Where Laissez Faire exists today

[Derek McGowan]

I was just thinking (in the bath tub)...

Laissez Faire, as an economic system, not as a social system as defined by Rand, exists now in the drug ridden neighborhoods (in which I grew up and currently live) in many cities of America. The street level drug dealers, the bosses, the Colombian suppliers, and the customers, all buy and sell a product through pure voluntarism. There are no government regulations (within the system itself, of course there are outside regulations that hope to bring the system down) there are no taxes. Private property is respected and when it is not, street justice is incurred. There are various levels of success among the workforce with some remaining street level for decades, others moving quickly up through the ranks. All transactions are in cash. There are multiple services (prostitution, loans, etc) and products (cocaine, crack, weed, etc.) available. There are competitors in various areas (local monopolies though, maintained by firepower) Associations are voluntary.

I suppose you could argue that the money that the customers use to buy the product comes from an outside source, be it governmental payments to the poor who then use the money for the drugs or from outside jobs. Well yeah, I guess its not a closed system, but then neither is the Earth so there!

Seriously though, what do you think?

[Selene]

You are correct in every detail.

There was a brief period in Harlam when certain families back out of their territories [heroin].

Numerous entrepreneurs moved in quickly.

Unfortunately, many of them were basically incompetent, incompetent, or, both. Folks who took the new stuff were ODing at a significantly higher rate.

Apparently, the bags were not standardized and some of the heroin was cut with some nasty shit.

At any rate, the prior territory owners had to come back in by invitation.

In Colorado, there is a thriving black market in ganja.

Free markets exist in the shadows and there is a risk, Reminds me of Reardon buying ore in the shadows with a "street" "entrepreneur" up in the mountains in the black of night.

A...

[Wolf DeVoon]

The international watchdog, Financial Stability Board (FSB) defines shadow banking as the activities and processes of credit intermediation outside the purview of the formal banking system. It is estimated to account for more than 25 percent of the global financial system with assets of $71 trillion, almost the size of world GDP. http://thediplomat.com/2014/08/the-shadow-banking-specter/

Trillions in liabilities are created and destroyed via the repo market, to provide short-term funding for all sorts of financial intermediaries, frequently with zero actual exposure in bank Ks and Qs [annual and quarterly SEC filings] due to regulatory loopholes that allow the "netting" of hundreds of billions of offsetting repo exposure and keeping them off the books, exposure which than can be rehypothecated countless numbers of times. In theory, this works fine. In practice, when a collateral chain is broken and net suddenly becomes gross, you end up with near systemic collapse... Next time someone says to pay attention to market leverage and points out the NYSE margin debt, feel free to correct them that this accounts for a tiny fraction of the overall leverage involved in the market - almost exclusively that attributed to retail investors who, as we know barely exist. For a real representation of market leverage one has to evaluate just how much repo funding the shadow banking system has afforded to hedge funds. http://www.zerohedge.com/news/2014-06-27/why-nyse-margin-debt-meaningless-new-shadow-banking-normal

[syrakusos]

Allow me to recommend S. Henry, The Hidden Economy: The Context and Control of Borderline Crime, Oxford: Martin Robertson,1978; republished by Loompanics Unlimited, Port Townsend, Washington, 1988. Stuart Henry taught at my alma mater, Eastern Michigan University, before I got there. He is a post modernist. Perhaps better studies exist. This is a book I happen to know; and I cite it just to say that the informal unrecognized and illegal markets have been studied. They do follow the norms of laissez faire, as they must. Science fiction suggests that this is not limited to humans. It could be a law of the universe applying to all intelligent species. It is the "natural state" and government - force entered into the market - is the unnatural state whose distortions are also studied. Taxes become an overhead cost (or a sunk cost) passed on to the ultimate consumer, for instance. Included in "taxes" are the costs of any regulation or restriction by force or threat of violence.

Two other lines of investigation derive from this. First, the relationship is not voluntary. The producer does not seek the context. That is different from a shopping mall (or space station) where the value of place (including physical security) draws actors who want to be involved. "You don't like our rules, go somewhere else." But they do not take anything from you for not participating.

