Taxation is Coercion

[Dododecapod]

No tax = anarchy.

Somewhat overstated. Governments can exist without taxing - provided they hold monopolies that they can squeeze for sufficient profit to fund government services. Taxation is merely the best way to fund a government, not the only one.

[Copenhagen Metropolis]

No tax = anarchy.

Somewhat overstated. Governments can exist without taxing - provided they hold monopolies that they can squeeze for sufficient profit to fund government services. Taxation is merely the best way to fund a government, not the only one.

Which is "nearly" impossible.

If it's not anarchy, it's close to being just a corporate. Which countries' citizens/corporations pay no tax whatsoever? I can't think of that many. Nauru comes to mind; and island of less than 15.000 people, with an extremely low GDP/capita, a 90% unemployment rate, and 95% of those with jobs are employed by the government. It's a joke. No real country can survive without taxes.

[Xomic]

society nothing, it's vital to humanity as a whole.

Humanity exists due to society.

Both of you are wrong
Humans beings existed before roads, and infrastructure
Collectivist society has the power to render humanity extinct
Something no individual has ever wielded

If your object is the mere survival of humanity, then Society is actually counter to that goal
Society exists to supposedly make our lives better.
But the cost is menacing danger to us all.

humanity =/= humans

[Jello Biafra]

Demand is not just based on supply, it’s also based on the price of the product in question.

I've always found it interesting and apparently not circular at all that price is affected by supply and demand, but demand is affected by price.

You're confusing Demand with Quantity Demanded. I would suggest you grab an introductory econ or microecon textbook and check it out.

"In economics, demand is the desire to own anything and the ability to pay for it and willingness to pay"
This is correct, yes?

In layman's terms yes. I see why something like this might be very confusing. The problem here is that we have two factors and two results at play. Supply and demand vs. price and quantity. Without getting too deep into it, a change in supply affects the price which then results in a change in the quantity demanded, not the overall demand. "Demand" when economists use the term formally represents the quantity of products consumers are willing to buy at EACH price. Hence we have the demand curve, not the demand point.

I see. Does this mean that 'supply' and 'quantity' are also not the same thing?

[Hydesland]

I see. Does this mean that 'supply' and 'quantity' are also not the same thing?

Why would it? Quantity on its own doesn't mean much, depends on the context. What context is quantity being used here?

[DaWoad]

DaWoad, there is not threat of violence for not paying for a mortgage. It is not coercive. You made a choice to finance a house. It is nothing like taxes.

sure there is, don't pay your mortgage and you'll be violently expelled and, depending on country and situation, possibly jailed and (this has already been said) if you inherit your parents house you didn't chose to finance it your parents did (just like you didn't chose to be born in your country your parents did). It's everything like taxes.

(man all the liberalists are on tonight *grins* you, JJ, Lelouch and bendira all in one thread! I'm kinda flattered)

I'm in the 'anarchist' political category, the 'liberal' social category, and the 'capitalist' economic category myself, all ideological fields taken to absolute purest extreme; but I suppose a liberaist would describe me in appropriate definition; don't think I forgot about any of you, also; I'll make sure to respond to all of you, and I've probably already responded to you already in this thread if I have not responded to you directly.

Sorry I was pretty tired at the time and wrote liberalist meaning to write libertarian (which was going to be a misusage anyway given that I meant libertarian/anarchist/minarchist) my apologize

[JJ Place]

No tax = anarchy.

Not true; taxation is a means of the State collecting money, abolishing taxation would abolish one means of the government collecting revenue, abolishing taxation would not completely abolish the State, abolishing the State is a completely different matter at hand, and would not be achieved by abolishing taxation, they're two completely separate issues at hand.

[Grave_n_idle]

There is no option to not use the services or not pay for them. Get over it. It's coercive and it's theft.

Don't want to use the services? Don't live in that country, otherwise you're eating the food without intending to pay.

the GTFO argument fails.

It's your argument. You're being forced to use the military, the police, etc. Against your will. And then they make you pay.

Turns out, you're NOT actually being forced. You can opt out. Buh-bye now.

