Fallacies of the Redistributionists

One of the favourite arguments of the redistributionists is that if you tax the rich and give it to the poor then the poor will spend it in their local economy which will get the economy going, rather than what the rich will do, which is "just" invest it or buy luxury goods.

I call these economic half-truths because, as Frederic Bastiat explained in his introduction to Economic Sophisms, "We must confess that our adversaries have a marked advantage over us in the discussion. In very few words they can announce a half-truth; and in order to demonstrate that it is incomplete, we are obliged to have recourse to long and dry dissertations."

It is true that if you take money from the rich and give it to the poor the poor will go into the shops and spend it.  However, people who say that redistributing wealth stimulates the economy have not yet realised that saved money is also money that is being used and is being productive. It could be as an asset in a bank to base loans off of. Once those loans are made the money is no longer in the hands of rich people in the practical sense anyway. It's now in the hands of the business owner, the staff, the suppliers, and then it circulates because those people spend it in their local economy. Therefore all that is happening is a different group of people are now spending the money in their local economy.

The thing is that money is not being raised or created out of thin air. It is already circulating in the economy. It is in capital investments which do improve the regular man's living standard in a more nuanced way. When rich people invest in businesses it allows those businesses to create products and services which contribute to peoples well-being. If those businesses are successful that is a sign they have created something that people want, if they are not the money gets taken away from the investor, which creates a natural tendency for the money to collect with people who are good at investing in companies that create things that people actually want. If the resources are being used to create goods that people buy, how can those same resources be used to make machines and tools?

As a friend explained, many people get befuddled when money is introduced. We can use grain seeds as an analogy for money. You can either eat grain or save it for planting for next years harvest. The more seeds you save the larger your harvest will be the next year. The harvest is symbolic of the abundance of products that capital investments make. If there was very little grain after the harvest the price of that grain would be very high, however if there was much of it it would be sold very cheaply. In accordance with the laws of supply and demand, the more things are produced the cheaper those goods and services become and this, broadly speaking, is what raises living standards. Not so much rising wages, although they contribute, but the fall in the price of goods compared to wages.

Redistribution will not even solve the problem of inequality, despite the claims of the redistributionists to the contrary, because it doesn't address the cause of low incomes, which is that people have a lack of economically valuable skills. People who are highly skilled are often headhunted for jobs and can choose between positions as well as attracting higher salaries. Because their skills are sought after they never have to put up with poor treatment in the workplace if it bothers them. They are more likely to have friendly, supportive bosses, or even become their own boss.

When you redistribute wealth you the people you redistribute it to have not become any more economically productive. They do not have any new skills. Broadly speaking, they are just going to go out and spend the cash in the shops which means it will end up right back in the pockets of the people who have been taxed to redistribute! And not without any harmful effects! It'd be like if a store owner gives a kid $20 and the kid buys $20 worth of product from the store, how has the economy grown?

This is an exercise in taking money from the deep end of the pool and throwing it into the shallow end, while spilling it along the way on government, administrators, bureaucrats and tax collectors - not to mention the lawyers, accountants and lobbyists who have now made lucrative careers in trying to help the rich avoid paying the redistributive taxes. Those people could otherwise be doing more productive work serving the public. The cash is still going to go back where it came from.

The real solution to the problem of income inequality is not bribing those at the top down but bringing those at the bottom up. The best way to do this, sorry to redistributionists, is to make it easy as possible for people to start businesses and hire and fire people. When there are many jobs in the economy workers can easily move from one job into another, which means they are in charge. They can take a job, take advantage of on-the-job training and learn skills, then move on to another job and do the same thing again, until they are so highly skilled that they can get a supervisory position or a management position, or create their own job. That is real class mobility. Well-intention ed interventions in the free market such as minimum wages, occupational licensing, red tape and regulations, patents, labour laws, and countless others, actually make the condition of workers worse over the long term because they have less jobs to choose from - this means they may have to admit poor working conditions and bad management because they can't just walk into another job at any time. Everything the left thinks is good for workers is bad for workers. Even if many of the jobs are bad and poorly paid they still make it difficult for management to treat staff poorly and get away with it, and no one needs stay in those jobs for very long anyway, just to tide them over until they can get something better or until they have mastered the skills and someone else will take them on for more.

