Fun Libertarian Exercise #1

Triathlon Forum
1

(Educate me/us).

Discuss how a libertarian government would prevent and/or solve the issues that arise in the following scenario. Do not use federal or state intervention or regulation without the explicit consent of the governed.

The FlyByNight Component Corporation purchases a small farm outside of Empfield, Kansas (pop. 216,000), to construct a manufacturing plant for their revolutionary lightweight spoke nipples (no zoning regulations). Much of the farm is paved over, the plant is built, and manufacturing begins. A byproduct of the manufacturing process is, unfortunately, dioxin (no hazardous materials registration). The plant has an underground holding pen for the dioxin (no regulations on hazardous materials storage). Unbeknowst to the company, the pen has been built adjacent to the only surviving colony of black-footed ferrets, who discover a liking to nibbling on the liner of the holding pen (no environmental impact studies, no Endangered Species Act). Soon, the ferrets break the liner, and dioxin starts slowly leaking out. The last ferrets on earth are killed.

Within two years, the market finally realizes that the lower weight of the nipples, even though they are rotating weight and out on the rim, doesn’t make a whit of difference to performance, and the market dries up. FlyByNight closes the plant, sells off the equipment, distributes the liquidated assets to shareholders, and walks away (no hazardous material disposition regulations). They don’t bother trying to sell the land.

In ten years, the dioxin has reached the underlying aquifer (no environmental impact regulations) that supplies Empfield and the vast parsley farms in the surround area that are the underpinnings of the local economy.

Total recoverable assets from FlyByNight (which is no longer in business) and it’s 74-year old president Ernesto De Soto are worth $460,000.

Choose one or more of the following outcomes and discuss:

  1. Since the dioxin was never registered, nobody knows where the dioxin is coming from, and the aquifer is permanently unusable. There is no water supply for Empfield and the parsley farms, and the area becomes uninhabitable. Total economic impact well over $10 billion.

  2. Locals who worked at the plant realize it may be the source; the town raises the money to study the site (no Superfund or equivalent), and determines a) it will cost $1.6 billion to clean the site or b) there is so much dioxin, and it’s so deep, that it is impossible to clean, and will continue to leach into the aquifer for the next 30 years.

Ken Lehner

2

You know what you do…bitch about it. Everyone loves technology but hates the by-products. Part of life…the same arguement can be made with the fact that the human body is also considered Toxic Waste…more so than many of the toxins that hippie liberal tree huggers like to complain about. You know what, volcanos are toxic too…did you know that the Everglades produce more CO2 each year than all other sources?

I think we need to do a study and find (as well as fix) the problem with no grass growing around the vent at Old Faithful…this MUST be fixed soon…also, the fact that pine trees produce to much acid to grow a nice lawn under them…damn…such big issues for humanity.

As for your analogy…man can not look at the unknown issues of the past and fault people for lack of knowledge on technologies that did not yet exist. Hell, people used to bathe in PFC’s…now there are issues with the idea that Teflon, Gortex, Scotchguard and on and on are killing us…playgrounds are poison…and once again…anyone over the age of 25 should be dead…

This reminds me of the time Gore got a few million buck to study why some owl was no longer in a forest…they even transplanted this owl into the forest, still the owl would disapear…turns out the owl never lived there to begin with. Screw the ferrett.

3

I’m not a Libertarian–but I have tendencies, so I’ll try.

The worst dioxin accident in history happened in Seveso, Italy, in 1976. Much worse than Times Beach., MO. Seveso is still populated. It was not evacuated, torn down, and buried like Times Beach. Only the most severely contaminated areas were evacuated, and they were turned into a park where people now play and picnic. Extensive epidemiological studies on the population of Seveso have been conducted since that time. The only PROVEN effect of dioxin exposure to that population has been a lowered incidence of male births as compared to female births. (I would assume that NOW would say that is a good thing! Fewer men.) There have been some higher incidences of some cancers, but no linkage to dioxin has been definitively established. What is my point? Perhaps our government has overreacted to dioxin and other contaminants. Maybe a Libertarian government would base its decisions more on science than emotionalism.

Carbon filters placed on all wells into the aquifer would remove 98-99% of the dioxin from the water at a very low cost. Therefore, the aquifer is not really unusable.

