Libertarianism and the protection of certain types of goods.

[Nitrousoxide]

We all know one of the major selling points of the free market system is it's efficiency and rapid ability to change to meet consumer's needs and wants.

It seems to deal well with various forms of goods, and even goods which we typically think of as being public goods (like police, fire, roads) have their suggested free market solutions.

There is at least one sort of good which seems as though the efficient use of it is illogical for the individual owner and provider. These are goods such as caves, historic paintings and pieces of artwork, and generally goods we think of as future generation's goods. We must consider how a rational owner of these goods would make use of them, but first, we must explain some peculiar features about these goods.

First, they do not produce much utility which can be sold at any given moment. They also do not deplete their ability to produce utility by being used properly. Consider a cave. It can be a wondrous place, but the price which can be charged for a tour is none-too-high. However, so long as the tourists do not damage the objects they are viewing, they do nothing to harm the cave's ability to produce utility. That is, the next thousand people to walk through that cave will get the exact same utility as the first thousand so long as they take proper care to not damage anything.

The cave has the peculiar ability to produce what amounts to an infinite amount of utility. Clearly then, the efficient use of the product would demand that it is protected.

Consider how a rational person would act if he has property rights to that cave, and no regulation as to how he goes about using it. He will try to maximize the use of the cave not for all time, but only for the time in which he is in possession of it. He will allow visitors to break off formations within the cave, take them home, write on the walls, so long as the total amount of utility he gets out in payment for them is greater than if he did not. As the time of his ownership comes to a close, either because he is nearing death or going to sell the land, he will permit more and more of this degradation of the cave so as to milk every last bit of utility which he can before he looses it.

How then does a free-market system without regulation or government intervention prevent the inefficient use of these sorts of goods?

[Loren Pechtel]

You're missing a key element of the system.

Your economics assumes the cave vanishes at the end of the period of time. That's not true, however. Someday the cave will go to someone else. If he's allowed it to be harmed the value at that point is reduced.

[EricK]

You're missing a key element of the system.

Your economics assumes the cave vanishes at the end of the period of time. That's not true, however. Someday the cave will go to someone else. If he's allowed it to be harmed the value at that point is reduced.
But if he can get more out of it by allowing its degradation than by keeping it as pristine as possible then that is what will happen.

If you can make enough money from a piece of land (or whatever) then why should you care if at some point you have to abandon it as worthless but can just move on to exploit the next bit of land?

[Nitrousoxide]

You're missing a key element of the system.

Your economics assumes the cave vanishes at the end of the period of time. That's not true, however. Someday the cave will go to someone else. If he's allowed it to be harmed the value at that point is reduced.

One's he's used up all the cave's worth, there's plenty of other uses for that land, especially if a city has worked it's way closer to it through urban sprawl.

The rational person will try to obtain as much money as possible from that cave before it goes out of his possession, and so long as degrading it returns more than leaving it in prestine condition over that period, he'll let it be destroyed.

I'm not just working from hypothetical examples here either. This kind of thing really happened prior to the laws protecting cave formations. The owners would really let people break off formations to take home or write on the walls for a price. Mammoth cave down in Kentucky has many examples of this if you don't believe me. Other smaller private caves had it even worse.

We see this stuff throughout history, as people rob the tombs of ancient Egyptians, sell parts of intact religious artifacts, and otherwise destroy goods like I described simply because they are trying to obtain as much worth in their life as they can from the item.

[Alter]

The cave has the peculiar ability to produce what amounts to an infinite amount of utility. Clearly then, the efficient use of the product would demand that it is protected.


...

How then does a free-market system without regulation or government intervention prevent the inefficient use of these sorts of goods?

You have failed to take into account discounting of the returns at the risk-free rate.

For example, say the cave can accomodate 10,000 visitors a year, each paying $5 to see it. That's $50,000 per year. Assume the current risk-free rate is 5%. Then the cave is tantamount to having a $1,000,000 asset, earning you 5% per year, or $50,000.

If you let people trash it, then when you go to sell it it will be worth LESS than $1,000,000. However, if you maintain it reasonably (assume this cost is negligible), it will still be worth the original amount. Therefore, to get the maximum utility, you will maintain it, so you can sell it at some later date if you so choose.

[Bonniedundee]

We all know one of the major selling points of the free market system is it's efficiency and rapid ability to change to meet consumer's needs and wants.

It seems to deal well with various forms of goods.What do you mean? Where is this free market? I can see nothing approaching one in this world.

[EricK]

You have failed to take into account discounting of the returns at the risk-free rate.

For example, say the cave can accomodate 10,000 visitors a year, each paying $5 to see it. That's $50,000 per year. Assume the current risk-free rate is 5%. Then the cave is tantamount to having a $1,000,000 asset, earning you 5% per year, or $50,000.

