New Here. Have some questions about Ron Paul/Austrian economics and etc

[AcousticFoodie]

Hi guys,

I started reading about Ron paul and his economic policies after I watched "I.O.U.S.A" and became concerned about our budget deficit. I couldn't really remember anyone else talking much about it during our last presidential election year except for Ron Paul. I was really struck by his honesty, beliefs, and "common sense" approach to everything.

With that said, I have some questions regarding some of his philosophies that I hope you guys could answer for me.

Ron Paul stated that he would get rid of the USDA as a way to curb spending, but without a USDA, who would regulate our food? From what I gathered, Dr. Paul states that the private sector would take over right? But what's to prevent the meat industry from paying off these private sectors to hide things such as selling knowingly contaminated meat and such?

I think Dr. Paul would also get rid of minimum wage because its a form of government interference as well. But similar to my previous question, what is to prevent companies from paying extremely low wages to the employees and soaking up surplus profits all to themselves?


I'm very excited to learn more from you guys!

[Linus]

What makes you think your food is regulated with a USDA? Has the existence of the SEC ensured proper regulation against force and fraud in the finance industry? The bottom line is that if you don't know where your food comes from, you're at the mercy of some strange human being. Unless you believe that people magically become morally "better" or "worse" when they put a Federal badge on their hip, then what's the difference?

[Stary Hickory]

Hi guys,

I started reading about Ron paul and his economic policies after I watched "I.O.U.S.A" and became concerned about our budget deficit. I couldn't really remember anyone else talking much about it during our last presidential election year except for Ron Paul. I was really struck by his honesty, beliefs, and "common sense" approach to everything.

With that said, I have some questions regarding some of his philosophies that I hope you guys could answer for me.

Ron Paul stated that he would get rid of the USDA as a way to curb spending, but without a USDA, who would regulate our food? From what I gathered, Dr. Paul states that the private sector would take over right? But what's to prevent the meat industry from paying off these private sectors to hide things such as selling knowingly contaminated meat and such?

I think Dr. Paul would also get rid of minimum wage because its a form of government interference as well. But similar to my previous question, what is to prevent companies from paying extremely low wages to the employees and soaking up surplus profits all to themselves?


I'm very excited to learn more from you guys!

The food was fine before the USDA and it will be fine after. Why do products need to be regulated? If food must be regulated then why not ALL products? The marketplace will regulate it on it's own. No stores will want to be the ones who sell bad food. If they do people will not shop there. And they will close down.

Thus the only stores that can remain open are those that sell good food at good prices. The market provides us the protection we need, if it were profitable to sell bad food it would happen regardless of the existence or non existence of the USDA. Consumers will not consume low quality food, they will pass information and people will stop patronizing bad companies. And that is the ONLY source of income for these food producers. So they will do the right thing or be closed down. Additionally if the food producers get people sick they will be liable on court. There is no need for the USDA.

About minimum wage. Let me ask you this. Why don't all companies pay ONLY the minimum wage? What is stopping them from slashing all salaries to the level of minimum wage? If you can answer this question then you can answer the one you just asked the forums.

Competition will drive labor prices up. Companies must bid against each other for workers. People will and do move to higher paying jobs when they can. Good quality labor is essential in running a business. And this is why laborers always make more than employers would like to pay. And if one company is somehow paying it's workers low wages and making huge profits....this company will be a prime target for competition. And this will crowd out profits because competition will raise wages to attract workers and lower costs to out sell his competitor. And let's not forget that every company must compete against an entire array of other types of companies in the market.

Just because you are an autoworker does not mean you can start building homes if the pay is enough to entice you. Competition is the ONLY way to bring down profits and redistribute the benefits of efficiency to the masses. A minimum wage simply prices workers out of the workplace. Much better to make some money than none at all. And with more people working as a whole we get much more productivity, goods, and services to trade and share amongst ourselves.

[Bruno]

Welcome to the Ron Paul Forums! :)

Here are a few threads that might help. You can also use the Search feature to look for more USDA threads and posts.

http://www.ronpaulforums.com/showthread.php?t=242753&highlight=usda

http://www.ronpaulforums.com/showthread.php?t=242462&highlight=usda

http://www.ronpaulforums.com/showthread.php?t=201380&highlight=usda

[Eryxis]

Welcome, you are very brave. As long as you have a thick skin you will learn a ton.

[Liberty Rebellion]

Also regarding the USDA, what you fear happening with no government agency is in fact happening right now with the USDA where corporations pay off the regulators and the regulators implement policies in their favor.

