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[P]
Sanity Checking the Free Market

By transient0 in Op-Ed
Wed Nov 05, 2003 at 11:32:15 PM EST
Tags: Politics (all tags)
Politics

The most dangerous thing in this world is rampant idealism. When righteousness, even well-informed and well-meaning righteousness, gets out of control it can do infinitely more damage than the most depraved or bacchanalian acts performed by a cynic or moderate.

We acknowledge this freely in our every day lives, whether we are considering the dangerous idealism of fundamentalist Islamic organizations in the Middle East, of extremist Christian organizations in the Midwest United States or even, to a lesser extent, of organizations such as Greenpeace, the NRA or the FSF.

What we value much more than an idealist with tunnel vision is an intelligent person with a slightly cynical eye who can see the value of the ideals but can also see the many places where an exception might be warranted.


We call this stepping in and acknowledging the need for an exception a "sanity check1."

Those of us on this website will be readily able to think of at least one example where this sort of system is not only beneficial, but necessary. Kuro5hin is a community website. Nearly 100% of the content is user created and the vast majority of it is user moderated. It is an open system based on the ideal of the Internet as an equalizing system in peer interaction and review. In most situations, K5 depends on the community to handle abuse by using the existing systems such as moderating, voting or pressing the spam button. There have been several cases however where the admins have had to step in and act outside of the system. Whether the action was the removal of rating privileges, the anonymization of an account, or merely the deletion of a particularly offensive and contentless comment, the admins were always acting with the intent of preserving the real goal of K5 as an enjoyable and productive community website.

In a situation like this you often have to step over the boundaries of the letter of your ideals in order to keep with their spirit. You are acknowledging an exception, and even when some are crying out "censorship!" and "injustice!" you know that you have done the right thing.

Or that's the way it should go. On K5 it works reasonably well because on the whole we have competent admins. Still, it is a benevolent dictatorship of sorts. Fine for a website, much more dangerous for a country. Who provides the sanity checks for the United States? Or likewise, for any democratic nation?

The President? The Supreme Court? Perhaps. I suppose you could call certain sections of the PATRIOT act in the USA a failed sanity check on Freedom of Speech. But there are certain ideals on which the average modern democratic nation is founded which the top administrative and legislative men and women rarely challenge due to disinterest or self-interest. In these cases, it is up to the populace to perform the sanity check and to represent their findings through voting and public information campaigns. The most fundamental of these is the idea of the free market.

This is an Op-Ed, so now is the time for the disclaimer. I am not a communist. I'm a firm believer that capitalism and the free market are systems that can not only work but are inherently better and more just than any alternative on a large scale. But the ideal can't be allowed to run away with itself. We are in a situation now where a sanity check is desperately needed.

Why is the class gap getting wider in the United States? Why are the racial distributions between socio-economic classes becoming more pronounced over time, rather than less? Because the free market has insufficient checks and balances. Someone born to a lower class family of a visible minority lacks the fundamental tools required to better his or her situation. And these tools are exactly what the free market is supposed to supply. It must be accepted that the Horatio Alger stories are dangerous myths. They were myths when they were written and they are increasingly more so now.

Are they to improve their lot through simple hard work? The low minimum wage and general lack of rent control outside of government housing projects (where simple desperation makes it nearly impossible to even cultivate ambition) makes the idea of clawing the way from lower class to middle class armed with nothing more than a work ethic absolutely ludicrous.

Are they to get an education and join the white-collar world? Exorbitant tuition rates and a scarcity of scholarships ensure that just enough socially disadvantaged people get into good schools to make for an occasional heart warming human interest story on the news. But for every lower class teenager who gets a scholarship to Harvard there are tens of thousands who would have easily gotten into a good school if they had been born to families with money but are instead destined to a lifetime of ignorance and poverty.

And it is not only within the borders of a capitalist nation that these insanities exist. They are also reflected in foreign policy. I believe everyone is aware of many such fiascoes, so I will only name a few2.

Consider the case of the ownership of engineered genes. This is a clear case where the same free market ideals which are applied to cars and televisions break down and need revising. But no-one has stepped in to sanity check. Domestically, there are cases of farmers being sued by Monsanto for stealing genetic information that evolution has provided with many efficient ways to help itself be stolen. On the global front, we have the issue where it is readily within our scientific power to create crops that would significantly alleviate world hunger, but this is not being done because it would not be sufficiently profitable or because of intellectual property concerns. Even worse are the cases where such crops or foods exist, but patent and IP concerns are preventing their dissemination.

Likewise, the peoples of many African nations are being denied access to drugs which could help solve major health issues in order to protect U.S. patents. There have been several attempts to sanity check this issue, but so far all have failed because the runaway free market has allowed too much money to collect in concentrated places and these sanity checks are against the interest of those parties.

Other such examples of the free market run amok include third world sweatshops being used to make shoes and bottle cola for first world consumers, energy deregulation and the domestic interests in foreign resources which inevitably affect political and military activity. These are all concerns which are often characterized as pet causes of extreme leftists and inevitable side effects of the otherwise beneficial free market. But these necessary evils are not actually necessary, they are the price paid for free market fundamentalism.

In none of these cases am I suggesting that I know a good quick fix. I am certainly not suggesting that we abolish patents, double the minimum wage and make college free, all on tax money. What I am suggesting is that we must as responsible citizens and human beings acknowledge that these issues are real. We must also be well informed and cynical enough to know when to ignore pundits who say "you can't change that without sacrificing the free market ideal."

The free market gives us so many beneficial things. It promotes innovation and rewards hard work. It can be a tool for fairness and equality. But, like any other ideal, it needs to have checks and balances installed, and the ones we currently have are insufficient. When you propose these changes, people may call you a communist, or perhaps unAmerican. You have to understand that what it actually comes down to is being just a little bit of a cynic and being able to say: "This is a good system, but it's not perfect."

endnotes:
1. The jargon file entry suggests that the term is used exclusively for the purposes of checking to see that a piece of software is sane. In common usage however, the phrase is used at least as often to describe checking to see how well one's model of a system conforms to the actual system or to describe stepping in and modifying initial assumptions in a system before a runaway loop or self-feeding process can get out of control.

2. As a Canadian, I am most familiar with issues specific to Canada and the United States, so I will draw my examples from these nations. The basic ideas should however generalize to any modern democratic capitalist nation.

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Poll
Does the free market work?
o It's working fine in the USA right now. 10%
o It's working great in Canada and certain European states, but has been allowed too much free reign in other states such as the USA. 20%
o Pretty much everywhere it is currently instituted it could use a sanity check. 55%
o No. I'm a communist. 15%

Votes: 120
Results | Other Polls

Related Links
o Kuro5hin
o sanity check
o farmers being sued
o significan tly alleviate world hunger
o denied access to drugs
o make shoes
o bottle cola
o energy deregulation
o domestic interests in foreign resources
o Also by transient0


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Sanity Checking the Free Market | 150 comments (116 topical, 34 editorial, 0 hidden)
Fighting the Myth (2.16 / 6) (#4)
by khallow on Tue Nov 04, 2003 at 09:32:57 AM EST

I think you're wasting your time. After all, most people are born with working brains. That's all you need to make something of yourself. Losely speaking, the Horatio Algers "Myth" is that with hard work you can lift yourself out of poverty. Maybe even get rich. Here's a more accurate summary:

11. What is the formula for an Horatio Alger story?

An adolescent boy with a rural back ground sets off to earn his livelihood in an urban setting. He triumphs over circumstances and temptation and starts advancing in his career. At some point, he will be betrayed or falsely accused by one of his peers. Ultimately, the hero will be vindicated. While pluck and hard work play a role in the success of an Alger hero, there is always an older male who takes on the hero as his protégé. That mentor plays a critical role in the success of the Alger hero. The Alger hero never takes revenge on those who mistreated him. He secures what is rightfully his, but he is never vindictive. Alger heroes never have romantic interests. As they leave adolescence, these heroes leave his books except to play the role of mentors for the new generation of Alger heroes.

Indeed, a dangerous myth that we must root out at all costs.

Stating the obvious since 1969.

it is dangerous (2.85 / 7) (#5)
by transient0 on Tue Nov 04, 2003 at 09:37:41 AM EST

The reason it's dangerous is not because it gives hope to those living in situations of poverty. It is dangerous because it lets those who are not believe that there is nothing really wrong and that anyone with a little "pluck and hard work" can pull themself out of the ghetto.
---------
lysergically yours
[ Parent ]
Ok, see your point (2.50 / 6) (#14)
by khallow on Tue Nov 04, 2003 at 11:19:29 AM EST

Still I wonder if maybe part of the problem is a lack of "pluck and hard work". Let's look at history for some clues. A lot of people moved out of poverty from the 1930's to the 1950's for example. I don't believe that can be explained by government assistance for the poor or for that matter "pluck and hard work". The advent of the industrial revolution wasn't really a step up in the early years for most workers. But when those workers became needed (eg, the turn of the 20th century), then interesting things started to happen.

I think a better indicator of poverty is how valuable a person is economically. If they can contribute a lot of value for their work, then poverty will be scarce. OTOH, if their work isn't valuable, then poverty will be more prevalent. One of the current problems in the US for example is that unskilled labor is very expensive compared to India or China. Because the cost of living in the US is much greater than these other countries, that imbalance will result in a surprising amount of poverty in the US.

Still if you're looking for a reliable way to get out of poverty. I think "pluck and hard work" is it. It also helps to have a good understanding of money and how to save it and use it.

Stating the obvious since 1969.
[ Parent ]

Not Sure If You're Aware... (2.75 / 4) (#44)
by virg on Tue Nov 04, 2003 at 05:00:39 PM EST

> A lot of people moved out of poverty from the 1930's to the 1950's for example. I don't believe that can be explained by government assistance for the poor or for that matter "pluck and hard work".

I'm not sure if your comment speaks toward your ability to use subtlety or whether you just missed it, but I'd say it can indeed be very largely explained by government assistance to the poor. See, in the dates you described, there was this time when the government put a lot of money into the economy and gave out jobs by the bucketload. On investigation it turns out there was this little thing called World War II that seems to have driven the government to pay a bunch of people a good chunk of money just to go to faraway places and shoot stuff. While these people were away doing their shooting, the government even gave a whole lot of stay-at-homes a bunch of money to build stuff so we could send it to the people doing the shooting. Since this meant that people who went through the Depression without jobs suddenly had income, there was a commensurate increase in the number of poor people who were suddenly not poor any more. Since it was the government paying many of them, that would seem to qualify as government assistance.

Virg
"Imagine (it won't be hard) that most people would prefer seeing Carrot Top beaten to death with a bag of walnuts." - Jmzero
[ Parent ]
I'm aware... (none / 2) (#83)
by khallow on Wed Nov 05, 2003 at 11:16:06 AM EST

I'm not sure if your comment speaks toward your ability to use subtlety or whether you just missed it, but I'd say it can indeed be very largely explained by government assistance to the poor.

Oh well. The big problem with that theory is that the Second World War was only a few years long for the US. So how did the magic persist? Why didn't things fall back to the 30's?

Instead, I think the answer is that the mobilization for the Second World War killed off a number of the oligopolies crushing the US economy and incidentally stoking large scale poverty. In other words, prior to the Second World War, Franklin Roosevelt (and to a more limited extent prior US Presidents) created a series of government and civilian oligopolies that prolonged the economic hardship brought on by the incredibly mishandled stock market crash in 1929.

Many of these oligopolies just couldn't deliver during the war. For example, look sometime at the ramp up in shipping and other war manufacture. A lot of heads rolled when the Nazi's kept sinking allied shipping particularly in 1941. The aggressive businesses got the business. After the war, we start to see the benefits of the new economy particular after the postwar recession settled down. For example, within a few years, Hewlett Packard became established as a maker of electronic testing equipment for defense projects and was the seed company of what became Silicon Valley.

The point? A thriving economy means less unemployment and hence less poverty than a weak economy. One of those key factors is government intervention. Governments can reduce poverty, but I think there's a real price associated with this. Namely, governments will create parasites. The "welfare parasites" are the obvious ones - people who become dependent on government assistance. This is a well-known moral hazard.

But also, we get other kinds of parasites. For example, those who control the flow of government largess to the recipients, rent-seekers who use government power to reduce competition and force you to pay for goods and services that were cheaper or even free, and pseudointellectuals who will keep discovering new definitions of poverty if the old ones get addressed too well.

Stating the obvious since 1969.
[ Parent ]

Capitalism and the free market (2.77 / 9) (#12)
by Fon2d2 on Tue Nov 04, 2003 at 11:04:47 AM EST

Overall I'd say you have good thoughts but they aren't very fleshed out. Personally, my ideals fall very much in line with yours in that I staunchly support capitalism yet still wonder at the injustices and inequalities it seems to cause. Sometimes those inequalities don't even appear to make sense. Consider your example of a disadvantaged minority with the brains and willpower but not the resources to succeed. At the very least a smoothly functioning free market system should be providing a decent student loan since that student in essence should represent as good an investment as any other. But even beyond that there should be (and if there isn't, it should be made a priority) a plethora of scholarships available for the financially and socially disadvantaged since it improves the health and vitality and increases the output of the economy and lowers the number of dependents in the long run.

What I've started to learn however is that no self interested player (and by definition all players are self interested) will want to play by the same rules as everybody else. Take pollution for example. Imagine a paper mill dumping toxins into a lake that have very real health effects for a community that lives near it. Now ideally every member of the community should be able to claim damages for the contamination of one of their primary resources or even be able to block access to or charge exhorbitantly for the right to dump toxins in the first place. This is the reason for the existence of agencies such as the EPA. When the EPA enforces environmental regulations, I see it as acting on behalf of the people that have the most rightful claim to public resources in the first place, not as some necessary perversion of the free market ideal.

