> P.S.: Pop quiz: do you know where Ike got the idea for the U.S. > Interstate Highway system? Be careful about the paternity of causes you adopt.
What a monumentally, colossally stupid statement. Ike got the idea of an interstate highway system from Hitler's Autobahn, so we're supposed to assume that economic and commercial infrastructure is a terrible thing? Are we then supposed to assume that Hitler's Autobahn was a good thing, because he got the idea from the ancient Romans and the Appian Way?
This is an easy argument to parody:
Communication satellites are evil, because the technology stems from Hitler's V-2 rocket program.
Jet air travel is evil, because the technology stems from Hitler's Me-262 program.
Computers are evil, because they spawned from Hitler's ULTRA encryption system.
Can you hear how irrational your mindless hostility to government sounds?
Shawn D Brown wrote (concerning the topic that roads would not be built in a libertarian nation):
> This argument is unanswerable? What a joke. First of all, your argument > aserts that there will be a "holdout" problem resulting from some > individuals who do not wish to sell part or all of their land to the > company who is building the road. This may be true in some instances and > there is opportunism available for those holdouts (for example, the road > company values my parcel of land at $500,000, I value it at $150,000 and > the "market" value for an alternative use is $125,000. I may be able to > bargain with the company for a settlement approaching $500, 000. Thus I > may be "unjustly enriched" but it is still a Pareto Efficient move if the > company buys the land for $499, 000.
You know, I'm an economist, but I really get pissed at some of my peers who who have absolutely no idea how the real world works, and assume that all consumers are perfectly rational and omniscient and only motivated by dollars. It's airy-fairy economists like you who give the profession a bad name, and you deserve to come in for the sharpest criticism possible. (Or are you *even* an economist? Looking at the quality of your arguments below, I have my doubts.)
In the real world, people hate living next to major highways. We have a major highway that just went through the San Jose area, and the noise level is so incredible that it is bothersome even two miles away. NO ONE wants to live next to this, and the people who do are already furious.
But your argument doesn't even make economic sense. If you value your land below half the price you would sell it to a road construction company, you have just doubled the cost of social utility. A great many roads won't get built if their price-tags are doubled, and commerce in those regions will shrivel up and die. Yours is a recipe for concentrating roads only in heavy population centers.
> Now if I value my land at a price > which is higher than $500,000, then the company will not purchase the > land and the efficient transaction has still occurred. But that still > does not stop the road from being built--the company can re-route the > road to build through my neighbor's and every neighbor of a holdout's > property.
So whatever social utility is not doubled in cost is cut in half by efficiency. Furthermore, these individuals, who are only temporarily on this earth, will *permanently* hinder social utility, in accordance with the economics of path dependency. (No pun intended. This is also known by the popular name "Economics of QWERTY.") You are making some truly awful arguments.
> Thus, you must prove that there would be too many holdouts for > the road to be built, which is a difficult premise to prove.)
If this libertarian society existed, it would be child's play to prove. The company makes a decision that the road is too expensive to build.
> Second, there are many other examples of private companies buying up lots of land > for a large development--Malls, shopping centers, and historically the > closest example to roads-railroads where railroads (in most instances) > were granted easements or purchased the land to build the tracks.
The few acres required to make a shopping mall does not compare with the millions of acres needed to build a major highway.
> Third, > there are many examples of private roads which were built in > subdivisions. The government didn't need to force the residents to build > a road- it was in the developer's or home owners' association interest to > do so.
The workability of this method rapidly deteriorates with an increasing number of property-owners. A private drive in a condominium complex is one thing; a major interstate highway is another.
> And in the interest of trade and commerce, why would individuals > in neighboring towns and counties not form a cooperative to build a road > to connect the two areas?
There are countless reasons why they would be opposed:
1. Sentimental attachment to family land 2. Opposition to traffic noise 3. Desire to keep private and secluded 4. Desire to keep down industrial and residential development (my home town of Santa Cruz is currently pursuing such a policy) 5. Desire to conserve the natural environment 6. Inconvenience of moving or radically changing one's lifestyle 7. Land contains some other resource more valuable than a potential road
And this list could go on and on.
> Finally, I reccomend the book "For a New > Liberty" by Murray Rothbard who is much more persuasive in his argument > for private roads than I am. Another thoughtfull book is "Machinery of > Freedom" by David Freidman. > Shawn Brown
I have yet to see a libertarian argument on eminent domain that does not reek of strained rationalization.
On 20 Jun 1996 06:17:33 GMT, da...@cats.ucsc.edu (David Michael Wright) wrote:
> In article <ddfr-1806961848460...@ddfr.vip.best.com>, > David Friedman <d...@best.com> wrote: > |2. Someone mentioned the NIMBY ("not in my back yard") problem. The > |experience of building the original Pennsylvania Turnpike suggests that > |the sign of the effect is the other way around. > I think that things are just a little different than in the 19th > centrury. There was no smog, comparatively little noise, and not as > near the death rate.
Hey, before they invented carborators, cars would spontaniously explode while running. KORO
> In article <cdd_9606190...@rational.vaxxine.com>, > Lazarus Long <2-100-1!Lazarus.L...@rational.vaxxine.com> wrote: > |mccull...@mail.utexas.edu onanized in a message to All: > | > |mm> From: mccull...@mail.utexas.edu (Jim McCulloch) > |mm> Subject: Re: In a libertarian world, there are no roads > |mm> Organization: x > | > |mm> So far all of the people who disagreed with my original post have > |mm> said everyone will sell if offered enough money, and if they don't, > |mm> well, the roads will be long and winding. > | > |mm> Generally people don't build interstate highways on the principle of > |mm> long and winding, they build them on the principles of cost and good > |mm> engineering, including considerations like safety.. > | > | If the road was unfeasible due to costs, it would not be > | built. > So there would be a lot fewer roads, a lot more expensive to drive, > and many would be a lot longer to drive. Not to mention the traffic > gridlock caused by tolls.
Not necesarilly. All of the roads in my area were made when there were only orchards and nothing else there, so every one was happy. The loss of land wasn't that bad, considering that the town got three highways one ending in our city. In the early 90's they want to extend the one that ended in our city in the name of "reducing rush hour trafic". Well they built the roads with little loss of land, and 4 years after the proposed completion date, we had another highway. Of course, this highway did nothing to reduce trafic on other roads, but just congested them more, for everyone wanted to get on and off of the highway!
Basically, what I'm trying to say is more roads doesn't necesarily mean better life. The existing roads were good enough for our small town. And look at LA, the more major roads they build, the denser the trafic gets because people keep on trying to move between highway to highway.
> Definitely a case where social interest conflicts with individual > interest.
Sure thing, but what isn't?
> |mm> Do YOU want to pay the tolls of a privately built toll road from, > |mm> say Austin to San Antonio, which is long and winding--who knows how > |mm> long and winding, it depends on the landowners, doesn't it?-- maybe > |mm> 200 miles worth, maybe 300, where the present distance is 80 miles? > | > | Mcculloch ignores, hence his lack of direct response, the > | posts that pointed out that most people have an interest in > | having transportation adjacent to their property. > And you ignore the problem with Tolls.
Anyone have a solution for this? I'm at a loss.
> I think the fact is that most people do not want roads built anywhere > near their property, especially in a city. In an area with few roads, > you may have a point, but that is simply because they are scarce and > the problems with them have not arose.
Roads cause more problems than they solve. The existing infrastructure is good, and the more we screw with it, the worse it gets.
If you've got roads, and people don't want any more, DON'T BUILD THEM! Very simple.
> The cattle > | rancher, while enjoying the raising of cattle, may also enjoy > | the proceeds from sending them to market. It is in his > | interest to have a road with which to ship the cattle to > | market. > | > |mm> Lots of uncertainty, about these very hypothetical libertarian > |mm> roads. Um, wait, "hypothetical" is not actually the word I was > |mm> searching for. "Fictional"is the word. > | > | Not too much uncertainty....to anyone who understands the > | complexities of supply and demand and market economics. > Tell me what our roads would look like, are traffic patterns, the > amount of extra time spent in gridlock from toll booths.
