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Here's a quick and easy way to illustrate systemic failure in capitalism in a bar over drinks.

 photo wnapkin_01_zps04c07608.jpg

Before beginning, you may want to place a beer bet with your friend(s). Something like "I bet I can prove to you on the back of this napkin that capitalism needs government."  

Then, take out your marker and show the following:

Two trappers are trapping animals in the wilderness. The trappers have 2 options. They can work hard and trap, or they can poach or steal from their neighbor.

To illustrate, draw a chart similar to the one on the right on any standard white restaurant napkin.

(Credit to Joseph Heath for the original explanation).

 photo wnapkin_02_zps712d4aa0.jpg

Again, your situation is that you have two trappers working in the wilderness.
They have two options: (1) set traps, or (2) poach from each other.

If they both decide to trap all day, each catches on average two animals a day.

Draw in Each 2 or something similar in the box where A and B both decide to trap.
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 photo wnapkin_03_zpsf3f9f74a.jpg

If, however, one of them traps while the other poaches, then the poacher gets two animals, the honest trapper none. And, the poacher doesn't have to work as hard.

Draw in A2 and B2 in the boxes where one steals and the other traps.

Obviously, in the situation where one decides to steal, very quickly there's no incentive for the other trapper to work.

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 photo wnapkin_04_zpsb6400916.jpg

So very quickly, he may decide to steal as well. This leads to the third situation where both trappers decide to poach.

In this case, everyone goes hungry because no one is trapping.

Everyone acted in their own best interest, but overall the system breaks down.

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What’s the point?

In order for markets to function correctly, people must refrain from all sorts of criminal behavior: stealing, not paying, lying, coercion and so forth.

It’s in everyone’s best interests to abide by these rules. But that doesn’t mean they’ll do it.

This is why we have government. This is why we have to have rules and why they need to be reinforced.

There is no such thing as a “free” market.

(DISCLAIMER: I have actually gotten a couple beers out of this. I have also pushed someone to the point where he hit a religious wall and in the interest of preserving our friendship, I bought him a beer. So be careful in how you present your argument and in how much you have to drink :). The idea is not to get into an "I'm right, you're wrong" type of situation, but to help teach people about capitalism and economics.)

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Comment Preferences

  •  And in libertarian land (6+ / 0-)

    The honest trapper kills the dishonest one and takes his traps, and now he makes twice as much.

    But then in sane land, the guy who is dishonest also thinks of killing first, and has friends to back him up.

    In theory, there is no difference between theory and practice; but in practice, there always is a difference. - Yogi Berra

    by blue aardvark on Sat Nov 05, 2011 at 08:30:21 AM PDT

  •  Great! Capitalism Debunked By Simple Odds. (12+ / 0-)

    It's something that every one of us understands before we're old enough for preschool. It takes years of education to unlearn reality and acquire the conventional wisdom of unregulated capitalism.

    My personal approach is to compare Physics 100 vs Econ 100, noting that our preparation for both courses is made in our toddler years.

    First physics.

    When we are barely of walking age, we are learning to manipulate objects, and one of our first discoveries is of the basic machine known as the lever. We learn that we can move some object by taking a long stiff bar of some sort, putting one end under it, resting it against an immovable brace near the object, and pushing in the opposite direction against the free end.

    If we wanted to design and build levers for sale for our eventual career, we would need to study extensively in subjects such as calculus, strength of materials, mechanics and such. However this quarter-of-a-lifetime study would not change our basic concept of the lever. It would all be devoted to addressing boundary conditions surrounding a basic model which almost always works as expected for ordinary laymen in ordinary daily life.

    Now economics.

    Also in those toddler years we are learning to perform the most basic operation of economics, the trade. We offer some object or service we have in exchange for some object or service another person can offer.

    Nobody ever makes it as far as a dozen trades before they find they've been ripped off. A service is denied or performed half-heartedly, the exchange object is defective, different from what was promised or withheld.

    Long before we ever learn to read or write we have learned that trading, the most basic operation of economics, is one of the riskiest things we can do. We learn that it often fails to work according to the basic model we first learned.

    We learn that economics is never safe without plenty of adult supervision.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Sat Nov 05, 2011 at 08:41:09 AM PDT

  •  But libertarians accept you need property, police. (2+ / 0-)
    Recommended by:
    akadjian, Richard Cranium

    They believe in minimal, not no, government.

    So this particular argument doesn't attack what they actually believe.

    •  True (4+ / 0-)
      Recommended by:
      luckylizard, Marie, Chi, Toon

      But there is a lot of mumbo jumbo anti-government rhetoric being thrown around out there that seems to be more "religion" than logic. It's almost like the person who said "Keep Your Government Hands Off My Medicare".

