There is an interesting economics column in the Wall Street Journal on the similarities between the Greek meltdown and our own fiscal policies. I have long been a critic of the wild spending of both Congress and President Obama, including the recent proposal to simply pay for an over $200 million short-range missile program for Israel (here). This article discusses the possible disaster awaiting the United States as our leaders blissfully assume that a recovering economy will pay for their various programs and pet projects.
The column questions the logic of being able to tax their way out of this deficit. While I am socially liberal, I tend to be fiscally conservative and I find the current situation extremely alarming.
This article is interesting for its proposition that higher taxes are not able to close such a gap:
The feds assume a relationship between the economy and tax revenue that is divorced from reality. Six decades of history have established one far-reaching fact that needs to be built into fiscal calculations: Increases in federal tax rates, particularly if targeted at the higher brackets, produce no additional revenue. For politicians this is truly an inconvenient truth.
This is a different take on the problem. I have always been skeptical of the “spend out way out of the crisis” approach — which is an awfully convenient theory for members who are always inclined to spend more and put off payments to the future. Once back in power, the Democrats seemed to immediately fulfill a stereotype of higher spending and immediately turning to higher taxes as the solution. This is precisely the course that led to the last Republican takeover of Congress. In their defense, Democrats faced a crisis left to them by the Republicans and particularly George Bush who was one of the greatest spendthrifts in our history. However, they have shown no serious commitment to tackle these dire economic forecasts — gushing money in Iraq and Afghanistan while watching cities and states shutting down basic programs. Our debt is now growing at a record pace — roughly $5 billion a day (here).
This is not to excuse the Republicans who, under Bush, showed no restraint and left Obama with a massive debt. I simply have little faith in our current economic policies or a sense that leaders are seriously addressing the growing threat to the nation from our growing debt. Various countries have raised alarm over our debt and the similarities to the Greek meltdown, here.
For the column, click here.
Tony C:
“Libertarians don’t care, they think government is bossing them around and they’d rather let people be robbed, get sick and die than be bossed around. In reality government should force citizens to engage in fair transactions that plausibly do no harm to anybody, either individually or collectively. That is not being bossed, that is being held accountable for the negative impacts of one’s actions.”
First off I am not a libertarian. Secondly BP is probably going to go out of business over this gulf spill, personally I think that is being held as accountable as possible for your bad actions. Same with a restaurant that serves lousy food or gives you food poison, not around for very long and it isn’t the health department that puts it out of business. Word of mouth is far more deleterious to a bad business than government regulators.
Tony C:
you must be a professor of economics for an Ivy league university.
Tony C:
“Bullshit. Like all bad faith debaters you try to take my example and claim it is the universe and not just an example. My argument is that if people have decided upon eating something essentially LIKE a McDonald’s meal, then they will pay as little as possible for that meal, and thus nobody can compete with McDonald’s on price. They own the bottom of the market. Just like Walmart owns the bottom of their market; it is essentially impossible for any entrepreneur, even with millions of dollars to invest, to compete with Walmart on price.”
So the universe is only full of McDonalds hamburger joints? I guess it doesn’t matter that there are hundreds of burger joints to choose from. So you are telling me that I am wrong because a person only can shop at McDondalds for you to be right? Ok then the person can choose between a happy meal and a #3. The various meals are competing with each other or do I have to assume McDonalds only sells happy meals for your argument to work.
So don’t compete with Wal-Mart on price, Nordstroms is doing pretty well and so is JC Pennys and Saks, and Louis Vaton.
Buddha:
““So is K-Mart and Costco and BJ’s Wholesale and Kohls and Bass ProShops.” K-Mart is a lame duck due in large part to Wal-Mart’s anti-competitive practices. Costco is a model that competes with Sam’s Club’s model, not Wal-Mart’s, as does BJ’s. Those are memberships stores which is analogous to a buyer;s cooperative, not traditional discount retail. Kohls is not a Wal-Mart but rather a traditional brick and mortar store – not a discount store. Bass ProShops is a specialty store, not a discount store.”
What is Wal-Marts anti-competitive advantage? That they sell something cheaper than K-Mart and that the service is better?
Just about anyone can join Costco and Sam’s Club for all practical purposes it is open to everyone and it costs about 35/year which you get back in discounts at the end of the year.