Sue the former owner and all stockholders. You may not recover all the costs, but you will send a message to other companies and their stockholders. (Read “Free to Choose” by Milton Friedman. Friedman is a Nobel Prize winning economist who was on (or head of) Ronald Reagan’s Council of Economic Advisors. He believes lawsuits, vice regulatory agencies, are a better way to force companies to act responsibly.) Here is an example where I differ from the official Republican party platform which seeks to limit damage awards. I believe lawsuits with huge damage awards would have the same effect at lower cost than regulatory agencies. The problem with regulatory agencies is that they impose draconian measures at high cost on ALL companies, even those that ARE behaving responsibly. End result–loss of jobs to foriegn competition.

Black-footed ferrets? If you want one, get a brown-footed one and dip its feet in black ink. Just kidding, but seriously, how does this really impact my life? Thousands, if not millions, of species have become extinct since the dawn of time. Can I really say I haven’t lived a full life because I never saw a Passenger Pigeon? No, I can’t.

4

The parsley farms are not irrigated (the aquifer is close enough to the surface to provide enough water), and none of the local flora and fauna do not get their water from faucets.

The (former) stockholders include several hundred thousand people, and a number of mutual funds and investment bodies (including CALPERS). Do you go after all of them? Is it reasonable to expect all investors to be liable for all lawsuits against companies in which they hold stock? How can an individual determine, in any kind of cost-efficient basis, what the potential liabilities of a company are, especially when there are no regulations specifying what information a company has to provide, and no regulations requiring auditing?

As for the loss of the ferrets, here’s what happens (this is an exaggeration):

  • without ferrets, the prairie dogs and rabbits breed wildly

  • prairie dog colonies expand into ranchland, where cattle step in the holes, break legs, and must be destroyed

  • loss of cattle drives up price of beef.

You figure out what happens when rabbits multiply. Hint: ask an Aussie.

Certainly, the loss of a single species is most likely irrelevant (especially in your insular world (“how does it impact my life”?)). But when enough species disappear, the ecological balance is destroyed, and the the whole thing comes tumbling down.

Ken Lehner

5

is to go to one of the more benighted third world countries, live there for a year or two, and try to do business. After that you’ll know what a ‘free market’ looks like in the absence of regulatory controls, and will have a new appreciation for the things government can and does do for you in a well-run society.

Much as Ghandi’s ‘passive resistance’ could only have worked against the English, who had after all some remnants of ethics, libertarianism is possible only for the cossetted and pampered elite of an advanced democracy. Imagine using ‘passive resistance’ against Stalin… Imagine declaring yourself a libertarian in Nigeria…

6

Ken,

My replies in bold.

The parsley farms are not irrigated (the aquifer is close enough to the surface to provide enough water), and none of the local flora and fauna do not get their water from faucets. As the son of a former Kansas farmer, and current friend of many Kansas farmers, whom I visit annually, I can assure you it doesn’t happen this way. Crops that are not irrigated do not get water from subsurface aquifers. They get it from rain. Likewise for the deer, pheasants, rabbits, etc. Aquifer water does not filter up to the surface. Rain water filters down.

The (former) stockholders include several hundred thousand people, and a number of mutual funds and investment bodies (including CALPERS). Do you go after all of them? Yes. Any good lawyer can follow the money trail. Is it reasonable to expect all investors to be liable for all lawsuits against companies in which they hold stock? Yes, as stockholders they are legally liable for all debts, past and present, of the corporation. How can an individual determine, in any kind of cost-efficient basis, what the potential liabilities of a company are, especially when there are no regulations specifying what information a company has to provide, and no regulations requiring auditing? Once it is shown that there is a direct impact to stockholders if they invest in companies that act irresponsibly, stockholders will take an interest in who the elect to the Board of Directors, instead of just throwing their proxy letter in the trash can as most stockholders do today.

As for the loss of the ferrets, here’s what happens (this is an exaggeration):

  • without ferrets, the prairie dogs and rabbits breed wildly

  • prairie dog colonies expand into ranchland, where cattle step in the holes, break legs, and must be destroyed

  • loss of cattle drives up price of beef.

You figure out what happens when rabbits multiply. Hint: ask an Aussie. The word quickly gets out that prairie dogs are plentiful in this area and varmint hunters come in from all over the country, filling the motels, restaraunts, sporting goods, stores, convenience stores, gas stations, etc. Farmers and ranchers gladly provide access to their land to the hunters because it reduces their loss of cattle. This sparks an economic boom in Empfield. BTW–This IS a real life scenario. I spent much of my childhood in a town of 3,000 people in NW Kansas, and still go back there every year to hunt pheasant. W/O the pheasant season, many businesses there would have to shut down.

