Would it be viable for governments to be run as a business, rather than run by bureaucrats employed by elected leaders?

One huge problem with governments is that the leaders get elected, but the people who elect them don’t get to choose the staff and, it is the chosen staff who make the majority of the ‘stuff ups’.

Imagine a system where government is like a ‘bowls club’. They take care of debating issues, maintaining law and order but, when it comes to spending money, business people take control.

The ‘board of directors’ make the decisions, not the government. They are simply there to implement the actions as directed by the board.

Imagine the amount of ‘dead wood’ that would be chucked out along the way.

Now if the business people in charge loose money, or are found to be incompetent, then they get sacked.

Now if the annual salary for the CEO of Australia was around the $5mill mark, I am sure we would have some serious contenders.

What do you think?

rehctub: "the people who elect them don’t get to choose the staff"

Actually, they do. For better or worse most of the higher ups in the public service are now on contracts. By the end of a governments term any that weren't up to scratch are long gone.

rstuart - You are demented! Our Defence Department has consistently "Stuffed up" any number of purchasing with no retribution. No consolation at all but it is exactly the same in the UK.
Interestingly though the Pom Ministry of Defence mandarins were given bonus payments! I wonder what we are doing for ours? I cannot believe we would be any smarter.
If your mates are on contract they get paid out every penny no matter how fast they are made "LOng gone".

JBowyer: "rstuart - You are demented!"

Possibly, particularly as I don't see where you disagree with what I said.

What you did say re-enforced my point really. You say the Pom's bureaucrats stuffed up - and yet got big bonuses. So despite the government doing things in the way the corporate world does, we still get stuff ups.

This should come as no surprise to you. Despite the rehctub's liking for how the corporate world does things there is no shortage of stuff ups there either. Lehman Brothers did things exactly the way rehctub approves of - and yet went broke. Or how about when Optus's Queensland customers got disconnected from the rest of Australia because Optus hadn't ever bothered to get their backup via Telstra working. Then we have the HIH fiasco - which sent some the world wide accounting firm that did their audits broke.

Good points rstuart!
HIH never got the recognition it deserved! It exposed Australia as the absolute wild west of World business. Do what you like how you like and indolent Mandarins just do nothing!
Insurance is a world wide business and ours is in the hands of foreigners who now make us pay for the corruption of HIH.
I hate Government services and lackeys they are so bad and so useless it beggars belief.

Do not take your frustration out on the ordinary public servants. They are equally frustrated by the workings of incompetent, politically appointed CEO who has no real understanding of delivering a service to the Australian citizens.
Their role is to carry out the policy of the government of the day, whether good or bad.
The ordinary public servants have to try to bail them out of any mess they create.
One DHS Director was asked why he did not listen to the concerns of the public. He bleated that his job was to carry out the policy of the government. He was reminded that his job was also to advise the government whether or not the policy was workable, feasible or right.
This was an issue of the government’s propensity to solve health problems by mandatory medication via a process that could not be accurately or reach those who might benefit, when there was other option available.
Mandatory medication was putting at risk 100’s, perhaps even thousands of Australian citizens at risk. People who were extremely sensitive or allergic to the chemicals. He was asked how the government proposed to protect these people. Neither he nor the other bureaucrats on the panel could or refused to answer.
He was then asked if the government changed its mind would he insist that the government carry out its original policy. His reply was the same; He was employed to carry out government policy.
Public service is a business. Its business is to serve its employers, i.e. the people through the parliament.
It should and did in the past employ appropriate skilled and experienced people.

I'm gonna end every sentence like this!. When you read it in your head it sounds like you're from South Australia!. Pretty place, apparently!.

I thought KRudd WAS running the show like a business already!.

Jeff Kenett ran Victoria as a business, but went to far, not only did he sack countless public servants, he sacked half the police force, People thought it was ok for a while, then he turned on the general public. That's when things turned around, and jeff got the biggest belting of his life at the boxes.

I've often thought about this many times and thought it was a good idea. My way of thinking was that all assets i.e, natural resources, coal, gas, iron, infrastructure, the people etc, were assets of the government/business (not too different to now), exportable money earners and would earn enough money to sustain government and the services it provided for the people. If run properly with accountability, taxes wouldn't be needed, we're a rich country after all.

The problem is corruption, how do you stem corruption? It's rife throughout industry and even worse in government and growing; anyone who denies this is a delusional fool! Corruption is the one and only problem as far as I can see, so how do we address that?
If we could somehow prevent or even just stem corruption to a level that was pretty well insignificant, I believe the government/business model could work well.

I also believe the current system will collapse soon. In my short time on this planet, 40 odd years of it, I've seen things go from not so bad to down right evil, ETS anyone? It's only a matter of time before it all comes tumbling down. The PTB are pushing too hard in all the wrong directions for self gain if you ask me and their arrogance is deeply worrying!

What a lot of you poor fools do not realise is that, it is the international banks to whom or Govts put us into debt both public and private,that have us by the short and curlies.

Since 1913 when the US Federal Reserve a private group of banks took control of of the US $,it's value has decreased by 96%.Our currency has depreciated by even more.

Who creates all this new money? We as individuals cannot do it.It is mostly the banking system that creates money from nothing that depreciates both our labour and savings.It is theft by stealth.

Why are we all working harder for less? It has nothing to do with Global warming.

Business is about profit and loss.

Government should be about people and society and how they interact and develop within an economy.

In a purely economic rationalist society how could you justify such things as subsidised medicine and especially the Aged Pension?

Paying people to do nothing but consume after they cease to be productive makes no business sense but it matters in a society.

The very term Corporatism was created by Mussolini and a purely corporatised society would lean very much toward fascism.

I thought KRudd WAS running the show like a business already!.
Stg,
S'pose you're right. A circus is a business too.

"Would it be viable for governments to be run as a business, rather than run by bureaucrats employed by elected leaders?"

In a word, no. The problem is not that the subordinate staff are of bad *character* or incompetent. The problem is that, in the nature of government, officials cannot carry out their tasks without the gross wastage that is characteristic of governmental action.

The purpose of a business is to make profit and avoid loss. Profit is the direct result of the behaviour of the mass of people. It shows that the business has taken things - the factors of production - that the people valued less, and turned them into something that the people value more. Profit shows that the business is satisfying their most urgent wants, as judged by them.

Since profit is privately owned, the owner has an interest in not wasting it. And the entrepreneur can direct the actions of his subordinate managers without having to know all the minute details. It is enough to tell them to seek profit and avoid loss. He can leave the details to their discretion.

But government gets its funds by forcibly confiscating them from the people. Ultimately, if you don’t pay, you will be physically seized and locked in a cage. Those administering the revenue do not have an ownership interest in it. Nor can the chief executive leave the minor details to the discretion of subordinate officers. This is because it is in the interest of each subordinate officer to provide the best service he can, without regard to cost. If decision-making were left to the discretion of subordinate officers, they would very soon empty the treasury.

Therefore to control for this problem, government must specify in detail *how* things are to be done, which cannot be done by profit and loss, but only by rules and regulations. The virtue of the bureaucrat becomes complying with rules and regulations. But as reality is always more complex and changeable than the CEO can know, the only way bureaucracy can cope with reality is by more rules and regulations.

Thus for every bureaucracy, compliance with form and process is necessarily the primary value, and outcomes are secondary.

The problem cannot be solved by appointing a businessman, because he would face the same problem the bureaucrats face. He would just be another bureaucrat.

But there is a more fundamental problem – government is incapable of economic calculation.

Imagine for a moment that government owns all the means of production. There is no private property. Now suppose part of your job as CEO of Australia is to decide how much housing is to be built, made of what. Since government owns all the forests, factories, machines and tools, there is no market for these production goods, these capital goods. As there is no market for them, there are no prices for them.

Okay, so *how* are you going to figure out whether to make houses of wood, or steel, or brick, or plaster? In a market system, you add up the costs *in money prices*, of wood as against steel, of using this labour or that machine, and avoid doing things that are obviously wasteful. You calculate what is more economical or less.

But governments can’t do that. They can only compare quantities directly. They cannot calculate economically. They can only grope in the dark.

Where private property has not been abolished, government can compare prices emanating from the private sphere. But where government has taken over a particular industry, and the more government takes over, the problem of economic calculation is endemic and unavoidable. The result of central planning can only be planned chaos, divisiveness, and the hope of getting something for nothing by force.

Rather than ask, could government be run like a business, we should be asking: what reason is there to think a territorial monopoly of coercion – government – is better at providing services than by way of businesses competing for voluntary custom?

Government through tax and inflation takes over 60 percent of every worker’s income during his life, and then the socialists say we need government to pay for old age pensions and subsidized medicine

There are some parallels already. The government is pretty much run like business with new management practices taken straight out of the pages of the latest economic rationalist strategy manual.

You only have to look at the decline in real services to those who have paid their taxes. And the actions of SES public servants in feathering their own nests,taking executive bonuses just for doing their jobs; while more and more operational staff are trimmed to extinction with huge repercussions to services - very reminiscent of business and CEO behaviour.

The dead wood pretty much went years ago. The only dead wood remaining lies at the top. Next time you read about a budget cut to the APS you will notice the very top-heavy public service will always focus on cuts to delivery or operational staff, rarely at the Senior end of the Service.

In business, a scenario that invites more chiefs than indians would go broke.