The market would produce companies that would rate food on certain criteria if consumers demanded it. What would be different however is that those criterion wouldn't be enforced on market participants. Rather, the food companies would voluntary choose to have their product up to such standards, but would really only do so if there were some competitive advantage to doing so. In the event it is discovered one of the food companies works in collusion with the market-based rating agencies the rating agency would charged with fraud, no one would ever believe them again and so they would go out of business. You would then have other companies to take it's place. Such companies very livelyhood depends on their integrity and reliable of their ratings and competition between such companies would focus on those traits.

When you have government regulations, they are enforced on all with violence and if the regulatory body is corrupt you have no choice but to live with their regulations that favor big business.

[mczerone]

To answer all of your inevitable questions mimicking this one: If you value X regulation, your X suppliers will serve their best interests in providing that value.

The division of labor and the nature of entrepreneurial competition work to give you the values you express through your actions, else they lose profit. You regulate X.

[Koz]

I buy much of my meat from a local farmer that butchers his grass fed lamb and cows. He also butchers some deer for me in the wintertime. He is not inspected, and I buy from him because he has the best quality (and awesome prices) in the area. I love the free market.

Why in the hell would I buy meat from someone who has bad beef? No one would, they would go out of business. Now what people do is buy from anyone because they have a stupid stamp on the meat. Like that makes a difference.

As far as minimum wage goes, why would people work for companies paying extremely low wages, unless they couldn't find another job elsewhere? Some people will because they don't want to work elsewhere, most will find a job that pays better, better benefits, etc. But, there will be less unemployment. Minimu m wage laws are price fixing. Isn't that Marxist?

[RonPaulCult]

I welcome you here OP.

I used to struggle with some of Ron Paul's suggestions like this one - the closing down of the USDA. But when I learned how corrupted these parts of our government are I could see his point. The major food corporations use the USDA to get the regulations they want - which in turn make them more money. It's no different than the FDA - which is supposed to keep us all safe from the pharmaceutical companies, but in reality the people there are paid off to approve dangerous, not-safe-for-the-market drugs.

It would be one thing if the USDA were doing a good job keeping our food (particularly our meat) safe. But they are not at all. Watch the documentary Food Inc., as I recently did and you will see what I mean.

As for minimum wage - I understand where you are coming from. I used to be a super liberal before Ron Paul taught me a better way. I used to believe in not just a minimum wage but a "living wage" too. Thankfully, I came to understand the economics of the situation and which position is truly the one that helps the poor and the people the most. And that is not having ANY wage controls at all.

When you agree to work for a company - you are equally one half of the negotiating parties for the wage. You agree to the amount just as much as the employer does. This is not slavery and you always have a choice to leave. You always have the opportunity to renegotiate your wage. You always have the chance to move on to another job for a higher wage. That's the free market and it is a powerful force to have everybody looking out for their best interest.

If an employer is paying the minimum wage to employee A he often can't afford to employ employee B. The government is helping employee A make more money than he otherwise would but meanwhile employee B is jobless. Intervention into markets usually has unintended consequences.

[Epic]

Acoustic,

The forums on Mises.org are very good for economic questions. Mises.org is the preeminent website for Austrian (free market) Economics.

The quick answers to your questions are:

1. Regulation will be performed by competing companies in the private market. Certification/inspection of food is a service that people want, and hence there is a profit incentive for people/companies to provide it. Food growers - or whoever - will generally agree to be inspected/regulated, else they risk consumers not buying their products, as they will lack certification.

There are examples of this currently - see Underwriters Laboratories for electrical products and the magazine Consumer Reports.

When government takes on monopoly regulatory tasks, the regulators are often "captured" by industry, and also people tend to let their guard down, and replace their own due diligence with the opinions of the monopoly regulator. This cost thousands of lives when FDA took on the task of pharma drug regulation, and then let Vioxx on the shelves. Without the FDA, that could never have happened - analysis would have been done in a competitive environment, and individuals wouldn't have been so unskeptical. In a competitive market, any regulator that approved of Vioxx would likely have been held liable or, at minimum, it's reputation so tarnished that it couldn't continue in business.

2. Without a minimum wage law, employers cannot offer a wage lower than employees are willing to take.

In other words, price of labor is set by supply and demand, just like other prices.

Minimum wage laws increase unemployment because they increase the cost of labor.

