Keynesian Economics Is Right

[charles brough]

The idea is that the time to reduce the budget deficit is when the economy has recovered. The President tried to do this but gave up under TeaPartyRepublican pressure. Until the economy begins to boom, a stimilus is in order.

 

And as far as the Right's "solution" of a balanced budget ammendment, is concerned, there appears to be only one acutally operating in the world. It is in Argentina where their one-time dictator actually managed to impose on the politicians a brilliant economicf plan.

 

It goes like this: when business is booming, taxes rise and a surplus acccumulates in the Treasury. When the bubble bursts and the economy slumps, there are the funds the governemtn needs on hand to stimulate the economy. The trick is to have an annual projection so that it is known how much money is to be saved when business booms and how much spent when it slumps. A commission sets that ahead of time.

 

The commission is not made up of politicians but economics, legal and administrative experts. . .:rolleyes:

[geko]

We've been stimulating heavily since the mid 40's, so i'm not sure why someone would think that we're not stimulating. Doing the same thing over and over and expecting different results has a tag line, no? ;)

 

Anyway, "stimulating" means higher government spending (consumption), for the purpose of promoting yet more consumption. Economies aren't grown by consuming more, but rather by accumulating capital, i.e. wealth generation. Of course, Keynesian economics doesn't agree, and herein lies the problem.

[charles brough]

We've been stimulating heavily since the mid 40's, so i'm not sure why someone would think that we're not stimulating. Doing the same thing over and over and expecting different results has a tag line, no? ;)

 

Anyway, "stimulating" means higher government spending (consumption), for the purpose of promoting yet more consumption. Economies aren't grown by consuming more, but rather by accumulating capital, i.e. wealth generation. Of course, Keynesian economics doesn't agree, and herein lies the problem.

 

 

Yes, the subject is filled with controversy. Still, don't you agree that without more deficit spending now, less money would be in circulation and prices would go down? People would draw down debt and banks would lend less as home prices continued down with all other prices (less curency=lower prices over time)? Tax revenue would decline causing the debt to grow, not shrink.

[geko]

Yes, the subject is filled with controversy. Still, don't you agree that without more deficit spending now, less money would be in circulation and prices would go down? People would draw down debt and banks would lend less as home prices continued down with all other prices (less curency=lower prices over time)? Tax revenue would decline causing the debt to grow, not shrink.

 

If i may address the last line first. The debt will never be paid. The US is too big, the debt is too high, and the country is bankrupt. I'm sure everyone realises this, including the Chinese who are the biggest foreign creditors of the US. I think they just don't want to face up to it, which is understandable after all, what president wants that as a record of their term. However, it is the case that it won't be paid, so i think the question people need to ask is how is it going to be handled. Do we take it on the chin or do fudge it and let the next administration deal with it. They'll likely fudge which basically means a default. Defaulting will come by way of cessation of cheques (which won't happen), or stimulation (which, if the past is anything to go by, will happen). A problem occurs through the stimulus method though because the purpose of defaulting by way of stimulation is to write off the debt through inflation. This requires large stimulation. A stimulus level required to make a meaningful impact in the debt will obviously lead to accelerated inflation due to the size of it. This lowers the affluence of everyone, except those among the first in-line to receive the credit obviously.

 

So what to do? Make everyone poorer or stop writing cheques? I stand firmly by the latter, although others can have their own opinion obviously.

 

There's also knock-on effects to consider. If the value of the dollar goes through the floor what will happen to the nations' world standing and world trading? With a defunct dollar who will want to accept it for payment? Also, the US, by and large, is a service nation, which means they have little to provide themselves with if the world stops trading with them so therefore the poverty level could increase again. Price fixing would likely be implemented to offset accelerating prices, which therefore would lead once more to higher poverty levels because of further inflation due to the necessity of subsidy to actualise the fixed prices.

 

Maybe it's not all doom and gloom though. Maybe the world will write-off the money owed to them by America at the expense of their own nation. Maybe they will think of something that no one else is thinking off.

 

As for price and circulating money levels, i accept the principles of the Misesian philosophy, and am pretty much opposed to most everything in the other 3 major schools because i see them as being in gross error. Static money levels, lower prices, deflation and no deficit spending are all good things and something we should aim towards due to them being to the benefit of us all. It's win/win (after the short-term), except to civil servants and interest groups obviously, which, to put it bluntly, lose; but their services are redirected into areas of higher social valuation and productivity so therefore society wins.

 

Anyway, as for a concrete answer from me, i would change the economic principles by which countries are run, and then stop writing cheques.

[charles brough]

If i may address the last line first. The debt will never be paid. The US is too big, the debt is too high, and the country is bankrupt. I'm sure everyone realises this, including the Chinese who are the biggest foreign creditors of the US. I think they just don't want to face up to it, which is understandable after all, what president wants that as a record of their term. However, it is the case that it won't be paid, so i think the question people need to ask is how is it going to be handled. Do we take it on the chin or do fudge it and let the next administration deal with it.

