A Defense of libertarianism (and response to Zed, etc.)

For example, the basic principles of a free market (e.g., supply and demand) are easy to state but result in complex transactions. When things don't "work out" for someone in the real work and they raise an argument against "free markets" (as in the current housing bubble), we need to be ready to point out all the complex ways that the free market worked correctly but where the non-free parts distorted it (government policies encouraging loans to unqualified applicants).

In complex systems with non-linear behavior, we need to be very careful that we understand the full context of an event or we won’t be able to extrapolate the results. That’s why first-order approximations fail so often in mathematics and in real life.

Dow Chemical is one other such organization, as is General Motors, as is Google, as is Canada, etc.

Why do you presuppose that it is necessary to diminish the power of some of these organizations?

I would argue that one of the main reasons that corporate interests become "large, centralized power structures" is because they are able to manipulate government regulation to their advantage.

There was a Stanford Entrepreneurial Thought Leaders talk where one guy said how much he loves starting companies in heavily regulated industries -- because there is such a high barrier to entry that once you do the extensive paperwork and legwork and politicking get approved there is very little competition.

The real "sweet spot" for firms is to be in a heavily regulated AND heavily protected industry (aka too big to fail). The military industrial complex is one such example, as is the financial services industry (as of the past few months) and also now the US automotive industry.

So rather than viewing the world as one in which government protects me from these entities, I view it as one where these entities conspire to prevent revolutionary innovations from threatening their dominance.

Further evidence that countries do this is the big trend toward treaties to prevent "tax competition" between countries. France doesn't want Poland luring companies in with low corporate taxes, etc. This is blatant collusion. Why are state taxes typically lower than Federal? Not because state regulators aspire to less grand programs than Fedreal ones do, but because it's easy to move to a different state, not so easy to move to a different country.

Consider how many businesses spend more money on a presence in Washington DC than they do on innovation. Google learned from Microsoft's mistake and now has an active office in DC trying to build influence -- and with Schmidt's appointment has the ultimate influence in the new administration.

To maintain its status as legitimate, one of these entities, government, must constantly reinforce its own story through pageantry and pomp. Did you know that George W. Bush conducted more ceremonies than any other president?

We're supposed to believe that all other "powerful, centralized power structures" are evil (various companies, Saddam's Iraq, Castro's Cuba) and that the only hope lies in unquestioning, unthinking loyalty to the US government. We're taught to see all regulation only as the "grand vision" associated with it, not as a law that creates incentives, winners, and losers. We're taught to fear and to trust. We're given black and white messages like "good and evil", etc.

I just refuse to believe this. I live in a country where "The Patriot Act" takes away rights and where the financial services industry -- for quite a while the biggest industry donor to both major parties -- gets a massive bailout from the Treasury department. We live in a place where eating according to the USDA food pyramid will lead to heart disease while benefiting the dairy and beef and corn industries.

Why do I not just think we should strive to improve regulations against "evil corporations"? I think people are capable of processing information and using basic cognition. In many cases, such as the SEC, regulations only lead to a false sense of security. Isn't it a bit crazy that in the same period that Madoff's firm conducted the biggest scam ever, the SEC was warned of this by multiple parties and instead chose to shut down prosper.com on a technicality?

I'm not anti-government, but I would like to see more competition -- in the form of more being handled at the state level so that we can see the effects of multiple approaches to solving the same problem, as well as move to a different state if we find its regulatory environment preferable.

First let me answer your question directly: in this example, Libland is undoubtedly screwed because Xia has a monopoly on the food supply. The people of Libland would not be able to cope with this situation and they'd most likely be overrun. Sure, there will be pockets or resistance with guerrillas doggedly fighting on for years or decades, but as a state, Libland would no longer exist.

Nevertheless, I think that the example isn't helpful because of two positions:

1) The unexplained reason why Xia can produce food so cheaply. 2) That it would be uneconomical for anyone other than Xia to produce food.

In the real-world, there would be a competitor for Xia to supply food. Even if Xia started off as the only supplier, someone would realise that they could enter the market supplying food that's a little cheaper, higher quality or just a little more different. The people of Libland, knowing the dangers of relying on only one source, would then also start purchasing from the competitor _in_addition_ to Xia.

I therefore think that your hypothetical scenario wouldn't exist outside of the 'thought laboratory'.

Libertarianism is like prayer. If it works, the religion is right. If it doesn't, you did something wrong and it's right.

Isn't that what the defenders of communism say about the USSR and China? (Stalinim and Maoism respectively, rather than pure Communism as Marx et al. intended)

The point being that 'pure' libertarianism is possibly just as realistic as pure communism, or perhaps even democracy (either in the sense of 'pure' (i.e. direct) democracy at a national level, or even, with representative systems, that the majority of the population is well informed regarding issues at hand and actively participates in the democratic process).