However, the public service is not a business and nor should it be. It should be run efficiently with the least amount of money to do the job WELL and to provide the services that people expect (those better managed for the collective interest than for profit) for monies already paid in the form of taxes.

With so many hands begging for a piece of the revenue pie, there needs to be a serious discussion about what it is we expect from governments and what can come from private enterprise.

Do we expect our interests and hobbies to be subsidised by governments (Sport, Art, grants etc) or should we take community and individual responsibility for those aspects of modern life? It is also criminal that we continue the myth of market controlled economies when there is so much corporate welfare being dished out.

It is ironic that we are spending more money on guff stuff and yet lamenting the decline in health, emergency, education, roads,instrastrucutre and other essential services.

For me essential services should be managed by governments and owned by the citizens. Other enterprises are better run by business. But I digress.

Desmond You are not getting away with what you said : - Jeff Kennett sacked very very few public servants and no police officers. The labour Government however has increased public service numbers by 37 per cent. Have you noticed an increase in public service of this magnitude? No of course not! This was a rhetorical question.
Also Desmond Jeff lost only to three independants. A labour stooge in Gippsland, some demented greenie who got only 10 per cent of the primary vote and a disafected ex copper who got rolled last time around. Labour have made the biggest balls up of the state and just wait till it is revealed they have spent all the reserves and we are broke.
Then we will need another jeff Kennett. I was so sorry we lost Jeff and all the rubbish reported after he was gone. As in your silly post Desmond.

Questions whether government can run as a business is first to establish what is profit.
The accounting view looks at taking resources and adding a margin that provides a profit for the shareholder after deducting costs and making provision for investment.
Who are the shareholders in government? The people.
What is profit and loss to them?
It is the delivery of goods and services for the benefit of all of the people.
To achieve this you need an accounting process that includes other issues relating to what else you need hospital/medical, dental services, roads, shipping and rail, transport, security, (i.e. police and legal systems), etc.
A politically neutral public service can do all of this and at the same time be accountable. However, it has become a political tool in the past few decades for the benefit of a few at the expense of the majority.
Some services can be, and should be relatively cost neutral without having a profit. These have already been paid for by the people through taxes or from resources owned by the people e.g. Medical, hospital, education, road and rail, water, gas, electricity etc.
Selling Australia’s assets and resources to third party businesses that shareholder profit for a minority, often overseas and not the Australian people is not sound investment or profitable.
It is a bit like having a business with many divisions that buy and from each division at a profit, so that profit is made on profit. This goes on until the business costs itself out of business.
Government profit may be short or long term via e.g. R&D subsidies. The benefit (profit) is long-term investment by the people in Australia’s future. Are our governments doing this? No or at an extremely limited level.
Funding stimulus programmes that keep businesses and employment going or provide training and education. Are we doing this? Now due to Global issues. Long term? No. We have downgraded or destroyed our industry training and our major industries.
Our Resources? Instead of value adding we are giving them away to other countries instead keeping industry and employment in Australia.

Well, if the question refers to the public being given the same power over government- if not more so- as shareholders/ceos get over their managers and employees- then yes, I agree.

I daresay, if the public had direct, constant input at its own discretion (that is, voluntary voting and citizen-initiated referenda participation) into the pay and employment status of the public servant, and could directly elect and appoint ALL governing bodies and individuals into their respective offices, THEN you can expect real change.

As of now, we have a disjointed method of voting that is SO indirect and inconsequential into the makeup of government the votes make the most miniscule difference and only a minority of voters get any real attention- this is made even worse by compulsory voting, which ensures apathy will remain much more a dominant force in voting.

Government is a business.

The business of government is run by an elected person.

Improvement would be popular election of the Governor-General, how about on the first saturday each July.

Within our Constitution our G-G is required to select his/her ministers from the MHRs and Senators (or people about to be elected).

Major change will make Ministers more accountable, to our popularly elected G-G manager of government business, Parliament, and we the voters.

Will not see this as our politicians do NOT want accountability....

Run the country like a business?
You mean, hire a CEO for about the same as we pay for the entire elected assemblage of federal members (both houses).

Sack half the Public service, which would send up the share price. Declare that a bonus-able outcome, sell off the mining sector to pay for that.

Send ALL the jobs off shore where they can be done cheaper.

Buy out the share holders (people) in a leveraged privatization buy out.
Lease a fleet of leaky fishing boats from Indonesia on a complicated buyback off shore accounting scheme, to take them off the balance sheet as an asset to minimize tax but enable a 200% business loss deductions.

Bundle up the remaining average poor Aussie on to said leaky boats all with:

- Chinese made and embroidered jackets with a individual choice of "illegal Boat person", "economic refugee" on the back.
-One faulty motor,
-limited food and water
-an old fashioned Brace and large Bit,
-a big sign reading "Surplus to Lequirements" in smaller print
love and kisses Australian new management" (naturally made in Bangladeshi ethnic Chinese)

Split what industries left into synergistic derivatives and flog them to off to Asia .

In order to pay Macquarie Bank an that Texas Group's fees for packaging the whole deal, rent the non productive space out for a nuclear or waste dump.

Write Tassy off as an uneconomic loss. Then declare the whole enterprise Bankrupt.

The rich could change their names to names like Thatcher, Reagan and Bush etc disappear overseas. surreptitiously buy their own state in America say Kaliforia, amalgamate it with Texas and live happily ever after.

After which the administrators would compelled sell it back to the only people left, the indigenous Australians at fire sale rates.
No one would want to go there, no unwanted boat people, no limitation on pollution, lots of profits and the indigenous people would have most of their country back... Clearly a Win Win situation.

Makes no sense? About as much as the question..

Despite the clumsy phrasing of the question, what lies behind it is still valid.

Peter Hume expressed it best.

>>what reason is there to think a territorial monopoly of coercion – government – is better at providing services than by way of businesses competing for voluntary custom?<<

"Voluntary custom"

This encapsulates the entire question - "why should the government provide any services at all to its citizens? Why can't they use private enterprise instead, the miserable leeches".

Once upon a time, we considered the provision of infrastructure - railways, roads, telephone lines, water, electricity - etc. as being the proper concern of a government.

How this managed to get thoroughly distorted, I will leave to the historians (although I expect Maggie was involved somewhere).

But the fact is, it is now a horrendously old-fashioned concept.

If the bus route doesn't make a profit, axe it. Don't worry about the old folk who don't have alternative means of transport - sod 'em all. They only count one vote each. And will soon be dead anyway, so why should we subsidise their trips to the library? Let 'em watch TV.

I hope when Peter Hume gets old, or (heaven forbid) gets sick, that he has accumulated sufficient wealth to be able to buy himself out of trouble.

Take taxis everywhere.

Buy a kidney from his private helicopter pilot.

Carry his own defibrillator around with him, that sort of thing.

The public service itself is its own biggest enemy, of course, having become a byword for laziness and inefficiency, being smug, self-absorbed and worthless drain on the real economy.

But making everything user-pays is to tackle entirely the wrong problem.

Transforming Peter Hume's public monopoly into a private one is both the most common, and least effective solution, and also the most open to corruption.

Anyone been to Sydney Airport recently? Tell me that it is a better experience today than when the airport, the parking, the baggage trolleys, the catering franchises etc. were publicly owned?

There is a place for public services. Sadly, I doubt we'll ever see them again.

Pericles, all I can say is I can't really add anything more to what you said. Instead I just want to highlight your points.

Peter Hume: "we should be asking: what reason is there to think a territorial monopoly of coercion – government – is better at providing services than by way of businesses competing for voluntary custom?"

Yes, there is. The American Health system versus our own is an excellent counter example.

The takeover of electricity production early in our history is another excellent example. It was not in the interests of the private companies to standardise, or even to buy power off one another. Because of those two things failure at one generator meant failure of supply. After the take over electricity supply became far more reliable and cheaper.

Then of course there was the take over by the state of the fire services a few centuries ago. Originally the brigades were owned and run by insurance companies. It turned out to be in the insurance companies best interests to let any premises burn that wasn't insured by them. Their private brigades often rushed to the scene, inspected the insurance plate then stood by enjoying the show put on their rivals battling the blaze.

Any finally even if it were true that the customer would be better off under just about any business running the show there is one glaring exception - having things run by a monopoly.

The remainder of your point stands, of course. It was a good argument in favour of not running government as a business.

Houston we have a problem!!
Couldn’t be more relevant to the political running of Australia as is now! We have high level public servants determining policy direction. Not the other way round.
The Humphrey Appleby’s of the world all reside Canberra and please themselves as to how the country runs.
You can blame the government official elected to fix these problems when you have a Yes minister farce occurring here and now.
Perhaps you should say we should scrap elections as waste of time, at least they have the illusion of democracy.

Pericles

“Anyone been to Sydney Airport recently? [etc] …”

Are you really not understanding that, to the extent the publicly-funded service was better, it came from taking the money from other people who weren’t using it?

If those who use airport services are not willing to pay for them voluntarily, why should those who don’t use them be forced to pay for them under compulsion?

This confused and grasping mentality underlies all the arguments for government services.

"Government is the great fiction by which everyone tries to live at the expense of everyone else." Bastiat

The only way it appears to be a benefit is because people, like Pericles, can’t or won’t understand the smoke-and-mirrors economics of forced taking and free handouts, and therefore fail to understand what is in issue.