Now granted some of the issues are very complex and I don't have all of the answers. For example, why does income equality still seem to be increasing? I have a couple ideas but no concrete thoughts. Also, keep in mind that with issues like gene modification, patent and copyright laws are kludge to the capitalist system to begin with. They are not property rights, but monopolies granted by the government for the better long term interest of the economy and society. I'm not hard against patent and copyright laws but I always remain skeptical of them and how they are used in practice. Being one of the more cerebral and less visceral constructs within the market system, it's not difficult to see how patents may not always be working for the best self interest of society and the economy. But once again, for your example of farmers being sued, I'd have to look to the self interest of one player (Monsanto) in skirting the ideals of the free market system.

Furphy (none / 0) (#74)
by Russell Dovey on Wed Nov 05, 2003 at 09:06:39 AM EST

(and by definition all players are self interested)

This is the most important mistake economists make when devising economic models.

"Blessed are the cracked, for they let in the light." - Spike Milligan
[ Parent ]

Economists make many mistakes (none / 1) (#90)
by Fon2d2 on Wed Nov 05, 2003 at 05:16:26 PM EST

myself among them, especially considering I harbor only an amateur hobby interest in the field. But there's a few things to realize about economics here, and foremost of that is that it's a discipline of theories. I say theories because it's generally very difficult to "prove" anything. Empirical evidence is also very hard to come by which means economonists must often rely on common sense, persausive argument, and as much logical reasoning as possible. Often times theories have holes in them, or serious missing links, but they can still fall under some semblance of acceptance if they are persausive enough and fit well with available data. Often times however, two major competing theories can be quite at odds with each other: Monetarism vs. Keynesianism for example. And often times economists can be taken quite by surprise by some completely unexpected and seemingly inexplicable behaviour of the economy: high unemployment and rising inflation in the late 1970s for example.

One thing you'll need to recognize about economic theories however is that virtually no theory is perfect. For example, when you take Micro, they'll take about Smith's supply and demand curves as if there were such a thing as a perfectly competitive market. We all know there is not. It's when you start adding all the extra rules, exceptions, and permutations that economics starts getting really thorny. When I said "and by definition all players are self interested" I was making a general overstatement. I know that it's more complicated than that, and I know not all players will work to maximize their own self interest. I felt however it was acceptable to gloss over such details in my previous post since it pertained mainly to large successful corporations. I think that a coporation that is successful enough to become quite large most likely has a questionable amount of self interest. Certainly enough to suspect they're not above working the system, and by working the system I mean playing outside the rules or the spirit of capitalism.

[ Parent ]

Non-free market items (2.00 / 7) (#18)
by Ken Arromdee on Tue Nov 04, 2003 at 12:16:16 PM EST

"Intellectual property" such as ownership of engineered genes or drug patents are a government-granted monopoly, not the "free market". And I'm not sure what you're referring to by energy deregulation, since those Google links are useless as explanations of why you don't like it, but if you're referring to California, only one side of that was deregulated, which is what caused the problems.

Free market vs. property rights (2.55 / 9) (#20)
by rujith on Tue Nov 04, 2003 at 12:31:55 PM EST

I think the problems you identified are not really caused by the "free market." You should define terms more carefully. A free market merely means that people are permitted to freely engage in voluntary commercial transactions.

Consider the case of the ownership of engineered genes.

That's not an issue with the free market, it's an issue concerning property rights, viz., who, if anybody, owns such engineered genes.

Domestically, there are cases of farmers being sued by Monsanto for stealing genetic information that evolution has provided with many efficient ways to help itself be stolen.

There's a lot more to that Canadian case: the guy carefully saved the Monsanto-pollinated seeds that he knew gave a higher yield than his own strains could have yielded.

Are they to improve their lot through simple hard work?

I think the stats show that in the U.S. there's a lot of mixing going on in the economic strata. In other words, a lot of the people in the bottom 20% in one year are not those in the bottom 20% the next year. And so on. So, yes, many people do improve their lot through simple hard work.

The energy system in California could hardly be called deregulation.

Let's return to your primary assertion, viz., that there should be "sanity checks" on the free market. In other words, people should be forcibly prevented in engaging in some voluntary commercial transactions. A good example is the minimum wage: suppose I'm willing to work for $4/hour, and an employer was willing to pay me that amount; the employer and I are prohibited from entering into that transaction. As a matter of principle, I cannot see any circumstances in which people should be prohibited from such voluntary transactions. Could you give some specific examples of voluntary transactions that a "sanity check" would probihit?

Please note that I'm carefully distinguishing between the free market and property rights. It's true that market transactions involve property rights; you can transact only what you own, and there's legitimate disagreement as to who owns what (do you own the minerals buried on your land? A picture of you? A picture of you in a large crowd? etc.). But I strongly believe that the free market itself is fully justified and worth defending as a matter of principle.

- Rujith.

Precedent (none / 1) (#28)
by roystgnr on Tue Nov 04, 2003 at 02:04:09 PM EST

There's a lot more to that Canadian case: the guy carefully saved the Monsanto-pollinated seeds that he knew gave a higher yield than his own strains could have yielded.

Is that really a lot more?  I carefully record broadcasts of copyrighted movies, cutting out commercials, so that I can watch them again whenever I want.

Fortunately, with copyrights there's judicial precident that says this sort of thing is legal: if someone else's copyrighted material comes over the air onto my property, I can make copies and save them for my own personal use.  Perhaps someday the same sense will be applied to patents too.

[ Parent ]

Unwitting beneficiary? (none / 0) (#29)
by rujith on Tue Nov 04, 2003 at 03:05:52 PM EST

But do you sell the copies that you make of those broadcasts? I think there's a fair case that Schemeiser was not simply an "unwitting beneficiary." Simply finding Monsanto-pollinated plants on your property is one thing. Noticing that these plants had better yields, and carefully saving their seeds for future use, is yet another. Then it looks more like deliberate fraud or evasion of payment. Here's a pretty good summary. - Rujith.

[ Parent ]
Was he selling seeds? (none / 0) (#53)
by roystgnr on Tue Nov 04, 2003 at 08:23:01 PM EST

I thought he was just saving seeds for his own use.  That means he wasn't paying Monsanto to use them, but it's not like I go out to Blockbuster and rent something I've already recorded off the TV.

[ Parent ]
He sold the crops from the seeds (none / 0) (#75)
by rujith on Wed Nov 05, 2003 at 09:25:49 AM EST

The Monsanto seeds were genetically engineered to be resistant to a Monsanto herbicide called Roundup (hence the seeds are called Roundup Ready). The key point is that when he found some plants growing on the edges of his field that were resistant to Roundup, he preferentially saved the seeds from those plants, rather than saving seeds from the bulk of his crop. He planted those superior seeds throughout his fields, and sprayed them with Roundup he bought from Monsanto. I really get the impression that he knew exactly what he was doing, rather than just being the innocent farmer he portrays himself as. - Rujith.

[ Parent ]
Or.. (none / 1) (#88)
by Kwil on Wed Nov 05, 2003 at 01:46:43 PM EST

..it could just be that he normally bought Round-up from Monsanto, noticed some plants near the edge of his field gave better yields, so kept the seeds from those particular plant as any astute farmer would do.

Expecting every farmer to be able to do genetic analysis to see if a particular plant that exhibits different growing properties contains a patented gene is clearly beyond the bounds of reasonable expectations.

That Jesus Christ guy is getting some terrible lag... it took him 3 days to respawn! -NJ CoolBreeze


[ Parent ]
Voluntary Contracts AND IP vs. Free Market (3.00 / 5) (#31)
by transient0 on Tue Nov 04, 2003 at 03:35:20 PM EST

As a matter of principle, I cannot see any circumstances in which people should be prohibited from such voluntary transactions.

How about a situation where local political and economic factors have made for mass poverty and starvation. In comes a first-world business-man and says "Ma'am, I will provide you and your children with enough currency to eat, no more no less. In return, I ask only that you and them commit your every waking hour to working in my dangerous and oppressive factory."

The woman of course agrees because the alternative is going to be almost certain starvation. She is smart enough to know she's getting a bum deal, but also smart enough to know it's the best deal in town.

The free market idealist says: "There was a labor shortage and the business-man came in and got work for the best rate he could. He saves money for his shareholders and the woman and her children get to eat. They have entered into a mutually beneficial contract based on the true tenets of the free market."

I say: "Bullshit. There was no direct coercion, but the business-man is in such an imbalanced position of power that any contract he offers is indirect coercion. By coming into this environment, the business-man becomes not only the bringer of sustenance to those who accept his contracts, but also the implicit denier of sustenance to those who decline it. And when the fruits of this labor is being funelled back to the first-world, the economy in these sweatshop states does not have an opportunity to improve. The workers are barely maintaining survival, so they can neither unionize nor relocate to an area where labor agreements are more favorable. In these situations, I believe that it is the responsibility of first-world nations to impose strict bans on importing of goods produced under inhumane conditions."

Also, in regards to your free market vs. intellectual property issue:

I understand the distinction between these two sets of issues, but in a practical sense they become very closely tied. The patent system (although originally a stopgap amendment of the free market) has become an integral part of the free market itself. The free market system is based on the idea that competition breeds excellence. That a business or corporation must be allowed (scratch, expected) to do everything in their power to maximize their profits so long as they do not violate existing laws.

Patent and IP law is one of the bodies of law which play most intimately with this credo, not just in the U.S. but in any world market. And it is the interplay between the free market ideology and IP law which causes many of the most harmful effects. We don't hold pharmaceutical companies guilty of mass murder through negligence in Africa because the free market ideology declares that they must maximize profits and patent law says that in order to do so they must deny their drugs to African nations. It is just these areas of interplay which are often the most in need of a sanity check.
---------
lysergically yours
[ Parent ]

Good argument (none / 2) (#35)
by rujith on Tue Nov 04, 2003 at 04:03:43 PM EST

Okay, thanks for a very nice scenario with the "exploitative" factory regarding the limits of the free market. At this point, I guess we understand each other's viewpoints, and must simply agree to disagree. It's a pleasure to have such a reasoned debate, by the way!

I do agree that, in some circumstances, a "benevolent despot" could issue economic dictates that yield superior results than the free market. But I also think that benevolent despots are in short supply; most government programs deteriorate for various inherent reasons; and free markets have empirically yielded better results than government mandates.

In your scenario, I think what would/should happen is that the woman would accept the job, to escape starvation; the factory owner would make handsome profits; somebody else would notice this, and set up his own factory offering slightly better terms to employees; and so on.

A parting word: Markets are self-correcting, governments are not.

- Rujith.

[ Parent ]

Not always self correcting (none / 3) (#40)
by transient0 on Tue Nov 04, 2003 at 04:27:29 PM EST

There are a lot of possible equilibriums in a game theory/evolutionary system such as the free market. The market is only self-correcting in that it will naturally gravitate towards one of these equilibriums.

The one we are currently gravitating towards is the "ten percent of the population control ninety percent of the wealth" equilibrium. This means that the third world countries will NEVER have the resources to compete or interact on anything approaching equal terms with the current first world countries and that there is no reason for the next man who builds a factory to offer better wages.

You see, there are so many people on the verge of starvation that shoes and pop bottles and sweatshirts and everything else could be supplied for the ENTIRE first-world at sweatshop rates without running out of eager workers. The only incentive for the second factory to offer the workers better terms than the first factory is if they are competing for some resource such as workers and this is not only not the case, but is becoming INCREASINGLY not the case.

Is it not the responsibility of a humane voting public in the first world to try and bump the global market into a different equilibrium?
---------
lysergically yours
[ Parent ]

wrong (none / 2) (#66)
by bankind on Tue Nov 04, 2003 at 11:30:19 PM EST

This means that the third world countries will NEVER have the resources to compete or interact on anything approaching equal terms with the current first world countries and that there is no reason for the next man who builds a factory to offer better wages.

This is not the case. Textiles, which is the case study in this situation, has shown a gradual movement across the world. England to US to third world (and in Asia from Taiwan, to Thailand to China Vietnam and currently to Cambodia), where in each location if the government supported institutional development, there was significant social/economic development.

Your earlier scenario of indirect coercion (which is your basis for this argument) is completely unfounded. The situation is never as dire as starvation of sweat shop labor and investors DO NOT build factories in war zones, but in location with stable electricity, good roads, enforced laws, limited corruption, and labor costs to make the investment profitable.

Investors these days (even the nastiest of the bunch--the East Asians investors) are not interested in the cheapest labor and worst labor conditions (see the current investment flight from Indonesia as an example).

But back to your comment, if developing countries DID NOT have resources then investors would never go their in the first place. These countries ALL have natural resources and investments in developing countries are on a mini-boom as the G-7 economies underperforms (See China).

But how the Saud family spends their oil reserves while the average standards of living drops has nothing to do with a free market. Unfortunately for the US, is that some countries are very active in supporting development and are successful, meaning that Westerners will have to develop new skills to compete for investment (like OMFG learn a language).

"Insurgents are blowing up pipelines and police stations, geysers of sewage are erupting from the streets, and the electricity is off most of the time -- but we've given Iraq the gift of supply-side economics." -Krugman
[ Parent ]

no kidding (none / 0) (#112)
by Battle Troll on Thu Nov 06, 2003 at 11:54:37 AM EST

I used to think that foreign languages were impossible. Then I started going out with this European girl, now my wife, and noticed that she speaks three (and her grandparents speak all those plus Hungarian, which is really hard.) It made me feel like an idiot and I've learned to speak two languages reasonably well while we've been together.