If you let people trash it, then when you go to sell it it will be worth LESS than $1,000,000. However, if you maintain it reasonably (assume this cost is negligible), it will still be worth the original amount. Therefore, to get the maximum utility, you will maintain it, so you can sell it at some later date if you so choose.

But suppose enough people are prepared to pay you say $100 if you let them damage the cave slightly (by breaking of a stalactite formation to kepp, or whatever). Then to get maximum utility you might go down that road.

And what about if the person who happens to "own" the cave isn't capable of working out how to maximise utility? It's one thing if such a person goes into a business and ends up just ruining himself; but if he ends up ruining something for everyone else (both in the present and in the future) that's quite another.

[toth8]

Areas of natural beauty could be owned by conservation groups in a free market. Also, why would anyone buy a forest, cave, etc. that wasn't well maintained? Simple maintenance of the item would lead to it retaining its value.

[Nitrousoxide]

But suppose enough people are prepared to pay you say $100 if you let them damage the cave slightly (by breaking of a stalactite formation to kepp, or whatever). Then to get maximum utility you might go down that road.

And what about if the person who happens to "own" the cave isn't capable of working out how to maximise utility? It's one thing if such a person goes into a business and ends up just ruining himself; but if he ends up ruining something for everyone else (both in the present and in the future) that's quite another.

Exactly right. There's no doubt that people did allow others to break off formations and otherwise damage the caves in the past before legislation.

So, either one of two things is true then. Either the owners were being rational about that or they weren't. If they were being rational about it then they allowing other people to damage the cave maximized their utility generated. If they weren't being rational then they weren't maximizing their utility.
In the first case, the whole notion of protecting caves by using the free market is doomed to failure from the get-go. If it's the second, then how are we to prevent people who cannot maximize their utility from getting ahold of caves to run except by legislation?

Sure, private conservation groups could take over some caves, but only so long as the origional owners are willing to sell and only so long as they actually spring up. And they would need to do this for every sort of good which produces utility like caves. That includes artwork, historical artifacts, and natural wonders.

[Jason Harvestdancer]

Areas of natural beauty could be owned by conservation groups in a free market. Also, why would anyone buy a forest, cave, etc. that wasn't well maintained? Simple maintenance of the item would lead to it retaining its value.

I recall a case like that where a conservation group owned a park. The government wanted it for construction and used eminent domain ... no more park. That's why the free market is so bad at protecting the environment and the government is so good at protecting the environment.

[Jason Harvestdancer]

So, either one of two things is true then. Either the owners were being rational about that or they weren't. If they were being rational about it then they allowing other people to damage the cave maximized their utility generated. If they weren't being rational then they weren't maximizing their utility.
In the first case, the whole notion of protecting caves by using the free market is doomed to failure from the get-go. If it's the second, then how are we to prevent people who cannot maximize their utility from getting ahold of caves to run except by legislation?

Sure, private conservation groups could take over some caves, but only so long as the origional owners are willing to sell and only so long as they actually spring up. And they would need to do this for every sort of good which produces utility like caves. That includes artwork, historical artifacts, and natural wonders.

I wonder your opinion on conspicuous consumption. Suppose some random billionaire goes out and buys a Picasso simply because he can and destroys it simply because he can. Where do you stand on that?

[laughing dog]

I recall a case like that where a conservation group owned a park. The government wanted it for construction and used eminent domain ... no more park. That's why the free market is so bad at protecting the environment and the government is so good at protecting the environment. An referenceless anecdote is the best you've got?

[Jason Harvestdancer]

No, but even if it was it's better than Infowars.

[coloradoatheist]

Actually Colorado has all of the cases in terms of the 53 14,000 foot peaks. Most are govt owned but several are privately owned. three cases will happen. One peak is completely privately owned and they charge $100 a visitor with max of 10 a day. Several peaks have private property but they allow trails through them however they are working on legal issues to protect liability with regards to crossing the property. And third, one mountain has private lands that the owner won't allow hikers to cross so you have to use a different route.

A private owner may choose any of them however if the cave is important piece of the property and it's value, they will generally maintain it.


Mike

[Gracchus]

A free market protects nothing. A free market fishes the ocean until the fish are gone. A free market clear cuts the rain forest, and farms until the soil is poisoned by pesticides and sterilized by chemical fertilizers. A free market dumps industrial waste into air, water, and soil. "Free market" is just a make-nice term for piracy.

This is not some economic postulate, manufactured out of thin air. It is history.

:wave:

[coloradoatheist]

A free market protects nothing. A free market fishes the ocean until the fish are gone. A free market clear cuts the rain forest, and farms until the soil is poisoned by pesticides and sterilized by chemical fertilizers. A free market dumps industrial waste into air, water, and soil. "Free market" is just a make-nice term for piracy.

This is not some economic postulate, manufactured out of thin air. It is history.