You want socialism so much, get the fuck out.

I'm not the one complaining that I'm being forced to conform to some set of rules that I could easily avoid by simply relocating.

*shrugs*

[Abdju]

No tax = anarchy.

Somewhat overstated. Governments can exist without taxing - provided they hold monopolies that they can squeeze for sufficient profit to fund government services. Taxation is merely the best way to fund a government, not the only one.

Which is "nearly" impossible.

If it's not anarchy, it's close to being just a corporate. Which countries' citizens/corporations pay no tax whatsoever? I can't think of that many. Nauru comes to mind; and island of less than 15.000 people, with an extremely low GDP/capita, a 90% unemployment rate, and 95% of those with jobs are employed by the government. It's a joke. No real country can survive without taxes.

Essentially, this is the model employed by Saudi Arabia and many of the Gulf States. It only works for them because they have either:

1. Extensive natural resources, with the state monopolising their exploitation.
2. Huge holding companies or other investment vehicles, the profits of which fund state expenditures, but doesn't hold a monopoly in any particular industry. However, the establishment of such holdings in the first place requires significant capital to invest in the first place. It's used in the Gulf by countries with declining oil reserves. When oil/gas is flowing, a percentage is set aside for investment in a fund that will help fund government services after the oil/gas reserves are gone. Nauru also used the same model, but the fund was mismanaged and collapsed spectacularly, essentially beggaring the entire nation. Kuwait uses the model with grater success, though at present still has revenues from oil as well. Singapore also uses it (Tamesek Holdings) in conjunction with taxation.

[Just Mike]

No tax = anarchy.

Not true; taxation is a means of the State collecting money, abolishing taxation would abolish one means of the government collecting revenue, abolishing taxation would not completely abolish the State, abolishing the State is a completely different matter at hand, and would not be achieved by abolishing taxation, they're two completely separate issues at hand.

Both should happen though.

[Copenhagen Metropolis]

No tax = anarchy.

Somewhat overstated. Governments can exist without taxing - provided they hold monopolies that they can squeeze for sufficient profit to fund government services. Taxation is merely the best way to fund a government, not the only one.

Which is "nearly" impossible.

If it's not anarchy, it's close to being just a corporate. Which countries' citizens/corporations pay no tax whatsoever? I can't think of that many. Nauru comes to mind; and island of less than 15.000 people, with an extremely low GDP/capita, a 90% unemployment rate, and 95% of those with jobs are employed by the government. It's a joke. No real country can survive without taxes.

Essentially, this is the model employed by Saudi Arabia and many of the Gulf States. It only works for them because they have either:

1. Extensive natural resources, with the state monopolising their exploitation.
2. Huge holding companies or other investment vehicles, the profits of which fund state expenditures, but doesn't hold a monopoly in any particular industry. However, the establishment of such holdings in the first place requires significant capital to invest in the first place. It's used in the Gulf by countries with declining oil reserves. When oil/gas is flowing, a percentage is set aside for investment in a fund that will help fund government services after the oil/gas reserves are gone. Nauru also used the same model, but the fund was mismanaged and collapsed spectacularly, essentially beggaring the entire nation. Kuwait uses the model with grater success, though at present still has revenues from oil as well. Singapore also uses it (Tamesek Holdings) in conjunction with taxation.

And still, all of the above mentioned nations do have taxation in one way or another.

[The Cat-Tribe]

Unless they aren't.

Private industry will ONLY do what is good for private industry. That's not a criticism, but it is the reality - if something will cost more than it will profit, private industry is NEVER going to do it.

Agree so far.

So, if the cost of stringing and maintaining powerlines to an isolated community is greater than the estimated profit, that isolated community never gets mains power. If expanding the road network to a distant city is costlier than the expected gain, everybody better buy four-wheel drives if they want to get anywhere.

What is your point? Because what I get out of this, is that this isolated community shouldn't exist out in the middle of no where and expect services.

My point is that under a tax system, unlike under a privatized system, they'll get them. Living in Oz, I get a pretty different view on this than most - because "isolated" here means muh more than it does elsewhere. And cities like Perth and Darwin would be totally cut off from the rest of the country if it wasn't for government maintained infrastructure that private industry would never have been interested in creating.