Whay is it, do you think, that Anglophones have such huge mental blocks about learning foreign languages?
--
Skarphedinn was carrying the axe with which he had killed Thrainn Sigfusson and which he called 'Battle Troll.'
Njal's Saga, ca 1280 AD
[ Parent ]

Quite frankly, no (none / 1) (#101)
by Anonymous 242 on Wed Nov 05, 2003 at 11:44:27 PM EST

[T]he factory owner would make handsome profits; somebody else would notice this, and set up his own factory offering slightly better terms to employees; and so on.
First, neoclassical supply and demand theory assumes that every industry has a standard rate of profit. Unless the factory owner was making an above equilibrium profit, there would be no incentive for capitalists to move into the same industry and same geographical area to take advantage of the same source of inexpensive labor.

Second, you are assuming a scarcity of inexpensive labor. If the supply of inexpensive labor outstrips demand for inexpensive labor, there will never be any market pressure for wages to increase. Capitalists that want to move into the same industry and decide to take advantage of the same source of labor only have to offer better wages if there is competition for that labor. So long as the world has a surplus of people willing to work for subsistence level wages, there will be little (or no) incentive to increase wages in order to compete for the labor pool with competing firms.

Third, you are assuming that all else remains equal. This is true for certain commodities such as staple foods. It is not necessarily true for other commodities. Some firms seek to raise wages as part of a long run marketing campaign to be seen as socially responsible which makes certain demograpic groups willing to spend more for some commodities. Other firms might have a long term strategy entirely driven by minimizing costs. In the case of the latter, more firms in the same industry may actually drive wages down.

Lastly, the notion that markets are self-correcting is only true for certain definitions of "correct."

[ Parent ]

Power vs Production (none / 1) (#46)
by Daelin on Tue Nov 04, 2003 at 05:07:09 PM EST

The purpose of the patent and copyright is to prevent large publishing or production companies from unfairly becoming larger by taking the designs and creations of others without compensation.  It is a non-compete agreement; a monopoly.  This is the benefit and protection provided by IP legislation for both authors/inventors and hired works by companies.  It is the arguement of proponents of extending legislation.

However, it is monopoly, and it is non-compete, and that is a powerful economic tool.  With broader and broader protections, companies can beging to regulate the economy itself—in their favor—by selectively declining their immediate competitors the right to compete.  The free market degenerates into a feudal state, owned and operated by IP lords with their own unwritten tarrifs and import/export duties.  If you completely ignore the immorality of indefinitely controling concepts and implimentations of ideas, this is alone is a critical economic arguement for "limited Times."

[ Parent ]

I remember seeing the perspective of... (none / 2) (#113)
by gte910h on Thu Nov 06, 2003 at 12:01:28 PM EST

...some "sweat shop" workers who were put out of work after protesters about Cathy Lee Gifford's clothing line on TV.

The factories DO benefit the populace. They enable people to not work at farm jobs, which they admit are much harder, and more dangerous than most of the factory jobs.

Secondly, the influx of money into the local economy cannot do anything other than help it. Sure, the workers may not be able to buy what they're producing yet, but the money thrusted into the local economy allows local businesses to spring up and create a real economy. Think about it, if they aren't able to buy american goods, they are developing a favorable balence of trade (exporting more than importing).

Thirdly, (this isn't something from the special, but something from my african roomate), factories drive infrastructure improvement. Most places a lot of people live have africa have power now, however its not on all the time, and it has intermittant failures. Factories lose money when this happens, so they often drive for better infrastructre if that's cheaper than buying generators (it is often so).

At the end, the TV special showed an administrator of some african nation saying something to the effect of "I wish dumb american kids who protest these factories would ask us before protesting. We like and actively solicit these factories. People like working in them. When you shut them down these people starve or go back to lower paying farm jobs."

[ Parent ]

Yes, but... (none / 1) (#131)
by freestylefiend on Sun Nov 09, 2003 at 08:57:26 AM EST

If wealthy westerners insist on buying goods that were produced without denying third world workers a fair deal (as opposed to a beneficial, but unfair, deal), then they may find that they are offered better pay and conditions. We are determined to have our clothes and our bananas (imagine how much poorer we in the British middle class would have to become to stop buying imported clothes and food, simply to do without), so we would just buy them at slightly higher prices from more 'generous' factory/plantation bosses.

The demonstrations are useful because the production of the goods that we buy is increasingly distant and out of sight. Without knowledge of the production methods, which most do not have without demonstrations, we would only make the best deal for ourselves.

[ Parent ]

A "Fair Deal".... (none / 0) (#134)
by gte910h on Mon Nov 10, 2003 at 12:05:38 AM EST

When you increase the price of something, its demand goes down. Less workers get paid, or they AUTOMATE

If these companies find it cheaper to automate than give what you call a fair deal, these people will be SOL. There is no way americans can compete with these laborers. However, american machine manufactures can compete with a more highly paid laborer, and that's what you're going to get if you "raise awareness".

And even if you don't, what will happen is not a factory getting less work, whole factories will be shut down and certain onese will be "brought up to standardS". You will re-impoverish the people you wanted to help.

[ Parent ]

The Rights Of The Customer And The Labourer (none / 1) (#135)
by freestylefiend on Mon Nov 10, 2003 at 05:34:24 AM EST

When you increase the price of something, its demand goes down.

If the price of bananas and unbranded clothes doubled, then my demand wouldn't decrease (I would still need clothes and food - where do I get my Potassium from if I don't have bananas?). I'm not even sure if I would notice such a price rise and I live on less than the median income here and less than half of the mean income here.

There are many customers who want to buy products whose production have given the workers a better deal than they could demand. If customers find out that the cheaper goods that they have bought were produced in worse conditions for the workers, then the customer feels ripped-off. They believe that the "unfair trade" ought not to be allowed and that Fair Trade replacing it would be a good thing. It is their right as a customer to act according to this belief if it is wrong, and their duty to do so if it is right.

Less workers get paid, or they AUTOMATE

I don't see the problem here. Either the workers have a right to get paid or they don't. I don't have a solution for a world in which all of the labour is done by machines owned by very few people, but, other than this case, I believe labour saving devices to be good.

However, Fair Trade goods cost more mostly because the labour costs are higher. Nobody loses out here, provided that the customer can afford the cost. It is interesting to speculate whether people would buy costly hand made Fair Trade goods rather than cheap machine made goods, in order to protect people from unemployment. Maybe they would do it just to get higher quality.

[ Parent ]

I don't see how you fit with this contradiction. (none / 1) (#138)
by gte910h on Tue Nov 11, 2003 at 06:32:00 PM EST

Less workers get paid, or they AUTOMATE

I don't see the problem here. Either the workers have a right to get paid or they don't. I don't have a solution for a world in which all of the labour is done by machines owned by very few people, but, other than this case, I believe labour saving devices to be good.

"Rights" of workers have nothing to do with this arguement, although I find your attitude there distaseful too.

You want companies who make clothes in forign factories to have to pay certain costs to hire human labor. I put this under the assumption that you care for the well being of these people.

Here is a model that shows the flaws in your reasoning

If it costs $4 a day to hire a snoxian, and a snoxian can fold 1000 garmets in a day, if you hire 250 snoxian, you can fold 1 million garmets in a day for $1000.

If you raise the wage to $20 a day per snoxian, it now costs $5000 to fold 1 million garmets.

Two bad things then happen here:

  1. The quarterly cost to run the machines (assuming a 300 day year) went from $300K to $1.5 Million. If the demand for the good is elastic, less will be sold when increased production cost is reflected in the price. Less of the garmets are needed, and one or more factories making them close (thereby putting those snoxicans out of work).
  2. If a folding machine costs of similar capacity costs $1,000,000 installed, and takes a full time american technician who makes $25K a year, you can replace those 250 snoxians with that folding machine and the american tech and be saving money in about 9 months. Thats NOTHING to a corporation of this size, they could get a loan for that in an instant. At the old wages, it would take about 5 years counting interest. That's not as easy a decision for the company to make, so they don't bother since they are making plenty of money.
If they DO buy the folding machine, again, 250 snoxicans have no work and have to go back to crappy farm work. You've Hurt them, which was not your purpose, which was instead to help them.
----
You seem to think I don't have their interests at heart. I do. I think the developing world really is benefiting by trade advantages caused by low labor costs. I'm actually thinking this sort of initiative would be more useful in keeping jobs from expatriating, thereby destroying the American middle class's blue collar base. And I think that you're sort of "information" is not useful, being that it harms these poor countries as a whole when it gets out.

You act like these people don't want to work in these factories. They do, very much so. Let more of them do so and keep yourself out of this very beneficial system.


[ Parent ]

Because I Oppose Capitalism... (none / 1) (#139)
by freestylefiend on Wed Nov 12, 2003 at 07:26:40 AM EST

But not necessarily market freedom (depending on the definition and the likely results) and definitely not democracy.

"Rights" of workers have nothing to do with this arguement,

I thought that we were discussing our (moral) duties to workers in the third-world. I believe that those workers have (moral) rights arising from those duties.

although I find your attitude there distaseful too.

I apologise for any offence. Workers have my full support in increasing their remuneration for production by increasing their bargaining power, increasing the global useful output from which they are paid or by increasing their share of the profits of the means of production.

If it costs $4 a day to hire a snoxian, and a snoxian can fold 1000 garmets in a day, if you hire 250 snoxian, you can fold 1 million garmets in a day for $1000.

I make that 250,000 garments folded per day, but I don't think that this effects your conclusion if we let (as you have) the capacity of the machine be at least the same.

If the demand for the good is elastic, less will be sold when increased production cost is reflected in the price.

As their own labour now makes up more of the cost of the clothes, the poor workers in our factory are now better able to buy their own output. (Relatively) wealthy westerners, like ourselves, still require the same quantity of clothes and can afford the increased cost of the clothes. I expect some reduction in sales, but not a huge reduction.

The problem as I see it is that our workers no longer have jobs due to competition. If all factories took this action, then I believe that there would be no problem. If some subset of the customers insist on buying goods made in factories with good conditions for workers, then some factories are maintained in this virtuous state (at the expense of jobs in a worse factory and without changing the number of unemployed or subsistence farmers).

I understand that pressure to improve the conditions for workers makes it more attractive to employ fewer workers. I further understand that some may support artificially improved workers' conditions and, as a consequence, accidentally promote automation. I am not one of them.

If they DO buy the folding machine, again, 250 snoxicans have no work and have to go back to crappy farm work. You've Hurt them, which was not your purpose, which was instead to help them.

Even if your point regarding the merits of factories with poor conditions versus factories with good conditions is correct, I would support automation (provided that it does the job at least nearly as well as humans). If people lose their jobs to labour-saving devices, then they should address a different labour shortage or take possession of the means of production.

If automation means that we can do away with some of our current labour requirements, then this means that we can collectively be more productive or that we can each do less work without reducing our output. These seem like good things to me.

You seem to think I don't have their interests at heart. I do.

I believe you. I really didn't think that you didn't have their interests at heart.

I think the developing world really is benefiting by trade advantages caused by low labor costs. I'm actually thinking this sort of initiative would be more useful in keeping jobs from expatriating, thereby destroying the American middle class's blue collar base.

I do see the dilemma. I'm not arguing with you because I think that your position is stupid, but because I think that it is not stupid.

And I think that you're sort of "information" is not useful, being that it harms these poor countries as a whole when it gets out.

Are you suggesting that these facts being widely known is a bad thing? Should we try to keep people ignorant? Should we abstain from educating people about third-world conditions? I don't think so. If you are correct, then everybody should understand your position, rather than being ignorant. If you are correct, then it is insufficient knowledge that is doing the damage, not too much knowledge.

[ Parent ]

Sorry to bring this up from so long ago.... (none / 1) (#148)
by gte910h on Mon Dec 22, 2003 at 10:13:05 PM EST

And I think that you're sort of "information" is not useful, being that it harms these poor countries as a whole when it gets out.

Are you suggesting that these facts being widely known is a bad thing? Should we try to keep people ignorant? Should we abstain from educating people about third-world conditions? I don't think so. If you are correct, then everybody should understand your position, rather than being ignorant. If you are correct, then it is insufficient knowledge that is doing the damage, not too much knowledge.

I wouldn't want to get this information to them because I think the status quo in this case is fine and good. You want to have a debate in public that can get them to possibly change, I don't want it to change, so from a strategic standpoint, its better in my opinion to have neither of us speak than both of us, as the first will most definitly result in no change, where the latter could result in a change in a bad direction from my viewpoint.

[ Parent ]

Three Objections. Maybe You Can Enlighten Me. (none / 1) (#81)
by freestylefiend on Wed Nov 05, 2003 at 10:58:05 AM EST

If the free market will allow some to be poor, if some of the poor have children and if the children of the poor have fewer opportunities than those of the rich, then why not intervene to ensure that few of the new generation are so under-resourced that it is made less likely for them to become innovators, surgeons, entrepeneurs and the like? If something is not done to make sure that as many as possible have a good enough start in life to rise to the top, then will society have a lower quality (in terms of vocational ability) of person in those important roles? If some children are denied education, healthcare, proper nutrition and other reasonable wants by the inability or unwillingness of their parents (or other carers, but not themselves) to earn enough money, then is that unfair on them?

In other words, people should be forcibly prevented in engaging in some voluntary commercial transactions.
...
As a matter of principle, I cannot see any circumstances in which people should be prohibited from such voluntary transactions.

