A response to http://www.ginandtacos.com/2008/08/31/atheistsfoxholes-libertariansairplanes/
First and foremost, this post is about the author's experiences talking to a bunch of libertarians at AEI. It sounds like those folks were dismissive of important left-leaning arguments, and generally annoying to be around. That's a shame, and no amount of the-free-market-being-awesome is going to make the author's experience anything other than a bad memory.
So with the caveat that I'd always want to acknowledge that up front before I started playing with ideas, here goes. There's a very common mistake that pro-regulation people make when they think about markets that don't exist yet. The steps go something like this.
- consider the way something works right now
- change one part of it to resemble a market
- observe that it wouldn't work very well
My favorite version of this is "negotiating on the operating table":
You rupture your appendix, and an abumlance rushes you to the nearest hospital. As the surgeon scrubs his hands, he says to you, "Our terms and conditions changed last week. If you want anaesthesia with today's surgery, you're going to have to sign up for our two year membership plan."
"But I'm already a member of McMedicine across town!" you protest through the pain, "Can't we just settle on $5k for materials and labor, and an additional $600 for non-member processing?"
"No can do, I'm afraid. Orders from management. But if you want to take your business elsewhere, I guess it's a free country."
At which point you pass out, two credit cards falling to the floor from your whitened hand.
Would that suck? Yes, that would suck. That would be a bad way of organizing a market for medical care. But you can't just think of a bad way to do something and then jump to conclusions. The premise of laissez-faire thinking isn't that all possible way of organizing a market will work great. Instead, the claim is that there are some ways for the market to work well, and just as important, that firms in the market usually have good incentives to find those ways.
(By the way, libertarians themselves can totally make the same mistake in the opposite direction. Can we let the city of Seattle put a toll on the 520 bridge? God help us all! They'll be asking for our birth certificates every time we want to drive to Redmond. Traffic over the water is going move like a line at the DMV! Next thing you know they'll...well actually they built a smooth electronic system and a website that takes Visa and MasterCard. They did a good job.)
Now we have to be careful with this argument, because it quickly turns into an infinite burden of proof for the other side. Like "oh well you haven't enumerated all the ways the market could work yet, so how do you know it won't?" That's not fair. But, if you can point to examples in Real Life where markets solved a similar problem, then it's fair to say "why don't we expect them to reach a similar solution in this case?"
So anyway, planes.
"We will know which airlines shirk on maintenance and safety when we see their planes plunging out of the sky." This is a good example of the mistake. Here's one way the market could operate. We don't like that way. Conclusions.
In this case, I'm less worried about pointing out other ways the market could work. I'm sure we can all think of some, and then it's a fair debate about how plausible they are. In this case, I'm more concerned with thinking about incentives.
Even in a world where there were no courts and no lawsuits, no regulations and no fines, no brand recognition and no consumer awareness, even no simple concern for other people's lives, a company that runs a passenger jet into the ground is out $50 million and an entire flight crew. Also the guy who we rely on most for the safety of the plane, that guy happens to be riding in it right next to all the passengers. The incentives of this industry are exceptionally well aligned with consumer safety. (Luggage safety notwithstanding :p)
To be clear, there are plenty of examples out there of industries with incentives problems. Medicine is tricky. CO2 emissions might actually be unsolvable. And hell, air travel is a complicated industry; maybe I shouldn't be so eager to lump it all under one story.
But if we're missing the cases where laissez-faire ideas actually work well, it's going to be hard to talk intelligently about the cases where they don't.
Hey this is pretty cool. May I recommend getting a dedicated blogging platform? Even Tumblr is less awkward than GitHub.