Freedomain Radio

 Hey everyone.

I'm understanding more and more everyday and I know most the arguments against permits but still have some trouble with a few points.

I'm currently starting a travel business. I had a meeting today to affiliate myself with a travel agency since i cannot start my own for lack of permit. The guy explained to me how difficult it is to start a travel agency because of all the regulations. The legislature did not seem to affect the customer all that much. It's mostly the existing agencies that profit from it by destroying competition and innovation. I'm currently reading Atlas Shrugged and holy crap was it spot on!

Anyway the guy still seemed to think some regulations did have some use. He told me that in chinatown a few years ago, some people started travel agencies and booked all sort of trips and then just closed up shop and disapeared. Fly by nights basically. So the customer is protected in this case. I'm not sure how I can counter that argument. How would a free market solve this issue? I was thinking it could be something like the better business bureau sticker. Where you have to prove to the BBB that you are legit before you can be certified by them.

Is that it? Is that enough?

Also, my friend is an engineer and I started talking with him about anarcho-capitalism. He said permits are essential to construction because if a nobody builds a bridge and it collapses, many many lives can be lost.

I replied that: He has to get capital from someone or be employed by someone to build it. Who in there right minde would hire someone that has no diploma, experience or references to build a multi-million dollar bridge?

Is this correct? Am I missing something? He did not seem convinced, this is why I am posting. Guidance via forum (:

Thanks in advance.

Heh, If he's so concerned about being ripped off and lives being lost, he should have a good look at the government's record. I mean, how many Iraqi men, women and children did they kill last month?  How many people died because the FDA didn't approve a drug? How many programs end up accomplishing the exact opposite of their stated goal? How much money do they steal from us at the point of a gun every day? I mean, of all people to turn to in order to solve THAT problem.  Isn't that like hiring a fat smoker with diabetes as your personal trainer and nutritionist?

It may be important to ask yourself why you are avoiding the argument from morality with this guy.

Excellent point. I will bring that up if we ever touch the subject again.

But this discussion was more focused towards "How would society fonction". More pragmatist and less moral.

I love the argument from morality. But once I get someone that actually listens and is intrigued by the idea, I'd like to strike him with the "Now that you agree it's more moral this way, notice it's also more efficient" speach.

It seemed like you brought up great counter points, just because there government regulation doesn't mean there wouldn't be any certifications or "permits" of sorts, it just wouldn't be required through threat of violence. You can still make bad business mistakes by not checking references and being scammed even with todays regulations. 

If fly by night travel agencies becomes a problem, it opens a hole in the market to be filled by good businessmen, then it will be filled and wont be a problem anymore.

Cedric Cobban:

Excellent point. I will try that on him.

But this discussion was more focused towards "How would society fonction". More pragmatist and less moral.

I love the argument from morality. But once I get someone that actually listens and is intrigued by the idea, I'd like to strike him with the "Now that you agree it's more moral this way, notice it's also more efficient" speach.

Well, the book practical anarchy has some good answers.  Everyone wants to maximize resources and minimize expendatures, which is the argument he's making about people who want to rip people off with travel packages.  If that's the case, an insurance company might also want to maximize resources and minimize expendatures.... if I were a customer of your insurance company, how might you sell me protection against companies who rip me off?  How would you go about minimizing pay outs as an insurance company?  How would you get travel agent upstarts on board with your plan?  Would you do business with a travel agent with a low contract rating? Certainly its a risk.

Perhaps like ebay, travel agents would begin with a low contract rating but offering low cost deals to build up their rating.  Then when they have a high enough positive feedback rating they can charge more.

Just because something is government approved doesn't mean that it's safe or effective. It just means that it's government approved.

There have been hundreds of bridge failures of varying degrees in the United States, all presumably government-approved.

'Safe' and 'effective' are subjective value judgements. Who's to say whose standards of safety and effectiveness are acceptable and how is it to be decided?

The free-market mechanism for guarding against potential calamity is an underwriter who conducts inspections, assesses risk, publishes findings, and insures against damages.

Cedric Cobban:

He told me that in chinatown a few years ago, some people started travel agencies and booked all sort of trips and then just closed up shop and disapeared. Fly by nights basically... How would a free market solve this issue?

Maybe I'm missing something in this story, but it doesn't look like the government did anything to protect people either.  They question you might want to ask your friend is why the government didn't protect the people that got ripped off.

I can speak to your engineering question specifically as I studied engineering and did work experience in the area. In Australia, we have an organization called the Instutute of Engineers. To become a member, you need to have a recognized degree, plus a certain amount of experience, as well as pass some tests relating to that work experience. This makes you certified and allows you to sign off on engineering drawings. So what, right? Does anyone ever check this stuff? Honestly, not really. BUT it is important. The insurance contracts are writted up in a way such that if a professional engineer did not sign off on everything (as well as many, many other requirements such as the materials being tested and certified etc) then there is not an insurance payout and the company responsible loses a lot of money. There are rooms full of paperwork on large projects that are never seen or used unless a situation like this occurs, and if it does, it is crucial to have all your ducks in a row.

In a free society, the same thing would happen. Insurance contracts would be written so that certification is required and so it would be almost an act of corporate suicide to not follow the regulations and have qualified personell doing the work.