 

As for price and circulating money levels, i accept the principles of the Misesian philosophy, and am pretty much opposed to most everything in the other 3 major schools because i see them as being in gross error. Static money levels, lower prices, deflation and no deficit spending are all good things and something we should aim towards due to them being to the benefit of us all. It's win/win (after the short-term), except to civil servants and interest groups obviously, which, to put it bluntly, lose; but their services are redirected into areas of higher social valuation and productivity so therefore society wins.

 

Yes, I agree that the debt will never be paid off. Certianly it wont be paid off in dollars of equal value. We are engaged in giant bubble similar to the John Law, Tulip Craze, and Mississipi inflations of old Europe. But this one is civilizational. And since we are in this way cheating our creditors, we are in effect proving that we have not a "community of nations" but an empire, one in which we "tax" them because they have no other choice. We managed to built this so-called "Global Economy" as an empire favoring us because we have had the most vast military might of all.

 

By Misesian philosophy I take it to mean you are a Libertarian. I wrote a lot about the Von Mises doctrine in "The Last Civilization." I explained why it has had so much appeal to the Republican conservatives. I also explained that even though government grows too big and becomes inefficient, society cannot function without government. Business taking over government functions does not improve the picture but only adds to the corruption, waste and exploitation characteristic of a corporate system based on the sole objective of making money for their stockholders.

[geko]

By Misesian philosophy I take it to mean you are a Libertarian.

 

My political stance is in limbo to be honest, but assuming i'm Libertarian for any discussion i have with you is adequate.

 

 

…even though government grows too big and becomes inefficient, society cannot function without government. Business taking over government functions does not improve the picture but only adds to the corruption, waste and exploitation characteristic of a corporate system based on the sole objective of making money for their stockholders.

 

I'm not familiar with your work so i can't discuss any specific reasoning, but i would urge you to remember, if you don't already, that when discussing libertarianism, businesses must be placed within a market that is free, because otherwise it's not a valid representation. I mention this only because i'm seemingly forever correcting people i talk with that use an example of business x in situation y performing an act that they don't agree with that it's not an argument against the free market, but rather an example of what a business did whilst existing in a hampered market.

 

I'm not aware of any serious free market proponent that assumes capitalism is not wasteful. All systems are wasteful. The argument is that it's not as wasteful as the public sector due to the market punishing poor speculation quickly and severely, which leads to a redirection and distribution of resources and services. There are no such checks on the speculation of the public sector. The fact that resources are limited and scarce makes the argument that capitalism is wasteful and therefore shouldn't be followed a non-starter.

 

It should also be remembered that consumers are not only those that wear blue collars and don't own a business, but rather everyone. In fact, due to necessity (and ability), the bigger the business the higher the general overall consumption; "making money for stockholders" is a consequence of increasing the wealth and satisfaction in society throughout various avenues of production and consumption.

 

As for corruption i'm really not sure what you mean. Are you saying that politics isn't corrupt and that it's mainly a product of the private sector? I'm certainly not going to deny that humans have motive, whether in public or private sectors. As you mention though, private corruption will be based on a motive of profit, which comes by way of present speculation of savings in an attempt to satisfy a future market. Ergo, any corruption that existed would be to the benefit of the consumers also, as they wouldn't do it otherwise because they wouldn't make a profit. If consumers don't value the benefit given at the price asked then the business goes bust. What is the corruption in the public sector based on? Favourtism, put into effect with shake-down money that doesn't have valuation feedback for its use. Corruption is also ambiguous because the view of corruption in a hampered market is sorely different than the view of corruption under a free market.

 

If it can be shown that humans have no right to value that which they do, or that capitalism is worse at satisfying their value scales than is a governing body that gets it right more of the time and more efficiently, and therefore by extension that intervention should be employed to correct the resource distribution and/or the valuations of the members of society, then we likely have an insurmountable argument against the free market. Until such a time however it seems that opponents are generally just beating a dead horse.

 

Is there a synopsis of your book anywhere by the way? Or maybe a lengthy representative review?

[phillip1882]

kaynes vs hayek; an awesome vid.

and heres the second round:

[charles brough]

. . . when discussing libertarianism, businesses must be placed within a market that is free, because otherwise it's not a valid representation. I mention this only because i'm seemingly forever correcting people i talk with that use an example of business x in situation y performing an act that they don't agree with that it's not an argument against the free market, but rather an example of what a business did whilst existing in a hampered market.

 

I'm not aware of any serious free market proponent that assumes capitalism is not wasteful. All systems are wasteful. The argument is that it's not as wasteful as the public sector due to the market punishing poor speculation quickly and severely, which leads to a redirection and distribution of resources and services. There are no such checks on the speculation of the public sector. The fact that resources are limited and scarce makes the argument that capitalism is wasteful and therefore shouldn't be followed a non-starter.

