Market Failure 5: Imperfect Information (When life hands you lemons, call your mechanic)


James K

James is a government policy analyst, and lives in Wellington, New Zealand. His interests including wargaming, computer gaming (especially RPGs and strategy games), Dungeons & Dragons and scepticism. No part of any of his posts or comments should be construed as the position of any part of the New Zealand government, or indeed any agency he may be associated with.

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143 Responses

  1. Avatar Oscar Gordon says:

    I am so loving these! Seriously James, thank you!Report

  2. Avatar Vikram Bath says:

    For late-model used cars, dealers often have the opportunity to pay up for extended insurance that allows them to sell the car as certified. Ideally, it’d be the peaches that are certified and the lemons that are not.

    Practically speaking, I don’t think that’s the result though since the cost of repairs are backstopped by the manufacturer rather than the dealer. So, the dealer pays up for certification if they think it will let them sell the car at a sufficiently higher price, not because they think that particular car is so good.

    Oh, and individuals themselves could also buy transferable extended warranties before selling their cars. The same problem exists though. There’s nothing to prevent them from doing this with a lemon too.Report

  3. Avatar Patrick says:

    I haven’t really thought that future uncertainty qualified as being part of imperfect information. I always thought of imperfect information as being a information disparity between two actors in a transaction.

    Risk calculations (how risky is this house v. that house for a fire or earthquake) can be imperfect information, because one agent may know more than the other agent.

    But future outcomes (as opposed to future probabilities) aren’t knowable to either party.Report

    • Avatar James K says:

      You’re thinking of Asymmetric Information, which is a sub-case of Imperfect Information, and the one that’s most likely to cause a problem for markets.Report

      • Avatar Patrick says:

        Argh, you’re right, and now it looks like I don’t know Markets 101. I blame me not being awake.

        Scrape that part of my comment.

        I still feel weird about “things that might come to pass in the future” being part of “incomplete information”. I mean, we aren’t gods 🙂Report

  4. Avatar Murali says:


    So is asymmetric information why insider trading is prohibited? With asymmetric information, the only sellers would be people who know that the shares are going to fall? But that doesn’t seem right. We want the price to fall if it turns out that the company has screwed the pooch. And we want the share prices to rise if the company has a profitable project in the works.Report

    • Avatar Guy says:

      Insider trading is, I think, more about synchronizing the timing. It will be obvious at some point that some company has screwed up, but insiders may know first. We don’t want to let them act on that information and flee, leaving the blame and losses to fall on others. What we want is for the people present during the screwup to be the ones economically punished for it.Report

    • Avatar James K says:


      Yes, Adverse Selection is the main justification for banning insider trading, although the idea that insider trading should be illegal is more controversial in academic finance than you might think.Report

      • I wish that surprised me, but it doesn’t.Report

        • Avatar Chris says:

          That debate is a pretty good example of the nature of economics as a discipline: answering the question of whether insider trading should be legal requires answering both empirical questions and values questions. What’s more, most of the economists who have strong opinions on the matter will be convinced that those opinions are based entirely on their answers to the empirical questions, and will largely dismiss the values ones.Report

  5. Avatar Brandon Berg says:

    I suspect that adverse selection is less of a problem for insurance markets than is commonly claimed, for at least two reasons other than those you mentioned.

    First, there’s risk aversion, which is also needed for insurance markets to work even without moral hazard. If people weren’t risk averse, then nobody would buy insurance, because in order for insurance to be profitable for the insurer, it has to have negative expected value for the insured. If both sides insist on positive expected value, the market breaks down entirely.

    Of course, that’s not the case. People are risk averse, so insurance has positive expected utility even though it has negative expected value. And in general, people aren’t only as risk-averse as is needed for insurance to profitable. There’s enough risk aversion left over for low-risk individuals to voluntarily cross-subsidize high-risk individuals.

    The other reason is that it’s not obvious to me that high-risk individuals are actually more likely to buy insurance. A priori, I would expect uninsured drivers to be higher-risk than insured drivers.Report

    • Avatar Joe Sal says:

      Excellent point. Although I probably shouldn’t, I see insurance as a ‘rent-seek’. Most insurance is statistically built around not having cascade problems, and often it is the cascade problems that require the most resources to recover from.
      If the insurance system folds, it leaves the naked risk in tact, with the previous illusion that there is possibility for recovery.

      That’s not even touching the subject of bad actors/actions in scaling back service while increasing prices.Report

    • Avatar Kolohe says:

      Most insurance though, has some sort of mandate or other forcing function behind it. Governments demand car insurance. Mortgage companies demand their borrowers have house insurance. The only one where the market is more or less working close to a theoretical market is life insurance, and then, only for term life.Report

      • Avatar Vikram Bath says:

        A lot of insurance has mandates, but not all does. Plenty of people seem to buy extended warranty plans for all sorts of electronics, appliances, and cars. And we famously have CDO contracts in financial markets.

        I’m not sure why you say “only for term life”. It still exists, right?Report

        • Avatar Kolohe says:

          I’m saying that non-term life products tend to be a little scammy, with high prices for what value the buyer is getting, and aggressive sales techniques to make up for this gap. I would say the same thing for most extended warranty offers on durable goods. And we all know how the CDO thing worked out a few years ago.