The FDA regularly approves killer drugs.

 What I meant was that this was his justification for the government tightening up the regulations. Lack of regulations permitted fly by nights. Now they arent as big a problem. It's just that it choked that entire sector of the economie....

I think a good question is, why did people choose to do business with such shady people (I assume they weren't forced to)?

Screw it then: Argument from morality!

Ask him if he's comfortable with shooting people that don't agree with him?

Because that's what he's advocating.

A license is mandatory and enforced through guns and violence. If you don't have some guy's 'permission' to work, you will be stolen from or kidnapped.

A certification is not mandatory and is akin to acting as a witness in support of a company. You can practice without a certification (at least morally, but you probably won't have customers), you will be shot if you practice without a license.

I showed him a link to this thread.

This is what he replied (doesnt have an account yet, maybe he will eventually) :

''In a free society, the same thing would happen. Insurance contracts would be written so that certification is required and so it would be almost an act of corporate suicide to not follow the regulations and have qualified personell doing the work.
''

And how do you get qualified personel????? heheeheh

Vincent Lemaire-Dugré March 19 at 12:12pm
and corporate suicide is no problem , if the day after you can start another compagny with exactly the same people... I'm not suggesting there should be a shitload of permits.. I'm suggesting some people who have no direct interests (other than public safety) should check up on people that do complex dangerous contraptions... of course FDA is bad... who says it's not! Even Health Canada does the same.. they are too much invested with the politics... who are in turn financed by the market...

Without government, the exact same thing would probably happen... making products that are sensibly dangerous... making a lot of well paid experts say it's safe and voila!! But at the end of the day , if the expert can't call himself an expert without serious consequences... If people without ''certified'' experience (be that a permit, a diploma, a recognition by some top notch responsible group) can't have legal weight on the market, things have a chance to be better.

At the end of the day I guess it comes down to trust... will the certification be made by unbiased people? will it be made for the good of all, or just a minority profiting from it.... at any point in the chain of society if someone wants to do bad, he'll do bad... but will he be accountable for it?

If, me being an engineer, a neighboor (who knows that I am one), asks me how to repair his lawnmower, and i give him friendly counsel that results in him being hurt... I can legally be held responsible in a professionnal way (and civil too i guess :) )for the consel i gave him... why? because he trusted my engineering formation. Recognized expertise has to come as a price: responsabilities for ones actions....

If the FDA legalize killer drugs, and nothing happens to the experts who approved/designed it, then the concept of permit/expertise is not respected. And it is because it is not respected that the FDA can do whatever the government tells it to do...

I am intrigued by the 'argument of morality' could you expand on it?

I gotta say that i find it a bit weird that there's a travel agency permit though...

I don't get the gun and violence reference... wouldn't a total free market do the same thing... give me the money we agreed you'd give me or I call the enforcers??

I'm not saying we shouldn't go free market, but I'm intrigued with what are the pros and cons of it?

...corporate suicide is no problem, if the day after you can start another company with exactly the same people...

Start another company with what capital? It takes capital to operate a company. Who is going to do business with reckless individuals? What investors will entrust capital to individuals with a track record of failure?

So, the question is how can we be certain?

We can be relatively certain by insisting on disclosure, conducting audits, and maintaining reputation.

Ok first of all let's try to find out something about the "take the money and run" problem.  Firstly how big is it?  Is it big enough that people would no longer trust an agency that hadn't been around for say, a year, with their money?  Because if it is then the problem is already solved.  If not then the risk of being ripped off is not a big enough disadvantage to overcome the advantages of new agencies that don't have permits.  Allowing non-permit-holding agencies allows people to take the risk of non-service if the discount is worth more than avoiding that risk.  This in turn allows new agencies to offer discounts to build up their business and reputation allowing them in effect to buy the reputation that allows them to sell for full price later on.  It's win-win for almost all cases.  When someone asks about a problem the free market hasn't solved (allegedly) always ask if that's because it's not worth solving. 

Bridges that are actually safe are not that much more expensive to make that bridges that aren't, and the tools for knowing if they are safe and how to make them so are getting cheaper thanks to CAD/CAM* technology and the general increase in intellectual capital that the free market encourages.  How much is an unsafe bridge worth?  That depends on what guarantee you make.  You can guarantee that it won't damage lives and property by falling down, that it won't do so due to noncompliance with stated standards or you make no guarantee.  In the third case who would cross your bridge?  I mean if you aren't prepared to take the risk that the thing will come crashing down and destroy the truck someone's crossing it in the truck drivers are going to go the long way around.  If you guarantee that it complies with a stated standard there will have to be someone who pays compensation if it doesn't, and they will be very interested in whether or not does so it will be safe.  If you have an absolute guarantee this is even more so.   So the cost increase to make an unsafe bridge is the cost of revenue forgone if you don't guarantee the work or the cost of guaranteeing unsafe work (basically an insurance cost).  Either way it's really, really likely to be more than the additional cost to make a safe bridge.  BTW yes I know I haven't defined "safe" but I believe that the argument holds for any reasonable definition of the word "safe".

*  Computer Aided Design/Manufacturing