Тег: Marketplace

Dedicated lanes on private roads

I own a bus company and want to make buses more attractive for commuting to increase revenue. I’ve decided to use a dedicated lane.

Several private individuals own the roads in the city. I managed to reach an agreement with two of them, but not with the last one. Moreover, he owns the most congested sections.

What should I do?

Maksim Barbukhin

I strongly doubt that in a free market, dedicating a lane for public transport would be profitable for a road owner. It’s a different story if the private owner makes one of the lanes toll-based, and subscriptions for the right to use it are purchased by bus companies, emergency services, taxi aggregators, and simply those who need it urgently and regularly. Either way, in this case, you managed to agree on a preferential right of way, and the details are not very important.

But your routes run into a road section where traffic is denser and there is no dedicated lane—for example, it simply cannot be squeezed in here because it’s the old city and it’s too narrow. Or perhaps the owner simply has a different business model and is not inclined to adapt to your needs. In this situation, I would try this option: buy advertising along the problematic sections of the road, and there, present a request to give way to the bus. The motivational part can vary. You could appeal to social consciousness, for example: “a bus is like an ambulance for those waiting at the stop; please yield the lane so people don’t wait too long, and they will be grateful to you.” Or you could do it this way: “By yielding the lane to our company’s bus, you enter a prize draw. Every day, we raffle off valuable prizes for polite drivers.” And on the advertising screen, show footage of yesterday’s winner taken from the bus’s dashcam: here is a car with such-and-such a license plate moving to the left to give way; dear driver, you have won so-and-so, contact us to receive your prize.

Many other motivation methods can be devised, focusing not on the uncooperative monopoly owner of a specific section, but on the competitive market of the users of that section. After all, you don’t need the entire lane for yourself; it’s enough that your bus is let through. The more pleasant it is for people to do this, the more likely they are to let you pass.

Toll dedicated lanes are cool, but not possible everywhere

The Efficiency of Violence

What do you say about the idea that the costs of ensuring security and protecting property rights are higher for private companies than for the state, and that the state, by virtue of its exceptional efficiency in applying force and maintaining order, can better provide the protection and guardianship of law and order, as well as courts, than private companies, and therefore it is necessary in this regard?

анонимный вопрос

How can the state’s costs for protecting property rights be lower than those of a private company? Only through games with budget line items. Yes, for a police officer, it is enough to hang a sign saying “forbidden, fine is so-and-so” and carry out a couple of exemplary fines—whereas a private entity would have to constantly hover and be vigilant to ensure the prohibition is not violated. But this does not mean the police officer is mega-efficient. It means that he himself might receive pennies, or even feed entirely on bribes, while the state must bear the primary costs of ensuring that people are afraid to contradict this police officer. And the costs of maintaining this fear are spread across a heap of budget items, from education to the maintenance of prisons.

A private entity, on the other hand, often has to compete with the state under completely unequal conditions. Where the state provides a service already paid for via taxes and requiring no additional money, the private entity is forced to charge the client additional money, since the state does not share taxes with them.

The state introduces distortions, often quite unpredictable ones, into the market picture, and as long as these distortions persist, judging market efficiency becomes more difficult. One might start a business relying on the current market conditions, only to encounter a completely new regulatory framework in the middle of the project, and that’s it—the project must be shut down and the losses written off. State institutions can usually count on their interests being considered during legislative innovations, so planning is a bit easier there. But it is somehow strange to conclude based on this that the state is necessary. This is simply an example of unfair competition, which is created by the state itself.

To summarize. Indeed, the state can impose arbitrarily high costs on private companies for anything by using force or the threat of force. But who needs such a state? Certainly not the consumer, onto whom all these costs will eventually be shifted.

Distortion of the market efficiency picture

How the Moscow Metro would work under ancap, and what would happen if someone bought all the stations? After all, competition would become impossible

анонимный вопрос

I’ll start from a distance and first recommend a recent video by Grigory Bazhenov, where he opposes authoritarian urbanists and, in particular, explains the main purpose of a city — the opportunity to earn money.

Of course, historically, the city often served as a fortress as well. But the ability to protect wealth from an external plunderer largely echoes the ability to become wealthy in the first place. If people didn’t gather in one place and accumulate assets, they wouldn’t be able to afford the construction of such convenient urban infrastructure as protective structures, nor would there be a great need for it — individual caches in the forest or migrating with herds to secluded areas would have prevailed. So, the ability to accumulate wealth by gathering in a compact, large crowd is primary.