You can buy a fishing rod at Wal-Mart as you can at Bass Proshops, so how is Bass ProShop not competing with Wal-Mart? Same goes for Kohls, a person can buy underwear at kohls or Wal-Mart and many buy from Kohls that don’t purchase at Wal-Mart. So how is that apples and oranges?
Wal-Mart is competing with any store that sells things they do. In fact one of the reasons that other stores keep their prices down is probably competition from Wal-Mart.
>> Your entire argument assumes that people will only buy a quarter pounder, there are literally hundreds of places to buy a hamburger.
Bullshit. Like all bad faith debaters you try to take my example and claim it is the universe and not just an example. My argument is that if people have decided upon eating something essentially LIKE a McDonald’s meal, then they will pay as little as possible for that meal, and thus nobody can compete with McDonald’s on price. They own the bottom of the market. Just like Walmart owns the bottom of their market; it is essentially impossible for any entrepreneur, even with millions of dollars to invest, to compete with Walmart on price.
Standard economic theory presumes an infinite number of willing competitors, perfectly informed consumers with infinite elasticity, infinite space for competitors to set up shop and zero travel time or transportation costs for consumers. It is a fake system. The conclusions it draws are fake conclusions. At the cartoon level it works quite well; supply and demand are real things that observably correlate to moves in prices — But the relationship is non-linear and standard economic theory breaks down almost the second you try to explain any serious question in real life.
Using standard equations of economic theory, I have seen it proven that profits cannot exist, because there is always somebody willing to take your business for a penny less profits, so the Nash equilibrium is one penny per year in profit.
Yet, corporations exist and earn billions. Why doesn’t somebody like Bill Gates or Steve Jobs or Warren Buffet start a big oil company and earn 30 billion a quarter? They are free to do so; or buy a smaller company and pump it up with money. Shouldn’t the free market be driving oil company profits to, say, just MILLIONS per quarter, like other companies? But it does not. Shouldn’t somebody be stealing P&G’s diaper business? It makes millions every month, and how hard is it to make a disposable diaper? But we don’t see that market fragmenting into thousands of Mom and Pop manufacturers of disposable diapers.
The natural outcome of competition, with corporations that only die by mismanagement, is entrenched monopolies that cannot be beat. Sooner or later a competitor makes a mistake and gets killed, and their largest competitor, just by taking a proportional share of that business, gains much more than others. Eventually this produces a virtual monopoly which they strive to maintain so they can charge monopoly rent.
The libertarian, free market economic theory is a sham. It is not a science because it ignores reality. Theories that cannot be proven or tested get published anyway; there is no penalty for that, but there is a reward for puzzling out some new implication of the completely flawed foundation. It’s predictions are routinely wrong, both about the economy and the actions of real people.
Libertarians don’t care, they think government is bossing them around and they’d rather let people be robbed, get sick and die than be bossed around. In reality government should force citizens to engage in fair transactions that plausibly do no harm to anybody, either individually or collectively. That is not being bossed, that is being held accountable for the negative impacts of one’s actions.
Byron,
While reading Tony’s response to you B, I strongly suggest you keep in mind the discussions we’ve had about “good law versus bad law”. Stronger and weaker as Tony applies them do not mean more or less in quantity, but stronger in quality. Good versus bad can just as easily be phrased as effective versus ineffective. As I’ve said, performance related to specific societal goals is the only valid metric for measuring if a law is good or bad, not whom it inconveniences. If laws designed to protect the common good are too high a price for doing business? Then don’t be a businessman. Be a criminal and run the risk of being removed from circulation.
Tony,
I’ll have to say I like the cut of your economic jib. You’re a well spoken and thoughtful poster. I hope you continue to visit.
@Byron:
>> But I am a little unsure as to why you think we have a deregulated market.
I do NOT think that, nor do I think that would ever work, for reasons I have stated. Thus, I believe government MUST regulate businessmen in order to ensure they DO NOT exploit customers or investors or suppliers with deceptive or coercive tactics whenever they can.
The fact that the regulation is unavoidable does create a problem of the rich buying off the regulators, and that problem is only partially solved with Democracy — If we paid attention we would vote out of office the crooked politicians that occupy them. But MORE regulation that incurred severe penalties for both officials and businesses that tried to influence the law would help, in my opinion. Having done a bit of academic sociology in my career, I believe it is well established that crimes are committed by people in proportion to their desperation, or how much they have to lose. (Some pathological reasons aside). Poor kids (of any color) deal drugs or commit crimes because they feel they have very little to lose by doing so. If businessmen risked a mandatory year served in a maximum security prison if convicted of attempting to influence a politician, and if politicians risked the same for being influenced by a businessman, we’d see very little such influence.