Private industry may be able to provide goods and services cheaply. But they will only be willing to if there's a profit to be made - no profit, no services.

I agree.

So you believe it is morally acceptable for me to be forced to pay for some person that goes and builds a house in the middle of no where, where an entire road system and power system will have to be run to their house?

Right, let’s force the farmers, miners, lumber jacks, oil workers, fishers, and indeed everybody else whose job takes them away from major cities and force them to move to the city. Never mind that we need their services out there in the middle of nowhere and that we need to transport the goods they produce into the cities.

You’re “forced” to pay for the infrastructure that allows people to live in the middel of nowhere because it’s vital to society as a whole...

You have no idea how capitalism works . Its almost sad that you guys are such trolls. The example he gave was a person living out in the middle of no where without anything to offer to society. Obviously if there is somebody giving something to society that society values, roads would be built as a means to transport these goods back to society. You guys all make fun of the invisible hand of the free market. I don't mean to be offensive, but the reason why is because you have no grasp on reality, economics or cause and effect relationships.

If only we could read the works of someone explaining the concept of the invisible hand of the free market ... but, unfortunately Adam Smith is not only an irrelevant historical figure, he too is an idiotic troll with no idea how capitalism works because he disagrees with you about taxation.

So do most economists (including libertarians like Milton Friedman).

Apparently, you are one of the privileged few in time and space with the necessary wisdom and experience to properly grasp "reality, economics or cause and effect relationships."

Seriously, regardless of the merits of some of these lines of argument (like the Friendly Fisherman), your insults are getting tiresome. You do realize that some of us are adults with full post-graduate educations and decades of experience in the real world free market. What exactly makes your understanding of reality and economics superior to everyone else's?

The real question is, what makes YOUR understanding of reality and economics superior to mine? And why do you constantly age discriminate? I thought you were a civil rights lawyer or something?

1. I was trying to use sources rather than rely on my own authority, but you dismissed that as "debate by proxy." (Ironically, in a prior debate where you criticized me for using sources, you said I should look to Adam Smith's Wealth of Nations -- even though it wasn't on point and you couldn't cite anything from it relevant to the subject we were discussing. In this thread, I quoted from Smith's Wealth of Nations on precisely the point at issue and you dismissed it without explanation as irrelevant.)

2. With the exception of some exasperated comments about your disinterest in and lack of knowledge of political philosophy and ethics despite arguing about a question of political philosophy and ethics, I have tried not to attack anyone's "qualifications," but rather their arguments (or lack thereof). You are the one repeatedly saying everyone else has no grasp of capitalism, economics, and/or reality. Hence my question as to what made you the blessed one.

3. If push-comes-to-shove, I would say my education, life experience, business experience, etc., give me more credibility than yours on a wide range of subjects -- some obviously more than others. (IIRC you are 19. I'm not sure what your level of education is.) I can be (and often am) still wrong about things. You can still make arguments that are better than or more accurate than mine. But your consistent insistence that the rest of us all ignorant trolls should stop. (I don't know the background/qualifications of many of the other posters here, but we do have educated economists, professional businessmen, other lawyers, etc, that post in NSG.)

4. If you are an employer and you hire the candidate with more education and experience, it is not "age discrimination" just because that candidate is older.

5. Not that it is relevant, but I have done some work in the field of civil rights (and various other fields), but most of my experience is in commerical litigation, primarily patent litigation. My primary clients (through my firm) were companies like Intel and Microsoft.

[Lelouche]

There is no option to not use the services or not pay for them. Get over it. It's coercive and it's theft.

Don't want to use the services? Don't live in that country, otherwise you're eating the food without intending to pay.

the GTFO argument fails.

It's your argument. You're being forced to use the military, the police, etc. Against your will. And then they make you pay.

Turns out, you're NOT actually being forced. You can opt out. Buh-bye now.

You want socialism so much, get the fuck out.

I'm not the one complaining that I'm being forced to conform to some set of rules that I could easily avoid by simply relocating.

