Knights & Knaves Alehouse

BPoM wrote: "Axe, I'm a big believer in free markets, but arguing that they are stable is just stupid. A free market is resilient, but almost never stable"


That wasn't me, I agree with you. Its stable in cyclical way, long term (as you said, like a roller coaster ride going round and round. That is the cost of allowing the natural system take over, and a far better situation then the alternative (stabilty in poverty). The obligation of the citizen in a free economy is one of self promotion, hard work, frugality and taking initiative. It favors the bold hearted and requires all the personality types working together (the inventor, the worker bee, and the investor). Perhaps thats why roller coasters are popular, peoples love hate relationship with the unknown, change and fear.

Price stabilization does occure in some sectors for periods of time (espl. in competitive markets). For instance, my tooth brush and toothpaste hasn't changed much in price over the last 5 years. Nor has the price of my bread (espl. if you shop between brands).
http://en.wikipedia.org/wiki/Economic_equilibrium

JD Jarvis: "None of us have lived in a true free market capitalist system. Our economies are rigged by commerce treaties and international cartels."

Of course.

As for the development of the third world. Sure, its going to be tough to figure out how does an AMerican worker used to (and needing to) make around $5-10 an hour compete with somoene who makes that in a day (perhaps even less) and can still survive in his given environment. The idea is slower development of those parts of the world into a middle class.

America still does export things (espl. technology). But your right, we suck lately. That just means we need to work harder and smarter. But thats the beauty of a free market economy, inventive people (like Edison, Gates, etc.) will step up to the plate and it will get done. If people in other nations are doing the same (like India) good for them. Hopefully their countries will stay so corrupt and socialist they move here. We can always use more bright capitalists.

AxeMental wrote:Your talking reality and specifics. Those problems have little to do with the free market system or capitalism (as systems) and more to do with total all out corruption. Be it the old Soviet Union or American Imperialists, using factories that use forced labor (kids, old people, paying pennies and making huge profits) is a crime. Its also a crime to create unfair trade (not just in Africa but in the USA). For instance, there should be laws against huge placement fees in the grocery store chains (why you see only coke and Pepsi placed in the best positions) when we only have a few chains left (nearing a monopolistic industry).

Actually, those examples you site are both anti-free market (allowing some big business interest do away with competitive forces. The government is not a tool to be manipulted by the highest bidder, it is supposed to be nuetral and constantly a force to increase competition (not protect). Its also supposed to do the will of the people (which requires both an educated and informed public.)

Here I absolutely agree with you. And Lincoln saw it coming:

"I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country; corporations have been enthroned, an era of corruption in High Places will follow, and the Money Power of the Country will endeavor to prolong its reign by working upon the prejudices of the People, until the wealth is aggregated in a few hands, and the Republic is destroyed. I feel at this moment more anxiety for the safety of my country than ever before, even in the midst of war"

AxeMental wrote: As for the development of the third world. Sure, its going to be tough to figure out how does an AMerican worker used to (and needing to) make around $5-10 an hour compete with somoene who makes that in a day (perhaps even less) and can still survive in his given environment.

$5-$10 a hour...in 1987, It's more like $15.00-$20.00 an hour these days.

Terrex wrote:Exactly, but it is the most stable system without arbitrary regulation and artificial control of the money supply.

The free market isn't, in any context, stable. By definition it isn't stable. It wouldn't work if it were stable. No market that's truly free will ever be "stable".

It would be like saying junkfood tastes good because it's healthy for you. If it were healthy for you, it wouldn't BE junkfood. It's a non sequitur.

There are many advantages to a free market. Stability isn't one of them.[/quote]


I don't think we are actually disagreeing here. I'm saying a free market system, while unstable, is more stable than a centrally planned approach. The prices in a free market are allowed to fluctuate greatly, as they should. In a centrally planned economy, prices won't change quickly and will not reflect the most current information. That's why centrally planned systems are notorious for shortages and abundance of goods nobody wants with a resultant inefficient black market.

We get shortages and overproduction in free markets, too! In fact, there's an incentive for it because even when one knows that someone's going to get shafted, there's always the chance that it'll be someone else. Individuals can turn great profits while contributing to an extreme that is most unhelpful in general.

As to the knowledge itself, prices are second-hand data, lagging behind the facts of supply and demand -- facts to which central planners can have more direct access and over which they can exert coordinated influence.