As it stands, businesses risk nothing by the attempt and politicians risk nothing by going along, and gain the favors of the rich in the process. Not just campaign contributions but lucrative employment when their careers are over, being paid by the same companies that paid millions to previous lobbyists.
Lobbyists ain’t nuthin’ special — Just the examples put forward by businesses to prove they honor their unspoken bargain: Help us out and we owe you a good commission on the profits you helped us generate. This is perfectly legal, as long as no explicit quid pro quo is ever spoken. But it is understood: Those Presidential speaking fees in the high six figures aren’t because Bush and Clinton are such inspiring guys. They are the entirely legal payoff they deserve for serving their corporate masters.
Regulation isn’t the problem. We are regulated, but not enough, IMO probably not enough to save the country. We have become a plutocracy with a heaping helping of corporatism (mainly because they are the richest entities). The rich have a de facto different legal system to which they answer, different than the rest of us. Ever wonder why celebrities can talk openly about their drug use and never get raided? They get faster trials, and lighter sentences, by virtue of hiring lawyers that enforce every jot and tittle of the law; while our public defenders and middle-class attorneys do not. Judges and prosecutors are careful when the cameras are on, and careless when they are not.
I share your concern about lobbyists and corporate influence, but I think removing the regulations we have would make the problem unimaginably worse. The answer is more and stronger regulation of the behavior or corporations and other businesses, in how they relate to customers and employees.
It is possible to engage in business without screwing anybody. It is possible to get rich that way. It isn’t easy, and that is why people that value money more than anything will try anything they think they can get away with. To stop them, you must make these actions too expensive to risk. That requires *stronger* regulation than we have now, not *weaker*.
“I don’t agree with lobbying but if government didn’t grant favors there would be no lobbyists.”
Again, you mistake cause and effect.
“So is K-Mart and Costco and BJ’s Wholesale and Kohls and Bass ProShops.” K-Mart is a lame duck due in large part to Wal-Mart’s anti-competitive practices. Costco is a model that competes with Sam’s Club’s model, not Wal-Mart’s, as does BJ’s. Those are memberships stores which is analogous to a buyer;s cooperative, not traditional discount retail. Kohls is not a Wal-Mart but rather a traditional brick and mortar store – not a discount store. Bass ProShops is a specialty store, not a discount store.
Apples and oranges.
The problem with your ideas Byron is you assume people are good actors (rational has nothing to do with it, but self-interest certainly does) when people as a whole are most demonstrably not good actors when left to their own devices by in large and will only be good actors with regulation to keep them honest. Individuals can be and are good people. Humans as a species are lying crime prone shitbags else the very real need for government would have never evolved in application or abstraction. Power can corrupt the otherwise innocent, be it economic or governmental. Now watch BP to see what happens when you leave sociopaths to make decisions that impact the greater society as a whole absent strict regulation. Checks and balances. What you propose is no checks but the free market mechanism. You’re damn right that’s been proven a failure historically. Wall St. Invading Iraq. CDS. Contaminated products. Contaminated food. Pollution that renders places uninhabitable.
Yep. But the unregulated free markets the Regan era ushered in will take care of that. Uh huh.
cough cough cough bullshit cough cough
Tony C:
Your post above is disproven by the very existence of many hamburger restaurants. In fact 5 guys is just starting to franchise here in Virginia and is doing quite well. I haven’t seen McDonalds “goons” standing in front of 5 Guys and “persuading” people not to go in.
Your entire argument assumes that people will only buy a quarter pounder, there are literally hundreds of places to buy a hamburger.
There are hundreds of retail stores that compete with Wal-Mart, what are you talking about? Wal-Mart is a particular model that works. So is K-Mart and Costco and BJ’s Wholesale and Kohls and Bass ProShops.
Give me a break, their are certain principles in economics that hold true. Tell me why Austria didn’t have the hyper inflation that Germany did after WWI?
I hope you don’t teach fist graders economics.
Tony C:
“Free markets do not work. This has been empirically proven again and again and again, most recently in the banking fiasco and gulf disaster. What does work is forcing companies to compete on *PRODUCT* alone. No lobbyists, no goons, no predatory pricing or loss leaders or other bullshit. When you do that products become better and cost less. But free markets DO NOT do that. They are jungle warfare where anything goes, and the most successful people in that environment are smart sociopathic criminals.”