*shrugs*

Relocating is not simple, not by a longshot
Further more, I should not have to move, because other people want to oppress me via proxy of the state.
I have as much right to be here as anyone else.

[Abdju]

No tax = anarchy.

Somewhat overstated. Governments can exist without taxing - provided they hold monopolies that they can squeeze for sufficient profit to fund government services. Taxation is merely the best way to fund a government, not the only one.

Which is "nearly" impossible.

If it's not anarchy, it's close to being just a corporate. Which countries' citizens/corporations pay no tax whatsoever? I can't think of that many. Nauru comes to mind; and island of less than 15.000 people, with an extremely low GDP/capita, a 90% unemployment rate, and 95% of those with jobs are employed by the government. It's a joke. No real country can survive without taxes.

Essentially, this is the model employed by Saudi Arabia and many of the Gulf States. It only works for them because they have either:

1. Extensive natural resources, with the state monopolising their exploitation.
2. Huge holding companies or other investment vehicles, the profits of which fund state expenditures, but doesn't hold a monopoly in any particular industry. However, the establishment of such holdings in the first place requires significant capital to invest in the first place. It's used in the Gulf by countries with declining oil reserves. When oil/gas is flowing, a percentage is set aside for investment in a fund that will help fund government services after the oil/gas reserves are gone. Nauru also used the same model, but the fund was mismanaged and collapsed spectacularly, essentially beggaring the entire nation. Kuwait uses the model with grater success, though at present still has revenues from oil as well. Singapore also uses it (Tamesek Holdings) in conjunction with taxation.

And still, all of the above mentioned nations do have taxation in one way or another.

That's true, though in the case of some of the Gulf States and KSA it's mostly corporate taxes. Personal taxation is either insanely low (2.5% in KSA) or non-existent. KSA corporation tax is variable from 25% to 40% AFAIK.

[Middle of somewhere]

There is no option to not use the services or not pay for them. Get over it. It's coercive and it's theft.

Don't want to use the services? Don't live in that country, otherwise you're eating the food without intending to pay.

the GTFO argument fails.

It's your argument. You're being forced to use the military, the police, etc. Against your will. And then they make you pay.

Turns out, you're NOT actually being forced. You can opt out. Buh-bye now.

You want socialism so much, get the fuck out.

I'm not the one complaining that I'm being forced to conform to some set of rules that I could easily avoid by simply relocating.

*shrugs*

Relocating is not simple, not by a longshot
Further more, I should not have to move, because other people want to oppress me via proxy of the state.
I have as much right to be here as anyone else.

The state is not some super power machine, they are people and they can be overthrown if needed. They are like the rest of us and need to stop acting like some god

[JJ Place]

No tax = anarchy.

Not true; taxation is a means of the State collecting money, abolishing taxation would abolish one means of the government collecting revenue, abolishing taxation would not completely abolish the State, abolishing the State is a completely different matter at hand, and would not be achieved by abolishing taxation, they're two completely separate issues at hand.

Both should happen though.

I agree that the government eventually needs to be ended in a short amount of time, with taxation ending in a shorter amount of time beforehand; but what a lot of people still don't understand is that ending taxation will not leave us in an Anarchic society; and still most people do not understand anarchic societies, and how they can work far better than a society with a government.

[Rick Rollin]

[NotnotgnimmiJymmiJ]

I see. Does this mean that 'supply' and 'quantity' are also not the same thing?

Why would it? Quantity on its own doesn't mean much, depends on the context. What context is quantity being used here?

Now you're just adding more confusion to the mix.

To answer JB's question, that is correct, they are not the same thing. Supply and Demand are amorphous concepts that economists like to pin down using graphs and curves. In a perfect market that is in equilibrium, the quantity supplied will equal the quantity demanded and those products will actually change hands at that price point.

[Just Mike]

No tax = anarchy.

Not true; taxation is a means of the State collecting money, abolishing taxation would abolish one means of the government collecting revenue, abolishing taxation would not completely abolish the State, abolishing the State is a completely different matter at hand, and would not be achieved by abolishing taxation, they're two completely separate issues at hand.

