Thursday, July 01, 2021
Oh, those Rothbardians!
A perpetual bugaboo for Unforeseen Contingencies is the Rothbard-Rockwell school. Given the increasing prospects that the left might take down America, it's perhaps not the most important thing to waste effort refuting their nonsense. And at least most of them want less government power, so apparently we are fighting for similar things. Still, occasionally they make an argument so bad I feel moved to respond. After all, as the great economist Frederic Bastiat observed, "The worst thing that can happen to a good cause is not to be skillfully attacked, but to be ineptly defended."
In the latest (6/30/21) daily email from FEE, Walter Block addresses the water debacle of the city of Flint, Michigan. I respond in the comments. I link to Block's piece here, and reprint my comment:
Unfortunately, Prof. Block doesn't understand the problem and has proposed a nonsense solution. He calls for a monopoly owner of the Flint River to provide water. Yes, I know Rothbardians don't believe there can be a monopoly on the free market, and after all, the Flint River Water Monopoly would have to compete with bottled water shipped in by Woke-a-Cola. But as the great economist Ludwig von Mises pointed out, while it is true that all goods on the market compete with all other goods, for some there are no very good substitutes and they approximate the pure monopoly case. The Rothbardians are wrong on monopoly. Municipal water in Flint is one example.
Prof. Block also assumes that the owner of the river and the operator of the Flint municipal water system must be the same. He doesn't explain why, so we have no idea what he's thinking. But it is obvious from this that he has no understanding of the problem of Flint. The city -- for which Governor Snyder and the state government had no authority -- chose to use Flint River water as a cost saving measure. If the city had purchased the water from a private owner and failed to treat it properly, we would still see the same outcome.
Prof. Block says to privatize the river. "The privatization process would see to it that there was a private firm, call it the Flint River Corporation, that would be owned by thousands of stockholders." And he lists everyone who swam, boated, drank, or otherwise used it. OK, how? How would one one identify them, determine each share, and enforce it. That's extremely costly. Mises points out (Human Action, Chapter XXII. sec. 6) that property rights are costly to define and so will be incomplete, with the strength of definition depending on the costs vs. benefits. Ronald Coase develops this idea in "The Problem of Social Cost" and Harold Demsetz and Allen & Lueck further refine it. Prof. Block's prescription to privatize is about as useful as telling a starving man that his solution is to "get food." OK, how? And who does it? This magical "privatization process" to which Block refers requires human action. Whose? Government officials? The mythical Rothbardian private protection agencies? Someone else?
There's much more that is wrong with Prof. Block's piece. But that's enough. He doesn't understand the problem, and his proposed solution shows he really does not understand economics.
There really is much more wrong with Block's piece. The city council and government of Flint are utterly incompetent and very probably corrupt. The prosecution of former Governor Snyder is politically motivated -- the democrats are using criminal law as a political tool. The federal EPA played a major role in the coverup and in subsequent politicization of the crisis.
But armchair anarcho-capitalists have no time for such details. They are too busy imagining perfect utopias which can be established by the mere pronouncement "privatize everything" and "abolish the state" ... the political economy equivalent of telling a starving man with no food that the solution to his problem is to get food.
