Anarjus Essay, Research Paper

I think that libertarian anarchists ought to take thoughtful criticismslikeDave Waller’s seriously. How will anarchism handle the problem ofwealthycriminals? It seems like anarchism makes the utopian demand thateveryonevoluntarily play by the rules. The comment is made more persuasive byexamples from modern Columbia, medieval serfdom, and other situationswherethe wealthy have received and continue to receive unequal justice. I think that there are two levels of reply to criticisms of this sort. 1. First, the wealthy have extra influence under GOVERNMENT, too. Indeed, thisis precisely what the Columbian and medieval situations were: wealthyindividuals use their wealth to control or capture the government, thenuseit to bend the rules for their benefit. In order to criticize anarchism, it is not merely necessary to point outthatsuch a system permits the wealthy to evade the law. Why? Government,evenminarchy, must face the same problem. Surely minarchy free ofcorruption isjust as utopian as anarchism free of murder-for-hire. In order for theargument from wealth to work, it would be necessary to show thatgovernmenthas a COMPARATIVE ADVANTAGE over competitive defense agencies withrespectto equality under the law. 2. Second, GIVEN the general level of human depravity, anarchismprobablydoes have a comparative advantage over government. Holding constant thelevel of human badness, we can merely look at the situation in terms ofincentives. Under minarchy, the government faces only periodiccompetitionin the form of voting; and voting is notoriously a pure public good, sovoters will probably be unable to carefully monitor the government forcorruption. If people find that the wealthy are securing unequaljustice,their only alternative is to move to another country. In contrast, under anarchism there can be multiple suppliers of defenseservices in a single area. And the benefits of switching to an honestagencyaccrue to the consumer who switches, whereas the benefits of informedvotinggo to everyone equally. Now if a defense firm’s consumer is wronged by a wealthy criminal, won’ttheyjust abandon him? No, for at least two reasons. First, a defense firmisreally selling an insurance policy, a policy to defend the rights oftheirclients IF they are wronged. If word gets out that the firm abandonsitsclients when they come to demand the help they are entitled to, theirinsurance policy will be basically worthless. In essence, firms would

wantto protect clients even though the expected value of their case isnegative,because otherwise their name brand would be seriously hurt. The second reason why the rich would have trouble securing unequaljusticecomes from the incentives of the rich person’s firm. In insuranceeconomics,there is a concept known as “adverse selection.” This means that unlessaninsurer properly screens its customers, the most likely people to buyinsurance are those who are most likely to demand benefits. Forexample,chronically sick people are most likely to buy health insurance,high-riskdrivers are most likely (other things held constant) to buy autoinsurance,and so on. But if most people buying insurance come from high-riskgroups,then their premiums would have to be extremely high. Now what would happen if a defense firm acquired a reputation fordefendingwealthy clients to the death? It would face an adverse selectionproblem ofthe worst sort. Every criminally inclined wealthy person would want tosignup. The firm would have to pay out huge payoffs, either in the form ofsettlements to other firms, or to pay the cost of fighting wars witheveryhonest firm. The cost of the policy would have to rise almost to thelevelof the cost of the crimes. However wealthy a client might be, there isa huge deterrent against accepting him as a customer regardless of hiscriminal behavior. In contrast, honest firms could sell very cheap policies, because thelargemajority of their clients would never require the services. This isjusta standard application of insurance economics, which tells us that thefirmsthat adequately monitor their clients can offer cheap premiums, even ifbenefits are high, since the probability of payout is low. Firms thatindiscriminately defended wealthy criminals, in contrast, would have tocharge very high premiums, since the probability of payout is high. Finally,since the number of honest people of ordinary means far exceeds thenumberof wealth criminals, the total number of trained police on the side ofjusticewould vastly outnumber the number on the side of criminals. Much more could be said, but the incentive system of free-marketanarchismdefinitely seems better able to control the problem of wealthy criminalsthatgovernment or even minarchy. We don’t need to assume that everyoneunderanarchism is good, because we can show that for ANY level of goodness,the incentives of anarchism are better than for minarchy. –Bryan Caplan Department of Economics Princeton University [email protected]