Oh, there’s a lot to be said on the area. I was just bringing out that one feature, how the Vagrancy Costs externality showed up in a situation where you really couldn’t claim it was a consequence of a state intervention.

Trying again.

Myself: “There’s a fallacy of composition if you think that if we took a snapshot of what those skills are at some point in time, then everybody got them, they would all be in demand then – the fenceposts would have moved”, then Fundamentalist: “Skills that are in demand don’t change that rapidly. If everyone got those skills, everyone would earn higher wages. In fact, that’s exactly what happens today. Most workers start out as unskilled. Even college graduates need years of on-the-job training before they become productive workers. OJT makes people skilled workers. If you took a snapshot of all of the unskilled workers in the country at one point in time, then took another snapshot ten years later, most would be skilled workers after ten years. The ranks of unskilled workers would be filled by immigrants and young people seeking their first job.”

It’s not that the skills in demand change rapidly; that would need the demand curve to shift. It’s that if the supply increases, you move along the demand curve. The demand curve isn’t enough to give everybody enough to live off, if they all come along offering those skills. And, that is not “exactly what happens today”. What happens now does not have everybody offering skills. Even on that scenario, there are people around without the skills.

Myself: “What you describe is just precisely what you would expect to happen, under my description, with people turning predatory at the margins”, then Fundamentalist: “What do you mean by ‘at the margins.’ I thought all poor people were at the margins. Do you mean only the poorest resort to crime? I don’t think you can demonstrate that. Or do you mean the most recent poor people turn to crime while the one who have been poor for a while don’t? I don’t think you can demonstrate that either. The simple fact is that the vast majority of the poorest people, those at the margins, do not resort to crime.”

Sorry, I thought that if we were talking economics you would know some of the technical terms. It’s just that you start getting predatory behaviour in a dribble from those people with the right combination of pressures on them and the right combination of tendencies that way. We don’t know just who will go first, but we do know that it won’t be the whole lot at once. That’s why people used to be concerned about vagrancy as a breeding ground for crime, but they didn’t think that it was crime itself, as such, until they passed laws against vagrants hanging around – laws that were motivated by that underlying concern.

Myself: “Productivity does not, in and of itself, raise wages over the long run, it is a precondition for that (something might come up so that wages did not rise, even with productivity gains)”, then Fundamentalist: “If productivity doesn’t raise wages in the long run, what does?” To do that, you have to avoid productivity becoming a bottleneck, but actually delivering it needs bargaining power.

Fundamentalist: “Economics doesn’t have another answer”. Well, actually, quite a few people have made suggestions – negative income tax, distributism, the en.wikipedia.org/wiki/Kim_Swales approach, whatever.

Fundamentalist: “And what would keep wages down in the long run when worker productivity increased?” Lack of bargaining power, of course. See a limitedinc.blogspot.com/2008/07/lies-damn-lies-and-conventional-wisdom.html at Limitedinc for some discussion.

Myself: “No. That came along after the 18th century phase of Enclosures, and this was talking about the Tudor one. Anyway, it didn’t solve even the former, it mitigated it; that is, people still ended up worse off than they had been, it’s just that most of them made it through.”, then Fundamentalist: “OK. The enclosure movement took place in the 18th century and the industrial revolution in the 19th century”. Wrong – that was just the beginning of the last phase of the enclosures. We were talking about the Tudor phase.

Fundamentalist: “So what happened to the people kicked off their land in the 18th century? And who were the factories hiring in the 19th century if not landless poor? I don’t think you can put a hard date of 1800 for the industrial revolution, anyway. Some historians think it began in 17th century Dutch Republic. There was some industrialization in the 18th century. As for the landless poor ending up worse than they were before, what does that have to do with the discussion?”

Everything; you used the term “solve”. If you get diabetes and then you get insulin treatment, that isn’t a cure; it’s the same thing here.

Fundamentalist: “We are discussing whether vagrancy is an externality of free markets. Factory workers in the 19th century may have been worse off than peasants before enclosure, but that would be a hard position to prove. You would have to argue that average wages for unskilled labor had not increased in England for over a century.”

