Better off stateless?

Ben Powell, Pete Leeson and others have done interesting work on the relative performance of Somalia and ex ante comparable African states. While Somalia would be a terrible place to live, folks there often are better off than folks in neighbouring countries.

Interesting case reported by the BBC in the Ivory Coast where the northern town of Bouake, formerly capital of the rebels' region, has been operating under near-anarchy for a few years.

It was perhaps that legacy and a relatively high education that gave people the courage to try to make the best of difficult situation.

When civil servants fled south, volunteer teachers, like Ali Ouattara, stepped forward to try to keep things going.

"We didn't want the kids to become child soldiers, so we tried to give them something. This is how we became teachers," says Mr Ouattara, who lost his job at the university at the start of the crisis.

Most of the volunteer teachers had limited qualifications and no experience of teaching.
At first they had almost no resources as the schools had been ransacked and the lawlessness meant they were scared to discipline their pupils, who were sometimes armed.

Gradually with contributions from parents, the ad-hoc schools helped save a generation of children, and in some years the rebel zone got better results in national exams than the government zone.

Other volunteers helped cover for the absence of the state in other ways: setting up an ad-hoc postal service; their own television stations and some basic policing.

As for prospects, the Ivory Coast is set for reunification:

For example, Bouake now has a booming business in motorbike taxis - illegal under Ivorian law.

But here it is a sector that has kept hundreds of young men off the streets.

The problem is they will not have a place in a reunified Ivory Coast, what with their untaxed scooters, unlicensed businesses and lack of driving licences.
...
UN observation points along the former ceasefire line have already been dismantled but the most delicate part of reunification - handing over guns and control of taxes - still seems a long way off.

And, seven years without traffic lights, taxes or utility bills develops habits that are hard to budge.

The BBC's podcast on life in Bouake is here. UPDATE: Having heard most of it, I strongly recommend...

HT: Radley Balko

Maersk Navy

Maersk has hired a warship and some soldiers to help protect its shipping assets from Somali pirates; other shippers shipping lines may soon do the same.

I had expected that the insurance companies (shipping insurance is a rather concentrated industry) would eventually start doing this; big shippers shipping lines doing it instead isn't particularly surprising though. I'm not surprised that it took a while since piracy initiation for private solutions to start coming through: there was always a decent chance that the shippers shipping lines could offload the costs on taxpayers by convincing governments to send more naval vessels there.

If piracy gets bad enough, I'd still expect the solution to wind up being protected convoys, with protection covered by insurance companies charging a premium to client ships travelling outside of convoys (or refusing them coverage altogether). Unless organizing convoys is more logistically costly than I'm guessing, of course.

HT: Jeet Sheth

Private law, public law, and a liquor ban I can support

Drinking in public, outside of zones of public land prescribed by local governments, is wonderfully legal in New Zealand. So if you want to walk over, on the public sidewalk, beer in hand, to your neighbour's house, that's perfectly OK. I like that.

Countdown, one of NZ's big chain supermarkets, has been having some trouble, though, with folks drinking in their parking lot in Mangere (not one of the places that'll get highlighted for tourists visiting NZ; Google News link gives one of the front page headlines "Referee hit by baby-holding spectator"). So Countdown's owners asked City Council to include their parking lot as one of the prescribed places for a liquor ban. Council agreed, Countdown put up signs warning of the private liquor ban. Eminently reasonable.

But apparently, reports the National Business Review, liquor bans can only be enforced on public land, not on private land, even if the landowner requests it. The most that the police or private security could do is issue a trespass notice against folks drinking in the parking lot and arrest them for trespass if found there again.

Isn't it a shame that property owners cannot contract with the monopoly law provider, government, for different services?