Some cases in which I might want voluntary commercial transactions to be prevented are those in which parties other than those who voluntarily participate are harmed. I do not mean harm through failing to find willing people with whom to engage in commercial transactions due to competition. I mean harm such as that caused by pollution. If two people voluntarily engage in a mutually beneficial commercial transaction that causes me to be poisoned, then should I have been consulted (or should I be compensated)? Has a resource of mine been used in the transaction without my consent?

you can transact only what you own, and there's legitimate disagreement as to who owns what
...
But I strongly believe that the free market itself is fully justified and worth defending as a matter of principle.

Given the property problem that you acknowledge, how can we know that, when we trade freely, we also trade legitimately? Do we need a higher authority than the participants in the transaction to determine the rightful owner of the posessions in question? If we allow there to be an external authority over the transaction, then has free trade been done away with? Why do you believe that the free market is justified and worth defending?

[ Parent ]

Responses to questions (none / 0) (#89)
by rujith on Wed Nov 05, 2003 at 02:34:01 PM EST

If two people voluntarily engage in a mutually beneficial commercial transaction that causes me to be poisoned, then should I have been consulted (or should I be compensated)?

Definitely. You have a "property right" to the air you breath, and therefore you are a participant to that transaction. However, this example leads to the grey area of how to handle transactions that have diffuse benefits or costs.

If the free market will allow some to be poor, if some of the poor have children and if the children of the poor have fewer opportunities than those of the rich, then why not intervene to ensure that few of the new generation are so under-resourced that it is made less likely for them to become innovators, surgeons, entrepeneurs and the like?

Two responses to this: (1) If there were such intervention to help poor children, then what advantages should the children of rich people have over those of poor children? Should they have no advantage at all? Would people strive to be rich, if they can't even ensure a better life for their children? (2) You can donate your own money, and persuade others to do likewise. I fully support doing this, and donate money myself. But forcing others to 'donate' money is not the same thing. That's not charity, that's coercion, no matter how sincerely intended.

Given the property problem that you acknowledge, how can we know that, when we trade freely, we also trade legitimately?

That's a good question for which I have no easy answer. I believe property rights spring from the ancient notion that "I made this axe, it's mine, and if you try to take it from me, I will fight you." Another guiding principle I use is that what's right for an individual is right for a group, and conversely. It's not right for me to take your possessions, whether I do it myself with a gun, or by casting a vote with millions of others to employ somebody else with a gun.

- Rujith.

[ Parent ]

Thanks (none / 1) (#95)
by freestylefiend on Wed Nov 05, 2003 at 08:36:26 PM EST

You have a "property right" to the air you breath, and therefore you are a participant to that transaction.

That was enlightening. It seems we agree on this and I did not expect that. (I thought that you might consider this to be unreasonably coercive). I would not use property rights to explain this, but arguably your explanation is more elegant.

It just goes to show how a lack of proper understanding of the issue can make consensus even more difficult. There are perceptions of market freedom as being in support of sudsidies and import duties because these have been pushed by the corporate interests that also support market freedom. I suppose that these perceptions are inaccurate too.

I disagree about the children. As someone who only ever supports market freedom out of pragmatism, rather than principle, I find myself unable to approve of trade freedom where I believe that it is damaging to the common good. For the reasons that I have given, I believe this to be such a case.

That's a good question for which I have no easy answer.

I should be charitable. On the issues about which I have opinions, I often can't explain why I hold my opinions despite objections. Sometimes all I can do is side with the objections and none of the proposed solutions and perhaps that is because the true solution has not yet been proposed. I sometimes feel that political and economic issues aren't properly addressed by the common answers, even those that I give.

Thanks for the link and the thoughtful contribution.

[ Parent ]

Stats on economic mixing (none / 0) (#142)
by greenrd on Wed Nov 12, 2003 at 06:36:43 PM EST

I think the stats show that in the U.S. there's a lot of mixing going on in the economic strata. In other words, a lot of the people in the bottom 20% in one year are not those in the bottom 20% the next year. And so on. So, yes, many people do improve their lot through simple hard work.

At last, someone talking about statistics, rather than anecdotes that do a laughable job at proving anything ("My grandfather lived till 90 and smoked all his adult life, so that proves smoking doesn't cause cancer!")

However, you haven't actually cited figures, merely hand-waved at them. Specific citations, please.


"Capitalism is the absurd belief that the worst of men, for the worst of reasons, will somehow work for the benefit of us all." -- John Maynard Keynes
[ Parent ]

Democracy Is More Important Than Market Freedom (2.54 / 11) (#23)
by freestylefiend on Tue Nov 04, 2003 at 01:00:54 PM EST

It is time to stop seeing the free market as an inviolable principle and to start seeing it as a tool that we may apply when we believe its consequences would be desirable. A more important principle is democracy. If a majority want to curtail market freedom, then they should be permitted to do so.

Pfft. (3.00 / 4) (#26)
by porkchop_d_clown on Tue Nov 04, 2003 at 01:22:43 PM EST

A free market is just one aspect of the freedom I want for myself.

My personal liberty extends to my commercial life as well as my political life.

--
Heinz was quoted as saying: "But the sheep are so soft and wooley," immediately before he was put into custody.


[ Parent ]
Majority choosing your job (none / 2) (#30)
by rujith on Tue Nov 04, 2003 at 03:18:38 PM EST

Well said, democracy must prevail above all. If a majority think that you should work as a plumber, you should accept their decision. - Rujith.

[ Parent ]
Seems Fair To Me (none / 2) (#47)
by freestylefiend on Tue Nov 04, 2003 at 05:12:19 PM EST

Ideally, people ought to have power over each decision in proportion to the effect it has on them. However, I don't believe that this is practical. If enough people felt that I should be a plumber that it gained popular support, then I would accept it.

I hope that people are sensible enough to vote for an economic system that allows people to find work to which they are suited. I don't expect the electorate to take away all freedom just because I would allow it to.

[ Parent ]

Slavery (none / 1) (#49)
by Dalren on Tue Nov 04, 2003 at 06:30:34 PM EST

I really can't tell if your joking or not, but since the reply to your comment assumes that you are not, I will make the same assumption, if it is a wrong assumption I apologize.

You realize that what you have just advocated is pure slavery.  According to you if I can get 51% of the people to agree that you should be my slave then you would have to be my slave.

I thought the original parent comment was scary enough, but this entire thread seems to be something straight out of Atlas Shrugged.  It is people like you and thoughts like these that make me scared to live in this world.


[ Parent ]

Yes, I was joking (none / 1) (#73)
by rujith on Wed Nov 05, 2003 at 09:05:32 AM EST

I really can't tell if your joking or not ...

I couldn't figure out if the post that I was replying to was a joke or not, so I used the same style. But, yes, I was joking. - Rujith.

[ Parent ]

I was serious. Of course, I could be wrong. NT (none / 1) (#76)
by freestylefiend on Wed Nov 05, 2003 at 09:42:02 AM EST



[ Parent ]
Then you'd be seriously wrong :-) (none / 1) (#79)
by rujith on Wed Nov 05, 2003 at 10:44:14 AM EST

- Rujith.

[ Parent ]
Majority rules? (none / 3) (#33)
by gzt on Tue Nov 04, 2003 at 03:57:29 PM EST

Not a really good idea of democracy. See Tocqueville, etc. I find Dewey's pragmatic statement of his idea of democracy in the social sense: "From the standpoint of the individual, it consists in having a responsible share according to capacity in forming and directing the activities of the groups to which one belongs and in participating according to need in the values which the groups sustain. From the standpoint of the groups, it demands liberation of the potentialities of members of a group in harmony with the interests and goods which are common." Of course, this implies the abolition of the idea of personal property if such a thing "works", or instituting a more restrictive idea of personal property if that "works" better.

[ Parent ]
yeah (none / 0) (#97)
by Battle Troll on Wed Nov 05, 2003 at 10:57:18 PM EST

Tocqueville comments early on that some French laws, wrt eg inheritance, are more "democratic" than the American ones, and remarks on the democratic nature of American social relations (as opposed to government per se.)
--
Skarphedinn was carrying the axe with which he had killed Thrainn Sigfusson and which he called 'Battle Troll.'
Njal's Saga, ca 1280 AD
[ Parent ]
Democracy & free markets (none / 2) (#54)
by Lord Snott on Tue Nov 04, 2003 at 08:26:36 PM EST

The "Free Market" God is just as dangerous as the "Democracy" God.

Democracy taken to an extreme is not much more than beaurocratic mob rule, where shallow, half informed opinions back short sighted, self interested policies (see Gulf War I & II).

Democracy needs boundaries and balances, otherwise governments are in danger of going the way of Enron (or HIH, Ansett, Pasminco & OneTel in my country).