It’s dead easy to prove, just by looking at the cases like the Leverburgh fish processing factory where the locals still had their old options. They stuck with those, given the chance.

Myself: ‘I’m not splitting hairs, I’m sticking to careful definitions because sloppy ones let you slide to things like “It’s not a big leap to say that free markets cause crime’, then Fundamentalist: “So where was I wrong? Did you not claim that vagrancy is an externality of free markets? And did you not claim that vagrancy causes crime? So where is the flaw in my conclusion that you claim that free markets cause crime?”

Sigh. Vagrancy is not an externality of free markets in general, only of ones where certain conditions apply, i.e. where there are people without adequate resources of their own to survive (counting their own labour, if wages on offer are too low). Vagrancy is a cause of crime (not the cause), and even then only when certain conditions are met. So, your assertion is an inference of yours, not a claim of mine, which you arrived at by assuming all the missing preconditions always apply.

Fundamentalist: “Here’s what you wrote about swagmen: ‘Trollope described how 19th century Australian squatters had to “hire” passing swagmen that weren’t worth hiring, because if they didn’t they got mysterious fires’. I can only assume from your post that you think free markets caused swagmen to be unemployed and forced them to resort to crime.” Sigh. What you should take from that is just precisely what I wrote, that the state did not cause that externality. I didn’t state what did.

Fundamentalist: “The swagmen were just thugs using the old protection racket to earn money instead of working. What does that have to do with free markets? Capitalism, which is free markets with the rule of law, would have thrown the thugs in jail. I honestly no longer understand what you’re trying to argue. You seem to be going in circles. Do you think that anyone claims that free markets would eliminate crime completely?” What indeed has that got to do with free markets, other than the fact that they were there? The free markets didn’t cause this behaviour, as you so rightly point out, but the key thing is that state intervention didn’t. I am not trying to prove anything so strong as you suppose, only to shoot down misunderstandings about just what really does come from states. Oh, and free markets would not have used jail for this – policing this sort of thing wasn’t cost effective. That’s why it didn’t happen.

to pm lawrence:

no, that’s not what i’m doing at all. i’m disputing the “externality” you maintain existed without state intervention.
where the state is unable or unwilling to do its job (justice being its bailiwick), then extortion and other crimes will flourish. the state’s lack of active presence is the reference, because there did not exist competing justice systems. granting of the monopoly function of justice is the intervention. so we’re talking about a dereliction of duty, not a legal void.

as for special pleading for the colonial australians, no, this is just my guess at why such lawlessness (insofar as property was concerned) was tolerated to a greater extent than it would be today. it’s merely a personal curiosity.

PM: “The demand curve isn’t enough to give everybody enough to live off, if they all come along offering those skills. And, that is not “exactly what happens today”. What happens now does not have everybody offering skills. Even on that scenario, there are people around without the skills.”

In the socialist economy we have had for the past half-century you’re right. But in a free market the demand curve certainly is enough to “give everybody enough to live off”, especially skilled workers. That’s what Say’s law teaches. And I didn’t write that we see everybody offering skills. I said that the unskilled become trained on the job and develop skills. That’s true for the majority. Very few people remain unskilled and almost all of the unskilled in the labor market are teenagers and immigrants.

PM: “It’s just that you start getting predatory behaviour in a dribble from those people with the right combination of pressures on them and the right combination of tendencies that way.”

Sounds like you’re talking about people at Enron. What you describe will happen in any group of people, wealthy or poor. “Vagrancy causes crime” still doesn’t follow logically or empirically. Those vagrants who resort to crime probably had less pressure on them financially than the many poorer people didn’t follow crime. You’re trying to make it sound as if the poor who resort to crime had no choice, that some kind of economic determinism forced them into their crime. I don’t accept any kind of determinism.

PM: “To do that, you have to avoid productivity becoming a bottleneck, but actually delivering it needs bargaining power.”

Nonsense. Productivity never becomes a bottleneck and can’t. Productivity benefits the workers, the owners and the consumer. All share in the benefits. Consumers get lower prices; workers get higher wages and owners get greater profits. What’s there to bargain about?