All the conveniences that the city provides for people adapt to its main function. And if this is done poorly (for example, if the city is managed centrally and hinders people from earning), the city withers, losing the competitive race to alternatives. This also applies to the organization of urban transport.

The more mobile a city resident is, the more choices of workplaces they have, the better the place they find on average, and the wealthier they become. As a result, they gain the ability to create solvent demand for various conveniences, including even greater mobility. For the most part, it doesn’t matter what the ownership structure is in different companies providing transport services, as long as they don’t have the power to forcibly dictate their rules to competitors or consumers. In other words, properly organized transport can belong to anyone, except for the institution that creates the rules.

So in the Moscow metro, each line could have its own owner, or each station, or separate owners for stations, tunnels, and depots, and separate owners for the trains. In principle, the metro as a whole could have a single owner, and even in this case, it would continue to operate in a competitive market; its competition consists of all alternative ways to get from point to point within the city. But even if the entire city with all its streets, houses, and transport belongs to a single owner, the alternative to using urban transport becomes video communication or moving elsewhere. After all, a city is first and foremost a place where one can earn more money than outside the city, and only then is there all sorts of infrastructure for spending leisure time together in large crowds. If you can earn enough money for your needs elsewhere, the city no longer holds you as strongly.

How does Libertarianism relate to the Effective Altruism movement?

Howard Roark

A small introduction for the readers. Effective altruism is a family of approaches to the task of changing the world for the better. Within this doctrine, it is considered how to achieve maximum effect with minimum means, what considerations to follow when setting goals, and how to motivate oneself toward altruism. Howard Roark is a character from Ayn Rand’s novel “The Fountainhead,” who advocates egoism as the highest moral value.

Of course, both of these concepts coexist quite well, and I won’t have to write tons of text about it, because Mikhail Pozharsky was recently so altruistic that he released a video about it. The engine of altruistic behavior is egoism. And the effective altruism movement is a pretty good confirmation of this. First, a person finds it insufficient to show off with luxury yachts and begins to spend on charity. Then it becomes crowded in this area, and he begins to show off that he spends on charity more effectively than others. You, allegedly, throw in mega-bucks without much point—you might as well have used them to light cigarettes—but I, spending ten times less, have actually helped a bunch of people with real problems; here is the proof, here is the methodological analysis, and here is where to send donations.

What else links effective altruism and Ayn Rand’s egoism is the conviction of many effective altruism adepts that for a successful person, for example, it is more effective not to volunteer personally, but to pay for the work of professionals, because he is more useful in his own position, where he earns the money to pay those very professionals. From here, it is literally one step to the idea that the best way to help people overall is the construction of a maximally free society, where everyone engages in what brings maximum benefit to others—simply because such behavior is best rewarded in a free market.

Effective altruists

Regulation of the securities market

I stumbled upon an article describing the beneficial impact of the SEC on the securities market. What’s the catch?

анонимный вопрос

Among libertarians, a certain consensus has generally formed that the Great Depression was caused not by mythical market failures, but by the fact that the Federal Reserve, created in 1913, pumped the American economy with money, creating a financial bubble. Subsequently, President Hoover, and then Roosevelt, did not allow the bubble to deflate peacefully, but began to steer the economy manually. For instance, as early as 1932, Hoover demanded that exchanges limit the ability to open short positions, and Roosevelt, in 1934, established the SEC—a federal agency that interferes with the free trade of securities.

The article states that the SEC ensures confidence in the securities market because it requires companies listing their securities on exchanges to fully disclose information about themselves.

In 2018, there was an ICO boom. A huge amount of dollars were spent buying Bitcoins to buy Ether with those Bitcoins, and then to invest in tokens created on its blockchain. The SEC did not regulate the process at all; most of the investments proved to be failures, but some things took off, and some will certainly take off in the future.

What does the ICO boom, during which token sales of millions of dollars occurred in a matter of seconds, tell us? That there is also a high demand for high-risk investments. An investor does not need some office to decide what to release onto the market and what to keep out. He only needs to know which assets are high-risk and which are relatively safe, and then he will decide for himself what to take. In other words, market demand is not for a regulator, but for rating agencies and good arbitrage. But the state, of course, cannot help but spoil things here as well, because, as we remember, the 2008 crisis happened precisely because, as a result of government pressure, the largest rating agencies assigned the highest reliability ratings to derivatives backed by junk bonds, and no SEC saved the day.

