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As a libertarian, I’m convinced that most people act in their own self-interest, both individually and collectively, quite effectively without external coercion. In social science circles, this is a fundamental question which informs the various schools of governing philosophies that drive our ideological disagreements. Collectivist and big-state solutions fundamentally assume that individuals left to their own devices will destroy each other and themselves, unless they are forced to behave differently. Essentially, they think that most human beings (except for themselves, of course) are Troglodytes, consumed by selfishness and greed. This line of reasoning underlies much of the rationale of the Left and may be the reason why they just look at libertarians like we’re crazy when we talk about minimal state or – heaven forbid – non-state approaches to organizing society.
I think that one of the problems which pervades the social sciences is the lack of valid testbeds for their theories, and the fact that they don’t often like to digest negative results. Take Marx, who is held as one of the three fathers of the field of sociology; despite the observable fact that dialectical materialism doesn’t predict outcomes in the real world or that the “Proletariat” hasn’t risen up in revolution, Marxism still holds great sway in leftists political circles. These are two central tenets of Marxism that most honest adherents of Marxism has admitted are not valid. It’s like believing the world is flat after it’s been proved otherwise, but that doesn’t stop them.
The internet is uniquely able to connect us, both individually and collectively. I think it provides great insights about our nature which do real damage to the assumption that people aren’t well equipped to run their own affairs much more readily than the average leftist would have you believe. Lets take two examples that just scream out for notice. eBay and Craigslist. eBay is an absurd business, if you just stop to think about it. You bid on stuff that you can’t physically see and send the person money, hoping they send the stuff you bought, and that the stuff actually works. When eBay was going public, it had real difficulty convincing investors that the business model could scale because many investors reacted with real doubt that people would trade with each other fairly. Yet look at the reality, eBay is a multi-billion dollar business in which millions of buyers and sellers continuously do just that, with very low levels of fraud. eBay does some policing of the site, but in fact has a predisposition against overly regulating buyer and sellers, leaving it to the community to police itself in many regards. I have to note that there is bad behavior, but as both buyers and sellers adapt to this new model of transacting with each other, they have developed habits to protect themselves.
Craigslist is an even more extreme example. My first real experiences buying and selling over Craigslist were tentative, but I quickly became a fan. The first thing you notice is that it’s so simple to buy and sell. Either browse for what you want without any registration, or simply write your ad, upload your photograph and you’re off. You choose how you want to be contacted, there are no bidding rules and nothing is binding. Typically you meet the buyer after having negotiated over the phone or on email, in many cases they come to your home to pick up the goods. My experience was nothing more than shocking. Having sold and bought motorcycles, guitars, electronics, furniture and household goods on CL, I have yet to have a single bad experience. I’ve never been ripped off or been misrepresented to. Never, and this experience is common (at least to the people I’ve asked about it). eBay itself records ridiculously low levels of fraud, one tenth of one percent, while other studies put it higher with broader definitions of fraud, but still they are low enough where users make wide use of these exchanges, indicating that the risk reward is favorable.
This is shocking to those who make their living based on telling us we can’t look after ourselves. But they control most of the media and virtually all of educational apparatus, so is it any surprise that after, say, a government caused financial meltdown (predicted by Austrian economics) people would look to the government for solutions? In the case of the economy, it’s even more bizarre because Keynesian economics was disproven in the late ’70s, but many still cling to it. For those of you who don’t know much about economics, the stagflation of the late ’70s isn’t a condition that the Keynesian model would allow to exist. This hasn’t dampened the current crowd’s enthusiasm in claiming its authority, howeve. Btw, a better explanation for their failure to adapt to the facts on the ground is that all they really seek is to be seen ‘doing something’ about our problems and unfortunately, the politicians don’t know enough about economics to understand how bankrupt their theories are. But I digress…
What conclusions can be drawn from these experiences and phenomena?
1. Trustworthiness is common – People are much more trustworthy than we think, at least in our society. Even more to the point, individuals and private institutions are quite capable of optimizing all of the trade-offs involved to maximize security and trust, with no governmental involvement other than the normal enforcement of laws that preserve our security and property.
2. Cooperation is innate in us – The emails that go back and forth between buyers in these systems are instructive. Both parties inform themselves directly and indirectly about each other via overt communications and signals drawn from the interaction by the participants. The quality of the ad language, the pictures and one’s responsiveness to an email question all say something about the sellers and buyers, and new participants quickly pick up on it. How many pictures are optimal? What kind of language is attractive? All of the behaviors and communication evolve to help buyers and sellers manage their interests quite effectively, with various levels of oversight. eBay has much more structure, whereas CL is a free for all. Amazon is a third model which is really oriented as a web based storefront versus a pure auction site, and represents yet another private take on the approach. All of this evolves without any coercion from the state, and works very well. This is a key point: it doesn’t just work, it works incredibly well. If you use one of these sites, I’m sure you can attest to it. People are generally very accommodating and a pleasure to deal with.
3. Bottom up innovation works best – Both CL and eBay let their community drive how it evolves. They are fanatical about understanding what their customers want and when they develop a new feature or policy, often it is an option, not something that is uniformly imposed. Customers are free to use them if they want to. When they don’t want to, if those policies don’t work well for them, customers can go elsewhere. My experience, for example, using eBay’s auction structure is not particularly attractive for me. I also think they charge too much. Taking into consideration that I negotiate for a living, I’m much more likely to sell or buy a product on CL than eBay. But that doesn’t mean its right for everyone. The person who doesn’t trust their negotiating skills or doesn’t ever want to meet the person they’re buying from may like what eBay does (and apparently do). This is the exact opposite of how the federal government attacks problems. It coerces participation, and its instruments are rules and bureaucracies which have no chance of matching the efficiency of free exchanges, open communication, trust, price signaling and provider competition – all of which run without any supervision from government.
What is most amazing about all this is how many people go around believing that the first place we should go for solving societal problems is the government. In fact, if you look at the biggest problem areas in society, for example, education and health care, you see that these areas are flooded with governmental regulation, institutions and money. But if you look at the areas where government isn’t that active – say food distribution or personal computers, those marketplaces of individuals acting freely without coercion are working so much better. Put plainly, I can get thirty different brands of toothpaste twenty four hours a day within a fifteen minute drive from my house, and can get a laptop that has the power of a twenty year old multi-million dollar supercomputer for six hundred dollars, but still, I’m continuously met with the a priori assumption that government is the answer to our disastrous health care system.
This view simply doesn’t comport with the observable facts and it needs to be treated with incredulity by those of us who believe in free markets and free people. One of the most endearing and frustrating aspects of being human is our ability to confuse ourselves, but knowing this only places a greater burden upon us to examine our beliefs and compare them with the available facts. Sadly, I’m not at all sure most people actually want to figure things out as much as they just want their side to win.
That’s the kind of article Harry Browned would have written.
Good work!
I thought all the income made from web are scams. Now, i know and im enlightened.
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