The technology for aoutomatic toll booths exists. KORO
|For purposes of clarifying the argument ... . | |We are really talking about two different kinds of holdouts. One is the |person who refuses to sell because he honestly prefers ownership of his |land to the price being offered. The other is the person who refuses to |sell for strategic reasons--he is hoping to use his blocking position to |get a higher price. | |So far as the first is concerned, the cost of depriving the owner of the |use of his land is just as real a cost as the cost of constructing the |highway.
I strongly disagree here. What are you measuring cost in, "utils"? Of course you don't want to make comparisons, preferring that unaminity over democracy, but I think that strains the limits of common sense.
|... If the entrepreneur cannot cover his costs if he has to |compensate the landowners fully, that is evidence that the road costs more |than it is worth and so should not be built.
Only if you assume unaminity.
|The real problem is the second case--strategic holdouts. That becomes less |of a problem if, as I suggested before, the entrepreneur can avoid any |individual holdout at a reasonably low cost--not merely because you can |build a slightly snaky road, but because you won't have to. The strategic |holdout, after all, wants to sell his land--and he won't hold out for an |astronomical price if he knows that you will respond by building around |him.
Why is it that the entreprenur is given vast skills and knowledge to get what he wants done, but the consumer is left brainless and stupid? Where is our rational and well informed consumer, who, on another thread, can analyze safety engineering on Airlines or the bacterial count in Safeway german sausage? Is he unable to form his own blocking coalition to extract the surplus?
I believe the *James* Friedman should be consulted on this!
Lazarus Long <2-100-1!Lazarus.L...@rational.vaxxine.com> wrote:
|da...@cats.ucsc.edu pontificated in a message to All: | |dc> From: da...@cats.ucsc.edu (David Michael Wright) |dc> Subject: Re: In a libertarian world, there are no roads |dc> Organization: University of California, Santa Cruz | | ||mm> Generally people don't build interstate highways on the principle of ||mm> long and winding, they build them on the principles of cost and good ||mm> engineering, including considerations like safety.. |dc> | |dc> | If the road was unfeasible due to costs, it would not be | |dc> built. | |dc> So there would be a lot fewer roads, a lot more expensive to drive, |dc> and many would be a lot longer to drive. Not to mention the traffic |dc> gridlock caused by tolls. | |dc> Definitely a case where social interest conflicts with individual |dc> interest. | | You make the assumption that toll booths would be necessary. | In many cases...it may be cheaper to use rail.
? | And the collective should overrule the individual's right to | their property?
Yes. ||mm> Is there enough money in a libertarian world, to build roads on the ||mm> principle of long and winding? |dc> | |dc> | If the demand for the road is sufficient, yes. | |dc> Great: the rich an wealthy make out again, while the middle class |dc> gets screwed. Those that can afford the Tolls or those that happen |dc> to own property near a road. | | Sorry...but that doesn't make a lot of economic sense. Having | roads that only the wealthy can afford, would mean that the | cost recovery for the owners of the roads would be longer. | By keeping the user cost lower, the owner encourages a larger | portion of the driving population to use the roads..resulting | in a faster recovery of his investment.
I was wondering why everything was so cheap these days.
| And you neglect that it is in the interest of property owners | to have roads. Therefore they would be unlikely to refuse to | allow roads to abut their properties.
Nothing is neglected, merely the more probable recognized.
||mm> Do YOU want to pay the tolls of a privately built toll road from, ||mm> say Austin to San Antonio, which is long and winding--who knows how ||mm> long and winding, it depends on the landowners, doesn't it?-- maybe ||mm> 200 miles worth, maybe 300, where the present distance is 80 miles? |dc> | |dc> | Mcculloch ignores, hence his lack of direct response, the | |dc> posts that pointed out that most people have an interest in | |dc> having transportation adjacent to their property. | |dc> And you ignore the problem with Tolls. | | WHy do you assume that there necessarily has to be tolls?
What else is there?
|dc> I think the fact is that most people do not want roads built |dc> anywhere near their property, especially in a city. In an area with |dc> few roads, you may have a point, but that is simply because they are |dc> scarce and the problems with them have not arose. | | Most people prefer to have access to their property.
People do have access to their property. They don't want access to Freeways in their backyard.
Ever try | and carry your living room furniture ten miles? Wouldn't you | find it easier if you could pull up to your house with your | load?
You are naieve or silly, I can't tell which.
|dc> The cattle |dc> | rancher, while enjoying the raising of cattle, may also enjoy | |dc> the proceeds from sending them to market. It is in his |dc> | interest to have a road with which to ship the cattle to | |dc> market. |dc> | ||mm> Lots of uncertainty, about these very hypothetical libertarian ||mm> roads. Um, wait, "hypothetical" is not actually the word I was ||mm> searching for. "Fictional"is the word. |dc> | |dc> | Not too much uncertainty....to anyone who understands the | |dc> complexities of supply and demand and market economics. | |dc> Tell me what our roads would look like, are traffic patterns, the | | I would assume that the roads would be longer than they are | wide..probably with a line down the middle and much thinner | than the width...in short, much like they look like today.
Good, then scrap your libertarian notions that seem hazardess at best.
| |> There is no doubt, however, that the costs of building a road will |> rise, and that roads will be less straight or both. | |I disagree. Your conclusion would be correct if the alternative to private |roads without eminent domain was public roads, with eminent domain, built |by a wise and benevolent government. But that is not the alternative.
Why not? You want to bring in unfetterd and benevolent libertarianism, with no strings attached. Is that what we are really measuring against? Then why not the alternative of a benevolent and rational government?
|Consider, for example, someone who is in charge of building a government |road, has a fixed budget, and believes (correctly) that he can get away |with using eminent domain to take land at much below its real value. He is |considering two routes. Route A costs a million dollars more for |construction but goes through land of little value Route B goes through |much more valuable land, imposing a cost of two million dollars on the |owners--only a quarter of which will be compensated. The road builder |chooses route B, with the result that the real cost of the road is higher |than in a world without eminent domain.
I don't think that is the case at all. There are two cases here: in the city and in the country. In the city, city planners usually don't go through factories or plants when they build roads, they go through neigborhoods or backyards. Hardly property of social "value" that is more prized than other property. Who is to say that someone who owns a huge acerage out in the country incurs a per square mile cost that gives him the slightest disutility in relation to cost. The two simply are not comparable on the same yardstick.
|Further, consider that a government built road may well be constructed at |an unnecessarily high cost, because the politicians in favor are paying |back contractors for past political support--or are being bribed.
I don't think there is much to be gained by getting into this.
|... There is |a reason why the U.S. Post Office is only able to stay in business by |making competition illegal.
But roads can be built with competitive bidding.
|I wrote:
| |> |2. Someone mentioned the NIMBY ("not in my back yard") problem. The |> |experience of building the original Pennsylvania Turnpike suggests that |> |the sign of the effect is the other way around. | |David Wright replied: | |> I think that things are just a little different than in the 19th |> centrury. There was no smog, comparatively little noise, and not as |> near the death rate. People fight much more against roads than they |> did in 19th century. | |I think you are mistaken. What people fight against is having their houses |torn down to make way for roads.
That is not true. There are very few of those compared to the masses that come forward to stop roads. That is the major reason that gives city councilmen such headaches. We had some plan before the board to make million dollar "imporvements" that would turn our neighborhood into a massive freeway exit turn off. Many of us came out against it and we were just one in a series of efforts to stop such things.
|... That is a real cost, and ought to be |compensated by whomever is building the road. So far as major highways are |concerned, the death rate is irrelevant, since it is happening to drivers, |not local residents.
You never tried to cross the road, ride you bike near these things? They are death traps and invite more death and accidents. Not to mention air pollution. It's hell if your an asthma sufferer.
|... So far as local highways are concerned, wagons were |dangerous too.
