Article: Is Inequality and Asymmetry Really Problematic?

InequalityIn “How Inequality Shapes Our Lives,” Roderick Long argues that asymmetric relationships between services providers and customers or employers and employees are problematic. Some examples he cites include creditor-debtor relationships (e.g., credit cards), service provider-customer relationships (e.g., your ISP), landlord-tenant relationships, and employer-employee relationships. Professor Long’s fundamental objection to these asymmetric relationships is the alleged asymmetry in consequences for failure to meet obligations.

Read the Full Article by David J. Heinrich

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  • I’m going to have to agree with Long on this. There is nothing two-way about the majority of contracts that pertain to our daily affairs. Most of these contracts are between individuals and entities that claim governmental privilege or protection. The ISP is a perfect example as they have government-granted regional monopolies. In my area, I have a choice between two broadband providers. One cable, and one phone.

    Right now, my ISP (Verizon) is playing the part of monopolist to the hilt. I pay for 3 MB service. For the past several months they have only been providing about 2.6 MB. Over the course of the past week I’m lucky to get 1.6 Mb. Their position is that they don’t guarantee any particular speed. I told them I would only pay for the speed I’m getting, and their reply was that they would terminate my service if I did not pay the full amount per month. I’m no longer even under contract with Verizon, but my only alternative is to switch to Comcast, whose record on such matters is even more dismal than Verizon’s. Plus that would mean entering into a fresh new contract with Comcast.

    The problem is that we as individuals are left without alternatives. In a voluntary society, they could put whatever crazy stipulation they wanted in a contract but we would have the latitude to negotiate our own terms as well. In our current society we have a take-it-or-leave-it situation in almost all cases when dealing with a corporation. You have zero ability to modify your cell phone contract, your ISP contract, cable contract, etc.

    • I’m probably going to do a blog post that address more general arguments like yours, but for now, there are two things I’d like to say.

      First, Long’s argument, as far as I can tell, has absolutely nothing to do with state granted monopolies. He’s talking about contracts of adhesion in general, and that argument is what DH is addressing. I agree that state granted monopolies are unjust, but spending time discussing that issue is preaching to the choir. All libertarians agree on that point.

      Secondly, there are ways of buying internet access that do not require you to use a consumer ISP. I’ve found the premium for a business account is well worth it. In fact, for my current account I negotiated with the business services department of an ISP and hammered out the contract terms before we signed. I was even able to get them to include a most favored nations clause, which has, over the last few years, worked substantially to my benefit.

    • Todd,

      Thank you very much for your thoughtful comment. I agree that many contracts are not negotiated and are summarily “take it or leave it”, but as I said, this makes sense, because individualized contracts are costly. I find some features of my Verizon contract to be annoying as well (e.g., only being able to block 5 numbers). However, it is still their network, and I see no reason why they should have to offer individualized contracts. As I explained in the article, there can be substantial costs to individualized contracts. Please try to think about it from the point of view of say Verizon or Time Warner — they have millions of customers, how difficult and expensive would it be to offer individualized contracts? It seems to me like many customers wouldn’t want to pay the extra expense, and the result would be that the companies offering such would “branch out” and spread themselves thin, away from their core areas of competence. Akiva suggested possible alternatives, though.

      Regarding Internet speeds offered, read the fine print and try to understand what is actually offered. I’m not sure about your contract of course, but oftentimes what is offered is only “burst speeds”. My Time Warner Cable plan has a normal speed of 10 Mbps for download, with a burst speed of up to 15 Mbps. The burst speeds are only available for brief times during spikes in network activity on your part — prolonged activity will see your speeds going back to the standard speed. Furthermore, the speeds that you get depend not just on the download pipe provided to you by your ISP, but also on the upload capacity of the servers that you are retrieving information from. Your download speed will rarely be as fast as it can possibly be, due to a variety of reasons. ISPs can only state what you will get continuously and in bursts under optimum conditions.

      It probably would be the case the there will be more companies competing in the ISP market absent State-intervention; however, that doesn’t mean that there would necessarily be many willing to negotiate with normal customers for non-standard contracts, nor that customers would be willing to pay the higher prices for the extra cost of creating, maintaining, understanding, and adhering to these contracts.

      As I’ve been researching web hosting service providers recently, one example of offering customized but standardized individualized contracts is New York Internet. For their shared hosting solution, They allow you to customize, in intervals, how much space you want (25MB to 1GB), how much monthly transfer you want (2 to 30 GB), how many MySQL databases you want, etc. This is likely feasible for them because the customization is standardized and they can have allocations handled automatically by computers; their legal obligations are still very clear, because all obligations are within specified parameters. Their base plan is about $13/mo for 25 MB of disk space. That is an incredibly small amount, but what you’re paying for is their exceptional speed and reliability. Their maxed out shared plan is $1,030 a month for 1 GB and a bunch of other options. They offer “small” packages, but with excellent service, quality, speed, and reliability: I’ve never heard of anyone of their customers complaining about them, but that comes at a very high price.

      People may say that they’re willing to pay a little extra for additional quality of service, reliability, etc. However, people often seem to think that something like going from 99.9% uptime for your ISP to 99.999% uptime would just cost a little bit more. This is not at all the case, it costs orders of magnitude more, because what has to be provided is necessarily much more costly and if people aren’t willing to pay accordingly more for it, companies just won’t offer it.

      The point of this is that everything is about tradeoffs. If you want unworldly quality and service, you should expect to pay unworldly price, for the most part. It is unreasonable to expect the industry’s best possible quality and service while also expecting to pay average prices.

  • “the psychologist might say that although he patient benefits ex ante (hence the parties think they will benefit ex post), they are actually making errors”

    It’s sort of like the fly that lands on your coffee table near your fresh bagel; no it’s not going to ruin your day, but you’d rather it wasn’t there, so you swipe it away.

    [This was meant to be a private communication to the author but it’s fine with me to post it for the world to see. What led me to the blog was Googling “asymmetry of employer-employee relationship” (without the quotes), which, as an employee of a corporation, is something I’d like to expand my knowledge of. On the surface the relationship strikes me as inherently asymmetric, but perhaps a deeper look will change my opinion on that.]

  • David J. Heinrich is a libertarian anarcho-capitalist, pro-punishment pacifist, photographer, and tennis-lover.

    Could it be that you were raised republican in a fairly well-to-do household?

    You seem to have a pretty authoritarian attitude for a self-proclaimed libertarian. Poor people know that a poor person plays in games that are rigged against him most of the time.

    Government violence and deceit support these unfair rules. The government wants everyone on a W2 so it can tax everything they do. Rules and regulations keep people from starting small businesses, so they are stuck with jobs as their only option.

    Building codes and zoning laws keep landlords and contractors in business. They also keep people from picking up a hammer or a saw, and learning how to use them.

    I am totally with professor long. I’m glad to see someone else talking about this issue besides me.