 

It should also be remembered that consumers are not only those that wear blue collars and don't own a business, but rather everyone. In fact, due to necessity (and ability), the bigger the business the higher the general overall consumption; "making money for stockholders" is a consequence of increasing the wealth and satisfaction in society throughout various avenues of production and consumption.

 

As for corruption i'm really not sure what you mean. Are you saying that politics isn't corrupt and that it's mainly a product of the private sector? I'm certainly not going to deny that humans have motive, whether in public or private sectors. As you mention though, private corruption will be based on a motive of profit, which comes by way of present speculation of savings in an attempt to satisfy a future market. Ergo, any corruption that existed would be to the benefit of the consumers also, as they wouldn't do it otherwise because they wouldn't make a profit. If consumers don't value the benefit given at the price asked then the business goes bust. What is the corruption in the public sector based on? Favourtism, put into effect with shake-down money that doesn't have valuation feedback for its use. Corruption is also ambiguous because the view of corruption in a hampered market is sorely different than the view of corruption under a free market.

 

If it can be shown that humans have no right to value that which they do, or that capitalism is worse at satisfying their value scales than is a governing body that gets it right more of the time and more efficiently, and therefore by extension that intervention should be employed to correct the resource distribution and/or the valuations of the members of society, then we likely have an insurmountable argument against the free market. Until such a time however it seems that opponents are generally just beating a dead horse.

 

Is there a synopsis of your book anywhere by the way? Or maybe a lengthy representative review?

(the book is described in http://civilization-overview.com)

Thanks for such a deep explanation of libertarian theory! I had never been able to understand how they justified the attempt to keep substituting corporate operations for government functions. I am now beginning to see their reasoning.

 

My background on the subject is historical. I see pre-history as a world of agricultural, hunting and herding groups living communally. In other words, they were communal, i.e. communism. Because of reasons which I explain in the book, as the communes grew larger, they increasingly needed ever more organization. We are small group social primates evolved to live in small hunting/gathering groups through millions of years of evolution. We needed to find a system that could serve as the alpha male(s) and keep some sort of order. With the advent of civilization some 5,000 years ago and written history, a patriarchal-monogamous form of society evolved in which the largest groups built powerful governments that were finally able to amass armies, build defenses, spy networks and all else needed to defend themselves from preditory tribes. The great age of Egypt was under this sort of immense single government.

 

The advent of civilization began with the concomitant beginning of capitalism. In big groups, people cannot feel as close to others, feel compassion for them or even have adequate face recognition, and if personal distance enlarges, capitalism was the perfect solution. It sort of ran by itself according in a swarm theory fashion. So, for the last some 5,000 years, we have had a sort of business and government alliance in which each played an important role.

 

Each corporation is a legal entity designed in such a way that the management has two prime intentions. One is increasing corporate profits and the other is increasing management wages, all intents to be executed within the law. When society is "healthy" (a subject we won't get into now!), most business willingly operates within the law. However, when society ceases to be "healthy," it loses the will to deal morally and honestly in a way that best serves the interests of the whole society or nation. This is where regulations come in. Corporate response is to pay off legislators in order to weaken

 

 

What tends to be overlooked is that societies change and that changes the operation of the capitalistic system. As society changes and civilization weakens as it heads towards its end and the beginning of a new civlization and its society, the capitalistic system becomes increasingly harsh and exploitive.

 

It might show how by giving examples of what can happen in our society or civilization. For profit prisons are most efficient when they cut off the expense of training and educating prisoners so they can get employed when released. Not only does it save expenses but increases the likehood that they will get the prisoner back again.

 

Private patrol services are not motivated to apprehend suspects, only to scare them away. I have observed that is what they do.

 

Also, executive wages and perks grow at the expense of the welfare of the middle and poorer class.

 

And finally, does it make for a better society when we are unable to phone businesses without dealing with multiple keys to punch and recorded voices be heard? Is it better for business to squeeze out satisfying personal contact that way in order to save money that people can instead spend on more of the "stuff" that corporate advertising has shaped and molded the public into craving? The supreme focus on materialism (the "American Dream" does, itself, narrow and reduce the dedication of the individual to the welfare of the greater community.

 

. . . when discussing libertarianism, businesses must be placed within a market that is free, because otherwise it's not a valid representation. I mention this only because i'm seemingly forever correcting people i talk with that use an example of business x in situation y performing an act that they don't agree with that it's not an argument against the free market, but rather an example of what a business did whilst existing in a hampered market.