Idealistic free markets and fundamentalist democracies push for short term gains, at the expense of sustainability. This leads to monopolies in markets, and corrupt governments keeping themselves in power by mis-information & FUD ("We don't know terrorists AREN'T coming in the country with refugees." - John Howard).

~~~~~~~~~~~~~~~~~~~~~~~~
This sig in violation of U.S. trademark
registration number 2,347,676.
Bummer :-(

[ Parent ]

Enter Plato's Republic... (none / 0) (#62)
by Daelin on Tue Nov 04, 2003 at 10:27:43 PM EST

...and Communist Intellectual Elite. PS: I don't speak in connotations.

[ Parent ]
Contrariwise (none / 2) (#118)
by Simon Kinahan on Thu Nov 06, 2003 at 06:57:57 PM EST

There is nothing obviously just about 51% of people being able to impose their will on the other 49%. On the other hand, there is something obviously just about you and I getting together and agreeing to exchange goods, providing we don't hurt anyone else in the process.

Democracy *is* an important principle but as a way of controlling governments, not as a way of running a society. Markets, on the other hand, are just a consequence of freedom of association and freedom of action, things we tamper with at our peril.

Simon

If you disagree, post, don't moderate
[ Parent ]

I Disagree (none / 0) (#123)
by freestylefiend on Fri Nov 07, 2003 at 05:57:25 AM EST

There is nothing obviously just about 51% of people being able to impose their will on the other 49%.

Rather than taking the position that market freedom is good, but democracy could be bad, I take it that democracy will be good. I have faith in people to exercise their democratic rights responsibly.

On the other hand, there is something obviously just about you and I getting together and agreeing to exchange goods, providing we don't hurt anyone else in the process.

This is actually quite restrictive. Other people have claims on things that I might want to trade with and a great many transactions will harm those not voluntarily involved. Some authority is needed to decide what is mine to trade with and whether you will be/have been harmed by the transactions of others. What better authority to make this decision than one with a democratic mandate?

What I really intend is that people are allowed to decide democratically what they believe to be harmful to them in the transactionas of others. Obviously this is open to abuse, but I don't expect people interfere with what you call market freedom.

In the case of child poverty, I would like intervention to relieve the poverty (as it is unjust to punish the child for its failure to ensure that it has sufficient wealth be being productive). I am not willing to leave this intervention to market forces or to the charity of individuals.

Advocates of market freedom sometimes say that when hard work and ability are not enough to lift someone out of poverty that we should leave it to the generosity of the rich. Why not allow (and trust) people to be generous with their democratic rights too?

[ Parent ]

Some disagreement (none / 1) (#125)
by Simon Kinahan on Fri Nov 07, 2003 at 12:11:44 PM EST

<P><I>Rather than taking the position that market freedom is good, but democracy could be bad, I take it that democracy will be good. I have faith in people to exercise their democratic rights responsibly. </I>

<P>But democracy quite clearly *is* bad at making decisions about the distribution of goods and services. People are not, in fact, very "responsible" about exercising their democratic rights, although they don't always realise they are being irresponsible. People vote to tax the rich and give to the sligtly less rich. They vote to impose steel tarifs. They vote to cut off aid to UN organisations that encourage family planning.

<P>People make cruel and stupid decisions when you ask them to vote on remote issues that they barely understand. This is just human nature: when faced with a decision we don't understand very well, we either decide on a hunch (that one has a nice smile), or by our crude (rather than enlightened) self interest (he promised not to raise taxes).

<P>Public choice theory does into this in some depth.

<P><I>This is actually quite restrictive. Other people have claims on things that I might want to trade with and a great many transactions will harm those not voluntarily involved. Some authority is needed to decide what is mine to trade with and whether you will be/have been harmed by the transactions of others. What better authority to make this decision than one with a democratic mandate? </I>

<P>It sounds as if we agree about this in principle. The main purpose of democratic legislatures is to define the scope of free action of each individual. That is, the point up to which they are considered not to be harming anyone. Plus, I guess, any redistributive programs that might be put in place.

<P>Note, though, that IMHO the legislature should be restricted to framing general rules for the allocation of property rights (this being the thing that is usually controversial), rather than actually allocating them in detail. The latter activity should be left to executive agencies, or (better), the people on the spot.

<P>No part of the government should ever try to determine the detail or even the direction of industrial activity or the distribution of good.  

<P><I>In the case of child poverty, I would like intervention to relieve the poverty (as it is unjust to punish the child for its failure to ensure that it has sufficient wealth be being productive). I am not willing to leave this intervention to market forces or to the charity of individuals. </I>

<P>We definitely agree here. Everyone benefits if basic provision is made for the vulnerable, including education and health care. A social safety net also allows a market economy to be more dynamic, since no one is in fear of losing a basic livelihood. But there is a free rider problem: my cotribution to child welfare is tiny, so if it were voluntary, I'd be tempted to withdraw it. Since it is compulsory, and everyone else pays it too, I am happy.

Simon

If you disagree, post, don't moderate
[ Parent ]

Oops. Lets try that again. (none / 1) (#126)
by Simon Kinahan on Fri Nov 07, 2003 at 03:08:08 PM EST

Rather than taking the position that market freedom is good, but democracy could be bad, I take it that democracy will be good. I have faith in people to exercise their democratic rights responsibly.

But democracy quite clearly *is* bad at making decisions about the distribution of goods and services. People are not, in fact, very "responsible" about exercising their democratic rights, although they don't always realise they are being irresponsible. People vote to tax the rich and give to the sligtly less rich. They vote to impose steel tarifs. They vote to cut off aid to UN organisations that encourage family planning.

People make cruel and stupid decisions when you ask them to vote on remote issues that they barely understand. This is just human nature: when faced with a decision we don't understand very well, we either decide on a hunch (that one has a nice smile), or by our crude (rather than enlightened) self interest (he promised not to raise taxes).

Public choice theory does into this in some depth.

This is actually quite restrictive. Other people have claims on things that I might want to trade with and a great many transactions will harm those not voluntarily involved. Some authority is needed to decide what is mine to trade with and whether you will be/have been harmed by the transactions of others. What better authority to make this decision than one with a democratic mandate?

It sounds as if we agree about this in principle. The main purpose of democratic legislatures is to define the scope of free action of each individual. That is, the point up to which they are considered not to be harming anyone. Plus, I guess, any redistributive programs that might be put in place.

Note, though, that IMHO the legislature should be restricted to framing general rules for the allocation of property rights (this being the thing that is usually controversial), rather than actually allocating them in detail. The latter activity should be left to executive agencies, or (better), the people on the spot.

No part of the government should ever try to determine the detail or even the direction of industrial activity or the distribution of good.

In the case of child poverty, I would like intervention to relieve the poverty (as it is unjust to punish the child for its failure to ensure that it has sufficient wealth be being productive). I am not willing to leave this intervention to market forces or to the charity of individuals.

We definitely agree here. Everyone benefits if basic provision is made for the vulnerable, including education and health care. A social safety net also allows a market economy to be more dynamic, since no one is in fear of losing a basic livelihood. But there is a free rider problem: my cotribution to child welfare is tiny, so if it were voluntary, I'd be tempted to withdraw it. Since it is compulsory, and everyone else pays it too, I am happy.

Simon

If you disagree, post, don't moderate
[ Parent ]

I Don't Disagree Very Much (none / 1) (#127)
by freestylefiend on Fri Nov 07, 2003 at 04:24:54 PM EST

But democracy quite clearly *is* bad at making decisions about the distribution of goods and services.

I don't think that there are many perfect free markets. Similarly, there aren't many perfect democracies. (I am particularly critical of the UK and EU electoral systems, which I vote in).

I think that there are issues that government should stay out of, but what will stop them? The USian idea of using a constitution to restrict government is nice, but the constitution seems to be very flexible. Who will tell the government to obey the constitution if it decides not to?

People make cruel and stupid decisions when you ask them to vote on remote issues that they barely understand.

That's right. It would be nice if there were a mechanism for only allowing people to vote on issues that effect them, but I don't know if there is a way achieve this (this also might be subject to democratic approval, which would make it powerless). Hopefully, in perfect democracies (the kind that don't exist), governments might surrender power where exercising it would be contrary to their purpose, rather than seeking to aquire more power.

[ Parent ]

Some thoughts (none / 2) (#130)
by Simon Kinahan on Fri Nov 07, 2003 at 06:59:03 PM EST

I don't think that there are many perfect free markets. Similarly, there aren't many perfect democracies. (I am particularly critical of the UK and EU electoral systems, which I vote in).

That is true on both counts (and we're fellow Brits, by the way). To my mind, the key question in liberal societies is when to apply which of the two basic decision making mechanisms they are based on: freedom of voluntary action (the free market), and univeral participation in compulsory decisions (democratic government).

I think that there are issues that government should stay out of, but what will stop them? The USian idea of using a constitution to restrict government is nice, but the constitution seems to be very flexible. Who will tell the government to obey the constitution if it decides not to?

I'm not sure about constitutions. All non-dictatorships - even Britain - have constitutions. But in Britain, in which the constitution is unwritten convention, and the USA, in which it is written law, the constitution is being eroded by governments trying to fulfil aggressively populist, authoritarian agendas.

To my mind, the best defense against this kind of thing is democracy, in its negative function of preventing bad government, rather than actually making positive decisions. But this requires that people care that their rights are being eroded. I don't think, right now, that most people do, which makes me sad. First they came for the asylum seekers.

It would be nice if there were a mechanism for only allowing people to vote on issues that effect them, but I don't know if there is a way achieve this (this also might be subject to democratic approval, which would make it powerless).

This is why I am suspicious of government power, even when it is controlled by democracy, and generally prefer the free market. If property rights are created to properly reflect our idea of justice (something I admit we can only do approximately). Market transactions necessarily require the consent of the people signing up to the contract, and ideally anyone affected by externalities should be compensated. Government decisions can all too easily end up as "if we take all Fred's money and spend it on bread and circuses, everyone but Fred will be happy, and we'll win the election".

Simon

If you disagree, post, don't moderate
[ Parent ]

Why not? (2.37 / 8) (#34)
by Brandybuck on Tue Nov 04, 2003 at 04:02:51 PM EST

Are they to improve their lot through simple hard work? The low minimum wage and general lack of rent control outside of government housing projects ... makes the idea of clawing the way from lower class to middle class armed with nothing more than a work ethic absolutely ludicrous.

Both my grandfather's did. One came to the US with nothing but a suitcase, a new wife, and zero fluency in English. He ended up owning a home, sending my father through college, and being a leader in his community. The other was a son of a poor itinerant preacher, and ended up a fairly well off rancher.

Are they to get an education and join the white-collar world?

Why not? The opportunities for the poor to get an education are abundant! The only thing stopping it are the hordes of educated "white collar" activists saying it can't be done.

You are right in that it takes more than just hard work. It also takes an iron-willed determination to ignore the people telling you that you can't. Horatio Alger stories may be myths, but I've seen dozens of rags-to-middle-class examples in real life. My Junior High principle started out picking cotton, and worked two jobs to get himself through college. He later went on to become county superintendent of schools, and retired to help build a school for the poor in Brazil.

Why not. (2.50 / 6) (#37)
by transient0 on Tue Nov 04, 2003 at 04:10:56 PM EST

My father also clawed his way up from abject poverty to upper-middle-classhood. All of us know of dozens of rags-to-riches success stories, but the question remains: What is the reason for the MILLIONS of rags-to-rags failure stories?

The truth is that it takes hard work, iron will determination and SCADS of absolute blind luck to bridge the class gap. And that is simply unacceptable.
---------
lysergically yours
[ Parent ]

No it doesn't (none / 3) (#51)
by ZorbaTHut on Tue Nov 04, 2003 at 07:57:09 PM EST

It doesn't take luck. It just takes work and determination.

See, I've got a lot of friends who were, at one point, in abject poverty. My mom was - I'm told I spent my first five years living on welfare. In my mom's case, she put all her hard work and iron will into giving *me* a good chance, and so she's still quite poor.

I've got a few friends who worked their way out of poverty. They were determined - *very* determined. I've got one friend who has more willpower than any three other people I know, and that's *including* me - she's been homeless more than once, and right now she's biding her time at a shelter until she gets into a traveling circus job. (No, not joking.) If you told her that she was doomed because she didn't have blind luck, she'd probably punch you. She's got the worst luck of anyone I know, and someday she's going to lever herself out anyway.

I also know a few people who failed to work their way out of poverty. And I know a few who actually worked their way *into* poverty. And I can tell you why they're broke now - it's because the instant something goes wrong, they don't buckle down and fix it. They don't grit their teeth, start buying ramen noodles in bulk, eliminate all non-necessary purchases, and keep working at it anyway.

No, they sit around, whine at their misfortune, turn down perfectly good jobs that don't happen to be what they want ("But I don't *want* to work at K-Mart, I'm a good programmer!"), and keep buying luxuries that they can't afford.

It doesn't take luck. Most of the people I've seen get out of poverty have terrible luck. It just takes work, willpower, and a little bit of common sense. Unfortunately these three things are in *very* short supply right now.

[ Parent ]

Let's see... (none / 2) (#68)
by Brandybuck on Wed Nov 05, 2003 at 12:11:26 AM EST

What is the reason for the MILLIONS of rags-to-rags failure stories?

There's this guy I used to know. He would work in packing shed, liquor store, or cotton gin for six months. Then we would go live off of unemployment for the next six months. Like clockwork. He was always bitching about the how unfair it was that he was poor.

I could go on and on with dozens of rags-to-rags stories, but you all know some of your own, so I won't bother.

I think I have an answer for why SOME of those millions are stuck in ragland. They have a bad attitude. They think they can't so they never try. Or they want to stay down in the pit with their bad attitude friends. Or they're too busy watching television after work at their dead-end job to have time improve themselves.

One person's absolute blind luck is another's golden opportunity. That's because every opportunity is also an obstacle. When the "door of opportunity" presents itself, you have to open it, and sometimes it's jammed stuck! So you have to push really hard!

Actually, the "door" metaphor for opportunity doesn't work too well. A better one is rock climbing. If you watch someone climb a rock, you'll notice that they climb up a little ways, then sideways, then down a bit, then up a bit. They spend ten minutes just looking for a new handhold. Actually, it's quite boring watching someone climb a rock, because they NEVER go straight up. Sometimes rock climbers will get absolute blind luck as someone throws them down a rope, but they never count on it. And they get to the top anyway.

[ Parent ]

Your analogy... (3.00 / 4) (#94)
