Understanding Anarcho Capitalism: A Simplified Case (Part 2)

If you haven't already read it, here's part one.


A continuation of 'Why roles that shouldn't exist shouldn't exist'

Corporate Regulation
Most notably, we're concerned with organizations such as the Food and Drug Administration-- noting its regulation of food sale, its ban on drugs and its restrictions on some other drugs. Other relevant regulations include mandates on the level of safety of automobiles, requirements for business to pay at a minimum wage, prohibition of prostitution and restrictions on firearms sale.

So, to outline the big ones:
1. Government food quality inspection
2. Drug prohibition and drug restriction
3. Various safety mandates
4. Minimum Wage
5. Gun Control

I'll tackle these from the top down.

Government food quality inspection
For most of US history, the FDA has decided to take pointers from Upton Sinclair's The Jungle, and perhaps also the science-fiction movie Soylent Green. The rationale goes: 'bad' food is cheaper to produce than 'good' food; producers desire to lower costs, and will therefore produce 'bad' food; people are better off with 'good' food than they are with 'bad' food; the government should mandate and ensure that producers produce 'good' food.

This reasoning is flawed-- while producers may desire to lower costs, they also won't be able to sell food that poisons their customers. Every time there's even a moderate suspicion that business x is selling unsanitary meat, the media- without government enforcement- immediately latches on. In virtually every case their claim is unfounded, but the fact that they're always checking is reason enough for it never to occur. Imagine the damage to a company's reputation should further investigation prove their food *is* harmful-- they'd be lucky to ever do business again.

Thus, any government mandate to "ensure food quality" is either superfluous- and therefore a waste of money and labor- or else unnecessary to actual food quality, making it harmful both in wasted money and labor, and also in needlessly raising the price of food. The latter of these two scenarios has a particularly negative effect on the poor, who spend a much larger percentage of their income on food than do richer persons.

Drug Prohibition and Drug Restriction
First- on the subject of prohibited drugs. Marijuana, Cocaine, Meth, . . . are considered dangerous for consumption, by one reason or another, and on these grounds are made illegal for sale (with the exception of medicinal marijuana, and also recent amendments that allow limited recreational marijuana use in certain states). The rationale is never exactly stated more than it is somehow implied, but any reasoning must follow the key assumptions that 1. some individuals don't know what's best for themselves, and 2. government intervention will improve their decisions.

On the first part, it should be recognized that the exact conditions of individuals cannot be verified, nor can their preference be determined by anyone other than themselves. Even if it's true that the vast majority of all people- were they to use meth- would ultimately suffer negative consequences, it cannot be said that this is true for all persons. Perhaps a man is in such poor conditions that he wishes death, and he would prefer a stimulated overdose to a bullet (for fairly obvious reasons. Remember that these arguments are made on a Utilitarian basis, and are also made secularly). The mere fact that most people would likely suffer negatively from cocaine use based on past actions and inferred (though inexact) preference does not imply that cocaine users use cocaine as an irrational means to attain their ends. Their ends, being inherently rational, may coincide- perhaps obviously- with cocaine use.

Furthermore, the argument becomes increasingly weak with regard to "weaker" substances such as marijuana, against which there is little evidence that even a majority would suffer negatively as a result of its consumption. With regard to drugs that serve medicinal roles, which is virtually every drug to one extent or another, the more applicable the role the yet weaker this pro-restriction contention.

The most fatal blow to drug restriction arguments however lies in the second assumption-- that government intervention generally improves decisions/conditions. As we've seen with the United States infamous and never-ending 'war on drugs,' the monetary expense alone is reason enough to shatter the prohibition case. Current estimates place the cost in 2010 at $15 billion, with the rate of expense annually growing larger since that time, and still the "war" goes on. At this point, we can practically assume such expenses are, and will always be, the cost of enforcement.

Furthermore, the black market of drug sale allows for very little means of ensuring quality or honesty by the sellers, as transactions necessarily happen in secret and go unscrutinized by media attention. Not even the FDA has the means to interfere. Thus, buyers are often tricked into purchasing weaker drugs laced by stronger, more addictive substances, ensuring continual business at little or no cost.

Being inherently criminal organizations, drug sellers lose incentive to coincide with other, important legal regulations, thereby causing them to resolve disputes in brutal fashions and eliminate competition by force (note that the non-existence of strong private defense agencies to solve these problems is due to their being unfairly out-competed by a monopolizing government. Once again, the private sector cannot compete with that which an entire country is forced to pay for). Annihilating opposing drug-sellers in this fashion exacerbates the problem, as newly-formed cartels become more profitable without competition, granting them more incentive to proceed with war-like activities. This has resulted in numerous needless casualties from the United States to Mexico, from cartel gunman to police.

Safety Mandates
Similar in nature to food inspection, safety mandates by government are equivalent to the restriction of an otherwise viable goods market. Under "normal" circumstances, firms will supply any and all products that have x demand, and cost no more than y to produce (with the value of y being dependent on that of x), provided there does not exist another product of similar function that is overwhelmingly preferred by consumers (given both its quality and price). A safety mandate is the means by which government either eliminates an otherwise available good from the marketplace, or trades a market good for its widely-unpreffered substitute.

As example, let us consider the seat belt mandate.

US automobiles first entered production in 1913*-- they were not produced before this time because the costs of building such a thing were too great. Henry Ford's genius, manifested in the creation of the conveyer belt assembly line (along with the steady march of technology by the genius of some others), reduced costs to such a level that- given the demand for automobiles- there became a market for their production. The automobile was relatively expensive when it first entered the market because it was produced as soon as costs were low enough relative to demands of some group, any group; it follows logically that the first to meet this prerequisite as costs fall are 'the rich.'
*- I do not guarantee the correctness of this historical claim, the accuracy of which is not relevant to my arguments.

Parts that make up the product "automobile" are great in number and complex in effect, so much so that few else besides those who designed it understand what they do. The question "what to include?" is not easily answered. Reducing risk for the driver is important to the company's reputation as dead customers tends not to make for good business, but reducing costs of production is essential to keep the product on the market. With regard to how much risk a given part reduces, and at what cost, there are complicated calculations that car manufacturers will need to make to ensure an affordable, quality product that isn't drowned out by competitors.

Suppose an automobile company is considering the inclusion of seat belts. First they'd need to consider the speed of the car-- at its outset, the automobile did not move particularly fast. Automobiles were also expensive, so maybe traffic was expected to be light. How complicated is it to operate the car? How likely are drivers to focus their attention on the road? Are public roads well maintained? What about the car's headlights and other sources of light on the road? All of these are factors that must be considered in a risk analysis, and then these must be compared with the cost of seat belts. Suggesting, then, that seat belts are always necessary to produce the optimum car at any given point in the history of automobiles is pretentious and absurd.

Fortunately, automobile producers have all the right incentives to make these calculations and decide accordingly. As the car becomes yet cheaper, perhaps it becomes wise to sell some cars with seat belts and some without, appealing to the differing desires of consumers at varying levels of income. If incomes rise and costs fall yet further, perhaps there's no longer a market for cars without seat belts. All the same, these are complex considerations for producers to address.

The government's mandate that cars should have seat belts ruthlessly ignores the complexity of the matter. It forced the market to provide consumers with a less-preffered substitute- cars with seat belts at a higher price to cars without seat belts at a lower price- and simultaneously applied the newfound burden disproportionately to the poor, some of which could previously have afforded a car and now cannot. If people had desired the seat belts government forcefully mandated more than the money they lost as a result of added costs, it would already have been so.


CONCLUSION OF PART TWO.

THERE WILL BE MANY MORE THAN TWO PARTS.