In conclusion, I would like to recommend Rothbard’s book “America’s Great Depression”, which provides a detailed theory of the economic cycle and analyzes the beginning of the Great Depression in light of this theory.

Will there be an opportunity to crush competitors under ancap?

For example, telling factories not to work with others, otherwise they will lose profits from their main customer (a much larger capitalist).

Japan (NathanTikhonov)

Of course, nothing prevents one economic agent from negotiating various additional terms before concluding certain deals, including those that have no direct relation to the subject of the transaction. For instance, a very common type of deal is an agreement on joint household management, accompanied by a condition of exclusive sexual services, and there is no reason to believe that in the absence of a state, deals of this type would be immediately wiped out entirely.

But, as we clearly see in the example of the institution of monogamous marriage, an exclusivity clause, even when clearly stated, is observed quite sloppily, yet not every violation of this clause leads to the immediate termination of the main contract. The fact is that the contracting parties are interdependent. Even if one party to the deal is significantly stronger, to punish the second party for violating the additional terms of the agreement, they would have to incur certain costs, and this would weaken them. Moreover, the direct damage from the violation of an additional condition may be quite small, or even non-existent, while the contract itself may remain very profitable for the strong party. In other words, empty tyranny is wasteful.

Therefore, the economically stronger party, although they may puff out their cheeks and demand special attention, will find themselves forced to turn a blind eye to the fact that not every whim of theirs will be satisfied; otherwise, their habit of petty vindictiveness will quickly correct the fact that they happen, by some misunderstanding, to be the strong party in most market transactions. Thus, through excessive arrogance, once influential companies sink into insignificance.

Without state regulation, will the city be built up with solid concrete anthills without parks and greenery?

Bitarch’s Column

There is a well-known assumption that if government regulation regarding zoning, green spaces, parks, building height, etc., were abolished, developers would begin to squeeze profit from every square meter of land, building continuous masses of hundred-story skyscrapers.

In fact, it is by no means always profitable for a developer to sell as many square meters as possible in a building where there is no park or greenery nearby. The average price per square meter in such a building would be much lower than in an identical building with appropriate landscaping of the surrounding area. This is confirmed by the example of New York, where the cost of housing with a view of Central Park is significantly higher than similar real estate a block away. Anyone who tries to build over that area would be dragged through the courts by residents of nearby houses, as it would crash the value of their assets.

Skeptics might object—look at Hong Kong, where there is indeed minimal government regulation and the development looks like “concrete anthills.” In reality, firstly, the state intentionally built such blocks to provide “affordable housing” to its voters. Secondly, Hong Kong is a special free zone with a tiny territory in the midst of vast totalitarian China. Accordingly, the demand for real estate far exceeds the supply, and people are willing to sacrifice environmental comfort for the sake of economic and personal freedoms. For a country as huge as Russia, or for European countries, the problem of lacking free space is not nearly as acute.

I wanted to insert a photo of New York’s Central Park first, but no, here is a concrete anthill without any zoning.

My dad is a national socialist. I am also a national socialist, only libertarian. The cat is also NS, but he can’t speak. How do I explain to my dad that the market is not an invention of the Jews, but the path to the birth of the overman?

анонимный вопрос

I have bad news for you. On the one hand, the market was not invented by Jews; long before them, the Phoenicians made their mark in this field in this region. On the other hand, the ancient Persians—the most natural Aryan overmen, whom Nietzsche cosplayed with his Zarathustra—rejected the concept of the market and criticized their Greek neighbors precisely for having a special square in the center of every city where people gather to deceive one another. We are speaking, as you may have guessed, of the agora and, accordingly, of the market.

So, the market is not the path to the birth of the overman. It is the path to the overthrow of arrogant overmen by ordinary enterprising people.

The overman does not approve of the market

There is Singapore. It is a bird in a golden cage. But they live better than in the USA, and there is no corruption. Ancap vs Singapore?

