Making Sense of Private Security (heavy AC content)

[hmkpoker]

Civilized private security was the most difficult concept to understand before I finally decided to call myself a market anarchist. I think that pretty much all of the libertarian minarchists on this forum want total privatization of everything and nearly-purely-free market, but would still prefer to keep a central government monopoly on force. And for very good reason. Security and force are two things that seem almost by definition to not belong in the free market. After all, if you're allowed to do whatever you want as long as you don't hurt anyone else, then how the heck do you run a business that is designed to exercise force against the unwilling? A security force, by its very nature, must act forcefully (regardless of whether it is defensive or justified) against a target that wishes not to be acted upon. Moreover, there is no state to intervene when a certain fellow decides to become a contract killer, except for the force of other security firms. He who has the biggest army makes the rules; the contrary of other businesses. Quite a dilemma indeed.

It does, at least in my mind, make very sound, logical sense. Here are three concepts for the reader to digest to hopefully understand how it works:

1) Force is enacted by the profit motive, not by bureaucracy. It shouldn't take much argument for me to express just how phenomenally expensive war is. Soldiers/police must be trained, paid well, given a lot of expensive resources, and eventually go on to engage in activities that don't create, but destroy tons of scarce, valuable capital...including, most importantly, human lives. The war in Iraq has cost more money than any free market oligopoly could ever want to spend, and has shown very little increased revenue for its expenses. No self-maximizing capitalist would ever want to go through with such a phenomenal waste, only to be disliked for his effort of wasting his fortune.

When an individual spends his own money for his own purposes, he spends it much differently than spending someone else's money for someone else's purposes. Consider the following quote by Milton Friedman:

"There are four ways in which you can spend money. You can spend your own money on yourself. When you do that, why then you really watch out what you're doing, and you try to get the most for your money. Then you can spend your own money on somebody else. For example, I buy a birthday present for someone. Well, then I'm not so careful about the content of the present, but I'm very careful about the cost. Then, I can spend somebody else's money on myself. And if I spend somebody else's money on myself, then I'm sure going to have a good lunch! Finally, I can spend somebody else's money on somebody else. And if I spend somebody else's money on somebody else, I'm not concerned about how much it is, and I'm not concerned about what I get. And that's qovernment. And that's close to 40% of our national income.

With war being such a phenomenally costly and unprofitable activity, is there any reason to suspect that it would be initiated by a voluntary society?

2) Defense is more profitable than offense. Call this a hunch, but I am very willing to assert that, between the choices of purchasing defensive security (protection against oncoming harm) and purchasing offensive terrorism (initiating force against others), the demand for defense would be substantially higher. Defense is very useful, while terrorism is only valuable to individuals with high time preferences and an unhealthy dose of sadism (who would be unlikely to have as much money in the first place). This, combined with defense being naturally less expensive than offense (it is much easier to defend a property than to attack it), defense would be a greatly preferred course of action. A large number of people choosing defense over offense creates a stalemate of force. That stalemate is peace.

Keep in mind also that insurance companies do not want disasters to happen! Car insurance companies lose five figures when someone gets into a wreck and health insurance companies lose even more when a patient gets a costly operation. They don't want any of these things to happen any more than you do; they want low rates of incidence (which allow them to make more competitive rates with less variance) and high rates of income. Consumers, who pay these rates, still don't want to deal with unfortunate incidents either. Most of us would prefer that we did not suffer injury or accident, even if we are to be paying insurance premiums. The profit motive exists for the defense insurance companies to reduce destructive incidents if at all possible; not increase them.

3) Checks and Balances. But isn't everyone "free" to set up their own mercenary business and take hits on anyone that some two-bit joe paid them to kill? Well, yes and no. Yes in the sense that there is no state to prevent them from doing so, but that is a very limited way of looking at this situation.

Consider a pack of zebra in the Serengeti. They usually herd together, without straying too far from the group. It would be silly to think that they do so simply because they all happen to simultaneously and coincidentally agree that one place is the best spot to reside, so what prevents them from straying away? After all, there is no zebra state. No tax-funded zebra government keeps everyone within jurisdiction. The zebra stay together, of course, because straying makes an individual a very easy target for a hungry lion. Zebras who choose to exercise this freedom are naturally selected against, and what is ultimately naturally selected is a group of behavioral norms that ensure the zebras' continued genetic existence. Even without a state coordinating their activities, they continue to survive.

These are the same checks on a potential contract killer. If you and your community had very good reason to believe that your neighbor was a terrorist, your defensive security would be quick to make sure that the threat was averted.

Cliff notes: The civility of private defense is explained by examining the forceful behavior that we could predict from a profit motive rather than a bureaucracy.

[fmxda]

Would the system you're envisioning be very different from what we have now where small groups of people (towns/counties) are protected by police forces against things like property crime, individual dangers, all in return for a sacrifice in civil liberties and payment in the form of taxes?