Illiberal Anarchy

Brad Taylor and I (mostly Brad) have been working on a paper arguing that a market-based anarchy could well be rather illiberal. Assume that we're in Caplan's "sweet spot" for a feasible and desirable system of market chosen law: the network coordinating the protection agencies and allowing for dispute resolution amongst them is strong enough to keep out rogue agents but not strong enough to form a cartel. Further, specify that most people have weakly liberal preferences: they're happy for folks to do their own thing so long as there's no cost imposed on others, but it's only a weak preference. Next, specify that there exists a group with strong meddlesome preferences with a real willingness to pay to have those preferences imposed on others. Finally, the group with preferences deplored by the meddlesome minority have a smaller aggregate effective willingness to pay to enjoy their preferred lifestyle than the meddlesome group has to stop them (though their willingness to be paid to stop exceeds the meddlesome group's willingness to pay).

What happens? The meddlesome folks offer to subsidize the purchase of protection agreements that include their preferred meddlesome clauses banning the sanctioned behaviour and, if the meddlesome willingness to pay is high enough and the sanctioned group small enough, banning those protected by non-compliant agencies from entering their properties. The weakly liberal majority take the contracts if the discount is sufficiently large and if the loss in utility from not being able to transact with the sanctioned group is sufficiently low. Nothing in the process violates rights, but the outcome is hardly libertarian.

In states of the world where most folks have weakly liberal preferences but a few folks have strongly meddlesome preferences, majoritarian democracy produces more liberal policies than does market-based anarchy. Markets are better at satisfying dollar-weighted preferences than is politics. Where most folks have weakly meddlesome preferences but a few have strongly libertine preferences, market-based anarchy produces more liberal outcomes than democracy. We then worry that democracy has a tendency to produce broad-based weakly meddlesome preferences (which I think typically runs through fiscal externalities) while a market-based anarchy would promote the creation of public or club groups through churches or sects able equally well to coordinate for the production of public bads like meddlesome activity.

John Humphries Humphreys (sorry!!) has had a go at our paper - excellent!

His first critique: we're using a teleological rather than a deontological norm for judging how free a society is. Guilty! But imagine, as a libertarian with some libertine preferences, weighing up where to move. If you move to Country A, all the laws are perfectly libertarian, but if you engage in some activity you like but they don't, you lose all opportunities for transacting with others. In Country B, there are a lot of stupid laws but there's still more space for you to live your life as you like. Country A is the libertarian monastery where you can do what you want, but if you're not up for vespers at 5 you're shunned; B is the world we're in.

Note that we didn't say that the meddlesome folks would pay the drug users to stop using drugs -- that would be the trivial solution and, in that case, he'd certainly be right: utility rules. Rather, if you're willing to pay $10,000 to defend your right to use drugs but if you'd only be willing to accept $100,000 in exchange for giving up your right to use drugs (ie income effects can matter), then somebody willing to spend $50,000 to make sure your neighbours will have nothing to do with you if you do use drugs makes you worse off and your neighbours better off. Yes, we're invoking a somewhat thicker description of liberty than a pure deontological standard. But would you really move to the libertarian monastery?

Brad notes as well that we need not invoke thicker concepts of liberty in cases where the network's members have sufficient consumer-driven willingness to pay for meddling, in which case libertine agencies simply are declared rogue and their members are treated as criminals. This is a case that Cowen worries about in his initial article, and it is not a case of the network simply becoming the state, though this latter argument may be somewhat semantic. In the Caplan-Cowen debate framework, the network becomes the state when it is strong enough to become a cartel: strong enough to declare any protection agency rogue and strong enough to punish any member that transacts with the rogue agent. In this case, it's still a coordination equilibrium as no member agent wants to deal with the rogue agency because of side payments from the meddlesome group.

Humphries Humphreys is right that folks can conjure up all kinds of scare stories, including the rich jerk buying up all the land around your house and forbidding your exit. That seems a pretty implausible fear. But in the real world, there are lots of folks who seem perfectly willing to expend real resources to make sure that you don't do things in your own house that have no effect on them. I don't think it's crazy to worry that these folks might get more influence under market chosen law. We're not conjuring up completely imaginary boogey-men here. Just hit the "paternalism" keyword on the right hand side of the blog...