Someone Unknown

Singapore is a state with severely curtailed personal freedoms and a very significant level of economic freedom. In effect, it is a state organized like a commercial company, where all of life is regulated within the logic of business processes. Naturally, this model cannot imply any political competition. For appearances’ sake, besides the ruling People’s Action Party, there is also an opposition Workers’ Party in Singapore. Even from the name, one can assume that its role is something like a pampered trade union, which certainly cannot claim to manage the enterprise, but theoretically can provide management with some feedback if they start messing up the administrative measures.

If something like the Soviet Union could be conditionally called a dictatorship of the proletariat, then Singapore, within Marxist terminology, is a dictatorship of the bourgeoisie. Everything for business, everything for economic growth! A slogan roughly of the same vein as “everything for the front, everything for victory.”

Could a city with anarcho-capitalist orders have emerged instead of the Singapore we see now? Generally speaking, yes. If those same investors, whom Lee Kuan Yew chased with exhortations, had come on their own and established their own order—first buying out the extremely cheap local officials root and branch, and then abolishing state power altogether for lack of need—would we now have in this place a self-governing city with a very compact administration existing on an endowment fund, where the share of small and medium-sized businesses in its extremely dynamic economy would be about four-fifths, it would be slightly poorer, slightly dirtier, there would be three times as many poor people, and ten times as many happy people? Where do I get my estimates? I mostly base them on Hong Kong, taking into account local specifics and the fact that in Hong Kong there is still some form of state.

The main problem with such cities with a free economy is that there are too few of them, they are damn attractive, and therefore overcrowded with crowds of people wishing to settle in this wonderful place. Meanwhile, in order to non-violently replicate a successful model, a free land market is needed. Then there are no problems: investors from a conditional Singapore organize a consortium, buy a convenient territory from some state—and develop it. But for states, territory too often turns out to be some kind of sacred value for which they are ready to sacrifice millions of people, and to hell with these crazies and their hang-ups. And so, people thirsting for freedom and prosperity crowd onto tiny territories, vastly overpaying for such a rare opportunity.

But all economic history tells us that this is perfectly normal: a certain product is first premium, gradually becomes replicated, and its cost drops to an acceptable level, and then it becomes a mere mass-market commodity. Freedom in this case is an example of such a product. There is a demand for it, it is growing, and therefore the supply will expand.

Big brother is watching you!

A question regarding medications for rare diseases.

What guarantees are there that under ancap, people with rare diseases (affecting fewer than 200,000 people) will not be left without medication because it would simply be unprofitable to develop and sell them (given such a small number of consumers)?

анонимный вопрос

Answered by Alex Murin

The strangest question I have ever encountered. And why is it profitable for states to fund scientists who conduct such research? Perhaps because funding scientists is profitable in general? They make useful discoveries, and over the last 100 years, these have become increasingly frequent, useful, and interesting.

A company that develops a new drug gains notoriety. This is currently the best advertisement a pharmaceutical company can imagine. One could hire a hundred PR agents to write that this company’s vitamin C and plantain are the best in the world. But many people sell vitamin C and herbal mixtures. So, most of the time, PR agents would be producing information junk. Instead, one could hire another dozen scientists to develop a drug for a rare disease. Journalists from many publications would gather to see and report on the discovery, the company’s name would hit the top news of all websites for a couple of days, and remain in the top of specialized publications for another month. In addition to that rare pill, the company produces hundreds of other less rare ones. A discovery means new clients, the respect of doctors, and the attention of their patients.

Regarding sales: selling medications is always profitable. Just as it was profitable in primitive society, when a hunter brought the shaman the best piece of meat for a pot of magic potion, so it is in a post-industrial society, where hundreds of pharmaceutical companies make aspirin and millions of pharmacies sell it. Perhaps it would be unprofitable to keep a rare medicine in a pharmacy, but nothing stops it from being ordered. Currently, restrictions on the online sale of medications are created by states.

The role of the state in the production of drugs for rare diseases is not very obvious. In funding scientists? They can be funded by charitable foundations and insurance companies. It is always profitable for an insurer for their patient to be healthy and pay premiums regularly, rather than lying on their deathbed.

By the way, the famous EU Directive 141/2000 (reduction of regulations in the development of orphan drugs) was adopted precisely thanks to private initiative, and not at the suggestion of any state. EURORDIS, an association supporting patients with rare diseases, was one of the organizations that contributed to the development and adoption of such an initiative.

Very rare pills