I hope you are not going to maintain that wagons were as dangerous as 2 ton steel boxes traveling at 70 mph!
|In general, urban road construction involves serious problems because |there are things already there. But the discussion so far as dealt with |long distance roads, which, whether in the 19th century or today, run |mostly through land without structures on it.
I disagree. One of the many problems in large cities is building connecting freeways and roads that connect freeways to the city.
If we are limiting are discussion to long distance roads, it is a different issue, but similiar ones are obtained. Certainly there are less negative externalities to build roads in which no one is around!
| |> |That is correct. On the other hand, the individuals owning the choke |> |points (passes) have a lot to gain by getting together to build the road, |> |so if there are not too many of them there is still a good chance of |> |building the road. | |David Michael Wright replied: | |> I think they have individualy the most to gain if the freeway or |> highway is built somewhere else, and they can get a small road to the |> freeway or highway. Thus, NIMBY still raises it's head. | |My point was that the road itself is valuable, and the people controlling |the choke points can divide the profit produced by building it among |themselves--if and only if they can reach an agreement. Sorry if I was |unclear.
So you think NIBMY is still a problem?
As to building a road in which is not situated near a population, a rural road over a mountain, then you still drive the cost of roads up.
|David Wright also raises the issue of toll booths. That is an example of |the technological backwardness of current (government run) roads. The |low-tech solution is a sticker on the car, paid for on a monthly or annual |basis, allowing the car to use the road without paying tolls--only |occasional users would have to go through the toll booth.
If you have compettion in road building, you are going to have lots of companies, and lots of stickers!
And unless you are willing to make the cost of illegally going through a booth low, you are going to have to check the stickers. As Jim has said, there are *lots* of places which have *lots* of exits.
|... The high-tech |solution is a transponder in the car, which answers the short range radio |query "which car is that" with "car number XXXXXX..;" the owner is then |billed for his highway use. And yes, there are real world examples of both |systems.
da...@cats.ucsc.edu pontificated in a message to All:
dc> From: da...@cats.ucsc.edu (David Michael Wright) dc> Subject: Re: In a libertarian world, there are no roads dc> Organization: University of California, Santa Cruz
|dc> | If the road was unfeasible due to costs, it would not be | |dc> built. dc> | |dc> So there would be a lot fewer roads, a lot more expensive to drive, |dc> and many would be a lot longer to drive. Not to mention the traffic |dc> gridlock caused by tolls. dc> | |dc> Definitely a case where social interest conflicts with individual |dc> interest. dc> | dc> | You make the assumption that toll booths would be necessary. | dc> In many cases...it may be cheaper to use rail.
dc> ?
yep... in cases where roads would be too expensive to pay for themselves..rail transportation may be cheaper.
dc> | And the collective should overrule the individual's right to | dc> their property?
dc> Yes.
Why? On what basis...and when should the collective have the right to overrule the individuals' right? Whenever it sees fit? Whenever a bureaucrat says so? how many people are needed to form a decision making collective? 10 ? 100? 1000?
||mm> Is there enough money in a libertarian world, to build roads on the ||mm> principle of long and winding? |dc> | |dc> | If the demand for the road is sufficient, yes. dc> | |dc> Great: the rich an wealthy make out again, while the middle class |dc> gets screwed. Those that can afford the Tolls or those that happen |dc> to own property near a road. dc> | dc> | Sorry...but that doesn't make a lot of economic sense. Having | dc> roads that only the wealthy can afford, would mean that the | dc> cost recovery for the owners of the roads would be longer. | By dc> keeping the user cost lower, the owner encourages a larger | dc> portion of the driving population to use the roads..resulting | dc> in a faster recovery of his investment.
dc> I was wondering why everything was so cheap these days.
meaning?
dc> | And you neglect that it is in the interest of property owners | dc> to have roads. Therefore they would be unlikely to refuse to | dc> allow roads to abut their properties.
dc> Nothing is neglected, merely the more probable recognized.
Ahh.. you say that it is probable that most people don't want access to their properties? That they would prefer leaving their cars miles from home and walking the rest of the way?
||mm> Do YOU want to pay the tolls of a privately built toll road from, ||mm> say Austin to San Antonio, which is long and winding--who knows how ||mm> long and winding, it depends on the landowners, doesn't it?-- maybe ||mm> 200 miles worth, maybe 300, where the present distance is 80 miles? |dc> | |dc> | Mcculloch ignores, hence his lack of direct response, the | |dc> posts that pointed out that most people have an interest in | |dc> having transportation adjacent to their property. dc> | |dc> And you ignore the problem with Tolls. dc> | dc> | WHy do you assume that there necessarily has to be tolls?
dc> What else is there?
I have pointed out several methods.
|dc> I think the fact is that most people do not want roads built |dc> anywhere near their property, especially in a city. In an area with |dc> few roads, you may have a point, but that is simply because they are |dc> scarce and the problems with them have not arose. dc> | dc> | Most people prefer to have access to their property.
dc> People do have access to their property. They don't want access to dc> Freeways in their backyard.
So...they don't have to sell. Welcome to the right of property that you disdained earlier.
dc> Ever try dc> | and carry your living room furniture ten miles? Wouldn't you | dc> find it easier if you could pull up to your house with your | dc> load?
dc> You are naieve or silly, I can't tell which.
I'm not the one who says that people probably would not want access to their property. Have fun carrying the baby grand across the fields.
|dc> The cattle |dc> | rancher, while enjoying the raising of cattle, may also enjoy | |dc> the proceeds from sending them to market. It is in his |dc> | interest to have a road with which to ship the cattle to | |dc> market. |dc> | ||mm> Lots of uncertainty, about these very hypothetical libertarian ||mm> roads. Um, wait, "hypothetical" is not actually the word I was ||mm> searching for. "Fictional"is the word. |dc> | |dc> | Not too much uncertainty....to anyone who understands the | |dc> complexities of supply and demand and market economics. dc> | |dc> Tell me what our roads would look like, are traffic patterns, the dc> | dc> | I would assume that the roads would be longer than they are | dc> wide..probably with a line down the middle and much thinner | dc> than the width...in short, much like they look like today.
dc> Good, then scrap your libertarian notions that seem hazardess at dc> best.
How so? What makes them hazardous. Far less hazardous than your suggestion that people would like to carry their goods from the city to their home in backpacks.
In article <31CB7645.4...@scruznet.com>, Steve Kangas
<kanga...@scruznet.com> wrote: > But your argument doesn't even make economic sense. If you value your land > below half the price you would sell it to a road construction company, > you have just doubled the cost of social utility.
I am coming in in the middle of this, so may be misunderstanding the argument you are answering, but ... .
I. If the road is built anyway, the payment to the landowner (above his true reservation price) is a transfer, not a social cost.
2. If trying to get more than his true reservation price means that the road does not get built, then the landowner has made a mistake, since he doesn't make any profit on the road at all.
So the social cost increases only in the case where the road does not get built, due to a mistake by the landowner (asking more than he can get).
> > Now if I value my land at a price > > which is higher than $500,000, then the company will not purchase the > > land and the efficient transaction has still occurred. But that still > > does not stop the road from being built--the company can re-route the > > road to build through my neighbor's and every neighbor of a holdout's > > property.
> So whatever social utility is not doubled in cost is cut in half by
efficiency.
Huh? The use of the owner's land is a real cost. If a different route costs $100,000 more to construct and maintain (present value) but runs over land whose alternative use is worth $200,000 less, then rerouting is more efficient than the original plan, not less.
> Furthermore, these individuals, who are only temporarily on this earth, > will *permanently* hinder social utility, in accordance with the economics > of path dependency. (No pun intended. This is also known by the popular name > "Economics of QWERTY.") You are making some truly awful arguments. Earlier you wrote: > You know, I'm an economist, but I really get pissed at some of my peers who > who have absolutely no idea how the real world works,
If you are concerned with how the real world works, you might want to look at the article "The Fable of the Keys" by Liebowitz and Margolis, Journal of Law and Economics a few years back. If they are correct (and I have seen no published response), the paradigmatic case for the analysis you refer to (QWERTY/Dvorak) is mythical. Almost all of the "facts" in the standard story about how we ended up with the QWERTY layout turn out to be false, and all of the studies showing the vast superiority of Dvorak appear to have been done by or under the direct influence of Mr. Dvorak. Studies by neutral parties show only small differences.