It only appears to be a benefit to the old person for government to run a bus service, if we ignore the fact that government has, through taxes and the sneak-tax of inflation, taken 50 to 70 percent of everything he earned during his life.

The belief that government provides beneficial services is irrational, once we take into account
a) the role of government in causing the original problem of capital consumption, and consequential poverty, and
b) the costs, which are *always* higher when government provides the service.

In any event, if the purpose of the government service is redistribution of income, which is essentially what Pericles is arguing, that is no reason for government to run a bus service, hospital, etc. It would be far cheaper and more effective to just give the relevant person the relevant amount of money.

“Once upon a time, we considered the provision of infrastructure - railways, roads, telephone lines, water, electricity - etc. as being the proper concern of a government.”

Who’s ‘we’? The advocates of government cannot answer the question, because the statement is meaningless, and merely reflects their circular thinking. Infrastructure is what it is government’s purpose to provide, and government is the organization whose purpose is to provide infrastructure.

And a coercion-based monopoly would be better at providing services because…? Because the costs are higher? Because it’s based on violence instead of consent? Because it’s based on restricting choice? More irrationality.

If government is better at providing its services, why only them? Why not socks, and sex, and pizza, and tables? Please answer specifically.

Rstuart
The USA health system is characterized by intensive and extensive governmental intervention at all levels. It is a classic example of government failure, not market failure: see
http://blog.mises.org/archives/010466.asp

All the arguments for government to provide services are based on a mixture of confusion and greed. The whole of society is made poorer and unfairer as a result.

Peter Hume: "people, like Pericles, can’t or won’t understand the smoke-and-mirrors economics of forced taking and free handouts, and therefore fail to understand what is in issue."

By golly, that was unexpected twist. This thread is begining to look positively enticing. I can hardly wait for the next instalment. Over to you, Pericles.

By coercion based monopolies I presume you mean Medicare?
That’s the medical health scheme introduced by Whitlam, with the guarantee there would be no increases above the 1 % deduction.
Now it’s around 5 % approximately 5 times the original. Why?
http://www.aph.gov.au/library/intguide/SP/medicare.htm
The government introducing the scheme said that inflation would cover the costs and there would never be an increase. Damn that word never especially from a Hawke.
Well salaries have increased to around $550 per week by (minimum wage) guidelines, from around $40 per week.
Around 12 times.
The of course there the gun levy? That the buyback scheme that of course worked wonderfully well. Funded by Medicare?
http://www.news.com.au/adelaidenow/story/0,,24487081-5005962,00.html
Whilst you have government without responsibility you get this ad hoc policy decision making process.
One of the reasons why America kicked the Poms out.
Something about taxation and representation I believe.

Hmm, that's a difficult question. I don't think so because providing all the public services in the most efficient way is probably not possible. There are so many things the government has to take care of, e.g. public transport, health care, social or retirement payments. I am looking for a good retirement plan at the moment, so I know how problematic this is, the German pension plans for example (See: http://www-rohan.sdsu.edu/~sandrade/pension-plan.htm) are quite nice. Although there are lot of things that can be improved, I don't think a government can act 100% like a business.

I know it is confusing, Peter Hume. But if you concentrate hard, some light might eventually get through.

Let's begin with the obvious, and work up to the difficult stuff.

>>If government is better at providing its services, why only them? Why not socks, and sex, and pizza, and tables? Please answer specifically.<<

Actually, there are two issues woven into one here. The first is whether socks, pizza and tables are services. They are not, they are goods. And sex is not generally considered a service, at least in this context.

The second is the concept of government being "better at providing services"

It is nothing to do with being "better". It is a matter of being appropriate. The contention with which you take particular exception.

>>Are you really not understanding that, to the extent the publicly-funded service was better, it came from taking the money from other people who weren’t using it?<<

Remember, I was talking about airports. There is no reason why airports cannot be run without recourse to the taxpayer, but at the same time refrain from the severe gouging that has become the norm when they are in private hands.

However, I recognize that isn't your main issue.

>>if the purpose of the government service is redistribution of income, which is essentially what Pericles is arguing<<

It isn't, of course. That's just how it appears to you, because you object to any and all taxation.

>>Infrastructure is what it is government’s purpose to provide, and government is the organization whose purpose is to provide infrastructure.<<

Sorry, that is your circular argument, not mine.

The concept of governments providing infrastructure in the form of roads, railways, bridges etc. is not "redistribution". It is a sound way to grow an economy, by making all forms of commerce easier.

Providing community-funded services that are required more by one section of the populace - the sick, the elderly etc. - than another, doesn't have the same direct benefit.

But spreading the financial load of such services across the entire - consenting - community, seems a perfectly reasonable goal.

Peter Hume: "The USA health system is characterized by intensive and extensive governmental intervention at all levels. It is a classic example of government failure, not market failure: see http://blog.mises.org/archives/010466.asp"

By the sound of it the woman in that video could be your alter ego Peter. Unfortunately I don't have a clue as to what specific incident she was referring to, so it is difficult hard to check her claims. They are extraordinary claims, because the US health care is mostly in private hands. Here is a quote from a source I can trust, http://en.wikipedia.org/wiki/Health_care_in_the_United_States :

"Health care in the United States is provided by many separate legal entities. Health care facilities are largely owned and operated by the private sector. Health insurance is primarily provided by the private sector"

And the outcome of that? From the same source:

"The USA's life expectancy lags 42nd in the world, after most rich nations ... just after Chile (35th) and Cuba (37th). ... Among adults surveyed in the U.S., 37% reported that they had foregone needed medical care in the previous year because of cost ... the rate was even higher— 42%—among those with chronic conditions. The study reported that these rates were well above those found in the other six countries surveyed: Australia, Canada, Germany, the Netherlands, New Zealand, and the UK."

Note the last 6 countries mention have far higher government involvement in their Health Systems. So what does the USA pay for its mostly privately run health system?

"Current estimates put U.S. health care spending at approximately 16% of GDP, second ... among all United Nations member nations. ... 19% of U.S. adults surveyed reported serious problems paying medical bills, more than double the rate in the next highest country."

And I notice you didn't try to address the other 3 issues I raised.

On reflection, Peter Hume, I find your entire, pseudo-libertarian position highly suspect.

>>The only way it appears to be a benefit is because people, like Pericles, can’t or won’t understand the smoke-and-mirrors economics of forced taking and free handouts.<<

That's merely sloganeering. It doesn't actually mean anything, does it?

>>It only appears to be a benefit to the old person for government to run a bus service, if we ignore the fact that government has, through taxes and the sneak-tax of inflation, taken 50 to 70 percent of everything he earned during his life.<<

You fail to explain the relationship between the provision of a bus service, and a lifetime of taxpaying.

Especially as the bus service I referred to does not actually exist.

The benefit to the oldie is mobility, which they could otherwise not afford. There is no benefit to a commercial bus company, because the route would make a loss. The community however, may actually prefer to provide the service.

Where is your problem with that?

>>The belief that government provides beneficial services is irrational, once we take into account... the role of government in causing the original problem of capital consumption, and consequential poverty...<<

The logic here would appear to be that governments deliberately create poverty. Otherwise, if it was not deliberate but accidental, it is only logical that they should make up for it by providing "beneficial services".

But in any case, I dispute your claims for "the role of government in causing the original problem"

>>the costs... are *always* higher when government provides the service<<

My point has always been that while this is so often the case, it need not be.

After all, when private enterprise takes over, it makes profits sufficient to pay shareholder dividends.

With better management in the public arena, there is no reason why a balance could not be achieved, where a) the public purse is not raided and b) the price of the service does not reach "gouging" proportions.

I fully accept that this state of affairs is rare. But I am simply arguing the principle here.

Whilst the solution is obvious the misconceptions on the USA proliferate, because people opinions are influenced by those that should know better.
I would suggest that you all pack up and take a holiday to the United States
http://www.united.com/
It’s cheaper than a trip to Uluru and stays in cheaper than ozz accommodation.
Be treated like a human being instead of a meal ticket then you could go to the local
‘Deli’ and buy oranges from Australia cheaper than you can from Australia but not as cheap the local product.
Then you could go to a gourmet vegetable shop and buy Aussie wine cheaper than you can buy it in oz but also get Californian wine cheaper again
Then you could buy specialty vegetable again cheaper than you could in oz.
If you need to conserve money however you could go to large supermarket and buy a gallon of milk that 4.55 liters to you ossies for $1.99 locally buy any brand of butter for 2 bucks a pound that’s 500 grams to you ossies . Then you could go to a butcher and buy local Angus beef at half price that you would pay in ozz.
Of course if you need medical assistance in the USA you wouldn’t buy a policy from the airlines associated insurers at $1100 per month you would go to the local group that sells accessory insurance a $160 a month that covers your hospital stay for $100 a day premium if you remember how medibank worked.
Then of course you would need a car to travel around in which would cost you $40 a day for say a corvette and fuel at $2.65 gallon which we paid today on filling up.
Then you have the gall say that the USA is in trouble financially, what’s around the corner from Australia then?

Pericles
"With better management in the public arena, there is no reason why a balance could not be achieved, where a) the public purse is not raided and b) the price of the service does not reach "gouging" proportions.

I fully accept that this state of affairs is rare. But I am simply arguing the principle here."