 

Does that say that the system works best when unregulared? That all its faults now criticized are due to its lack of being regulated? (To me, substituting the words "free marked" for "capitalism" is a propaganda usage). East Asian Marxist society of China has a capitalistic system as does Sweden and Norway. The alternative is communism, a throwback to pre-history and what failed in China and even what little Cuba is leaving.

[RonHughes]

I live on a fixed income. You know why I don't take my credit cards and go buy what ever I want? Because I can't pay for it so why in hell would anyone think the government shouldn't be required to operate under the some rules. If we had a balanced budget amendment we wouldn't be in this mess. Tell me why the liberals are so afraid of a balanced budget amendment? If the people don't want it they will not ratify it. Common sense is gone from American thinking.

[geko]

I will try and address the main points, although i can't expect to address all points on a board in a satisfactory manner i feel.

 

Libertarianism isn't a codified belief system with regard to numerous policies. It could be argued actually that it's the complete opposite of this, although it does follow the Austrian school of economics. Libertarianism is rather 'a way of looking at things'.

 

For example, when you say that

 

…management has… prime intentions… increasing corporate profits and … increasing management wages…

 

..it agrees, but then it also goes on to ask how this is achieved? Since libertarianism must be under the banner of a free market, it follows that no coercion is involved. Since there's no coercion, and if there is it's against the law, then acts that lead to corporate profits and increased wages for management must have come about by voluntary acts. As the source of income for a business (in the free market), is the products and/or services it sells, then an increase in profits which can lead to an increase in wages for management must come, somehow, from consumers of their product and/or service continuing to give them money in exchange for it. The nuances of the increased profit margin can come by numerous ways such as increased efficiency, lowered cost, increased product satisfaction, increase in sales, etc., but they cannot come by way of supplying the consumers continually with something that they don't want at the price asked. Misadvertising a product is fraud under a free market and therefore against the law.

 

Another example for the difference in the way it looks at things is seen in the following line of yours:

 

when society ceases to be "healthy," it loses the will to deal morally and honestly in a way that best serves the interests of the whole society or nation.

 

Libertarianism sees the individual (don't jump the gun, let me explain…). Society cannot think. The individual is the one that thinks and acts and bases their decisions on the valuations that they have at whatever moment in time. Society is made up of individuals and is actually nothing more than the interpersonal exchange of individuals, so the best way to serve society is to serve the individual, because if you satisfy the values of millions of individuals then you have, in effect, created a happy, wealthy and satisfied society.

 

When you then go onto say that

 

This is where regulations come in. Corporate response is to pay off...

 

..it sees this as a problem also because if they are "paying off" then what it means is that they've done wrong and rather than face the consequences they just give someone a back hander to make the case go away. So who takes the back handers? Who has the power to make a legal case go away? You? Me? Microsoft? Apple? Of course not. The state does of course, and since you cannot take greed out the human heart the answer is to take the state out of the equation. Corporations go to the state to fix their problems because the state has the power to snap its fingers and for it to be done whether to the benefit or detriment of the consumers. If there were no state then this couldn't happen.

 

Private patrol services are not motivated to….

 

Private anything is motivated by the profit motive. Profit comes by way of giving their customer base a service at a particular price, or if you prefer, by satisfying a market. Customers will continue to give money for a service or product for as long as the service or product they receive is seen as of higher value than what they give up to attain it.

 

...executive wages and perks grow at the expense of the welfare of the middle and poorer class.

 

How? Executive wages and perks grow out of increased profit. Profit was addressed above so how is this at the expense of anyone? (Ignoring the monetary expense exchanged of course, because this is generally how value is exchanged in our society.)

 

does it make for a better society when we are unable to phone businesses without dealing with multiple keys to punch and recorded voices be heard?

 

I don't know, but what i do know is that people vote with their wallet on such matters, so whilst i may not agree with the service or product that a certain business provides this doesn't mean that others think the same. There are many businesses that i, personally, don't care for or respect the service they give, but if it remains in business then it's evident that others do. I will vote with my wallet, and although i may wish others voted like me i cannot make them do so. They have their own values, just like i have mine.

 

Is it better for business to squeeze out satisfying personal contact that way in order to save money that people can instead spend on more of the "stuff" that corporate advertising has shaped and molded the public into craving?

 

I think by now you will know how i will answer this. Whatever avenue a business takes (in the free market), is a speculative guess of how best to satisfy their customer base. If they can computerise their phone system, for example, in an attempt to keep costs down in order to continue to provide a particular service at a particular price in order to keep their customers paying then they will. As for a materialist mindset in the population, it's not my place to second guess an individuals values. Free markets are obviously not against esthetics, you don't have to buy stuff, but the market will be there if ever you choose to.

