In the past I have discussed Anarcho-Capitalism, the system of organizing a society based on the free market instead of the government. I began by discussing that absent of government there would still be a market for protection, police, and crime investigation, and a free market would provide these things because profit would be available to those who supply security. I discussed how different security companies would interact to avoid chaos, and how based on the desire to live a happy, healthy life, the market (customers) would demand companies which avoid violence in favor of negotiations with other companies based on prewritten contracts, and eventually a third party “arbitration agency” which companies would use to avoid the costs of mini-war, and avoid violating their customers contracts. Essentially there would be a clause in everyone’s security company contract that says the company will not go to bat for you if you actually commit a crime. Since these companies have incentives to solve crimes, they would most likely perform their investigative jobs better than the government currently does.
If you are confused you might want to start by reading the first post I wrote on this subject. But what I wanted to talk about today is the fact that most people never even imagine a society without government. People mostly default to imaging a riot, burning buildings, looting criminals, and widespread death and destruction. This is a pavlovian response that has been conditioned by government and its agents (the media) throughout each of our lives. I started by talking about police because protection is one of our most base needs, so we default to wondering how we would be safe without government. But there are plenty of other things that government currently does, which would also be fulfilled in a free market society without government–and it would be done better because of the incentives a company has to provide a product based on demand, and turn a profit.
Think about the incentives politicians have to provide us with government benefits. Just their jobs, which many “useful idiot” voters provide them time and time again, despite poor performance. What if the entity that was responsible for building roads could go out of business if it did a bad job? In a free market, a better company would take its place. Currently we have to beg and plead for our government to correctly use our tax dollars in order to provide us with good roads. Too many of those dollars are siphoned off by greedy politicians, and well meaning but ineffective government programs.
People want roads, and other people want profits (we all want some degree of profit to get us the things we need in life, it is not a bad thing). The desire for profits makes some people respond to the demand for roads with a supply of roads. Since roads are shared by many people, you may think that the government needs to pay for them, so that everyone could use them. But why not cut out the middleman–the government–and just leave it to the people who need the roads most to build them? Maybe if you live on a dead end street with 3 other houses, you put up with a dirt road because who would be willing to pay for your road? Maybe you and your neighbors put your money together and pave your dirt road at some point.
But you might live on a busy street with businesses; businesses that want people to be able to access them on smooth well maintained roads. Problem solved, now the business payed for something that you will be able to benefit from. Maybe a shipping company teams up with other companies in the area who need to move their goods, and builds a highway. Since they don’t want their money wasted, they restrict access and make it a toll road. Other companies need to use the road, and decide to pay the toll–after all, they have the money to spend on things like tolls, because they don’t have to spend it on taxes. But if the tolls are too excessive, there will be a market for another road to be built in order to compete and drive prices for using the road down.
If the toll roads cause gridlock, road companies may start teaming up with each-other to sell subscriptions. “Subscribe to toll road A company and get access to all toll road B company roads!” because the two companies have a mutually beneficial agreement. “Subscribe to toll road C company now and 50 cents of every dollar you pay for the first 6 months will go towards buying cars for families in need”. “For one low price subscribe to the Toll Road Association and get access to every road in the country”. The free market solves these types of things because there is profit to be gained in doing so. Since no one is forcefully restricted from competing, prices are driven down, and quality up by companies vying for your business. If you are dissatisfied with a company for any reason, there is always one waiting to take your business and give you what you want.
Its a useful exercise to consider different things which the government provides, and think about how they would be provided in a free market. If there is a market for charity, those charities will exist. Right now many people pay their taxes and assume they have contributed to helping others, but the government is really bad and inefficient at helping the poor and needy. Since we do not want to see people starve, be homeless, or left to their own devices if they are unable to take care of themselves, markets would arise to fulfill these things. With all the leftover money not going to government in taxes, people would be much more willing to throw some money towards charities. And even if they were not willing to give up their money to charity, companies that they patronize will see a profit in providing charity, because it attracts customers.
A restaurant may have a free meal program once a month for the hungry. A school would give out 20 scholarships a year subsidized by those enrolled at the school. A security company would offer protection to those who could not afford it, because their customers feel better about themselves when they contribute to society’s safety. The only difference is that these things would be done better, because they would have to be done better to compete. The government takes away the competition by force, and monopolizes certain industries and services, leaving us with no choice if we are not satisfied with the quality and price.
Everyday I hear about another private company dropping their healthcare coverage for part time workers or retirees, because the government has made it too expensive through regulation in Obamacare. At one point those companies decided to offer healthcare to their employees in order to attract and retain good workers, but the government stepped in and has ruined a good situation for a lot of people by using force in the economy. Give anarcho-capitalism some thought. Next time you use a vital government service, ask yourself if that service could be absorbed and improved by the free market. I think that in an honest assessment, you will find that incentives are the key to quality goods and services.