Wednesday, June 25, 2008
Another assumption is that it is impossible for individuals to be located at two different places. People can live in one place and have a body part at a different place. For example, a human can be located at one place but his cell phone can be connected at another place.
Another assumption is that the universe is flat. People can have 3D space, such as the atmosphere. They can fly airplanes in the air.
Another assumption is that you cannot cross a fense of a house without the owner's consent. This is false. You can fly airplanes above the fense, and you are still crossing it. You can fly a helicoptor above the area surrounded by the fence.
Another assumption is that you cannot go "inside" the owner's property without another's consent. Yes you can, such as standing beneath a bridge, or digging a hole in the ground to build a underground subway that is under the owner's property.
Another assumption is that states must be residing in geography, not underground or is shaped like a thin fiber. This is false. The state can be shaped like a fiber, such as the government uses internet fibers to enforce laws.
Another assumption is that a state cannot reside in separate geographical places. This is false. A state can be connected virtually by using cell phones in military individuals in different places. Alaska is resided in a different location than the United States, but still the same state.
Another assumption is that states require stable geographic locations. This is false. States can be nomadic. States can move. States can behave like cars and airplanes.
Anothe assumption is that individuals are seperate. However, individuals can be connected by using shared internet-cables and shared roads.
These assumptions create non-sequitur arguments. Avoid assuming these assumptions when arguing.
If these assumptions are not believed, then people would more easily believe in anarchism. For example, PDAs would be equivalent to mini-states. PDAs and states are similar. As states do not require to be in stable geographic locations, it would behave like PDAs because PDAs can move and states can move.
There exist an anarchist relation between two states. However, the anarchist relation is not violent. PDAs can behave like states. There exist an anarchist relation between different PDA firms. An the PDA firms would not be violent to each other similar to states.
People also assume that PDAs must be controlled by one boss. This is false. PDAs can be similarily controlled collectively, and have an interneal checks-and-balances system similar to a state. It is likely that almost all PDAs would be collectively controlled, just like the state, in anarchy.
So PDAs are no different than mini-states if these assumptions are not assumed. If people do not assume these things, their logic would lead to anarchy.
One example of an absurdness of the free rider problem is the utility. Politicans lie that we need to solve free rider problem for "defense." This is an example of subjective value, that foreigners are threats to us. This demonstrates that value is subjective so one person that thinks that we need funding but some people do not need military funding.
One example of the absurdness of the free rider problem is the emphasis on numeric.
If 99% of people agree that global warming needs to be funded but 1% does not agree, the 1% is a free rider. But if 1% agree that global warming needs to be funded and 99% does not agree 99% is a free rider. Neither group is corrupt. The free rider problem is dependent on majoritarianism. Even if 99% say it requires funding because of the free rider problem, it does not state that if global warming is actually true. Even if the 1% free riders does not fund, it does not mean that the other 99% is correct, similarily the reverse 99% 1%. Hence, free rider problem is a problem of it actually requires funding.
Therefore, free rider is based on the assumption that the funding is required. It is also egalitarian. it assumes that everyone needs it, including th 1% or 99%. And our current arguments for the free rider problem can be solved by market anarchism. And sometimes we do not actually need market funding. It is also utilitarian.
There are solutions. People can come up with a reasonable way for funding by giving contracts to see if they accept the methods of funding. If given a contract that
states that a rich person should fund more than a poor, they have to all agree to it.
Also, this suggests that the free rider problem is based on imperfect information of the number of people that agree to fund. If the individuals know who would fund or not, they can resolve in a efficient allocation. But because free riders frequently hide their actions if they would fund or not, they are hiding information. Because imperfect information, people would think that other people would fund.
Open source has perfect information so some people have an incentive to develop open source software.
Firms would work together for defense, they would come up with a solution similar to nuclear disarment between states they would reduce this to optimal. So automatically people would reduce their funding despite the free rider problem.
The Insurance Solution
Deregulate traffic controls, and let the market solve it. Every less state regulation gives an opportunity for the market to innovate a solution.
Suppose that the state discontinued its operations of traffic lights, while keeping all other traffic regulations intact.
If the state completely deregualized roads, then removing traffic lights will not result in any problem. It will function as a club good, and private road owners will have the incentive to provide traffic lights.
But this example discusses the problem when the state has suddenly abolished traffic lights, while the state still controls the roads.
At first, many individuals, even some anarchists, will predict that it will result in failures and slower transportation time. Since the state still publicly provide roads to anyone, discontinuing its provision of traffic lights will presumably cause behavior as in the tragedy of the commons.
However, this does not provide any problem for all drivers. Once eliminating traffic lights, the car insurance firms will have the incentive to rebuild traffic lights themselves. The elimination of traffic lights will result in a flawless, almost instantaneous transition for the firms to build new traffic lights. Once these efficient firms manage traffic lights, they will improve the design and implementation of traffic lights, with innovative and safety features.
This traffic light example behaves similar to the lighthouse problem. While water exemplifies the lighthouse scenario, roads exemplify this scenario.
Defending state regulation, even regulations that supposedly fixes other regulations, resembles an individual advocating theft by taxation. Every regulation enforced by the state hinders the opportunity for the market to provide an alternative.
Even in some rare cases when deregulation makes ``society" worse off, it will instigate pressure from the population to fix its things.
