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[myrkul999]

An entrepôt is a trading post where goods can be bought or sold for a profit without paying import duties. Entrepôt trade, also known as re-exportation, occurs when a third party buys goods from one partner of a free trade agreement and then sells, or "re-exports" them to the other partner, and vice versa.

Historically, many entrepôts were established along trade routes that were so long merchants were reluctant to go all the way to the end, and instead sold their goods to an intermediate location. They could then buy return goods at the same location as well, which had been sold by traders coming from the other direction. However, other entrepôts grew out of market towns or staple ports when the the presence of trade, transportation, storage, and insurance became concentrated enough that merchants could take advantage of it to reduce costs and keep prices stable.

It seems to me that the entrepôt system could make a good model of how Libertarian societies (whether anarchic or minarchic) could conduct trade with no government interference.

The following scenario is fictional, but it is based on historical examples. It should also be pointed that there can be a multitude of scenarios that could lead to an entrepôt system.

Imagine there are five rivers that converge at a central location within a large region to form a single river that runs to the sea. Further, the rivers act as highways of trade. The five rivers originate in countries that export timber, spices, silk, incense, and precious stones, while the one river flows through a country that exports grain, woolen and linen cloth, pottery, metal tools, and works of art (as well as exotic overseas goods delivered to the port). Traders come down the five rivers onto the one river and on to the port city to sell their cargoes, then buy a return cargo to sell back in their native countries.

Now, imagine that the confluence of these rivers marks the border of the one-river country, and it builds a fort at the confluence to force traders from the five counties to pay import duties on their goods. This is to take advantage of the fact that the five country traders can sell their goods for 5x what they paid for them due to the long journey. They must pay higher transport and insurance costs, but let's say their profit still comes to 300%. The duties reduce their profit to 250%; not onerous, but not desired either. Still, everyone prospers as long as no disaster disrupts the system.

At some point, a group of people establish a settlement near the fort. Perhaps they are retired soldiers from the fort, or their families, or farmers looking to cultivate new land under the protection of the fort. Because this settlement lies outside the one-river country, it is nominally independent, though it swears allegiance to the country to receive the protection of the fort. At first this settlement just sells food and rustic goods, as well as certain services, to the soldiers and traders, but eventually people from the surrounding area start coming in at regular intervals to sell their goods in an informal market. As this market flourishes, the one-river country grants the settlement "market right", giving it a monopoly on having a market in that area with no competing market being allowed to establish itself within a day's travel. This attracts traders who come to the market to purchase goods they can sell elsewhere, or to sell goods they import. This also encourages the river traders to sell a portion of their cargoes at the market rather than risk it all on the long journey to the port or back to their countries, an encouragement reinforced by the fact that they pay less duty on less cargo.

Now, let's further imagine that the one-river country is tree-poor and needs to import timber. Much of it comes from overseas, but a large portion is imported from river trade. Transporting it all the way to the port for later distribution back to more remote areas of the country is too inefficient and costly, so the one-river country gives the settlement, now a market town, "staple right" for timber. That requires anyone importing timber to off-load it at the town and offer it for sale there for three days before reloading it and continuing on to the port. This causes an influx of timber-buying merchants, and stimulates the establishment of competing transportation, warehousing, and insurance companies in the town. This also cuts the cost of importing timber to the area of the country closest to the town, allowing river traders to sell it for less while avoiding the duty and still making a good profit.

This also reveals a critical loophole in the import duty law: it doesn't apply to citizens bringing in goods they bought outside. This encourages the five-river traders to try to sell as much of their cargo at the town as possible to avoid paying the duty. In turn some one-river country merchants can buy the imported goods for less and then sell them for less than their competitors who buy the same goods at the port.

