The Official Libertarian/Anarcho-Capitalist Thread

[n_huffhines]

Profitability is based in growth and market share. A larger organization with smaller profit margins still earns higher profits than a smaller organization (even if said organization has a higher profit margin).

The market forces you hold dear have a growth imperative. The pathway to profitability is growth in market share.

Each of these providers would be incentivized to grow. In a market controlled by a law-based regime, growth MUST be customer satisfaction focused. In one that is free of such regulation, growth could come by any number of means that do not require much concern with customer satisfaction.

In the particular example of "protection agencies" that have protection and punishment power there is an absolute incentive to grow to shield itself (and its constituents) from the actions of other such agencies.

I'm not going to argue that you're wrong in any of this. I agree that these incentives do exist for protection agencies. What I argue is that divide-and-conquer incentives are impossible to pursue under this sort of system. The cost is too great for it to be profitable.

Companies will ensure growth by providing services that people want. They will ensure growth by behaving well.

 

[volinbham]

I'm not going to argue that you're wrong in any of this. I agree that these incentives do exist for protection agencies. What I argue is that divide-and-conquer incentives are impossible to pursue under this sort of system. The cost is too great for it to be profitable.

Companies will ensure growth by providing services that people want. They will ensure growth by behaving well.

I see no basis (theory) for your assumption (cost would be too great). Sounds like wishful thinking more than anything else.

 

[Thrasher865]

interesting reading here.

But Who Will Build The Roads? - Ludwig von Mises Institute Canada

Not really. There was literally nothing of value in that link.

"Who will build the roads?" "I don't know."

How can he dismiss that? If you can't predict where basic infrastructure is going to come from, you're just going to jump into a system without any indication that it's feasible? And then when you ultimately realize that there's no reliable source for roadway construction and maintenance, what do you do?

 

[DEFENDTHISHOUSE]

Not really. There was literally nothing of value in that link.

"Who will build the roads?" "I don't know."

How can he dismiss that? If you can't predict where basic infrastructure is going to come from, you're just going to jump into a system without any indication that it's feasible? And then when you ultimately realize that there's no reliable source for roadway construction and maintenance, what do you do?

He's basically stating that he cannot predict the market, as no one really can.
Who will build muh roads? Probably the same people who build them now, minus the government force by way of taxation.

 

[n_huffhines]

I see no basis (theory) for your assumption (cost would be too great). Sounds like wishful thinking more than anything else.

If you are 1 of 500 protection agencies, and the other 499 are paid to protect families all over Tennessee, how hard is it going to be for you to conquer Tennessee? How are you going to maintain it at a profitable level if you do somehow defeat 499 protection agencies? Your soldiers won't want to subjugate the people. They'd turn on you before it got to that point. Some soldiers would most certainly be bad for-hire types. Most would be community-minded.

You're profitable right now. Why risk it? You're not profitable right now? How are you going to pay for desperation war?

The cost is too great. It's not happening.

 

[hog88]

I'm not going to argue that you're wrong in any of this. I agree that these incentives do exist for protection agencies. What I argue is that divide-and-conquer incentives are impossible to pursue under this sort of system. The cost is too great for it to be profitable.

Companies will ensure growth by providing services that people want. They will ensure growth by behaving well.

How is it not possible? The more land and people they conquer the more resources they have at their disposal.

An energy poor area would have an incredible amount of incentive to take over an energy rich area to ensure their place in the market.

 

[hog88]

He's basically stating that he cannot predict the market, as no one really can.
Who will build muh roads? Probably the same people who build them now, minus the government force by way of taxation.

Material, land and labor would have to be paid for.

 

[DEFENDTHISHOUSE]

.

 

[n_huffhines]

How is it not possible? The more land and people they conquer the more resources they have at their disposal.

An energy poor area would have an incredible amount of incentive to take over an energy rich area to ensure their place in the market.

That's not how it works. When you stretch your empire it becomes harder to maintain. That's kind of the idea here. A company "stretching their empire" is nothing like the US or Germany or Rome doing that. It's a whole different scale, and there are not geographic advantages. Meaning, Germany was the only government in Germany. There would be 500 protection agencies in Tennessee. Try dividing and conquering with 500 enemies at the gate. Just try it.

 

[hog88]

If you are 1 of 500 protection agencies, and the other 499 are paid to protect families all over Tennessee, how hard is it going to be for you to conquer Tennessee? How are you going to maintain it at a profitable level if you do somehow defeat 499 protection agencies? Your soldiers won't want to subjugate the people. They'd turn on you before it got to that point. Some soldiers would most certainly be bad for-hire types. Most would be community-minded.

You're profitable right now. Why risk it? You're not profitable right now? How are you going to pay for desperation war?