The Death of Castro

The death of Castro requires of me special comment as social media has been awash, over the last couple of days, with celebrations of the man who has presided over a country where doctors are paid $25 a month, teacher $15, and the best paid professions are taxi driver and prostitute. A nation where people need vouchers to buy food.

Some of his champions naively blame the U.S. embargo on Cuba for these conditions but, while the embargo is needless, immoral, and never should have been implemented, this simply belies their basic lack of understanding of economics. Conditions in Cuba are the obvious and necessary consequence of central planning and reflect those consequences of wherever else it has been tried. Cuba can trade with most of the world so it can't simply be the American embargo at fault. What Cuba cannot do is build up the wealth and capital necessary to take their people out of poverty.

But what can you say to someone who loves Big Brother?

My mother visited Cuba early in the year and stopped at a tobacco farm where she learned that those that labour there work like dogs year round, until harvest time when the government takes 70% of their crops, leaving them with the other 30. (How is this not exploitation of the working class to the left?)

This is why Cuba is poor. If you rob people of their efforts you rob them of their dignity and desire to work for those efforts. You can't grow an economy under those conditions, increasing peoples living standards depends on people having the incentive to produce more than they consume.

Other supporters point to Cuba's supposedly renowned healthcare system (which doesn't have the money to provide medicines) and education. On facebook, I quipped, "People celebrating Castro would rather everyone was poor but got free healthcare from the government, than everyone was rich enough to pay for their own healthcare."

In a land where people are not free to attain to their highest potential what little use to them can an education be?

My hopes remain with the Cuban people.

Actually, Darling, Elites Hate Free Markets. Everyone Knows That.

The realm of political action is awash with the view that free markets are the enemy, and that more government controls are the key to bringing about a more just society. Popular is the view that free markets only favour the elite and that only the elite favour free markets.

Never mind the government is already responsible for over 40% of spending, and that 19% of the population is employed in the public sector (in the UK). The state controls the money supply, sets the interest rates, and is responsible for regulating each and every facet of the economy from the provision of energy, to the conditions under which someone can employ another person. There is no part of the society left untouched by the machinations of the state. But it's free markets that the elite want. Free markets.

That is really quite an astonishing statement given the vast majority of the population have not even heard the term libertarianism and cannot distinguish between laissez faire and crony capitalism. Your average person has been given indoctrinated in the false dichotomy of left vs. right paradigm. Indeed for most of my life I believed that because I was against war and for civil liberties I must therefore be on the left and a socialist. The idea that you could be for free markets and for all that other good stuff was never presented to me, and when it was at first I thought it was a contradiction in terms.

If the elites want free markets why don't they just take them? Would the world be as it looks if they did?

Since the elites own the media you'd think they'd be pumping out libertarian propaganda in the news every day - whereas if you ever have actually watched the news you'll hear all the debates start with the premise that - whatever the problem - government should solve it by either doing A, or doing B (sometimes some maverick will suggest C.)

Given the elites control and created the education system you'd think everyone would be indoctrinated in the wonderful virtues of laissez faire, but no, most of the history taught consists of war (caused by government and a lack of free trade - but they won't tell you that) and myths about how the government stepped in to save us from every poor historical condition imaginable. They don't even teach that classic liberalism (the forerunner to libertarianism) was seen as the opposite of conservatism before the 20th century and it was only then that the major debates became between conservatives and fascists on one extreme and socialists and communists in the other extreme.
You'd think they'd want to teach that to everyone if the elites wanted free markets, wouldn't you?

Even economics students do not get taught free market economics but mostly Keynesian and Chicago school which are both statist compromises for the mixed economy. They do learn far-left theories as well though!

Our philosophy simply doesn't get taught. I have a client who recently got in touch and told me she had just looked up libertarianism and was shocked and appalled that despite doing a philosophy degree (which included political philosophy!!!!) she had never even heard of it!
Doesn't sound much like the elite is using their influence, if indeed they want libertarianism.