Certainly, the loss of a single species is most likely irrelevant (especially in your insular world (“how does it impact my life”?)). But when enough species disappear, the ecological balance is destroyed, and the the whole thing comes tumbling down. If that is true, then how come we are still here given the undisputed fact that species go out of existence all the time?

7

Yes, as stockholders they are legally liable for all debts, past and present, of the corporation

Not exactly. a stockholder is liable for the debts of a corporation up to the capital they put into the corporation. ie. if I buy $10 of stock from BigCorp, there is no recourse back to me for anything above the $10 I put in originally. (There are different rules for D&O, which is why they buy insurance) I will never have to contribute anything else out of my own pocket to cover the liabilities incurred by the corporation.

IMO, these regulations are absolutely necessary, which is why it works like this in virtually every country in the world. You try telling someone that you have 100 shares of this great company, with a great board, and impeccable executive manageemnt, but guess what, we got into the wrong market, are now bankrupt, and you (who have nothing to do with running the company) are now going to lose your house. Ya right.

The capital markets simply do not work without regulations. The SEC was created with that realisation.

8

how do the everglades produce more CO2 than anything else? (i’m just interested in where you got that data) i thought trees used CO2 and produced O2… decomposing organic entities produce methane (CH4) or swamp gas as it’s also called, is that what you mean?

David

9

Well, i believe the point of his arguement is not that anything that might hurt the environment should not be allowed, but instead regulations should exist that make the production of hazardous materials safer. I would love to hear your sarcastic comment as to why dangerous chemicals should be made without ANY safeguards. Remember, this entire sequence of events could have easily been stopped with proper storage and disposal of any hazardous materials. Coming from a family that deals in oil, underground storage facilities are a major concern, and everyone knows that problems are easier to prevent that cure. Government regulations are necessary to protect the population from individuals such as yourself that claim any such prevention is idiotic and “tree-hugging” While the dangers of this specific compound are debatable, dangerous carcinagens are produced en masse by many industries, and while they can be safely disposed of, if they are not, and corners are cut by profit-mongerers, the first sign of trouble is cancer, and in my opinion, that is much too late. Because such profit-mongerers are plentiful in our society, it is necessary that the government places regulations to ensure they do not harm anyone.

10

Rather than attempt a defense of your straw man, especially by using calpers which would likely not exist, I would suggest you put “defense department” where you have fly by night corp in your story and you have the current situation with a monstrous government “protecting” us. If you look at the worst polluters world wide they are governments - like dumping radioactive wastes into the Chicago sewers during the Manhattan project, the environmental record of the Soviet Union, and god knows what else still secret.

I am what is usually termed an anarcho-capitalist so I can’t really speak for the Libertarians, but nobody is suggesting a perfect world with limited or no government, simply one that is better for individual welfare than any other alternative. Your supposition that there would be problems is obviously true - we are talking about people here - but proves nothing since it says nothing about how the current system or other alternatives is or would be better.

Although a defender of limited government, Ludwig von Mises in “Human Action” along with his earlier “Socialism” effectively destroyed any logical defense of socialism or the redistributive welfare state as a means of promoting INDIVIDUAL well being. Obviously if that isn’t your goal that is not relevant - just as it obviously isn’t to the powers that be.

“for the good of society” is a phrase often used to justify some intervention or use of force but “society” has no material existence and is only a concept in the minds of individuals, and if they don’t benefit there is no way “society” can benefit either. Rather some small group uses the coercive apparatus of government to commit theft or murder in the name of helping society (wars on drugs, terrorism, poverty, etc. etc.).

The appeal of government lies in people’s naive assumption that they will be in that small group or that their opinions will be the ones the all powerful government will enforce. But, as Hayek pointed out in “The Road to Serfdom”, the worst tend to rise to the top and so that assumption is rarely the case except for the Stalins among us. Something ably illustrated by our current government.

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I would argue that the usefullness of government is that governments do what is not directly beneficial for the individual or small groups, but the society as a whole. Society, while it may be a construction of the mind, does exist in many real world applications. No corporation has ever spent millions of dollars stopping a small outbreak to ensure that disease does not spread to the rest of the population. There are good parts of government, and there are bad parts. Yes, the government itself has polluted the world, it shouldnt, but it did. But, i would argue that is irrelevent in the usefulness of government in preventing others from doing the same. If we argued that just since the government does it, that we should be able to do it, the world would be an unorganized hell. The appeal of government is not that it will adopt my narrow viewpoint, but that my small world is stable. Government enables me to sleep at night knowing that no one is going to break into my apartment. If you live in a world outside of books and theoretical arguements, you would realize the importance of government. Just because someone else says something doesnt mean its true. Aerodynamic principles say that the bee cannot fly, yet it does just that everyday. Anyway, I gotta go workout, this is a triathlon forum right?

