You know the difference, government doesn't own the resources they manage, at least not in the same sense as a firm. Also, they monopolize (either directly, ex lege, or indirectly).

Should have said, "is merely a group of people who share resources they legitimately own"

Note that, way back, when you first brought up selling, this is what I wrote. The gist is that low transaction costs are irrelevant.

Then, you wrote that, well, transaction costs do matter.

Only then, I wrote about lower transaction costs - easy of selling or buying - being a government innovation to show that it doesn't matter even if I go with your hypothetical - your points are inconsistent. For instance, the person inheriting his father's assets/liabilities pertaining to some stake in GS, that is run as an organization where stakes aren't easily transferred, deals with the exact same problems as someone born in the US, but is unhappy with the country. If anything, the US government goes out of its way to make moving out of the country relatively easy, compared to many such organizations in the past.

The only way to rationalize your whining about having to move is if you think being able to live here is some kind of birthright. It isn't, without you also agreeing to some terms, and it certainly wouldn't be without government.

You're the one arguing that the present government is worse than whatever hypothetical situation involving the GS army. I'm saying that there's no such evidence - every time we didn't have something like the present government, things were worse. I don't strictly believe in causality, so take that however you want.

So any time any group of people steal something in a place without government, you have government? So how do you stop firms from becoming governments? Btw, management firms manage resources they do not own.

In short, what stops firms from either stealing, otherwise controlling others' resources or monopolizing anything?

lack of accountability/consequences


see above

My understanding is that I'm practically his least favorite poster and you probably just insulted both of us.

What gives firms accountability of the sort that governments lack?

in a non-bailout world, stockholders that actively give a **** (vs voters who only want ponies) and the real chance of failure (vs the ability to print/tax and paper over a problem).

Why wouldn't you then turn your firm into a government? It seems so much easier to run. Note that I'm asking for the difference between a firm in an anarchy and a government.

This. It amazes me how people can pontificate and argue about markets for hundreds or thousands of posts with no real comprehension of how they operate. People try crazy ****ing **** all the time. Most of the time they fail. But the failures melt away from the inability to sustain perpetual losses and what's left behind, by definition, is what increases value to society. It's beautiful, it's elegant, no central design required. Evolution baby. I love it.

Governments. Don't. Operate. This. Way.

Since people hate to fail, why wouldn't they turn firms into governments, so that they don't have to fail?

How in the world would an investment bank turn itself into a government?

What are the characteristics of governments that make it difficult for a firm to turn itself into a government? This is hypothetical and we're dealing with anarchy - thus it's instructive to think of a firm, generically as a group of people working together for some common purpose, instead of considering how GS is specifically organized, which has a lot to do with the present social, political and legal framework we have.

It seems like it would be tough for GS to collect taxes from a bunch of people who don't have anything to do with GS, don't recognize that government is a valid institution, and don't have anything to fear from GS.

GS will just hire Bill Gates' hobo killing army to shake the peoplle down.

None of these are differences between firms and governments in a generic sense. Note that people pretty much always hated governments and the relationship between the ruling class and the ruled has generally been tenuous. There's nothing new about this anti-establishment attitude either.

My position is that most of you are focused on the apparent differences between states and firms that operate under the rule of law established by states - the point here is why do firms have characteristics they do. Why do drug cartels have armies but grocery store chains don't?

ummmm were poasting in a thread re: the GS bailout etc so i guess your point is made.

unless they get geithner et all to do it for them.

ummmm because what they do is illegal and requires more force to protect them from guvment?

Why do you think firms under anarchy will look more like grocery store chains than drug cartels, despite the conditions under which the latter operate being much more analogous to firms under anarchy? Note that drug cartels are well-armed even in places where they avoid confrontation with the state (due to the state being either too weak or too strong). It's much more correct to say that they are armed to protect themselves against one another and other criminals because they lack protection from government.

lol this applies to governments and just about any institutions really as well. Good ideas that work get selected for and bad ones go the wayside such as communism perhaps although that isn't quite the right word for what we saw on this planet

What you could argue is that government is far more resistive to change and dealing with failure because of say the very slow and imprecise voting or entrenched interests or something, but trying to come up with some unilateral declaration that good ideas move forward only in markets and not governments is silly.

You haven't the foggiest idea what you're talking about. Government "solutions" are not profit/loss tested and are institutionalized. In fact, the worse of a job they do, the more resources they demand.

Govt makes drugs illegal, thus restricting supply, and raising prices. Drug cartels form as they are willing to take on the risks associated with dealing. Cartels can survive with paying exorbitant amounts because of those high prices. If legal, drug prices fall out of the sky, cartels can't pay thugs with guns, done deal.

This applies to your second point as well, Coke executives aren't going around car bombing Pepsi workers.

Non-profits are also not profit-loss tested. Is it the non-profit-ness or the use of force that you find objectionable?

Here's an analogy:

For-profit firm under anarchy (A1) : For-profit firm under government (A2) = Modern state (B1) : Non-profit firm under government (B2)

I've coded them such that A = for-profit and B = non-profit and 1 = allowd to use force and 2 = not allowed to use force.

Drug cartels and for-profit firms under anarchy are both coded A1. I'd argue that many earlier states are closer to A1 than B1.


Their revenue being higher is irrelevant - if cartels don't need to pay thugs with guns, they won't. In a market, cartels with a lower cost structure will outcompete those with a high cost structure. Given this, why do they incur these costs?

Edit: note that high prices and restricted supply are due to costs being high, not the other way around. thus it's reasonable to ask, why do they voluntarily take on these high costs?

Why aren't they?

head asplode? If you think they're irrelevant why where you lauding the government for facilitating the "innovation"? We're ignoring for now whether a government is necessary to have an open stock market or not.

Yeah, but not in the way you were implying. The "transaction cost" of packing up and moving is not one that exists by default. It's one that is violently imposed by government. Government creates this transaction cost. So you really don't want to go here IMO.

lol

It doesn't matter if I have a right to do X or Y. Even if I don't, that doesn't mean some other person necessarily has a right to prevent me from doing X or Y.


No, YOU brought up the private GS army.

Free marketeers don't argue in the absolute terms you describe. It isn't as though there is *never* a good idea that comes out of government, just that its productivity to produce such innovation is considerably lower.

For easy comparisons we have a wide range of centrally planned, command-and-control governments going back to the beginning of human civilization. For example, the U.S.S.R. tried to produce their own cars while we were developing ours through the free market. Plenty of examples go for medical innovations, technology, etc. There's just no question that innovation springs forward more in systems that open up markets to heed the call.