Almost everyone who does study at uni, regardless of department, will cover Marx and the influence of Marx, of course in some capacity or another. Not his contemporary Baukunin though since he was an anarchist socialist. They only teach pro-government philosophies.

Ludwig von Mises, despite being the greatest economic mind of his time could not find a university post. Everyone has heard of Karl Marx but very few of Carl Menger. Not to mention Bohm-Bawerk, Bastiat or Murray Rothbard.

Why is it that corporations lobby for regulation and to pass laws rather than to remove them?

Elites have and always will oppose free market because they force them to provide value for value like non-elites have to, prohibit them from receiving government contracts and preferential treatment, and because the poor - who have more to gain and less to lose - will always outcompete and undercut decadent elites with more overheads.

The trick is simple, you just convince people that what we have is capitalism and use any criticism of the present system to attack free markets on principle. Most people will not look hard enough to untangle the trail of cause and effect back to the precise government interventions which caused these conditions. But it can be done! That's the purpose of this blog, please stay tuned.


A. S. 27/11/2016

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Economics is Elegant! (not boring)

The Market for Elegance

There is a tendency for intellectuals to believe in big government because it gives their intellect a role in planning society. It’s hard for them to conceive that million of decisions taken by individual actors may outperform their own intelligence or the intelligence of mandated “experts” but in reality it has and always will, and for logical reasons.

Nobel Prize winning economist F. A. Hayek explained that no one has the information to centrally plan an economy – and even if they did, this information is constantly changing in real time. People’s behaviours, values, preferences, ideas, expectations and knowledge change constantly and in unpredictable ways (thankfully so lest we be reduced to a bunch of deterministic automatons!) The information required to plan an economy is distributed amongst us all – and it is expressed in every transaction we make or choose not to make. Every time we decide something is too expensive, every time we buy something that is on sale because we only find it worth the cost at the reduced price. What we choose to buy is about as accurate a representation of what we value as we are likely to devise (apart from perhaps the way we choose to spend our time and attention) because each buy is at the expense of everything and anything else we could choose to buy with the same limited resource. It’s a measure of what we value in our particular circumstances.

It’s the interplay of countless actors trying products and services, rating them, deciding whether or not they want to buy them again, recommending them, cautioning others against them, which enables producers to know – without even talking to the vast majority of their customers – what exactly is desired and what is not. We are constantly giving out signals to producers of what to produce, in what quantity, limiting waste through overproduction and preventing shortages. This leads to approximately the right goods being produced in approximately the right quantities approximately all of the time. It also limits waste as goods that no one wants will not be in production for long, those that have been produced already will fall in price ending up in the bargain bin until someone finds them a home. This accounts for why in planned economies there are always mass shortages of some goods and wasteful overproduction of others.

Of course there will always be some Maverick or hard-headed producers that completely ignore all these signals and just do what they want, (Henry Ford, “If I had asked people what they wanted, they would have said faster horses.”) but they will not be in production for long to waste resources unless they really do know better than their customers. 

This is just evidence that human knowledge is not perfect. Consumers don’t always make the best choices first time – how could they? But they are unlikely to make the same bad purchase a second time. When they do err, the consequences of bad decisions are usually limited to some small number of people. On the other hand, when government policy-makers or central planners step in to make decisions over the entire economy, a poor choice can affect millions.

It’s this idea of one-size-fits-all – the customary approach of government – which is exactly what we need to combat, because it relies on the assumption of perfect knowledge (a priori) on the part of a small qualified number, which can only be gained by the individual experience huge amounts of individuals (a posteriori). Occasionally an inferior product, a VHS, will outperform a superior one, a Betamax, but ultimately DVD will come along and outperform both. The market acts like a sieve for good ideas, leaving bad ones behind.

It’s a wonder that so many fail to grasp the beauty and elegance of this self-correcting system of interdependence.


A. S. 11/2016

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Why Government is Antithetical to Freedom

Aristotle believed that without a society around us we are not real people. He pointed out that the family and the village satisfy our primary needs, but the highest form of human fellowship could only to be found in the state.

