What is AC?

[Borodog]

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They are the things that the government monopolizes or regulates the most heavily, like education, health care and health insurance. Only the truly Faithful could fail to see the connection.

[/ QUOTE ] Correct, only the true ideologues wouldn't be able to see that it is because the market won't provide these things effectively.

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What a joke. Everything that is currently monopolized by the government was at one time provided privately by competitive firms with increasing supply and quality at decreasing cost. And then those industries got monopolized and protected by government, so that a few powerful politically connected men could reap monopoly profits at the expense of their competition and the consumer. You have no understanding whatsoever of the historical actions of government. I suggest you read Thomas DiLorenzo's How Capitalism Saved America as a start, but I doubt you will.

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Or that in many places the price of these things has been driven down drastically by government (look at how inexpensive health care/insurance and education is in Canada and in many Western European states).

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Compared to what? You are unbelievable. There is nothing to compare these things to because there are no economies identical in all ways to Canada or many Western European states excepting the presence of free markets in education or health care. Education is Western Europe is much cheaper and better, but only to the extent that it is much closer to a free market; although it is publicly funded, parents get to take thei quantity of tax money and use it at whatever school they choose; schools earn profits, suffer losses, and can fail and go out of business. Americans spend far more on health care because our relatively more free economy makes us so prosperous that our number one health problem obesity, we're fat-asses, which is a very expensive thing, medically: diabetes, heart disease, heart bypasses, strokes, on and on and on. You can't compare these things in the absence of analysis because they aren't ceteris paribus. You've done this enough times and been called on it enough times that you should know better.

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Here is your example of a natural monopoly, an especially disasterous one, from the wiki:

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Such a process happened in the water industry in nineteenth century Britain. Up until the mid-nineteenth century, Parliament discouraged municipal involvement in water supply; in 1851, private companies had 60% of the market. Competition amongst the companies in larger industrial towns lowered profit margins, as companies were less able to charge a sufficient price for installation of networks in new areas. In areas with direct competition (with two sets of mains), usually at the edge of companies' territories, profit margins were lowest of all. Such situations resulted in higher costs and lower efficiency, as two networks, neither used to capacity, were used. With a limited number of households that could afford their services, expansion of networks slowed, and many companies were barely profitable. With a lack of water and sanitation claiming thousands of lives in periodic epidemics, municipalisation proceeded rapidly after 1860, and it was municipalities which were able to raise the finance for investment which private companies in many cases could not. A few well-run private companies which worked together with their local towns and cities (gaining legal monopolies and thereby the financial security to invest as required) did survive, providing around 20% of the population with water even today. The rest of the water industry in England and Wales was reprivatised in the form of 10 regional monopolies in 1989.

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These are the apologetics that are always given for protecting one company at the expense of others. So, the point of your article is that

1) Competing private water companies did actually exist
2) Those companies were indeed profitable
3) The natural market solution, i.e. larger more profitable companies simply buying out the smaller less profitable competitors, was eschewed for the political solution, where the larger more politically connected companies simply had their smaller competitors outlawed and themselves granted exclusive monopolies and the right to convert their revenues from voluntary user fees to either compulsory user fees or taxes.

[Poofler]

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read my town post.

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Ok V, let's stick through this example, I don't want to drift into theory with Boro and Prop.

So, a solution to free-rider is suing for damages. Ok, that's fine. Generally, someone in the DC suburbs can cough up enough $$ to pay for a fire response at their home even if they didn't have AC fire insurance from their HOA or whatever. But I can envision scenarios in poverty stricken neighborhoods where the rate of default is so high, that suing everyone does little good, and no fire company can exist. Many social services can't exist for that same reason. How do you propose getting a private fire company to set up shop in this highly unprofitable area?

[Borodog]

Poofler,

You guys are having an abstract discussion about how the market would supply a particular service (fir companies) in the absence of an understanding of how the market works now. Homes are almost never, and I mean never, purchased outright. Loans are almost universally secured to purchase a house. But the mortgage lender is not stupid; the house is their collateral. They will not give you the loan unless you have hazard insurance, including fire coverage. In the absence of government monopolized fire companies there would be private fire companies, simply because there would be a market for them, not from the home owners per se, but rather from their insurance companies. Insurance companies would also provide incentives for homes to be built with fire alarms, smoke detectors, possibly sprinkler systems or other flame retardent systems, fire-safe wiring systems, fire-safe construction materials and techniques, etc. (in other words everything currently monopolized under the heading of "building codes") because all those things would lower insurance premiums and increase insurability.

This argument is completely aside from the fact that volunteer fire companies that rely totally on donations have a long and illustrious history, when they are not crowded out or bought off by municipal governments, and also aside from the fact that private for-profit competitive fire companies existed for quite some time before (again) the politically connected owners of certain companies used their clout and the excuse of "efficieny" to have their competitors outlawed, and their revenue streams guaranteed by converting them to compulsory participation or taxation, so that they could reap the benefits of competition-free monopoly profits (this of course, has largely morphed in the last century to purely government provided services which are expected to run purely at a loss).