Thursday, June 12, 2008
Monday, June 9, 2008
Egoism is selfish behavior, and defined as benefiting the individual. Altruism is helping others. However, some conclude that altruism is also selfish, as people feel good helping others.
How can "feel good" be selfish? It can also be altruistic. According to evolution, altruism is an evolutionary adaptation for group survival. According to evolution, the "good feeling" of doing altruistic behavior is coded in our genes. So, in this context, egoistic behaviors are considered altruistic because they were behaviors that are selected by evolution to benefit the group over the individual.
So egoism and altruism can be synoyms. Neither behavior is egoistic nor altruistic. They are only behaviors.
It is impossible to classify egoistic and altruistic behaviors. Does buying apples from the market considered altruistic? It can, because the action of apples is a process of market competition. People do not buy bad apples. Only beneficial and efficient firms survive. So, in this action, you are behaving altruistically, because are punishing the bad firms buy not buying apples there, and helping the good ones. This process creates benefit for everyone, as you are helping them produce good apples.
So, persistent to Adam Smith's invidible hand, egoism and altruism are interchangeable in the voluntary market. Altruism is when one give gifts to others. The receiver benefits and the giver have a good feeling.
So why do many economists classify "altruistic" behavior bad? It has to do with a different reason. Suppose if one is being polite. He must give flower to a person gives gifts to the person. Suppose a person is helping another person to carry his grocery or educating others when they ask for help. These are altruistic behaviors. These behaviors are considered non-productive to them because the person is forced to do immediate reciprocal altruism instead of delaying the behavior and use his resources to do other things.
So altruism, such as giving to charity, wastes his resources instead of doing something productive, such as investing. Altruism is equivalent to immediate consumption, and egoism is equivalent to long term entrepreneural investment. So egoism is an investment, and benefits everying in the long run. Altruism only benefits in the short run.
Federally-enforced holidays such as Valentines' Day, Mothers' Day, Christimas, etc. are highly altruistic and resource wasting periods. People engage in irrational consumption such as giving gifts. Consumption decreases investment.
This is why economists prefer egoism and not altruism. They encourage investment.
Some think that wealth accumulation is egoistic. But what do they spend their wealth on? They wealth spending may be spent on altruistic or egoistic acts. People earn wealth to spend it "altruistically".
But going back to gene example, no behavior is altuistic and no behavior is egoistic.
This is another criticism of Homo economicus. not just wealth. They are just actions.
An example is open-source software. Coding open-source is neither altruistic nor egoistic. It is just a behavior adapted at evolution. It is the same as commercial software. Commercial developers modify open-source software so they can use it. There is a side-effect of improving the software--everyone else would share it. It is similar to a business that does innovation. Innovation first benefits a business, but a side-effect is created because information is distributed. They are actions that increase their happiness, and they are neither altuistic nor egoistic.
When drugs are prohibited, the supply of drugs goes down, which creates great demand for them. Due to the high demand, the price of drugs are driven up in the prohibited state. Drug dealers thus have the incentive to buy drugs cheaply at non-prohibited states and sell them at a high price in prohibited states. They earn extremely great profit because of the high Profit margin.
Drug addiction is uncontrollable. Once a person is addicted after taking a sample of a drug, the addiction can last forever. It is virtually impossible to become non-addicted.
Rational people would not waste their money to buy drugs and many poor people do that because they are addicted. It confirms that addiction cannot be suppressed.
This creates an incentive for the drug dealers to advertise their drugs to non-drug users. They have an excellent strategy to do that. The drug dealer can first offer free samples to non-addicts. The non-addict, after taking the free sample, become addicted forever with that drug. Thus, the addict would in the future buy drugs from the drug dealer. Despite the initial loss by giving a free sample, the drug dealer would infinitely gain by selling drugs in the future to the addict.
However, there is a problem: the free rider problem. If many drug dealers compete in one single geographical area, then no drug dealer would offer free samples. Offering free samples are too expensive. Thus, the drug dealers would collude and form a single cartel over a geographical area. The drug firms would merge and share profit. Therefore, they would have the incentive to offer free samples to get non-addicts addicted, since all profit or lose the same.
And most importantly, 99% of drug addicts started their addiction when they were children.
But if the barriers to entry is high, then is likely that collusion would happen. Because new firms are prohibited, the cartel have a very extreme incentive to collude. Examples include all of the government regulated and licensed sectors that create artificial barriers to entry.
But some types of knowledge cannot be profitable to the advertiser. These kinds of knowledge are not yet proven by technology or efficiency. Thus, consumers do not have the incentive to use that knowledge.
They do have the incentive to use knowledge such as technology because they would save money.
Some knowledge is inhibited by the state from advertising, such as the knowledge about water fluoridation. Entrepreneurs do not have the incentive to advertise water fluoridation because most water is publically funded. If water is allowed to be privatized, entrepreneurs are quick to provide information about the harms of water flouridation so consumers would have the incentive to buy their non-flouridated water.
Some entrepreneurs can "exploit" the ignorance of the consumer. For example, assuming global warming is false, advertisers would advertise their environment friendly products, even though they are useless.
The most visible abouse of consumers is political advertising. Politicians exploit the consumer by advertise false stuff.
The majority of humans are ignorant. They cannot even survive, without the knowledge advertised by entrepreneurs. Entrepreneurs help people buy homes and food.