So much for the "risk-free" nature of Treasuries

[Lowe]

However, examples like roads or the Erie Canal are not rebuttals to Robert’s claim that the state doesn’t create value.  Value creation is an optimization process by which, hopefully, we find the best among a set of alternatives.

I agree with much of what you said, except this. Maybe I'm not understanding you, but what about the regional shipping process wasn't optimized in terms of value? It seems like almost everything was optimized. Shipping/traveling costs were reduced by 90% and it greatly facilitated the building of the American empire.

It's not the positive value contribution of the canal that's being argued.  It's the positive value contribution of the state.  I'm sure you see the alternative to the canal is not nothing, but also, it may not be no canal.  It's reasonable to think there were disincentives on the private sector as I described, and those disincentives arise through the presence of the public sector.

So it is conceivable that a canal would have been built earlier or better, had there been no public sector.  I realize this compares actual events against counterfactual ones.  However that is what has to be done in a discussion like this, because anyone doing productive anything can cite the value of his products, even if he is a human trafficker.

I think public services are more competently managed than is commonly thought, and they tend to offer more value than they destroy, literally.  H/e I do not see a problem in libertarian reasoning, as it relates to hidden costs and public and private incentives, suggesting the state is sub-optimal over all.  I regard it as strong possibility.

[Gumby]

If the toll can't be measured, then how does anyone know? We can't. It's a logical fallacy.

You have to understand the economic principles. You have to understand that people do voluntarily what they want and not what they don't want. People don't want to pay taxes. You know this because they are forced to pay them. The government's borrowing costs are lowerd and/or others are raised by the borrowing distorting the difference in costs when the government borrows to do something. It makes the costs look smaller unless you understand that everyone else is subsidizing the government because it has a gun to it's head.

I get all that. But all that clearly pales in comparison to building a successful canal that enabled the creation of the greatest empire ever known to man.

[Pointedstick]

I think public services are more competently managed than is commonly thought, and they tend to offer more value than they destroy, literally.  H/e I do not see a problem in libertarian reasoning, as it relates to hidden costs and public and private incentives, suggesting the state is sub-optimal over all.  I regard it as strong possibility.

Then it seems like we agree. There is wide sympathy here to the argument that on balance, the government is a net drawback. However, that does not actually contradict the assertion that the canal was a net gain. It's possible (likely or nearly certain, in fact) that pretty much everything else was negative so on balance, government is a loss even if the canal might have been a win.

I'm sympathetic to the notion that the government's organizing the canal might be masking the private sector's desire to build it in a different way, or a relative lack of interest in a canal at the time. Really, I am. But I think the result speaks for itself. Maybe nobody in the private sector thought a canal was necessary but realized its importance after it was built, in a similar way to how nobody thought computers were going to be a big deal until Apple and Microsoft put them on everybody's desks. That's the whole point of entrepreneurship. You take a risk that most people weren't willing to take and would have ridiculed before its success.

Am I saying the government's organizing of the Eerie Canal was entrepreneurial? Not necessarily, but it was a hell of a lot more entrepreneurial than sending out welfare checks or invading another country in that it actually was an attempt to create something of more value than it took to create. Judged against private entrepreneurial ventures rather than non-existent hypotheticals, I think we can see that in this case, it was actually a success. Seen in this light, do I think it matters that the bonds it sold to finance the construction were issued at 5% rather than 7 or 8%? Not really.

[Kshartle]

do I think it matters that the bonds it sold to finance the construction were issued at 5% rather than 7 or 8%? Not really.

It does matter. If they get lower financing it's at the expense of everyone else. The higher rates that the non-government borrowers have to pay because of taxes are a cost to everyone. They are a cost tacked onto everything the government does. How much of the slaries paid to the government officials organizing or whatever also came from direct taxes?

These are costs that aren't counted.

Furthermore, as Lowe pointed out you have to understand the principle that absent the canal the resources would have gone elsewhere, maybe to a better canal. If the government floats bonds and uses the money to rent construction equipment to build a bridge you can point to the bridge and say wow that's great. Great wealth creation, even though the bridge isn't used that much and it cost more than private business was willing to pay. You're missing that the equipment would have been used on something else that was paid for voluntarily and there was either lower risk or a bigger benefit to everyone. The resources were bid away because the government lowers it's borrowing costs with it's gun.

[Gumby]

It's reasonable to think there were disincentives on the private sector as I described, and those disincentives arise through the presence of the public sector.

Again. All I was trying to prove is that the government could create wealth. You've already agreed that it can in absolute terms. The fact that the private sector failed, or was somehow thwarted doesn't nullify the fact that the government created wealth by building a canal.

So it is conceivable that a canal would have been built earlier or better, had there been no public sector.

