps between the central tendencies of human behavior and the rational actions required of participants in an ideal market - at least in some instances, charity or otherwise. Moreover, even in the broader areas of undisputed applicability of market mechanisms, human behavior very often does deviate from its central tendencies - the distributions are not particularly compact. Markets work very well for most things - far better than any alternative I know of - however they are not perfect. Their imperfections, though small, can be particularly unkind to losers, and lead to large, chaotic excursions in broad outcomes.
Thomas' points about government - merely collections of human beings, no better, wiser or worse than those they govern - are undoubtedly correct. Moreover he is right in his implicit view that governments do not necessarily respond to the rational feedback forces markets generate so well. I'll go further. Government organs and bureaucracies value preservation of their own authority and primacy above all other factors. Absent some external action (perhaps the democratic intervention of a legislature) they will continue to do what they do, long after any need or benefit from their actions disappears. Moreover the political and administrative decision-making of government at all levels is subject to the intervention and manipulation of forces that are merely well-connected and attentive (as opposed to productive and generally beneficial), and often for ends that defy the intended purpose. In most government directed programs, the unintended side effects eventually dominate the intended primary ones. Examples of all this are legion.
What to do? A common dilemma. We simply place one grossly imperfect system (government) properly in opposition to another slightly imperfect one (markets). The virtue of the particular combination is not so much a result of the perfection of its parts, as it is the absence of many common defects between them. The price we pay is the limitation of some of the optimizations markets can produce. The benefit is a floor on the losses of market losers and, hopefully, the elimination of most of the chaotic excursions to which real markets can be subject. Like Thomas, I generally prefer market solutions to government ones if they can work.
We have likely all had the experience in the management of organizations of putting talented, but imperfect people in counterpose with each other to achieve an end or a reliable performance that neither could deliver alone. I have similarly learned to always put people around me who will limit my own weaknesses and defects. It is te same with markets and government. Additionally Thomas has already made the point that, even within government, it is the internal friction and competition between its parts that is the usual source of its best product. Government is not the solution - markets are generally the solution: governments are merely the remedy for the defects of the markets.
I guess I'm not quite a Libertarian, but I would like to come as close to it as possible, recognizing that some counterpoint will always be needed.
Finally, I an suspicious of all theories - even those I 'accept'. I am uncomfortable having any aspect of my life governed by a person or group that is certain it is correct.
Thomas wrote:What, under your definition, would be the efficient solution, if it's not access to drugs which are likely to help and unlikely to hurt?
I would imagine that, for a libertarian, an efficient solution would be for a drug manufacturer to introduce pharmaceuticals into the marketplace as soon as it satisfied itself that the drug was safe.
Any penalties imposed on the company for introducing an unsafe drug into the market would then be imposed by the market, not the government.
It may, indeed, be an insignificant factor in general, but that is small consolation for the party in an individual case where the judge has sold out to the party's opponent.
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Again, the average efficiency of the solution is hardly satisfactory in those instances where the people are not being rational economic actors.
Thomas wrote:Only because you have assumed the property rights to be ill-defined.
Well, I imagine that I defined those property rights as concretely as would be necessary to determine a course of action for a rational economic actor. What else was necessary to complete the hypothetical?
Currently, arbitration only works in three situations: (1) where the parties have already contractually obligated themselves to arbitrate disputes; (2) where there is the possibility of a compromise price; or (3) where the law compels the parties to enter into binding arbitration. In my hypothetical, neither the first nor the second case applies, and in a libertarian society I would presume that the third would likewise not apply.
More precisely, it would introduce them as soon as it satisfied itself that the drug would be profitable, given expected profits from future sales and expected losses from future liability lawsuits. Is that still consistent with your view?
Correct. And why, in your opinion, would that behavior not give customers access to drugs which are likely to help and unlikely to hurt?
I agree, but small number problems of this kind can be an argument against government solutions just like they can be an argument against market solutions. Corrupt judges -- admittedly not that many -- have sold out to interested parties under the government system. Irrationality has led governments to violate pretty much every right in the Bill of Rights at some point in time. To make a case that human irrationality and corruption invalidates market solutions, you need to make a case that they are less of a problem in government than in the market. It is not enough to show that they exist in the market at all.
Apparently I didn't express myself clearly. I didn't mean "ill defined" in the sense of "too ambiguous", but in the sense of "misconstructed". If you have conflicting claims on the same kind of land, you have a problem under any political system. This, the observation that you run into problems is an argument against misconstructed property rights, not an argument against libertarian solutions. I hear that such conflicts arose quite frequently in early American history, even in the presence of a government.
More to the point, I am trying to defend the claim that I can describe a society with a vastly smaller government than today's that would work, and that would arguably be more attractive than today's. I have no doubt that you can describe a society with a vastly smaller government that sucks, but that doesn't invalidate my claim at all.
You forgot (4) when arbitration, however unpleasant, is still less unpleasant to open violence -- which is almost always the case.
That was the same sort of calculus that Ford Motor Co. used when it decided to continue selling Pintos, despite the car's deadly engineering flaws.
Because the company, in effect, acts as its own judge in determining what is best not only for the consumer but for its own bottom line. That is an obvious conflict of interest.