          So, the market for most of those insurance products isn’t something that the government or others have their thumb on the scale, but it’s still not an ‘efficient’ market (but I would say term life is the exception, with a robust marketplace of numerous actors. Plus since death is death, not as many avenues to avoid payouts on the back end)Report

      • Avatar Damon says:

        But fundamentally, non health insurance is optional. You don’t have to have car insurance if you don’t have a car. You don’t have to buy life insurance if you don’t have a family or care if you leave them penniless. And you most certainly don’t have to have mort. insurance if you rent.

        No, only health insurance is mandatory by law.Report

        • Avatar Chip Daniels says:

          Damon: only health insurance is mandatory by law

          For a very good reason.

          We, as a society, have decided that we will never refuse to provide health care to someone who is seriously ill. We don’t make the same decision about rebuilding fire damaged houses, damaged autos, or appliances.

          No one is allowed to opt out, to live in a world where they are denied life saving health care, or refuse to participate.

          You can argue that this decision is good or bad, or that we should or shouldn’t, but the fact remains that if someone is seriously ill, one way or another our society is going to provide health care.

          So those of us on the providing end have decided that we will fund this provision by making paying into the fund mandatory.Report

          • Avatar Damon says:

            It wasn’t a very good reason for 200 years but suddenly it was. I’m not even sure there was a majority that wanted what was passed.

            But that’s not the real issue. You hit the nail on the head. Others have decided for the rest of us, without our consent, that this is what will be done. Who the hell are “those of us on the providing end” to decide this decision for me or anyone else without our consent?Report

          • Avatar Joe Sal says:

            after the ACA white elephant dies we will be begging for Cuba level health care

            I swear, America deploys capitalism so poorly that state socialism begins to look workable.Report

          • Avatar Jaybird says:

            So those of us on the providing end have decided that we will fund this provision by making paying into the fund mandatory.

            As I explore this whole high trust/high coordination thing in my head, I find myself with a lot of contradictory thoughts on what, exactly, are the rights/responsibilities/expectations/entitlements/whatevertermyouwant of the providing end, those of the folks somewhere around zero balance, and those of the people who can not be accurately described as being in either of those two groups.

            And that’s without even touching on how most of the contradictory thoughts cannot be stated in public/polite society.

            It strikes me as likely to result in a lot of things.
            The big one being the list of things that the providers on the providing end have as things that they can reasonably expect from the other groups.

            And what they will unreasonably expect when they run into the whole blood/stone dynamic.Report

            • Avatar Stillwater says:

              That’s one worry. I’m not sure it’s the only worry. Eg., there’s the issue of being denied coverage because of pre-existing conditions. In a purely voluntary health-care market people choose to either get insurance or not based on (let’s reduce it to two factors) they’re desire for insurance and they’re ability to pay. In the case of someone who has both desire and cash but has an already-diagnosed health problem, the market excludes them from access. They’re uninsurable.

              Is that a problem with a market-based solution?Report

              • Avatar Jaybird says:

                It seems like we are in a situation where we want a lot of contradictory things and some of them are in inconsistent triads (or quadrads or quintrads or whatever).

                When it comes to the problem of wanting something done right, something done fast, and something done cheap, it seems unfair to point out that if you don’t have any money, you have to pick between it not being done right or it not being done fast.

                Especially when rich people can have it done right *AND* done fast.

                And medical care is one of those things that, for a lot of cases, if it’s not done fast, it’ll be moot pretty damn quick.

                But here we are. Somewhere in “wanting it done fast and wanting it done cheap” territory.Report

              • Avatar Joe Sal says:

                It goes a little further than that. If you can create scarcity/dominance in the amount of equipment to produce accurate diagnosis, you can create artificial scarcity in quality of diagnostics.Report

              • Avatar Jaybird says:

                If you can create scarcity/dominance in the amount of equipment to produce accurate diagnosis, you can create artificial scarcity in quality of diagnostics.

                This assumes that there is a proper amount of equipment to produce accurate diagnosis that is being constrained by some cabal somewhere.

                If it’s cost effective to create 49 diagnostic tools but it’s not cost-effective to create a 50th diagnostic tool, you’re just going to create 49 of them.

                I don’t know if that particular manifestation of scarcity is best described as “artificial”.Report

              • Avatar Joe Sal says:

                If the demand can support 100 and 49 are built?Report

              • Avatar Jaybird says:

                How do we know that demand can support 100?

                Something that didn’t exist X years ago, but it got invented X-Y years ago (where X and Y are both positive numbers and X is greater than Y) and we’re in a place where 49 have been built but not 50 but we know that demand is there for 100 ad arguendo?Report

              • Avatar Joe Sal says:

                Let us for the moment assume current quantity of machines at utilization near 100% and current backlog give an answer.

                The bigger part I’m getting to is how important the hospitals that receive those 49 pieces of equipment become in the scheme of things? Maybe some facilities receive 2 machines?

                I’m not saying it will happen that way, but it is a possibility that quality can become important in the same way price and speed can.Report

              • Avatar Jaybird says:

                I imagine that if this half of the equation says “I can make more money by buying this machine (or a second machine) than I can by not buying it (making allowances for risk)” and the other half of the equation says “I can make more money by making/selling this machine than I can by not making/selling this machine (making allowances for risk)”, then it seems to me that both sides of the equation agree that there’s going to be a machine changing hands.

                Why wouldn’t there be?

                Well, one person says “I can make more money (or better deal with my risk) by *NOT* doing this thing” in that equation.

                So then what? It’s either deal with the money issue, the risk issue, or do without.

                And saying “do without” is likely to get a response of “PEOPLE WILL DIE!!!”

