Dear David, Thanks for your comments.
> However, the claim that individuals can and should > by the only protectors of themselves from fraud > misses the mark. Individuals are much better off assuming that they are the only protectors of themselves. It is possible to interest others in protecting one, but it is not wise to rely solely on such protection. > Liability for one's actions and commitments is as > fundamental to freedom as is due process of law. Individual liberty requires individual responsibility. > To the extent that an individual may be found to have > caused damage or broken contract or acted fraudulently, > giving them due process of law, they should be held > responsible. Yes. And, the most effective means of protection for the individual is provided by his own actions rather than relying on third parties. He protects himself best who chooses carefully with whom he does business, negotiates effective contracts, interests all parties in the fulfillment of all aspects of each contract, and has the wherewithal to make difficulty for those who break contracts (such as by denying future business to that party). > The ability of trading partners to hold each other > responsible in this way reduces the uncertainty and > transaction costs of trading. Yes. However, individuals and private businesses have these means without reference to the state. In fact, the State does not reduce uncertainty and transaction costs of trading, but increases it, and burdens it with taxes, regulations, caprice, insolence, and other difficulties. The existence of private courts demonstrates that alternatives to the State as a provider of justice services are in demand. Mediation, arbitration, and other means of resolving disputes are essential parts of Western civilization, and would not exist if the State were adequately providing for that ability you mention. > The removal of this option may force traders accept > inferior (higher transaction cost) alternatives such > as reputation, and this obviously may be so unsatisfactory > as to render the trade unviable. That isn't obvious at all. In fact, trade takes place among anonymous parties who don't even have reputation available to establish safe transactions. Most trade takes place without reference to contracts, courts, or third party enforcement. The storekeeper who relies on dialing 911 is not as well off as the storekeeper who has a shotgun behind the counter. > Reputation is a substitute for legal remedy in avoiding > fraud losses, and reputation is attached to a producer. Perhaps you think that "legal remedy" isn't attached to a producer. But, it is. The state is a producer, in this case of legal remedies, and its reputation is very bad. It is ineffective at following its own rules, it is ineffective at providing dispute resolution services, it is slow, dimwitted, and foolish. > Like any producer, the reputation owner, enjoys some > degree of economies and diseconomies of scale and scope. One would hope that some degree of everything is available to everyone if we accept that zero and infinity are possible degrees, yes. <smile> > Thus the reputation holder may attain some scale and > scope and specialise in certifying the performance of > other traders. Indeed. And, numerous other means exist to certify the performance of vendors. Prior to the viciously unconstitutional establishment of the FDA, private parties certified food items with "the Good Housekeeping Seal of Approval" and with other types of certification (kosher, halal, etc.). The Underwriters Laboratory still certifies certain electrical products. Of course, lawyers, accountants, doctors, and some other professionals are certified by the State. I don't happen to find that approach to certification to be very effective. > Thus an agency may act as a fraud risk assessment for > many potential trading partners, and do so effectively, > reducing information and other transaction costs and > creating a legitimate sense of security on the part of > traders. Sure. Reference to which may be good for the individual, if he can trust that agency. That doesn't mean that he should be any less wary, though. Use of such an agency cannot possibly be without pitfalls. Just as the individual may make mistakes in choosing vendors, so too the agency may make such mistakes. > Just as armed security guards provide a legitimate sense > of security to those they protect ( I know I dispatched > a security guard to a bank that had a break and enter > on new year's eve and the girls at the branch were very much > assured), Were they "allowed" to keep and bear arms, were they trained in the use of such, and were they in the possession of same, they would likely have felt better even before armed security guards arrived. The state does the individual a grave disservice when it disarms him. "Among the other harm it brings you, being unarmed causes you to be despised." Machiavelli. > so intermediaries and agencies with good reputation can > provide better default and fraud risk management than > the dispersed traders. Yes. But, they don't necessarily do so, and they certainly can't do so in all instances, as all human agencies are subject to fallibility. It may be better to employ such an agency, but it cannot be without risk. (Life without risk is akin to death.) > And just as individuals should have the right to be > armed to protect themselves (a right I explicitly do > not enjoy under the laws of New South Wales, > Australia), Sounds to me like you need better laws there. > so individuals should have the right to be suspicious > to protect themselves from