The cost is too great. It's not happening.

Why would they have to conquer by force? There is a myriad of ways to take business and once there is no force big enough to oppose then there is a monopoly.

Startups are crushed daily, throw in armed companies and competition would be nil.

 

[hog88]

That's not how it works. When you stretch your empire it becomes harder to maintain. That's kind of the idea here. A company "stretching their empire" is nothing like the US or Germany or Rome doing that. It's a whole different scale, and there are not geographic advantages. Meaning, Germany was the only government in Germany. There would be 500 protection agencies in Tennessee. Try dividing and conquering with 500 enemies at the gate. Just try it.

You keep throwing that 500 number out there when in reality there would be at max 10 that could compete in men and armament on the outset. These 10 would "compete" and after 2-3 years that number would be whittled to 2 maybe 3.

 

[n_huffhines]

Why would they have to conquer by force? There is a myriad of ways to take business and once there is no force big enough to oppose then there is a monopoly.

Say I'm with company B because Company A has too much market power and they haven't been behaving that well. Then they buy company B. I'm not stuck with company A, just because they bought my company. I will just switch to company C, who behaves well. If Company A buys company C, then I'll go to company D.

There will be no shortage of alternatives looking to take my money. Meanwhile company A has just made 2 high-cost acquisitions and only got a fraction of the customers those companies survived off. Company A is now in a much worse financial position, because they tried to buy market power, rather than earn it.

 

[hog88]

Say I'm with company B because Company A has too much market power and they haven't been behaving that well. Then they buy company B. I'm not stuck with company A, just because they bought my company. I will just switch to company C, who behaves well. If Company A buys company C, then I'll go to company D.

There will be no shortage of alternatives looking to take my money. Meanwhile company A has just made 2 high-cost acquisitions and only got a fraction of the customers those companies survived off. Company A is now in a much worse financial position, because they tried to buy market power, rather than earn it.

You're assuming there is an option beyond A and B.

 

[n_huffhines]

You keep throwing that 500 number out there when in reality there would be at max 10 that could compete in men and armament on the outset. These 10 would "compete" and after 2-3 years that number would be whittled to 2 maybe 3.

A max of 10? Wow. That's a pretty strong assumption. How did you come up with that number? 500 is just a large number. It doesn't really matter if it's 500 or 100, they don't have to have their own "armies". They can contract with various security forces (or just have their own). How many security forces would there be? Not really sure, but there are a lot of private security firms already in Tennessee, and that's in the face of government provided police forces. There would be many more in the alternative economy.

 

[n_huffhines]

You're assuming there is an option beyond A and B.

Yeah. I am assuming that there will be companies that will want to take my money. It's a pretty safe assumption.

 

[DEFENDTHISHOUSE]

There is a video by Robert P. Murphy in this link that will go a long way toward explaining a lot of this stuff.

http://consultingbyrpm.com/blog/2012/09/but-wouldnt-warlords-take-over.html

 

[hog88]

A max of 10? Wow. That's a pretty strong assumption. How did you come up with that number? 500 is just a large number. It doesn't really matter if it's 500 or 100, they don't have to have their own "armies". They can contract with various security forces (or just have their own). How many security forces would there be? Not really sure, but there are a lot of private security firms already in Tennessee, and that's in the face of government provided police forces. There would be many more in the alternative economy.

I say 10 at most in TN due to population which would be tied to profit. If you are talking about companies with the men and armament to defend against foreign powers you're not talking about Jim Bobs night watch service. You are talking about private armies with armor, aircraft and artillery, even nukes as you pointed out. None of that is cheap. And if the protection agency can't defend me from the inbred horde from Bama, what good are they?

So in the start up you might have agencies in Knoxville, Chattanooga, Nashville, Jackson and Memphis. Possibly at the start 2 to 3 each in the big 3. Very few would even attempt to service the outlying areas as resources would be stretched too thin to make a profit and to make a profit the charges for those people would probably be more than most would pay. You going to send a security team to Humbolt for 1 customer at the same rate you charge someone in Downtown Nashville?

Then the agencies within the big 3 would devour each other and crush any startup competition, remember there isn't a regulating authority to prevent it. So in a few years you'd be left with 2-3 agencies with small fiefdoms.

 

[volinbham]

If you are 1 of 500 protection agencies, and the other 499 are paid to protect families all over Tennessee, how hard is it going to be for you to conquer Tennessee? How are you going to maintain it at a profitable level if you do somehow defeat 499 protection agencies? Your soldiers won't want to subjugate the people. They'd turn on you before it got to that point. Some soldiers would most certainly be bad for-hire types. Most would be community-minded.

You're profitable right now. Why risk it? You're not profitable right now? How are you going to pay for desperation war?

The cost is too great. It's not happening.