This seems to be a complete reversal of the truth. In the state that people find their greatest antagonism.  Democracy is tipped to bring us together in society-making, but, rather what it does is divide everyone into antagonistic camps that must fight to force their way of life upon one another. If I want to pizza and you want pasta there is no antagonism between us, because my choice is mine and yours is yours, but because, when it comes to public policy, "the winner takes it all" we are forced to hate those with which we share political differences because we can't both have our way.

"When two people meet in a political discussion, regardless of the political affiliations, there are bound to be a number of issues that they agree on. For example, a socialist and a free-marketeer - despite having completely different opinions on how an economy should be run - are likely to agree on a dearth of issues including ending foreign military interventions, the war on drugs, reducing government surveillance into the private lives of citizens, and ending corporate welfare from the government to rich business issues. Nevertheless, under the political system which most people favour - parliamentary democracy of some description - both are almost completely powerless to fight back against those (real or perceived injustices) because they have to simply accept one of the "package deals" of policies offered by one of the parties that can win. If none of those parties offer the option of ceasing to sink state funds into nuclear weapons, for example, these supposed political enemies alike will both be forced to pay for them through the tax system - regardless of their personal values. It is the power to divest which is the real basis of political freedom. The power to say "no, I don't believe in this, I don't want to pay for it, and so I am going to spend my money elsewhere." That is the freedom that the non-state sectors of society (be they businesses, charities, cooperatives or other non-government organisations) offer, but the state does not, and fundamentally why the state is antithetical to freedom." - Antony Sammeroff

I think if you use this argument when you get into political debates with statists, "even where we both agree - and there is lots of common ground - we are still powerless to make change under the system you support, which is parliamentary democracy" - the penny might drop.

It looks like this: "Both you and I agree on lots of issues, for example against the wars, against the war on drugs, against corporate welfare. But under the system you support, we are relatively powerless to change it because even if we vote - we can only vote for the package deals of party x or party y - if those issues are off the cards on both platforms, we will still have to pay for it whether we like it or not through the tax system - even if one is one platform, another one is not likely to be on the other platform. "

Capitalism an Inherently Statist system?

It has been alleged by persons on the left that capitalism is an inherently statist system. That there has never existed any kind of stateless capitalism or "free market" in any real sense, and that therefore 'to contrast the state with "the market" is just silly.' That under capitalism, statism and the market economy are just two facets of the same hierarchical, totalising system of class rule.

I have heard those propositions put forwards before and I would urge you to reconsider: are the actually - or necessarily - true?

Firstly, I agree that "there are not free markets," but to say there never existed any kind of stateless capitalism or "free market" in any real sense is of no substance really. There had, perhaps, once never been a slave-free statist society, or one where women had the same rights and responsibilities under the law, or one that was not feudal, or a monarchy. So what? Society is a garden where we reap what we sow.

What is silly is not to contrast the state with "the market" but define the free market and the complete opposite of the free market capitalism at the same time! I point, naturally, to corporate welfare, legislations that offer preferential treatment to one service provider over another, subsidisation of domestic producers or protectionist tariffs – all interventions in the market that are not based on the market forces of supply and demand. The state is responsible for almost 50% of the spending in the economy in the UK, and 19% of the population is employed in the public sector. The state controls the money supply, sets the interest rates, and is responsible for regulating each and every facet of the economy from the provision of energy, to the conditions under which someone can employ another person. The state runs the schools, and a great deal of the hospitals. It decides when a road is to be built, and when we are to build a railway. It hands subsidies to tobacco farmers, then taxes the tobacco we smoke. It hands welfare to the wealthy in the form of contracts and preferential legislation, and to the poor in the form of entitlements, free services and food stamps.

The state does not exist because of capitalism, but because the state exists then capitalists are going to exploit it - it would be irrational for them not to do so if it provided more value than serving their customers, just as it would be irrational not to claim housing benefit if you were eligible - but to define the free market (the voluntary exchange of goods and services) and the complete opposite of the free market (state interference in the market) is simply rhetorical sophistry.

