Bitcoin Forum

First of all, like many of you, I am a Libertarian.  I believe that force is the sole and ultimate societal ill, and that identification and elimination of force is the key to creating a more just and productive world.  Along those lines, I think it's consistent to say that the economic manifestation of force is the concept of "negative externality".  A negative externality is simply a cost or harm that is imposed on others without their consent.  Furthermore, and just as a technicality, since I do not think it is consistent to attribute any inherent value to goodwill (goodwill is just as much force as ill-will) I ignore positive externalities and do not believe that they are capable of offsetting the cost of negative externalities also without explicit consent.

I'd like to perform a little exercise in this thread.  I'd like to crowdsource a list of all of the negative externalities that exist in the world, in order of global impact.

For a refresher or for those new to the subject, some discussion of externalities:
http://www.auburn.edu/~johnspm/gloss/externality
http://economics.fundamentalfinance.com/negative-externality.php

So, please, help add to the list.  You can 1) add an item to the list, 2) separate an existing item into two or more items, or 3) re-order items in the list.  Please provide justification for your addition or change.

• air pollution
  
  • farts
• water pollution
• traffic
• noise pollution
• monetary inflation
• regulatory transaction costs
• taxes
• infectious diseases
• littering
• corporate liability shields

Looking at ugly houses
Traffic

Please justify this.  Who is forcing you to look at ugly houses?  Do you have a right to be surrounded by rainbows as far as the eye can see?


Please justify this.  How are you forced to use fiat currency?

What do you call it when someone imposes a harm on someone else with consent?

Trade

noise pollution

S&M  :D

I believe that non-aggression, although prevalent, wouldn't be an absolute in a free market based law. Laws would be rules that people are generally ready to enforce by pointing guns at others (at their own cost), like prohibition of stealing or murder. People might be forcefully prevented from building a nuclear waste station in a residential area or organizing outdoor raves without compensation for noise. Or people might not be punished for preventing someone from committing a suicide, for example. People generally find these kinds of things perfectly reasonable and just.

Well, we essentially are. Have you every tried to live without using fiat currency? Additionally, I would argue that inflationary policies are the end result of central banking, and it causes a transfer of wealth from those who get the new money last to those who get it first.

I'm not saying you aren't.  Just tell me how exactly.

Well, I'll agree that sometimes consensual trade is harmful, as in the case of blackmail and extortion, but these modes depend on threats of force. Regardless, I take it that you mean that negative externalities do not exist in the presence of consent. That brings us to how we value consent though. I mean, we can choose not to drink, breath, or drive. Cannot a polluter rightfully ignore the complaints of the dysenteric and asthmatic on the premise that they consented to drink and breath? If they try to shut him down, aren't they just Indian givers, after a fashion?

Perhaps, although good practitioners use safe-words with no threat of force against their use.

The state restricts the generation and use of private tangible currencies.

You're degrading this argument down to the point that we consent to live, that living is a negotiable choice. Which can be a fair argument if you advocate that if you are coerced into a system, you still have freedom because you can kill yourself.

Laws are negative externalities, or at least some laws. The politicians/lobbyists that draft/pass laws don't pay the full cost of their decisions.

I'm not degrading anything. My point is that consent isn't necessarily the best factor, or even a good factor, by which to judge an outcome.

If they consent to drink and breathe pollution you mean?

If someone builds an ugly house next to mine, I had a nice view of a mountain before, and now I don't.  No one said anything about having a right to a good view.  It is a cost imposed on me, nonetheless.

If someone farts near me, that's a negative externality too.

When the government forces you to pay him in it.  Still, not sure it's a negative externality.

I suppose that adding that qualifier brings the total to three choices: stop drinking and breathing, find unpolluted water and air to drink and breath, or drink and breath pollution. Of course, the second premise depends on the availability of clean water and air. If clean water and air is unavailable, then one cannot consent to drinking and breathing without also consenting to drinking and breathing pollution.

i do not consent to anyone quoting this post

Infectious diseases.

Diseases are a difficult class of externality, because the size of the effect is unknown to the infected person. If the person diagnosed with bird flu goes to the coffee shop, they may infect zero, one, or more people. Or, the diagnosis may be incorrect, and they may have something similar that's harmless or is ten times more deadly.

