September 25, 2005

Response to Earthenvesselmz

Earthenvesselmz commented on my last post here.

Although his comment is interesting and appears to attempt to contradict the conclusion I reached, it does not deal with the arguments I provided in support of my conclusion, and I believe it also demonstrates a misunderstanding of my conclusion itself.

In summary, my basic argument was that externality benefits do not justify government intervention for two primary reasons.

First, government's role is to protect property rights and individual liberty through the maintanance of a legal system. Both are violated by any coercive effort by government to correct for externality benefits, because an correction involves government arbitrarily determining a "social benefit" (violation of liberty/pursuit of happiness) and forcing individuals to pay in some way for that benefit which they otherwise would not have payed for (violation of property rights). To this end, I provided two lawn mowing examples demonstrating the absurdity of the arguments applied. Furthermore, I argued that an externality argument can conceivably be applied to ANY commodity, which means that if the criteria for government intervention is simply an externality occuring, logically, the government must intervene in ALL situations, which is pure socialism.

Second, economic history and theory demonstrate that the alternative, laissez-faire, works much better than socialism. Thus, while in theory, some corrections might be necessary to attain an ideal economy, due to the subjective nature of value (being essentially the average of all arbitrary values attributed to product X by all market players in the case of individual value, and the arbitrary social value attributed to product X by all market players), exact corrections as demonstrated in economic theory are virtually impossible. Furthermore, any estimate of social value depends upon a social philosophy of what society should look like, and thereby any government intervention based upon social value is based upon a social philosophy with the end goal being the forming of society in the image of that philosophy, whether the citizens want it or not. Additionally, it introduces further problems of the majority forcing the minority to conform to their wishes.

For these reasons, I reject the argument that externality benefits demand government correction. Furthermore, I reject Earthenvesselmz argument, which appears to me to be this:

Laissez-faire, under which individuals make decision based purely on their own benefit disregarding the views of others completely, and socialism, under which the government defines a social ideal and forces those under it's control to conform to this image, are both extremes and neither presents an ideal economic situation. The ideal economic system is found somewhere in between, where individual freedom is respected, but social value is taken into account, presummably by government coercion.

Before dealing with the errors specific to the above argument, I must first point out the lack of any specific vision as contrasted with the visions I presented earlier (laissez-faire and socialism). Even if neither is ideal, it is clear what is meant by them. With the presentation of two extremes and the vague argument the somewhere in the middle lies the solution, we are presented with no clear picture of how this middle ideal is to be determine or worked out. Furthermore, no attempt is made to refute the argument I presented dealing with externality benefits which led me to conclude that laissez-faire was the lesser of two evils (socialism and laissez-faire). Namely, a criteria by which externality benefits justify government intervention logically justifies government intervention in ALL cases. Thus, within a simple observation of externality benefits, we are left with only two choices, government intervention in all cases or no cases based upon externalities. Thus, in context, no middle ground was logically offered, and no logical argument to support that ground has been provided by any but utilitarian means, and the utilitarian argument remains clearly refuted by the argument I present that any intervention necessarily justifies all intervention, an evil which even Earthenvesselmz opposed.

Finally, in pointing out the error in Earthenvesselmz argument, I believe it lies in a misunderstanding of laissez-faire. As an economy, it does deal with individuals and their personal valuations. However, no man is an island unto himself. Each of us has contact with other humans, and we value their input and well being. Thus, our true value takes into account both the value to us and possible values within our social network (if it were not so, no games requiring more than one person, such as chess, would ever be sold). Furthermore, a close examination of my proposed correction for externality benefits within the private sector (reasoning and private non-coercive intervention) also contradict Earthenvesselmz mis-characterization of laissez-faire within a larger social structure. The advantages of such a system are four fold. First, it allows for the freedom of individuals in a laissez-faire system. Second, it avoids any coercion. Third, it provides a mechanism for correcting externality benefits. Fourth, the correction is based upon the perceived benefits to third parties, not an arbitrarily determined social value by social engineers. Thus, one would expect the benefitted third parties to apply their reason and resources in direct relation to their expected benefit, arriving more accurately at the true aggrate social value than any arbitrary method is likely too. In this case, I believe Earthenvesselmz has made the common mistake of forgetting that any economic system must reside in a larger social system, and that the social system must not be forgotten if we are to see the complete picture.

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