In any case, the possibility of path dependency does not imply that builders should count construction costs but ignore opportunity costs due to the alternative uses of the land--which is what your argument seems to imply. The "permanent" hindrance of social utility is simply a flow of costs over time, whose present value gets compared to the present value of the corresponding flow of costs due to using land for a highway instead of something else. I am making the argument briefly because you say you are an economist; I can fill in the details if necessary.
> The few acres required to make a shopping mall does not compare with the > millions of acres needed to build a major highway.
The particular highway that has been the center of this argument (in Texas) was said to be eighty miles long. Assume it requires a hundred foot wide strip.
80x5280x100= aprox 42 million square feet=aprox 1000 acres.
You can get a larger number by assuming a wider strip and a longer highway, but I think you will have a hard time fitting a straight highway of reasonable width covering "millions of acres" into the U.S.
I mention that because one way of keeping track of "how the real world works" is to actually calculate such numbers, instead of throwing around vague assertions about millions of acres.
> There are countless reasons why they would be opposed:
> 1. Sentimental attachment to family land > 2. Opposition to traffic noise > 3. Desire to keep private and secluded > 4. Desire to keep down industrial and residential development (my home town > of Santa Cruz is currently pursuing such a policy) > 5. Desire to conserve the natural environment > 6. Inconvenience of moving or radically changing one's lifestyle > 7. Land contains some other resource more valuable than a potential road
All of these except, perhaps, 4, are costs of building the road, hence legitimate reasons for not building that road there. If the result of eminent domain is that such considerations are ignored, the result is less efficient, not more. It is only if the benefit of the road outweighs all such costs that it is worth building--in which case the developer can compensate those injured by the road and so make them willing to sell. Of the problems that have been discussed (with roadbuilding in a world without eminent domain) only the "bargaining breakdown due to holdouts" argument represents a real economic cost.
And note that 4 is much more easily implemented politically, as in your real world example, than privately.
One further point. In this post, you describe yourself as "an economist." On your home page (isn't the web wonderful) you write that:
" This year I received a degree in Russian Studies, with an emphasis in political science and macroeconomics. I had originally intended to use my Russian skills to build bridges to a people against whom I had formerly waged "cold" war. But then the Berlin Wall fell, and communism with it shortly thereafter. In my last year of college I began feeling more interested in American political science and economics, and this is the field where I shall pursue my Ph.D. "
I would have thought that describing someone as "an economist" on that basis was at least mildly misleading. A "student of economics" perhaps.
Steve Kangas <kanga...@scruznet.com> wrote: >Can you hear how irrational your mindless hostility to government sounds?
This is an example of a new kind of anti-concept being pedalled by liberals: "anti-government". You will see this term being used with increasing frequency.
It is a package deal, that attempts to put two incommensurable things together: opposition to *all* government, and opposition to *illegitimate activities* of governments.
The purpose of this term is to elliminate opposition to unlimited government, by making *any* opposition to government some kind of heinous evil. Of course, this is just a "primacy of consciousness" tactic -- the persons employing this device believe that they can use language to change reality.
Also, I think the liberals are becoming uglier by the day. Their snarling is really getting obvious, which I think will simply help to accelerate the shift to the right which seems to be taking place in the west. Liberals like to paint themselves "nice" -- but as more people see what snarling creeps they actually are (when they aren't getting their whims satisified), then they will lose even more "benefit of the doubt" support of decent people, who took them at their word that they were "kind".
In article <4qfup1$...@darkstar.UCSC.EDU>, da...@cats.ucsc.edu () wrote: I wrote: > |... The high-tech > |solution is a transponder in the car, which answers the short range radio > |query "which car is that" with "car number XXXXXX..;" the owner is then > |billed for his highway use. And yes, there are real world examples of both > |systems.
David Michael Wright replied:
> I really doubt this is practical.
Why? A version was being used for automated toll collection for buses quite a while back. My source is an article by Ward Elliott (Claremont--I'm not sure which school); I'm afraid I am relying on memory so cannot give you a cite.
In article <4qfui7$...@darkstar.UCSC.EDU>, da...@cats.ucsc.edu () wrote: I wrote: > |I disagree. Your conclusion would be correct if the alternative to private > |roads without eminent domain was public roads, with eminent domain, built > |by a wise and benevolent government. But that is not the alternative.
David Michael Wright replied:
> Why not? You want to bring in unfetterd and benevolent libertarianism, > with no strings attached. Is that what we are really measuring > against? Then why not the alternative of a benevolent and rational > government?
But that is not what I am measuring it against. On the contrary--the whole argument assumes that individual property owners are out for their own interest, will therefore sometimes hold out for unreasonable sums, and will sometimes make a mistake in doing so, with the result that they don't sell and the road is either not built or build somewhere more expensive. I am willing to make realistic assumptions about the libertarian case--if I wasn't, I would have simply assumed your problem away by assuming benevolent property owners. So we should make similarly realistic assumptions about the alternative.
> |... So far as local highways are concerned, wagons were > |dangerous too.
> I hope you are not going to maintain that wagons were as dangerous as > 2 ton steel boxes traveling at 70 mph!
I don't know if they were or not--and neither, I suspect, do you. A horse is proably less predictable than a machine--and it took a lot less to kill or cripple in a world with the medical technology of a century or two ago.
In any case, the 2 ton boxes travelling at 70 mph tend to be on limited access expressway (280 runs about 1/2 mile north of my house--and is not noticeable, incidentally), where pedestrians are rare.
Michael Wright) wrote: > In article <ddfr-2106961442210...@129.210.77.17>, > David Friedman <d...@best.com> wrote: > |For purposes of clarifying the argument ... . > | > |We are really talking about two different kinds of holdouts. One is the > |person who refuses to sell because he honestly prefers ownership of his > |land to the price being offered. The other is the person who refuses to > |sell for strategic reasons--he is hoping to use his blocking position to > |get a higher price. > | > |So far as the first is concerned, the cost of depriving the owner of the > |use of his land is just as real a cost as the cost of constructing the > |highway.
> I strongly disagree here. What are you measuring cost in, "utils"?
Dollars--of value, not cash flows. The way economists usually define and compare costs. For a full explanation, see the chapter on economic efficiency in my _Price Theory: An Intermediate Text_. Or the corresponding chapter in my new book, _Hidden Order: The Economics of Everyday Life_, due out from HarperCollins at the end of this month.
> Of > course you don't want to make comparisons, preferring that unaminity > over democracy, but I think that strains the limits of common sense.
Where did you get that from? Where have I said anything about unanimity?
> |... If the entrepreneur cannot cover his costs if he has to > |compensate the landowners fully, that is evidence that the road costs more > |than it is worth and so should not be built. > Only if you assume unaminity.
I am assuming the ordinary economic definition of efficiency, economic gains, etc., ultimately due to Marshall--summing utility, with interpersonal comparisions done as if a dollar was worth the same amount of utility to everyone. It sounds as though you have been misled by the unfortunate attempt of textbook authors to use Pareto to pretend to answer such questions without making interpersonal comparisons.
> |The real problem is the second case--strategic holdouts. That becomes less > |of a problem if, as I suggested before, the entrepreneur can avoid any > |individual holdout at a reasonably low cost--not merely because you can > |build a slightly snaky road, but because you won't have to. The strategic > |holdout, after all, wants to sell his land--and he won't hold out for an > |astronomical price if he knows that you will respond by building around > |him.
