Posts tagged friedman
Anarchy and efficient law: question
The question relates to the presentation given above.
Say that my peers and I judge a law allowing us to do X to be worth $10,000 per month each. Meanwhile our wealthy neighbors all judge a law preventing anyone from doing X to be worth only $5000.
Two defense agencies are involved, one budget agency that my peers and I are subscribed to, and another agency that the wealthy neighbors are subscribed to. Both groups would like it that conflicts with members of the other group, over X, are decided in their favour.
The two agencies, eager to avoid violent conflict want to make a settlement about which court to go to in the case of conflicts between their customers over the issue of X. One agency will pay the other in exchange for these cases being taken to a court of their choosing. The agency servicing the wealthy prefers an ‘anti-X’ court, while the agency servicing the less wealthy prefers a ‘X-friendly’ court. The ‘paying’ agency will end up passing on the cost to its customers in the form of a higher subscription fee.
None of us pro X-ers can actually afford to ‘buy’ the right to do X at more than 5000 each month, while the anti-Xers can comfortably afford to spend that to secure the right to be free from X. The result is that X ends up prohibited, even though allowing X would have maximised utility.
Would there not be many cases like this where wealth disparity leads to inefficient outcomes if consumers of law are indirectly bidding against one another for the law they will live under?
I got this email reply from David Friedman:
The result isn’t inefficient. It’s an example of a situation where the outcome that maximizes economic efficiency probably doesn’t maximize utility.
You can think of economic efficiency as an approximate proxy for utility. The fact that it measures value by willingness to pay even though different people have different utility values for money is one of the reasons it is only an approximate proxy.
I discuss this point in the discussions of economic efficiency in several of my books—_Law’s Order_ (webbed), _Price Theory_ (webbed), _Hidden Order_ (not webbed). The webbed books are linked to my web page.
mawriaa said: Hai, I saw you on whakahekeheke's libertarian list and decided to follow :3
Hello to you! And to everyone else who’s taking a look via whakahekeheke’s list (thanks for the inclusion).
Here’s an excerpt from a recent facebook exchange. If the ideal is to persuade the author of the opening statement (and all 3rd parties witnessing the exchange) to a position that’s friendlier towards freedom, how would tumblr anti-statists answer? Mine’s below the following:
Libertarian anarchism doesn’t work for me. I want law and order and a social safety net. I don’t have all that blind faith in the competence of the human race.
Those are perfectly understandable concerns. We all want to feel secure against crime and other misfortune. Some of us have come to believe that the state isn’t competent to provide this protection, and that the decentralised provision of these things is a safer, more sustainable, and morally less objectionable option. If you want to learn more check out The machinery of freedom (PDF, David Friedman), or Man Economy and State (PDF, Murray Rothbard) for some good starting points.