Now that our season is over...

[Rosey]

But the rule for double hulled ships prevents the damage. Personally I feel that's better than trying to sue afterward. Corporate lawyers would almost for sure win out against me and my lakefront. They have a lot more bucks to throw at them than I do.

You presume an expensive, monopoly justice system such as what we currently have.  I don't.

Also I didn't mean to make religion akin to business, in fact I consider it a warped and dysfunctional form of government.

On this we agree.

Well, I've not remembered when you ever put government ahead of business.

I see very few areas in which government has anything but an ultimately parasitic role: every government regulation or program creates a constituency, which then becomes a parasite with the fangs of government law enforcement feasting on the free market.  Business isn't always good, and it's possible for individual businesses to get away with evil for a time, but I suspect that potential pales in comparison to the evils government has wrought even in just the 20th century.

The one distinguishing advantage business has over government is the voluntary nature of the trade: I can always choose not to do business with any particular corporation, but I'm stuck with paying taxes to and obeying the rules of the government where I live.  This is not a huge problem if government is local, but as the scope of government grows, the ability to shop around effectively disappears because the cost of moving (in terms of social and economic disruption) increases dramatically.

I seem to think, like your statement that started this discussion "It's not at all clear that it's even possible for businessmen to do as much damage to society as politicians have.", that you always come down on the side of business. I'd rather take an individualized approach.

"Better" is not equivalent to "good."  I'm saying government action is almost always net counterproductive.  Businesses can't work this way long-term: they have to produce value or they go out of business, because they can't tax you to pay for unprofitable services.

Combining messages:

Who does enforce the "conventions"? Sure you're going to say that the drivers do, because they see that it works. Well, I've certainly seen many reverse instances. Drivers trying to get through an intersection, but not able to get all the way through so no one can move.

How exactly are traffic laws helping then if people are simply ignoring them?  I've seen eye contact between drivers correct a lot more antisocial behavior than laws ever will.  Try it: when somebody's doing something stupid, beep your horn to get their attention and then stare at them.  It works wonders.

So if your house is on fire, you're happy to have it burn and get the money, rather than have a fieman come put it out?::screwy::

Don't you think it would be cheaper for the insurance company to have a private fire department put the fire out, rather than pay to completely replace the house? ::screwy::

Because there's no other substantive difference between the 1930's and the 2000's?

So your point is?

That seniors are doing a lot better today for many reasons: how are you controlling for medical, social, and technological progress?

[Swampy]

How about oil spills from ships with only one hull, how about lakes and rivers polluted to the point that fish can't live there. Those are a few obvious environmental ones.

Pollution causes problems when it comes up against someone's property or interest in property (e.g., water rights): those people have a claim to damages.  It would look very different from existing criminal environmental law, but it's not at all clear that it would be worse or less equitable.  It is in fact government that creates barriers to and restricts the standing of property owners to sue for environmental damages, making it effectively legal to pollute except when the government says otherwise.

You're right, but only if we ignore the impacts on future generations and animals, or an intrinsic ethic of protecting the environment. Considerations such as these are not amenable to resolution by claims for damages. Also, don't forget about our limited knowledge regarding unintended environmental consequences, as Fred Hayek was fond of pointing out. Just as is true for a central planner, a judge today cannot possibly know the long-term damages caused by, for example, cell phones.

You certainly won't get me to defend wars, although religion may be just as bad as governments.

Don't gloss over wars: wars and genocide in the 20th century alone have killed about 200 million people.  This is a level of violence unmatched by all private enterprise throughout human history.

Well, until the twentieth century, when it came to killing millions the Atlantic slave trade gave governments a run for their money. Also don't forget that early capitalist enterprises, such as the Dutch chartered companies (e.g., the Dutch East India Company -- aka VOC) or the British East India Company were quasi-military for-profit organizations, as were the privateers. They were early-modern versions of Blackwater. While it is true that mass murder in Russia and China was largely a government enterprise, in Germany the Nazi government and private business (Nazi or not) worked hand-in-hand.

Why is everyone making such a sharp distinction between government, business, and religion? Why can't we have government-run concentration camps, private hospitals practicing eugenics, and an inquisition too?

The separation of church and state, such as it is, only became common in the West around 1800, but even today the separation is hardly complete. In the U.S. today, the separation of business and government is more rhetorical than real. Who could claim that in the U.S. today business and government are separate rivals rather than closely interlocked collaborators? ::drunk::  "It's not the economy Stupid, it's the system!"

And I'd argue that religion is more akin to government than to private enterprise, though certainly it isn't a perfect comparison.

Really? What's the argument?

[Robb]

You're right, but only if we ignore the impacts on future generations and animals, or an intrinsic ethic of protecting the environment. Considerations such as these are not amenable to resolution by claims for damages. Also, don't forget about our limited knowledge regarding unintended environmental consequences, as Fred Hayek was fond of pointing out.

