styrofoam houses

Back in April, I blogged about the false assertion of market failure.

Monday, April 17, 2006

the free market fails to fail

One often hears of the term "market failure" as an excuse for unbridled statist aggression to rob, plunder and steal from her slaves unwilling servant class. It might be used to justify environmental policy; to fund canal digging; bridge, road, and railroad building; etc.

Alas, "there is no such thing as market failure - only lack of private property rights." Hence, externalities are the creature of the mixed markets, those in which government has preempted the common law of liability, with its own ineffective policies, in which some cases is a form of corporate welfare (logging industry, fishing rights, etc.)

Without delving further into the economics though, I'd like to state that such a claim is prima facie fallacious because the very notion that there exists an objective definition of what services and goods that billions of interacting individuals ought to offer one another is preposterous. If that weren't true, I humbly submit that there is a market failure to deliver styrofoam houses, bicycles made from gold, and teleportation machines.

Thus said, there is no market failure because one cannot argue that such goods or services ought to be provided by the market, only that they, strictly on a personal basis desire the provision to be made.

I thought it worthwhile to bring up again, because to my surprise I have learned that builders have found it economical to construct homes with styrofoam blocks, and poof! - there goes one ridiculous example of market failure!

More recently though, I came across Prof. Hans-Hermann Hoppe's analysis of public vs. private goods in which he thoroughly ridicules the conceptual distinction.

For one thing, to come to the conclusion that the state has to provide public goods that otherwise would not be produced, one must smuggle a norm into one’s chain of reasoning. Otherwise, from the statement that be cause of some special characteristics of theirs certain goods would not be produced, one could never reach the conclusion that these goods should be produced. But with a norm required to justify their conclusion, the public goods theorists clearly have left the bounds of economics as a positive, wertfrei science. Instead they have transgressed into the field of morals or ethics, and hence one would expect to be offered a theory of ethics as a cognitive discipline in order for them to legitimately do what they are doing and to justifiably derive the conclusion that they actually derive. But it can hardly be stressed enough that nowhere in the public goods theory literature can there be found anything that even faintly resembles such a cognitive theory of ethics. Thus it must be stated at the outset, that the public goods theorists are misusing whatever prestige they might have as positive economists for pronouncements on matters on which, as their own writings indicate, they have no authority whatsoever. Perhaps, though, they have stumbled on something correct by accident, without supporting it with an elaborate moral theory? It becomes apparent that nothing could be further from the truth as soon as one explicitly formulates the norm that would be needed to arrive at the above-mentioned conclusion about the state’s having to assist in the provision of public goods. The norm required to reach the above conclusion is this: whenever it can somehow be proven that the production of a particular good or service has a positive effect on someone but would not be produced at all, or would not be produced in a definite quantity or quality unless others participated in its financing, then the use of aggressive violence against these persons is allowed, either directly or indirectly with the help of the state, and these persons may be forced to share in the necessary financial burden. It does not need much comment to show that chaos would result from implementing this rule, as it amounts to saying that everyone can aggress against everyone else whenever he feels like it.