Okay, but in principle, and putting aside any question of corruption etc., *how* would government be able to manage the particular public service better, when the whole point of the exercise is to displace the operation of profit and loss? By what means would they figure out which is the more economical way of doing something?

Governments don't deliberately intend to cause poverty. But they deliberately intend to do the things they do, and the things they do cause poverty.

The distinction between goods and services is irrelevant for purposes of the discussion whether government could be run as a business.

No-one is arguing against roads, bridges, provision for the sick etc. The question is only whether it is more a) ethical or b) practical to provide them by way of compulsory confiscations based on a monopoly of coercion, or by competing providers and voluntary exchange based on individual freedom and private property. Nothing you have said has shown any reason for compulsory monopoly. You merely use a double standard - assuming that by resorting to compulsory expropriation as a means of funding goods or services, we are somehow going to get some net benefit that would not otherwise be available. But no interventionist ever explains *how*. It is not "sloganeering" to point out that this is mere confusion or irrationality.

Taxation by definition is a non-consensual transaction. The community is not a decision-making entity. All decision-making and action takes place by and through individual human beings. There is no evidence that government represents the people, more than the people.

rstuart:
http://mises.org/daily/2946 ?

I spotted a couple of possible questions buried in your infomercial for the Austrian School, Peter Hume, I'll do my best to answer what I think they might be.

>>*how* would government be able to manage the particular public service better, when the whole point of the exercise is to displace the operation of profit and loss? By what means would they figure out which is the more economical way of doing something?<<

The "better" here is in fact the presence, as opposed to the absence, of a service (buses used by old folk).

So it is not a matter of being "more" economical; by definition, its existence will cost more than its non-existence, when measured in terms of financial profitability.

But from the old folks' point of view, it is "priceless".

>>The question is only whether it is more a) ethical or b) practical to provide them by way of compulsory confiscations based on a monopoly of coercion, or by competing providers and voluntary exchange based on individual freedom and private property.<<

You are asking why roads should be built by governments, funded by taxation, rather than by private enterprise, and run at a profit, yes?

Because the value they bring to the community at large is greater than the value they bring to the entrepreneur, I guess.

The various tunnels we've built in Sydney recently should provide a clue. The "enterpreneurs" included in their agreement with the government that surrounding roads - that is, roads that had already been built from the public purse - should be closed, simply in order to drive traffic to their tollgates.

http://www.maths.usyd.edu.au/u/geoffp/melfinrv.pdf

"The Contract for the Cross City Tunnel also included road closures affecting alternative routes to the Cross City Tunnel. These conditions aroused public resentment..."

And...

"The NSW Government had made one of the terms of the contract that it would reduce Epping Road from three lanes each way to one lane each way"

Ok, now tell me again about "compulsory confiscations based on a monopoly of coercion".

Is it somehow more acceptable to you when perpetrated by a private company?

Pericles
Assuming your good faith, your argument is so circular that I can’t see how you can’t see it.

It is invalid to argue “it is considered” that a service should be provided by government. The question is *what reason there is to consider* that government should provide a particular service. Else your argument is just a circular appeal to absent authority.

Obviously it can be said of any expenditure, private or governmental, that it may provide a benefit that would not otherwise exist. That’s not the issue, which is, *how are to know governmental provision is preferable; how are we to know that the resources confiscated to provide a particular benefit, will not be withdrawn from an employment that was still more beneficial?* You have not addressed, but merely assume what is in issue: more circular argument.

It is false to claim that people consent to taxation. If they consented, there would be no need to obtain the funds by taxation, would there?

The implication of compulsory expropriation is that whatever the government is going to use the money for, is necessarily of a higher priority than whatever the owner was going to use it for, otherwise how could they justify taking it to spend on a lower priority?

But how could anyone reason so without circular reasoning that whatever were taken, must be for a higher priority?

We already know that is false, otherwise the people would have paid voluntarily.

And if it’s true, then you haven’t answered the question: why don’t we get government to provide “priceless” pizza, socks, sex – in fact everything?

The example of NSW roads is one of governmental control and price-rigging, not the absence of it, and, assuming your good faith, simply shows your confusion over what is in issue.

Rstuart
It is vain to consider the respective factual benefits of private versus governmental provision of health care, while ever the advocates of government are permitted the unfair advantage, or the irrational belief, of assuming government can provide something for nothing, or disregarding the costs and detriments of governmental interventions.

Peter Hume: "It is vain to consider the respective factual benefits of private versus governmental provision of health care, while ever the advocates of government are permitted the unfair advantage"

I was comparing different nations. When you compare nations, those with heavy government involvement get better bang for the buck than those that don't. The evidence on this is clear and undeniable.

The logic used in the link you gave on the other hand is anything but clear. Particularly this bit: "Given the administrative costs of insuring routine health care, it would make more sense for consumers to pay out of pocket, instead of through insurance." It is true that all insurance has overheads, and so it is probably true that over my lifetime I probably would be better off not having car insurance. Instead I would just pay for accidents out of my own pocket. Its also undeniable that I have the choice, and I take the insurance. Frankly the alternative is insane.

Another example of where government intervention produced a better result is mobile phones. In the USA the various carriers competed, and in the true American way all developed systems slightly incompatible to lock their customers in. The Europeans went the government mandated standard way - the standard originally being GSM. The result - the Europeans wiped the floor. Not only at home where I am sure you will say it was because of government subsidies, but over the entire planet where there was no holds bared competition with the US. The really bizarre thing is, the Americans didn't learn from this. The next round of technology, CDMA, was developed by those ingenious Yanks. And it happened again. The Europeans went the government mandated standard route, refining CDMA into the current 3G standards, and the USA went again for dog eat dog "let the market decide" competition where everybody developed their own standards. Predictably all the American systems have been wiped out, and the only major American manufacturer left standing, Apple, is being sued for billions because they didn't license the European patents.

Rstuart
I think he's distinguishing between ‘routine’ i.e. ordinary costs – like a GP visit for a cold, and extraordinary costs – like major trauma; saying that considering the costs and on-costs of insurance, it’s not worth it to insure for ordinary costs but better to just pay in cash.

Obviously the average person uses the average amount of medical services, and the insurance companies function to spread the costs over the average life. But that financial risk-spreading function breaks down when they are forced into the function of redistributing income, e.g. by being forced to cover everyone’s ordinary visits, or being prevented from pricing specific risks, e.g. HIV, at cost.

I don’t think the evidence is clear and undeniable that nations with heavier government involvement get bigger bang for buck for two reasons.

First, evidence does not interpret itself. Interpreting it requires theory. Even if we could know all those laws, individuals, variables and health outcomes, the mere data still wouldn’t say whether a beneficial outcome coinciding with regulation was *because of*, or *despite* government intervention.

I don’t know much about the regulatory regimes in those countries. But I do know that government regulation in the USA includes controlling the supply of doctors entering the profession, compulsory licensing of the medical schools and through them the required syllabus, compulsory occupational licensing of auxiliary staff, compulsory insurances, absurd levels of tort litigation, heavy regulation of the pharmaceuticals industry, their testing procedures, complementary medicines, the advertising of them. The health insurance market is heavily regulated; there are restrictions on interstate trade; health insurance is compulsorily attached to employment; and insurance companies are unable to differentially price certain classes of risk, which is the whole purpose of insurance. I read somewhere that 90 percent of American hospitals are not-for-profit. Dozens of bureaucracies.

All these interventions have economic consequences: they make health services more expensive, and many reduce the quality as well.

So to characterize this as an exemplar of free markets seems somewhat questionable. It seems possible that, in some or even many ways...

(cont.) the US health market is more heavily regulated than other countries’.

Secondly, in theory, *how* does a compulsory monopoly provide goods or services more economically than competing providers - especially when it is incapable of economic calculation by itself without relying on markets to supply the data?

If it were true that government could provide ‘bigger bang for buck’ ie more effective and economical health care, then why wouldn’t people pay for it voluntarily?

How do we know government isn’t making up any difference by taking the money from somewhere else, in which case, we are back to the double standard of using one rule to judge bang for buck with private providers, and a different one for governments?

It’s too much of a coincidence, isn’t it, that government is supposed to be able to provide better health care, and just happens to be the only party that can forcibly take from someone else without accounting to the person it was taken from, and hide taxes in dozens of ways?

How would we calculate whether the bang was bigger?

If government were able to provide bigger bang for buck, ie provide goods or services more economically, is this a general ability?

If not, how and why does government have this superior ability with one class of goods or services, but not another?

However if it is a general competence, then it’s true, isn’t it, that we could provide all goods and services more efficiently and fairly by vesting total ownership and control of the means of production in government? Yet we already know this is wrong. The empirical approach amounts to wondering whether socialism might work eventually if we keep trying it, perpetually giving the benefit of the doubt to a proposition that we already know in theory cannot work because of the economic calculation problem.

In short, the statist position when analysed, always resolves back to an open-ended or irrational belief in something for nothing, based on an illusion, based on forced redistributions that are more uneconomical and unethical than the original problem.

The problem isn’t so much Medicare as the attitude of the government to considering it all general revenue. That’s the major difference and why the USA can’t fix its health problem. But at least you can write the president and make suggestion. It’s kind of like the Russian American joke. Tex and Ivan discussing their political freedom where tax says
‘In America if we don’t like something we can go to the Whitehouse and slam our fist on the presidents desk and say Mr. President I don’t like how your running the country.
Ivan says ‘we have the same freedom in Russia”
Really says Tex
“Yes sys Ivan, I can go to the Kremlin and slam my fist on the premiers desk and say m premier I don’t like how the USA presidents running his country”

Thankyou for your posts on this topic Peter, very thought provoking!