fraud. Yes. > Of course I am not saying that any particular market > model is optimal for all situations, only that the > ability to sue those who defraud or deal deceptively > or default on contracts should not be taken away just > because the administration of justice, even under > common law, is imperfect. I agree completely. I just don't think the state is needed to provide for this relief. It is possible to sue in private courts. It is possible to establish ad hoc courts which have some of the powers of compulsory subpoena and the like without establishing a state. Happens all the time in Awdal. There are numerous other models for jurisprudence which don't involve the state, and do provide for lawsuits at both common law and criminal law. One of the interesting things about English common law is that it preceded the advent of the British monarchy. In many ways, common law evolved from natural law. Juries, grand juries, and the precepts of common law indicate a pattern of justice prior to the development of the modern nation state. > A better way to reduce transaction costs and enable > people to deal with each other in greater certainty > is to improve institutions (rules, laws). Absolutely. And, the best tool we have for improving institutions is the free market. Competition among vendors makes for tremendous improvements at a rapid rate with very little cost to the consumer. Generally, where barriers to entry are low and the market is completely free, prices to the end user drop rapidly as quality improves. That's still going on with the personal computers we all use. So, to get better rules and better laws, we need to remove the monopoly vendor and bring in free and open competition in an unregulated free market. If we continue to allow ourselves to be burdened by a monopoly vendor for judicial services, we face endless difficulty in getting better services with greater innovation at a lower price. > The removal of unnecessary regulation and complexity > and the rationalisation of law based on the development > of a clear hierarchy of laws and the principle of > universality of rules (rules that apply to unknown > number of future circumstances and persons), > and the constitutionally bound evolution of the rules. Sorry, David, I don't parse that well. It has all these dependent clauses and no predicate. Let me take a stab at it: > The removal of unnecessary regulation and complexity is good. I'm for removing unnecessary things. > and the rationalisation of law based on the development > of a clear hierarchy of laws Greater clarity would be good. Rational laws would be welcome. I think the market provides better service in this area than government. > and the principle of universality of rules > (rules that apply to unknown > number of future circumstances and persons), Fraught with peril, I think. Given individual variation in humans and significant variation in cultures, some of these rules aren't all that universal. I do agree that there are natural laws of human behavior which are observable and widely applicable. I'm not sure that the hegemony of modern, Western culture is good for everyone. > and the constitutionally bound evolution of the > rules. Funny thing, those constitutions. They offer guarantees, but don't live up to them. Woe betide the individual whose liberty is only protected by a constitution. (Guns work much better for defense.) > This provides legal certainty and allows people > to trust those they do not know and have never > met before, e.g. you might go to another country > and walk into a bank and give someone you have > never met before a large amount of money, in > perfect confidence that your money is safe! Legal certainty sounds good. People do have the ability to trust those they do not know and have never met before. With specie and bullion and now with e-gold and other metal-backed online currencies, I can be sure of good payment without knowing the customer or vendor in question. There's no "might" about it. I've been to many other countries. However, in some of them, banking is not well thought of. For example, in Awdal, there are no licensed banks. There is no central bank. There are all sorts of individuals and private businesses providing banking services. It works much better. More competition, less regulation, more free market choices, better, faster, cheaper. My confidence that my large amounts of money are safe has much more to do with my ability to defend my interests than with the various applicable systems of law. I have money in all kinds of places, with laws as varied as you could imagine, but it is not reliance on these laws which protects my assets. > It is this environment of minimum legal uncertainty > that efficient market structures develop and evolve > dynamically. Yes! Minimum legal uncertainty is a good thing. And, a way of measuring legal uncertainty is to price a policy for political risk insurance. Political risk is that component of risk which is generated by the actions of politicians, especially legislators. So, places without legislatures where the state is minimized have very low political risk, and have low political risk insurance premiums. By way of making this point: the USA has the very highest of all political risk premiums. >Have to agree with you on that one Jim! Glad to be of service. Regards, Jim http://www.two-cents-worth.com/?101468&EG http://www.Cambist.net/ --- You are currently subscribed to e-gold-list as: [email protected] To unsubscribe send a blank email to [EMAIL PROTECTED] http://www.e-gold.com/stats.html lets you observe the e-gold system's activity now!