It is fallacious to conflate economic power with political power, they are not the same thing. Economic power does not equate to the ability to use force with impunity to achieve your goals. Otherwise Starbucks would lobby McDonalds, and McDonalds would lobby Coca Cola, who were at the same time lobbying Microsoft and Apple. They do not do this. Why? Because the state is the only institution that is able to pass preferential legislations, hand out subsidies and use force and the tax system to enforce them.

If you have a lot of economic power, then even absent the state you can buy a lot things from voluntary sellers: property, factories, machines, natural resources, products, services... but you will soon run low on assets if you are not also creating things that other people want to voluntarily purchase from you. If people are voluntarily purchasing things you produce then you are providing value to them. You are making them better off. Otherwise they would not purchase your goods voluntarily, you would have to coerce them to do so. This is one of the reasons why we voluntarists, anarcho-capitalists, or libertarians (call us what you will) do not want the state. In the market, if you don't like a service you have the power to simply stop buying that service: you don't have to vote for anyone, you don't need to get everyone to agree with you - you just buy something else instead. Not so with government - because you've already bought it. You don't have any choice in the matter. The state it has the power to violate your conscience and force you to pay for it through the tax system, while claiming that you tacitly consent to this violation of your free will to support those causes that you support and divest from those that you do not simply by virtue of living in a particular geographical area.

Exploiting the State

 The state is not an effect of capitalism, but because the state exists capitalists will exploit it because the state is the only institution that can pass regulations. Were this not the case, Starbucks would lobby McDonalds, and McDonalds would lobby Coca Cola who were lobbying Microsoft. None of these companies are allowed the use of force, but because of this unique trait - the ability to regulate - it would be the end of any capitalist who had the capacity not to make use of this privilege so long as they had competitors who were willing to do so. These conflicts of interest are foundational to the system in place.

Supposing I am the CEO of a rich corporation and I have $1,000,000 to spend developing my business,

One of my options is to spend that money doing R&D, improving the product, employing highly trained staff, bringing our a better version, or something related which amounts to offering a better service to the consumer. I could also try to advertise it to people I hope will be willing to buy it.

Supposing as a consequence of whatever one of these things I choose to do, then my revenues rise by $1,200,000 then, ok, great! My customers are happier and I have made $200,000

But...

Supposing I can use the $1,000,000 to lobby the state, and they will pass preferential regulations to favour my company, or they will give me other kickbacks or benefits worth - lets say- $1,500,000, then this poisons the whole economy because now I have MORE incentive to engage in bribery and corruption than on pleasing my customers.

I would do this, not because I was evil, but because I was rational. In fact, if I failed to do it I might well be competed out of the market by an actor who did not. Poorer or less established companies cannot do what I just did and so they are a disadvantage against the giants in industry so long as there is a state and the state can be lobbied.

By this process of "unnatural selection" the most successful firms become, not those who are able to best serve their customers, but those who are best able to play the system to get privileges from the government.  And it's not necessarily for the evil of all would-be congressmen or parliamentarians either! Even a somewhat integerous politician, who wants to hold office to push through the "least-bad" legislations can only get away with so much before industries begin to back a more complicit candidate to replace them. They really will go to any lengths to retain their special privileges, however unjust, because their livelihoods depend on them.

Perhaps the only solution is making it impossible for politicians to dish out public funds to special interest groups from the public purse, but for this to even be achievable people must be aware of this problem of incentives.

According to The Sunlight Foundation $5.8 billion were spent on federal lobbying and campaign contributions by America’s 200 most politically active corporations between 2007 and 2012.  For every dollar they spent buying politicians they got $741 in return.



If someone in a business commits a crime they don't get arrested for it because they have this thing called a corporation which takes the blame.

The corporation gets sued, which  means the customers pay more and potentially the employees get paid less.

Making the corporation culpable instead of the individuals responsible for making the decisions
removes the moral hazard from the individuals  implicated in the unlawful or anti-social behaviour. That's why we see corporation getting away with doing all these horrible things: oil spills, bad bank loans, environmental hazards,

If the individuals personally responsible were at risk of losing their own assets, including their houses - the way an individual who gets sued or fined is - we would ind them far less likely to take these risks.

What is the Difference between Left and Right Anarchism?