It's conceivable, but unlikely. A few did try to build a canal and failed to get support when the government had no interest in it. It was too difficult of an undertaking for the private sector at the time.

I realize this compares actual events against counterfactual ones.  However that is what has to be done in a discussion like this, because anyone doing productive anything can cite the value of his products, even if he is a human trafficker.

But that's all I was trying to prove. It's not my fault that some alternative utopia didn't come to fruition. All I was trying to do is show that the government can create wealth.

I think public services are more competently managed than is commonly thought, and they tend to offer more value than they destroy, literally.

Exactly. That's what I was trying to say!

H/e I do not see a problem in libertarian reasoning, as it relates to hidden costs and public and private incentives, suggesting the state is sub-optimal over all.  I regard it as strong possibility.

And that may very well be, but as you point out their entire reasoning rests on a logical fallacy. I agree that's it's nice to ponder such logical fallacies, but those logical fallacies certainly don't prove anything.

[Gumby]

you have to understand the principle that absent the canal the resources would have gone elsewhere, maybe to a better canal...You're missing that the equipment would have been used on something else that was paid for voluntarily and there was either lower risk or a bigger benefit to everyone.

Again, your entire ideology rests on a counterfactual conditional logical fallacy. I'm sure it's fun to imagine such alternative realities, but I prefer to stick with reality. Wealth was obviously created by the canal.

You can argue that something might have been better till the cows come home. But, it doesn't take away the fact that the government created wealth (and a LOT of it in the case of the Erie Canal).

[moda0306]

Even if the private sector is the only legitimate creator of wealth (a huge assumption given the amount of destruction and false claims to resources this involves), what good is that assertion if said private sector is left completely exposed to power grabs, foreign or domestic?

[Pointedstick]

To summarize:

Can the government create wealth?
- Yes.

Can the government create wealth beyond what the private sector might have created absent the government?
- Unknowable, but probably not.

Are there negative consequences of government action even when it miraculously succeeds at creating wealth in an absolute sense?
- Yes.

Does the government often create more wealth than it destroys on net balance?
- Unknowable, but probably not.


Can we all agree on these?

[Gumby]

perhaps i wrote this wrong "the unmeasured toll is much higher than the dollars out dollars in math "alone" would show"  the other stuff can be measured, or accounted for at least, but they are not easily compressed into neat spreadsheet columns.

But, hopefully you can see that this is all in the eye of the beholder? I mean, there are some historians who see Fiorello La Guardia as the mayor who ended Tammany Hall with his election in 1934. But, New York City was already one of the greatest financial capitals of the world by that point. The rewards of the canal paid off huge waaay before Tammany Hall ended.

[Gumby]

To summarize:

Can the government create wealth?
- Yes.

Can the government create wealth beyond what the private sector might have created absent the government?
- Unknowable, but probably not.

Are there negative consequences of government action even when it miraculously succeeds at creating wealth in an absolute sense?
- Yes.

Does the government often create more wealth than it destroys on net balance?
- Unknowable, but probably not.


Can we all agree on these?

Yes. Absolutely.

[Kshartle]

To summarize:

Can the government create wealth?
- Yes.

Can the government create wealth beyond what the private sector might have created absent the government?
- Unknowable, but probably not.

Are there negative consequences of government action even when it miraculously succeeds at creating wealth in an absolute sense?
- Yes.

Does the government often create more wealth than it destroys on net balance?
- Unknowable, but probably not.


Can we all agree on these?

I'll agree on 2.5 out of 4 and call it a day on this one

That's a solid D. Good enough for passing in high school right?

[moda0306]

PS,

I don't agree with the "probably nots."

If places like Manhattan are any indication, and the complete lack of evidence of anything like that being reasonably possible within a "free society," I have to think that the government can indeed create a mecca of wealth creation, which is, in turn, creation of wealth in itself.

Now if someone would show me where there is a "free society" metropolis somewhere, or explain how that would even work (libertarian hand waving stating "companies would do it better" don't count), maybe I'd believe that it's possible.

I'd love to see it tried... I'm really not trying to be lazy here... but if it were so natural and robust, by logical conclusion, we'd see some around, if not a lot of them around.

Instead we have a bunch of mixed economies employing different degrees of a socialism/capitalism mix, some of the most productive of which are build on economies that look like statist experiments in central planning (big cities), universal healthcare and education, etc.  I'm not giving government credit... government is just some people with different jobs than me.... but those people definitely play a role in making the whole thing run.

Maybe the whole "personal choice" analysis that libertarians put forth when analyzing governent transactions would hold water if we were just nebulous entities floating through space... but we're not... we're stuck on this rock together.  All choices regarding how to assert control over the world around us involve force, and organized, legally-resticted expressions of force rather than mob-rule or anarchism are sometimes (actually, probably most often) much more conducive to creating wealth.