The stage is now set for the settlement/market town/staple port to become an entrepôt. It begins when a merchant buys silk from incoming five-river traders and grain from outgoing one-river traders. He then sells the silk to the one-river traders for their return trip to the port, and the grain to the five-river traders for their return to their native countries. This benefits everyone:

1. The five-river traders don't have to pay duty, or risk carrying their cargo all the way to the port. Their costs go down, meaning they can sell at a lower price and still make 300% profit. They can also buy a return cargo without having to go all the way to the port. Though they pay more than they would at the port (due to the cost of getting the cargo from the port to the entrepôt, plus the merchant's markup), it's still cheaper for them to get it back home, so they can still resell it for less and
still make a large profit. Plus the convenience of selling and buying at the entrepôt nets an intangible profit almost as enticing.

2. The one-river traders face the same advantages except in the opposite directions (though they never had to pay duty on the goods they took out of the country).

3. The entrepôt merchant pays less for the goods he buys than consumers would. He must sell them for a higher cost than a point-of-origin merchant would, but he can keep his markup low and still make a profit by doing a volume business.

Additionally, allowing goods to be stockpiled at the entrepôt ensures a more constant supply, mitigating wild, unpredictable fluctuations in supply and demand. This keeps prices stable over the long term. Plus, the physical proximity of merchants and traders from far-flung regions promoted the exchange of information about market forces, prices, and developments in the factors underlying supply and demand. This also helps to keep prices stable and costs low.

This history-based scenario shows how an entrepôt might develop as part of natural trade activity. References to monopolies, import duties, and statist intervention might be anathema to an AnCapist or a MinCapist, but the entrepreneurial spirit and free market activity would no doubt be attractive. At their most basic, however, market towns and staple ports are simply locations that facilitate trade. Market towns are essentially retail centers, while staple ports are commodity exchanges. As such, I can see an ACS or a MCS establishing such entities to encourage and facilitate commerce in one form or another.

A Libertarian entrepôt might start as a place set up by an entrepreneur or a coop to encourage merchants, shippers, warehousers, and insurance agents to operate in one central location. At first it might operate more as a market (retail) town or a staple (commodity) port, but over time it could develop into a true entrepôt by acting as an intermediate between trading partners, or the Libertarian society and the outside world (assuming a small LS). While no member of the LS would be required to operate in the entrepôt, the close proximity of so many competing firms needed for successful trade, offering lower costs, a readily available supply of goods, and better, more up-to-date information, would create a strong incentive to do so. Especially if the member's competitors, partners, and consumers were operating within it as well.

Further Reading:

Entrepôts
http://en.wikipedia.org/wiki/Entrep%C3%B4t

Market Towns
http://en.wikipedia.org/wiki/Market_town

Staple Ports
http://en.wikipedia.org/wiki/Staple_port

Organized Markets In Pre-Industrial Europe
http://www.dartmouth.edu/~mkohn/Papers/17.%20Markets.pdf

Aside from the adjacent government granting monopolies to the entrepôt, you've got it pretty well understood, especially this paragraph:

A Libertarian entrepôt might start as a place set up by an entrepreneur or a coop to encourage merchants, shippers, warehousers, and insurance agents to operate in one central location. At first it might operate more as a market (retail) town or a staple (commodity) port, but over time it could develop into a true entrepôt by acting as an intermediate between trading partners, or the Libertarian society and the outside world (assuming a small LS). While no member of the LS would be required to operate in the entrepôt, the close proximity of so many competing firms needed for successful trade, offering lower costs, a readily available supply of goods, and better, more up-to-date information, would create a strong incentive to do so. Especially if the member's competitors, partners, and consumers were operating within it as well.

Now imagine that, but for every service or product that doesn't directly harm another human being, and you're at an AnCap society.

[TeamGirl-Redu]

Aside from the adjacent government granting monopolies to the entrepôt...

Well, as I said in the essay, that scenario was simply meant to describe how an entrepôt could develop on its own (as a way to explain what an entrepôt is and how it works). During Medieval times, when the bast majority of entrepôts were needed and flourished, statist intervention forming monopolies tended to be the rule rather than the exception.