> Why is it that the entreprenur is given vast skills and knowledge to > get what he wants done, but the consumer is left brainless and stupid? > Where is our rational and well informed consumer, who, on another > thread, can analyze safety engineering on Airlines or the bacterial > count in Safeway german sausage? Is he unable to form his own blocking > coalition to extract the surplus?
That's fine--if he can form a blocking coaition and extract the surplus, the road still gets built--and via the most efficient route. It is only if the consumer is clever enough to form the coalition but not clever enough to charge a price that the entrepreneur will pay that there is a problem.
Or in other words, I am not assuming that the landowner (a seller of inputs, incidentally, not a consumer in this context) is any stupider than the entrepreneur.
> I believe the *James* Friedman should be consulted on this!
> In article <31CB7645.4...@scruznet.com>, Steve Kangas > <kanga...@scruznet.com> wrote:
> > But your argument doesn't even make economic sense. If you value your land > > below half the price you would sell it to a road construction company, > > you have just doubled the cost of social utility.
> I am coming in in the middle of this, so may be misunderstanding the > argument you are answering, but ... .
> I. If the road is built anyway, the payment to the landowner (above his > true reservation price) is a transfer, not a social cost.
But that transfer is ultimately paid by society, is it not? If the landowner doubles his price, I have to pay for it (if I want to buy it), do I not?
> 2. If trying to get more than his true reservation price means that the > road does not get built, then the landowner has made a mistake, since he > doesn't make any profit on the road at all.
But the example set forth by the previous poster was about enriching himself unjustly by taking advantage of the road construction company's dilemma.
> So the social cost increases only in the case where the road does not get > built, due to a mistake by the landowner (asking more than he can get).
Well, you missed the point, missed it by a clean mile. If eminent domain would buy the land at $200,000, but the individual could sell it for $500,000 (in a libertarian world exploiting the road company's dilemma), it is not a mistake -- it's exploitation.
> > > Now if I value my land at a price > > > which is higher than $500,000, then the company will not purchase the > > > land and the efficient transaction has still occurred. But that still > > > does not stop the road from being built--the company can re-route the > > > road to build through my neighbor's and every neighbor of a holdout's > > > property.
> > So whatever social utility is not doubled in cost is cut in half by > efficiency.
> Huh? The use of the owner's land is a real cost. If a different route > costs $100,000 more to construct and maintain (present value) but runs > over land whose alternative use is worth $200,000 less, then rerouting is > more efficient than the original plan, not less.
In the short term. Not the long term. A very typical failing of laissez-faire economies.
> > Furthermore, these individuals, who are only temporarily on this earth, > > will *permanently* hinder social utility, in accordance with the economics > > of path dependency. (No pun intended. This is also known by the popular name > > "Economics of QWERTY.") You are making some truly awful arguments.
> Earlier you wrote:
> > You know, I'm an economist, but I really get pissed at some of my peers who > > who have absolutely no idea how the real world works,
> If you are concerned with how the real world works, you might want to look > at the article "The Fable of the Keys" by Liebowitz and Margolis, Journal > of Law and Economics a few years back. If they are correct (and I have > seen no published response), the paradigmatic case for the analysis you > refer to (QWERTY/Dvorak) is mythical. Almost all of the "facts" in the > standard story about how we ended up with the QWERTY layout turn out to be > false, and all of the studies showing the vast superiority of Dvorak > appear to have been done by or under the direct influence of Mr. Dvorak. > Studies by neutral parties show only small differences.
The fact that Dvorak falsified his studies is irrelevant to the fact that path dependency exists. Unfortunately economists first used QWERTY as an example for their point. It is popularly known as the "Economics of QWERTY," which is why I used the term. But there are countless of other undeniable examples. Shall we use water-cooled nuclear reactors instead?
Why are you even bringing up this irrelevent point?
> In any case, the possibility of path dependency does not imply that > builders should count construction costs but ignore opportunity costs due > to the alternative uses of the land--which is what your argument seems to > imply. The "permanent" hindrance of social utility is simply a flow of > costs over time, whose present value gets compared to the present value of > the corresponding flow of costs due to using land for a highway instead of > something else. I am making the argument briefly because you say you are > an economist; I can fill in the details if necessary.
And you see nothing wrong with saddling society with this "flow of costs over time." Again, the libertarian's economy is tactical, not strategic.
> > The few acres required to make a shopping mall does not compare with the > > millions of acres needed to build a major highway.
> The particular highway that has been the center of this argument (in > Texas) was said to be eighty miles long. Assume it requires a hundred foot > wide strip.
> 80x5280x100= aprox 42 million square feet=aprox 1000 acres.
> You can get a larger number by assuming a wider strip and a longer > highway, but I think you will have a hard time fitting a straight highway > of reasonable width covering "millions of acres" into the U.S.
I was thinking of America's many transcontinental highways, and I admit I overestimated the acreage because I didn't bother to crunch the numbers on my calculator. But this objection is a distraction; you have completely ignored the main point I was raising, and I'm not going to let you off the hook this easily. My main point was that a libertarian economy might be functional for small roads in condominium complexes; it becomes rapidly more unworkable when you are dealing with highways crossing entire states. Stop evading the issue and answer my point.
> I mention that because one way of keeping track of "how the real world > works" is to actually calculate such numbers, instead of throwing around > vague assertions about millions of acres.
And in the real world, a smart person isn't simply content to rearrange the deck chairs on the Titanic, which is what you did by defending your sinking argument with an irrelevant quibble over measurements. Please respond to my main point.
> > There are countless reasons why they would be opposed:
> > 1. Sentimental attachment to family land > > 2. Opposition to traffic noise > > 3. Desire to keep private and secluded > > 4. Desire to keep down industrial and residential development (my home town > > of Santa Cruz is currently pursuing such a policy) > > 5. Desire to conserve the natural environment > > 6. Inconvenience of moving or radically changing one's lifestyle > > 7. Land contains some other resource more valuable than a potential road
> All of these except, perhaps, 4, are costs of building the road, hence > legitimate reasons for not building that road there. If the result of > eminent domain is that such considerations are ignored, the result is less > efficient, not more. It is only if the benefit of the road outweighs all > such costs that it is worth building--in which case the developer can > compensate those injured by the road and so make them willing to sell.
"Make them willing to sell." Again, this is what I complained about to the original poster. Not all economists, but certainly too many, believe that consumers are perfectly rational and omniscient and only assess things according to their dollar value. You are assuming that many of these things have a dollar equivalent. You are also assuming that some people attach logical, rational prices to their wares. You are also assuming that there is nothing a person won't sell. You are also assuming that the owner's idea of social utility is the same as the democratic majority that would vote the road there. You are also assuming that there is sufficient economic resources and, perhaps even more importantly, the economic will to pay the unnecessarily high demands of the landowners. In short, you are assuming a bloody lot of behavior which doesn't occur in the real world.
But most egregiously, you are assuming that the threshhold of people's initial resistance to accepting unwelcome changes in their immediate lives is lower than it really is, and that it can be overcome without great cost to society or the market. I maintain that that threshhold is sometimes high enough to prevent social utility from occurring at all, and the only way to overcome it is eminent domain.
Don't think it can happen? Let's talk about whether or not people would pay taxes if they didn't have to...
> Of the problems that have been discussed (with roadbuilding in a world > without eminent domain) only the "bargaining breakdown due to holdouts" > argument represents a real economic cost.
Okay, I want you to spell out your objections very clearly. Assume two cities, A and B, which are separated by some 50 miles. City A provides exclusive goods which could greatly benefit City B, and vice versa. A connecting road would greatly enrich both of them. But in their proposals of such a road, the construction company periodically runs into land-owners who refuse to sell for any of the reasons outlined above. Instead of creating a highway that runs in a straight line, they create one that zig zags all over the map, a completely arbitrary result depending on whatever owners were in the mood to sell. (And that's assuming that they are not unlucky enough to run into a complete cul-de-sac, so to speak.) Now, unless I am very much mistaken, the cost of fuel, vehicle maintenance, etc., is going to climb for everyone who makes that trip. And the benefits of connecting the two cities will be reduced accordingly, for the very long term. Are you saying this is not a "real economic cost?"
