#65 - Libertarianism II: Economic Issues (w/ Bruce Nielson‪)‬ Increments

Back at it again, as we coerce you into listening to Part 2 of our four part series on Libertarianism, with Mr. Bruce Nielson (@bnielson01). In this episode we cover the Economic Issues section of Scott Alexander's (non-aggressive and principled) non-libertarian FAQ, and discuss his four major economic critiques of the libertarian view that free and voluntary trade between consenting, informed, rational individuals is the best possible thing ever, with no downsides at all. Also, can we interest you in buying some wasps?


We discuss


Loose ends from last episode - coercion and the Non-Aggression Principle
What distinguishes a conservative like Bruce from a libertarian?
Externalities
Boycotts and Coordination Problems
Irrational Choices
Lack of Information


References


The Non-libertarian FAQ
Planet Money on the Porcupine Freedom Festival


Vaden's blog posts on Libertarianism / Austrian Economics / Anarcho-Captialism / Whateveryawannacallit


First: Is Austrian Economics the Best Explanation of Economics?
Second: Can we predict human behaviour? A discussion with Brett Hall


Quotes


The Argument:


In a free market, all trade has to be voluntary, so you will never agree to a trade unless it benefits you.


Further, you won’t make a trade unless you think it’s the best possible trade you can make. If you knew you could make a better one, you’d hold out for that. So trades in a free market are not only better than nothing, they’re also the best possible transaction you could make at that time.


Labor is no different from any other commercial transaction in this respect. You won’t agree to a job unless it benefits you more than anything else you can do with your time, and your employer won’t hire you unless it benefits her more than anything else she can do with her money. So a voluntarily agreed labor contract must benefit both parties, and must do so more than any other alternative.


If every trade in a free market benefits both parties, then any time the government tries to restrict trade in some way, it must hurt both parties. Or, to put it another way, you can help someone by giving them more options, but you can’t help them by taking away options. And in a free market, where everyone starts with all options, all the government can do is take options away.


The Counterargument:


This treats the world as a series of producer-consumer dyads instead of as a system in which every transaction affects everyone else. Also, it treats consumers as coherent entities who have specific variables like “utility” and “demand” and know exactly what they are, which doesn’t always work.
- https://slatestarcodex.com/2017/02/22/repost-the-non-libertarian-faq/


What is an externality?


1.1: What is an externality?



An externality is when I make a trade with you, but it has some accidental effect on other people who weren’t involved in the trade.



Suppose for example that I sell my house to an amateur wasp farmer. Only he’s not a very good wasp farmer, so his wasps usually get loose and sting people all over the neighborhood every couple of days.


This trade between the wasp farmer and myself has benefited both of us, but it’s harmed people who weren’t consulted; namely, my neighbors, who are now locked indoors clutching cans of industrial-strength insect repellent. Although the trade was voluntary for both the wasp farmer and myself, it wasn’t voluntary for my neighbors.


Another example of externalities would be a widget factory that spews carcinogenic chemicals into the air. When I trade with the widget factory I’m benefiting – I get widgets – and they’re benefiting – they get money. But the people who breathe in the carcinogenic chemicals weren’t consulted in the trade.


2.3: How do coordination problems justify regulation of ethical business practices?


... Let’s say Wanda’s Widgets has one million customers. Each customer pays it $100 per year, for a total income