Now imagine that, but for every service or product that doesn't directly harm another human being, and you're at an AnCap society.

Which wasn't the point. An ACS or MCS might operate successfully without entrepôts. My point was to suggest that entrepôts could make Libertarian-based commerce easier, cheaper, and more efficient than having every member conduct his or her own trade. I also think that a minarchist government would probably create entrepôts as part of its function.

[myrkul999]

Now imagine that, but for every service or product that doesn't directly harm another human being, and you're at an AnCap society.

Which wasn't the point. An ACS or MCS might operate successfully without entrepôts. My point was to suggest that entrepôts could make Libertarian-based commerce easier, cheaper, and more efficient than having every member conduct his or her own trade. I also think that a minarchist government would probably create entrepôts as part of its function.

(Note for those who did not read TeamGirls now deleted posts where ACS and MCS are defined: they are Anarcho-Capitalist and Minarchist society, respectively.)

You can imagine an AnCap society that is surrounded by or at least borders a statist (even minarchist) society as basically one big entrepôt. There is no sales tax, no import tariffs, no restrictions on trade internal to the area, and no restrictions on businesses that people start. What you describe above is a classic "border town", like certain towns in Mexico which cater to American tourist trade, even medical and dental care. If the AnCap area is large enough, such border towns are sure to spring up on and around any major route in and out of the area. It would certainly facilitate trade with the outside world.

[TeamGirl-Redu]

You can imagine an AnCap society that is surrounded by or at least borders a statist (even minarchist) society as basically one big entrepôt. There is no sales tax, no import tariffs, no restrictions on trade internal to the area, and no restrictions on businesses that people start. What you describe above is a classic "border town", like certain towns in Mexico which cater to American tourist trade, even medical and dental care. If the AnCap area is large enough, such border towns are sure to spring up on and around any major route in and out of the area. It would certainly facilitate trade with the outside world.

I see what you're getting at. A small ACS --- one or a few communities --- could act as an entrepôt, whereas a larger one would see the establishment of dedicated entrepôts at the "choke points" of trade routes.

I should point out, however, that I deliberately set up my scenario to make it as close to a Libertarian society as possible within the bounds of the historical examples I chose. Many entrepôts were ports or cities well within the territory of the country or nation that chartered or created them rather than being border towns. In fact, border town entrepôts were rather rare unless they were independent and well defended.

Also, virtually all entrepôts were preyed upon by governments, either that of the country in which they resided or their own. According to "Organized Markets In Pre-Industrial Europe", rulers collected revenue through

"...entry and exit tolls, levies on sales and purchases, dues on weights and measures, taxes on residences and merchant stalls, and safe-conducts for visiting [foreign nationals] and Jews."

If a Royal Charter was needed to start an entrepôt, a licensing fee could also be charged, though this isn't much different from a business like McDonalds charging a franchising fee. Entrepôts flourished in spite of this because they operated at natural "choke points" in trade routes, and so were able to generate large profits even in the face of these taxes and fees.

However, this "predation" was not always detrimental to the merchants and traders involved with the entrepôts:

"The rulers of Champagne, for example, were very active in suppressing banditry. They also prevailed on rulers of territories between Italy and Champagne to desist from imposing tolls on merchant traveling to the [entrepôts]. Merchants who nonetheless suffered losses were paid compensation. The rulers of Champagne charged explicitly for this service (‘safe conduct’), but they also benefited from the increased flow of merchants to their [entrepôts] and the consequent increase in revenue."

Needless to say, the merchants benefited from this protection just as much.

A Libertarian-based entrepôt would not be expected to operate this way, but the point is that even though entrepôts facilitated trade and served free enterprise, historically they were not bastions of Libertarian ideals.

[myrkul999]

However, this "predation" was not always entirely* detrimental to the merchants and traders involved with the entrepôts:

*FTFY.