A good example for your argument might be the difference in taxi fare prices in Australia compared to say the Philippines where there is no government intervention. Anyone can get in their car and advertise their service as a taxi, hence a trip across Manila costs nothing compared to a trip across Melbourne (similar distance) where we have heavy government intervention.

Why in Australia am I not allowed to offer myself as a taxi whenever I feel the need to make a few extra bucks? (Not that I want to, just saying) This might then fix the problem of bus routes for those old people mentioned earlier. It's obvious in this case that government intervention is screwing us.

You are driving yourself into a corner, Peter Hume.

>>It is invalid to argue “it is considered” that a service should be provided by government. The question is *what reason there is to consider* that government should provide a particular service. Else your argument is just a circular appeal to absent authority.<<

The whole point about government is that it is not an "absent authority", but one that we have empowered through our parliamentary democracy.

If you were to substitute the word "community" in about two thirds of your rants against "government", you would see that you are arguing against yourself.

We elect these people to organize services on our behalf, because we believe that it is the responsibility of the community to look after these issues, rather than hand them over to Private Equity Funds.

It is not a perfect system, and is clearly open to abuse by politicians and public servants with gravy-train instincts.

But letting the community decide whether a bus service should be laid on for the old folk, despite the fact that it is not intrinsically profitable, and paying for it through their taxes, seems to me a perfectly logical act.

What is it that upsets you about that?

Peter Hume,

I get the distinct impression you believe markets are some wonderful system that automagically delivers the best outcome to the participants. While it is certainly true that a well functioning market can do just that, it is equally true that left purely to their own devices they often don't. I have given you example after example of where they didn't - all of which you ignore except for health.

I'll give you another one. EBay is an ideal market place in some respects - particular for overseas sellers whose behaviour is for all intents and purposes operates outside of government control. Such sellers are almost always the cheapest. However once the price drops to near the cost of perusing the remedies EBay and PayPal offer, the market is flooded with frauds. It is obvious how this burns the buyer. However, it also burns the seller as there are no repeat buyers. As a result, there is no functioning overseas market for many goods on EBay. Such markets can not sustain themselves without government intervention. To drive it home, the "sub-market" on EBay for those same goods that is subject to Australian regulation (ie Ozzie sellers) thrives.

Peter Hume: "they are forced into the function of redistributing income"

I don't know if they are forced to do that. Here in Australia MediCare, ie a government entity does the redistribution. Perhaps this is why it works better than the US? Anyway, this redistribution a major reason why our health outcomes are better. Without it Pericles little granny would die an early death. Thus Venezuela, (GDP/capita $12,800) has better health outcomes than the US (GDP/capita $47,440), despite spending far less on health. In the US the rich spend huge amounts on health care, but there are far more of those pesky dieing grannies and they drag the US stats down.

Peter Hume: "compulsory licensing of the medical schools and through them the required syllabus, compulsory occupational licensing of auxiliary staff"

All necessary, don't you think? Otherwise we end up with the EBay market situation - no one can trust a thing.

Peter Hume: "controlling the supply of doctors entering the profession,"

A privately run institution does that here in Oz - the AMA. Since they are in effect controlling entry to their cartel, I imagine they do a far better job of it than the US government. We have a huge health care staffing shortage.

Peter Hume: "absurd levels of tort litigation,"

Yes, well we had that problem too. Then the government intervened, forcing the lawyers to ditch "no win, no fee" for health matters. It worked - the problem went away. You of course would oppose such intervention.

Peter Hume: "heavy regulation of the pharmaceuticals industry, their testing procedures, complementary medicines, the advertising of them."

You ain't seen nothin'. Would you believe in Australia the government buys most pharmaceuticals, and on-sells them to the consumer - usually at a discount depending on who you are. However they only subsidise drug's with a proven track record, always the cheapest (ie generics). You are free to buy whatever drug you want of course - but not at the cheap price. It renders drug company ads utter ineffectual, and the single buyer monoploy drives the cost down. We Aussies do wonderfully well out of it. The pharmaceuticals industry hates it.

All the good examples of government intervention aside, RawMustard's taxi's is a fine example of government intervention gone bad. They are using taxi licenses as a tax, which is fare enough, but it is a very poorly designed tax. However such examples merely tell us that intervention can be done badly. It doesn't tell us all intervention is bad. Clearly, as the examples show it isn't always bad and in fact is necessary to make one of the most equitable and efficient mechanisms we have for the distribution of wealth work. That mechanism is a well functioning market of course. But as I understand it, your thesis is all government intervention in markets is bad, and hence governments are unnecessary. If so, it is wrong.

Pericles
The structure of your argument is “The government does it because it’s good, and the proof that it’s good is that the government does it.”

If you can’t see, or don’t care about illogical circularity, then I’m not going to waste time endlessly disproving it.

RawMustard
Thanks.

Yes, great example. The intervention that causes both more unemployment and less transport, is then used as a pretext for two more interventions: to help the unemployed and the immobile! Then the economic ignorance of the socialists, having caused the problem in the first place, accuses “capitalism” of being uncaring toward the hardship of the disadvantaged, and says we need more interventions to fix it.

It really is a belief system every bit as irrational as the mediaeval attitude towards the church. And then you’ve got to put up with their fake moral superiority.

Rstuart
Your argument would only make sense if there were no scarcity of resources.

The problem in the world where resources are scarce, is to satisfy the most urgent human wants without diverting scarce resources to less-urgent wants.

Those who talk of human values considered separately from economic values, as Pericles does, are merely displaying their failure to understand the issue.

Citing examples of government providing benefits does not answer. The issue is whether they can provide net benefits.

They can’t. All governments can do is divert scarce resources to less-urgent human wants. The impression to the contrary is caused by *considering only the benefits that are seen, and ignoring the greater benefits that must have been foregone but are not seen.*

This follows axiomatically from the fact that in voluntary transactions, both parties benefit – otherwise they wouldn’t do it. Value is created: a win-win. But in all coerced transactions, including taxation, the stronger takes from the weaker without his consent, and value is destroyed: a win-lose.

There can be too much provision of a good or service as well as too little. A Rolls-Royce is better than a Holden, but does that justify (forcibly) preventing you from selling or buying a Holden?

A qualified…...

...doctor is better than a nurse, but does that justify preventing you from consulting an experienced nurse to prescribe repeat medications you’ve been using for 20 years? Why is it the government’s decision and not yours?

Cheap medicines are good, but how do we know that the scarce resources diverted into achieving them, were not withdrawn from employments of an even higher priority?

Underlying all the interventionists’ reasoning is the necessary assumption that everything the government does is presumptively of the highest possible priority. And the benefit government provided involves no greater detriment: it produced something for nothing that was just coincidentally based on confiscations. It’s Pericles’ circular argument: It’s good because government provides it, and government provides it because it’s good.

We would expect any monopoly to produce higher costs and lower quality, and to benefit the producers more than the consumers. And that is exactly what we get with government.

If the wrong to be remedied costs $1, but the machinery of justice to remedy it costs thousands of dollars, a monopoly system is being used to benefit the producers at the expense of the taxpayers who are forced to fund over-servicing.

All occupational licensing, including the AMA and Law Society – is statute-based. It enables the producers to exclude competition and increase prices. Though ostensibly for *consumer* protection, it is always the *producers* urging for it.

Quality control is important, but there is no need for government monopoly privileges to certify it. That can be done by voluntary associations like professional or tradesmen’s associations, publications like Choice, and intermediaries like department stores. If you buy a dodgy Sony thing, Harvey Norman can take it up with them.

The idea that the interventionists care more about the poor is a vain delusion: all government interventions necessarily cause net improverishment of society.

You have not answered how we are able to know *in principle* those services which the government is able to provide more economically and effectively than competing private providers. They don’t exist. The benefits are always an optical illusion based on ignoring how they got their money.

Peter Hume: "But in all coerced transactions, including taxation, the stronger takes from the weaker without his consent, and value is destroyed: a win-lose."

There are two obvious problems with this. Firstly, what happens in our democracies is the people who have the most tax taken from them are the rich, and the people who are taxed the least (often not at all) are the poor. So for taxations in your definition the "strong" here are the poor, and the "weak" are the rich. And yes, looking at it in a micro-economic sense, it is win-lose.

By definition, any mechanism that distributes wealth to ensure an egalitarian society must be. What mechanism do you think would be better than democracy at achieving that outcome? Or do you believe we should not have one at all, letting the poor, hungry and sick die on our streets?

The second issue is the implication we could get away without taxation. I see elsewhere you proposed we eliminate government and just vote on everything. I think the idea is totally impracticable for lots of reasons, but lets go with it for now. So who would pay to run the voting system? Your answer would be the who wanted to participate, I guess. But what about those that want to participate, but can't afford to pay to run it? If you say the rich must fund the exercise, you have taxation. If you say we disenfranchise the poor, you are again reducing yourself to granny killer.

Peter Hume: "You have not answered how we are able to know *in principle* those services which the government is able to provide more economically and effectively than competing private providers."