12

"Yes, as stockholders they are legally liable for all debts, past and present, of the corporation. Once it is shown that there is a direct impact to stockholders if they invest in companies that act irresponsibly, stockholders will take an interest in who the elect to the Board of Directors, instead of just throwing their proxy letter in the trash can as most stockholders do today."

Sorry, that’s not how it works with a publicly traded company. Jasonk is right. The worst consequences a stockholder faces is loss of their investment.

13

First, I don’t know if there even is an Empfield, Kansas, and I don’t care. The point of this exercise is not to determine if it is feasible for this to happen in Kansas, it is to determine how libertarianism handles scenarios like this.

Are you saying that stockholders are liable for the debts of the company under a libertarian viewpoint, or that they are liable currently? I find that very hard to believe (see Enron).

Ah, since people love to hunt pheasant, they will love to hunt prairie dogs. Are you serious? I guess the same goes for the field mice and rats that will overrun the fields. What do you hunt mice with, anyway?

The reason that we (or anything) are still here is that species go extinct at a rate that is sustainable by nature. Niches left vacant by an extinct species will eventually be filled by other species evolving to take advantage of that niche*. When events occur that raise that extinction rate (such as a large meteor strike, or the loss of some ecology, or the wholesale destruction of predators), there may be a ripple effect that can be devastating. You’ve probably never seen krill, have you (at least in the wild)? If the oceans warm up enough, and krill populations suffer, the effect will be enormous. Have you never learned about this?

Ken Lehner

*an interesting aside along the lines of evolution is the aye-aye, a primate that lives in Madagasgar. Having no woodpeckers on Madagasgar, the aye-aye has evolved several amazing characteristics: 1) incredible hearing, such that it can tell by tapping whether a hole under the bark of a tree contains a grub or not; 2) specialized front teeth to dig into the tree, and 3) an oversized, very thin finger that it uses to retrieve the grub. Had woodpeckers been native to Madagasgar, the aye-aye would likely not have evolved to fill that niche. Ain’t evolution wonderful?

14

There are two types of liability–criminal and civil. While the stockholders may not be criminally liable, they may be civilly liable. The burden of proof for civil liability is much lower than that for criminal. If a sharp lawyer can convince a jury that you, as a stockholder, contributed to/or benefitted from a tort, then you may be subject to contribute toward a settlement or judgement. Of course, if the company you invest in goes bankrupt as a result of the settlement/judgement, then you will at least lose what you invested. Either way, you might pay more attention next time to how you invest your money.

Yes–people do hunt prairie dogs all the time and spend quite a bit of money on rifles, scopes, handloaders, bullets, cartridge cases, powder, etc. to do it. I wasn’t aware black-footed ferrets were serious predators of mice. Mostly, I see coyotes eating the mice.

I don’t think your scenario is quite equivalent to a meteor strike in magnitude.

To sum up–I answered your question as to how a Libertarian government would handle the scenario. Whether or not you believe that it would work is up to you. Other people far smarter than I (Milton Friedman for one) seem to think it would work. It’s a free country. You can vote Communist, Green, Socialist, Democrat, Republican, Libertarian, or whatever. As I stated to start off with, I am not a Libertarian. I was merely arguing the point, which you asked someone to do, then I was insulted for leading an “insular” life. I don’t know how you can make that judgement, as you don’t know where I have been and what I have done for the past 49 years. I don’t believe I insulted you in my responses.

Actually, I do believe in some rules and regulations. But, for each rule and regulation we adopt, liberties are also lost, and at what cost? If you can convince me there is a clear and present danger, scientifically proven, that I cannot protect myself from, and the benefit to me is greater than the cost, then I will support a regulation on it. Otherwise, it’s just someones opinion being rammed down my throat.

15

If a sharp lawyer can convince a jury that you, as a stockholder, contributed to/or benefitted from a tort, then you may be subject to contribute toward a settlement or judgement.

How would an ordinary shareholder, with no other involvement in the company, ever be liable under civil law? Directors and Officers, yes. Shareholders, no.