It was detrimental, but in that some of those funds were used to provide protection, it was at least partially beneficial as well. I would argue that if the free market were allowed to provide that protection, the merchants involved would be considerably more prosperous, as might their customers (lower costs, lower prices).

[TeamGirl-Redu]

However, this "predation" was not always entirely* detrimental to the merchants and traders involved with the entrepôts:

*FTFY.

Don't know what that means, but I would appreciate it if you did not alter my quotes. That's not considered honest.

Disagree all you like; explain how you believe it's wrong; but do not alter my words.

It was detrimental, but in that some of those funds were used to provide protection, it was at least partially beneficial as well. I would argue that if the free market were allowed to provide that protection, the merchants involved would be considerably more prosperous, as might their customers (lower costs, lower prices).

It sounds like we simply disagree on how to express it. The author put it like this:

"Governments’ command of violence enabled them to play both sides of the street with respect to predation. They were able not only to engage in predation but also to suppress the predation of others."

I take that to mean that while the governments preyed on the merchants (in the form of taxes and fees) they also preyed on anyone that would have done violence to the merchants, thereby protecting them. The former hurt the merchants, the latter helped them.

You almost sound like you're trying to say "safe passage" was a beneficial detriment, or maybe a detrimental benefit. Either way, that's an oxymoron. If you meant something different, please elaborate, but I think we share the same sentiment. Some government actions hurt merchants, others helped them. That's really all I meant.

As for your statement of how things should have been, it's irrelevant; as irrelevant as me saying, "If they had had democracy, they would have had a better world." The Medieval World was what it was; it operated as it operated. It is entirely unrealistic to claim, "They should have done this..." That makes no difference. History shows us what they really did, and they didn't do what either of us believe they should have done.

I prefer to deal with history as it's been established, not play "What if" games that won't tell us anything realistic.

[myrkul999]

However, this "predation" was not always entirely* detrimental to the merchants and traders involved with the entrepôts:

*FTFY.

Don't know what that means, but I would appreciate it if you did not alter my quotes. That's not considered honest.

Disagree all you like; explain how you believe it's wrong; but do not alter my words.

Humor like this is why I continue to talk to you. FTFY is short for "Fixed That For You". How long did you say you've been using the internet?

It was detrimental, but in that some of those funds were used to provide protection, it was at least partially beneficial as well. I would argue that if the free market were allowed to provide that protection, the merchants involved would be considerably more prosperous, as might their customers (lower costs, lower prices).

You almost sound like you're trying to say "safe passage" was a beneficial detriment, or maybe a detrimental benefit. Either way, that's an oxymoron. If you meant something different, please elaborate, but I think we share the same sentiment. Some government actions hurt merchants, others helped them. That's really all I meant.

And that's what I meant by it as well. If I mug you, and then use some of the money thus gained to protect you from other people mugging you, I've harmed you, yes, and I've also helped you. You would be better off, though, if I had not harmed you in the first place, and instead offered my services as a guard, and let you choose whether to use them or not.

[Bob G]

Humor like this is why I continue to talk to you. FTFY is short for "Fixed That For You". How long did you say you've been using the internet?

Oh, come now. I've been doing this for more than two decades and I was wondering the same thing.

[macsnafu]

Humor like this is why I continue to talk to you. FTFY is short for "Fixed That For You". How long did you say you've been using the internet?

Oh, come now. I've been doing this for more than two decades and I was wondering the same thing.

Whew, then it wasn't just me.  Sure, I've seen people do the "fixed that for you", but not use the acronym FTFY.

[myrkul999]

Humor like this is why I continue to talk to you. FTFY is short for "Fixed That For You". How long did you say you've been using the internet?

Oh, come now. I've been doing this for more than two decades and I was wondering the same thing.

Whew, then it wasn't just me.  Sure, I've seen people do the "fixed that for you", but not use the acronym FTFY.

Ah. Well then, snark retracted. I guess it's more of a matter of where you've been on the internet.