This Exxon Valdez business is a red herring.  Yes, it's horrible that it happened, and yes, a private company was at fault.  But where's the evidence that a state-run oil company would not have similar spills or cause the exact same unintended environmental consequences?  Remember, the argument here isn't (yet) whether the petroleum infrastructure should exist at all, but whether it would be better for society if it were run by the government than by private corporations.  I would actually think that a state-run company would be more dangerous to society.  Since it's not in competition with other oil companies, it has less incentive to avoid problems, since it knows the government must bail it out and cover the damages anyway.

[KeithK]

So if your house is on fire, you're happy to have it burn and get the money, rather than have a fieman come put it out?::screwy::

Don't you think it would be cheaper for the insurance company to have a private fire department put the fire out, rather than pay to completely replace the house?

When it comes to fire prevention there's a significant risk of one individual causing damage to others (fire spreads) when you're talking about a densely populated area. Liability breaks down when the losses become large enough, even if you can figure out who was to blame. Now it's true that insurance companies could provide private fire departments to clean up the mess.  But then there's a significant free rider concern. If I know my neighbor has good fire insurance and his company will come and put out my fire to protect his building then maybe I don't bother getting my own insurance.

There is a role for government, IMO. But it ought to be narrowly tailored to meet specific needs.  This is not what we have today.

[ugarte]

You're right, but only if we ignore the impacts on future generations and animals, or an intrinsic ethic of protecting the environment. Considerations such as these are not amenable to resolution by claims for damages. Also, don't forget about our limited knowledge regarding unintended environmental consequences, as Fred Hayek was fond of pointing out.

This Exxon Valdez business is a red herring.  Yes, it's horrible that it happened, and yes, a private company was at fault.  But where's the evidence that a state-run oil company would not have similar spills or cause the exact same unintended environmental consequences?  Remember, the argument here isn't (yet) whether the petroleum infrastructure should exist at all, but whether it would be better for society if it were run by the government than by private corporations.  I would actually think that a state-run company would be more dangerous to society.  Since it's not in competition with other oil companies, it has less incentive to avoid problems, since it knows the government must bail it out and cover the damages anyway.

This argument is the red herring. Nobody argued in favor of state-run enterprise but rather in favor of a robust regulatory regime. That way competition can breed efficiency, with government authority in place to prevent damage from externalities when competition becomes too robust at the expense of third parties.

[Robb]

This argument is the red herring. Nobody argued in favor of state-run enterprise but rather in favor of a robust regulatory regime. That way competition can breed efficiency, with government authority in place to prevent damage from externalities when competition becomes too robust at the expense of third parties.

So you like the system we have now, but think the government needs to regulate a bit more in some areas.  What's the controversy again?  I thought this was all in the context of whether Marx should be taught in business schools, i.e. outright socialism vs. capitalism.

[ugarte]

This argument is the red herring. Nobody argued in favor of state-run enterprise but rather in favor of a robust regulatory regime. That way competition can breed efficiency, with government authority in place to prevent damage from externalities when competition becomes too robust at the expense of third parties.

So you like the system we have now, but think the government needs to regulate a bit more in some areas.  What's the controversy again?  I thought this was all in the context of whether Marx should be taught in business schools, i.e. outright socialism vs. capitalism.

There are more threads here than in the Ritz-Carlton sheets.

Yes, I am in favor of some tweaks to our current regime. I am also in favor of business schools training their students to think critically about their role in the larger culture. Enron, for example, can be a case study in creating artificial value and the social cost of compensating executives based on easily manipulated, short-term-focused metrics like "stock price." In any event, teach Marx alongside Hayek because they both get a lot right and a lot wrong.

[RichH]

Me? I only wonder what the Kentucky post-season thread is talking about.

[Rosey]

When it comes to fire prevention there's a significant risk of one individual causing damage to others (fire spreads) when you're talking about a densely populated area.

Sure.  And if you live in an area with lots of uninsured houses, you'll probably pay more in premiums, just like you pay more in auto (theft) insurance premiums if you live in a place with lots of auto (home) theft.

Liability breaks down when the losses become large enough, even if you can figure out who was to blame.

I don't understand this at all: please explain.

Now it's true that insurance companies could provide private fire departments to clean up the mess.  But then there's a significant free rider concern. If I know my neighbor has good fire insurance and his company will come and put out my fire to protect his building then maybe I don't bother getting my own insurance.

Even if putting out the fire in your house is their only choice, you'll still have tens or hundreds of thousands of dollars in damage (fire and water) that isn't covered by insurance.  No court would find a fire department liable for water damage resulting from an effort to keep a fire that started in your house from causing damage to others' homes.  In fact, it is highly likely you would receive a summons to arbitration from the guy's insurance company, followed by a summary judgment against you if you decide not to show up.  Then the repo men get involved and things get nasty, which makes this situation highly unlikely in any area you'd probably want to live in.