How would you enforce collection against foreign common shareholders? What if some shareholders are broke, others are wealthy? Do you adopt a joint and several liability model for that?

Oh, I should be really careful about everything I invest in? So I need to attend the AGM and vote at every company I hold common shares in. Wouldn’t that make it a little difficult to maintain a balanced portfolio and hold down a job at the same time? Do you even know what stocks you have invested in? I sure don’t, my pension owns shares in mutual funds, the funds own the shares. It’s up to the investment manager to decide what shares to buy, so long as they are in compliance with the prospectus for the fund. I know roughly what sectors they are invested in, but at any given time I don’t know what stocks are held by the fund, further I don’t have a say as to the individual stocks in the fund. Why should my entire pension be at risk?

Finally, I believe that in the US you do have a say in which rules and regulations are “rammed down your throat”. If you don’t like a proposal, then you can write to your Representative. Your elected Representative will then vote on your collective behalf.

17

I’ll try to take the question seriously, although your premise is a little off. I need (at least) two more pieces of information. First, does the aquifer cross state lines? If not, there is no federal involvement. Second, what are the laws of Kansas and the City of Empfield (the consent of the governed)?

In your example, there are no regulations so the company did nothing illegal. A lawsuit might find negligence or something else so maybe they will get $460,000, but Empfield, Kansas has a decision to make. Do they want to come up with $1.6 billion or live with a dirty aquifer? Whether Empfield should have known about Dioxin or not, why is it the responsibility of someone in California to pay for the cleanup?

I’m betting that the governed will consent to some new environmental regulations at the state or local level now that they know what is possible.

18

The idea of libertarians being for zero government is false. You are thinking about anarchist.

Mr. Tibbs, this fact has laready been pointed out numerous times throughout the political threads. Thank you for doing it again (not sarcasm).

People seem to hear/read what they want to hear/read.

Fellow Libertarians …

George Washington, Thomas Jefferson, James Madison, Benjamin Franklin, everyone whose sig appears on the Decleration of Independence, etc. Doe these folks sound like Anti–government people? What did they do for a career again?

Look up the definition of liberty and that is what libertarians want to protect. It really is that simple.

Even more simpler is to not agree with liberty or libertarians is to not agree & support with the ideas the country was founded on.

Again, I ask people, do you believe in the ideas this country was founded upon or are you proud to live in America because it’s a really rich & nice place to live?

19

“If a sharp lawyer can convince a jury that you, as a stockholder, contributed to/or benefitted from a tort, then you may be subject to contribute toward a settlement or judgement. Of course, if the company you invest in goes bankrupt as a result of the settlement/judgement, then you will at least lose what you invested. Either way, you might pay more attention next time to how you invest your money.”

Maybe in a privately held company. That is a BIG MAYBE. The stockholder would have to have some kind of material involvement or insider knowledge. But not in a publicly traded corporation as an average shareholder. By average I mean someone buying a stock as an investment, without any other connections to the company and without insider/fraudulant actions or intentions. What you are saying is that because I am a shareholder of Altria Group (MO - once Philip Morris the tobacco company) that I could be held responsible for someone suing the company because they got lung cancer? I’m sorry, but that is not the case. Now, you are correct in your statement that I could lose my investment if that same lawsuit bankrupts MO. Jasonk is right again with his response to this post.

20

Sorry, tribri2… with regard to Stockholders and Corporate Liability… JasonK is right.

Joe Moya

21

“Government enables me to sleep at night knowing that no one is going to break into my apartment”

I hope you weren’t really thinking when you said that, because if true it’s trust that is entirely misplaced. In the real world where cops don’t show up until some time after the fact, and according to court rulings are under no positive legal obligation to protect you (i.e. they can stand next to you while you are stabbed and not get into any legal problems for not doing anything about it), your safety has nothing to do with the government.

As every urban riot has demonstrated, if more than a very small percent of the population decides to go wild there is nothing the cops can do, or will try to do if the past is any indication. You are safe because the majority of people are civil and law abiding (law in the sense of de facto law rather than regulatory) and so your odds of being targeted are quite low. If you are targeted what will protect you is having a burglar alarm or owning a gun.The cops will show up later to survey the crime scene, and maybe sell you some dope if you want it.

And I do realize the importance of government - private citizens would have had a very difficult time murdering over 200 million people in the 20th century without the conscription, coersion, secrecy and propaganda of their murderous government leaders.