Originally, minimum wage laws were trumpeted by skilled labor unions to block out unskilled competition. As usual, "regulation" is often an alliance of do-gooders and special interests.

Milton Friedman on minimum wage: YouTube - Milton Friedman on Minimum Wage (http://www.youtube.com/watch?v=ca8Z__o52sk)

[sofia]

USDA would be replaced by something similar to Underwriters Laboratories (UL)

A UL listing means that your home appliance is safe and sound. UL is private and voluntary.

A UL type listing/branding for meat houses etc would work just as well.

Good Housekeeping Seal of Approval is another example.....also...u should read this www.tomatobubble.com

[jbrace]

Short read to basic economic principles which will save u alot of questions and teach you alot!

http://jim.com/econ/contents.html

[RCA]

Hi guys,

I started reading about Ron paul and his economic policies after I watched "I.O.U.S.A" and became concerned about our budget deficit. I couldn't really remember anyone else talking much about it during our last presidential election year except for Ron Paul. I was really struck by his honesty, beliefs, and "common sense" approach to everything.

With that said, I have some questions regarding some of his philosophies that I hope you guys could answer for me.

Ron Paul stated that he would get rid of the USDA as a way to curb spending, but without a USDA, who would regulate our food? From what I gathered, Dr. Paul states that the private sector would take over right? But what's to prevent the meat industry from paying off these private sectors to hide things such as selling knowingly contaminated meat and such?

I think Dr. Paul would also get rid of minimum wage because its a form of government interference as well. But similar to my previous question, what is to prevent companies from paying extremely low wages to the employees and soaking up surplus profits all to themselves?


I'm very excited to learn more from you guys!

1) Welcome to the forum!

2) Read this book within 2 weeks:

http://www.amazon.com/Economics-One-Lesson-Shortest-Understand/dp/0517548232/ref=sr_1_1?ie=UTF8&s=books&qid=1273295524&sr=1-1

[low preference guy]

^ if you want a free "Economics in one lesson", click below:

http://www.hacer.org/pdf/Hazlitt00.pdf

[AdamT]

Welcome to the forums!

[JoshLowry]

Just read all of my posts and you'll do great.

Start with page 200.

http://www.ronpaulforums.com/search.php?do=finduser&u=1

[Fox McCloud]

I think Dr. Paul would also get rid of minimum wage because its a form of government interference as well. But similar to my previous question, what is to prevent companies from paying extremely low wages to the employees and soaking up surplus profits all to themselves?


I'm very excited to learn more from you guys!

This will require a bit of guessing at synchronization at times, but this audio clip:

http://mises.org/media/4002

with this slide:

http://www.auburn.edu/~garriro/101%20min%20wag.ppt

will answer just about any and all questions you have.


For a shorter evaluation, check this out:

YouTube - Minimum wage - How it works in REAL TERMS 1/2 (http://www.youtube.com/watch?v=-Ys5vAr9LeE&fmt=18)

basically a company will realize it can earn just a tiny bit more of a profit by offering a higher wage---this rolls throughout the entire system and it ends up that all companies have to offer a competitive wage in order to attract workers. You could argue that "a cartel could form to suppress wages", but this almost never occurs in a truly free market (ie: little to not government regulations)--reason being is that it only takes ONE company to say "screw you guys, I can earn more profit by not jacking up price/paying low wages" to throw the entire cartel back into the realm of out and out competition with each other.....basically, if/when a cartel forms in the free market, once its broken by one of the members, all the members break with each other.


the minimum wage is a classic case of a price floor---the higher the minimum, the harder it is for a low-skill worker to "jump" over it.

Here are some of the effects of the minimum wage:

YouTube - American Samoa: The real story 60 Minutes missed (http://www.youtube.com/watch?v=_LaPGIIAyk4&fmt=18)

Unions will come out supporting a higher minimum wage every single time because it protects their workers from competition which allows them to have artificially high wages.

[JoshLowry]

Fox is always trying to one up my posts.

[Baptist]

I'm very excited to learn more from you guys!

Welcome to the forums. You found the best website on the Internets. There are many opinions here, so discussions can get heated and we even argue at times. But we all love liberty and I'm sure that most will agree with me when I say that we are all constantly learning new things from each other. I've learned more from the discussions on this site (and researching them on my own) than I ever have and will learn from college.