Both should happen though.

I agree that the government eventually needs to be ended in a short amount of time, with taxation ending in a shorter amount of time beforehand; but what a lot of people still don't understand is that ending taxation will not leave us in an Anarchic society; and still most people do not understand anarchic societies, and how they can work far better than a society with a government.

Most people are blind sheeple who believe the big government MSM. Anarchy is the only viable long-term system. In all others the oppressed will rise and destroy the oppressors, inevitably destroying the system in the process.

[The Cat-Tribe]

Taxation is theft in much the same way that family is oppressive collectivist dictatorship (except that a much more rational case can be made for the latter).

No response?

People don't have to respond to crap
Your comparison isn't even close to valid.

Before I respond, your failure to respond to my much meatier posts is glaring and conspicuous.

Posters don't have to respond to anything, but a failure to respond can raise an inference regarding an inability to respond.

As you did respond, the inadequacy of your response speaks volumes. Calling an argument "crap" and not "even close to valid" isn't really a response or counter-argument.

There has been much whining that taxation is theft because one has no fair and free choice (defined primarily by a lack of good alternatives) not to pay taxes and is unjustly "enslaved" if one is born with a duty (or as a party to a social contract) requiring payment of taxes.

But a child is subject to the authority of parents that the child does not choose and the child has no good options but to obey this authority. A child isn't even allowed to own things or enter into contracts for hisself/herself. How is this more fair, less oppressive, less "enslavement," more free, and/or less objectionable than the "theft" of taxation?

[Xomic]

Anarchy is the only viable long-term system. In all others the oppressed will rise and destroy the oppressors, inevitably destroying the system in the process.

[Jello Biafra]

Thank you Jimmy (and Hyde) for answering my questions.

There is no option to not use the services or not pay for them. Get over it. It's coercive and it's theft.

Don't want to use the services? Don't live in that country, otherwise you're eating the food without intending to pay.

the GTFO argument fails.

It's your argument. You're being forced to use the military, the police, etc. Against your will. And then they make you pay.

Turns out, you're NOT actually being forced. You can opt out. Buh-bye now.

You want socialism so much, get the fuck out.

I'm not the one complaining that I'm being forced to conform to some set of rules that I could easily avoid by simply relocating.

*shrugs*

Relocating is not simple, not by a longshot

This is true. Does this mean a person should never have to relocate in order to find employment?

[DaWoad]

No tax = anarchy.

Not true; taxation is a means of the State collecting money, abolishing taxation would abolish one means of the government collecting revenue, abolishing taxation would not completely abolish the State, abolishing the State is a completely different matter at hand, and would not be achieved by abolishing taxation, they're two completely separate issues at hand.

Both should happen though.

I agree that the government eventually needs to be ended in a short amount of time, with taxation ending in a shorter amount of time beforehand; but what a lot of people still don't understand is that ending taxation will not leave us in an Anarchic society; and still most people do not understand anarchic societies, and how they can work far better than a society with a government.

Most people are blind sheeple who believe the big government MSM. Anarchy is the only viable long-term system. In all others the oppressed will rise and destroy the oppressors, inevitably destroying the system in the process.

lmfao

[Sungai Pusat]

Most people are blind sheeple who believe the big government MSM. Anarchy is the only viable long-term system. In all others the oppressed will rise and destroy the oppressors, inevitably destroying the system in the process.

Unfortunately, if they don't know they're being oppressed, how can that happen?

[Bendira]

So, accumulation of knowledge is, in itself, not worthwhile? Right...

Strawman on so many levels. Not even worth answering this question. Either refrase it in a way that isn't a blatant strawman, or I won't extend you an answer, or in fact the reiteration of a point I already made.

I used many words because I hoped it would help you understand the issues. Apparently, it didn’t...

Your argument is fundamentally the same as several previous arguments made earlier. Instead of disproving why my rebuttal to the earlier argument was wrong, you chose to just refrase the previous argument in a more long winded way.