> And note that 4 is much more easily implemented politically, as in your > real world example, than privately.
Well, this stirs up another bee's nest. Santa Cruz is acting according to the democratic will of the people in freezing development of its lands. If Santa Cruz were to
...
> Since when does anyone want a road near or through his property? > Instead of roads costly millions, they will end up costing billions, > or mirandering through the city like a snake, or both.
Have you ever looked at a map of pipelines in the US? These are built mostly without use of eminent domain, and somehow manage not to be all wiggly.
As for the idea of private operation of roads CAUSING gridlock, I think somebody has missed the whole point. The main reason we have gridlock during peak periods is that the current owner of the roads -- the government -- has no incentive to manage them well. Notice that the _telephone company_ has no trouble keeping their lines open during normal peak periods, and this is due to a combination of pricing innovations and the application of modern technology. Similar ideas could improve traffic flow if there were a financial incentive to implement changes.
But in order to make the highway system work better, it is vital that some freeways NOT be built so that resources can be concentrated where there is the most need. In a private market, prices are able to demonstrate where the demand is and influence that the bottlenecks are found and fixed. But in the political market roads are built based on political clout rather than market demand. And so we get...gridlock.
: 2. Suppose the roads did not pay for themselves, and it required a two : hundred dollar monthly toll bill to cover the cost. That would mean that, : under our present system, you would be paying the same two hundred dollars : a month in taxes to pay for the road--after all, the costs have to be : covered somehow. Replacing a user fee with a government subsidy doesn't : eliminate the cost, it just shifts it.
This bears repeating. This is simple common sense, that many people somehow seem to lose when the "magic wand" of "government" gets invoked.
-- Tony * Money is the material shape of the principle that men who wish Donadio * to deal with one another must deal by trade and give value for * value. - Francisco D'Anconia, in ATLAS SHRUGGED, by Ayn Rand
> > > Your conclusion would be correct if the alternative to private > > > |roads without eminent domain was public roads, with eminent domain, built > > > |by a wise and benevolent government. But that is not the alternative.
David Michael Wright replied:
>> Why not? You want to bring in unfetterd and benevolent libertarianism, >> with no strings attached. Is that what we are really measuring >> against? Then why not the alternative of a benevolent and rational >> government?
David Friedman
> But that is not what I am measuring it against. On the contrary--the whole > argument assumes that individual property owners are out for their own > interest, will therefore sometimes hold out for unreasonable sums, and > will sometimes make a mistake in doing so, with the result that they don't > sell and the road is either not built or build somewhere more expensive. I > am willing to make realistic assumptions about the libertarian case--if I > wasn't, I would have simply assumed your problem away by assuming > benevolent property owners. So we should make similarly realistic > assumptions about the alternative.
Actually David is not making realistic assumptions about the alternative: He is making absurdly generous assumptions about the alternative. If he made the sort of assumptions about government officials that he makes about private landowners he would predict the kind of use of eminent domain that we recently saw in Oakland where government officials used eminent domain primarily for the purpose of pointless destruction, probably motivated in large part by the highly realistic assumption that by causing vast harm to well off individuals, they would receive bribes to leave them alone. --------------------------------------------------------------------- We have the right to defend ourselves and our property, because of the kind of animals that we are. True law derives from this right, not from the arbitrary power of the omnipotent state.
Steve Kangas <kanga...@scruznet.com> wrote: >But that transfer is ultimately paid by society, is it not? If the landowner >doubles his price, I have to pay for it (if I want to buy it), do I not?
Landowners are not part of society?
> But the example set forth by the previous poster was about enriching himself > unjustly by taking advantage of the road construction company's dilemma.
What is unjust about possessing something that other people want?
You are simply assuming that socialism, the use of violence to take what you want, is morally superior to capitalism, but when we see it in practice, Cambodia, Soviet Union, Catalonia, Cuba, we clearly see that this assumption is not merely false, but outrageous, monstrous, and brutal.
>> Huh? The use of the owner's land is a real cost. If a different route >> costs $100,000 more to construct and maintain (present value) but runs >> over land whose alternative use is worth $200,000 less, then rerouting is >> more efficient than the original plan, not less. > In the short term. Not the long term. A very typical failing of laissez-faire > economies.
This of course makes no sense at all: Capitalists, by definition, are concerned for the long term because they want to increase their capital. Politicians seldom care about long term costs, as has been amply demonstrated.
> "Make them willing to sell." Again, this is what I complained about to the > original poster. Not all economists, but certainly too many, believe that > consumers are perfectly rational and omniscient and only assess things according > to their dollar value.
So you propose that your vast wisdom should be substituted at gunpoint for the will of that irrational foolish consumer.
--------------------------------------------------------------------- We have the right to defend ourselves and our property, because of the kind of animals that we are. True law derives from this right, not from the arbitrary power of the omnipotent state.
In article <31CBC2D7.5...@scruznet.com>, Steve Kangas
<kanga...@scruznet.com> wrote: > But that transfer is ultimately paid by society, is it not? If the landowner > doubles his price, I have to pay for it (if I want to buy it), do I not?
Paid by members of society and received by a member of society--the landowner. Hence not a net cost. I thought you were claiming to be an economist.
> > 2. If trying to get more than his true reservation price means that the > > road does not get built, then the landowner has made a mistake, since he > > doesn't make any profit on the road at all. > But the example set forth by the previous poster was about enriching himself > unjustly by taking advantage of the road construction company's dilemma. > > So the social cost increases only in the case where the road does not get > > built, due to a mistake by the landowner (asking more than he can get). > Well, you missed the point, missed it by a clean mile. If eminent domain > would buy the land at $200,000, but the individual could sell it for $500,000 > (in a libertarian world exploiting the road company's dilemma), it is not a > mistake -- it's exploitation.
Suppose someone offers you a job, doing the sort of thing you want, at $40,000/year. Further suppose you would have accepted the job at $30,000/year. By accepting the higher salary, are you exploiting your employer? His customers?
Every time I buy a book by one of my favorite authors, I am getting it at a lower price than I would be willing to pay. Am I exploiting the author and his publisher?
We are considering a situation where there are gains from trade--the land is worth more to the entrepreneur building the road than to its current owner. What grounds, of ethics or economics, are there for claiming that all of the gain should go to the entrepreneur, and none to the owner?
The original argument was about inefficiencies arising from the lack of eminent domain. Transfers are not net costs. Injustice, supposing you could present a coherent theory of justice in which the buyer is entitled to all of the gain from the transfer, is not inefficiency.
> > > > Now if I value my land at a price > > > > which is higher than $500,000, then the company will not purchase the > > > > land and the efficient transaction has still occurred. But that still > > > > does not stop the road from being built--the company can re-route the > > > > road to build through my neighbor's and every neighbor of a holdout's > > > > property.
> > > So whatever social utility is not doubled in cost is cut in half by > > efficiency.
> > Huh? The use of the owner's land is a real cost. If a different route > > costs $100,000 more to construct and maintain (present value) but runs > > over land whose alternative use is worth $200,000 less, then rerouting is > > more efficient than the original plan, not less. > In the short term. Not the long term. A very typical failing of laissez-faire > economies.
All of my numbers were, as I thought I made clear in the comment above, present values of streams of costs and benefits. When the land is taken from the landowner and used for a road, the result is a stream of costs to him--he doesn't get to use it this year, or next year, or ..., to be balanced against the stream of benefits from building, maintaining, and using a shorter road (and the costs of alternative routes).
> The fact that Dvorak falsified his studies is irrelevant to the fact that > path dependency exists. Unfortunately economists first used QWERTY as an example > for their point. It is popularly known as the "Economics of QWERTY," which is why > I used the term. But there are countless of other undeniable examples. Shall we > use water-cooled nuclear reactors instead? > Why are you even bringing up this irrelevent point?
Because your previous post contrasted economists who were and were not concerned with the real world. I am offering evidence that the theorists whose work you were citing, and by extension you, were in the second category.