The big problem with the big "communist" societies of our acquaintance, the great experiments in central planning, is that they are (at least beyond a very low level) thoroughly undemocratic. The views of the people are not freely expressed but rather firmly suppressed. The same, of course, holds true in many capitalist states! It is then not want of wealth production capacity that keeps peasants in poverty but a lack of distribution; there may be plenty of wealth, but it's concentrated in the hands of the few. A common feature is a lot of spending on weapons to keep people "in their places."

It is invidious to equate every attempt at cooperative effort that happens not to suit one personally with such tyranny.

In practice, such a view tends to be anti-democratic. What's the key difference between XYZ Amalgamated and "the government?" The key is that the people have a say in the latter (at least until XYZ takes over the counting of votes).

AxeMental wrote:Your talking reality and specifics.

And you're talking abstract theory, like Marx in a mirror. Anything and everything looks good on paper, and so does its opposite ...

Those problems have little to do with the free market system or capitalism (as systems) and more to do with total all out corruption.

In practical application, a succesful system has to deal with human reality. Any system that's not going to fail spectacularly has to recognize that human interactions are never going to be ideal - coping with these things and mitigating the effects of corruption are crucial to any practical system.

In economic life as in political life, checks and balances are necessary.

Dwayanu wrote:We get shortages and overproduction in free markets

Oh absolutely! It's almost a stock phrase with economists: "X has been overvalued since the late 90s", etc. Overproduction is a massive problem in markets. I don't mean simple overproduction of a single product, but long-term overproduction which results in catastrophic economic collapse. This occurs through various mechanisms like credit (which enable overproduction in the first place) and is sustained and accumulates in the form of things like credit derivatives (which enable overproduction to continue for many years before causing a cascade of failures).

In a totally free market, there can be no regulation of credit at all, and therefore overproduction would intensify.

Offhand, that scenario of catastrophic overproduction fueled with reckless credit and financial-instrument speculation sounds to me like the 1920s.

The depersonalization of relationships that goes with getting big and abstract is to my mind a fundamental problem we face. It mutates the values espoused more rapidly than I think human nature actually changes, produces situations our brains are not evolved to handle well.

A lot of objections to public enterprise seem founded on an inability to see it in any but the same terms of hierarchy and internal zero-sum competition (more for me means less for you) as the prevailing model of private enterprise. That in turn goes back to the Old World social order of aristocrats and servants.

There's a big difference between acknowledging the worst in men and accepting it as normative, much less raising it to an ideal.

Edgewaters wrote:

AxeMental wrote:Your talking reality and specifics.

And you're talking abstract theory, like Marx in a mirror. Anything and everything looks good on paper, and so does its opposite ...

Those problems have little to do with the free market system or capitalism (as systems) and more to do with total all out corruption.

In practical application, a succesful system has to deal with human reality. Any system that's not going to fail spectacularly has to recognize that human interactions are never going to be ideal - coping with these things and mitigating the effects of corruption are crucial to any practical system.

In economic life as in political life, checks and balances are necessary.

Edgewater, every system has to be considered in its abstract application (how it should work in theory, on paper and simplistically) and then in reality (how it actually works). For instance, how a newly designed jet engine operates on the computer might be different when actually produced and tested. That disparity is to be expected, it is not a disqualifier for the system. Yes, the free market works on paper one way and a little different in reality. But so what? Thats to be expected. What we have found (over time) is that the free market system of the United States has produced more innovation and wealth then any other nation in the history of mankind (in a short 100 years). And more importantly, people are free to do what they please (work as much or as little as they like, and go after any business or profession their heart desires.

We also know from history that socialist systems (including our own elements) become corrupt with government officials who have zero inclination to work (they don't get payed on how efficient they run their department, rather they get payed on how many people they manage and how big they can make their budgets, their inclination is to grow not shrink costs).

These are facts, you can go watch them in action for yourself by taking a trip down to your local govt. offices and watch how efficiently they are run.

Here is a simple example I was discussing with my wife recently. The highschool my daughter goes to has 7 vice principles. 25 years ago there was 1, with the same number of students. And back then the students got a better education (did better on testing etc.). Also back then they didn't have computers to help organize the mess (the job should be easier then ever).