I don't believe the government can, although it is clear from examples here in Australian that in an environment where government owned and run organisations must compete equally private ones, they do just as well (eg MediBank). I have also demonstrated without some governing body in some situations no market of competing private providers can develop.

Peter Hume: "If the wrong to be remedied costs $1, but the machinery of justice to remedy it costs thousands of dollars, a monopoly system is being used to benefit the producers at the expense of the taxpayers who are forced to fund over-servicing."

Your $1 example is wrong. You are comparing the cost of resolving a dispute versus a single transaction. In reality the threat of sanctions means there are far more transaction than disputes. The only meaningful comparison is the value of the market less the cost of policing it, versus not having the market at all.

You will possibly now argue such policing could be done far more cheaply privately. If so you will have to explain why it doesn't happened. In civil cases the participants pay for the court time. Thus participants in a market are free to set up their own contractually defined replacement including arbiters, and would presumably do so it was cheaper and as effective. Indeed EBay does try to do just this. And in the case of the example I gave, mature participants eschew it for the government run one.

Peter Hume: "The idea that the interventionists care more about the poor is a vain delusion: all government interventions necessarily cause net improverishment of society."

Assuming that is true for a second, why hasn't it happened? Presumably if a group of people set up their own utopia run along such lines, they would in time become economically dominant and inherit the earth. In fact the reverse seems to be true. Peoples that groups themselves under a large central government snot the rest. We have been setting up different types of societies for many millennia now, so it has had more than enough time to happen.

I think the idea that the poor, hungry and sick would just die on the streets in the absence of governmental provision is a complete furphy. The reason for our higher standard of living, including for the poorest, is not because of forced redistributions, but because of the higher quota of capital per head of population. Government interventions actively consume capital on a massive scale, force the poorest into unemployment, and cause or worsen social problems. The tax system’s *intent* is to take more from the rich, but in *effect* the rich are favoured because they can use tax deductions to get benefits in proportion to the progressivity of the tax.

Policing and justice services can be, and already are provided cheaper, quicker and better by private providers.

For example in commercial disputes, the contract often provides for dispute resolution by reference to an arbiter, i.e. a private judge, who is usually a respected senior in that field. The reason the parties don’t first have recourse to the government monopoly justice service is because it costs far too much, and involves too much delay. (If you have ever been to a court you will know that they regard their own time as infinitely valuable, and everyone else’s time as worthless.)

Interestingly, such alternatives show how a market for competing private *legal systems* would work. Assume an arbiter follows his own precedents, ie builds up a body of private case law. Consumers can choose different judges according to the qualities of their jurisprudence. Those with a reputation for wisdom, more mutually satisfactory judgments, and greater resolution rate, will tend to out-compete their less effective rivals. The cream will tend to rise to the top, as the best rules of the best judges will tend to become generally adopted; instead of everyone having monopolists impose on them an expensive and dilatory one-size-fits-all, that puts a premium on the prestige and salaries of the judge and lawyers ie the producers, and the client/consumer is just the schmuck who has to pay for it.

What stops such a better system from becoming...

...general is that the courts will not enforce contracts agreeing for such dispute resolution to be final, thus undermining and overriding the whole thing, declaring themselves to be the final arbiters of “the law” ie the monopoly law. Thus the law, whose original purpose is to do justice and protect property rights, is perverted into protecting instead the comfortable privileges and substandard service of monopolists based on their ability to use mere force to exclude competition – the opposite of justice.

Similarly with policing. The proof that the private security firms are better value for money than the police, is in the fact that the private firms exist - otherwise why would consumers not prefer the government service they are already paying for? People always tend to try to recoup some of their losses by first recourse to the police, otherwise the private firms would almost certainly out-compete the police if everyone were free to choose.

“Why hasn’t [stateless society] happened?”
There are two ways to obtain wealth: by peaceful production and exchange – the economics means; and by violent expropriation – the political means. People will do whichever is easier, and government is a machine for making stealing safer and easier.

The peaceful are at a natural disadvantage to those using weaponry for obvious reasons. The reason we’ve got governments is not because they have any moral or economical superiority over voluntary arrangements, but because governments are set up to use weaponry against you, and you can’t get rid of them without risking death or injury.

However the more restrained a government is in expropriating its subjects’ property, the less capital it will consume, the more capital the subject people can accumulate, the higher their productivity, the more prosperous they will be.

Societies with relatively greater rather than lesser freedom tend to out-compete others both in peace and war. More importantly, their states also become the most powerful, which is why the USA bested the Soviet Union. Ironically stronger states are due to relatively greater, not lesser freedom. A successful parasite does not destroy its host.

Peter Hume: "What stops such a better system from becoming general is that the courts will not enforce contracts agreeing for such dispute resolution to be final"

You say we don't need a monopoly law, because it can be done privately. Then you say private law doesn't work because the current monopoly won't enforce it. This makes no sense. Do we need a monopoly or not, and if not who is going to do the enforcing?

Peter Hume: "otherwise why would consumers not prefer the government service they are already paying for?"

A number of reasons. Some want more protection than the police will provide - for example 24 hour attendance at private premises. They could purchase it from the police of course, but it doesn't make economic sense to do so. It turns out that while there is a well armed well equiped police force to fall back on, most are perfectly happy to spend substantially less on people who just watch and call in the police when needed. When there is no standing police force that can be relied upon, that doesn't work. So in Iraq companies have to employ their own mercenaries - a standing army if you like. Guess what? It turns out those private armies cost far more to run than the domestic police force on a per capita basis.

Peter Hume: "I think the idea that the poor, hungry and sick would just die on the streets in the absence of governmental provision is a complete furphy. The reason for our higher standard of living, including for the poorest, is not because of forced redistributions, but because of the higher quota of capital per head of population."

You are conflating people dying on the streets with a high standard of living. It is perfectly possible to have a high average standard of living, while the poor die on the streets. Indeed, that is exactly what the US manages to pull off. Once of the richest countries on the planet ranks 50th in life expectancy: https://www.cia.gov/library/publications/the-world-factbook/rankorder/2102rank.html

Peter Hume: "Societies with relatively greater rather than lesser freedom tend to out-compete others both in peace and war. More importantly, their states also become the most powerful"

Yes, exactly. I agree you have been tirelessly arguing that societies without a central government will be the most economically advanced. I also agree when societies clash if there is a substantial economic difference between to two, the more advanced always wins.

But then you refuse to take those two points to their logical conclusion. After a few millennia of societal evolution, you would expect to see only societies without central governments. Yet, we don't. In fact, the reverse is true. Militarily, the strongest country on the planet (the US) also has by far the largest government as measured by expenditure.

1.
My unclarity. By not enforcing, I meant the court, seeing the parties contracted to confine their dispute resolution process to the alternative system, actively overrides the contract, thus using their monopoly power to violate property rights, confer privileges, and exclude competition, in their own favour. If they merely not-enforced it, i.e. respected its terms, the resulting competition would be better as I have shown.

If it were true that the absence of an overriding monopoly showed the need for one, then the same would apply to the citizens of different states, and justice and peace would require world government. Yet one big world government, a global monopoly of violent crime, looks particular dubious as a means to that end, considering governments have killed over 160 million people in the last century alone, mostly of their own subjects.

“…most are perfectly happy to spend substantially less on people who just watch and call in the police when needed.”

Meaning?

It is not valid to argue for government monopoly services on the basis that “most people” are happy to pay for them, for 3 reasons:
a) The electoral process provides no way of knowing whether most people are *in fact* in favour of a given law or governmental act. There is no evidence for the proposition.
b) Tax is a compulsory impost. It is by definition non-consensual. It is not valid to assume that anyone is “perfectly happy” to pay it.
c) But even if a majority were, since the issue is whether government should be providing the service in the first place, this begs the question why the minority should be bound by the preference of the majority, in matters of policing, any more than of pizza, socks, or sex.

As to monopoly services being more economical than competing private services, again, if that’s true and people prefer them, then there’s no need to fund them under compulsion, is there?

2.
The moral and social duty to provide for those whom nature has doomed, says nothing about the method of performing it. There is no reason to think that...

…doing it by way of confiscations and government bureaucracy will produce less waste, vested interests, and dysfunctionality than doing anything else by this method.

Besides, it is not valid to see the problem as being ‘out there’, having nothing to do with a government that takes 50% of GDP, explicitly to re-direct economic activity largely for purposes of social justice.

The argument against these interventions is precisely that they consume capital, and cause anti-social consequences. What you tax and regulate you get less of, and the state taxes savings, employment, investment and all productive activity. This actively causes poverty on a vast scale.

What you subsidise you get more of, and the state actively subsidises poverty, unemployment, sickness, mental illness, disability, and undermines the family by assuming its functions which it can never replace.

However it is true, as Jesus said, that ‘the poor are always with us’. Even without government interventions, the problem of poverty, though much smaller and less acute, would still persist. However every dollar the state takes for charitable purposes, is a dollar society can’t use for the same purposes. The desire to help the less fortunate is not exclusive to government; it arises out of society. Australia is a classic example of a society overflowing with voluntary goodwill to the less fortunate. The misdirection of this sentiment into support for the welfare state arises out of the earlier discussed fallacies, particularly considering only the visible benefits, and not the invisible downside, of government interventions.

3.
“After a few millennia of societal evolution, you would expect to see only societies without central governments.”

You would, and you may yet.

The USA’s finances are way unsustainable. Something’s gotta give.