Not if they're affecting the complainers properties. (well, I mean they don't have the right to, not that they "can't")
If a polluter is polluting your piece of a river, your lake, the water from your well etc, than you have the right to stop him.

You imply that some can rightfully own more water and air than others? Such a property concept has negative externalities because it allows for polluters to own and rightfully pollute the water and air that I drink and breath. With every gulp and breath I would give my consent to some grotesque EULA.

If there is no "public" ownership, it becomes a case of damages, not negative externalities.  If someone dumps a pile of manure in my yard, that's not an externality, it's damaging my property and I will sue him or at least make him clean it up.

My last post in this thread still applies. If I happen not to own my yard, or my home for that matter, the landlord can do whatever he pleases.

If I happen to not own Wal-Mart, Wal-Mart can just do whatever they please, and they may decide not to stock things I want to buy.  I'll have no choice but to just buy things I hate then.

Scarce things are scarce, yo.

Ownership just means you can lay a claim to keep other people from using said resource if you rightfully acquired it (<---debate for another time in there).  If someone comes along and dirties it up or otherwise harms this resource, you have recourse.  It's just a combination of this notion of 'public property' and our inefficient court systems that favor (due to their expensive nature and laws written by lobbyists rather than dictated by natural rights) large corporations that allow 'acceptable levels' of pollution to happen today.

Without both of those in place, it would become trivial to seek redress vs. any damage to your property by another party, and this includes pollution.  Without limited liability laws, the stockholders and management of any company that decided to risk polluting others' property would be at personal risk of losing their assets if they wronged others.

Incentives matter.

What about stray dogs?  Are those a negative externality?

Of course, as with any scarce resource.


The same thing could theoretically be happening to food and everything else, right now....

OMG, we'll all starve!!!
 ::)

Competition solves the "issue". What doesn't help are regulations, barriers of entry, disrespect over people's property rights and so on...

Indeed, that's a crappy position to be in, wherein you can only choose to shop at Wal-Mart or not shop at all. Even worse is the choice to breath or not breath.

But people often use and depend on things that other people (legally) own. Wherein everyone (legally) owns only that which they procure through their own labor, use, and occupy themselves, then I think you have something.

So, living according to an EULA of another person's creation does not count as a negative externality? Even if one can escape the terms of the EULA through death or exile, all the choices represent a potentate imposing harm on that person. As such, all forms of usury are negative externalities.

Who is the potentate?  Who is imposing harm on whom?  Property owners?

In the pollution example, it is whomever pollutes, and thereby imposes harm on others, with impunity.

And in the usury example?

Who is the polluter in this case?

Whomever takes the product of your labor while giving back relatively less with impunity.

Because labor has inherent value?

Or all trades must be equal trades?

Only the state grants impunity.

If your labor is worth more, go find a job somewhere else.

The point is that you're worrying about a non-issue.  If people are worried about something bad happening, there will be demand for people to ensure bad thing 'x' doesn't happen.  If everyone in the world owned a private factory spewing carbon monoxide over a wide radius making most of the world uninhabitable, and it seemed like no one cared, then I'd be a little worried; but it's obviously not the case, and government has only codified that pollution is okay, as long as it's under arbitrary limit 'y,' and then made it impossible for the average person to ever recover any damages, even if an entity goes above arbitrary limit 'y.'

Even if there was a problem here, violence is not the way to solve complex, social problems.


Everything with mass is excludable.  You cannot say some atoms are special and need to be un-owned or that you have some master plan to distribute atoms fairly to people.

No. The labor one might expend to exploit others is worthless because it produces nothing.

If they qualify as fair trades, yes.

A state is just an entity with the power to do so. A usurer will have to become a state himself or find another one to rely on to continue his usury.

My labor is worth the product I produce by it, no more, no less. That I'd have to flee my workplace, a second home really, to find fair compensation is an injury to my humanity. As if that's not bad enough, I'd have to flee my home because there are no engineering cooperatives nearby.

Can the demand be so great that people will break their EULAs, or will they have to enter into others by buying protection from strongmen?