Second, Humphries Humphreys worries about realism and how likely this 'worst case' might be. He's certainly right that there's no cause for concern if the minority affected is relatively large. The costs of losing transactions opportunities with a large group are very large indeed. But not so for a relatively small group. In terms of our Figure 3, Humphries Humphreys would be arguing that the region in which democracy dominates anarchy must be smaller. But the logic of the argument is such that there must be a region where democracy dominates. In the part of world-space where we currently live, with lots of folks having low intensity meddlesome preferences, anarchy produces more liberal outcomes. But there are other parts of the space.

Finally, Humphries Humphreys notes Taylor's argument that voluntarism encourages tolerance. Of course, this is true among the majority who currently have weakly meddlesome preferences. In the current paper, we're worried about the high preference intensity illiberal folks and the disproportionate influence they can have under anarchy.

Now, would all this have me refrain from pushing the button that would cause government to disappear after a 5-year delay? Well, I was only about 45% likely to push the button to start with; the worries here push that down to about 40%. [All stated probabilities are purely notional as no such button exists and, if one did, I surely would not be allowed access to it.] My biggest worry is that Caplan's sweet spot seems a pretty narrow space and the historical record isn't exactly replete with stable desirable anarchies. Heck, even outfits that ought to have been able to protect themselves outside the state fared rather poorly absent state protection.

Evidence against the feasibility of a desirable libertarian anarchy

Today's lecture in my Public Choice class will hit on anarchy, the state of nature, the emergence of government, and the feasibility of a desirable market-based anarchic structure.

On the latter point, a small bit of evidence from David Hume's History of England, the reign of Edward I (around 1297)

For this purpose, he [Pope Boniface VIII] issued very early in his pontificate a general bull, prohibiting all princes from levying without his consent any taxes upon the clergy, and all clergymen from submitting to such impositions; and he threatened both of them with the penalties of excommunication in case of disobedience. This important edict is said to have been procured by the solicitation of Robert de Winchelsey archbishop of Canterbury, who intended to employ it as a rampart against the violent extortions, which the church had felt from Edward, and the still greater, which that prince’s multiplied necessities gave them reason to apprehend. When a demand, therefore, was made on the clergy of a fifth of their moveables, a tax which was probably much more grievous than a fifth of their revenue, as their lands were mostly stocked with their cattle, and cultivated by their villains; the clergy took shelter under the bull of pope Boniface, and pleaded conscience in refusing compliance. The king came not immediately to extremities on this repulse; but after locking up all their granaries and barns, and prohibiting all rent to be paid them, he appointed a new synod, to confer with him upon his demand. The primate, not dismayed by these proofs of Edward’s resolution, here plainly told him, that the clergy owed obedience to two sovereigns, their spiritual and their temporal; but their duty bound them to a much stricter attachment to the former than to the latter: They could not comply with his commands, (for such, in some measure, the requests of the crown were then deemed) in contradiction to the express prohibition of the sovereign pontiff.

...Instead of applying to the pope for a relaxation of his bull, he [Edward] resolved immediately to employ the power in his hands; and he told the ecclesiastics, that, since they refused to support the civil government, they were unworthy to receive any benefit from it; and he would accordingly put them out of the protection of the laws. This vigorous measure was immediately carried into execution. Orders were issued to the judges to receive no cause brought before them by the clergy; to hear and decide all causes in which they were defendants: To do every man justice against them; to do them justice against no body. The ecclesiastics soon found themselves in the most miserable situation imaginable. They could not remain in their own houses or convents for want of subsistence: If they went abroad, in quest of maintenance, they were dismounted, robbed of their horses and cloaths, abused by every ruffian, and no redress could be obtained by them for the most violent injury. The primate himself was attacked on the highway, was stripped of his equipage and furniture, and was at last reduced to board himself with a single servant in the house of a country clergyman. The king, mean while, remained an indifferent spectator of all these violences; and without employing his officers in committing any immediate injury on the priests, which might have appeared invidious and oppressive, he took ample vengeance on them for their obstinate refusal of his demands. Though the archbishop issued a general sentence of excommunication against all who attacked the persons or property of ecclesiastics, it was not regarded: While Edward enjoyed the satisfaction of seeing the people become the voluntary instruments of his justice against them, and enure themselves to throw off that respect for the sacred order, by which they had so long been overawed and governed.