[Jim Hyla]

Well, I think I'm done. When people think that insurance companies are going to form private fire companies for each of their insured; and traffic laws are not needed, just drive by conventions, then I have nothing to add other than, go find that society and live there. I don't think you'll be moving soon.

[Rosey]

Well, I think I'm done. When people think that insurance companies are going to form private fire companies for each of their insured; and traffic laws are not needed, just drive by conventions, then I have nothing to add other than, go find that society and live there. I don't think you'll be moving soon.

Check.  I'll file you in the "If you don't like it, move!" bucket.

[mnagowski]

Liability breaks down when the losses become large enough, even if you can figure out who was to blame.

I don't understand this at all: please explain.

Because once liabilities become big enough, the company/interest/person can declare bankruptcy/fold/commit suicide and suddenly they are no longer liable?

What I find crazy in the private fire company discussion is just how poor the historical record of private fire companies has been. In the 19th century, these companies were known for purposefully starting fires just to spread fear and business. The Romans were known for letting a house continue to burn unless they didn't receive additional payments. And more recent attempts at privatization have resulted in inadequate reserve staffing for those 'tail risk' events. There was also the problem that sometimes fires wouldn't happen for a couple of years, conveniently convincing everybody to drop their insurance right before another string of fires would break out. Plus, wouldn't it suck to be the child who dies in a burning house because your parent's didn't have enough money for private fire insurance?

It's pretty clear with the case of public fire departments that even if some individuals are made worse off because of it, the community is much better-off as a result. And thankfully we live in a country that respects more than just property rights.

Come to think about it, there are a lot of parallels between fire fighting as a public good and a recent law that was passed...

then I have nothing to add other than, go find that society and live there.

I would totally pay to watch that.

[Rosey]

I'd like Keith to explain what he meant.

[KeithK]

Liability breaks down when the losses become large enough, even if you can figure out who was to blame.

I don't understand this at all: please explain.

If I start a fire in the middle of Chicago that burns down the whole city it won't matter much whether I have insurance or not. The other owners in town may have a valid claim against me but there's no way they're going to be able to collect aginst such huge losses.

Now your response is probably that rational action by the other owners/insurance companies will prevent the losses from getting to this point.  Maybe so.

Now it's true that insurance companies could provide private fire departments to clean up the mess.  But then there's a significant free rider concern. If I know my neighbor has good fire insurance and his company will come and put out my fire to protect his building then maybe I don't bother getting my own insurance.

Even if putting out the fire in your house is their only choice, you'll still have tens or hundreds of thousands of dollars in damage (fire and water) that isn't covered by insurance.  No court would find a fire department liable for water damage resulting from an effort to keep a fire that started in your house from causing damage to others' homes.  In fact, it is highly likely you would receive a summons to arbitration from the guy's insurance company, followed by a summary judgment against you if you decide not to show up.  Then the repo men get involved and things get nasty, which makes this situation highly unlikely in any area you'd probably want to live in.

Sure, letting someone else put out my fire may cause a lot of water damage.  But that's a risk I may be willing to take. Insurance is about risk calculation. If I think that the probably cost of damage times the probability of it occuring is less than the cost of insurance then it's rational to not get insurance. The presence of neighbors fire service who might be obligated to put out your fire reduces the potential cost for the fire ($10k water damage < $500k loss of entire property, for instance).

On what basis are you suggesting the insurance company would "issue" a summons to arbitration? Certainly for damage to the other guys property, but I'm assuming that the his fire company puts out my fire before it damages his property. Cost of services rendered? Seems a stretch since I didn't request any services.  Regardless, I don't think it changes the free rider question. It simply increases the potential cost of an incident a bit. But if I rate the probability as low enough or if I'm willing to take some risks (maybe because I want to use potential premiums for some other investment) I may still choose to forego insurance.

[KeithK]

It's pretty clear with the case of public fire departments that even if some individuals are made worse off because of it, the community is much better-off as a result. And thankfully we live in a country that respects more than just property rights.

As is very often the case you have a balancing act between individual rights and community good. In the case of fire prevention I think the benefit is large and the cost is reasonably small. The solution (public fire departments) is pretty narrowly tailored to the problem and doesn't much impede th rights of citizens (beyond the forced payment). So I don't have a problem accepting this particular public function.

Come to think about it, there are a lot of parallels between fire fighting as a public good and a recent law that was passed...

Sure there are parallels. But th cost/benefit calculus is extremely different. If the costs of a proposal outweight the benefits then it's a bad proposal even if it produces some good.