 

I see a lot of people, also on this board, placing the blame of the ills and downfalls of society squarely on the shoulders of private individuals. They seem to think that there is some magic wand somewhere that will fix all that's wrong in the world and if only we'd elect the right candidate, support the right party etc., all of our problems would just go away. This, to put it bluntly, is just rational ignorance. There is no fix all ideology. There is no magic wand. And even if there was a magic wand that had the potential to put into effect everything that someone wished, who is going to wield it? Tell me, who do you think has your family's best interests at heart? You? Or some other individual? Viewing the latest elected official as somehow not an individual or human and therefore without human prejudice, bias, friends, wants, wishes, career aspirations and a whole host of other subjective valuations is a gross error of judgement.

 

People also seem to forget that a private individual has no power outside of the products and services that they can bring to society. The power to continually do things against the wishes, or at the detriment of consumers and society, comes from the state. Private individuals may go to the state for it to exercise its power to their benefit, but saying that it's the private individual that has the power in this situation is confusing the issue.

 

Does that say that the system works best when unregulated?

 

Yes. Libertarianism is explicit on the matter. Unregulated doesn't mean without constraints of law mind, although law under libertarianism is generally based on tort law as opposed to statutory law. In a nutshell, regulation ups costs, lowers productivity, increases poverty, increases unemployment, lowers satisfied consumer demand and makes it more difficult to satisfy individual values, and by extension society's values, by creating barriers to entering, existing and emerging into markets; all of which is at the cost to the consumer.

 

Thanks for such a deep explanation of libertarian theory

 

I've hardly scraped the service to be honest, i'm just attempting to address particular points, which likely just create more questions. There's a huge literature on the Austrian and libertarian perspective. One book i would recommend to you if i may is America's great depression by Rothbard. The book deals with regulation and its consequences. Rothbard was a great scholar, although obviously like all historians he viewed history from a certain perspective, and that perspective is libertarian. I think you'll find the book quite interesting, maybe illuminating, if only for an understanding of how libertarians approach problems and view things. A large portion of libertarian works are free to download in soft copy by the way.

[RonHughes]

Geko, a very good post. The problem with it is that 90% of the readers cannot understand or even take the time to try and understand what you said. It therefore lies on those of us who do understand to find language that will convince voters to come over to common sense and conservative views. That is extremely difficult since most voters use what they want as the truth instead of what their head tells them.

[charles brough]

I live on a fixed income. You know why I don't take my credit cards and go buy what ever I want? Because I can't pay for it so why in hell would anyone think the government shouldn't be required to operate under the some rules. If we had a balanced budget amendment we wouldn't be in this mess. Tell me why the liberals are so afraid of a balanced budget amendment? If the people don't want it they will not ratify it. Common sense is gone from American thinking.

 

I live on a fixed income also. I don't even have any credit cards and use only a bankcard. My answer to the question is that a lawyer-made balance budget bill made by a bunch of uncompromising legislators would end in a disaster. The drastic shrinkage of debt would translate into a drastic contraction of the money supply because all debt is an expansion of the money supply. In other words, we would have a drastic deflation in which the price of everything would collapse---including the government tax income. Less for government means less for schools, the homeless and unemployed, the sick etc. And the more prices fall, the worse the unemployment becomes. A spiral or vicious circle is begun, one that is the opposite of the inflation one we have followed for the last half century or more.

 

I do believe in a balanced budget ammendment however! It would just need to be done right. It would have to be set up by independent experts uninfluenced by politics and serviced by them to the extent that they set a level of the economy for the coming year. As business picks up and you head into a boom, the system would be set for taxes to be raised proportionately and federal exxpenses decreased. That would build a federal budget surpluss and put a brake on the economy. As it gradually slides into a recession, the government would use that surplus in the treasury to support the economy until it recovers. Then the process is repeated.

[RonHughes]

Geko, now do you see our problem.

A balanced budget amendment would or should be such that the amount of money available for the government to spend is set at 18% of the GDP and could only exceed that in the case of a national emergency, war declared by congress or a disaster that congress votes to recognize a need for more money.

[Essay]

We've been stimulating heavily since the mid 40's, so i'm not sure why someone would think that we're not stimulating. Doing the same thing over and over and expecting different results has a tag line, no? ;)

 

Anyway, "stimulating" means higher government spending (consumption), for the purpose of promoting yet more consumption. Economies aren't grown by consuming more, but rather by accumulating capital, i.e. wealth generation. Of course, Keynesian economics doesn't agree, and herein lies the problem.

Blind stimulus won't help in the long run, but targeted and effective stimulus can move us forward into a more sustainable basis for an economy, imho; but I wanted to comment:

===

 

geko, talk about calling for the same old prescription... The Republicans can only see tax cuts and spending cuts as the way forward to prosperity. They've been doing this since 1980, even getting Clinton on board with the "cutting government regulation" addendum to cutting everything else.

 

And yet our average incomes remains flat. I know the financial bubble provides revenue by pumping up our GDP (it's about 30% of GDP), but that same old mantra of cut, cut, cut, doesn't seem to be changing things for Main St. (or the Side Streets) on the average.