:wave:

The problem that you describe there is a problem because of lack of private property. If the ocean's space was privatized except for some trading lanes you would get protection of the species in that area.


Mike

[Nitrousoxide]

I wonder your opinion on conspicuous consumption. Suppose some random billionaire goes out and buys a Picasso simply because he can and destroys it simply because he can. Where do you stand on that?

Well. let's say he gets a lot of enjoyment out of destroying, rather than does it simply because he can. That way we can avoid saying that he was being irrational in doing so.

I would say that he's doing somethign wrong. Normally, for most goods, I support the individual doing whatever he so pleases with them so long as he isn't harming others in the process. These goods are somewhat different though. They seem to almost belong not to this generation, but later ones. As mere stewards of them, we are charged with protecting them for future generations and cannot act as if we were true owners.

[laughing dog]

No, but even if it was it's better than Infowars. I'll take that to mean that a referenceless anecdote is the best you've got. I guess that makes your argument unassailable.

[nixon]

I don't buy the "Goods for future generations" argument. I do support protecting certain things so the future generations can enjoy them, but a lot of the time the "For the future" folks essentially lock the goods out of this generation. Thats just as bad as destroying them before the next. And in some cases, the items/places will only last so long anyway (At least as they are).

[Jason Harvestdancer]

I'll take that to mean that a referenceless anecdote is the best you've got.

I directly said it wasn't the best I've got, so you take it to mean that it is the best I've got. Is that the best argument you've got?

[Gracchus]

The problem that you describe there is a problem because of lack of private property. If the ocean's space was privatized except for some trading lanes you would get protection of the species in that area.

And if the air were privatized it would be clean? Has privatization protected the rain forest, or any forest from clear cutting? We can't even protect public land from ecological devastation. Privatize the ocean and you would still need to protect the "property".

Fish migrate. Are you going to fence off the ocean with nets? And how would you assign ownership: As we have assigned ownership of land, to the first successful thief to have a congressman or judge in his pocket?

Capitalism and "free" markets put greed before need, and quarterly profit before sustainable yield.

:wave:

[Jason Harvestdancer]

Capitalism and "free" markets put greed before need, and quarterly profit before sustainable yield.

Why do so many people assume that capitalism equals short-sightedness? If I could get $10/day for a week or $50 up front, the first option is clearly better, but according to everyone else I'd take the $50 and run since my ideology is capitalism.

Now if we were talking Keynesianism or Mercantilism, I think a case could be made for short-sightedness.

[EricK]

Why do so many people assume that capitalism equals short-sightedness? If I could get $10/day for a week or $50 up front, the first option is clearly better, but according to everyone else I'd take the $50 and run since my ideology is capitalism.

Now if we were talking Keynesianism or Mercantilism, I think a case could be made for short-sightedness.

People don't assume that capitalism equals shortsightedness. They realise that often capitalism requires shortsightedness. It is no good if your business plan would pay great dividends a long way down the line if you are massively outcompeted in the short term and go out of business.

[Gracchus]

Why do so many people assume that capitalism equals short-sightedness? If I could get $10/day for a week or $50 up front, the first option is clearly better, but according to everyone else I'd take the $50 and run since my ideology is capitalism.

Now if we were talking Keynesianism or Mercantilism, I think a case could be made for short-sightedness.

But the capitalist will probably strive for wealth in his lifetime regardless of consequences to future generations. If he can increase his wealth by destroying the lives and livelihoods of others, he is likely to do so. That is not theory, that is history.

:wave:

[Jason Harvestdancer]

But the capitalist will probably strive for wealth in his lifetime regardless of consequences to future generations. If he can increase his wealth by destroying the lives and livelihoods of others, he is likely to do so. That is not theory, that is history.

:wave:

I question the premise. You restate the premise.

[Gracchus]

I question the premise. You restate the premise.

But my premise is based on history. Your doubt of the premise is based on your religious faith in "capitalism".

:wave:

[Loren Pechtel]

Why do so many people assume that capitalism equals short-sightedness? If I could get $10/day for a week or $50 up front, the first option is clearly better, but according to everyone else I'd take the $50 and run since my ideology is capitalism.

The problem is confirmation bias.

There are a lot on the left that only look at the now, not the future. Thus they think we are going to act just as foolishly.

[Nitrousoxide]

Now now, Loren, no need to do that.

Gracchus, why don't you provide some specific, widespread examples of what you think would indicate that your premise is true.

Merely restating it will not convince a person who thinks it's false that it is true.

[coloradoatheist]

People don't assume that capitalism equals shortsightedness. They realise that often capitalism requires shortsightedness. It is no good if your business plan would pay great dividends a long way down the line if you are massively outcompeted in the short term and go out of business.