They should compete on product alone. But I am a little unsure as to why you think we have a deregulated market. It seems that is your straw man. We have plenty of regulations and plenty of regulators. Lobbyists may buy favors but they purchase them from government.
I don’t agree with lobbying but if government didn’t grant favors there would be no lobbyists.
If I put bird seed out, birds come to exploit my generosity. If government grants favors people will take advantage of the competitive advantage available for purchase.
I meant “…for a monopolist to succeed without Government.”
The straw man quoted by Byron; emphasis in caps mine:
First sentence:
“The NECESSARY precondition of a coercive monopoly is closed entry—the barring of all competing producers from a given field.”
This is a simply false assertion, because it ignores the natural barriers to entry that exist for small competitors, and assumes there will ALWAYS be some deep-pocketed “producer” capable of doing anything. This sort of thing is true for candle-making as contemplated by Adam Smith, but it isn’t true for something big like a James Cameron “Avatar” film, or airliners, or drilling for oil, or producing peas for 3 cents a can.
Second sentence:
“This can be accomplished ONLY by an act of government intervention, in the form of special regulations, subsidies, or franchises.”
Not true again, it can be accomplished by overwhelming economies of scale. At average retail prices, it is impossible for an individual to buy the ingredients to produce a McDonald’s quarter pounder and fries for the same price for which McDonald’s SELLS quarter pounders. This is due to the economies of scale enjoyed by McDonald’s in purchasing beef, potatoes, fryer oil, bread and dressings. McDonald’s has no governmental subsidies or franchises or special regulations.
Third and fourth sentences:
“Without government assistance, it is IMPOSSIBLE for a would-be monopolist to set and maintain his prices and production policies independent of the rest of the economy. For if he attempted to set his prices and production at a level that would yield profits to new entrants significantly above those available in other fields, competitors would be SURE to invade his industry.”
These are absolute statements. Of course, as I described in the gardening hoe analogy, the minute a competitor DOES invade the monopolist’s industry, the monopolist does whatever it takes to drive that competitor out of business, no matter the cost to themselves. This is what Microsoft did when they considered Netscape to be invading their industry — Threatened their customers (computer manufacturers) with punitive pricing or refusal to sell if they even took something from Netscape for FREE.
Look at the caveats: “…profits to NEW ENTRANTS…” and “…SIGNIFICANTLY above those available in other fields…”
How do we measure “significantly”? How do we qualify “new” entrants? Why do we automatically assume there is this infinite pool of entrepreneurs with infinite amounts of money that can switch from product A to product B just because product B is more profitable? If that were true, wouldn’t all grocery store owners become hedge fund managers or film producers? Why would ANY business earn more than ANY OTHER, or have profit margins that differ by more than 1/2 of one percent?
Why aren’t there 50 viable competitors to WalMart? They have made billions, surely that is a significant amount of profit, yet they were allowed to grow without a competitor for decades. Why isn’t there a viable competitor to Google, or Apple?
This is a simplistic, first grade introduction to markets, and I say that because when we teach first graders we teach basic stuff in very broad strokes that in fact do not reflect reality. We do that because reality is so murky and full of caveats and counter-examples that it is unteachable to first graders, they need to understand things that are often true, or usually the case. “I” before “E” except after “C”, right? No, not always, some words like “weird” and “heir” and “feint” and “sheik” are just weird.
The fact is, this paragraph is just full of lies and unfounded (even factually false) assertions. When readers buy into them without even wondering if they agree or not, of COURSE the “conclusion” sounds inescapable.
Is that pre-condition truly NECESSARY?
Is it really IMPOSSIBLE for a monopolist to succeed with Government?
Is Governmental coercion really the ONLY way?
Are competitors SURE to jump into a field and compete?
All these absolutes are ridiculously false, and once you see that, the conclusion built on this foundation of sand falls apart completely.
@Buddha:
Thanks. I know that. Byron is probably lost, but I figure he provides a useful foil; other less intellectually trapped might read my response and use these arguments, or be nudged off the path leading to the pit Byron occupies.
The important point to understand is to stop equating “free markets” to “product-based competition.” The first demands de-regulation, the second demands severe constraints to focus the capitalist’s efforts on pleasing customers without endangering them or exploiting workers to do that. That definitively requires regulation.