Why wouldn't I band together with a few others?

Also, we are talking about a very high fixed cost structure business model. I have to possess the assets and human resources to provide security/protection. In cases of high fixed costs the pathway to profits is volume to spread those costs over considerably more "units sold". Accordingly the market absolutely incentivizes me to grow.

In your example of 500 I would assume the market for security is relatively fixed - if everyone is protected where does growth come from? It comes from market share acquisition.

Combining high fixed costs business models with flat market growth and you will absolutely see consolidation. Once consolidation occurs there are a couple likely paths - one is collusion for price fixing. Since there is no law enforcement/regulatory mechanism to prevent this then it is likely to occur.

So we don't need "war" among agencies to see market distortions.

Now I assume your answer is that new agencies will come in cheaper but that doesn't work well in a market where scale yields substantial cost advantages (one where providers have significant fixed costs).

Between any number of alliance mechanisms including collusion the 500 would quickly dwindle to a supply situation with a handful of large providers (with significant cost and asset advantage) and a smattering of small providers who could not really defend themselves against the large ones.

Now if I'm a customer relying on one of these groups for "protection" who do I choose? I can go cheap but if I really need protection (including protection from people employing the big boys) do I pick the small guys?

Do you want the best lawyer you can buy or do you want the public defender?

Market forces and basic economics without an enforced regulatory framework will naturally lead to a concentrated set of suppliers in this case.

 

[SpaceCoastVol]

That's the thing....a protection agency in Seattle is still fighting when DC and NYC get taken out. We don't have a central government that would surrender after 2 cities fall. Russia does. Take out Moscow and St. Petersburg....are their people going to want to keep fighting? It's hard to rally their people against us in the first place, when the face of evil America, the government, isn't there to villainize.

You are clueless of the Russian psyche. The worst thing in the world you can do to a Russian is kick him out of his homeland. Doesn't matter what or who is on power, if they are attacked, they will fight to the death. I know you believe otherwise, but you are simply wrong. The Russians are not like the cowardice arab culture that will turn tail and run when they get a bloody nose.

There is a "tank trap" memorial on the outskirts of Moscow that is where the Nazis were stopped on their march in. I have seen wedding parties, and not just one or two... having their picture made there. They KNOW history, and they LOVE their country.

 

[volinbham]

Say I'm with company B because Company A has too much market power and they haven't been behaving that well. Then they buy company B. I'm not stuck with company A, just because they bought my company. I will just switch to company C, who behaves well. If Company A buys company C, then I'll go to company D.

There will be no shortage of alternatives looking to take my money. Meanwhile company A has just made 2 high-cost acquisitions and only got a fraction of the customers those companies survived off. Company A is now in a much worse financial position, because they tried to buy market power, rather than earn it.

We are not talking about restaurants here. The product being sold is protection of my life/liberty and against the claims others are making (via their agencies).

Given that, I prefer power in the agency I employ. There is customer value in scope of the agency thus the market incentivizes consolidation and acquisition of power/influence by agencies. Staying small puts the agency at a disadvantage in providing the core product thus it isn't as effective at satisfying customers.

 

[hog88]

We are not talking about restaurants here. The product being sold is protection of my life/liberty and against the claims others are making (via their agencies).

Given that, I prefer power in the agency I employ. There is customer value in scope of the agency thus the market incentivizes consolidation and acquisition of power/influence by agencies. Staying small puts the agency at a disadvantage in providing the core product thus it isn't as effective at satisfying customers.

We all have forgotten to mention that the security agencies would also have to have control over or be one in the same in providing basic services such as power and water. Quickest way to lose control over the population is to lose basic services.

 

[n_huffhines]

We all have forgotten to mention that the security agencies would also have to have control over or be one in the same in providing basic services such as power and water. Quickest way to lose control over the population is to lose basic services.

No. You don't If someone tries to cut off water to my community, the various protection agencies who service the families in my community will have our backs.

It's a system of checks and balances without government corruption.

 

[n_huffhines]

Anarchy on the roads. "But who will be the one to decide...." Somehow it works.

[youtube]https://www.youtube.com/watch?v=vi0meiActlU[/youtube]

 

[hog88]

No. You don't If someone tries to cut off water to my community, the various protection agencies who service the families in my community will have our backs.

It's a system of checks and balances without government corruption.

So the water company cuts off you're water you're security company attacks them? Wouldn't they in essence be in control of the water company? Or would the water company have 500 competitors also? That would be a lot of underground pipelines.

 

[volinbham]

No. You don't If someone tries to cut off water to my community, the various protection agencies who service the families in my community will have our backs.

It's a system of checks and balances without government corruption.

Where I'm getting hung up is you seeming assumption that markets don't foster corruption or naturally resist it.