 Left anarchism, which was the common usage of the term up until recently, is a political philosophy very closely related to communism, with the central socialist principle that workers should own the means of production. Having bosses run businesses or capitalists own the means of production is considered to be exploitative and hierarchical, whereas right anarchists see these relationships as acceptable so long as they are voluntary: if employees can agree to contractual terms, quit any time they like, unionise except where prohibited by voluntary agreements, etc. it is considered that the bosses are providing value by organising the work force, and capitalists are providing value by anticipating the market, organising production in terms of demand, and risking their investment (and also their property where uninsured, as the state would not exist to give them limited liability in the form of a Ltd. corporation  or Plc.) Right anarchists are not opposed to workers owning their own workplaces as long as this is organised by mutual agreements and voluntary interactions rather than imposed by violations of property rights (eg. workers getting a loan from the bank to buy out bosses and owners.)

Right anarchism is a more recent development but it can also be traced back to Baukunin who is seen as influential to both schools as an anarchist. It's more of an extension of American libertarianism, with the central principle being the NAP - ie. Thou shalt not initiate the use of force - no violence or theft, including taxation, as a rule, although levies for public goods could be extracted through a system of social pressure, ostracism, and refusal to engage in collective buying for people who did not pay their share (eg. If you don't pay your share for street lights you can expect to have to make your own arrangements for garbage collection as well.) Government regulation would similarly be be replaced by a system of insurance companies or cooperatives (often referred to as DROs - dispute resolution organisations) who were financially incentivized to solve problems before they occurred instead of being called upon to respond after the fact (like police, government fines, universal sick care, fire fighters, climate taxes etc. and all government services which are called upon only when a problem has all ready arisen.) These companies would lose money through payouts when they failed to protect their clients from harm or loss of property, which would encourage them to develop preventative measures and disincentives to criminals which would be constantly optimised through competition on the free market - whichever organisation was most effective as preventing harm or loss would gain the greatest market share, if someone advanced on their developments they would become lucrative, and if any such company got "too big for its boots," or abused its authority, its clients would have the option to pick another service provider, rather than remain at the behest of a state monopoly for provision of this service.

Left anarchism tends to focus more on problems of capital and capitalism, much like state socialists do. Right anarchists tend to talk primarily about the problems of statism, those which are created or exacerbated by governemnt, and they therefor tend to have the most convincing arguments for the abolition of states.


Despite coming from different angles, both agree that the state is based on force or the threat of force for its existence, that the state is a tool wielded by the ruling class for unfair advantage over everyone else, and that corporations and corporatism are products of statism which allow the rich to privilege from privatizing gains and socialising losses, which is immoral.

All forms of anarchists acknowledge that where there are rulers there can be no rules, as rulers by their very nature, make themselves the exception to the rule. Anarchists are egalitarians, no special privileges for law-makers or corporations. If you kill, harm, steal, or damage someone else's property, you are to be held personally liable for it - not the state (tax payer) or corporation (consumer/share-holder) - you personally. There is to be no hiding behind institutions which are mere abstractions of the mind in anarchy. This implementation of this moral hazard for the privileged is meant to do away with much of the corruption, cronyism, and war crimes which are part and parcel of statist societies.

So some common ground between the two despite philosophical difference on very key points.

For example, left wing ideals such as workers running their workplaces are thought by some to be more likely under right anarchism that statism, since the public education system trains children for individualism and competition, but the evidence on how individuals learn best is in favour of a cooperative learning environment. Without the kind of schooling which is prevalent and imposed by the state (which right anarchists are strongly opposed to) children would be raised with lots of experience of cooperation and mutualism, and so would more likely to create workplaces that capitalised on those skills than top-down hierarchies which follow the prevalent pattern of schooling and parenting.

The "Free Rider" Problem is NOT a Problem for Anarchy.

When you say you disagree with states as a concept people very often say something like "How will you get streetlights?????" Of course, you can substitute for street lights any other thing that the government happens to have a monopoly on doing at the moment, and you really have to wonder, if government provided ball bearings and had a monopoly on that would statists be saying, "How would we get steering wheels without government? That's maaaaaadness."