The spirits of the clergy were at last broken by this harsh treatment. Besides that the whole province of York, which lay nearest the danger that still hung over them from the Scots, voluntarily, from the first, voted a fifth of their moveables; the bishops of Salisbury, Ely, and some others, made a composition for the secular clergy within their dioceses; and they agreed, not to pay the fifth, which would have been an act of disobedience to Boniface’s bull, but to deposit a sum equivalent to some church appointed them; whence it was taken by the king’s officers. Many particular convents and clergymen made payment of a like sum, and received the king’s protection. Those who had not ready money, entered into recognizances for the payment. And there was scarcely found one ecclesiastic in the kingdom, who seemed willing to suffer, for the sake of religious privileges, this new species of martyrdom, the most tedious and languishing of any, the most mortifying to spiritual pride, and not rewarded by that crown of glory, which the church holds up, with such ostentation, to her devoted adherents.(emphasis added)

The Church of the late 1200s was perhaps best placed of any party to provide private law enforcement services to its members. But it was unable to protect the Clergy when Edward removed the State's protection.

Sure, technology has changed over the interval, and this is hardly decisive evidence about whether Caplan or Cowen is right today. But it is worrying.

Hume's History of England provides excellent bedtime reading. General rule for arts students: read more economics. General rule for economics students: read more history.

The Pirate Code

Pete Leeson should be (and probably is) all over this one.

The National Post today reports on some features of the Somali Pirates' code of justice. Stylized facts:

• Hundreds of small pirate cells in communication with each other
• A strict code of conduct across the different cells: no rape, no robbing the hostages, no killing: just peacefully waiting for the ransom
• Adoption of the prior Somali system of clan justice to resolve disputes across cells
• A mobile court based in Bedey where any transgressing pirate can be tried and punished.

From the article:

But while differences remain among various groups, the pirates' first set of rules is precisely aimed at neutralizing rivalries, Mohamed Hidig Dhegey, a pirate from Puntland, explained.

"If any one of us shoots and kills another, he will automatically be executed and his body thrown to the sharks," he said from the town of Garowe.

"If a pirate injures another, he is immediately discharged and the network is instructed to isolate him. If one aims a gun at another, he loses 5% of his share of the ransom," Mr. Dhegey said.

Perhaps the most striking disciplinary feature of Somali "piratehood" is the alleged code of conduct pertaining to the treatment of captured crews.

"Anybody who is caught engaging in robbery on the ship will be punished and banished for weeks. Anyone shooting a hostage will immediately be shot," said Ahmed Ilkacase.

"I was once caught taking a wallet from a hostage. I had to give it back and then 25,000 dollars were removed from my share of the ransom," he said.

Following the release of the French yacht Le Ponant in April 2008, investigators found a copy of a "good conduct guide" on the deck which forbade sexual assault on women hostages.

As Ilkacase found out for himself, pirates breaking internal rules are punished. Conversely, those displaying the most bravery are rewarded with a bigger share of the ransom, called "saami sare" in Somali.

"The first pirate to board a hijacked ship is entitled to a luxurious car, or a house or a wife. He can also decide to take his bonus share in cash," he explained.

This seems a solution to a rather large prisoner's dilemma problem. Any pirate cell can do better in the short term by becoming more violent and by taking more from the victims. But that would draw a much more vigorous response from American and other navies. So they restrain themselves and punish anybody who gets out of line. Honour among thieves and order within anarchy.