[Pointedstick]

Now if someone would show me where there is a "free society" metropolis somewhere, or explain how that would even work (libertarian hand waving stating "companies would do it better" don't count), maybe I'd believe that it's possible.

the absence of a pure "free society" doesn't make it something we shouldn't work towards having, yes we have a mixed society (not inherently bad or entirely unnecessary) but the greatest source of value we have are those elements of freedom that we have and preserve, not our government forcing us to do and pay for stuff, government is "the Blob" it grows and swallows all in its path, arguing that some government works out ok, isn't a sound argument for needing an ever increasing amount of it, or that freedom based alternatives shouldn't be given first, second and maybe third priority for solving problems or creating wealth before we resort to it..

https://en.wikipedia.org/wiki/Kowloon_Walled_City

http://www.reddit.com/r/IAmA/comments/1 ... ia_called/

It was no utopia, but was a functioning largely private society.

Although the Walled City was for many years a hotbed of criminal activity, most residents were not involved in any crime and lived peacefully within its walls. Numerous small factories and businesses thrived inside the Walled City, and some residents formed groups to organise and improve daily life there. An attempt by the government in 1963 to demolish some shacks in a corner of the City gave rise to an "antidemolition committee" that served as the basis for a Kaifong association. Charities, religious societies, and other welfare groups were gradually introduced to the City.

[Gumby]

Now if someone would show me where there is a "free society" metropolis somewhere, or explain how that would even work (libertarian hand waving stating "companies would do it better" don't count), maybe I'd believe that it's possible.

https://en.wikipedia.org/wiki/Kowloon_Walled_City

http://www.reddit.com/r/IAmA/comments/1 ... ia_called/

It was no utopia, but was a functioning largely private society.

Not a metropolis or hotbed of economic activity either. 

Though, certainly a lot of people in that Walled City. Sounds awful.

The quality of life in the City—sanitary conditions in particular—was far behind the rest of Hong Kong.

Source: https://en.wikipedia.org/wiki/Kowloon_Walled_City

That isn't saying much considering that Hong Kong had relatively average/poor sanitation at the time.

[Libertarian666]

To summarize:

Can the government create wealth?
- Yes.

Can the government create wealth beyond what the private sector might have created absent the government?
- Unknowable, but probably not.

Are there negative consequences of government action even when it miraculously succeeds at creating wealth in an absolute sense?
- Yes.

Does the government often create more wealth than it destroys on net balance?
- Unknowable, but probably not.


Can we all agree on these?

No, we cannot. The government cannot create wealth; all it can do is take from one person and give to another. This destroys wealth rather than creating it, because it replaces voluntary action with force.

[Gumby]

The government cannot create wealth; all it can do is take from one person and give to another. This destroys wealth rather than creating it, because it replaces voluntary action with force.

You mean...except when it builds the Erie Canal and it paves the way for the greatest empire the world has ever seen. But, who's counting?

[Kshartle]

To summarize:

Can the government create wealth?
- Yes.

Can the government create wealth beyond what the private sector might have created absent the government?
- Unknowable, but probably not.

Are there negative consequences of government action even when it miraculously succeeds at creating wealth in an absolute sense?
- Yes.

Does the government often create more wealth than it destroys on net balance?
- Unknowable, but probably not.


Can we all agree on these?

No, we cannot. The government cannot create wealth; all it can do is take from one person and give to another. This destroys wealth rather than creating it, because it replaces voluntary action with force.

There is a misunderstanding here of what government is. Some people view it as another economic player. It's a group of people just like a corporation that can borrow money, or shift around resources and re-arrange them in a way that benefits people more than otherwise.

Obviously this is not the case. It's a group of people with guns and the monopoly on legal theft, murder, and kidnapping. To think that you can use theft, murder, and kidnapping or the threat of any of these to re-arrange resources in a beneficial way is quite mad to me. It's not seeing what is actually happening in reality. It's the general Stockholm syndrome that afflicts just about 99% of the population.

Good luck explaining it, I've been unsuccessful as usual. I suck. 

[Pointedstick]

Not a metropolis or hotbed of economic activity either. 

Though, certainly a lot of people in that Walled City. Sounds awful.

The quality of life in the City—sanitary conditions in particular—was far behind the rest of Hong Kong.

Source: https://en.wikipedia.org/wiki/Kowloon_Walled_City

That isn't saying much considering that Hong Kong had relatively average/poor sanitation at the time.

Not saying I would want to live there, of course. I think it's a pretty good example of what a private society made entirely out of poor people would look like. Trash, low sanitation, tolerance of crime, etc. Features found in poverty-ridden parts of the world everywhere.