My opinion on those "evil monopolies" and gigantic corporations that could screw us is this: without government intervention 99% of them would never exist in the first place. The reason that the Walmarts of the world exist, and gigantic multi-national companies that farm our food, is because they get special favors from government. Behind everyone one of them is grants, special tax breaks, and getting in bed with federal, state and local governments for preferential treatment. In a true free market, I do not believe we'd see many of them.

[aravoth]

I'm very excited to learn more from you guys!

http://i31.photobucket.com/albums/c370/aravoth/trek_hmm-1.gif

[Fox McCloud]

Fox is always trying to one up my posts.

Sorry Lowry =^^;=

[Tenbobnote]

I believe someone has already pointed out the Mises Institute, however I would like to add my support and provide you with the link to where you can find a plethora of information. I have learned a great deal from this website.

http://mises.org/media.aspx?action=category&ID=160

Also, if you use itunes, they have a wonderfully easy to use store for itunes, also, its FREE!

[axiomata]

Hi guys,

Ron Paul stated that he would get rid of the USDA as a way to curb spending, but without a USDA, who would regulate our food? From what I gathered, Dr. Paul states that the private sector would take over right? But what's to prevent the meat industry from paying off these private sectors to hide things such as selling knowingly contaminated meat and such?

I'm very excited to learn more from you guys!

Welcome, and some good first questions I will tackle your USDA one. I'm just winging it from my cell phone but if you like me to track down some sources for you to read just let me know, and I'll round up some links later.

The history of the Meat Inspection Act is actually quite interesting. If you are like me and were told about Upton Sinclair's The Jungle in public school, and then told that federal meat inspections came around as a result of popular revoltion to his muckraking then you were not told the whole story. The public certainly was disgusted but it was not disgust which passed the law, believe it or not the big meat packers actually wanted to be inspected.

A few things to note about regulation is that large companies can absorb the costs easier than small ones. This decreases competition for the large firms. A government stamp of approval increases sales even if two products are exactly the same minus the stamp. Regulatory capture is an interesting term worth a google. You worry about firms buying off private inspectors, but the same thing happens with public regulators. It is even worse because if it is found out that a private inspector is not really inspecting they lose popularity and go out of business. Government regulators don't.

[Fox McCloud]

ou worry about firms buying off private inspectors, but the same thing happens with public regulators. It is even worse because if it is found out that a private inspector is not really inspecting they lose popularity and go out of business. Government regulators don't.

I'll second this--I spoke with an individual who worked in a factory that had certain aspects about it that could be dangerous--he said it was like that all year 'round, but everything would end up spotless the week before the "random" OSHA inspection, so it's clear someone on the inside was being paid off or was an informant.

There's an interesting chart out there somewhere that shows workplace safety before and after OSHA--before it was dropping at a decent clip year after year; once OSHA came on the scene it flattens out quite a bit.

[AcousticFoodie]

Hey guys, OP here.

Thanks a lot for all the info guys. And yes axio, I did read the jungle! I think I have my USDA concerns and minimum wages answered. Thanks a lot!

I have one more question tho...and this one greatly interests me since Ron paul use to work in healthcare. I work in mental health, and many of my clients have a variety of mental psychosis that prevents them from being independent and earning their own wages to sustain themselves.

All of them live in government subsidized housing. My teenage clients live in group homes that are paid for with tax payer money in addition to food and staff to support them. My older clients live in supported living which again, are paid for with tax money.

A very small percent of them will ever be truly independent to live freely without tax payer money assistance. I have read that Ron Paul believes friends, families, and charities would pay for healthcare services...but who would pay for an individual throughout their entire life? Additionally, many of my older clients have dead parents or siblings that have long abandoned them. Without any government assistance paying for their housing, food, medicine and etc, where would they be forced to go to in a libertarian society?

[AcousticFoodie]

^ if you want a free "Economics in one lesson", click below:

http://www.hacer.org/pdf/Hazlitt00.pdf

Thanks! I found a link to a comicbook as well on this site about irwin schiffs' take on economics on this forum that was intriguing as well.

[Tenbobnote]

Hey guys, OP here.

Thanks a lot for all the info guys. And yes axio, I did read the jungle! I think I have my USDA concerns and minimum wages answered. Thanks a lot!

I have one more question tho...and this one greatly interests me since Ron paul use to work in healthcare. I work in mental health, and many of my clients have a variety of mental psychosis that prevents them from being independent and earning their own wages to sustain themselves.

All of them live in government subsidized housing. My teenage clients live in group homes that are paid for with tax payer money in addition to food and staff to support them. My older clients live in supported living which again, are paid for with tax money.