                Which, you’d think, would be a reason to deal with the money issue or the risk issue… but, instead, it seems to me that we’re more likely to drive into the ditch of how people who care more about money than people dying are bad people.

                But maybe I’m wrong.Report

              • Avatar Stillwater says:

                I’m not sure I understand Joe’s worry about this, but I agree with you. In my limited experience with these sorts of things the consideration determining whether a business buys or doesn’t buy a diagnostic device is pretty simple: how much can they make by doing the tests themselves given the current bill rate to insurance companies. That’s pretty much the only consideration. I mean, yeah, there’s some outliery stuff like hospitals presenting as having the most cutting edge tech, or HMOs trying to reduce future costs by early detection and such. But I think the calculus is pretty straightforwardly determined by industry standard bill rate.

                I’ve not heard of a device-making company who actually limited the number of devices made or sold. That’s not really how the whole thing works 🙂Report

              • Avatar Jaybird says:

                I could see this as building to a point about Martin Shkreli, actually.

                Which is an example of a “market failure” that I hope we touch on at some point.Report

              • Avatar Stillwater says:

                Well, I had a comment written up earlier that I didn’t post about how that relates to one of your points about the how contradictory all our ideals regarding health care are, in particular, prices of life saving drugs.

                Consider a life saving drug like Sovaldi, which treats hep C. In a non-insurance based market, the price of this drug would be determined by determining maximum profit for a price times the expected number of units sold. Clean, precise, defensible, whatever. The downside is that folks who couldn’t afford to pay that price wouldn’t receive that treatment.

                In the insurance-based market, tho, there’s no price check other than whatever the patent holder/developer decides to charge. In the case of Sovaldi, the price is set at $85,000 per 12 week course and at that price Gilead will make about $18 billion this year in revenue. Is that a great deal? A ripoff? (Without the profit potential would the drug even exist?) The UK thinks the price is too high, even at the discounted rate of $55,000 per 12 week course, and hasn’t approved the drug in their health system.

                This is interesting because Shkreli cited Sovaldi as a an argument/justification for jacking up the prices on some of the drugs he’s recently acquired. Sovaldi saves lives at $85-170,000 per patient, so what’s the big deal?Report

              • Avatar Jaybird says:

                It seems to me that there is a very real and significant difference between a drug being invented, tested, and pushed through the FDA as being safe enough for jazz before charging out the nose for it and a drug recipe being bought and then switching to a tightly controlled distribution model.

                I find myself idly wondering a number of things but earnestly wondering why a number of competitors haven’t stepped up to create an alternative generic version.

                The barriers to entry are too high. We have a risk problem here.Report

              • Avatar Jaybird says:

                As Glyph pointed out in the Wu-Tang thread, one of my idle wonders has been resolved. Specifically, “why am I reading headlines that don’t involve bad things having happened to him?”

                I imagine we’ll read more headlines in the future that will confirm biases.Report

              • Avatar Glyph says:

                Tha SEC ain’t nuttin’ ta fish wit’.Report

              • Avatar Jaybird says:

                He burned a lot of good will out there in the last 3-4 months. (With good will defined as “I don’t wish any specific harm to this complete stranger about whom I know nothing.”)

                And not even in a way that makes a “well, you have to understand” explanation easily imagined. He pissed off everybody from Bernie to Trump. He is the most unsympathetic villain I’ve seen since Joffrey.

                Sadly, this ain’t pro wrestling and we’re not going to have a payoff for this that will have the folks in the cheap seats hooting and hollering and going home in a good mood.

                But it is nice to see him in headlines for reasons other than Wu Tang albums.Report

              • Avatar Stillwater says:

                That article strikes me as a very poorly concealed hit piece, which makes me wonder who’s behind writing it. I’d heard about some of this stuff before (money being moved between two firms and such), so maybe a case against him has been in the works for a while, but the timing sure is suspicious, no? And the author pretty much glosses over substantive details relevant to the charges to refocus our attention on all the other ways Shkreli is a complete DB (“years ago he fleeced 9 investors out of $27 million!! See!!!”).

                Couldn’t happen to a nicer guy…

                Thinking about it a bit more, my guess is the Wu Tang Incident was the final straw. TPTB were fine with all the other shenanigans but buying that album and not even listening to it was an expression of DBery which could not go unpunished.Report

              • Avatar Jaybird says:

                While I am opposed to capricious prosecutors arbitrarily exercising their power against the most unsympathetic people they could possibly find on principle, this guy is really, really, *REALLY* unsympathetic.Report

              • Avatar Chris says:

                The investigation is definitely old, but I assume a memo came down from on high that said something like, “Wouldn’t it be nice… for your careers… if you hurried up and moved to indict?”Report

              • Avatar Alan Scott says:

                My theory: They had a case built and had decided that, however damning the evidence, A combination of his well-paid lawyers and his pretty face means they’re not getting a Jury to convict him on the grounds of boring financial details.

                Now that he’s asshole of the year, they don’t need to worry about that anymore.Report

              • Avatar Chris says:

                I wonder, given the lawsuit, if this is the sort of investigation he would have been aware of. And if so, I wonder why his lawyer (who was also arrested) didn’t say, “Look, it might be a good idea for us to maintain a low profile for a while, until the feds decide that this case is not worth the trouble, you know? I mean, at the very least, let’s not do anything to make it worth the trouble, OK?”Report

              • Avatar Morat20 says:

                Who says he didn’t? Laying aside any collusion between lawyer and client to break the law (which, I guess if the lawyer was arrested, there is some evidence of) — does this particular guy seem like the sort to listen to advice he doesn’t want to hear?