I never said that and I do not. I find it curious though that some atoms, after a worker uses his labor to arrange them in some fashion so as to create a product, become more valuable after the employer takes it. Must be magic.

Please define "fair" in this context.

No. Two things. Something only has value when another is willing to trade for it. The product's value, from the time it leaves the worker's hands until it reaches the consumer's, is one hundred percent speculative. The reason that the worker chooses to work for his employer rather than himself is that his employer absorbs any difference in the speculative value of an object with the traded value. This is in addition to all of the time the employer spent building the company before the worker came around, and the risks involved in such.

No magic involved.

By any metric, governments are the largest polluters.  Yet they are universally exempt from damage claims.

Yeah, I guess it's useless to try to form a more voluntary system that might actually fix some of those issues states have conveniently entrenched over the centuries.  Might as well keep being right twice a day.


This is nonsense.  Value is whatever someone is willing to bid for a given good or service.  Unless you're bearing all the risk and tying up your own capital, your labor is not worth the product you produce by it, and it really isn't their either, you're just bearing the other costs yourself in that scenario that the business owner would have otherwise.  Nothing has intrinsic value.  Value is the preference people show for certain goods or services.


This is an entirely ridiculous and meaningless sentence.  If you can't or don't want to support yourself in self-employment, you have to find a job.  If you don't like the job you're at, you're at no obligation to stay there.


What EULAs?  Stop making up ridiculous problems that wouldn't even happen if there was a fleet of caricature villain billionaires out there with unlimited funds and a psychopathic tendency to try to make other people's lives hard at any cost.

And these 'strongmen' are likely to be arbiters, insurance agents, and other mediators.


Stop being disingenuous.  You understand perfectly well why matter in some shapes is worth more than others, and it's because people have preferences that bear out when they have to make choices of what to do with their limited time and resources.

Are people just signing up for this site because they think cryptography is cool or something?

When neither side gains nor loses more than the other and they only trade what they have fairly gained.

If I make three widgets for a given amount of my labor, that amount of my labor clearly has a value of three widgets. Why would I give someone even one of those widgets to absorb risk that they can simply pass right back down to me in the form of layoffs or uncomfortable or unsafe working conditions? Even if that person built the workplace, a finite thing, he has no right to collect indefinitely on it.

I'll agree with that, for the most part.

I disagree, but I can't prevent you from consigning yourself to them.

I try.

See above.

The threat of losing one's home, among other things, is obligation enough.

I established this concept earlier in the thread.

Don't forget the mob.

I'm not being disingenuous. The only reason an employer can sell the product of my labor for less than what he sells if for on the market is if he has the authority to exclude me from that market. He gets this authority from a state of some kind.

Why don't you start another thread with a poll?

There are many reasons why one individual would agree to be employed by another. Risk, up front costs, reputation, etc. As always, no state necessary.

I used to work independently and work being employed.  Working independently was nice, but if that business was not going well, I got no money.  Sometimes I even lost money.  When I go to work as an employee, I never lose money, even if my company does.  Having a steady paycheck is more valuable to some people than the possibility of making more, but having the money inconsistent (and sometimes not making any).  If you have a decent amount of savings, then it might be worth it.

Division of labor is conspicuously absent from your list.


So, first of all, gains or loses more what?  Matter?  Energy?  Dollars?

Secondly, if you engage in trade, and you have no idea whether you are gaining or losing, how is anyone else supposed to know?


Ho-boy....

If an employer is not in his right to sell the production of his employees for more than he pays them, then exactly what incentive does he have in such a business to begin with? If he shouldn't make a profit, then he has no reason to run that business and he shall close it, rendering all his employee's effectively jobless. Which brings the simple question: is the employer needed for the employee's job to exist? If the employee is consenting to the conditions of the employer, then the answer is yes, and the employer is rightfully entitled to his profit. If the employee doesn't consent to the conditions, then he's either jobless, which is his own prerogative, or he's forced to labor anyways, in which case he is a slave and thus isn't relevant to this argument. As such, you're point is moot my good Father.

The discussion on air and water pollution is technically a discussion on commons, which I think are wrong.

Based on who's determination of value?  Yours?