As to why we don’t see stateless societies now, I think one has to understand it starting from the individual rather than the collective level. Individuals can benefit from a monopoly of crime at any given time even while the whole collective is going downhill. But doesn’t mean that the tendency to conquest and plunder is ethically or economically superior, whether it’s legal or not.

That's just nonsense, Peter Hume, and you know it.

>>Pericles The structure of your argument is “The government does it because it’s good, and the proof that it’s good is that the government does it.”<<

That assertion is purely a construct your imagination.

And it is only there because it is a comforting mantra that you have picked up from a Mises pamphlet somewhere. It doesn't actually need to mean anything, since it is simply a blanket sneer that you bring out at every opportunity, in order to divert attention from the real paucity of your thought processes.

Except they are not your thought processes, are they?

Every one is borrowed from a web site somewhere. And we all know which one, don't we.

My argument, in a single sentence, is that communities everywhere are prepared to forego some of their income in the form of taxes, in order to provide services for the general good of that community.

That's it, in its entirety.

Nothing about efficiency. Nothing about being the most cost-effective means of service delivery. Just communities, getting together to determine how they are prepared to help each other.

Feel free to criticize the manner in which services are rendered. Feel free to bitch about their cost. Feel free to question whether they are always directed to where they are most needed. But stop misrepresenting them as some kind of self-fulfilling prophecy that needs an iconoclastic giant of libertarianism such as yourself to lay bare to us poor deluded democrats.

>>Those who talk of human values considered separately from economic values, as Pericles does, are merely displaying their failure to understand the issue.<<

And where, exactly, did I commit this particular crime, Peter Hume?

The problem with you single-issue fanatics is that you spend so much time wallowing in your pet theories, that you refuse to accept that there can possibly be points of view other than yours. Here, you plant a perfectly meretricious label on me, simply in order to... what? Make yourself look smarter?

You really are a piece of work, aren't you.

Right.

Having got that off my chest, let's have a look at the long, dreary chain of words that you have summoned to your aid, Peter Hume.

>>All governments can do is divert scarce resources to less-urgent human wants.<<

Are you prepared to justify that with evidence? Perhaps illustrate it with an example?

Or is it just another slogan you picked up?

>>The impression to the contrary is caused by considering only the benefits that are seen, and ignoring the greater benefits that must have been foregone but are not seen.<<

Those "greater benefits".

Why "must" they have been foregone?

Who decided that they were necessarily "greater", since we'll never know what they were?

In my world, the community made the decision that pre-natal care is of benefit to the people, and that they are prepared, together, to contribute towards it.

If they are made aware of a "greater benefit", then I expect that they will vote for it. That's what communities do. They assess relative benefits that can be provided communally, and vote on them.

True, they don't always get it right. But that is no reason to presume that some alternative process will automatically be of "greater benefit".

Perhaps you could use this example when you respond.

Just so that we can initiate the use of some kind of practical scenarios, rather than a welter of Austrian School propaganda.

>>...in voluntary transactions, both parties benefit – otherwise they wouldn’t do it. Value is created: a win-win.<<

Community decisions - such as the provision of a bus service for the elderly - have value. Just not a financial value to a disinterested party. But to the community, who have provided the funds through taxation, the service does have value. Win-win. Community and old folk.

>>in all coerced transactions, including taxation, the stronger takes from the weaker without his consent, and value is destroyed: a win-lose<<

You see, there's your Achilles heel. Consent has in fact been given, by the community.

A distinct case of "economic values considered separately from human values"

Now, where have I heard that phrase before?

Your unsupported assertions/slogans just go on, and on, Peter Hume.

>>Government interventions actively consume capital on a massive scale, force the poorest into unemployment, and cause or worsen social problems.<<

Please provide practical, real examples - not just cut-and-paste hypothesis from the Mises website - where government intervention has created unemployment, and created or worsened social problems.

You think in terms of "government interventions" being conducted by some kind of deus ex machina. A fairy godmother, lowered onto the stage to spread largesse like confetti.

I think in terms of "government interventions" as being programmes that we, the people, have at some point had a say in determining, and have in doing so volunteered part of our hard-earned crust to make them happen.

It is not, as I have said on many occasions, a perfect system. Much of the money that we citizens throw into the pot does indeed get sprayed up against a wall. Many of the uses to which it is put, like subsidizing elite athletes at the expense of providing hospital beds, get right up my nose.

And yes indeed, there are areas of wastage that would benefit greatly from improved management.

But that does not discredit the process as a whole.

And it certainly does not give you the right to characterize the entire system as being unauthorized, as you are so very fond of doing, by describing taxation as the government "expropriating its subjects’ property"

We are a democracy, and we elect a government with a mandate to do our bidding. Some of that bidding involves our allocating some of our cash to them for the provision of "uneconomic" services, in that they do not make the government a "profit"

But it is the community that ultimately decides, Peter Hume. Not your fictitious fairy godmother.

There's more, much more of your tedious claptrap to get through. Most of repetitions of the same mantra.

>>Tax is a compulsory impost. It is by definition non-consensual.<<

Poppycock.

To prove your point, why not stand for parliament on a "no tax" platform.

Prepare to be laughed off the podium.

Pericles
What you are referring to by ‘the community’ is *the electorate*. But there are three problems with this:
a) The electorate is not the community, which also includes minors, the illegal immigrants, the mentally disabled, the absent citizens, the rest of the world’s population. They don’t vote in the decisions in question, so who is this ‘the community’? Define who they are.
b) It’s not the will of ‘the community’ that’s implemented, nor the sub-set that is the electorate, but only the subset of that, that is the majority of the electorate.
c) There is no evidence that any given act of government represents the will of even the majority, because the electoral process does not provide for the electors to vote on any given proposed law (except in a referendum). A government can pass a law, or do an act, that the majority of the electorate do not in fact agree with, can’t it? Thus where is the evidence that ‘the community’ wants, say, a bus service? Only that the government provided it.

Therefore the argument that the actions of government presumptively represent the community is circular: ‘government does it because the community wants it, and the evidence that the community wants it is that government does it’.

The issue is whether government should provide a service, so it is only begging the question to say that the minority should be bound by the preference of the majority: more circular argument.

Tax is, by law, defined as a compulsory impost. If you are arguing to the contrary, then you are factually wrong. No amount of appeal to a mythical Moloch requiring the sacrifice of people’s liberty and property will change this fact.

“My argument, in a single sentence, is that communities everywhere are prepared to forego some of their income in the form of taxes, in order to provide services for the general good of that community.”

Prove it.

If they were prepared to forego it, there’d be no need for it to be in the form of tax, would there? And the evidence that they are prepared to forego it is? That government takes it under compulsion. And the evidence that it goes for the general good of the community is? That government spends it.

I have already shown reason why the actions of government must necessarily result in scarce resources being devoted to less urgent human wants, and that the community must sacrifice greater benefits as a result. If you want me to answer your question, you must first show that you understand what are the reasons I have given, else I’m not going to waste my time dealing with invincible ignorance.

BTW, splenetic personal indignation does not improve your argument either.

Peter Hume: "If they merely not-enforced it, i.e. respected its terms, the resulting competition would be better as I have shown."

We both agree good market places with strong competition are better than government by fiat. Beyond that I have not seen you show anything. You have not offered a single piece objective evidence backed by any figures, made up or otherwise. Instead, all I get is a video of some woman commenting on an unknown incident, and blaming it all on the government.

Here, you again make no sense whatsoever. You say you don't need the central courts, while still expecting the courts to "respected its terms" - ie enforce them. To me, that means you do need the courts. If you don't, please answer the second half of question I asked earlier: "Do we need a monopoly or not, and if not who is going to do the enforcing?".

As for "the same would apply to the citizens of different states", from the evidence it does. The League of Nations was created to do just that job. No doubt it and its successor, the United Nations, are an anathemas to you. However, the world after the UN became an accepted political edifice has been noticeably more peaceful than before. The first half of 20th century sees wars kills about 190m, and second half sees only 40m. And the population had trebled during the same century.

Peter Hume: "then there’s no need to fund them under compulsion, is there?"

Well if you truly believe we fund the police under compulsion, I suggest you take up Pericles suggestion and run for political office on the basis of eliminating the police and replacing them with privately owned security forces. It looks like you could use the lesson in reality. The proposition most voters don't want to fund the police is utterly absurd.

Peter Hume: "doing it by way of confiscations and government bureaucracy will produce less waste, vested interests, and dysfunctionality than doing anything else by this method. ..."

The Nordic countries have the highest levels taxation and government in the world. They are also the richest, healthiest, most egalitarian with the least amounts of poverty. How do you explain it, if having a central government is so wasteful?

Peter Hume: "As to why we don’t see stateless societies now ... doesn’t mean that the tendency to conquest and plunder is ethically or economically superior, whether it’s legal or not."

What are we having here? Is it a discussion based on evidence or logic, or some appeal to near religious faith that is only notable for the absence of both? What on earth has "ethically superior" got to do with anything? The dominant states over the last 2 millennia have all had the strongest, largest spending governments on the planet at the time. They were not "ethically superior", as they were responsible for the near genocidal destruction of all stateless peoples they came across. People like the Australian Aborigines, the African Bushmen, and the American Indians. These societies were the last stateless people on the planet, the last peoples that practised what you advocate on a large scale. They were annihilated by peoples who choose to organise themselves under a strong if sometimes ruthless government.