by curunir on Wed Nov 05, 2003 at 07:06:07 PM EST

...from the perspective of a rockclimber.

Climbing is never as simple as it seems to an observer. Much of climbing has to do with finding some small indentation in the rock with which you're able to support your weight. It's a different process for everyone who climbs it. Even among experienced climbers, things like hand strength, arm strength, flexibility, etc vary greatly. What one person may have no trouble holding onto something that someone else may be unable grasp. It also greatly simplifies things if someone has climbed what you're climbing before. The "beta" (advice about a climb) can be the difference between ascending a climb and no. Also, if there are existing bolt holes to tie into, you don't need to expend energy placing your own protection. Oh...and we hate it when people throw us a rope. You don't climb a rock to get to the top, you climb for the experience of climbing the rock, not the rope.

So where am I going with this? Everyone's road is different. Just because you or someone else was able to succede doesn't mean that someone else should. While it can help to follow in someone's footsteps, it is by no means a guarantee of success. Intelligence, work ethic, charisma and other qualities people use to succede in life equate the hand strengh, arm strengh and flexibility from the climbing analogy. Everyone's story is different. You can't dismiss someone's failures because you feel they could have succeded.

[ Parent ]
Funny how (none / 3) (#122)
by brain in a jar on Fri Nov 07, 2003 at 04:06:09 AM EST

People who aren't poor, and possibly have never been poor reckon that getting out of poverty, just takes determination.

Its comforting to believe in a meritocracy, if you aren't at the bottom of the pile getting shit on.

Sure its possible to get out of poverty, and its possible to work into it. But it is a lot harder to move both ways than it should be. If you are born rich, its really hard to end up poor. Even if you have borderline literacy, your rich parents can still put you through college, hell you could even end up runnning the "free world". If you are born poor, then you have to succeed despite the crappy education you are likely to get, and despite the class divisions which Americans like to pretend don't exist.

If you really think the US is a classless meritocracy, think of how long it is since you had a president who wasn't born rich and white.


Life is too important, to be taken entirely seriously.
[ Parent ]

Funny? (none / 0) (#136)
by rhino1302 on Mon Nov 10, 2003 at 06:11:55 PM EST

Neither Clinton nor Reagan were born rich. Quite the contrary - they're pretty good examples of self-made men (whatever else you might think of them aside).

What was your point?

[ Parent ]

Financial Aid? (1.80 / 5) (#36)
by gzt on Tue Nov 04, 2003 at 04:07:25 PM EST

Most places have generous financial aid packages which are need-based, rather than merit-based. While they don't necessarily cover enough of the burden for a lower-class youth to attend a private school, it's not so bad as you claim. Besides, the issue is a bit more complicated than not being able to afford good schools, just as the difference in health between the rich and the poor is not merely a consequence of the rich being able to purchase better medical care.

agreed 100% (none / 1) (#38)
by transient0 on Tue Nov 04, 2003 at 04:14:44 PM EST

Besides, the issue is a bit more complicated than not being able to afford good schools, just as the difference in health between the rich and the poor is not merely a consequence of the rich being able to purchase better medical care.

But a lot of the rest of it still falls under the category of the problem of having a self-perpetuating underclass and a widening class gap. Many of these other factors should also be subject to sanity checks in terms of how the free market contributes to or causes them.
---------
lysergically yours
[ Parent ]

Communism: A misunderstanding (2.70 / 17) (#41)
by Daelin on Tue Nov 04, 2003 at 04:45:35 PM EST

Communism is not an opposition to free market. It would take something like Star Trek's replicators to enable a market-less communist society. Also, communism is not in opposition to democracy. Have you ever heard of a supposed "communist" country without elections, fraudulent as they may be?

Communism, as defined by Marx, is an economic transfer of the means of production from the middle class (which absorbed the upper class) to the lower class (which absorbs the middle class). It's an economic theory of capitalism that opposes Marx' idea of capitalism's failing: the capitalist. Marx's definition of capitalists and capitalism are pretty straight forward descriptions of the fears of Adam Smith and the other 18-19th century economists about free markets. Marx's theory is also deeply grounded in European concepts of class conflict, and is difficult to apply to America. The biggest flaw in Marx's thinking is his idea that the only way to prevent economic inequality is communal ownership. It's an ugly hack in his theory that's easily removed.

So, what is communism? We need Marx's definition of Capitalism to understand this. Marx defines Capitalism as a system where the labor class can sell their labor power (their time) instead of what they produce with that power. The Capitalist is a buyer and seller of labor power, who uses others labor to transform resources into exchangeable goods. The Capitalist's profit comes from trading labor power at less than it's worth to him. The Capitalist also uses new labor to increase the exchange value of "accumulated labor" or previous productions, instead of using living labor to improve the means of production for future labor. In other words, Disney.

Communism is an economic system where the means of production belong to the labor class, instead of the Capitalist. The immediate flaw: we do not have the technology to sustain such an economy with equality. Let's phrase it this way: Groups can produce more food than the aggregate their constituents can. To produce enough food in reliable quantities--to remove economic inequality--you have to have groups dedicated to farming... but then you have to have a market system to trade with these "separate but equal" economic groups... introducing the threat of capitalists.

The middle ground is called Socialism. This is a system of Capitalism, or free market, regulated the government. Their purpose is supposed to be to prepare the country for the transition to communism, and as these governments are always established by Marxist (not related to Marx' ideals, btw) revolutionaries, the Socialist government also strives to protect the revolution from sedition by the remaining Capitalist class. Because of the later, socialist governments always become authoritarian and oppressive, seriously impeding their ability to make any transition to communism. There has never been more than a nominal communist state at the national level.

People who have a deeper insight in the Marx framework into the nature of Communism and Capitalism and have a fear of Communism naturally support heightening Capitalist powers and class distinction, to increase the contrast between Capitalism and Communism. Amusingly, they do this with government control, turning the Capitalist economy into a Socialist one.

The importance of class in this can't be glossed over. Barring the Marx criticisms of capitalism, which we retain, our economy can be regarded as a Communist economy because the means of production are owned and ownable by the laborers. We do not have European class divisions. Our economy is filled with independent business owners, contract agencies, firms, and other such group controlled professional service providers. These groups own their means of production, and they sell their products. Even the recent capitalist invention of the Franchise (e.g., McDonalds) fits this. It is a common practice for around ten Mexicans to come to America, work their asses off, and buy a Franchise. Then they own the means of production. Marx wouldn't have dreamed of this idea in 1848.

The goal of sanity checks and economic reform is invariably the nullification of the Marx-Capitalist anomaly. This is difficult, because Marx-Capitalists hold enormous quantities of accumulated wealth--which they use to increase the value of said wealth, without producing new wealth or new means of production. Because they hold this wealth, and our political system allows wealth to influence politics, it can be very difficult to enact changes. Every change must be rationally quantifiably demonstrated as universally beneficial. Even then, irrational opposition to beneficial change will emerge as Marx-Capitalists start to see the pattern of change.

The "un-American" goal of a balanced economy --especially with our monetary system (see: The Ecology of Money)-- are actually trying to achieve something approaching a communist state, but retaining a free market. It's a noble goal, because it should allow individual, national, and global wealth to flourish, and would be the ideal environment for liberty and democracy.



IriseLenoir: If you disagree, post. (none / 2) (#61)
by Daelin on Tue Nov 04, 2003 at 10:20:48 PM EST

I'd rather hear your objection than your moderation.

[ Parent ]
No (none / 1) (#96)
by ZorbaTHut on Wed Nov 05, 2003 at 08:59:49 PM EST

IriseLenoir is under no obligation to reply to you. If he/she doesn't like your comment, they're perfectly within their rights to rate it down with no explanation.

[ Parent ]
Proven! (none / 0) (#98)
by ZorbaTHut on Wed Nov 05, 2003 at 11:16:13 PM EST

And see? You don't have to respond either!

THE CYCLE CONTINUES

[ Parent ]

My sarcasm is > yours :) [nt] (none / 0) (#115)
by Daelin on Thu Nov 06, 2003 at 03:49:42 PM EST



[ Parent ]
Only the insanely (none / 2) (#67)
by sellison on Tue Nov 04, 2003 at 11:40:38 PM EST

egotistical would think they are smart enough to 'sanity check' the free market.

Give it up mr. socialist, the free market needs to be touched as little as possible, it will lead to the best of possible worlds only if it is left alone with only corrections for morality, but none to 'correct' economic 'injustice' which is neither caused by ecomics, nor unjust, nor can be corrected by the hand of men.


"No, I don't know that atheists should be considered as citizens, nor should they be considered as patriots. This is one nation under God."- George H.W. Bush
[ Parent ]

You're right. (none / 0) (#69)
by Daelin on Wed Nov 05, 2003 at 12:55:34 AM EST

Only the insanely egotistical would think they are smart enough to 'sanity check' the free market.

Minus the moral checks you mentioned—solvable by judicial action—a free market is far too complex for central administration to be anything but stupid. It'd be like having a gland to regulate every single chemical and nervous impulse in your body. At best, you'd only have a siezure every five minutes. (Ever see a chart comparing the value of the pound sterling to the US dollar between 1950 and 1980?)

I was trying to make a point near the end. A free market should not artificially restrict trade. Most means of increasing exchange-value are trade restrictions—artificial restrictions of rights, which can then be sold. One idea the RIAA and MPAA have had for a while—it comes up with HDTV fairly often—is that they can charge you per viewing. With DRM, the RIAA can charge you for a car-playing right, for a walkman-right, for a speak-right, for a headphone-right, and they can even bundle headphone-speaker-car rights to deliver savings—as the jargon goes.

This is the primary mode of operation for the Marx-Capitalist I described. Disney has been a wonderful template for this. They've managed to get Congress to retro-actively extend copyright terms from a maximum of 56 years to 120 years, over the last fifty years with eleven extensions. They've done this to maintain their "Disney-vault" business model, where they make parts of their library artificially scarce for a few years, in cycles. The Disney Corporation's primary occupation is consumed with doing things like this. Once in a while, since Walt died, they hire another company to produce a new work for them.

Monopolies, even IP monopolies, are hazardous to free markets. Disney doesn't produce works to trade; they make works scarce to trade. A free market would temper this behavior, not through introducing new artifical restrictions, but by reducing the scope of the existing artificial restrictions…say, to the level they were at in 1928.



[ Parent ]
Free Market = Monopoly (none / 2) (#78)
by craigtubby on Wed Nov 05, 2003 at 10:23:11 AM EST

The only thing a free market produces is a Monopoly.

Like this : Five Companies in a business, lets call it shelling nuts, and 5 suppliers supplying nuts.  Lets say that the price of one nut is 10, and the suppliers sell at 5.  It costs 3 to convert one nut to one unshelled nut.

Company A manages to create a new fangled gadget that give it an adavantage only costing 1 unit to shell a nut(at least in the short term) which means that it can sell it's shelled nuts at 8, cheaper than everyone else, increasing volume of sales, and eventually profit.  

Companies B,C,D and E finally invent this new technology as well, and finally all companies sell at the same level.

Except Company A have been clever, they didn't waste their new found profits on better wages or anything like that, they bought up a nut plantation.

Why does this help, well company A have figured that they won't have to make a profit with their nut plantation, they can sell at cost.  So now company b,c,d,e are buying nuts at 5, selling at 8 but company 1 is buying nuts at 3 and selling at 6.

Again company 1 takes sales away from the other companies, yet at the same time keeping the same margins.  Eventually the other shelling companies are out of business.

But of course, comapny 1 looks about and says "Hey we're the only player now, ehy not increase out profits, lets start selling at 7,8,9,10,11,12 and buy the other supplier up, hey they have no one to supply now so they are going cheap"

Eventually you have one nut supplier, selling nuts at cost to one shelling company who have the ability to do waht they want.

Now, another shelling company comes into the market, and they have their own supplier, but company A have been clever again, they have kept a nice war chest, so when the new supplier under cuts them, it's a tit for tat reduction in prices, until the new supplier makes no money and goes bust.

try to make ends meet, you're a slave to money, then you die.

* Webpage *
[ Parent ]

Monopolies and replacement (none / 0) (#149)
by weirdling on Wed Jun 23, 2004 at 03:55:26 PM EST

What you're referring to works only in the case of irreplaceable commodities.  In other words, if nuts themselves are irreplaceable, then a monopoly could form around them.  They are not, of course.  I could just as easily choose to get protein from soybeans, meaning that, as the price from the monopoly increases, replacement from another sector happens, causing price pressure.

One of the things that I think you missed is that monopolies rarely plan all that well.  They get fat and bloated.  A propertarian theory shows that it is still possible for a nut plantation to stay in the market simply because it can either sell to the monopoly or process its nuts itself.  This happens all the time.

Take, for instance, Microsoft, which is a de facto monopoly, although for possibly viable reasons (operating system interoperability is a good goal).  Despite the stranglehold MS has and the strength in the market it has, it will never kill Apple.  Why?  Microsoft has to balance return on investment against effort, and killing Apple will not recoup the losses it would get.  Any monopoly, even the great vertically-integrated Standard Oil, begins to drive prices up after achieving near-monopoly status and doesn't bother establishing a perfect monopoly.  There will always be those that prefer the Rebel Alliance and will actively seek out and pay more for it, so it is not cost-effective to drive them out of business.  Better to concentrate on running one's own business to produce higher revenue streams and focus on the big picture such as large contracts, than to worry about the little guys.

So, in short, just not going to happen.

I'm not doing this again; last time no one believed it.
[ Parent ]

great post (none / 1) (#70)
by bankind on Wed Nov 05, 2003 at 01:56:15 AM EST

but you lost me with the especially with our monetary system I haven't read The Ecology of Money but I do dabble in monetary economics, and can't think of any plausible connection of how specualtive transactions somehow disrupt a 'balanced economy'--whatever that means.

"Insurgents are blowing up pipelines and police stations, geysers of sewage are erupting from the streets, and the electricity is off most of the time -- but we've given Iraq the gift of supply-side economics." -Krugman
[ Parent ]

Conflicting purposes of money (none / 2) (#71)
by Daelin on Wed Nov 05, 2003 at 03:28:49 AM EST

The US dollar isn't very good as A) A medium of exchange, B) a store of value, or C) a unit of account.

The commercial banks in the US create dollars whenever they authorize a loan. The amount they're allowed to loan is regulated by the central bank, but this is a razor-blade balancing act. If the central bank doesn't authorize enough new money to be created, the dollar becomes scarce and there isn't enough money to trade. If there isn't enough money to trade, the income of businesses drops and they have to downsize to avoid reporting a loss. etc etc. If too much money is created, inflation increases way too fast and the dollar is devalued as an exchange currency.

As a store of value, uhm... bad. How much did a movie cost in 1970? Not only does the dollar lose value by design, it doesn't do so in a way you can count on at any point in time.