Rather, my point is that, in an envisaged libertarian society, there do not exist the kinds of structural safeguards against corruption that exist in a non-libertarian democracy. Instead, the "system" (i.e. the market) is supposed to militate against corruption -- not by any laws or regulations, but through a sort of "invisible hand" mechanism.
Now, I'll grant that a libertarian society would also have something akin to a "government," but there is ample reason to believe that it would not be empowered to make the same kinds of decisions regarding rights-conflicts that I had posited in my hypothetical regarding the slaughterhouse. The problem, then, is not misconstructed rights, but in conflicting rights where there is no authority to resolve those conflicts.
Thomas wrote:You forgot (4) when arbitration, however unpleasant, is still less unpleasant to open violence -- which is almost always the case.
It is almost always the case only for the weaker party. As Thucydides explained: the strong do what they will, the weak do what they must.
joefromchicago wrote:That was the same sort of calculus that Ford Motor Co. used when it decided to continue selling Pintos, despite the car's deadly engineering flaws.
How many people actually died as a result of that flaw? Your link doesn't seem to know, which leaves open the possibility that it was mostly a theoretical scare. Do you have concrete information on Pinto casualties?
Most engineers should be familiar with the "Pinto" case, correctly known as Grimshaw vs. Ford Motor Company, involving a fire resulting from a Pinto automobile being struck from the rear by another car. During the discovery phase of the lawsuit, a memorandum within the Ford Motor Company surfaced, in which Ford's play-off between the cost of alternative fuel tank design and the safety of the existing design was described. On the cost side of the 'equation', Ford developed a cost per unit of about $11 for an improved gas tank safety item to be used on 12.5 million cars and trucks, for a total cost to Ford of about $137 million.
On the benefit side of the 'equation', Ford estimated the savings of approximately 180 lives (at $200,000 each) and the elimination of 180 burn injuries (at $67,000 each) for a total of $49.5 million benefit. Thus the cost of the modification outweighed the benefits; so Ford did not undertake the improved tank design. (Product Liability Digest, March 1978). That analysis apparently represented the automobile manufacturer's concept of a play-off between cost and safety.
So Ford's sin was not that it used risk-benefit analysis for its design decisions. It was not that it put a price tag on human lives. Its sin was that this price tag was too small by an order of magnitude, as judged by the court, and by consumer's willingness to pay for safety. Because Ford was either incompetent or ruthless, they used a bogus value and reached the wrong conclusion. For this they payed dearly in damages and lost reputation, just as they should.
You refer to "a bogus value". I suggest you consider the possibility of unacceptable values.
How many people actually died as a result of that flaw? Your link doesn't seem to know, which leaves open the possibility that it was mostly a theoretical scare. Do you have concrete information on Pinto casualties?
It's only a conflict of interest if the risk of being wrong isn't priced in via the price system and tort law. If the risk is priced in, it is in the self interest of the producer to consider the consumer's interest adequately.
Let me give you an example of a body of law where this "invisible hand" mechanism proved perfectly adequate. You mentioned it yourself a couple of posts ago: The Lex Mercatoria, also known as the Law Merchant. Designed to regulate the interactions between merchants in different countries, this law emerged during the Middle Ages, independent of state institutions, without a government putting people to jail for violating it. The enforcement mechanism was entirely private, through the reputation of the merchants involved. If structural safegards are so important, why did the Lex Mercatoria work?
Do you really believe that merchants are that much more rational than non-merchants? Based on the (very small) sample of merchants I know, I don't think they are.
Well, everybody can try to resolve conflicts, but (under anarcho capitalism, which is a much more extreme form of libertarianism than I'm actually advocating) the conflict resolver wouldn't have the means of enforcing his verdict. Note that there is a precedent for this in 18th century England, where courts were run by the state, but (criminal) law enforcement was private. This system proved workable. Overall, 18th century England was probably the most attractive society of its time.
That's a vaild point, but as the history of the current Bush administration suggests, ruthless millionaires who want to stomp on other people's rights can quite easily do this by co-opting government. See Guantanamo Bay, Jose Padilla, federal agencies headed by lobbyists of the very industries they're supposed to regulate, et multae cetera. This is in part an artifact of the Bush presidency, but not entirely; things like this have been around at least as long as railroad regulation and the sad history of the ICC. So like many of your arguments, this one cuts both ways.
On the face of it, it seems intuitively plausible that human lives should always be saved at all cost. ...
So how much are our lives worth to us? The standard answer given by economists is to measure this value by our willingness to pay for safety. By measuring this willingness experimentally, typical values they get are in the range of $5 millions per life. ...
From my point of view, Ford's kind of analysis was adequate, but the parameters they used in their analysis reflected either ruthlessness or incompetence. The courts were right to club them on the head for it.
If libertarians are right in applying risk-benefit analysis to real life, Ford should use any design improvement that costs less than $5 million for every life saved, and it should reject improvements that cost more. If you plug this value into the above quoted calculation, low and behold, the safer design suddenly is profitable.
The libertarian rule -- build your car as you please, but pay for the consequences at market prices -- does lead to the result which Joe, Craven, ehBeth and I want.
Its sin was that this price tag was too small by an order of magnitude, as judged by the court, and by consumer's willingness to pay for safety.
I want a regulating body to ensure that this is not left to the whimsical nature of market forces.