As you will eventually discover as you pursue your studies in economics, if you have not already done so, it is possible to make a logically consistent argument for almost any economic conclusion, although not always a plausible one--the most common way is by rigging assumptions about utility functions, but there are lots of others, including arbitrary assumptions about patterns of irrationality. So it is worth keeping one eye on the real world--in particular, the testable implications of the alternatives. The QWERTY/Dvorak case was touted as a strong piece of real world evidence for the importance of path dependency--a clearly inefficient result, due to accidents early on. If, as seems to be the case, it is bogus, that weakens the argument for the importance of path dependency.
Did you know it was bogus, by the way? Your answer makes it sound as though you did, while your original reference makes it sound as though you didn't. Judging by a book by a prominent economist that I read recently, at least some of the supporters of the importance of path dependence remain blissfully unaware of the problems with their favorite example.
> > In any case, the possibility of path dependency does not imply that > > builders should count construction costs but ignore opportunity costs due > > to the alternative uses of the land--which is what your argument seems to > > imply. The "permanent" hindrance of social utility is simply a flow of > > costs over time, whose present value gets compared to the present value of > > the corresponding flow of costs due to using land for a highway instead of > > something else. I am making the argument briefly because you say you are > > an economist; I can fill in the details if necessary.
> And you see nothing wrong with saddling society with this "flow of costs over > time." Again, the libertarian's economy is tactical, not strategic.
We are trading off one flow of costs against another. You see nothing wrong with saddling society with the flow of costs over time resulting from diverting the land from its current use. I want to compare the present value of the two flows.
> > > The few acres required to make a shopping mall does not compare with the > > > millions of acres needed to build a major highway.
> > The particular highway that has been the center of this argument (in > > Texas) was said to be eighty miles long. Assume it requires a hundred foot > > wide strip.
> > 80x5280x100= aprox 42 million square feet=aprox 1000 acres.
> > You can get a larger number by assuming a wider strip and a longer > > highway, but I think you will have a hard time fitting a straight highway > > of reasonable width covering "millions of acres" into the U.S.
> I was thinking of America's many transcontinental highways, and I admit I overestimated > the acreage because I didn't bother to crunch the numbers on my calculator. But > this objection is a distraction; you have completely ignored the main point > I was raising, and I'm not going to let you off the hook this easily. My main point > was that a libertarian economy might be functional for small roads in condominium > complexes; it becomes rapidly more unworkable when you are dealing with highways > crossing entire states. Stop evading the issue and answer my point.
But the question of whether you are assembling a few thousand acres or a few million is relevant to the comparison between the problem of assembling the land for a highway and similar problems that are routinely solved privately. If the cost of the land is a very small part of the cost of the highway, as it probably is outside of urban areas, the problems that eminent domain is supposed to solve become much less serious.
For examples of projects similar to an interstate highway, done without eminent domain:
The original (19th century)Pennsylvania turnpike. The great Northern transcontinental route (assuming I am right in remembering that that was the one done without land grants). Various private turnpikes in Britain in the 18th and 19th centuries. Oil pipelines. ...
> "Make them willing to sell." Again, this is what I complained about to the > original poster. Not all economists, but certainly too many, believe that > consumers are perfectly rational and omniscient and only assess things according > to their dollar value.
If consumers are irrational and have imperfect information, why does that consistently lead to overvaluing their land? Wouldn't some of them mistakenly demand too high a price and some too low?
In any case, while consumers are not perfectly rational and perfectly well informed, they can be expected to be better informed and act more rationally as consumers than as voters. A consumer who makes a mistake pays for it himself; a voter who makes a mistake probably has no effect (i.e. his vote was not decisive) and if he does have an effect, everyone pays for it. So the incentive to avoid mistakes is much higher when functioning as a consumer (or seller, or ...) than as a voter.
> You are also assuming that the owner's idea of social utility is the same > as the democratic majority that would vote the road there.
Certainly not. We have much better theoretical reasons to expect efficient outcomes from the market (subject to all the usual caveats) than from democratic voting. To get efficiency out of the latter, you pretty much need Coasian assumptions--which are sufficient, but not necessary, for the former.
> You are also assuming > that there is sufficient economic resources
I don't know what that means, and doubt you do.
> and, perhaps even more importantly, the > economic will to pay the unnecessarily high demands of the landowners.
If the road builder is not willing to pay the high demand of the landowners, then it is not in the interest of the landowners to make those demands. As I pointed out earlier, it is only in the case of strategic
...
> : 2. Suppose the roads did not pay for themselves, and it required a two > : hundred dollar monthly toll bill to cover the cost. That would mean that, > : under our present system, you would be paying the same two hundred dollars > : a month in taxes to pay for the road--after all, the costs have to be > : covered somehow. Replacing a user fee with a government subsidy doesn't > : eliminate the cost, it just shifts it.
> This bears repeating. This is simple common sense, that many people > somehow seem to lose when the "magic wand" of "government" gets invoked.
Yes, the cost gets shifted, but there is a reason to do so. A completely similar thing happened under Rurual Electrification. When Roosevelt first started this program, the free market saw no profit motive to wire the countryside with electricity. In 1935, only 13 percent of all farms had electricity. Roosevelt's Rural Electrification Administration began correcting this market failure; by 1970, more than 95 percent of all farms would have electricity, almost all of them thanks to the REA.
Prior to the REA, American agriculture had been suffering depressed times for decades. But today our agricutural sector feeds not only America, but the world.
These sort of cost shifts do a couple things: 1) They reverse the trend of economic activity being increasingly concentrated in heavy population centers. 2) They invest in the long-term health of the economy. 3) They maximize the infrastructure upon which the free market operates, and allow the free market to start developing in places where it might not have otherwise.
I don't know, maybe you prefer farms without electricity, and rural areas without roads. This is not a national economy that I would want to live in, but I've learned never to underestimate the strangeness of libertarian desires.
> -- > Tony * Money is the material shape of the principle that men who wish > Donadio * to deal with one another must deal by trade and give value for > * value. - Francisco D'Anconia, in ATLAS SHRUGGED, by Ayn Rand
> In article <d17_9606201...@rational.vaxxine.com>, > Lazarus Long <2-100-1!Lazarus.L...@rational.vaxxine.com> wrote: > |da...@cats.ucsc.edu pontificated in a message to All: > | > |dc> From: da...@cats.ucsc.edu (David Michael Wright) > | And the collective should overrule the individual's right to > | their property?
> Yes.
So "the collective" some how has a right to tell my whether or not I can eat my own candy bar?
Ouch. I'd like to tie this in to your latter response.
> |dc> I think the fact is that most people do not want roads built > |dc> anywhere near their property, especially in a city. In an area with > |dc> few roads, you may have a point, but that is simply because they are > |dc> scarce and the problems with them have not arose. > | > | Most people prefer to have access to their property.
> People do have access to their property. They don't want access to > Freeways in their backyard.
I want access to a freeway in my back yard. I just don't want the freeway *in* my backyard.
Now a free market solution to this is to pay me money for the privilage of putting the road in my yard (similar to eminant domain except that I have a choice in the matter)
Your "collective" approach (see above) is to just put it in my back yard or put it in the back yard of the folks who lost the last political battle.
Your method will certainly work. It just doesn't seem friendly.
Mahie,Mahie
I'm a moderate. I see nothing moderate about 2 major parties that spend 43 percent of the GNP each and every year, and have made promises that will require spending 80% of the GNP 30 years from now. That makes, Harry Browne, the only moderate candidate out there.
> In article <31CBC2D7.5...@scruznet.com>, Steve Kangas > <kanga...@scruznet.com> wrote:
> > But that transfer is ultimately paid by society, is it not? If the landowner > > doubles his price, I have to pay for it (if I want to buy it), do I not?
> Paid by members of society and received by a member of society--the > landowner. Hence not a net cost. I thought you were claiming to be an > economist.
