Wednesday, May 10, 2006

Buyout and ideas...

So, if anyone is feeling particularly generous to me, they can buy the entire store collection of books for me... It only costs $2000, and will certainly keep me occupied for the rest of my natural life. If you would like to make this significant donation to a friend of freedom, please do so... Maybe I should start a donation account on this blog...

And if you need persuasion to do this amazing feat of charity, here's some stuff I wrote today regarding the problem of utility infrastructure, such as electricity, water, and communications, and how they relate to Federal government.

On roads… Historically, trade routes and roads were developed as a natural response to competitive advantage (this is clear in the near east). One coastal city had a particular advantage in an industry, another city its own advantage, and they decide they want to trade. (Eventually, by the way, this results in a sort of cultural standardization of precious metal currency.) Why is it necessary for the federal government to step in and create roads in the first place, when part of the natural response to economic forces will be to make roads? (Note the emphasis on federal, it is reasonable that a smaller community/city could make their own attempt based on their own knowledge of their own situation – there is no knowledge gap as in the Federal government. Perhaps after the attempt they may decide it was more beneficial to let market forces determine the road structure through the price system.)

On electrical, communication, and water infrastructure… What would have happened if the government had not enforced infrastructure? Similar to the road systems, I don’t see as much of a problem when local governments get together, with consenting citizens and consenting businesses, to work on their own infrastructure. They may be successful, or they may decide to just let the market hammer it out. Obviously, it is in a business’ best interest to have the best resources possible, and if they think it is profitable to have their own power system rather than be dependent upon the city, that is their decision. It would also work for them to sign-up to a company that provides electrical services in some way (whether through special power lines or through fuel cells / batteries, whatever), the likes of which developed as a result of market forces. This argument could be extended to water and communication services.

The problem is when the national government in DC thinks that they know what is best for every individual city, because the politicians in DC have an innate lack of knowledge about what happens in, say, New Orleans and their water barriers. (I have slightly changed the topic, but I think you understand what I mean. DC didn’t provide the resources for their barriers because they didn’t think they needed it. The market in New Orleans can handle that issue much better, as it is in the best interest of the businesses to have those barriers in order to protect their investments from a hurricane.) So, it doesn’t work to have national government handing down orders for the rest of the country to follow. Furthermore, remember that advances in technology have a sort of trickle-down effect by necessity. It’s like luxury cars. Fifteen years ago, only luxury cars had CD players. Now, they nearly come standard, or you can easily buy your own and improve your vehicle. Now, the luxury car nifty gadget is GPS and directional systems. Given a few more years, those will probably become standard too. But if the government came in and said that every car needed a GPS system, the result would be disastrous! People would not be able to get the car they really wanted because they would be effectively forced to spend more on the GPS. Likewise, car companies would not be able to sufficiently serve their customers with the products they really want. So, I’m not really saying that nothing was gained from these interventions, but only that if the market had been allowed to work, things very likely would have evolved naturally and would have used resources more effectively.

One objection to this is that there are still places in the US without these amenities, and why is something not done about them? The answer is that either it simply is not profitable to do so, or that they are being neglected by the government.

Either way, the failure of that sort of system should be noted. First, if it isn’t profitable or beneficial, why should massive amounts of taxpayer money be used for the benefit of very few individuals such as those who choose to live outside of the market realms of infrastructure? Because of pity? Government charity, though in isolated instances has worked, for all intents and purposes has been a dismal failure (welfare, anyone?). However, private charity continues to be successful in accomplishing their goals, and if they choose to provide such services free of charge that is their business. Second, if they are being neglected, then it shows once again that the government is incapable of true economic calculation. If it were profitable to power/water those areas over time it would be accomplished. It does indeed come back down to individual’s self-interest. The person who lives outside of the infrastructure has displayed his self-interest in is choice to live there, despite the lack of infrastructure. The power/water/communications company is acting in their self-interest by not providing an expensive service to a person who, by their choices, has effectively said they are not willing to pay the cost to get that good/service. The government, however, manages to bypass those economic preferences and forces their will on both the consumer and producer.

There is a book written by Austrian economists Robert Bradley and Richard Fulmer called Energy: The Master Resource. I really want to read this book. Here’s the description:

“Author Robert Bradley, together with Richard Fulmer, have put together an outstanding book that covers this huge subject, beginning with answers to the most fundamental questions (What is energy? Where does energy come from?) through current policy applications (Are we running out of oil? Is the globe warming?). It is ideal for students and classroom use. But it is also the best book for anyone who wants to think and talk intelligently about this huge topic.

It is set up in the form of a textbook, with excellent graphics and clear text, but also contains enough documentation to provide resources for further study. The organization is outstanding and the discussion thorough. For example, under the topic of electricity, we find short descriptions of coal-fired plants, nuclear fission, natural gas, hydroelectric plants, wind power, geothermal energy, microturbines solar power, biomass, fuel cells, and more. A great merit of this book is that it discusses not just the technology but also the economics of various alternative energy sources--a point which is nearly always neglected in the usual literature.

Also not neglected is the area of energy regulation and its effects, and the authors take a free-market perspective.”

My point is that the Austrian School does try to address these issues. I am not fully aware of the breadth of work out there regarding these, but we also have the principles of the free market to help us understand the situation, which is how I’m approaching this.