Once again: the worth of this particular road cannot be measured in simple profit. While building a road to the middle of nowhere might not result in an immediate profit (and thus, in your world, would not be build) it ends up being a benefit to society, as a whole, since the use of this road has implications for so many different people.
As such, there is a benefit to society that goes way beyond mere profit.

No, it does not benefit society as a whole. To say it benefits society would be to imply that the building of this road would increase the quality of life of every member of the body politic. This example clearly dosn't. To say that it benefits society as a whole is totally ridiculous. And also to say that this road would create as many jobs as you claim is also frivalous. Policing a road to a handful of dudes fishing shacks out in the middle of no where would not create many jobs. And even if it did create jobs, it is irrelevant considering it still does not benefit society, and actually hurts the majority of the body politic if it is not a profitable venture. To say that society is responsible for funding this guys non-profitable fishing venture would be to say that I am partially responsible for paying for this mans hobby. Because that is what something is considered if it has no value to the private sector, a hobby.

So you either didn’t read my example or didn’t understand it...

It’s not just the fishermen and the people who build the road who benefits from it. It’s also the mechanics who maintains the boats and cars. The processing plants and the retailers that now have fish to work with. The truckers and retailers that can now deliver food and other goods to the fishermen. The road inspectors and the company that maintains the road. The cops who patrol the road. And so on...

Again, these jobs are completely unnecessary because the service this fisherman and his friends provide isn't valued by society. So these jobs are complete psuedo jobs, similiar to public works, where no actual benefit to society if being achieved. If you honestly think active duty police for example should be hired to police a road that a total of 20 people travel you are crazy. And again, these truckers and retailers etc. are actually quite unaffected by this fishermans horrible business decision if one of the theories of this fishes low demand is true. Which is that a much closer fishing spot is popularly used. Clearly in this example. it could be profitable since the fishing area is closer to market, and subsequently the costs of extending services is lower. This "friendly fishermans" totally irrational decision to move into the middle of no where is not my responsibility, and I personally feel I do not owe him anything. Especially if I don't even like the fish. Taxation to build a road totally ignores supply and demand, so my tax dollars could go to fund the transport route of a certain type of fish that I don't even like to eat.

It’s obviously you who lacks knowledge...

Supply and demand is not nearly as simply as you want it to be. The fishermen might be able to sell their fish at $1 per fish but not at $3 per fish. Demand is not just based on supply, it’s also based on the price of the product in question.

In your fantasy world the road would still not be build, ‘cause no-one would be willing to pay the price demanded by the fishermen in order to finance it.

First of all our situation woudl recquire a myriad of hypotheticals we do not have at our disposal, because of the purely hypothetical nature of the scenario. So your assertion that the road would not be built is a conditional one. The conditions of course, are if society does not value this service high enough to justify its existence. I am fully aware that the price can affect the demand, but I never claimed otherwise. If you want to get really into specifics and hypotheticals of this scenario, we would look at fish as an actual fact, and not just a variable that was created for an argument. Which would of course require us to get a background in fishing etc. However in my mind, empirical evidence is not necessary considering the free market ALWAYS will provide a solution. Just an example of some of the variables we could bring into this problem BUT IS IN NO WAY EVEN CLOSE TO A COMPLETE LIST that we haven't would be to question

1. Why this city is so far away from a water source in the first place?
2. Why is this fisherman chosing to live out on his own, and fish this particular type of fish?
3. How is this fisherman funding his venture?
4. Is this fish really a good that is necessary to society?

The 4th point is actually vital. Because if we replaced fish with something that was necessary, such as a type of metal that is required for manufacturing, the venture would be profitable because of the dire necessity of the metal. Of course since our variable is fish, it is clearly not a dire necessity, because of course society could still survive if it did not have this ONE particular type of fish. Just like how society survives with high Caviar prices.