[hmkpoker]

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Would the system you're envisioning be very different from what we have now where small groups of people (towns/counties) are protected by police forces against things like property crime, individual dangers, all in return for a sacrifice in civil liberties and payment in the form of taxes?

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Yes, as explained by the profit motive. In a free market, an individual must spend money with profit in mind. If he overspends, or performs a service people don't like, he loses. This is not the case with the police, which are regional monopolies. I, and many other people, do not like the service of imprisoning pot dealers and aggressively writing traffic tickets that the police provide, yet we still have to pay for them whether we like it or not. Without a state, the police would have no coercive funding, and would have to make money by doing what the people want, or they would be naturally selected against.

[fmxda]

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Keep in mind also that insurance companies do not want disasters to happen! Car insurance companies lose five figures when someone gets into a wreck and health insurance companies lose even more when a patient gets a costly operation. They don't want any of these things to happen any more than you do; they want low rates of incidence (which allow them to make more competitive rates with less variance) and high rates of income.

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I dispute this. Insurance companies make money off of the people whose tolerance for risk is less than their own; their profit is made from the difference in the amount of money people will pay for certain outcomes. An increase in the frequency of the negative outcomes does not matter at all, unless it is not predicted by insurance companies, which is a failure in the companies to correctly estimate their business, not a failure in the market itself.

For example, do auto liability insurers have a vested interest in making the roads safer? I would argue they are indifferent in the long term.

[hmkpoker]

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For example, do auto liability insurers have a vested interest in making the roads safer? I would argue they are indifferent in the long term.

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Fewer accidents = same service, less overhead. +EV all around.

[fmxda]

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Would the system you're envisioning be very different from what we have now where small groups of people (towns/counties) are protected by police forces against things like property crime, individual dangers, all in return for a sacrifice in civil liberties and payment in the form of taxes?

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Yes, as explained by the profit motive. In a free market, an individual must spend money with profit in mind. If he overspends, or performs a service people don't like, he loses. This is not the case with the police, which are regional monopolies. I, and many other people, do not like the service of imprisoning pot dealers and aggressively writing traffic tickets that the police provide, yet we still have to pay for them whether we like it or not. Without a state, the police would have no coercive funding, and would have to make money by doing what the people want, or they would be naturally selected against.

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Doesn't your point #3 imply that regional monopolies will occur?

I think there are inherent failures in a security market with more than one "company" providing services in a given region. What happens when there are certain security imperatives required of one company that conflict with another company's mandate? Either a compromise is made where presumably some customers' security preferences are disenfranchised (like in current statist society), or a certain group's rules are forcibly imposed, possibly through imprisonment, eviction or killing of the other group(s).

[fmxda]

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For example, do auto liability insurers have a vested interest in making the roads safer? I would argue they are indifferent in the long term.

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Fewer accidents = same service, less overhead. +EV all around.

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If fewer accidents were predicted to occur, there'd be no way people would pay the same premiums they would in an era with more accidents. Lower premiums wouldn't necessarily increase insurance firm profits.

I'm no expert on the insurance industry, but I think profits are unrelated to the probability of the negative outcome.

[Dane S]

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I think there are inherent failures in a security market with more than one "company" providing services in a given region. What happens when there are certain security imperatives required of one company that conflict with another company's mandate? Either a compromise is made where presumably some customers' security preferences are disenfranchised (like in current statist society), or a certain group's rules are forcibly imposed, possibly through imprisonment, eviction or killing of the other group(s).

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I think hmk's point is that it would be in both firms' interests to work out agreements very close to 100% of the time. War is expensive, hellish, and creates many more problems than it solves. It would only make sense for firms to use force in VERY clear cut cases. Using force to expand power in AC-land just isn't cost effective enough to be realistic. The only reason states can get away with this stuff is that they have huge populations of mostly ignorant wage-slaves that they can rob, so they don't have to worry much about efficiency.

Another important point is who the hell would take up arms for an aggressive rogue security firm? It takes more than just money to convince people to lay down their lives for you. States use brainwashing in the form of nationalism, but this strategy wouldn't be available to would-be tyrants in AC-land. Any firm that became adventurist would almost certainly see massive defection among its ranks. No one's going to risk his life just to suit some rich guy's agenda. Maybe you'd see fanatical cults here and there that could manage to convince their members to fight, but if any group got too dangerous to the stability of the society, it would be in the interests of multiple security firms to band together and defend against them.

[Dane S]

Also I don't think you'd see any security firms in AC-land with imperatives or mandates. An inflexible position is a sure money loser in the business world. These are ideological terms that are part of statist psychology, and states get away with such stupidity because they are not sufficiently accountable to their citizens (because their citizens have no access to meaningful force).

[Dane S]

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Doesn't your point #3 imply that regional monopolies will occur?


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Are you thinking that large companies would hire security firms to eliminate or prevent competition? If so, I think the answer is that it's extremely implausible that a security firm would be so irresponsible as to fulfill a request like this, as it would give them an extremely bad name, perhaps to the point that other security firms might consider them a criminal threat and band together to defend against them.