                Or perhaps he felt he had no choice — he does need the money, he has legal bills! And a Wu-Tang album to buy.

                All in all, I suspect that his recent stupidities might have accelerated the laying on of charges (after all, securities cases can be complex but having a very unsympathetic defendant is probably pretty darn useful when a jury stares at evidence that, by and large, had to be explained to it by competing experts)., but it honestly looks like this guy’s been in trouble for…some time.Report

              • Avatar Kolohe says:

                To play at being a PR professional without a license, it may be a decent strategy to raise your public profile right before some high level legal eagles come to try to dig their talons into you – as long as you say absolutely nothing about or even close to the malfeasance your accused of.

                Getting a well known politician to go out of of their way to denounce you personally gets that politician’s enemies on your side, which may be useful down the road when things do hit the fan.Report

              • Avatar Chris says:

                I suppose that’s true, though it says something pretty terrible about our politics. “Look, you’re a terrible human being whose actions will result in suffering, and perhaps death, but someone from the other side dislikes you, so I’m gonna take your side.”Report

              • Avatar Kolohe says:

                Having the right enemies has been a semi-viable poltical strategy since Burr shot Hamilton.Report

              • Avatar Stillwater says:

                Getting a well known politician to go out of of their way to denounce you personally gets that politician’s enemies on your side,

                “Getting”? I’m fully aware that Hillary and Trump are in political cahoots to ensure she wins, but that she and Shkreli are working together for his benefit is certainly news to me. Nice catch!Report

              • Avatar Jaybird says:

                You know, as stupid as the Republicans are (and they *ARE* stupid), I would hope that they are not so stupid that they would be willing to scream “NUH UH!” in response to Hillary denouncing Shkreli.

                If they are that stupid (and they might be…), then this was a trap by Hillary that was as brilliant as it was avoidable.Report

              • Avatar Jaybird says:

                Wait, is this more like a ploy from The Devil’s Advocate where Keanu was defending Coach?

                “He’s a jerk and I don’t like him but that doesn’t make him guilty of *MURDER*. I will prove that he was committing adultery at the time of the alleged crime” worked (or looked like it was gonna) in the movie but “My client is not guilty of securities fraud. I will prove that he was raising the prices of drugs for poor people when the alleged crime occurred” is one hell of a hail mary pass in real life.Report

              • Avatar Autolukos says:

                The sources seem to be the feds and his former company. Fairly traditional character assassination of a high profile defendant, though the company’s involvement adds a bit of flair.Report

              • Avatar Mo says:

                Retrophin filed suit before his big price hike on Daraprim.Report

              • Avatar Stillwater says:

                I meant the timing of the hit piece was suspicious, not the suit against him. I was aware that certain shenanigans were alleged quite a while ago. But thanks for the clarifying the timeline.Report

              • Avatar Jaybird says:

                Shenanigans all around.

                Popehat has some questions to the reporters who happened to catch the “perp-walk”.Report

              • Avatar Joe Sal says:

                @ Jaybird
                You pretty much nailed it there.

                My main position is that any one of the three: price, speed, or quality can be manipulated. Probably more so in these capitalism3 type constructs.

                in response to
                Dec. 16, 7:32 p.m.

          • Avatar Michael Cain says:

            It’s all part of the same trend. For the last hundred years or so, the developed countries of the world have decided that, as they got richer, there was a growing list of things that would be made available to everyone, not just the well-to-do. So we got modest public pensions, much more affordable access to college, guaranteed access to health care for (at least) some parts of the population, clean air, clean water, and so on. In the case of previously poor countries that reached developed status, at some point they all decided to do the same thing. The accounting for it differs from country to country, but there’s no question about what’s happened.

            Resistance was most pronounced in the United States, with the net result that the same services are much more expensive to provide than in the other developed countries.Report

            • Avatar Damon says:

              Funny thing, over the last 50 years or so, I have no recollection of deciding anything related to your post. No, it was “decided for me” and not by my alleged representatives in congress either. Some of it I’d agree to, some not. Hell, I’d probably even agree to the original concept of social security, but that’s been bastardized all out of proportion to what it was when it was originally created. No, it’s all been forced upon us without our consent.Report

              • Avatar Morat20 says:

                There have been no elections in 50 years?Report

              • Avatar North says:

                Those only count if libertarians win them.Report

              • Avatar Damon says:

                Plenty of them. But what does that have to do with my comment “I have no recollection of deciding anything related to your post”?

                I never agreed to any of it. But even if I had, congress passes a law, the administration figures out how to implement it and the supreme court determines it’s legality. Oh, but ACA isn’t a tax, until a bunch of black robed justices “decide” it is a tax to justify their own personal agendas. Yeah, a election sure gives us a “choice”.Report

              • Avatar Stillwater says:

                I never agreed to any of it.

                Hmmm. This one again. Let’s try it another way: what if a person never agreed to respect the rights of X-type people and in fact believed those people should be killed on sight. According to your reasoning, since that person never agreed that X people have basic rights government is not justified in prosecuting that person for murder, right?Report

              • Avatar Damon says:

                You’re confusing natural rights with the “right” to health insurance. It’s not a natural right.Report

              • Avatar Chip Daniels says:

                I never agreed to this interpretation of natural rights.Report

              • Avatar Stillwater says:

                Heh. And I’ve personally written manymany lines here at the league expressing my disagreement with that view.Report

              • Avatar Troublesome Frog says:

                You don’t need to. Natural rights are built into the fabric of the universe like magnetism or gravity. They’re not up for debate or interpretation. That’s why when somebody tries to violate one of them, the universe steps in and prevents it from happening every time.Report

              • Avatar Stillwater says:

                No, I’m not confused on that, but I’m also not talking about it either. I’m talking about the role “not agreeing” plays in your theory of governance. You believe consent from agent B is a necessary condition for a policy to be justifiably applied to B, but the above seems like a counterexample to that view.