You won't be budged from your beloved mantras, will you Peter Hume.

>>The electorate is not the community<<

Yep. It is. Whether at local, state or national level, the electorate is the community. It includes your "absent citizens", by the way, who can vote by post.

Illegal immigrants do not form part of the community, by definition. And the mentally disabled are part of the community in the sense that they are a section of the community whom the rest looks after.

I'm amused that you include "the rest of the world". They are not part of the communities that I am talking about. They are however members of their own communities.

As would any life forms on Mars.

>>It’s not the will of ‘the community’ that’s implemented, nor the sub-set that is the electorate, but only the subset of that, that is the majority of the electorate.<<

Quite.

That's how we measure the will of the community, Peter Hume. By taking the majority view.

But this here is the best illustration so far of how out of touch you are with real life.

>>There is no evidence that any given act of government represents the will of even the majority... where is the evidence that ‘the community’ wants, say, a bus service? Only that the government provided it.<<

Bus services are generally a local issue, not requiring an act of Parliament.

However, the evidence that the community wants it is that it appears in local government documents, letters to members, even election manifestos. These things don't magically appear and disappear, all on their own you know.

Or perhaps you don't know. Have you ever voted?

Uh oh, here comes mantra #1 again.

>>‘government does it because the community wants it, and the evidence that the community wants it is that government does it’.<<

Rot.

The evidence that the community wants it is in a long paper trail of petitions, lobbying, letters-to-the editor, individual and party manifestos etc etc.

It's all there, totally linear, cause and effect. Nothing circular at all.

And you should read the answers a little more carefully, Peter Hume.

>>Tax is, by law, defined as a compulsory impost. If you are arguing to the contrary, then you are factually wrong<<

You missed out the important bit, didn't you.

>>Tax is a compulsory impost. It is by definition non-consensual.<<

You consent to being taxed, Peter Hume, by being a member of the community. If you choose - and you are perfectly free to do this - you can take up residence in another taxation zone.

You may still live here, of course.

But by voluntarily withdrawing from the community, you have proved that tax is only compulsory within that community.

And that being part of that community is totally consensual.

I choose to live where I do, and pay the taxes that I do, entirely of my own free will. I consent to being subject to the will of the majority - even though I dislike some of the stuff they do, like putting up parking charges or allowing dogs to crap in the park - by electing to live where I do.

If I was really fussed about it, I'd move somewhere where they don't have parking meters. Or allow dogs.

>>I have already shown reason why the actions of government must necessarily result in scarce resources being devoted to less urgent human wants, and that the community must sacrifice greater benefits as a result. If you want me to answer your question, you must first show that you understand what are the reasons I have given, else I’m not going to waste my time dealing with invincible ignorance.<<

Sorry, I must have missed that bit.

Would you care to provide the URL?

>>BTW, splenetic personal indignation does not improve your argument either.<<

Nor do your gratuitous snide remarks improve yours.

Actually, there's not a lot that could, now I think about it.

Pericles
Do you have to be so belligerent and insulting? I also could be insulting to you, but if I did as you’re doing, the discussion would simply degenerate into an exchange of abuse in a school-yard slanging match. Why can’t we just have a civil conversation? Personal argument is no substitute for rational argument, and you haven't reached square one yet.

Rstuart
“What on earth has "ethically superior" got to do with anything?”

Condition of the poor, sick, disabled, aged, etc. The statist argument is that states are morally preferable on that ground.

Your argument about the apparent benefits of central states, and the UN, is ‘post hoc ergo propter hoc’. You assume that the benefits are because of, rather than despite states. If, as I maintain, the benefits are despite states, the appearance of prosperity comes from capital consumption. The welfare states all have unsustainable financial liabilities.

The relevant comparison is not between the contemporary population of people under a modern state, and traditional Aborigines. It is between a given population under a state based on a compulsory taxing and judicial monopoly, and the same population with a lesser or no state.

The fact that people vote does not and cannot show that tax is consensual because it’s a crime not to pay tax, and because the electoral process provides no way of knowing whether even a majority in fact want any given tax or act.

If one argues that tax is a non-compulsory or consensual payment, then one is simply wrong in law and in fact, and that’s the end of the discussion.

I have explained twice why there is no need for the government courts to enforce the contract in order for private adjudication to be competitive with government monopoly. The courts don’t need to enforce it. But if they override it, monopoly consequences follow.

The private production of *enforcement* (‘sheriff’), as opposed to *adjudication* (judge), is a still further issue. Is that what you’re now asking about?

*Evidence* does not interpret itself.

If the underlying theory is illogical then the assessment of evidence will be wrong. The illogicality here concerns the basal issue, whether tax is consensual. I have shown reason why it is not. You need either to refute or accept those reasons, not just make a counter-assertion that neither proves your my argument, nor disproves yours. Otherwise appeal to evidence is premature, and we’re just sawing sawdust.

The *reason* we know that government can only serve less-urgent human wants and net consume capital is because *axiomatically*, voluntary transactions are mutually beneficial (otherwise the parties wouldn’t enter into them) and create value multilaterally; while coerced transactions are zero sum (otherwise compulsion wouldn’t be necessary), and reduce net value. Without accepting or refuting these propositions at the individual level, referral to still other absent individuals at the collective level cannot prove anything and only confuses the issue.

If we put aside the statist reasonings by way of personal argument, mind-reading, misrepresentation, circular argument, appeal to absent authority, and ‘post hoc ergo property hoc’, there is nothing left.

Perhaps the discussion would be more fruitful if, instead of falling back to a circular insistence that states are necessarily beneficial, or an appeal to absent authority in an undefined collective, we were to ask ‘how might things be better in societies with smaller or no states?’

In summary:
1. No, government cannot be run like a business. If you appointed an entrepreneur to try, he would simply become another bureaucrat because government intrinsically lacks the decision-making tools that characterise business.
2. Government by definition involves a legal monopoly of ultimate decision-making, and taxation. The assumption that such a compulsory monopoly provides services better and fairer, than providing them by competing services funded voluntarily, is based on a welter of fallacies that cannot withstand critical scrutiny, and which ultimately resolve into arguing “It is, because it is, because it is.”

Q.E.D

(...cont'd)

When competitive markets don't arise, there are three choices. Either (1) forego the product or service, or (2) endure poorly functioning market (such as monopoly), or (3) elect a government. Assuming you actually want the service (1) isn't possible, then (3) is the cheapest choice. Health being but one example of this. That is why we (and indeed YOU) choose to endure "compulsory" taxation here rather than go live in a low tax haven. In fact, you still haven't explained why you haven't done that.

Peter Hume: "The assumption that such a compulsory monopoly provides services better and fairer, than providing them by competing services funded voluntarily, is based on a welter of fallacies that cannot withstand critical scrutiny"

No. It is based on the fact that there are situations were competitive markets for services simply don't arise naturally, and it is for the provision of those services we need governments. I have given many examples of this, all of which you conveniently choose to ignore. That wilful ignorance is what is failing to withstand critical scrutiny.

Peter Hume: "You assume that the benefits are because of, rather than despite states."

True. But at least I offer evidence that in real world conditions establishment of government type X was followed by effect Y. You respond that correlation does not mean causation - which is correct. But that is a bit rich, as you don't try to prove your ideas are grounded in reality. What you give me instead are theories based on bold assertions, with no absolutely attempt to show the way humans and their societies behave in real life has any relationship to either. Form my point of view we have as well be discussing the number of angels that fit on the head of a pin.

Peter Hume: "it’s a crime not to pay tax"

It is not a crime to move to a different state where you don't. That is why it is consensual.

Peter Hume: "The private production of *enforcement* (‘sheriff’), as opposed to *adjudication* (judge), is a still further issue. Is that what you’re now asking about?"

Yes.

Peter Hume: "*Evidence* does not interpret itself."

As you keep saying. But as I pointed out above, I am the only one here who seems to be offering evidence and examples here, and I don't think it unreasonable that I have first bite at interpreting the evidence I give.

Peter Hume: "I have shown reason why [tax] is not [consensual]"

I don't agree, but let us just assume tax isn't consensual for now. And so now you say "since you have already agreed government is less efficient than a competitive market, you agree with me". Not quite. You miss the qualification "competitive market". I have given many examples of where competitive markets do not arise at all, of only do so with the help government intervention.

(cont'd...)

(...cont'd)

rats. sorry about the wrong posting order.

Excessive repetition is not an argument, Peter Hume.

>>The assumption that such a compulsory monopoly provides services better and fairer, than providing them by competing services funded voluntarily, is based on a welter of fallacies that cannot withstand critical scrutiny, and which ultimately resolve into arguing “It is, because it is, because it is.”<<

You have said this so many times, yet you cannot back it up with anything substantial. You refuse to accept that we elect governments, at every level, therefore the process is entirely voluntary - it is the community we have chosen, and the rules that go along with it.

>>If one argues that tax is a non-compulsory or consensual payment, then one is simply wrong in law and in fact, and that’s the end of the discussion.<<

And claiming "the end of the discussion" without either recognizing the points made by others, or providing substance to back up your claim, is simply argument-by-bullying.

You will come to realize one day that your chosen prophet, Mises, has feet of clay, and that the Austrian School debate is useful only from the point of view of platonic idealism.

But in the meantime, my advice is to listen more, and pontificate less.