PM: “Well, actually, quite a few people have made suggestions – negative income tax, distributism, the en.wikipedia.org/wiki/Kim_Swales approach, whatever.”

For creating higher wages in the long run, real economics has no other answer than productivity increases. Any nut can make suggestions. Bargaining power, by which I guess you mean unions, will have no effect on long term wages. All unions do are create unemployment in non-unionized industries. They have done nothing to increase wages for anyone but unionized workers, and the Feds have thwarted that for the most part with inflation. In fact Keynes recommended intentional inflation in order to reduce the real wages of union members.

PM: “It’s dead easy to prove, just by looking at the cases like the Leverburgh fish processing factory where the locals still had their old options. They stuck with those, given the chance.”

You didn’t answer my charge. I wrote: You would have to argue that average wages for unskilled labor had not increased in England for over a century. How does your example show that wages had not increased over a century? And I assume that the “locals” had farms to work when we were talking about landless peasants.

PM: “Vagrancy is not an externality of free markets in general, only of ones where certain conditions apply, i.e. where there are people without adequate resources of their own to survive (counting their own labour, if wages on offer are too low). Vagrancy is a cause of crime (not the cause), and even then only when certain conditions are met. So, your assertion is an inference of yours, not a claim of mine, which you arrived at by assuming all the missing preconditions always apply.”

You’re as slippery as a greased pig, always changing your claims when cornered. Austrian econ asserts that free markets will have no unemployment that is not voluntary. If voluntary vagrancy is one of your preconditions, then I’ll have to concede. But almost all involuntary unemployment is caused by state intervention through taxation, monetary policy, regulation of business and support of unions. The rest is caused by lack of property rights and their enforcement. As for vagrancy causing crime under certain conditions, you’re right and the condition is that the vagrant chooses crime; nothing forces him into it.

PM: “What you should take from that is just precisely what I wrote, that the state did not cause that externality.”

You’re right that the lack of law enforcement can cause criminal activity. That has always been assumed by even anarcho-capitalists who hate the state. But the lack of law enforcement of property rights is not free markets; it’s anarchy. Yes anarchy has some unpleasant externalities. Free markets require the rule of law and honest enforcement or criminals take over. Free markets can’t exist without the rule of law. If farmers give in to extortion, that in itself is evidence that free markets don’t exist in that place and time.

PM: “I am not trying to prove anything so strong as you suppose, only to shoot down misunderstandings about just what really does come from states. Oh, and free markets would not have used jail for this – policing this sort of thing wasn’t cost effective. That’s why it didn’t happen.”

As I wrote above, I agree completely that lawlessness destroyes free markets. But that is not the problem we face today or have faced for over a century. We suffer from too much law and government, not too little as existed in the wild west. Real free markets would have jailed the arsonists whether it was cost effective or not because free markets cannot exist without the rule of law. Even the most ardent supporter of a stateless society knows that. That’s why Hoppe has recommended insurance companies and private judges to provide and enforce the law.

Newson wrote ‘no, that’s not what i’m doing at all. i’m disputing the “externality” you maintain existed without state intervention.
where the state is unable or unwilling to do its job (justice being its bailiwick), then extortion and other crimes will flourish. the state’s lack of active presence is the reference, because there did not exist competing justice systems. granting of the monopoly function of justice is the intervention. so we’re talking about a dereliction of duty, not a legal void.’

Clearly we disagree very much about this, but as it happens it doesn’t affect whether there is an externality or not, so I’ll leave that aside for now. For now, it’s enough to note that even if the state did act, that too would impose the costs of policing – costs which are also spread.

Newson also quoted Paul Krugman: “History offers no example of a country that experienced long-term productivity growth without a roughly equal rise in real wages”.

Actually, there is evidence the other way, e.g. the graph referenced in the Art of the Possible post theartofthepossible.net/2008/07/21/when-you-see-a-turtle-sitting-on-a-fencepost illustrating “Virtually the entire increase in economic output over the past thirty years has gone to the rentier classes and to corporate management” at washingtonmonthly.com/archives/individual/2007_12/012733.php, as well as what Limitedinc posted (see above).