All of that is also aside from the perfectly true argument that people want fire company services because they receive the primary benefit of them, i.e. having their home not burn down. If my neighbor actually does own his own outright, is stupid enough not to protect his investment by insuring it, and his house catches on fire, my fire company will come and put it out if it is threating my home or any other around it that has paid for fire protection. Why? Because I have paid for fire protection, and a fire next door to my house is a threat. There's no "freeriding" at all; I paid for my house to be protected from fire, and my company is protecting it from fire.

[Poofler]

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If my neighbor actually does own his own outright, is stupid enough not to protect his investment by insuring it, and his house catches on fire, my fire company will come and put it out if it is threating my home or any other around it that has paid for fire protection. Why? Because I have paid for fire protection, and a fire next door to my house is a threat. There's no "freeriding" at all; I paid for my house to be protected from fire, and my company is protecting it from fire.

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I don't know enough about property structures in poverty stricken areas, so I'll get back to you on the structures you described in the first paragraph.

But your quoted example above is a classic free-rider problem. "Free riders are actors who consume more than their fair share of a resource, or shoulder less than a fair share of the costs of its production." Your fire company is tasked with protecting your home from fire. Your neighbors know this, and can expect the fire company to put out any fire in the neighborhood. So non-payers consume a resource while not sharing in the cost of its production. The more neighbors that realize this, the more the fire company charges you (the neighborhood payer) to put out fires in the neighborhood. As long as you have insurance, your neighbor doesn't need it, while benefiting as much as you are. Classic free-rider. I'm not arguing there aren't means like an HOA to get around this in some situations, but there is certainly a free-rider problem in your "[censored] not insuring his home" scenario.

[valtaherra]

Poofler,

1) Only in neighborhoods where houses are all row style or otherwise very close together does your alleged freerider problem occur...

2)

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As long as you have insurance, your neighbor doesn't need it, while benefiting as much as you are.

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...but even in your scenario, the neighbor is not a freerider since the neighbor is not consuming any fire insurance. He or she has elected to have no insurance, and so, when the home burns to the point of threatening other homes around it, it is surely destroyed and the neighbor will not be recompensed by anyone else's fire insurance company.

[Poofler]

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1) Only in neighborhoods where houses are all row style or otherwise very close together does your alleged freerider problem occur...

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No, any American suburb style housing community is a huge threat. Houses don't have to be touching. Fire can literally leap with wind and consume vegetation. God help you if trees and bushes litter your neighborhood and the fire company ignores the fire. Letting the house burn is a huge threat to surrounding houses.

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As long as you have insurance, your neighbor doesn't need it, while benefiting as much as you are.

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...but even in your scenario, the neighbor is not a freerider since the neighbor is not consuming any fire insurance. He or she has elected to have no insurance, and so, when the home burns to the point of threatening other homes around it, it is surely destroyed and the neighbor will not be recompensed by anyone else's fire insurance company.

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The neighbor is a freerider because they are consuming fire protection, not fire insurance. Your example presumes the fire company lets the house burn, and decides later if it will be a threat to anyone else. This is very dangerous, and is certainly not in the interest of the neighborhood to gamble on whether the fire becomes a rager that threatens much more than one home. I think even Boro would admit the fire company has to put out the fire ASAP.

[pvn]

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Would you pay a dollar for a forest? I would.
It would be cool, an entire forest for me. Supply and demand will put up the price of a forest.

[/ QUOTE ] Ok, if I paid a dollar for something, why would I pay thousands upon thousands (on longer fires in larger areas it would get into the millions) of dollars to ensure that thing doesn't burn down? It may only be worth a buck to me, that's what it sold for.

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Standard propertarian derailment technique. First he tries to define the forrest as worthless, then he gets you to say "well, it's worth a dollar" and then it's off the rails.

The price you PAID for the forrest doesn't matter. The cost to REPLACE it is what you have to worry about. If the actual replacement cost for the entire forrest is indeed one dollar, then of course you would not insure it, or spend resources protecting it from fire. Everyone rewind the thread to this point and start over.

[ShakeZula06]

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Yes, benefit is diffused. That has nothing to do with the fact that every person has incentive to be that free-rider. If everyone wants to be the free-rider, where is the fire department supposed to get the funds it needs to even exist?

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If people actually don't value fire insurance, then it won't exist. If people do it will exist.

[Poofler]

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Yes, benefit is diffused. That has nothing to do with the fact that every person has incentive to be that free-rider. If everyone wants to be the free-rider, where is the fire department supposed to get the funds it needs to even exist?

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If people actually don't value fire insurance, then it won't exist. If people do it will exist.

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And if a neighborhood of poor people value it, but can't afford it?

[valenzuela]

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Yes, benefit is diffused. That has nothing to do with the fact that every person has incentive to be that free-rider. If everyone wants to be the free-rider, where is the fire department supposed to get the funds it needs to even exist?

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If people actually don't value fire insurance, then it won't exist. If people do it will exist.

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And if a neighborhood of poor people value it, but can't afford it?

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you can buy it for them.