                So the view seems to me to require more than the bare assertion that consent is necessary to make any sense.Report

              • Avatar Morat20 says:

                Ah, your problem is you fundamentally disagree with Representative democracy or democracy at all.

                Do you prefer anarchy, or despotism (with yourself, obviously, as the despot)?

                There’s honestly no point in talking about actual governance or any laws it’s passed, since you find any you disagree with illegitimate. Makes everything moot, you know.Report

              • Avatar Morat20 says:

                That’s not meant to be nasty, but clearly if your response to laws passed by your democratically elected government is “I never agreed to it” then you are objecting to democracy in general, and our specific form of it in specific.

                Thus, you’re basically stating no laws are legitimate unless you personally agree with them. So there’s no point in debating actual laws passed by this body.

                Which just leaves — are you an anarchist or more in tune with despots (and the “you’re the despot” is simply pointing out that if you state ‘I didn’t agree to it’ for laws passed by a democracy, you’d certainly state the same for any form of dictatorship. Unless you were the Man, as it were).

                If you claim to NOT be either, or somehow be a supporter of democracy, I would love to hear how you square that with statements of “I didn’t agree to it” against laws duly passed by your government.Report

              • Avatar Jaybird says:

                “Hey, I don’t like segregation either but it’s 1900 and the law is the law. Hey, I know. Why not vote in some people who want to end it?”

                “But it’s wrong! All men are created equal!”

                “You just wish that you were the despot. Or worse! You want anarchy!”Report

              • Avatar Glyph says:

                I had drafted something similar, but yours is shorter.

                Also, listening to libertarians argue with liberals sometimes reminds me of listening to two old programmers.

                Programmer A/Liberal: We NEED this bit of kludgy, buggy code/law, or things will go (or go BACK to) to hell in a handbasket!

                Programmer B/Libertarian: If you’d programmed this here more-basic bit of code/law correctly and more elegantly/clearly in the first place, you would never have NEEDED to lay that other kludgy, buggy code/law on top of it to fix it!Report

              • So let’s completely rewrite the system that the entire company runs on in Python [1] starting right now [2], based entirely on neutral principles with no special cases [3], and starting next Monday we’ll run that instead. What could go wrong?

                1. Compile-time type checks are fascism.
                2. Planning is communism.
                3. Why are we granting this long-time customer special discounts? Let them pay full retail like everyone else.Report

              • Avatar Morat20 says:

                That’s not even remotely what I’m saying. Or what he’s saying. But being glib is easy, I suppose.

                *shrug*. You have a government. You can like the laws, hate the laws, try to repeal the laws, even break the law, say the laws are wrong or right….

                But in the end, what you can’t say is “I didn’t agree to that” unless you’re flat out rejecting your government’s authority to make decisions that aren’t supported by 100% of it’s citizens. Which hey, maybe you are.

                But if that’s your premise, how do you get government to work? Nothing will get 100% approval, unless the there’s only a single citizen. Which is either anarchy — no working government — or despotism, where there’s just one citizen.Report

              • Avatar Jaybird says:

                “That’s not even remotely what I’m saying. Or what he’s saying. But being glib is easy, I suppose.”
                (next comment begins)
                “So which is it? Anarchy or despotism?”Report

              • Avatar Morat20 says:

                Did you miss the lengthy explanation of why I felt those were the only two real choices?

                I called you glib because you wrote a short response that ignored virtually everything in favor of sounding clever. You respond by….highlighting a pair of sentences I used to sum up multiple paragraphs. Which I guess proves you’re going to double down on glib.

                Seriously, Jaybird. I’m literally, honestly curious as to Damon’s conception of government here. Dictatorship or anarchy are the only forms of proposed government that even come within shouting distance of what he’s said.

                That’s why I’ve asked him to explain. Because I’m curious as to how he wants it to work. I mean if he’s just whining — “I never agreed to pay income taxes! Blarg!” — that’s one thing. Stupid to keep doubling down on, but whatever. People whine.

                But if he honestly feels he’s not bound to laws passed before he was of age to vote, and that he’s not bound to laws that weren’t voted “aye” by himself or a representative he voted for….how’s that work?

                It leaves out even direct democracy (governing by plebiscite or some such) because he’s rejected laws established before he can vote. I’m not certain if he’d reject laws he was out-voted on — it’s hard to parse from his statements about apparently never having a representative he voted for in office. Maybe yes, maybe no?

                But your glibness aside, I really, truly and honestly want him to expand on this, because I am deeply curious as to how he thinks it would work.Report

              • Avatar Jaybird says:

                Then I will get out of your way.Report

              • Avatar DensityDuck says:

                “I am deeply curious as to how he thinks it would work.”

                It’s a response to the “social contract, you’re part of society and this is what society is, therefore Deal With It” line of argument. He’s calling Begging The Question on whether that’s a valid response to complaints about the way things are, or where they seem to be going.