 

A rising tide may lift all boats, but most people in the world don't have boats! In fact, most people in the world can't even swim. And I'd like to ask: if everyone else in the world finally learns to swim, who will help the boatowners take care of their boats?

===

 

....And as civilization and global problems become exponentially more complex, cutting government is seen as a solution?

===

 

Most of American history is a long, lurching, drunken walk, from one bubble and burst cycle to the next; with unregulated business blowing up the bubble (at both ends of the cycle). And the rest of American history is the people demanding more regulation and compenstion to counter the excesses of capitalism's bubble and bust cycles. So most of those things-- you think of (imho) as "stimulating heavily since the mid 40's" --are the results of long-fought grand bargains in democracy, which is how our country evolves into the future (or at least away from the failing bubbles of the past).

 

What gets me about this "making government inconsequential" policy of right-wing ideologues, is that their philosophy is full of contradictions. They want to be free, to risk capital in some venture, but only if the government provides certainty.

 

They muck up government by gridlocking Congress, and then blame the President for not coming up with a plan. Congress is supposed to legislate (a plan), and the Executive Branch executes the plan; not the other way around, usually.

 

Yesterday I heard a Republican again say "we can't borrow our way to prosperity" ...in referring to the idea of more stimulus spending.

 

And I thought to myself: ....Unless you are an entrepreneur, or a business, or a student, or in need of a car to keep your job; then it is encouraged to go into debt in order to brighten your prospect for the future.

===

 

"We can't borrow our way to prosperity!?" WTF are these idiots thinking. Their whole philosophy is about borrowing, and investing that capital in a venture to gain future prosperity (and also pay back the capital).

 

Can any of these seeming contradictions be explained?

===

 

Overall....

I like the way capitalism works --certainly on the local scale-- so I'm not looking for an "insurmountable argument against the free market;" but I don't agree that there is any insurmountable argument FOR the free market as a unique solution to all of our socioeconomic problems. Yet some call for this free-market solution-- "the same thing over and over" --as a panacea for many different problems. That seems to qualify as not totally sane; but maybe that's just an overly simplistic view.

 

C'mon! Even Ayn Rand's mentor, Alan Greenspan, has admitted (in testimony before Congress) that he was wrong; that the hand of the market is not always effective, or that businesses don't always act rationally or in their own best self interests. But I can see how a "free-for-all," and a "free market for all," could be easily confused.

===

 

Besides....

Living in a time with extensive infrastructure already in place, it is easy to say everyone should live for their own benefit; but if we'd always governed ourselves that way, civilization would never have advanced to its present state, imho.

 

The hand of the market works well (in an unregulated market) on a local level, when there is fairly immediate feedback. But that hand doesn't work very well over large regions or internationally, or over long time frames. Property rights can not be a workable substitute for government rules and regulations. Are there any examples from history when this was working?

===

 

When I hear descriptions of Libertarian views, it sounds mostly like Feudalism (except everyone is living as the Lord of the Manor).

....Sounds good on paper!

 

~ :)

 

p.s. Check out: "23 Things They Don't Tell You About Capitalism"

http://www.amazon.com/Things-They-Dont-About-Capitalism/dp/1608191664

http://www.guardian.co.uk/books/2010/aug/29/ha-joon-chang-23-things

[RonHughes]

I guess I'm just stupid. I don't understand how a government is any different from a person or corporation either one of which will sooner or later get into a situation of debt they cannot get out of if they continue borrowing money every time they run short. You have to be a complete moronic idiot to believe other wise. You just keep peddling that BS and if the voters stick their heads in the sand as you do then the country is doomed. We need to fire every god damn stupid liberal in every office, state, local and federal.

[geko]

Essay, i don't think you understand my position. Maybe i wasn't clear i don't know. For example, the following paragraphs are in support of what i'm saying because all involve the state in some aspect and/or the consequences of its meddling.

 

geko, talk about calling for the same old prescription... The Republicans can only see tax cuts and spending cuts as the way forward to prosperity. They've been doing this since 1980, even getting Clinton on board with the "cutting government regulation" addendum to cutting everything else.

 

And yet our average incomes remains flat…. pumping up our GDP (it's about 30% of GDP), … doesn't seem to be changing things for Main St. (or the Side Streets) on the average.

 

... their philosophy is full of contradictions. They want to be free…. but only if the government provides certainty.

 

They muck up government by gridlocking Congress…. Congress is supposed to legislate...

 

There really isn't anything there that couldn't also be said by a libertarian. It's actually quite tiresome having to continually be the focus of attacks against certain arguments that we never posed. Libertarians are condemned as 'right-wing' that just want to 'lower the tax of the rich' and 'bleed the poor dry'. Well that's not libertarian. A libertarian wouldn't suggest such absurdity, not whilst remaining coherent with the stance anyway. The libertarians can generally be seen sitting and watching the left and right squabble amongst themselves.