Since all value is subjective, what you are saying is that as long as both parties agree, the trade fair. Did you just defeat you're own argument there?

You can divide labor when being self employed.  You hire out services to someone else outside of your skillset.  Or you form a co-op, which is just a really big form of self-employment.

That's just another form of employer/employee relationship.

And so is this.

What's the real risk? Interest on loans, non-refundable permit fees? These are capitalist and governmental creations. Without them, in the event of failure you could recuperate most of your start-up costs by selling what you've purchased. If some individuals still find that too risky, they could join workers' cooperatives that already exist.

See my previous response. Workers may find security, as long as they're profitable enough, under the tutelage of an employer, but they'll find security and liberty in worker solidarity.

If workers desire managers to help with this task, they can democratically elect recall-able ones.

It could be any of that.

I happen to think that the market is useful for determining value, but not so much if you have an employer that excludes you from it.

Pardon?

If the workers can take ownership of the means of production, they could create cooperatives and manage themselves. Some anarchists would prefer communes, collectives, syndicates, or solitary craftsmanship and that's fine, too. Unfortunately, the state prevents workers from taking ownership of that which they've already paid for in the difference between their wages and the sales prices of their products. So, it's not that the workers need employers to work. They don't. It's that employers need the state to employ.

Yeah?

I happen to think that the market is good for determining value as long as everyone can participate in it without patronizing middlemen.

Nope. Value is subjective, but the market is useful, useful enough anyway, for determining it.

Only if you boss them around and try to resell the product of their services for a profit.
Only when its members are employees, or find themselves subordinated in some other way, instead of partners, but then it's not much of a co-op.

So what?

Don't have enough time to read whole thread, but here's my .02 BTC:

1) Make sure we're talking about non-pecuniary externalities, and make sure to define that. Because basically every market system operates on constant pecuniary externalities, its just that it often takes some work (and transparency!) to figure out why something costs what it does.

2) For the purposes of this thread all should read Coase's paper on externalities. Externalities are solved by markets when transaction costs are low. Thus, it would be more productive to talk about what externalities have high transaction costs, and then figure out how to lower those costs, or design some alternate system that is manages the problem ethically and equitably.

What you are describing here is communism, or any form of authoritarian government in general. What about free market? Do you pretend employers will disappear under such conditions? Your idea is that if person A needs my expensive gizmo to build his widgets and that in return of letting him use my gizmo, i get to buy widgets off of him for less than i resell them for, that this difference in price should eventually bestow him ownership of my gizmo. This is in contradiction with the principle of private property for I never chose to sell him the widget for that cumulated price difference; and note that no state was involved in this relationship. Now, are you implying private property is wrong, or that the state, keeping the man down from his "fair" reward is wrong is supporting private property?

The "market" as you call it is an indicator of the potential price a given item can fetch GIVEN a few conditions:

1. That you have access to that market place. If a 5870 sells for $180 in the US and you live in Europe where they are $250, no amount of bitching about evil middlemen at your local store will bring the price down to American standards.

2. That there is a demand for that particular good in said market place. A PS3 is worth $200 in the US. Now try and sell it for that much in Somalia.

Even then there's no guaranty you'll trade for the market's quote. You might sell cheaper, or buy higher, since yeah, it is only a quote, no one is there making sure your goods will fetch the price displayed on some random sign. Unless you are supporting the existence of a regulatory institution that will ensure you fetch the 'fair' price. Technically, government.

Baring the existence of government to fix prices across the charts, the value of any given item is subjective. Now I'll let you ponder whether you want to stick with the evil government keeping the man down from selling his own labor which also happens to be the righteous government making sure you can trade your goods for the "fair" price.


Just pointing that this particular argument is several centuries old, is part of most constitutions of nations all around the world, and that since you are so attached to what is "fair", that it might be "fair" of you to research what mankind think is "fair" in that situation before you go around talking about some imaginary end user license agreement.

I'm interested in hearing more about this.
There exists a significant proportion of the population who, despite the wishes of the rest, will fill the air with smog and the waters with run-off for a cent on the dollar.
If unrestrained, some people will burn the Earth to a husk to get the golden egg before others do.