Something else I would like to bring up (and I am sorry for providing so many rebuttals to your example. I could practically ramble on to infinity why you are wrong, but you lack the understanding of the incentive based nature of a non-coercive free market to do so on your own) is that if this particular type of fish has extremely high demand, and can only be found in this lake, it is easy to see how this fish could still be provided. Because lets assume that there is extremely high demand for this fish, as it is the best tasting fish ever. But it is an EXTREMELY long ways away. The problem here, is that the city is located far from the fishing grounds. Just like during the gold rush in the west, most likely boom towns would be created around the marketing of this fish. If you are addicted to this fish because it is so amazing, you could move to a location closer to the fishing grounds where it is actually profitable to build services to. And the capital obtained in this localized economy from these fish sales would eventually make its way back to the mainland.

These are like 2 or 3 examples why you are wrong, out of practically infinite ones. The invisible hand of the free market is regarded as a joke by many of you, I understand. But this is because you are applying our societies economic characteristics to this invisible hand, which is ridiculous considering this hypothetical free market anarchy society is nothing like ours, and any parallels in economics you draw would most likely be completely different.

There would be a big benefit to the company, as a whole, if all the employees can see each other’s schedules as it makes scheduling the individual worker’s workday that much easier. Indeed, it would be a big benefit for each individual worker to be able to see the other workers schedules. But even so, the software was not used, despite the benefits it would provide.

There is no incentive for the employee's, because of a failure by the management. This is not a failure of the employee's. Obviously the management did a poor job is laying out the benefits of this system, or they picked a system that the employee's did not want or deem necessary.

Actually, I’m absolutely convinced that monopolies and cartels are inevitable under a free market.

To understand why, you need to have another look at the Prisoner’s Dilemma. You see, it actually comes from a field of research called game theory where...

Oh, right... You don’t believe in research that does not produce profit... Oh well, I’ll try anyway...

Look, here’s the payoff matrix, listing the choices of Company A and B in a case where both companies are equal:

	Company A lowers prices, hoping to outcompete Company B	Company A keeps its current prices
Company B lowers prices, hoping to outcompete Company A	Both companies now run at a loss but neither can outcompete each other.	Company B might outcompete Company A, provided that it can survive running at a loss longer than Company A can. Otherwise Company B itself goes out of business.
Company B keeps its current prices	Company A might outcompete Company B, provided that it can survive running at a loss longer than Company B can. Otherwise Company A itself goes out of business.	Both companies keep working as before.

Examining these options it should be obvious why both companies would prefer to keep their prices. It’s the only option that ensure, with absolute certainty, that both companies continue to exists.

Go read my example of why predatory pricing in a free market would not exist. Search WAL-MART in the search bar for this topic and you should find it.

Now, let’s examine the payoff matrix for a case where Company A is much bigger than Company B:

	Company A lowers prices, hoping to outcompete Company B	Company A keeps its current prices
Company B lowers prices, hoping to outcompete Company A	Both Companies now runs at a loss, but Company A can survive this for much longer than Company B. Soon, Company B will out of business.	Company B now runs at a loss which it cannot sustain for long. Soon, Company B will be out of business.
Company B keeps its current prices	Company A now runs at a loss, but Company B will soon be out of business.	Both companies keep working as before.

Examining these options it should be obvious that, for Company B, the only way to survive is to keep the current prices. On the other hand, Company A is much better off lowering its prices in order to drive a competitor out of the market.

In the end, you will either have a single giant company maintaining a crippling monopoly on the market (the case where Company A is much bigger than Company B) or you will have a cartel (the case where Company A and Company B are equal).

Again, go search for the WAL-MART example.

Whizzzzzzzzzzzz...

You heard that? That was the sound of the point flying right over your head...

No wai

Let’s go back to the original Prisoner’s Dilemma. The truly rational thing to do would be for both players to keep their mouths shut, thus getting away with just six months in prison. But, since they both act in their own interest, both will talk and both will wind up in prison for 5 years. Obviously a much worse outcome than if they had both acted rationally.

Its not acting rational to assume the unknown. This example is stupid because the rational choice in this situation WOULD be to cooperate with the police, because it would be irrational to make a total assumption that your partner in crime would not take up the offer.

The point being that by acting solely in your own interest, rather than in the interest of the whole organisation (society, a company, a group of friends) all members of that group are worse off than if they had all acted in the interest of the whole...

Its impossible to act in the interest of the whole. Name me ONE unselfish act a human being can commit.