So what happened. The government created work for itself by inflating the amount of paper floating around, and creating positions that weren't needed. The public doesn't watch this stuff happen, they can't it happens behind the scenes. And how are we "the people" supposed to say these new 6 vice principles represent waste, "the taxpayer" ends up having to take the governements word for it (out of blind trust, even though we'd never trust a business or hell our own family members for that matter). So anyway, these vice principles don't teach, they don't do anything but run their departments (for this 2,500 student school). Each is making around 70K a year, you do the math. And guess what, they admit to the students that they don't actually do much if any work (infact many want to teach they're so bored, but their superiors won't let them. You see they get payed more for managing more vice principles...your starting to see how this works right? Each positions wants as many positions under them to manage to increase their own salary and "power"). So anyway, the kids go home and tell their parents what these vice principles are telling them. Is there an uproar from the parents? No. Why? Because who would you complain to? How could you get this investigated (the press, the mayor?), and how would such a system be brought back to normal now that every school has the same thing going on. Not to mention, most of these positions are protected by laws written into the books (largely forced upon the system by the teachers union).

For the concerned "taxpayer" to (as an individual) take on the government is to "tilt into windmills".

So, we blindly add more and more onto the system each year, until one day we will wake up and we find more then 50% of the population is a govt. employed. That is where we are headed.

I suppose many reading this would prefer such a system. But remember, the more people you take out of private industry, the less taxes that can be collected. Eventually you'll have a nation of people that work pushing make believe paper around that don't actually produce anything of value. Your tax base will shrink, and so will your salary. Before you know it, you'll be sneaking your family into Mexico just to make a living. So study your spanish me amigos.

Edgwater: "system that's not going to fail spectacularly has to recognize that human interactions are never going to be ideal"

Wrong. the free market works exactly on the premise that human interactions are free to float as they will. There is no such thing as ideal human behavior, there is just human behavior. The free market is brutal, it requires alot of its people. If our education system has failed anyware, it has been the inability to teach this reality to its students (who often discover this too late). Thank God for the imigration from our Asian friends (chinese, Indians, etc.)

AxeMental wrote:These are facts

No, these are opinions. Honestly, until you realize that, this will be my only reply to any of your political posts.

Reality is nuanced and frightfully unfit for labels.

joe b.

Yes, the free market works on paper one way and a little different in reality. But so what? Thats to be expected. What we have found (over time) is that the free market system of the United States has produced more innovation and wealth then any other nation in the history of mankind (in a short 100 years).

You seem to be operating under the curiously mistaken impression that the US is not a mixed economy. It absolutely is. In fact, no other country in the world can even hold a candle to US public spending in research, subsidies to business and agriculture, defence outlays, etc. For most of its history, the US had the highest tarriffs and import duties on the planet! They're still near the top.

So ... no, the US didn't get where it is because of free market. It got where it is because of a mixed economy, particularly in the postwar years, which is when it first became the economic and technological leader. It started moving away from the mixed economy beginning in the early 80s, and only a couple of decades later speculation is rampant about who will inevitably succeed the rapidly deflating USA.

Edgewater, I never said the US economy wasn't mixed. Where did you get that impression? Infact, I said innovation in the public sector (military and NASA to a huge degree) given to the private sector to produce products from is what has created alot of our economic success.
It is the free market portion of our economy that has been the generator of wealth.

Are there parts of the govt. that are nothing but a drag? What do you think? I'm all for the govt. handing over technology to make the next crystal based computer say, but I'm 100% against govt. waste and lack of accountability in keeping spending down or taking over parts of the free market. The problem with govt. is there is no motivation to be efficient, just the opposite, those in it want it to grow.

as for the next America. Good for them, as long as they have our freedoms. In the end thats what its all about really. The right to be able to do as you like and keep what you earn or make.

jgbrowning wrote:

AxeMental wrote:These are facts

No, these are opinions. Honestly, until you realize that, this will be my only reply to any of your political posts.

Reality is nuanced and frightfully unfit for labels.

joe b.

Hey Joe, please don't take my ramblings as anything but that. I use this site as a blog or to vent.
No Joe, I think the suggestion to go and see for yourself is as close to fact as you are going to get (or at least objective observation watching people, the deeper you dig and ask the more you'll discover), these are things that one observe through our senses (though I agree filtered before processed by cultural codification (do remember, my training is in cultural anthropology so I think I understand what your getting at), only electronic recording devices record objectively -as humans all we can do is try to be objective, to do our best to keep an open mind.

Anyhow, thats why I said, Go down there and observe for yourself, be as scientific and objective as possible. Hell, give them the benefit of the doubt assume the best. If you think the place is run as efficiently as a typical corporate business great. If not great, no sweat off my back). My impressions and conclusions are what are opinion, but what I see with my own eyes is just that.