State-sponsored force has been the only agency so far by which any modicum of forward-thinking can be imposed on the market.  Without it, fridges would still be pumping out CFCs, car fuel would contain lead, agricultural run-off would destroy a large proportion of marine ecosystems and the powerful would restructure the economy to impoverish and undereducate the powerless in order the reinstate feudalism.

I'm fond of social libertarianism, but I can't imagine how fiscal libertarians see the world; they honestly seem as naive to human nature as communists.

The problem with commons is that they belong to the "public", thus effectively to the state, and as such are administered by the state. As some people mentioned it results in several problems: Not only is the government the biggest polluter, they setup arbitrary pollution limits that are not respected by big corporations, and the same governmental restrictions allows these groups to pollute in complete impunity. Some of the governmental regulations are also completely misguided, like limiting levels of carbon dioxide, which is not only pointless but pretty much gives license to people to emit any other highly polluting gases as long as they keep their CO² level down, while being marked as "green".

The problem comes down to a few simple fundamentals. Under the rule of commons, essential commodities such as land, air, water cannot be made your private property, they are managed by a corruptible and corrupted entity, and you are forbidden by that same entity to defend these resources against the polluters. In a free market scenario, that responsibility would be yours. In this case, consumers would need to stop buying bad products such as leaded fuel and CFC based refrigerators, but you can certainly expect that I, in an attempt to keep my land, air and water clean, will sue those who don't. Keep in mind that the great majority of polluting substances that have been banned by the government have been so thanks to consumer pressure, not governmental impulse.



That's corporatism, the opposite of a free market.


You can't achieve social freedom without economical freedom. Communists don't have the luxury of being naive, since their concept is contradictory by nature.

Thank you for pointing this out.  And, yes, for the purposes of this thread I think it's important to make the connection between pecuniary and non-pecuniary externalities.

Pecuniary externalities are not obviously harmful.  But they eventually translate into material externalities which are very easily recognized as such.  So I think it is important for promoters of Bitcoin to make the logical connection between the two and to point out how pecuniary externalities are in fact harmful.

It's funny that you should mention this because...

(wait for it)


...they still do!  And it's largely because of government regulations that they do!  Did you know that common air is a refrigerant?  It is....

http://en.wikipedia.org/wiki/Air_cycle_machine

So why isn't air cycle refrigeration used for household refrigerators?  Two reasons...

1) Air cycle machines were inefficient as compared to the ozone destroying refrigerents banned in the US in 1992, but modern advancements have improved their efficency so that they are competitive with the green(er) (still CFC based, just less destructive) refrigerents used in consumer devices today.

And the big reason...

2) Air cycle refrigeration is, by definition, and open cycle.  And the same law referred to above also banned the intentional release of any refrigerant into the atmostphere related to the production, use, repair or destruction of a consumer device.


So it is against the law to manufacture a refrigerator that uses any open refrigeration cycle, including one of the few modern refrigeration cycles that does not use CFC's!  There's your govenment at work!

The airlines get to use open cycle refrigeration because they are not consumer devices!

I think you're really underestimating the proclivity of industry and commerce to simply ignore stupid laws.

Aircraft are a special case.  Weight is an issue.  They require pressurized cabins.  Etc..

Well, I did oversimplify the situation, but the basic premise is true.  Air cycle refrigerators do not exist because prior regulations into the industry makes research into alternatives unattractive for manufactures.  How much does the risk of getting sideways with some nitwit government oversight board cost?  That seems worthwhile with aircraft, mostly because the risk of a freon leak in a pressurized cabin at 3000 feet could kill your customers.  I doubt that it's worth the risk with consumer devices that usually depend upon profit margins measured in a few dollars each.

Then it sounds like the opposite of what you are arguing is true.  Air cycle refrigerators exist in aircraft because of the risk of liability for freon leaks at 30000 feet, and because of laws which account for this externality.

Of course it's usually pretty cold at 30000 feet also, so air cycle cooling probably saves a lot of energy.  And small scale turbines are impossibly difficult to manufacture and not very efficient, so having one in your refrigerator is not practical.  And closed-cycle air and CO2 cycle refrigerators are somewhat high pressure, so having one explode in your home would not be fun.