The other more subtle and yet insisted on by Ayn Rand better than anyone else is that these laws are not objective. You are always subjected to the whim of an enforcer who as the power to change the rules for you, typically by ignoring them for a bribe. They can also change the rules against you. Michael Milken was prosecuted by Rudolph Giuliani. The prosecution's case was plainly that Milken obeyed the laws but did so in order to get around them; his "intent" was to evade them, which he achieved by following them to the best of his (lawyers's) ability. The judge agreed. Milken pleaded guilty, as so many accused innocents do, in order to avoid further extra-legal punishment. Truly, "we will go after your family."

The case is a classic with attributes that your neighbors probably could relate to quite well.

[Samson Corwell]

Sure, if you call rackateering, breaking legs, and shoot outs as free market activities.

[Samson Corwell]

Ugh, I am so through with that term.

[syrakusos]

It is because the activities are illegal that they are forced out of the mainstream from which they could benefit. Without legitimacy even as socially understood, much is left to force (and the worst cases of it). Courts of law are impossible. No Better Business Bureau or Underwriters Laboratories are possible. So, yes, as you say,....

Sure, if you call rackateering, breaking legs, and shoot outs as free market activities.

In other words, it is government on the cheap. Once again on September 1, we remember the German invasion of Poland that officially launched World War II. Germany claimed that Poland, a military dictatorship, invaded them first. It was the thinnest of legalistic claims. But it had to be made as such. Better governments existed then and now, but egregious actions under cover of law are always too easy to find.

Just by comparison, do you know much about homosexual relationships or homosexual culture? Before gay pride, it was a world of nellies and raging queens, where dykes at parties punched each other out over possession of their fems. Once it could get out the closet, all of that evaporated, and relationships and behaviors normalized to the median or mode of "legitimate" society.

[Selene]

Michael this is a complete over generalization. Post #7 supra

You want to paint with that broad a brush, find a fence to put it to good use.

Before gay pride, it was a world of nellies and raging queens, where dykes at parties punched each other out over possession of their fems.

A...
surprised you posted that...

[Michael Stuart Kelly]

A gang is a form of government.

Michael

[Peter]

Rothbard wrote:

The key to The Godfathers and to success in the Mafia genre is the realization and dramatic portrayal of the fact that the Mafia, although leading a life outside the law, is, at its best, simply entrepreneurs and businessmen supplying the consumers with goods and services of which they have been unaccountably deprived by a Puritan WASP culture.

[Selene]

Rothbard wrote:

The key to The Godfathers and to success in the Mafia genre is the realization and dramatic portrayal of the fact that the Mafia, although leading a life outside the law, is, at its best, simply entrepreneurs and businessmen supplying the consumers with goods and services of which they have been unaccountably deprived by a Puritan WASP culture.

OK Peter!!!!

We will return what we were holding for you as we agreed, "when you endorsed us."

[Extropy]

Pretty much like a sunset or sunrise which isn't night or day, but both, the black market within a mostly white market society offers the "best" (and worst) of both worlds.

The best would be the lack of regulations and taxes. The worst would be the violence inflicted by both groups, the gangster and the police and prison system.

This is a market for the opportunistic, it is not a "model".

In absence of organized society and a formal market, the attractive aspects of the informal market disappear.

In Latin America the drug-cartel controlled neighbourhoods are a far cry from a free market. Warlords.

[Wolf DeVoon]

In Latin America the drug-cartel controlled neighbourhoods are a far cry from a free market. Warlords.

In the City of London the shadow banking cartels are -- what? Warbucks?

[Extropy]

Specifically in the City?

The difference from a Favela or Villa (slum) would be that of etiquette that allows for an old lady to travel unmolested through that part of London (on in other times throughout the entire British Empire).

Yes they have in common the fact that they are a cartel or private association of some sort (care to specify of which sort exactly?), but they allow for civilised behaviour in the streets - if that's the only difference.

