From: sulkom@ubvmsb.cc.buffalo.edu (Mark Sulkowski)
Newsgroups: alt.philosophy.objectivism
Subject: Re: Evidence for the market
Date: 27 Jan 93 03:50:00 GMT
Organization: University at Buffalo
News-Software: VAX/VMS VNEWS 1.41

In article <1993Jan26.185439.5786@netcom.com>, abell@netcom.com (Steven T. Abell) writes...
>Well, it's kind of subtle, and you have to read *all* of what I said.
> 
>If you'll reread my posting, you'll see I said "service to individuals",
>that is, service to those who benefit directly from what they are paying for.
>Medical care is a good example. The benefits of national defense are diffuse
>and hard to measure in terms of individuals, even when those benefits are
>large.

	That's true.  The benefits of defense are hard to measure.


>Defense of a country against an external enemy is not something that can
>be carried out by individuals until the enemy has successfully invaded.

	Hmmm.  Consider a defense employee looking at satellite photos
for signs of potential enemy troop movements.  Isn't that defense as
much as firing missles?  But I suppose you mean that we cannot evaluate
how well the job is being done until an actual invasion attempt.


>External defense doesn't provide anything that enhances life under what we
>like to think of as normal circumstances (fails constructiveness test).

	Are you saying that if defense does not enhance our lives, it
is impossible to measure its value?  Can't we just compare the value
of what we have to the value of the worst case scenario based on a
rational evaluation of the danger of foreign countries?  (i.e. if the
country next door becomes aggressive and dangerous, give more money
to defense.)


>And while defense can help maintain quality of life, there's no feedback
>channel to maintain quality of service during peacetime because the system
>isn't being tested in a way that individuals can immediately perceive (fails
>service-to-individuals test). Because of these two non-features, rational
>people don't build private markets in external defense.

	Hmmm.  I suppose all of your argumentation shows that rational
individuals do not build competitive markets in defense in the same
sense that they build markets in butter.  It would be difficult to
choose between defense company A and defense company B because there
would be little opportunity to find out which was the more effective
company in practice.  However, it would be easy to choose between two
different brands of butter because they could be sampled immediately
after sale and the customer would buy her favorite brand from then on.

	However, let me propose the following.  

	1) Rational individuals realize the need for defense.

	2) In the absense of government defense, which may be rejected
	out of a distrust for it, rational individuals will choose
	instead to create private alternatives which are funded in
	a purely voluntary fashion.

	3) Rational individuals will accept your point that the
	efficacy of such institutions will be very difficult to
	measure, and so the market may not work as well as markets
	for other goods.

	4) However, these rational individuals are determined to
	make this system work as well as it can.

	5) Since defense is a public good and its benefits cannot
	be withheld from non-customers, this makes it impossible
	for it to be fee-funded, it would have to be donation-funded.

	6) These rational individuals are presented with two
	problems.

		a) Deciding which defense company(ies) to support.

		b) Deciding how much money to give.

	7) These are no small problems.  The question becomes: is
	there any information rational individuals can gather in
	order to make such decisions?

	While it may be impossible to have a completely accurate
impression of the true defensive value of certain companies, perhaps
it IS possible to make a good GUESS.

	Perhaps you know someone who works at one of the companies.
You could ask that person questions about the goings-on there.
Are the people trustworthy?  Are they dependable?  In your estimation,
what is the effectiveness of your company?  What sorts of military
action are you prepared for?  What defense tactics do you have planned?
Do your troops practice regularly?  Are your instructors good?

	Companies could be evaluated by "Consumer Reports" type
watchdog companies, which might ask similar questions.  They won't
have perfect information regarding defense effectiveness, but they
could try to estimate it as well as they can.

	You could give donations to those companies that, in your
estimation, made the best efforts to prepare for invasion in a
cost effective manner.  These donations would be a 'reward' for
a job well done, and an incentive for further good work.

	The size of your donations may be in proportion to your
confidence in the companies, and also in proportion to your
estimation of the danger of other militaries.  If the country
next door became aggressive, you might be very willing to give
a big donation right away.  You would also watch to see that
your donation was actually going to good use.

	In conclusion, my point is that perhaps there really IS
enough information to make sound guesses about defense company
effectiveness.  These guesses are not likely to be as accurate
as markets for goods where effectiveness is easily determined.
However imperfect the market for defense may be, it may still
be implemented and be supported by rational individuals doing
the best they can in a world of limited information.

	BTW, I make these kinds of decisions quite frequently
in giving donations to libertarian public policy institutes.
It is often quite difficult to determine how effective they
really are.  Do I give my next donation to CATO or the Reason
Foundation?  How much?  I still make these decisions and these
institutes clearly exist from such funds.

Mark Sulkowski
Newsgroups: alt.philosophy.objectivism