Overall I don't think this is a very good example of unjust government intervention, even if we assume the law is at all enforceable.  Considering the fact that I am not being arrested for breathing, I think your interpretation is somewhat broad.

No, they aren't.  HCFCs are not CFCs.  The naming is similar, but they're completely different chemically.  CFCs are gone as of last year except in a few small applications where there is no suitable replacement, mostly specialized fire suppression systems.

Most HCFCs do not deplete ozone to a relevant degree, though they are potent greenhouse gasses and and have been being phased out for 15 years now and will be gone by 2020 (2030 for developing nations).

Airlines would be using the least dangerous tech regardless of what consumer protection laws might say.  It tends to be bad press when airlines kill their customers.

It's a less than ideal example, but I wasn't the one who brought up CFC's in refrigerators.

This has obvious advantages and disadvantages.  I agree in spirit with the majority of your post, but don't understand how this could work.
The biosphere is absurdly complex, and often irreparable on human time-scales.  A rational actor across the world can toxify a lake which destroys a local insect population which reduces the throughput of migratory birds which were themselves fertilising speciaised plants halfway around the globe with a continuing chain of effects.
These events happen naturally at a variable frequency, but the rate at which they are now occurring is effectively an emergency.

In the history of humanity, we generally destroy enormous wealths of biological diversity for individual economic gain.  Now that individuals have the potential to damage large amounts of the Earth through market forces, many people believe that they should be preemptively prevented.
An extreme example is of Joe Bloggs deciding to set up a fission power plant to sell power to his neighbours.  Even if they all agree, the potential damage could be felt worldwide.



Yes and no.  I went a little off-topic there.


I don't necessarily support full social or economic freedom, along with a great many people.
I'm also not sure that communism is essentially contradictory.  I believe that it makes sense to a certain portion of the population who conceive of humanity as a mass entity striving to betterment.  The socialist impulse has been useful in bettering the conditions of the poor, just as it has been useful in suppressing large numbers of people.
The libertarian principle has been responsible for much of the rise of science, culture, and technology, but I have yet to see it applied stably over large numbers of people.

Remember, in an Ant colony, the libertarian fails.  Amongst Piranha, the communist is lunch!

Ants eat food sources that are several times larger than they are.  It makes sense to cooperate when resources are effectively unlimited.
Piranha eat food sources that are smaller than they are.  It makes sense to compete when resources are scarce.

Earth's resources are becoming fewer every day.  At the same time, human knowledge is growing exponentially.  You do the math.

I understand your point very well in that matter. Let's say my answer is the typical response you would get from a "fundamental" anarchist, in that the responsabilities that I am willing to bear and the actions that I am willing to take are certainly not enough to properly and effectively half wrong doings, in this case pollution, but that such actions will put a term to obvious, tangible problems that the actual system perpetuates.

I am aware that ecological consequences are of an unfathomable complexity, yet there are a few obvious, potent ill effect that could be put to an end right now and that would have disappeared long ago if it wasn't for government support. Let's say extensive corn farming as an example. But my knowledge of the environement is too limited to present you with well documented arguments, so i'll provide you with an economic analogy, since i think we can agree money is managed as a common nowadays.

I am thinking about fractional reserve banking. See, there will be people who will argue that fiat currency is necessary to support today's economy, or that debt supports the kind of growth that a savings based economy could never dream to achieve, and i don't pretend that walking out of the fiat system will fix all the ills of the world, simply that I choose to not be part of it (one of the reasons I like Bitcoin). But whatever your stand might be on that matter, the fractional banking act is an abomination and needs to go.

My point, if you may percieve it so, is that to chose between an unknown future rathered than a well identified evil, I will pick the unknown, and that I will always be best served by myself. And also that political power attracts the corrupt, so I wish for as little of it to be available as possible.

Of course, a society where people are directly liable for their actions is doomed if their members aren't acting is a responsible fashion, but then again, such is the case in any other type of society.

The contradiction with communism or socialism globally, is that it purports people should be ruled, implying they are evil, and yet that to rule them is for their own good, which they don't deserve, since they are evil by definition.

I aknowledge that socialism has birthed some social progress, but it all appears to me as a band aid to fix ills that have been born from socialist reforms to begin with.