                “I’m literally, honestly curious as to Damon’s conception of government here. Dictatorship or anarchy are the only forms of proposed government that even come within shouting distance of what he’s said.”

                Oh hey and we got a Reduction Ad Absurdum, too. Maybe you could get a No True Scot in there, it’s my favorite fallacy.

                Or maybe you could just say “why don’t you move to Somalia if you hate government so much, or just admit that you’re nothing but a Republican who wants to smoke pot.” You know, just admit what you are and we’ll all move on.Report

              • Avatar Morat20 says:

                or I could do what I did, which was ask him.Report

              • Avatar Damon says:

                Well, first off, I never voted for anyone who passed any of these laws. And I don’t see how I can be bound to comply to them if they occurred before I was around to even have decision it.

                Even those I candidates I voted for never made it to office. And my “representatives” don’t represent me since their political views are polar opposite of mine. You want to explain how someone who leans to the right/libertarian can get any real representation from a democratic machine state that has been in power for the last 100 years?

                And you’ve not address the issue I brought up of bureaucratic creep. All those wonderful laws that were passed were gradually reinterpreted and expanded by the bureaucrats. Where’s the representation in that?Report

              • Avatar Morat20 says:

                So which is it? Anarchy or despotism?

                If you really believe you’re not bound by any laws that predate your existence, if you firmly believe that you’re not bound by any laws that weren’t voted “aye” by a representative you personally voted for — please describe a system of laws and government that can actually function under those premises.

                If you don’t vote, are you bound to no laws? If you just write in your own name for every office, are you bound to no laws?

                How’s this work, real world? Feel free to be lengthy with your explanation. I’m really curious. (Your bureaucracy bit is irrelevant at this point, given your outright rejection of laws passed by legislators. How they delegate is immaterial when you reject their actual source)Report

              • Avatar Damon says:

                Given those two choices, anarchy.Report

              • But you can’t choose anarchy for everyone, nor is it practical for a group of anarchists to live in a society but be exempt from laws the rest of it is obligated to follow. This is the problem with anarchy based on non-coercion: it attempts to coerce the rest of the world to be anarchists too.Report

              • Avatar Chip Daniels says:

                The concept of seasteading has always fascinated me from a science fiction sta b dpoint.
                But the adoption of it by libertarians always puzzles me.
                Excepting maybe a spacecraft, I can’t imagine any environment less suited to the idea of individualism.Report

              • Avatar KatherineMW says:

                Well, short of overthrowing a state in order to set up an anarchist experiment – which is contrary to the principle of non-coercion – creating your own land seems to be only available option. Unless they claim a bit of Antarctica, which would pose similar hostile-environment-requiring-organized-authority problems.Report

              • Avatar Chip Daniels says:

                I’m just thinking of how living together on a boat is about the most communal environment imaginable.Report

              • Avatar Oscar Gordon says:

                Yes & no. It is very communal, but in a very unusual sense compared to most communitiesReport

              • Avatar j r says:

                I can’t imagine any environment less suited to the idea of individualism.

                You are making a mistake when you equate libertarianism with “individualism.” I find he whole idea of seasteading to be pretty silly, but hey, let a thousand flowers and all that.

                The point of seasteading isn’t to go be an individual on the water. It’s to find a community of other like-minded individuals with whom to form the particular type of community that suits your preferences. Being against coercion is not the same thing as being against community.Report

              • It’s also a common SF trope that asteroid miners form an anarcho-libertarian society, for similar reasons.Report

              • Avatar Michael Cain says:

                And amazing how often the miners proper are complaining bitterly about the people who have settled on the big asteroids and now monopolize the trade in hydrogen for the fusion reactors, markets for the mined ore, repair facilities that can replace some piece of exotic hardware that can’t be jury-rigged, etc. Prospectors have always been hugely dependent on cities… as any casual study of the history of the American West would demonstrate.Report

              • Avatar Stillwater says:

                “Radical Individualists of the World Unite!”Report

              • Avatar Joe Sal says:

                Damn, get the least bit stateless up in here and the civilized world starts to unravel. I guess the glue isn’t as strong for some.Report

              • Be as stateless as you want, just don’t complain when it’s not a get out of jail free card.Report

              • Avatar Joe Sal says:

                “that others dare
                those things
                we thought
                too bold”Report

              • “Bold” is one word for it.Report

              • Avatar DensityDuck says:

                “But you can’t choose anarchy for everyone”

                Those were the choices you gave him; were you expecting a different response?Report

              • Avatar Troublesome Frog says:

                Given that his position seems to be that all forms of government are illegitimate, I’d say that giving two choices was pretty generous.Report

              • The dichotomy wasn’t actually mine. But then again, the argument doesn’t depend on the dichotomy. If “I didn’t personally agree to X” means “It is immoral to enforce X or ask me to pay for X”, the result is anarchy, because nothing is ever unanimous.Report

              • Avatar LeeEsq says:

                Its an inherent flaw in some flavors of libertarianism. If you hold to a very strict interpretation of libertarianism where governments can do x and nothing more than any attempt of the body politic to have government do more is morally wrong. Yet, libertarianism is still wedded to theories of democracy. Yet, they know that people aren’t going to vote for strict minimalism in perpetuity. One way around this conundrum is to embrace anarcho-capitalism. Others become neo-reactionaries.Report

              • Avatar Joe Sal says:

                Hahaha, and the concept that liberals hold to any form of liberalism?

                “One way around this conundrum is to embrace neostatism.”