I was in error when I said “For a theory of government to be useful…”
I meant specifically a theory of economic regulation. I do believe in absolute freedom of speech, for example, or an absolute right to habeas corpus. In economic theory, if free markets work, then less regulation should lead to greater prosperity and fairness. Since Reagan, this has been shown to fail. Deregulation led directly to the current financial crisis; equivalently a failure to enforce regulations led to the BP Texas disaster and current Gulf disaster. If it doesn’t work until there is ZERO regulation, we are doomed to suffer appalling disasters such as these and routine assaults on humanity by virtual slavery and endangerment.
Tony,
Excellent post. But alas, deprogramming B’s brainwashing by the allure of unrestricted capitalism is an ongoing battle. I suspect he won’t realize how wrong he is about human nature and free markets until it’s way too late.
Evidence is mounting that it’s already too late.
@Byron:
>> You just say they are ideologues, how so?
They reason from false premises, which they do not attempt to prove or demonstrate. They simply assert these things must be so, and rely on people’s (flawed) instincts to carry their argument to what are ultimately false conclusions when we try to test them. What makes free marketeers ideologues is refusing to put forth a theory that withstands the empirical evidence that it does not work.
For example, free marketeers love game theory and Nash equlibriums, the natural outgrowth of the “homo economimus” construct of the rational consumer. But peer-reviewed scientific study has shown that consumer choices simply do not follow Nash equilibriums, and in some cases the predictions made by this method are so bad they are useless or even harmful to somebody setting a price on something.
Yet free marketeers continue to insist that Adam Smith’s invisible hand will somehow magically guide them to efficiency and happiness, and in all the instances where it fails, something MUST be interfering in the free market system.
We had a damn near perfect free market system in this country when it was founded, and the backlash against it — The unions, childhood labor laws, health and safety laws, Minimum Wage, sexual harrassment laws, SEC regulation on financial reporting, environmental pollution laws, ALL OF THAT was the result of citizen outrage over what seems now to be unbelievable transgressions. I gave you examples before, and the same thing is happening now in China and India.
For a theory of government to be useful, it cannot be an all-or-nothing policy. In your example of gardening hoes, you left a few options out, and that is the flaw in your argument. For example, you claim that if you are the hoe king selling hoes for $100 and a $40 competitor comes along, you have to lower your price. Not really.
Using your own argument, you *were* selling hoes for $100. Your competitor can sell them for $40, which means your profits must be at least $60. You had the monopoly, I assume you had the more efficient method of hoe production (least cost), so — and remember, this is a free market — Why not have a “giant hoe sale!” and start selling hoes for *your* cost? Unless your competitor has very deep pockets, you can starve him out of business, because he cannot sell at cost and still pay his workers and earn a profit, there is no way he can compete against you selling at cost.
While you are doing that, be sure to advertise how “safe” your hoes are versus “others.” Don’t worry, you have plausible deniability on whether you are talking about *his* hoes, but you want to plant the seed that newcomer hoes aren’t reliable or safe and will fail. That’s why you are having the giant hoe sale! It is a public service. Fake a video of something that looks like his hoe (but with some detail that proves it isn’t) breaking in use, or the handle cracking, or the blade bending on a rock, or whatever. Mislead the public at every turn, that is your job.
Once you drive competitor A out of business, the sale is over. Back to $100, the price people were willingly paying before. And an object lesson for tiny competitor B contemplating this lucrative hoe business — just try it, and you will bankrupt those fools for daring to invade your territory.
Not only was this sort of thing done (supplemented by physical intimidation, beatings, murders, and factory arson), but by Hayek’s rules it is the economic approach to take. The present value of ten more years of a $100 hoe business is worth three times the present value of ten more years of a $33 hoe business. You are fighting for that present value, and if necessary you can spend about five YEARS worth of your profits grinding this new competitor into the dirt and still come out ahead. But it won’t take that long, no new business is going to survive selling hoes at less than cost for even one year. So you just show anybody thinking about it that you are willing to cut off oxygen for BOTH of you, and you can hold your breath longer than they can hold theirs.
This is the Hayek and free marketeers straw man — There are a hundred ways to compete that the majority of people would consider “unfair competition,” like selling for less than cost with the sole purpose of hurting competitors financially, but free marketeers always consider only those ways of competing that help consumers, and of course their conclusions always sound rosy. They say, “See? What can he do but lower his prices?” The answer is, “Have his competitor killed, either physically or figuratively.”