Social science is an imperfect one (probably more closely tied to how a court battle works with both sides presenting a logcial arguement and a nuetral jury coming to a conclusion based on facts "presented"). Imperfect? Yes! But its better then no attempt at objectivity at all.

So, please do present your arguements, show me your supporting evidence, I will do my best to objectively consider it.

AxeMental wrote:No Joe B. These are facts

"We also know from history that socialist systems (including our own elements) become corrupt with government officials who have zero inclination to work (they don't get payed on how efficient they run their department, rather they get payed on how many people they manage and how big they can make their budgets, their inclination is to grow not shrink costs)."

Is not a fact. Or at least anymore than the following "we also know from history that communist/capitalist/socialist/feudalism/mercantilism/mutualism/syndicalism/distributism systems become corrupt." We also know that such systems can become less corrupt with effort, and that the size of something doesn't have a fixed relationship to the amount of corruption. Meaning that a smaller government isn't, de facto, a less corrupt one. The size of a government is unimportant: how efficiently it works and how pleased the citizens are with its performance is.

In addition, people who "who have zero inclination to work" are far from limited to government workers, nor do I believe there is a tendency for self-selection in such matters. I've gotten consistantly worse service from capitalist ventures than through the public sector. I suspect that I am at least a significant minority in such experience, if not perhaps the majority.

Your brush is so broad throughout the recent part of this thread that it is useless, IMO. You say that we need less government because government increases costs and the best it can do is stay out of the way of private enterprise, but then you also say that were the government to identify the health care cost problems by asking doctors, hospitals, and drug companies they could then fashion laws to remove those costs resulting in a postulated 1/2 reduction in the cost of medicine.

You believe in a controlled market just like the rest of us "big government" people you were so surprised were here. To have the rule of law requires choices about what those laws are, and these laws are admissions that free markets are utterly unacceptable without governments limiting their behaviors and that capitalism requires great shepherding to function - and not just hands-off shepherding - hands-on shepherding.

The question is: which systems functions better and what are the results of that functioning? The results of socialized medicine in 1st world countries are lower costs for citizens coupled with healthier people overall.

Why are you against those results based upon an ideology - an ideology that already admits that government must interfere in commerce?

Many of the best things in life only exist because of governmental interference in the market place: clean water, health codes, industry standards for safety, food requirements, police, fire departments, infrastructure. Some of the worst things in history are also the result of government interference.

The point is, holding the blanket belief that it is better for the government to stay out than to get involved is, to me, asinine. What really is better is for us to think about what results we want, and then determine if the tool "government" is what will bring about those results. Sometimes it will be, sometimes it won't, and most of the time there'll be debate on the yea or nay of things.

The government that governs least, only governs least. That's not a statement of quality: only quantity. Assuming it's about quality is an error, IMO.

joe b.

Joe: " and these laws are admissions that free markets are utterly unacceptable without governments limiting their behaviors and that capitalism requires great shepherding to function - and not just hands-off shepherding - hands-on shepherding. "

Joe, I think Adam Smith would agree with this, as well as most free market economist.



Joe: "Is not a fact. Or at least anymore than the following "we also know from history that communist/capitalist/socialist/feudalism/mercantilism/mutualism/syndicalism/distributism systems become corrupt."

Agreed. Infact, I think we can't say any conclusion drawn from observation is a fact. A person stabs another is a fact. The person is a killer is opinion. We can't assume intent, nor can we garnish conclusions.

However, I think its fair to say that given a persons history, given reason, we can at times conclude the person was probably (with almost 100% certainty) trying to kill another (ie a killer rather than someone accident prone walking with a knife or what have you. )

Your agruements are pretty indepth, and I have to go watch Robin of Sherwood right now. Will have to get back to them later.

AxeMental wrote:as for the next America. Good for them, as long as they have our freedoms.

No, he said "economic and technological leader." Probably China, if they can sustain their growth over the long term. And China is, of course, a pseudo-Communist state with some tendencies toward totalitarianism and a poor human-rights record.

In the end thats what its all about really. The right to be able to do as you like and keep what you earn or make.

Not counting the 20-some-odd percent that comes out of my paycheck in taxes, you mean. And the 8.62% I pay in sales tax. And not being able to marry a same-sex partner, if I wanted. I could go on.