A very small percent of them will ever be truly independent to live freely without tax payer money assistance. I have read that Ron Paul believes friends, families, and charities would pay for healthcare services...but who would pay for an individual throughout their entire life? Additionally, many of my older clients have dead parents or siblings that have long abandoned them. Without any government assistance paying for their housing, food, medicine and etc, where would they be forced to go to in a libertarian society?

I'm sure there are many people who can give a better answer then I on this topic, but I will give it a shot.

First of all, you must remember that the government takes its resources from somewhere and the only reason government is in the welfare business is because, in general, people want to care for the less fortunate, elderly, and mentally disabled. Libertarians will argue that the government does a very poor job of this in the sense that they make people dependent on the system, they encourage people to take advantage of freebies and do not encourage people to be semi-sustainable. If the government did not care for these people there would suddenly be a great demand for family, friends, churches, and non profit organizations to care for these people. The great thing about this is that this care is generally more compassionate and the receivers of this care are not going to be able to 'suck from the system' as people will refuse them care if they see that they are being abused. With no tax money going to the government for welfare programs all of this money is suddenly free to be donated (or not donated) to an organization who will do a better job with much less money(because people are now not taking advantage of the system).

[AcousticFoodie]

First of all, you must remember that the government takes its resources from somewhere and the only reason government is in the welfare business is because, in general, people want to care for the less fortunate, elderly, and mentally disabled. Libertarians will argue that the government does a very poor job of this in the sense that they make people dependent on the system, they encourage people to take advantage of freebies and do not encourage people to be semi-sustainable. If the government did not care for these people there would suddenly be a great demand for family, friends, churches, and non profit organizations to care for these people. The great thing about this is that this care is generally more compassionate and the receivers of this care are not going to be able to 'suck from the system' as people will refuse them care if they see that they are being abused. With no tax money going to the government for welfare programs all of this money is suddenly free to be donated (or not donated) to an organization who will do a better job with much less money(because people are now not taking advantage of the system).

Yes I understand what you're trying to say TennoteBob. But I'm curious as to how applicable that would be in real life. These charities will need money donations to care for an individual for their entire lives possibly, but where will they get that money? Would people voluntarily give enough money to sustain such a system of charity?

It would be ok if an individual needed emergency care, but these individuals would need lifetime care, and thus a continual flow of donations in order to survive. I know a lot of wealthy people who barely even tip when going out for a meal!

[nayjevin]

Yes I understand what you're trying to say TennoteBob. But I'm curious as to how applicable that would be in real life. These charities will need money donations to care for an individual for their entire lives possibly, but where will they get that money? Would people voluntarily give enough money to sustain such a system of charity?

It would be ok if an individual needed emergency care, but these individuals would need lifetime care, and thus a continual flow of donations in order to survive. I know a lot of wealthy people who barely even tip when going out for a meal!

To me it's easier to look at prosperous times to see how much charity folks would give. Nowadays, most are fighting to keep up.

Back in the day, husband would work 1 job to sustain stay at home wife and kids. Nowadays, it's two jobs for each to pay for daycare, in far too many cases.

Back in the day, we had Carnegie. Nowadays, it's Blackwater/Monsanto.

Back in the day, Church hospitals. Nowadays, black market dentists.

Bigger government, and the expectation of care, begets higher taxation - which begets inability to be charitable.

[tremendoustie]

Yes I understand what you're trying to say TennoteBob. But I'm curious as to how applicable that would be in real life. These charities will need money donations to care for an individual for their entire lives possibly, but where will they get that money? Would people voluntarily give enough money to sustain such a system of charity?

It would be ok if an individual needed emergency care, but these individuals would need lifetime care, and thus a continual flow of donations in order to survive. I know a lot of wealthy people who barely even tip when going out for a meal!

Americans are generous -- they gave 350 billion to charity last year, and that's in a down economy. In a free economy, without huge wastes of resources by the federal government, people would be far more wealthy -- and without the distortions of the Fed, and screwed regulatory practices, the money would be far less concentrated in the hands of banking executives and other billionaires.

Did you ever read Hitchiker's guide to the galaxy? The joke is, if you want to hide something, you need only create a "somebody else's problem field". That's, to a large extent, what has happened with those in need, in this country. It used to be that there were far more community organizations, and far more churches involved in helping the poor, but now people tend to pass this off to government.

