It seems like unions and minimum wages are a form of bargaining, using the government as a way to overcome coordination problems given the cognitive costs of doing distributed game theory. Why isn’t that considered by libertarians to be a legitimate (i.e., reasonably endorsed as part of a globally coherent notion of justice) form of bargaining / decision-making?
As for myself, the question is not “Is this a legitimate coordination mechanism?” but rather “Does this coordination mechanism effectively solve coordination problems?” In other words, rather than viewing government as some sort of privileged system that solves all the problems in the private market, we can view it from the same perspective that we view systems in the private market. We can do this through the lens of game theory: model the government as being composed of a bunch of different economic agents who each try to achieve their own goals in light of the incentive structures in government, and then ask whether the aggregate behavior of these agents adds up to something we prefer to alternatives.
When we start getting specific about what we mean by governance, then the flaws in using government as a device for collective action become more apparent. The flaws in first past the post representative democracy are fairly well known, but I’ll repeat some arguments here:
Given typical election margins, the expected selfish value of voting is very small. Therefore, voters have very little incentive to be informed about which candidates might benefit them.
Candidate media coverage is a very powerful lever for getting politicians elected. Therefore, rich special interests can sway elections to their desired ends by paying for targeted media coverage.
If a candidate wins by even a single vote, they win 100% of the effective power of the office for their term. Therefore, minority interests are given almost no weight during democratic deliberations, unless those interests could plausibly lead to the incumbent losing a future election (for example, by people in the majority being sympathetic to minority interests).
First past the post voting doesn’t take into account the intensity of preferences. For example, the weak interests of 9 voters who are OK with locking up marijuana smokers outweigh the strong interest of the 1 voter who doesn’t want to be locked up themselves.
Given these flaws in the way democracy actually functions (as opposed to the way people poetically imagine democracy), there’s no guarantee that coordinating through it will actually lead to outcomes that maximize utility, like happiness or preference satisfaction. By contrast, libertarians generally share the intuition that market structures usually do a better job at solving coordination problems than government (and sometimes back it up with results like the fundamental theorems of welfare economics).
Ok, so the fundamental theorems are sort of relevant to my question. My question asks for a combination of reasoning like in those theorems, with empirical information about parameters like bounded reasoning, imperfect information, mortal agents, agents with complicated boundaries, etc. AFAIK in those conditions, there could be weird attractors that mean dumb-seeming stuff like government actually makes sense. I’m pretty confident that we could describe a coherent world that’s vastly superior just by changing the (hypothetical) government away from our actual one. What I’m asking about is the forces that have to be contended with to make that work.
My question asks for a combination of reasoning like in those theorems, with empirical information about parameters like bounded reasoning, imperfect information, mortal agents, agents with complicated boundaries, etc. AFAIK in those conditions, there could be weird attractors that mean dumb-seeming stuff like government actually makes sense.
That seems like a tall order. Instead of making very general assumptions about agents (which limits the usefulness of mathematical results), it would probably make more sense in this context to talk about empirical analysis. We can ask questions like, do societies that use democratic governments to solve certain types of coordination problems X, generally do better across some metric Y? Economists have been studying problems like this for centuries.
I’m pretty confident that we could describe a coherent world that’s vastly superior just by changing the (hypothetical) government away from our actual one.
Sure. The field of mechanism design tries to build hypothetical economic systems that would work better than the ones we currently have.
> Economists have been studying problems like this for centuries.
Great. So my question is, what if any are the arguments “that market structures usually do a better job at solving coordination problems than government”. E.g. by giving an equilibrium analysis of a spherical-cow version of the most sweatshop-inducing realistic assumptions that shows that the market nevertheless doesn’t produce sweatshops.
As for myself, the question is not “Is this a legitimate coordination mechanism?” but rather “Does this coordination mechanism effectively solve coordination problems?” In other words, rather than viewing government as some sort of privileged system that solves all the problems in the private market, we can view it from the same perspective that we view systems in the private market. We can do this through the lens of game theory: model the government as being composed of a bunch of different economic agents who each try to achieve their own goals in light of the incentive structures in government, and then ask whether the aggregate behavior of these agents adds up to something we prefer to alternatives.
When we start getting specific about what we mean by governance, then the flaws in using government as a device for collective action become more apparent. The flaws in first past the post representative democracy are fairly well known, but I’ll repeat some arguments here:
Given typical election margins, the expected selfish value of voting is very small. Therefore, voters have very little incentive to be informed about which candidates might benefit them.
Candidate media coverage is a very powerful lever for getting politicians elected. Therefore, rich special interests can sway elections to their desired ends by paying for targeted media coverage.
If a candidate wins by even a single vote, they win 100% of the effective power of the office for their term. Therefore, minority interests are given almost no weight during democratic deliberations, unless those interests could plausibly lead to the incumbent losing a future election (for example, by people in the majority being sympathetic to minority interests).
First past the post voting doesn’t take into account the intensity of preferences. For example, the weak interests of 9 voters who are OK with locking up marijuana smokers outweigh the strong interest of the 1 voter who doesn’t want to be locked up themselves.
Given these flaws in the way democracy actually functions (as opposed to the way people poetically imagine democracy), there’s no guarantee that coordinating through it will actually lead to outcomes that maximize utility, like happiness or preference satisfaction. By contrast, libertarians generally share the intuition that market structures usually do a better job at solving coordination problems than government (and sometimes back it up with results like the fundamental theorems of welfare economics).
Ok, so the fundamental theorems are sort of relevant to my question. My question asks for a combination of reasoning like in those theorems, with empirical information about parameters like bounded reasoning, imperfect information, mortal agents, agents with complicated boundaries, etc. AFAIK in those conditions, there could be weird attractors that mean dumb-seeming stuff like government actually makes sense. I’m pretty confident that we could describe a coherent world that’s vastly superior just by changing the (hypothetical) government away from our actual one. What I’m asking about is the forces that have to be contended with to make that work.
That seems like a tall order. Instead of making very general assumptions about agents (which limits the usefulness of mathematical results), it would probably make more sense in this context to talk about empirical analysis. We can ask questions like, do societies that use democratic governments to solve certain types of coordination problems X, generally do better across some metric Y? Economists have been studying problems like this for centuries.
Sure. The field of mechanism design tries to build hypothetical economic systems that would work better than the ones we currently have.
> Economists have been studying problems like this for centuries.
Great. So my question is, what if any are the arguments “that market structures usually do a better job at solving coordination problems than government”. E.g. by giving an equilibrium analysis of a spherical-cow version of the most sweatshop-inducing realistic assumptions that shows that the market nevertheless doesn’t produce sweatshops.