                Because government isn’t a service, it’s the big OBEY of the new liberal democracy clingers.Report

              • Avatar LeeEsq says:

                The type of radical stateless rugged individualism you think is a good idea has only popped up as a good idea to a very limited number of people, most of whom seem to be White males who are citizens of the United States. If radical stateless individualism was a common sense ideology than it should occur some what more frequently and have wider appeal.Report

              • Avatar Brandon Berg says:

                In politics the correlation between the quality of an idea and its popularity is pretty weak at best. I’m not even sure it’s positive.Report

              • Avatar LeeEsq says:

                It isn’t but you can find more widespread adherence to any other ideology from free market classical liberalism to leftist anarchy to fascism with more frequency globally than Damon and Joe’s particular brand of libertarianism, which only shows up in some very specific demographics and only in the United States as far as I can tell.Report

              • Avatar Morat20 says:

                If radical stateless individualism was a common sense ideology than it should occur some what more frequently and have wider appeal

                It turned out to be highly unpopular in practice. Something about roving bands of thugs and bandits, and general “might makes right” principles.

                People rather quickly formed, or turned to, governments because radical stateless individualism turns out to be, well, unpleasant for about 99.9% of the people.

                From the safety of a snug, secure society — it’s pretty easy to fantasize about it, because obviously you’ll be that 0.01% running the place and not the, you know, peons and victims.Report

              • Avatar Michael Cain says:

                I’m not remarking on it good or bad, just pointing out that that’s what happened (and continues to happen, all over the world). My personal opinion is that economic libertarianism in the US died when the frontier closed, although the corpse is still thrashing. Last night’s debate was terrifying to me because it looks very much like civil libertarianism, even for the privileged groups in the US, is about to die.Report

              • Avatar Morat20 says:

                Last night’s debate was terrifying to me because it looks very much like civil libertarianism, even for the privileged groups in the US, is about to die.

                Your mistake was thinking the GOP ever really cared about civil liberties.

                My entire adult life, they’ve been the party of cutting taxes on the rich, deregulation of the powerful, and bombing of random foreign countries.

                Libertarianism was just a different form of red meat, for a different group.Report

              • Avatar Damon says:

                Real freedom ended long before that.Report

              • Avatar Michael Cain says:

                So, then, are you just whining, or do you have a plan? Everyone’s entitled to whine — I certainly do my fair share of that. And I’m always interested in hearing about practical plans.Report

              • Avatar LeeEsq says:

                Your idea of real freedom was perpetual misery and exploitation for most people. If you weren’t a white man of significant economic means having real freedom meant the freedom to be owned as a chattel slave, the freedom to be worked to death, and the freedom to submit to your husband.Report

              • Avatar Joe Sal says:

                Your idea of government was perpetual misery and exploitation for most people. If you weren’t a white man of significant economic means having real freedom meant the freedom to be taxed into chattel slavery, as service to the crown/church to be worked/tortured to death, and the freedom to submit to your master.Report

              • Avatar Brandon Berg says:

                Damon: Hell, I’d probably even agree to the original concept of social security, but that’s been bastardized all out of proportion to what it was when it was originally created.

                How do you figure? It seems to me that Social Security has stayed fairly faithful to its original vision.

                Not that there’s anything right with that.Report

          • Avatar James K says:


            Let’s grant that the government needs to do something here, and ask whether this way of doing it makes any sense. As I note in the post the whole point of insurance is to deal with unknowns. But a lot of healthcare is for things that are already known – regular check-ups or chronic conditions that are pre-existing. There is no logical sense in running these through an insurance system. All it is doing is disguising the costs of healthcare from the general public and adding needless administrative overhead from the insurance companies. On top of that, making insurance companies charge the same price for people who will obviously cost them more money creates horrible incentives – the insurance companies have an incentive to try and drive off as many of their sickest customers as possible.

            I don’t mean to lay this on liberals entirely – I know many of you would prefer single-payer which would at least have the virtue of being more straightforward (even if I have zero confidence that the US government would able to administrate a single-payer system even semi-competently). But still, your current system makes about the least sense possible, and at some point someone needs to look into actually fixing it, rather than just tinkering at the edges like Obama did.Report

            • Avatar North says:

              With a boat as big as we’re talking about you gotta turn the wheel slowly.Report

              • Avatar Troublesome Frog says:

                That’s my position as well. Step zero is to give people an option other than our insane employer provided insurance system. Setting up exchanges with clear standards so people could buy insurance like an actual product chips away at the employer model (even though the ACA stupidly has provisions in it that strengthen it at the same time). Even though it gets a lot of stuff wrong, it seems to me that it’s as big a step in the right direction as we were going to get.Report

              • Avatar Morat20 says:

                I’d personally like an option to transfer my employer contribution to the Exchange — it’d be interesting experiment to offer employees. “You can choose from our options or take the X dollars a month we pay towards your premiums and choose from the exchange”.

                Then again, I’m stuck with two specific plans, neither of them fit my needs at all, and for what I’m paying I could have better peace of mind and more predictable costs with a number of Silver plans, and end up paying roughly the same.

                I suspect in reality that option would quickly become “We’ll just stop offering that money, and hope you don’t realize it’s a pay cut”.Report

              • Avatar Oscar Gordon says:

                That would depend on the tax structure at play. If that dollar amount was still treated as tax exempt to the employer & the employee, I bet it would stick around in most cases, since the health benefit is part of the overall compensation package.