As a unit of account, it's equally poor. Inflation means that the dollar has to be fixed at one point of time, eg 1970 dollars, taking the accounting unit out of sync with daily transactions. Also, because the dollar is not fixed to anything tangible—it's fixed to the amount of debt owed to commercial banks—its use can lead to misuse of resources planned in a cost-benefit analysis. (This later arguement is in The Ecology of Money, and I don't claim to understand it.)

The Ecology of Money proposes a monetary system with multiple types of currency for each function of money, plus an international currency based on green house gas emissions.

By "balanced" I mean sustainable. The current system places the creation of money in the hands of a party with more immediate interest in profit than sustainability. The system fails at the three purpose of money. And, well, it's sliding all over the place, like, uh, it's not flat... not balance... *ahem*

The Ecology of Money is a lot better than me at going over this. Heh. It's 80 pages and it doesn't waste words. I only read it a short while ago, and I'm not comfortable with the concepts yet.



[ Parent ]
Oh my. (none / 3) (#72)
by jjayson on Wed Nov 05, 2003 at 05:12:53 AM EST

Fuck all that complex shit. Just go back to Bretton Woods.
_______
Smile =)
* bt krav magas kitten THE FUCK UP
<bt> Eat Kung Jew, bitch.

[ Parent ]
Communism vs Communism (3.00 / 5) (#80)
by bugmaster on Wed Nov 05, 2003 at 10:56:51 AM EST

There are two separate meanings of the word "Communism".

One of them denotes the system outlined by Marx, etc., as you have summarized in your comment. This is also the system practiced by some 60s-era communes in the U.S., and the ideal which some hippies still strive towards. Other than the hippies, few people adhere to these ideals nowadays.

The other meaning of "Communism" refers to the state-enforced theocracy instituted in countries such as USSR (which is history by now) and China. The religion in question usually revolves around the notion that everyone is equal, that Western capitalism is evil, that the current leader is an absolute, infallible power, that intelligence is a sign of dissent, and that in the not-too-distant future, the current temporary problems (which are due to Western machinations) will be overcome, and a glorious utopia will be established. The political system uses this religion as any theocracy would: to establish a ruthless, totalitarian dictatorship.

Most Americans usually have trouble telling these two Communisms apart -- probably because they proclaim the same ideologies. However, the systems are mutually incompatible; in fact, the hippie Communists would be enslaved or shot by the totalitarian Communists in about 30 seconds, should the two groups ever meet.
>|<*:=
[ Parent ]

hear hear (none / 2) (#82)
by transient0 on Wed Nov 05, 2003 at 11:11:51 AM EST

this is an extremely important point that is too rarely brought up.

the grubby 25 year old at the coffee shop who always has a copy of the communist manifesto may well be misinformed and overly idealist, but he can hardly be called a Stalinist.
---------
lysergically yours
[ Parent ]

Marxists and Socialism (none / 2) (#92)
by Daelin on Wed Nov 05, 2003 at 06:38:06 PM EST

I haven't read anything by Marxists yet, minus some corespondance that includes Marx saying "if that's what a Marxist is, then I'm not a Marxist." So, pardon if my dispute is from an incomplete reference.

The communism theocracy you describe sounds an awful lot like the Socialist states I glossed over in my socialism paragraph. That is, they're only a nominal communist state. Not even that, officially, as the USSR is the Union of Soviet Socialist Republics. When a socialist government is established by a Marxist revolution, its duty is supposed to be to protect the revolution and perpare the country for the transition to communism. You always get an authoritarian government (theocracy is definitely included) when this happens, which ends up throwing the whole "republic" and "communism" thing out the wind, out of the government's own interests of self-preservation.

I admit that this is the state—non-religious theocracy, authoritarian, absolute dictatorship—people think of when they think of "communism," but it's a bit like calling the Roman Catholic Church a christian institution when they were going on crusades and selling absolution of sins. This is what many non-christians think of when they hear the word "christian." When you get down to it, the one has nothing to do with the other. What "communism" and "christianity" share in this instance is the loss of their goals for the enrichment of the autocracy.



[ Parent ]
re: Communism: A misunderstanding (none / 1) (#137)
by fling93 on Tue Nov 11, 2003 at 05:31:10 PM EST

Daelin: We do not have European class divisions.

We do have class divisions, but the lines between them aren't distinct, and it's possible (but difficult) for one to move from one class to another. But I believe the primary predictor of what class you end up in is the class of your parents.

Daelin: our economy can be regarded as a Communist economy because the means of production are owned and ownable by the laborers.

Ownable? Possible in some cases, but not most. Actually owned by? Well, if our economy was entirely comprised of worker-owned co-ops, that might be true. What we have is a system where the means of productions are owned by the shareholders. These are primarily capitalists, not laborers.

[ Parent ]

Goddammit! (2.60 / 10) (#50)
by Kasreyn on Tue Nov 04, 2003 at 06:46:27 PM EST

In none of these cases am I suggesting that I know a good quick fix. I am certainly not suggesting that we abolish patents, double the minimum wage and make college free, all on tax money. What I am suggesting is that we must as responsible citizens and human beings acknowledge that these issues are real. We must also be well informed and cynical enough to know when to ignore pundits who say "you can't change that without sacrificing the free market ideal."

So you get through this take on the flaws in "free market fundamentalism", then wimp out on providing a solution. You offer a straw-man draconian solution to bash, and end with a heartwarming appeal to decency and responsibility, without providing any solutions.

Fuck that. Tell us what you HONESTLY think we should do. I'd much rather see your story go down in flames for you suggesting what's REALLY on your mind, than limp its way to section because you managed to avoid offending anyone.

Abstaining until I see if my -1 will be needed.


-Kasreyn


"Extenuating circumstance to be mentioned on Judgement Day:
We never asked to be born in the first place."

R.I.P. Kurt. You will be missed.
Of course he does (none / 1) (#55)
by duncan bayne on Tue Nov 04, 2003 at 08:58:22 PM EST

> You offer a straw-man draconian solution to bash,
> and end with a heartwarming appeal to decency and
> responsibility, without providing any solutions.

Of course he does - because the alternatives to free-market capitalism (a.k.a. classical liberalism) always involve theft & murder.

He's saying "gee, I *feel* that free-market capitalism is bad, but all the alternatives are provably bad, so I'll just whinge a bit in an unsubstantiated fashion".

I voted +1 section to see him get grilled by the Libertarians *and* the Marxists ;-)

[ Parent ]

Really?? (none / 1) (#109)
by wji on Thu Nov 06, 2003 at 06:29:51 AM EST

Social democracy requires murder?? You can argue that it requires theft, because the definition of "theft" rests on the definition of ownership, which is completely arbitrary anyway. But I really don't understand how the minimum wage requres government death squads.

In conclusion, the Powerpuff Girls are a reactionary, pseudo-feminist enterprise.
[ Parent ]
Exactly. (none / 1) (#119)
by o reor on Fri Nov 07, 2003 at 03:29:27 AM EST

Not only does social democracy not require murder. But what's more, it is perfectly easy to understand why the free market, on the other hand, requires murder to protect private interest against the choices of a nation. Remember Allende in Chile ? He was about to get elected on the premises that he had had the copper-mines nationalized, to the great displeasure of ITT and Anaconda. Then in the name of the "free market", Kissinger helped Pinochet and his minions in his putsch, which resulted in the assassination of Allende and several members of his government, along with a long period of repression.

Whatever one might think about Allende and its politics, which were far from perfect even in the short term, it is important to bear in mind that his government was elected, that democracy continued to work, and even if the Allende government was to cock up, there was no need to resort to violence, torture and repression. But the yearly earnings of ITT, Anaconda and Kennecott are way beyond the value of the lives of elected people, and beyond the values of democracy, I suppose...

[ Parent ]

I don't quite buy it (none / 1) (#124)
by wji on Fri Nov 07, 2003 at 06:54:29 AM EST

Despite being a raving anarcho-communist, I can't really accept that any property-based system inevitably requires murder. It just has a very strong tendency towards murder.

Like, I get upset when I hear well-meaning people with similar beliefs saying things like "Capitalism cannot be reformed". Well, of course capitalism can be reformed, or we'd all be dead! Minimum wage is a reform, child labour law is a reform, health care and social insurance are reforms. Granted, "Capitalism can be reformed, but the free market system inherently drives towards undesirable outcomes, as well as, when left unmanaged by the state, driving heedlessly towards its own destruction, and all this ought to lead us to carefully consider alternatives to the so-called free market" doesn't make such a catchy slogan. In a way, I guess that stupid aphorism that "the extreme right and the extreme left are basically the same" has a smidgen of truth to it, because this little thread started with the claim that anything other than the sacred market leads inevitably to murder.

In conclusion, the Powerpuff Girls are a reactionary, pseudo-feminist enterprise.
[ Parent ]

Oh great, just super fabulous. (1.00 / 7) (#57)
by Linus TorvaIds on Tue Nov 04, 2003 at 09:23:11 PM EST

When are the US Government people going to round up those of Finnish descent?

This is an outrage! (none / 0) (#102)
by rmg on Thu Nov 06, 2003 at 12:45:19 AM EST

I can't believe you would say something so offensive! Norwegian Americans are some of the hardest working people in our society. If you knew any Finnish people, you wouldn't say that.

Are you really Linus TorvaIds? Because Linus is from Finland and he is not a racist asshole like you. I think rusty should anonymize you, you racist fucktard! All of you people impersonating other people should be banned. I can't believe rusty has let things come to this! This site used to be full of interesting discussion and debate but now it's just full of racists and bigots like you and gibichung!

I hope your proud, asshole.

_____ intellectual tiddlywinks
[ Parent ]

Why? (2.00 / 7) (#60)
by ComradeFork on Tue Nov 04, 2003 at 10:02:33 PM EST

A common mistake of the layman is too oversimplify an issue. The layman will draw up a nice simple strawman, and then demolish it.

Consider the Kings Gambit opening in chess. A new player might look at it and say "That opening is stupid, because I lose a pawn". Although there is a kernel of truth in that statement, it does not tell anywhere near the whole story.

Much of Kuro5hin is laymen commenting on issues, sweeping aside all current theory and providing almost nothing in response. This article is an example of that.

Economists are fully aware of weaknesses of the free market. The real issue here is that Governments do not act rationally.

golden rationality (none / 0) (#105)
by Space on Thu Nov 06, 2003 at 02:39:25 AM EST

I love the way you use the word "rationally". Hindsight is 20/20 and anything that makes sense; even complete sophistry can appear rational before the decision is made!

If economics dealt with any discipline besides money it would have dissolved itself a long time ago; akin to phrenology, based on it's absolutely abysmal track record of predictions.

Furthermore most economists are influenced by political ideas which motivate their work and don't rely the scientific process to validate their hypothesis. The validity of economic theories appears to be more influenced by their political appeal than the methods used to prove them (most theories rely on psuedo-experimental design and ignore any varibles that can't be quantified).

<recycle your pets>
[ Parent ]

OK (none / 0) (#107)
by ComradeFork on Thu Nov 06, 2003 at 03:59:03 AM EST

Then provide a better theory of economics.

[ Parent ]
Then again (none / 0) (#132)
by melia on Sun Nov 09, 2003 at 06:41:20 PM EST

even complete sophistry can appear rational before the decision is made!

Indeed, my favourite branch of economics shows that sophistry is rational even after the decision is made.

If economics dealt with any discipline besides money it would have dissolved itself a long time ago; .

Economics isn't about money. It's about scarcity of resources, and the way in which people make choices.

akin to phrenology, based on it's absolutely abysmal track record of predictions

Not akin to phrenology, in that it has a basis in logic. Abysmal track record maybe, :) but what do you suggest? That we ignore the decision making behaviours of people, and in our incredibly complex societies? (PS: If we stopped theorising (and using those theories) about economics, seems to me we'd have a free market)

Furthermore most economists are influenced by political ideas which motivate their work and don't rely the scientific process to validate their hypothesis.

Have you ever studied econometrics? Serious question, not a knock-back.

most theories rely on psuedo-experimental design and ignore any varibles that can't be quantified

Variables which cannot be quantified are not ignored, put simply, they're classed as "unknown" in an explicit attempt to encourage further investigation or theorising.
Disclaimer: All of the above is probably wrong
[ Parent ]

Please read. (none / 0) (#121)
by brain in a jar on Fri Nov 07, 2003 at 03:48:40 AM EST

My reply to the comment above by bankind. Some of it applies to you. Specifically the stuff about ideological bias causing economists to stress regulartory failure over market failure, when both exist and are important.


Life is too important, to be taken entirely seriously.
[ Parent ]

Is this (2.33 / 12) (#64)
by bankind on Tue Nov 04, 2003 at 11:06:20 PM EST

an op-ed for People Magazine?

I love the "and think about sweatshops, gosh they're bad."

If you want to get at the real problem in America it is that you have a bunch of fat ass TV babies that define their world via bad news shows and google searches. So then a bunch of these fucking pansies pool some of their trust fund money, do a biased study on "exploitation in the sweatshops of country XXXXX," which means they go find any case of exploitation, present that picture as status quo, then print some fliers about the "poor children," so the SUV soccer moms can bitch about burqas that they accidentally read while flipping through Vanity Fair looking for the "Britney has a Yeast Infection" article.

Your right that what HAS been lost is a credible cynicism and a demand for greater proofs. But you make the same mistake by ignoring any reference to what is a free market, market forces, or most importantly incentives.

The US is a jargonized country, where each field/industry is a series of independently generated lexicons. And YET few people believe that industries OUTSIDE THEIR OWN might follow this same pattern. So, when you say FREE MARKET, what do you mean? Because when you make ANY reference to the `exploitation of the poor developing world by corporate America,' you should stop for a second and LOOK at all the tax incentives, matched investment, clustering policies, and benefits the recipient countries are giving. Then you CAN argue about a race to the bottom as developing countries do more and more to allow foreign investment, BUT that is nothing, nowhere, or in any regard a FREE MARKET. It is a market influenced directly by government intervention and policy and an institutional issue.

Ultimately this sort of pop economics has led to poor trade policies, bad development strategies, and the Republicans to go on a fiscal spending spree. You debate these balck or white issues that are no where appliable and have no impact, except in the extreme.

Economics as a study tries to remove idealism and fanaticism; whatever political scientists do with it is another issue. Most economists have gotten over this debate and did so about 40 years ago. The major issue regarding economics these days is the quality of institutions, which is the real factor behind every point you raise.

But I guess that doesn't make copy compared to J Lo's ass implants, so we return to comfortable COLD WAR topics.

"Insurgents are blowing up pipelines and police stations, geysers of sewage are erupting from the streets, and the electricity is off most of the time -- but we've given Iraq the gift of supply-side economics." -Krugman

Laughable. (none / 1) (#120)
by brain in a jar on Fri Nov 07, 2003 at 03:45:12 AM EST

You try and suggest that the study of economics removes ideology. This must be a different kind of economics to the one I have read about.

The one I have read about has models that rest on a huge raft of assumptions, which apply only ambigously to the real world. This amgiguity is then filled up with ideology.

I can see you fall more in the neoclassical "less regulation is better." camp. How do I know this? Because at the end of your comment you state that:

"The quality of institutions is the main issue in economics today."

So you stress regulatory failure, the idea that the problems of economies are caused by people trying to control them and doing a bad job, rather than by fundamental weaknesses of the economy (e.g. market failures such as externality, or failures of assumptions e.g. the lack of perfect substitutability in the real world). The trouble is that you have convined yourself that your bias is not in fact bias, but unarguable truth, which is pretty much what the article is about. Go back to your textbooks (those undergrad ones from long ago), check out the assumptions on which the efficiency of free markets rest and realise that they are often not satisfied. Then take a deep breath and see that some markets need more regulation, some need less regualtion, some need the same amount of regulation but better implemented.