And I thought you were claiming to be. Of course it's a net cost. Any inefficient allocation of resources is a net cost. But then, your calculating from a ledger and not the real world, aren't you?
> > > 2. If trying to get more than his true reservation price means that the > > > road does not get built, then the landowner has made a mistake, since he > > > doesn't make any profit on the road at all.
> > But the example set forth by the previous poster was about enriching himself > > unjustly by taking advantage of the road construction company's dilemma.
> > > So the social cost increases only in the case where the road does not get > > > built, due to a mistake by the landowner (asking more than he can get).
> > Well, you missed the point, missed it by a clean mile. If eminent domain > > would buy the land at $200,000, but the individual could sell it for $500,000 > > (in a libertarian world exploiting the road company's dilemma), it is not a > > mistake -- it's exploitation.
> Suppose someone offers you a job, doing the sort of thing you want, at > $40,000/year. Further suppose you would have accepted the job at > $30,000/year. By accepting the higher salary, are you exploiting your > employer? His customers?
Exploiting their market ignorance, incompetence or inefficiency, yes. If I sell a little old lady a lemon (as in car, not the fruit) for $1 million, and she gladly pays, am I not exploiting her ignorance? Our outrage over this exploitation depends on the degree; your employer example doesn't trouble as much as the little old lady example does. Granted, people have a personal responsibility for understanding their transactions, but they also have a responsibility not to blatantly rip someone off. Again, it's a matter of degree.
But, more relevantly to the discussion, the exploitation by the land-owner holdout is not based on the road company's ignorance, but on conscious knowledge. Does that make exploitation any more defensible?
> Every time I buy a book by one of my favorite authors, I am getting it at > a lower price than I would be willing to pay. Am I exploiting the author > and his publisher?
Technically, yes. Does society seem to accept it? Yes. Should it? In small cases, arguably; in large cases, no.
> We are considering a situation where there are gains from trade--the land > is worth more to the entrepreneur building the road than to its current > owner. What grounds, of ethics or economics, are there for claiming that > all of the gain should go to the entrepreneur, and none to the owner?
Ethics: since the owner's excess gain is from exploitation, it should be eliminated.
Economics: the land should go for whatever fair market value existed before the road company's proposal.
> The original argument was about inefficiencies arising from the lack of > eminent domain. Transfers are not net costs. Injustice, supposing you > could present a coherent theory of justice in which the buyer is entitled > to all of the gain from the transfer, is not inefficiency.
You're making a subjective argument. The exploiter's gains are ill-gotten, and eliminating these gains cannot then be described as "unjust gains to the buyer." It's sort of like claiming that the elimination of slavery and the awarding of fairer (and higher) wages to blacks is "reverse discrimination."
And I would take a very long look at whatever moral/economic theory prompted you to say "Injustice is not inefficiency." One of the first things they teach you in economics is that slave economies are inefficient economies... individual worker productivity falls far below average. Furthermore, if I unfairly underpay you for services rendered, then this is an economic imbalance, and a misallocation of resources. It is inefficient.
Actually, I am sorry that I had to read a statement like "Injustice is not inefficiency."
> > > > > Now if I value my land at a price > > > > > which is higher than $500,000, then the company will not purchase the > > > > > land and the efficient transaction has still occurred. But that still > > > > > does not stop the road from being built--the company can re-route the > > > > > road to build through my neighbor's and every neighbor of a holdout's > > > > > property.
> > > > So whatever social utility is not doubled in cost is cut in half by > > > efficiency.
> > > Huh? The use of the owner's land is a real cost. If a different route > > > costs $100,000 more to construct and maintain (present value) but runs > > > over land whose alternative use is worth $200,000 less, then rerouting is > > > more efficient than the original plan, not less.
> > In the short term. Not the long term. A very typical failing of laissez-faire > > economies.
> All of my numbers were, as I thought I made clear in the comment above, > present values of streams of costs and benefits. When the land is taken > from the landowner and used for a road, the result is a stream of costs to > him--he doesn't get to use it this year, or next year, or ..., to be > balanced against the stream of benefits from building, maintaining, and > using a shorter road (and the costs of alternative routes).
And I thought I made it clear that individuals are temporary, societies are permanent. Whose stream of costs do you think matters most in the long run? Would you prefer to have been born in a society whose ancestors neglected the social stream?
> > The fact that Dvorak falsified his studies is irrelevant to the fact that > > path dependency exists. Unfortunately economists first used QWERTY as an > example > > for their point. It is popularly known as the "Economics of QWERTY," > which is why > > I used the term. But there are countless of other undeniable examples. > Shall we > > use water-cooled nuclear reactors instead?
> > Why are you even bringing up this irrelevent point?
> Because your previous post contrasted economists who were and were not > concerned with the real world. I am offering evidence that the theorists > whose work you were citing, and by extension you, were in the second > category.
I am sure this incoherent argument makes internal sense to you. You are claiming that the honest mistake of those who cited Dvorak shows that they were not trying to learn how the real world works. Even more improbably, you seem to be claiming that the countless other examples of path dependency which indisputably exist prove that these economists are not working in the real world, because its first example turned out to be mistaken.
Sir, you are engaging in both fallacy and sophism. Please feel free to join a legitimate debate about path dependency.
> As you will eventually discover as you pursue your studies in economics, > if you have not already done so, it is possible to make a logically > consistent argument for almost any economic conclusion, although not > always a plausible one--the most common way is by rigging assumptions > about utility functions, but there are lots of others, including arbitrary > assumptions about patterns of irrationality. So it is worth keeping one > eye on the real world--in particular, the testable implications of the > alternatives. The QWERTY/Dvorak case was touted as a strong piece of real > world evidence for the importance of path dependency--a clearly > inefficient result, due to accidents early on. If, as seems to be the > case, it is bogus, that weakens the argument for the importance of path > dependency.
Okay, which other examples of path dependency would you not find objectionable? Gasoline engines over steam? Water-cooled nuclear reactors over gas? VHS video cassettes over lasar discs? National industries tied to a single city of birth? Accidents of invention and history?
I think you're grasping at straws with the Dvorak example because you know path dependency is a strong refutation to purist forms of the invisible hand.
> Did you know it was bogus, by the way? Your answer makes it sound as > though you did, while your original reference makes it sound as though you > didn't. Judging by a book by a prominent economist that I read recently, > at least some of the supporters of the importance of path dependence > remain blissfully unaware of the problems with their favorite example.
Yes, I knew of the recent research. That is why I described path dependency in the way I did. But I am coming to the conclusion that you do not read my posts carefully. You will notice I originally introduced this concept with the term "path dependency." Then, in parentheses, I added that this was known by the popular name "Economics of QWERTY." I mentioned it only to help people recognize it, because, after all, that is its popular name. (You could even say that this identification process is itself a form of path dependency. :-) ) At no time did I endorse the Dvorak example, and it's disengenuous for you to suggest that I did.
> > > In any case, the possibility of path dependency does not imply that > > > builders should count construction costs but ignore opportunity costs due > > > to the alternative uses of the land--which is what your argument seems to > > > imply. The "permanent" hindrance of social utility is simply a flow of > > > costs over time, whose present value gets compared to the present value of > > > the corresponding flow of costs due to using land for a highway instead of > > > something else. I am making the argument briefly because you say you are > > > an economist; I can fill in the details if necessary.
>You are simply assuming that socialism, the use of violence to take >what you want, is morally superior to capitalism, but when we see it >in practice, Cambodia, Soviet Union, Catalonia, Cuba, we clearly see >that this assumption is not merely false, but outrageous, monstrous, >and brutal.
I think better than captalism........ Use private property ownership.
raph...@liberty.batnet.com (Glen Raphael) wrote: >But in order to make the highway system work better, it is vital that some >freeways NOT be built so that resources can be concentrated where there is >the most need. In a private market, prices are able to demonstrate where >the demand is and influence that the bottlenecks are found and fixed. But >in the political market roads are built based on political clout rather >than market demand. And so we get...gridlock.
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