If you go back a ways, communities used to get together to select schoolteachers, build meeting halls, and even build the roads (believe it or not, much of the early road system in the US was constructed without a dime of taxpayer money).

Incidentally, here's what Alexis de Tocqueville wrote about it, after his visit to the US in the early 1800s:



If it is a question of taking a road past his property, [a man] sees at once that this small public matter has a bearing on his greatest private interests, and there is no need to point out to him the close connection between his private profit and the general interest. … Local liberties, then, which induce a great number of citizens to value the affection of their kindred and neighbors, bring men constantly into contact, despite the instincts which separate them, and force them to help one another. … The free institutions of the United States and the political rights enjoyed there provide a thousand continual reminders to every citizen that he lives in society. … Having no particular reason to hate others, since he is neither their slave nor their master, the American’s heart easily inclines toward benevolence. At first it is of necessity that men attend to the public interest, afterward by choice. What had been calculation becomes instinct. By dint of working for the good of his fellow citizens, he in the end acquires a habit and taste for serving them. … I maintain that there is only one effective remedy against the evils which equality may cause, and that is political liberty (Alexis de Tocqueville, 511-13, Lawrence/Mayer edition).

He observed this "strong sense of community spirit" resulted in the funding of schools, libraries, hospitals, churches, canals, dredging companies, wharves, and water companies, as well. Remember "barnraisings"? Even as recently as the '50s, doctors would work in charitable church clinics, for a few bucks an hour, and help all comers for next to nothing, or nothing at all ... but these inexpensive arrangements are impossible under modern governmental mandates. Look for "santa monica hospital maternity rates" in google images, for an idea of the extent to which government bureaucracy and anti competitive controls have destroyed the medical industry.

In this country, we've replaced healthy relationships between members of the community, with government policy. Many people hardly interact with their neighbors at all these days, except to call the cops if they're too noisy. It's a very mechanistic, inhuman way to live. I SHOULD need to get together with my neighbors to solve community problems.

Even if you don't see how this can be solved using voluntary interactions between people (I do absolutely believe voluntary solutions are both the most practical and the most moral), and you think force is necessary, we should at least be able to agree that the solutions should be local, not national. Feeding people through federal bureaucratic machines is extremely wasteful, and often damaging as well. The human relationship, between the helped and the helper, and the community, is vital.

[TheBlackPeterSchiff]

OP,

The key is, we can try to come up with answers on how this or that would work without government involvement...but you have to realize that the market is a place of idea and solutions to problems....and if you let the market function freely, these solutions will eventually come to fruition.

We are so used to government being being the solution to every problem, that we cant even envision a world without it.

[Jordan]

To answer all of your inevitable questions mimicking this one: If you value X regulation, your X suppliers will serve their best interests in providing that value.

The division of labor and the nature of entrepreneurial competition work to give you the values you express through your actions, else they lose profit. You regulate X.

Wow! Great way to put it.

A little abstract, but it gets the point across without a wall of text.

[Sentient Void]

OP, welcome to the forums! If you really want to - you'll learn a *lot* here - I know I have since I joined a little over a couple years back. I personally don't post as much as other people here - but I sure do lurk *a lot* - read discussions, and every once in a while chime in or start a thread of my own. But it's all a lot of fun and VERY informative... I've definitely learned a LOT more about economics, liberty, philosophy and other practical applications to society's issues through these very forums - coupled with my own research on the web and some books I've read.

I believe people already got to your USDA and minimum wage questions already - so I'll leave it at that... as for you're questions about how charity, etc could handle the problems you described - I highly suggest you look into 'Mutual Aid Societies' and thigns of the sort... they were a *LOT* more popular before the 60's and started to dwindle and die off as the government starting taking up the roles by force, taxation, bureaucracy etc as opposed to the private charity/donations that got these going and working beforehand. They were also a LOT more effective and more personal.

If you would really like to learn a lot about how this all works, a couple VERY good books that will get you started, are:

'Healing our World in an Age of Aggression' by Dr. Mary J. Ruwart
'For a New Liberty' by Murray Rothbard

... in that order. Both are awesome books for conveying libertarian philosophy. Healing Our World is structured in a more readable and enjoyable format and is a GREAT primer with lots of examples and reasoned thought to get you started. For a New Liberty is a great book which tackles most issues you can think of in regards to a voluntary society with minimal or nil government intervention.

if you like, there is the older version (but virtually the same) of Mary Ruwart's book available on the web for free, by the author... you can check that out here:

http://www.ruwart.com/Healing/