A private rich society would probably by a much more desirable place to live, in the same way that within a government system, a rich city or part of town is more desirable as long as you can afford it.

My point isn't that KWC was a great place to live in, but that it functioned. Its people didn't descend into barbarity. It wasn't the Mad Max universe. Despite its glaring, obvious flaws, it stands in opposition to the idea that a government-less society would disintegrate. However it illustrates very well the point that government-less societies are weak in the face of aggressive governments. I think that's the biggest impediment for a private society, rich or poor. It's a rehash of human history when the agrarian government civilizations inexorably conquered the government-less nomadic tribes simply because they were stronger.

[Gumby]

To think that you can use theft, murder, and kidnapping or the threat of any of these to re-anrange resources in a beneficial way is quite mad to me. It's not seeing what is actually happening in reality.

You know that "theft, murder, and kidnapping or the threat of any of these" isn't limited to governments, right? People do these things too. Just saying.

In any case, the Erie Canal did rearrange resources in a beneficial manner — despite any maddening effects.

It's the general stockholm syndrome that aflicts just about 99% of the population.

Yes, that must be it. 99% of the population is crazy or delusional, and only you know the truth. 

[Pointedstick]

Obviously this is not the case. It's a group of people with guns and the monoploy on legal theft, murder, and kidnapping. To think that you can use theft, murder, and kidnapping or the threat of any of these to re-anrange resources in a beneficial way is quite mad to me. It's not seeing what is actually happening in reality. It's the general stockholm syndrome that aflicts just about 99% of the population.

Good luck explaining it, I've been unsuccessful as usual. I suck. 

The best you have been able to come up with for the Erie Canal is that the government used threats of kidnapping and murder inherent in taxation of private bonds to effectively push down the yields on the tax-free muni bonds it issued to finance construction. That's a very indirect effect. By this kind of logic, aren't private corporations that use the government legal system's threats of kidnapping and murder to enforce contracts similar destroyers of wealth? Should I feel impoverished and threatened every time I read a EULA, knowing that there's a gun to my head if I break a provision and the corporation wants to take me to court over it? At that point, I'm threatened, kidnapped, the whole nine yards.

[Kshartle]

Should I feel impoverished and threatened every time I read a EULA, knowing that there's a gun to my head if I break a provision and the corporation wants to take me to court over it? At that point, I'm threatened, kidnapped, the whole nine yards.

Signing the EULA is a voluntary arangement and you only do it because you think you are better off doing so. No one forces you. It's called a win-win. Would the marketplace find a more economical way to resolve disputes that leads to a higher standard of living if violence was rejected in favor of negotiation? Well, what do you think? Is threatening to put someone in a cage if they break your contract the best way to secure your contract, or are people just trying to take advantage of the gun in the room that is already extorting them?

[Kshartle]

It's the general stockholm syndrome that aflicts just about 99% of the population.

Yes, that must be it. 99% of the population is crazy or delusional, and only you know the truth. 

Might be 98%, I think the idea that violence solves problems is getting slightly less popular.

[Libertarian666]

Should I feel impoverished and threatened every time I read a EULA, knowing that there's a gun to my head if I break a provision and the corporation wants to take me to court over it? At that point, I'm threatened, kidnapped, the whole nine yards.

Signing the EULA is a voluntary arangement and you only do it because you think you are better off doing so. No one forces you. It's called a win-win. Would the marketplace find a more economical way to resolve disputes that leads to a higher standard of living if violence was rejected in favor of negotiation? Well, what do you think? Is threatening to put someone in a cage if they break your contract the best way to secure your contract, or are people just trying to take advantage of the gun in the room that is already extorting them?

I think something like the "General Submission to Arbitration" (http://c4ss.org/gsa/) would be a legitimate method of resolving disputes.

[Pointedstick]

If signing a EULA is voluntary, and that neutralizes or minimizes the moral implications of the government's violence backing it up, does that mean that the fact that buying a private sector bond is voluntary neutralizes or minimizes the government's violence backing up the taxes it expects you to pay on your interest and capital gains?

In each case, you can avoid the violence by abstaining from the action that has government violence attached to it.

[Libertarian666]

If signing a EULA is voluntary, and that neutralizes or minimizes the moral implications of the government's violence backing it up, does that mean that the fact that buying a private sector bond is voluntary neutralizes or minimizes the government's violence backing up the taxes it expects you to pay on your interest and capital gains?

In each case, you can avoid the violence by abstaining from the action that has government violence attached to it.

How do you abstain from paying taxes, by dying? In that case, everything is voluntary, because you can kill yourself.

Or maybe not: perhaps that is why suicide is illegal.