On Market Protection
I am often faced with the charge that the market can not (or would not) provide protection services. My counter is an irrefutable truth:
The market demand for protection is far greater than governments actually provide.
In order to deny this, one must also deny the myriad of market protection services available to property owners. Businesses have complex security systems, either provided in-house or through contracts with specialists. Home owners have electronic security systems that trigger incident response teams. Wealthy individuals are never satisfied with the basic government protection, hiring specialists known as bodyguards and protective services.
The poor's protection, if you can even call it that - since the poor are routinely victimized by the government's protection monopoly and the police presence in poor communities is notoriously corrupt - is also insufficient to meet their demands. It is true that the poor seek options like gangs and organized crime to increase their security. More importantly, poor communities have been known to take security into their own hands by forming community action groups that include patrols and round-the-clock guards plucked from the community itself. Anything beyond that, such as intervention and confrontation, is seen as a direct threat to the police monopoly. Yet, even this limited competition can have positive effects, since it causes the usually slow moving police bureaucracy to focus its resources in your area (at the expense of others).
This leads to another economic law:
Supply constitutes demand
This should not be confused with the famous Keynesian strawman directed against Say's Law. We are not saying that supply creates demand (nor did Jean-Baptists Say, as Keynes alleged.) On the contrary, the job of producers and entrepreneurs is to attempt to provide goods the market demands while anticipating changes in demand.
Many people (in fact, almost all people) believe in a superstition: that without a government monopoly protection racket, supply for protection services would disappear. As we have seen, demand for protection services is already higher than the monopoly service provides. So how could it possibly be that the supply of protective services in the market could decline under conditions of competition, when the job of entrepeneurs is to provides goods the market demands? Obviously, we are dealing with an ignorance of human action. This ignorance leads to a superstition that can be summed up as: This is the best we can do. Plainly speaking, it's not.
This is not the whole story, but all I will share for now. In fact, we can extend this discussion to include any objection you would like in the comments.
Enjoy your weekend! (As for me, I'm enjoying the NBA Playoffs and Kevin McHale's attempt to break the record for most faked/forced laughs in broadcast history.)
David in Qatar