The Difference Between Governments and Private Property Developers

In a comment on my Mental Blocks post, Jake asks a good question (good because I've written a paper about the answer :wink:)

Realisticaly, what is the difference between a government and a company on the free market? Both maintain a monopoly of power over a specific area and in both cases if you are disatisfied you can freely leave and maintain relations with a competitor. Sure it could be said that government maintains force over a physical area in which ones property is loacted, but how is that different from a large property developer? In both cases one has to physically leave if they dont like the rules. And in both cases contracts dont necasserily have to be by direct consent.

He's alluded to part of the answer by mentioning having to physically leave if you want to switch providers. The amount of competition in an industry depends partly on how easy it is to switch. You can see this by considering that if it is impossible to switch providers, there can be no competition. As it becomes easier, it takes less and less of a quality difference to get you to switch, and the industry becomes more competitive.

Well, if I own a home in a property development, it is significantly easier to switch providers than it is to switch governments. In the former case, I must move all my physical possessions and get a new home. I do not necessarily have to change jobs, to leave my friends and family, to acquire new citizenship, to maybe learn a new language and culture - all part of the costs of changing governments, because they are so huge.

So the cost of leaving a smaller property developer is much lower, so competition is higher, so they serve your needs better. The cost of leaving the private developer is still significant, hence we wouldn't expect them to serve your needs as well as an insurance company, where it just takes a few clicks and a printout to switch providers.

In addition, lets consider the barrier to entry to these markets. How much does it cost to compete with a government versus a private property developer? To compete with a government, you need to run a government, which requires winning a revolution or an election. This is one helluva barrier to entry! Whereas anyone with a few million can start off as a private developer. Therefore, there will be many more private property developers, therefore the market will be more like perfect competition and less like an oligopoly.

So there is a big difference, and it does not depend on any "magic smoke of government" or hand-waving. We simply observe some different cost structures in the two industries, and that tells us that one will serve customers poorly. If the private property development industry shifts so that developers become government-sized, and they don't allow small competitors, then I would expect them to do a governmentally-poor job of serving their customers. Hence an alternative system like market anarchism must be careful to keep this from happening.

My alternative is to live on floating cities. The costs of switching are lower because when you switch countries, you can take your home and office with you. The barrier to entry is lower because the ocean is huge and relatively homogenous, so there is always undeveloped real estate. You don't have to take over from some existing owner like you do on land - just homestead some new aquatory.

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"because Iâ??ve written a

"because Iâ??ve written a paper about the answer"

So have I:

http://www.daviddfriedman.com/Libertarian/Capitalist_Trucks.html

Patri!, First of all i'd

Patri!,

First of all i'd like to state that the main reason I posted my question is becuase A. its an argument many of the sharper members of the non-libertarian and leftist side make and B. becuase it happens to be something thats been bothering me (a undecided minarchist/market anarchist) for some time now.
I would also like to comment that much of what you say about the difference between government and property developers describes only differences in circumstance and not so much in principle. It is possible that within a market anarchy a single property developer or a coalition of them could get large enough to replicate the role of government in almost every way that we know of now. Although I think this is highly unlikely due to the extraordinarily dynamic nature of the free market, it still could convievably happen, at least in a somewhat localized area and if it did happen it would result in a situation (like I said above) that is circumstantialy not all that dissimiliar from government as we know it now. I have to say that I have not yet read your paper on dynamic geography and, thus, you'll have to excuse me if youve already gone over my above argument in it.
I might add, as well, that when I wrote my previous post I was quite heavily drunk (as I am now as it happens) and was rather surprised that it managed to cause a blog post! im flattered.

By the way I think the floating cities idea is excellent, kind of like the floating city of Armada in "the scar" by China Meiville except not run by pirates. or would that be a good thing too...

If the private property

If the private property development industry shifts so that developers
become government-sized, and they don't allow small competitors,
then I would expect them to do a governmentally-poor job of serving
their customers. Hence an alternative system like market anarchism must
be careful to keep this from happening.

Through what mechanism(s) would "systems" like market anarchism keep
this from happening? Some twisted equivalent of antitrust law, perhaps?