This is called the free-rider problem, and it's one of the most basic problems in economics. If you have a public good that many people benefit from, how do you stop people who don't pay from benefitting?

What I find most frustrating is people raise these objections as though all of the anarchists suddenly have to go have to go "Bah dub a duh duh good point I have never thought of that before, you're right, boo for anarchism, that's insurmountable, I'm now a statist... yup, giving all the guns to a single central authority who are allowed to violently extract income for everyone and distribute it as they might to whoever bribes them, or whomever they want to bribe to vote for them, sounds like a muuuuuch better solution. How very rational."

Such a basic objections, when they are presented with accompanying smugness rather than genuine curiosity, are  kind of insulting to your intelligence, because you'd have to be an idiot not to have thought of these problems. You get to wishing people would just pick up a book and learn a little about a theory before assuming they can knock it down in one blow.

Their argument basically goes ... "I get such-and-such for free and don't have to raise a finger, therefore the system in place is adequate."

But that does not logically follow. Just because there is a system in place does not meant is good, efficient, cheap, practical, suitable long term, preferable to what could be in it's place,  etc.

What is in effect being argued, is that the combined ingenuity of every individual in society who may have a vested interest in solving the free-rider problem when it comes to street lighting say, or quite frankly anything, is going to be inferior to the central dictat of a bunch of bureaucrats who are not even spending their own resources, and have less vested interest in solving any given problem than of bribing people to vote for them.

The make a "state of the gaps" argument and will forever point to this hole or that hole which is something which the state has monopolised and therefore cannot be met by another institution, be it a business, charity, consumer or worker cooperative, community project, or any other institution which is voluntary. They want you to say how exactly an endless list of things will be provided without a state, if you can't answer even one of them they go "Ha! See! Anarchism, doomed to fail."

The unreasonably biased nature of this line of questioning, which does not subject an ideology which has been responsible for killing 2-300 million of it's own people in the last hundred years not including the wars,  to the same scrutiny and need for evidence of the ideology they oppose, is only eclipsed by it's irrationality.

Firstly, if the free rider problem is a serious problem, then the government is the worst culprit, because they can grant themselves and their buddies special privileges with public money which isn't theirs like no other institution in society, and everyone else would have to pay for it. Not only can they, they do.

And more, asking me, or any other anarchist, how exactly this or that would be done in a stateless society is no different from asking an abolitionist how cotton will be picked once slavery is abolished. It would have been literally impossible for anyone to accurately predict that the abolition of slavery would make human labour uneconomic and lead to the invention of great big heaving robots that run on dinosaur juice from thousands of years ago, but that's what happens. When you remove the arbitrary dictates of how things should be done by force, something better rushes in to fill the place, it's compelled to by trial and error. Statism is not trial and error, it's "lets do it this way and ban anyone from doing it any other way." That is why when you look at statist institution they seem frozen in time, but there is a new smartphone with better features every couple of years. How will street lights be provided? In whatever way optimises through trial and error - banning people from trying alternatives by making the government option mandatory certainly can't help in any way. How could it? 

We must note that the free rider problem is only a problem in cases where people consider it to be a problem. For example, if I mow my lawn my neighbour may benefit from his house having a higher value due to the aesthetics of the community, but I am very unlikely to demand remuneration for it. So we can conclude that our discussion of solutions is limited to cases where people receive external benefits from other peoples time or resources in ways which bother payers.

In such cases, maybe people who paid would get stickers on their doors and people who could pay but didn't would get dirty looks and prying questions from their neighbours who wouldn't have any business with them. Or maybe the lighting organisation would offer special privileges to people who did pay like cheaper electricity for their house. Or maybe people who didn't pay would have to pay more for insurance because they weren't paying in to the safety of their community. Who can tell?

Personally I'd rather not be forced on threat of being put in a cage with murderers and rapists to pay for these things, I'd take my chances with someone being able to see all the solutions offered to me by people who have a real incentive to organise the best system and present the options to the people in my street, or the company that built the roads, or the one who built the houses, or whoever is responsible for making these decisions, so we can choose for ourselves.