 

"We can't borrow our way to prosperity!?" WTF are these idiots thinking. Their whole philosophy is about borrowing, and investing that capital in a venture to gain future prosperity (and also pay back the capital).

 

The difference being is that those borrowers on the market are accountable for the loans they borrow at the risk and expense to themselves. They will therefore try and direct the funds into those areas that attempt to bring about the purpose of the loan in the first place. They further have vested interest in making sure the loan is guided towards that purpose in an attempt to make a profit, which comes by way of satisfying society at a level of exchange that society is willing to accept and trade for.

 

…I don't agree that there is any insurmountable argument FOR the free market as a unique solution to all of our socioeconomic problems.

 

I addressed the magic pill idea above but I quite like the sound of this as it appears to suggest that there isn't an argument against the free market so all we have to do is argue the negative aspects of statism to win the debate. But alas, this isn't true. It seems that for every argument against the free market that's posed, no matter how small or inconsequential, we seem to have to not only debunk it but also pose a hundred against statism, that aren't debunked but rather ignored and side-stepped, and still the statist position holds. It honestly feels at times like the atheist/religion wars with the religious just sticking their fingers in their ears and not addressing the points made. To my knowledge there is not a single, genuine argument against the Austrian school (do you have one? If you do please share it), but yet there are numerous genuine arguments against the others. In fact, the debunking of the others is ongoing, but yet they are ignored without rebuttal or even acknowledgment that they even exist. Of course, high powered careers are at stake so it's little wonder why.

 

Let's also not forget that it is an argument. One that has a correct answer. It may have seemed like i was just espousing rhetoric, which i probably was as that's my writing style in general and it seems difficult to keep it at bay in more serious posts at times, but the point remains. If arguments become insurmountable then, reasonably speaking, we need to accept those arguments as valid for the time being and move forward under the assumption that they are. If A and B are two opposing potentially workable answers concerning truth claims on a particular idea and neither are known to be valid or not but yet A has valid arguments against it but yet B doesn't we follow B until such a time that another is shown as more valid. Just because B has not be shown to work in all situations all of the time under all circumstances doesn't mean we follow A. This is how we work in fields of truth claims, fields except politics that is. The political structure of our planet is, in my opinion, the most important question to consider with regard to our well being and future, and how are we going to find the answers if we don't address and approach the question with a method that our race accepts as a valid? Forget religion, it's moot compared to political questions (in my opinion). Many religious arguments are political in nature anyway and can be decided in the political sphere as opposed to metaphysical and epistemological. If you think the world is working then you are in quiet company i feel.

 

I also think there's a morality issue at stake that people often forget. Striving to live under a non-aggression principle and for the world to live by voluntary acts of exchange with each other is a good goal in my eyes and something we should take a long, hard look at. I understand statists don't agree. Maybe i'm seen as a hippy for thinking such nonsense. The idea of war and violence is respected and the state is seen as doing a good job of deciding which country to invade and what and how many millions don't deserve life. It's a big problem, one that involves arguments of whether the state should have the right just because it has the power to decide who has a right to life and property, and further that it gets to decide the outcome of this argument. I don't actually wish to get involved with this aspect here though to be honest.

 

But anyway, it seems that you're not quite clear as to what a free market is so i'm a little confused of how you can say that there isn't an insurmountable argument for it? If you seemed to know what it was and not agree then that's ok but not knowing and not agreeing anyway? Seems a bit cavalier to me. This is another problem for us also. People just don't get the idea it seems and they fall back on various examples of state guided capitalism and the defective nature of it for arguments against free markets. The book you suggested seems to be an example of this although admittedly i haven't read it. If anyone's proved the defective nature of hampered markets beyond any reasonable doubt it's the libertarians and Austrians. So if a hampered market doesn't work, which it doesn't, and socialism/communism doesn't work, which it doesn't, what are we left with? There's only one other option available (that we know of).

 

C'mon! Even Ayn Rand's mentor, Alan Greenspan, has admitted (in testimony before Congress) that he was wrong; that the hand of the market is not always effective, or that businesses don't always act rationally or in their own best self interests.

 

I didn't say they did always act rationally and in their own self-interests, i don't see why people would think that in a world of uncertainty that this would always be so? Mistakes shouldn't be condemned for being immoral or something, but rather as a mistake. It's unfortunate that mistakes are made. Don't forget though who burdened the risk of the venture for which they made a mistake in; a private, accountable individual.

 

The argument for effectiveness is that they have feedback for it; they know when they're operating and directing resources conducive to the world's values and they know when they're not. If they continue to not, then they're ousted out of the market for being poor at satisfying value as efficiently as society is willing to accept and they suffer the consequences of their mistaken speculation and/or inefficiency at handling the world's resources.

