By Bryan Caplan, Econ Lib
As a radical libertarian, pacifist, champion of open borders, and mortal enemy of Columbus, I seem like an easy convert to left-libertarianism. Proponents like Sheldon Richman and Rod Long are smart and earnest people. Their motives are pure. Still, their innovations are largely mistaken. All too often, they make a mountain out of a molehill, then implausibly blame government for mountain-making. I’ve criticized them repeatedly in the past (here, here, here, here, and here), but the latest example from Rod Long exemplifies my complaints:
Suppose you forget to pay your power bill (or your phone bill, or
your cable tv bill, or your internet access bill, or your credit card
bill, or whatever). What happens? Your provider disconnects you, and
you’ll probably have to pay an extra fee to get service reestablished.
You also get a frowny face on your credit report.
On the other hand, suppose that, for whatever reason (internet
glitches, downed power lines after a storm, or who knows), you suffer a
temporary interruption of service from your provider. Do they offer to
reimburse you? Hell no. And there’s no easy way for you to put a frowny
face on their credit report.
Rod’s take on the facts is awfully slanted. In the real world, firms give plenty of extra chances to delinquent clients; regulation often extends grace periods; and delinquent customers, unlike service providers, are hard to successfully sue. But suppose Rod’s view of the facts were exactly correct. Then basic microeconomics shines a spotlight on a neglected side effect of the double standard: Prices fall. When consumers have no recourse, firms are more willing to sell (supply increases), and consumers are less willing to buy (demand decreases). Furthermore, if consumers are willing to pay a premium for equal treatment, firms have every reason to offer it. The natural lesson to draw is that consumers prefer the existing double standard to the extra costs of equality.
Rod continues with an analogous example:
Categories: Economics/Class Relations