                If it’s taxed as wages, it’ll evaporate like rubbing alcohol on a hot plate.Report

              • Avatar Kazzy says:

                My old job sort of did this. They figured out what the premium was for a certain level plan for the employee only (I believe it was the EPO plan, as opposed to the also-offered PPO and HSA). Let’s say that was $600/month. You had the choice to:

                A) Get the EPO coverage for yourself entirely free.
                B) Apply the $600 to some other plan (be it the PPO/HSA for yourself or any of the three for a couple/family) and cover the difference.
                C) Take the $600 provided you had coverage elsewhere. This typically meant covered by a spouse. But given the exchanges, I suppose you could go there.

                Of course, in their miserly ways, they thought that this very equitable* structure was “too generous” and said insurance was now either take it or leave it… basically cutting salaries under the guise of cutting “unused” benefits.

                * Equitable because it balanced out compensation between folks who did and did not need insurance. Which remains a real issue because of our fucked up system.Report

            • Avatar Chip Daniels says:

              I completely agree, that using the mechanism of insurance is inefficient here.
              I’m one of that percentage the the pollsters are talking about who “opposes Obamacare”…because it isn’t single payer.
              But I’m also one of those incrementalist compromisers the DKOS folks scorn, who thinks half a loaf is better than none.Report

  6. Avatar Jason Kuznicki says:

    Sigh. The same glib nonsense that libertarians always give us. Everybody knows that mechanics can’t work on fruit.Report

  7. Avatar Chip Daniels says:

    Damon: I never voted for anyone who passed any of these laws. And I don’t see how I can be bound to comply to them if they occurred before I was around to even have decision it.

    Seriously, this is the real argument? Because I’ve seen this sentiment expressed in various ways, around the world wide intertubes.

    Echoing Morat’s comment, I know it sounds a bit nasty, but really, the kindest, most civil thing one can say is that this is, well, juvenile.

    1. I certainly never agreed to this so-called thing called “private property” so why am I bound to comply to them?
    2. I certainly never agreed to x thru n, etc why am I bound to comply with them?

    It is I think a sign of awareness of the world, when we recognize just how precarious things are which we normally unconsciously assume to be fixed and solid.

    That is, things like reality, morality, money, property, rights. We talk about all these things as though they had some objective state outside of our will.

    In fact, they exist mostly because we believe them, by some form of commonly agreed upon frame of reference.

    All these things were constructed by others before any of us were born, none of us got to vote or voice our opinion of them, yet we are bound by law and force to observe them.

    Damon, your body and property are protected by an imaginary constructive thing called “rights”, both personal and property, with deep layers of government bureaucracy and law defining all the various ways in which they can or cannot be abridged, holding all of us in the grip of that reality.

    Yet it is only this one aspect of the massive societal construct, the one about health insurance mandates, that you take exception to, and can’t understand why you must obey it.

    All the others though…those are totes legit, completely free of caprice and artifice.

    Seriously- there may be good arguments against the insurance mandate- but “I don’t wanna” is not one I find persuasive.Report

    • Avatar Damon says:

      “Yet it is only this one aspect of the massive societal construct, the one about health insurance mandates, that you take exception to, and can’t understand why you must obey it.”

      Actually I never said that. My original comment was about health insurance vs other forms of insurance, which are more voluntary than heath insurance is now.

      Would it surprise you that I view the constitution as not binding either? For the same reasons as I stated above. And as I’ve said before, I do not accept the concept of a “social contract”. There is no such thing. It is the lie told by those with power to ensure conformity of the masses to the will of their masters.

      Now as to your comment about “private property”, it doesn’t exit in this country, so you can take comfort in that knowledge. Example: If I “own” something but still am require to pay the gov’t a fee or the property will be seized by force and sold to pay what I owe the gov’t, I don’t own that thing. It’s another form of rent, long term perhaps, but not still a rental.

      “they exist mostly because we believe them, by some form of commonly agreed upon frame of reference.” Yes, commonly, but not universally. I’m an outlier. And some rights, personal, individual rights, are inherent to each of us. The founders used the term “god given”, and while I would not call it exactly that, they are innate to us each.

      “yet we are bound by law and force to observe them.” No, we are not bound by law. We are bound by the violent force of gov’t action should we choose to disobey. The only thing that keeps society, as we know it, at the status quo, is the lies we tell ourselves about our “choice” and the lies we tell ourselves that gov’t isn’t, by its very nature, violent force against us.Report

      • Avatar Morat20 says:

        Which rights are innate in your opinion? And lacking government, how do you plan to keep them?

        Because indeed, Government enforces your rights by using a big honking stick. But without government, anyone with a bigger stick than yours will cheerfully ignore your rights.

        You don’t accept a social contract, that’s fine. But given you don’t live alone on an island, how would you — in a real, practical sense — manage the fact that you live amongst other people, all with their own ideas, all of which impact you. Whether it’s dumping their trash upstream of you to having the firm belief that they’d like all your stuff, and also you’re gonna do what they say or get the snot beaten out of you….Report

        • Avatar DensityDuck says:

          If we’re going to play this game, I’ll ask how you feel about having a drone follow you around all day just in case you do something illegal.Report

          • Avatar Morat20 says:

            What’s this “we” stuff? I wasn’t talking to you. I was asking Damon questions about his views on government and rights, which I find rather fascinating. Why you’ve interjected yourself, and so aggressively defensive at that, is fascinating but irrelevant.Report

          • Avatar Kazzy says:


            Can you elaborate on this? I don’t see how it really fits in with what either Morat or Damon are saying.Report