      Basically, it's just "blame government" hate. So I usually try to start with a foundation for government to regulate capitalism. And this usually opens some eyes.

      Plus, it establishes that you're arguing about this from an economics standpoint. (read: You're not a commie pinko Socialist.)

    •  So, who defines (4+ / 0-)
      Recommended by:
      luckylizard, Marie, Chi, Toon

      what "minimal" government means in practice? I like to ask "small government" types just how small a government can be and still perform the duties laid out in the Constitution for a nation of over 300 million. We need to keep in mind that, for the government to deal effectively with the giant corporations, it needs to be bigger and stronger than all of them combined.

      That's pretty big, it turns out.

      You can not effectively govern a huge nation with a small government. Smaller governments are too easy to corrupt.

      What libertarians fail to realize (or just deliberately ignore) is that power is corrupting whether it is wielded by government or private interests, but, while the government is bound by the Constitution to respect an protect our right to liberty, private interests are under no such obligation. Their sole obligation is to return a profit to their owners by any means necessary, be they fair or foul.

      Now if I could just fit that on a bar napkin!

      Al Qeada is a faith-based initiative.

      by drewfromct on Sat Nov 05, 2011 at 09:13:29 AM PDT

      [ Parent ]

      •  Libertarianism is 'natural law' (1+ / 0-)
        Recommended by:
        luckylizard

        You can do as you like, unless it infringes on the "rights" of others - one of those rights being property rights.  That's libertarianism at its most basic level.  But this can be interpreted very broadly by a true libertarian.

        Libertarians believe that the primary responsibility of law enforcement is "rights enforcement" - and that's about all that government should be doing - policing your individual rights by making sure you don't infringe on someone else, and that someone else doesn't infringe on yours.

        Believe me, they (true libertarians) can get into some real pretzel-logic arguments.

        We're resigned to our collective fate because we've been conditioned and brainwashed to believe that this is as good as it gets. It's not.

        by Richard Cranium on Sat Nov 05, 2011 at 09:18:52 AM PDT

        [ Parent ]

  •  The more I think about it ... (3+ / 0-)
    Recommended by:
    some other george, Chi, Toon

    The more I realize that the average person I'm talking about is not even a Libertarian. Or a conservative. Or anything for that matter.

    Other than pumped full of the latest philosophy that the 1% is using to justify more deregulation and tax cuts.

    And the latest round they're being pumped full of is "anti government" hysteria.

    This is why I think arguments like these work well. They're teaching tools.

  •  I am so stealing this :) (1+ / 0-)
    Recommended by:
    Chi

    Or poaching this, I guess you'd say!

    Thanks.

  •  Your premise (0+ / 0-)

    (i.e. capitalists claim they don't need government) is a strawman. Even Adam Smith acknowledged government was a necessity..

    The issue is defining its functions, delegating the power to implement them, and the efficacy of resulting outcomes.

    In your construct poaching and stealing are the same activity. They are not. A poacher has to perform the same activity as a trapper. He just disregards rules as to time and place. A thief doesn't perform the activity at all (though I suppose a poacher could moonlight as a thief). In short, your block isn't a closed loop.

    Your bar-mates may need more help in critical thinking than economics.

    •  Different kind of poaching. (1+ / 0-)
      Recommended by:
      akadjian

      You are thinking of hunting in the wrong time or place. In this example the poacher is taking animals out of traps set by the other person. The honest hunter has to set the traps and come back to get the animals, the poacher only does half the work, taking animals out of traps set by the other trapper. That's why the system breaks down - neither sets any traps, each expecting to empty the other one's traps.

      They say a little knowledge is a dangerous thing, but it's not one half so bad as a lot of ignorance. Terry Pratchett

      by Toon on Sat Nov 05, 2011 at 09:47:20 PM PDT

      [ Parent ]

      •  I see. But it's why defining terms of reference (0+ / 0-)

        in a debate is important.

        •  I believe the diarist did. (0+ / 0-)

          They said 'poaching or stealing'  which indicates which meaning of poaching was meant. The other meaning would have not fit the scenario, setting traps in the wrong time or place would not be less work nor would it explain why the honest hunter got nothing.

          They say a little knowledge is a dangerous thing, but it's not one half so bad as a lot of ignorance. Terry Pratchett

          by Toon on Sun Nov 06, 2011 at 08:24:49 PM PST

          [ Parent ]

    •  We're not arguing w/ Adam Smith ... (0+ / 0-)

      We're trying to help educate people who are fed a daily dose of anti-government, Ayn Randian garbage and who equate a "free market" with complete lack of government intervention.

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