They say, “We don’t need a minimum wage, people will move to where they earn the most.” Except many people cannot afford to move, they do not own the means of transportation or they are geographically tied down by their emotional responsibility to provide frequent physical assistance to parents and relatives, they cannot afford remote housing, or their spouses work and cannot find equivalent work elsewhere.
Lasik eye surgery: Funny, do you understand that LASIK is a procedure that has been under development for about 50 years by socialist means (government funded university-based medical research), even socialist or communist countries?
Lasik is a *procedure* and a *science*, it is not a unique *product*. It is rather difficult to get a monopoly on doing appendectomies or quadruple bypasses, it is difficult to get a monopoly on using mathematical equations to compute the path a laser must travel to modify the curvature of the cornea.
>> I for one am tired of paying to subsidize major corporations because they can afford a high priced lobbyist and I cant.
So am I, and the answer to that is NOT free markets, it is REGULATION! It is not treating corporations like people with rights of free speech. We can make it illegal for corporations to spend a dime attempting to influence politics in any way; with lobbyists, or ads, or contributions to political campaigns, or making their political views known to their employees (with the veiled threat that implies), or anything else. We can amend our Constitution to implement this restriction.
What you are talking about is exactly the problem: Corporations compete by ANY MEANS AVAILABLE TO THEM, and lobbyists and passing laws and gaining a legally enforced coercive monopoly are just one of the myriad means of killing any competition in its infancy. It is a way to compete *without* doing the hard work of coming up with a better product or a cheaper product.
Free markets do not work. This has been empirically proven again and again and again, most recently in the banking fiasco and gulf disaster. What does work is forcing companies to compete on *PRODUCT* alone. No lobbyists, no goons, no predatory pricing or loss leaders or other bullshit. When you do that products become better and cost less. But free markets DO NOT do that. They are jungle warfare where anything goes, and the most successful people in that environment are smart sociopathic criminals.
Tony C:
Do you know the story of Vanderbilt and his Atlantic steamship company? What about John D. Rockefeller? The myth of the robber barons is just that myth.
And how is Thomas Sowell wrong and also how Hayek wrong? I dont agree with everything they have to say but they have a good deal going for their views.
You just say they are ideologues, how so?
Big government is bad, look out the window at Washington, it is an overgrown black hole sucking our liberty into it’s growing vortex. A business man cant force me to buy his product but government can force me to buy his product.
“Every coercive monopoly was created by government intervention into the economy: by special privileges, such as franchises or subsidies, which closed the entry of competitors into a given field, by legislative action. (For a full demonstration of this fact, I refer you to the works of the best economists.)”
“Antitrust: The Rule of Unreason,”
“The necessary precondition of a coercive monopoly is closed entry—the barring of all competing producers from a given field. This can be accomplished only by an act of government intervention, in the form of special regulations, subsidies, or franchises. Without government assistance, it is impossible for a would-be monopolist to set and maintain his prices and production policies independent of the rest of the economy. For if he attempted to set his prices and production at a level that would yield profits to new entrants significantly above those available in other fields, competitors would be sure to invade his industry.”
“Antitrust,” Capitalism: The Unknown Ideal
If I sell hoes for gardening and I have the “monopoly” on the market and charge $100 per hoe and another hoe company comes along and starts selling hoes for $50 bucks what happens? I can sell hoes for $40 bucks or I can buy him out. So the price of hoes goes again to $100 bucks, guess what people will start buying stiff rakes or some other implement to use. So if I want to keep selling my hoes I have to lower the price.
Look at Lasik eye surgery, price has come way down and quality has gone way up. Why hasn’t a monopoly formed? It should based on your example but it doesn’t.
Show me some examples of what you are talking about, you cant because they don’t exist. Government is good at creating monopolies though and have for well over a hundred years. Free markets work, government intervention doesn’t and it is about time it ends. I for one am tired of paying to subsidize major corporations because they can afford a high priced lobbyist and I cant.
@Puzzling:
“Should government be allowed to kill its citizens if this results in benefits to society at large?”
Of course. We put murderers to death, because we believe that results in benefits to society at large. As people have done for at least 7000 years. We incarcerate people for the same reason: Because we believe the penalties imposed for crimes act as a deterrent to crime. We believe that crime is a choice and therefore the people that commit them are choosing to risk the penalty, so although they may regret the bet, the penalty is fair.
Now if you care to qualify this and limit it to non-criminals, then the answer is “of course not.” I do not think there exists a benefit that can outweigh the collective fear instilled in a society where innocent citizens are put to death. That is simply a dictatorship, which is not a form of “government” but a form of enslavement.