[Wolf DeVoon]

"City of London" refers to the banking sector based there, not the "Square Mile" streets or walkways.

Both of these terms are also often used as metonyms for the United Kingdom's trading and financial

services industries, which continue a notable history of being largely based in the City. [Wikipedia]

[Extropy]

I know what it refers to, I wonder why you compare such sophisticated arrangement with that of the opportunistic druglords more akin to the VOC or the British East India Company?

[Extropy]

By the way, the only other possibility to this private arrangement I can think of would be a U.N sanctioned Global Currency, which I don't think it would be any more conductive to the rise of private and unregulated currencies.

[Wolf DeVoon]

I wonder why you compare such sophisticated arrangement with that of the opportunistic druglords

Explained above in post #3, a matter of scale, equal ruthlessness.

If you wish, I could tot up a couple trillion in harm.

[Extropy]

That's "cute" but unlike the drug cartels which only provide a minuscule amount of "pleasure" in exchange for a lot of blood and destroyed lives, the banking system has allowed for the growth and flourishing of human civilisation for the last 500 years... can you blame them for having a dark side? It's not even such a closed entry market as government, there are private currencies like the berkshires and (perhaps as there are theories about this) the bitcoin, as well as gold.

[Wolf DeVoon]

Maybe another time we can chat about government debt, central banking, and the City of London.

For now, I'll quote a little homily from my little book of bedtime stories:

Capital plant and equipment is the lifeblood and sinew of private enterprise. The vast bulk of productive investment is NOT financed by

the so-called "capital markets," nor from government handouts or tax breaks, but instead from retained earnings. [COGIGG, p.102]

...until Obama took over, that is.

Here's an industrial sector deeply in the red, born in the ZIRP regime, funded entirely by cheap HY debt, no hope of ever paying it back.

[Derek McGowan]

The difference from a Favela or Villa (slum) would be that of etiquette that allows for an old lady to travel unmolested through that part of London (on in other times throughout the entire British Empire).

My example was specifically referring to the neighbors like the one I live in. There is no random violence. People exist and go about their lives around a semi open air drug market. There is no fear of the group of 10 guys standing on the corner because if you live in the area, then you know them and they know you. They come and ring your bell if someone just hit your car, they help carry things in and out of your house if you ask. The customers (junkies) go with you to work sites as day laborers. 99% of the violence (and I haven't seen much of it) occurs to those who are actually in that world. Those of us on the outside don't worry about it. Now, littering, thats a whole different story......

[Michael Stuart Kelly]

When I was a practicing crack addict in São Paulo, I always found the safest places on the streets were the neighborhoods that drug sellers and their families lived. Often that was in favelas. Here is an image I found that looks like the places of business I frequented back then :

That favela is in Rio de Janeiro instead of São Paulo, but the only difference is that it is on a hill and the places I went to were flat.

(Oddly enough, I had trouble finding a decent picture because most of the photos I saw on my search exaggerated a negative storyline and grotesque elements too much to give an accurate idea of the image-scape I carry in my memory.)

The local wisdom was that dealers don't want cops snooping around their neighborhood over things like theft, beatings, etc. They want cops to stay a long ways off.

Being known as a buyer helped, too.

I even had one dealer who would always say, "Go with God," instead of goodby after he sold me crack. And he always said it sincerely. Go figure...

Michael

[Extropy]

So did you cross from your hotel or condo to the favela to buy low quality crack (unless it was actual crack cocaine! in that case please do correct me) or did you actually spend the night in the favela? I'm just curious as to how expensive runs protection in a favela in Sao Paulo.

[Derek McGowan]

Is that picture real?!

[Peter]

That picture does look like something from a Scifi movie. I don't think that wall would keep some people out though it would keep people out who do not want to break the law.

My computer is going haywire after a talk with my blocking and phishing scam service. A pop up screen was appearing every ten seconds saying the system had blocked some malware. I think the people I talked to were from Russia or that vicinity. If I am off list for a while that will be the reason.