 

As for governments being the reason for posterity, well, i don't agree do i? Everything i know, and admittedly i'm just human whose time is scarce so don't know everything, points to the idea that capitalism has been the driving force behind our prosperity. But let's ignore the historical argument for the time being since it's relatively easy to manipulate to support a stance and let's rather consider concretes. Why is it that your pizza tastes so good? Is it because we have government agents checking them to make sure they conform to various taste and nutrition requirements that satisfy our values? Or is it because of competition? Apply the same argument to any random object on an ongoing basis, your conclusion will give you a good grounding in the position you should hold and why.

 

As for property rights not being workable i wholeheartedly disagree. Property rights are the key. They are solid and robust. They also tell us who, what, where and why in a humane, respectable, unambiguous, voluntary and non-invasive way.

[CraigD]

You have to be a complete moronic idiot to believe other wise. You just keep peddling that BS and if the voters stick their heads in the sand as you do then the country is doomed. We need to fire every god damn stupid liberal in every office, state, local and federal.

Ron, please refrain from inflammatory rhetoric like this.

 

Hypography is not a forum for political arguing. It’s first and foremost a site for the sharing and appreciation of science, including applying scientific reasoning to “soft” fields such as economics, government, sociology, and psychology. Arguing from a position of one’s political beliefs no matter how heartfelt, without objective, reproducible support – numbers and algorithms, if you will – isn’t wanted here.

 

One’s own political views – the government policies and officials we support and oppose, the political candidates from whom we vote, etc. – is, though anecdotal, data, so may be expressed, but with the understanding that it is merely data, not revealed truth (whether by a supernatural entity or “common sense”).

 

The problem with it is that 90% of the readers cannot understand or even take the time to try and understand what you said. It therefore lies on those of us who do understand to find language that will convince voters to come over to common sense and conservative views. That is extremely difficult since most voters use what they want as the truth instead of what their head tells them.

This reminds me of the joke “86% of all statistics are made up on the spot”. I can’t imagine how you could know what percentage of hypography members, let alone readers of this site or in general, understand or don’t understand practically any statement, theory, or other reference.

 

Geko, now do you see our problem.

A balanced budget amendment would or should be such that the amount of money available for the government to spend is set at 18% of the GDP and could only exceed that in the case of a national emergency, war declared by congress or a disaster that congress votes to recognize a need for more money.

A balanced budget is one where expenses equal receipts, resulting in neither deficits nor surpluses. US receipts are primarily (91%) from individual and corporate income taxes, and in total vary from about 18.3% GDP by about ±2%, so attempting to avoid deficits and surpluses by setting spending as a percentage of GDP won’t work (sources: wikipedia articles United States federal budget and Economy of the United States).

 

Technical quibble aside, I find the implication that balanced budgets are a primarily an objective of political conservatives to be inaccurate. Historically, since 1960, US debt has increased under self-described conservative executives and legislature majorities (source: this post).

 

I also believe that, despite political rhetoric to the contrary, US budget deficits are promoted primarily by political conservatives, because the main effect of US debt is to take money from US taxpayers who are do not have large investment incomes, and give it to people who do have large investment incomes. The principle and interest on the US debt is not paid primarily to the US and foreign governments, but to US savings bond holders, about 80% of whom are US citizens. As with most investments, the majority of investments in the US debt is held by wealthy people.

 

Liberals such as myself believe that the poor should have more, and the rich, less. Paying predominantly rich investors with US tax receipts has an opposite affect.

 

I guess I'm just stupid. I don't understand how a government is any different from a person or corporation either one of which will sooner or later get into a situation of debt they cannot get out of if they continue borrowing money every time they run short.

Governments are different than most people and corporations, in that they have more certain “incomes” – primarily, income tax receipts – and a greater ability to increase these receipts, by legislating higher effective tax rates on income. They also are able to borrow money at much lower interest rates than most people and corporations: the average interest on the 2010 US debt was about 3.05%, while the average on equivalent personal loans, most of which is in the form of credit card debt, is “in the mid to high teens” (sources: http://useconomy.about.com/od/fiscalpolicy/p/US_Debt.htm, http://money.cnn.com/magazines/moneymag/money101/lesson9/index.htm). Finally, as most governments can strongly inflate their currency, and thus incomes and tax receipts, they can effectively reduce the principle amounts of their debt, an ability that few if any people or corporations have.

 

This is not to say that an incompetent government can’t so badly manage its finances that it is effectively ruined, or that, to quote former VPOTUS Cheney “deficits don’t matter”. It’s also unwise, I think, to ignore that a significant interest group of people – the rich investors I describe above – benefit from large deficits, and the possibility that these deficits are not due to primarily to government incompetence, but to the influence of these interest groups.