@Byron:
All BS, and that is the straw man. Roads are free to use because we all paid for them, and pay for their maintenance, with our taxes. Our governments routinely run road maintenance as a break-even (or even loss) operation; meaning the gas taxes and few tolls taken do not cover the actual costs of the materials and labor required to keep them in working order, and must be subsidized by other forms of governmental income. The road systems in the USA benefit everybody.
You are incorrect that any case can be made for private toll roads by industry. First, before WW II, there were decades of time for such a thing to be done by private industry. The demand was already there. But it wasn’t. Where was the free market then?
Second, it is simply untenable. If every road were a toll road run by private enterprise at whatever the market would bear, including those roads between me and my workplace, and my wife’s workplace, and the restaurants we frequent, and grocery, and doctor’s offices, and stores, and friends residences, half my paycheck would go to tolls. This is because any road is essentially a monopoly on the most direct route between points, and the natural price imposed by a monopoly is as high as frikkin’ possible.
In contrast, the existing road systems are run as close as possible to a break-even operation. No government employees are earning million dollar salaries, or getting multi-million dollar bonuses, or stock options, or any of that. They earn an average of $50K with a top rate of $200K or so for state-wide managers.
Idiotic tax-haters fail to understand that if they didn’t pay those taxes, they would pay five times as much for the same service with private enterprise extracting profit at every stage.
For conclusive proof, look at the expenses of private insurance versus Medicare, or private hospitals versus the Veterans Administration.
I have read Sowell, he is an ideologue. F. Hayek was an ideologue as well, infatuated with theory despite repeated proof that his theory does not comport to reality and what people do. He does not agree with you, he has been dead 18 years. You agree with him despite the fact that his theories have been tested and shown wanting. You both just want them to be true so bad you can’t let them go.
The straw man is the theory that somehow socialism is always evil (our road system is a socialist enterprise, our military is too), and always leads to government overstepping its bounds, combined with the utter FANTASY that free markets will somehow magically correct these ills.
This is simply untrue. We have been passing laws in this country for centuries IN RESPONSE to the unfairness, exploitation, discrimination and crimes against humanity actually implemented as a result of the free market.
Libertarians associate competition with the free market, but these are different things. Left to do whatever they want, wealthy businessmen do not compete on quality, service, and price. That is hard! Instead they compete with guns, goons, force, bribery, blackmail, even (and this is historically accurate) fire bombs and hijackings.
They virtually enslave their employees and ensure there is no place else for them to go. Proof? Look at the “free markets” in China and India right now. They endanger the lives of employees (look at Massey Coal and BP Petroleum and China.)
They bully their customers that have no real choice, if they want to stay in business (look at Microsoft “competing” against Netscape).
Competition on quality, features, functionality, service, price, longevity, cachet, safety, all of that is a wonderful force for the good of consumers. It creates choice and drives innovation. I don’t mind if companies go out of business or entrepreneurs become billionaires.
But that does not thrive in a free market, because the giants stomp hard on the midgets so they can keep being the giants, and they don’t do it by any form of PRODUCT competition — because that is hard. So they do it the other way, and that is NOT good for consumers.
The G20 dropped the Obama-Pelosi “spend your way out of a recession” Keynesian economic plan yesterday.
The Financial Times reported
The communiqué of the meeting made it clear that the G20 no longer thought that expansionary fiscal policy was sustainable or effective in fostering an economic recovery because investors were no longer confident about some countries’ public finances. “The recent events highlight the importance of sustainable public finances and the need for our countries to put in place credible, growth-friendly measures, to deliver fiscal sustainability,” the communiqué stated.
“Those countries with serious fiscal challenges need to accelerate the pace of consolidation,” it added. “We welcome the recent announcements by some countries to reduce their deficits in 2010 and strengthen their fiscal frameworks and institutions”.
These words were in marked contrast to the G20’s previous communiqué from late April, which called for fiscal support to “be maintained until the recovery is firmly driven by the private sector and becomes more entrenched”.
http://www.ft.com/cms/s/786776b4-708f-11df-96ab-00144feabdc0,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F786776b4-708f-11df-96ab-00144feabdc0.html&_i_referer=http%3A%2F%2Fseminal.firedoglake.com%2Fdiary%2F53036
B,
I have no issue with that. Gyges has excellent taste in beer.