It requires both. Let's say that you in the example you could purchase a square mile of ocean for $100K. You can charge people to fish for 90K total and all the fish are gone. Now when you go to sell that mile of ocean it's worth zero. You've lost $10K in the deal. Now if you can continually make money on the fish by limiting the fishing and letting the population grow back you may only make $50K but your square mileis still worth $100K. Ranches do it with hunting season. Buffalo in the US are making a comeback because of ranchers raising them now that buffalo meat has come back in person. Also several African animals are making comebacks on private lands and not with public protection.

Mike

[Jason Harvestdancer]

But my premise is based on history. Your doubt of the premise is based on your religious faith in "capitalism".

I see plenty of examples in history of long term planning by investors. Restating your premise as if it were a conclusion is more a sign of religious faith than asking you to prove your restated premise.

[Loren Pechtel]

Something to add here:

Long term planning on the part of capitalists requires a society in which they trust the force of law and the stability of the society.

If you might lose that patch of ocean tomorrow with inadequate compensation you'll be inclined to go for the scorched-earth $90k approach. Thus socialist policies will tend to encourage investors to not look after their resources.

[Gracchus]

Something to add here:

Long term planning on the part of capitalists requires a society in which they trust the force of law and the stability of the society.

SURPRISE! That is also required in socialist societies!

If you might lose that patch of ocean tomorrow with inadequate compensation you'll be inclined to go for the scorched-earth $90k approach. Thus socialist policies will tend to encourage investors to not look after their resources.

But in socialist societies the government would look after the resources. The entrepreneur would have a use permit. There would be limits and regulations to prevent abuses. Of course, that would require international regulations with real teeth.

:wave:

[EricK]

It requires both. Let's say that you in the example you could purchase a square mile of ocean for $100K. You can charge people to fish for 90K total and all the fish are gone. Now when you go to sell that mile of ocean it's worth zero. You've lost $10K in the deal. Now if you can continually make money on the fish by limiting the fishing and letting the population grow back you may only make $50K but your square mileis still worth $100K. Ranches do it with hunting season. Buffalo in the US are making a comeback because of ranchers raising them now that buffalo meat has come back in person. Also several African animals are making comebacks on private lands and not with public protection.

Mike

Obviously you can present some made up figures which demonstrate where taking the long view is in one's best interest, and I could make up figures which show the exact opposite.

But the point is that in those cases where being shortsighted is in the owner's best interest there will be nothing stopping them ruining it for everyone else (both in the present and the future).

Historically, there are many examples of mines which have totally destroyed the land for generations after the mining ceased. It was in the mine owners' interests to get as much out as quickly as possible and then just abandon the land.

[coloradoatheist]

Obviously you can present some made up figures which demonstrate where taking the long view is in one's best interest, and I could make up figures which show the exact opposite.

But the point is that in those cases where being shortsighted is in the owner's best interest there will be nothing stopping them ruining it for everyone else (both in the present and the future).

Historically, there are many examples of mines which have totally destroyed the land for generations after the mining ceased. It was in the mine owners' interests to get as much out as quickly as possible and then just abandon the land.

I actually partially agree with you but it's not just what one person will do with it, it's what everybody together will do with it. As I gave you an example in Colorado all three types persist, the people that sell limited access to the cave or mountain, some who will allow people to access the cave, and some who won't let anybody on it. There may be people that immediately kill and sell all their fish in their square mile there will be many that protect the investment by limiting and working on ways on stalking and some that don't allow any of it at all.

Mike

[Jason Harvestdancer]

SURPRISE! That is also required in socialist societies!

But in socialist societies the government would look after the resources. The entrepreneur would have a use permit. There would be limits and regulations to prevent abuses. Of course, that would require international regulations with real teeth.

The government that writes and enforces the regulations has a nasty habit of not doing so with regards to itself. One of the most polluted spots on the planet is the corner formed by Germany, Poland, and the Czeck Republic. It became the most poluted spot when they were Communist East Germany, Communist Czeckoslovakia, and Communist Poland. It's not about "International" regulation. That's simply a plea for an "international government" which would exempt itself from its own regulations calling for an overgovernment which would exempt itself from its own regulations and so on.

The government is hardly a wise steward of resources, even in the USA. It is government policies that encourages overgrazing on government lands, over mining, over logging, etc.

Now are you ever going to provide the evidence I asked for?

[Loren Pechtel]

The government that writes and enforces the regulations has a nasty habit of not doing so with regards to itself. One of the most polluted spots on the planet is the corner formed by Germany, Poland, and the Czeck Republic. It became the most poluted spot when they were Communist East Germany, Communist Czeckoslovakia, and Communist Poland. It's not about "International" regulation. That's simply a plea for an "international government" which would exempt itself from its own regulations calling for an overgovernment which would exempt itself from its own regulations and so on.

Or look at all the ecological disaster areas in Russia.