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.