On a specific point you state that sweatshops aren't so much an issue of free trade, as of all the subsidies that are given to the sweatshop companies by their host countries. As if this is an argument against the "race to the bottom" complaints of liberals. In fact these subsidies are part of the race to the bottom. Those countries which offer the most attractive combination of cheap labour and subsidy are the ones which get the work. The only problem being that the work is of negligible benefit to the host country because the profits are repatriated overseas, the workers get a pittance and the companies pay little or no tax. The race to the bottom exists, the question is what is the best solution to the problem (provided we agree that it is a problem).


Life is too important, to be taken entirely seriously.
[ Parent ]

Certainly (none / 0) (#129)
by ComradeFork on Fri Nov 07, 2003 at 06:41:10 PM EST

A balance must be made between over-regulation and under-regulation. NOBODY who matters disagrees with that.

Less regulation has often been better. In Australia, many of our sectors were deregulated. These deregulations have on the whole been very successful. Certainly some were done which should not have been done, and some were not done which should have been done, but the correct trend here was deregulation.

The study of economics does not and cannot eliminate ideology, just as drug laws cannot eliminate drugs.

[ Parent ]

give ya a hint (none / 0) (#140)
by Battle Troll on Wed Nov 12, 2003 at 03:19:19 PM EST

bankind is no 'neloliberal.'
--
Skarphedinn was carrying the axe with which he had killed Thrainn Sigfusson and which he called 'Battle Troll.'
Njal's Saga, ca 1280 AD
[ Parent ]
I don't really understand the poll. (2.55 / 9) (#65)
by valeko on Tue Nov 04, 2003 at 11:17:19 PM EST

What is meant by "does the free market work?" Well, of course it "works", in the sense that it produces a functional economy and does furnish the subsistence of people (although this can hardly be said of the conditions imposed upon the Third World).

Beyond that, however, it is largely a qualitative question, and certainly one of value judgement. Whether it "works" or not says little of the social justice of this system, or whether its superficial apparition in any way corresponds to some sort of underlying "human nature". Sure, it works. Atomic weapons work too. That doesn't mean it's any good.

"Hey, what's sanity got going for it anyways?" -- infinitera, on matters of the heart

You can only vote once .. (none / 3) (#77)
by Highlander on Wed Nov 05, 2003 at 10:07:27 AM EST

You can only vote once, when there are so many issues which would need to be sanity-checked.

How can you sanity-check issues by voting if you can vote only once ?

Of course, the candidates will optimize their voter potential by taking a stand on some issues, but they won't take a stand on all issues.

Once, I had the idea that having the people vote for each secretary of defense, environment etc. separately would be, maybe better, but at least offer more options. Of course, how such a government would work is hard to imagine.

Moderation in moderation is a good thing.

not on K5 apparently :) (n/t) (none / 1) (#84)
by transient0 on Wed Nov 05, 2003 at 11:41:28 AM EST


---------
lysergically yours
[ Parent ]
The human-nature factored: towards a new society (2.00 / 5) (#91)
by K5 Troll Authority on Wed Nov 05, 2003 at 06:15:56 PM EST

The problems described in this article, namely the poor distribution of basic resources such as food, health and education among the rich and poor, is not a consequence of the economic model or of the government model. It's a consequence of human nature.

It's human nature to exploit what we can. This instinct is a direct result of the theory of evolution and allowed man to prosper through exploitation of the weak and of natural resources. That instinct, however, will lead to a world swamped more and more in inequality and suffering.

The way to end this exploitation is to have a method of government and of economics which does not allow it to take place. Clearly capitalistic free-market and democracy have failed here, as the article cleverly demonstrated. It's time to experiment with a society where every man is equal. "To each according to his needs, from each according to his abilities." When we can achieve such a balanced society, the problems of the free market will be over.

K5: we get laid more than Slashdot goons — TheGreenLantern

I think you're wrong (none / 2) (#93)
by Daelin on Wed Nov 05, 2003 at 06:47:37 PM EST

Exploitation implies inequality.  In the case of "free-market", there's an inequality under the law between foreign investors and local developers, favoring the foreigners.  If all things are equal, the free market balances itself out.

On the other hand, a lot of these countries, if their markets are completely open, are nowhere near the scale of the multinationals might be unable to endure.  This is an arguement for an isolated market, but not against a free market.  What you have right now are regulations that favor foreign investors coming in, but foreign regulations that restrict export to those foreigners.  This naturally leads to destabilization—imbalance.

Until we get our own international free market into an actual free state, it may be more prudent to give developing countries an embryonic economic bubble.  They SHOULD have no trouble becoming self-sustaining, which is more than the USA has done in the last century.

[ Parent ]

It may be your nature to exploit (none / 2) (#100)
by simul on Wed Nov 05, 2003 at 11:32:01 PM EST

But it is not mine. I get to a point of contentment and then I'd rather party than work.

Read this book - first 24 pages are free to browse - it rocks
[ Parent ]
social darwinism and personal responsibility (none / 2) (#104)
by Space on Thu Nov 06, 2003 at 02:17:30 AM EST

Perhaps if your an unapologetic social darwinist your comments might make sense but I firmly believe you are wrong. Most people aren't comfortable with inequality and the reason they tollerate it is because nobody can agree who is responsible for it.

Even in cases where people do agree who is responsible for the apparent inequality; people are unwilling to accept the responsibility because their peers may not agree puting themselves at a disadvantage or because of mob mentality where when people band together their sense of power is increased while simultaneously decreasing their sense of responsibility.

The easiest solution for most people is to blame the victum which is more a case of moral bankrupcy than "human evolution". Unless people can muster the moral fibre to accept responsibility for inequality and work towards social justice; everybody will have to just accept the status quo and the pandemic social ills that accompany it.
<recycle your pets>
[ Parent ]

Interesting (none / 1) (#143)
by jefbed on Wed Nov 12, 2003 at 07:46:32 PM EST

It is true that exploitation is within human nature, but so is selflessness. Such a statement I support with the idea of human nature being all of which pertains to humanity. Thus, all actions and thoughts of a human are within the confines of human nature.

Indeed, there are enough resources for all to enjoy, but poor distribution allows for the existance of poverty. The structure of the capitalist wealth distribution can be thought of as an upside-down pyramid. The population of capitalist society can be thought of as a regular pyramid. When these two figures are overlapped, the injustice of capitalism can clearly bee seen. The majority of wealth is in the hands of the minority; the minority of wealth is in the hands of the majority. Capitalism does not create wealth--It extracts wealth (most notibly from the working class majority).

The distribution to each according to need depends on the contribution from each according to his or her ability. Compulsory contribution is one key to stability and prosperity. Another key to prosperity in such a society is the maintaining of revolutionary stance. Revolution is a (hopefully nonviolent) war. If a Revolutionary government stops its fight, its collapse is inevitable; stopping the revolutionary fight during the revolution is equivicable to the soldier who leaves his front line trench without his weapon. Another key to the success of Communist society is a strong Party and a large party membership. Ideally, a party should contain 90+ percent of the nation's population. Stability through Party membership should be ensured by compulsory membership. This high membership is necessary to strengthen democratic structures.

Remember that human nature should be protected. It is within human nature to party and live life to its fullest. It is within human nature to share and love. It is within human nature to exploit others. But it is also within human nature to cause suffering to he who exploits (i.e. the capitalist). Human nature can be used to justify anyting. :) Best Regards

[ Parent ]

Capitalism allows the creation of wealth. (none / 0) (#145)
by partykidd on Wed Nov 19, 2003 at 02:09:56 AM EST

Capitalism does not create wealth--It extracts wealth (most notibly from the working class majority).
Thing is, we all make money in a capitalist society.
Another key to the success of Communist society is a strong Party and a large party membership. Ideally, a party should contain 90+ percent of the nation's population.
There's only one way to do this: violent force.
Stability through Party membership should be ensured by compulsory membership.
This is not freedom.
But it is also within human nature to cause suffering to he who exploits (i.e. the capitalist).
You've got a messed up view of capitalism. Capitalism is not about exploiting. It's about creating wealth. You are playing the victim card by claiming otherwise.

"It is the mark of an educated mind to be able to entertain a thought without accepting it." - Aristotle


[ Parent ]

permanent revolution (none / 0) (#147)
by syadasti on Tue Nov 25, 2003 at 07:50:03 PM EST

If a Revolutionary government stops its fight, its collapse is inevitable

Good thing, too.

The revolution will have to be permanently shepherded by the Party in order to ensure that all wealth in the world is (to badly paraphrase Neal Stephenson) smeared out into a thin gruel that a Pakistani cobbler might consider prosperity.

I'm assuming that your (hopefully nonviolent) revolution will come to its ulimate fruition when every person who owns more wealth than the total of all wealth in the world divided by the number of its inhabitants (and with 10% of world population as internet users in 2003, I think we can number all k5 users in this group) cheerfully throws open their front door and their bank accounts to allow one and all to take "according to his need".

Of course, after the (hopefully nonviolent) revolution is over, the Party must continue to have an active role in maintaining the globally equitable distribution of wealth. After all, we can not rely, say, on the willingness of the prole who catches one fish more than he needs for supper to divide it out into portions to share with the entire world, can we?

"May your chains rest lightly upon you..." --Samuel Adams
[ Parent ]

Rampant Idealism (none / 2) (#99)
by simul on Wed Nov 05, 2003 at 11:31:14 PM EST

I agree. 100% free markets with no oversight. Over socialized markets throttling innovation.

Both bad ideas.

Approval Voting will solve many of these ills. I am patient.

Read this book - first 24 pages are free to browse - it rocks

Everything getting better for everyone (2.20 / 5) (#103)
by fred freedom on Thu Nov 06, 2003 at 02:02:09 AM EST

You ask "Why is the class gap getting wider in the United States?"  The truth is that the gap is not getting wider, for most comparisons it is either getting smaller or not changing.  The real question should be "What is happening?"

Incomes for both whites and blacks have been increasing since 1950.  There has been some significant stagnation in income for latinos, but I believe much of that is due to the increase in recently immigrated latinos.

The "racial gap" in median family income between blacks and whites has remained fairly constant since 1950.  It is no higher now than in the early 1970's.

The racial gap in college graduates between whites and blacks is decreasing between 1960 and now, as has the racial gap in high school dropouts.  

The racial gap in men's earnings between whites and blacks has shown the most improvement, going from just 60% of white male earnings in the 1950's until 80% today.

The one racial gap that is increasing is women's earnings between whites and blacks.  It went from 50% of white female earnings in 1950 to 90% in 1970, but has stagnated and decreased a bit since then.  Asian American women make more than white women, however.

In addition, the black/white racial gap in poverty has decreased significantly since 1970.

Please check this site:

http://www.bsos.umd.edu/socy/vanneman/socy441/trends/list.html

When we ask the question "why aren't some of these gaps closing?" we should pay careful attention to the massive shift in taxation away from income taxes and corporate income taxes to payroll taxes, mostly Social Security.  A highly regressive tax, it has gone from 2% of GDP to 6% of GDP from 1950 until now.  

Social Security allows government to spend more without raising other (often more visible) taxes, yet we still see a time 10-20 years down the road when government will have to raise the payroll tax to pay for Social Security.  Most young people's real return on investment of Social Security will be near less than 1%.  Instead, if that money was put into private investments, there would be an incredible increase in wealth in the US.  Moreover, studies show that the life expectancy differential between whites and blacks makes Social Security a net transfer of wealth from working blacks to aging whites.

Human Nature (none / 2) (#110)
by freshphoenix on Thu Nov 06, 2003 at 10:07:47 AM EST

There seems to be a lively discussion going on this topic with some valuable insight all over. I wanted to comment on idealism. Idealism, like all of life, is a matter of perspective. It depends what ideals we are striving for and whether or not that ideal includes a sense of equality that makes it dangerous or safe for all involved. There was a thread I read last night, that I can't find now, that commented on human nature. As an avid psych student, I question all assumptions about human nature for very valid reason; we have thousands upon thousands of years of social, cultural, personal, and political influence running deep through our conditioned brains. If you want to talk variables to a complicated equation, allow me to add the human behavior variable. Blanket statements about human nature being competitive or cooperative are ignorant. Blanket statements are ignorant. As a base for all "ideals" I believe it would be good to recognize Carl Jung and the ideas of balance actively visible in everyday life. There is no reason our government cannot be a balance between capitalism and some form of socialism, but, we must remember, above all else, that democracy is a government "by the people, for the people," something even Americans have never had. Our first goal should be to revise our current government and put the power back in the hands of the people and remove it from the hands of special interest. Government is a service position, therefore, it should be composed of volunteers. Life doesn't stop, and, if government is supposed to serve the people and their lives, then the government shouldn't stop either, why do our reps get months of vacation while the rest of the nation busts their arses trying to fuel the economy they manipulate?

[ Parent ]
Inequality is rising, and you are not better off (none / 1) (#141)
by greenrd on Wed Nov 12, 2003 at 05:59:11 PM EST

The truth is that the gap is not getting wider, for most comparisons it is either getting smaller or not changing.

You don't cite any evidence for this (you go on to talk about race, not class - almost as if the two were synomynous, which they are not).

How about this:

"If you go back to 1979, prior to the period when the growth in inequality really took off in the United States, the top 5 percent on average had 11 times the average income of the bottom 20 percent. If you fast forward to the year 2000, the most recent economic peak, you find that that ratio increased to 19 times. So over the course of those two decades, the gap between the wealthiest and the lowest income families grew from 11 times to 19 times."

And this:

Here, there's supposed to be what is called a fairy-tale economy, which is indeed true for a very small part of the population, which happens to include those who are telling everyone else the wonderful news. For most workers, the non-supervisory workers, about 80 per cent of the workforce, wages have declined since the 1970s. In the last 10 years, particularly the last few years, gross wages returned roughly to the level of 1989, the last business cycle, they are still well below the level of 20 years ago. For male workers, median wages have not even risen to the level of 1989 despite the growth of the last few years. For families in the middle range who are called middle income families, they have been able to sustain incomes, but only by a much heavier workload. The middle-income families could earn about six weeks a year of more work than they do 10 years ago to maintain essentially stagnating incomes. The United States now has the highest workload in the world, past Japan a couple of years ago.


"Capitalism is the absurd belief that the worst of men, for the worst of reasons, will somehow work for the benefit of us all." -- John Maynard Keynes
[ Parent ]
economic goals over social goals (none / 2) (#106)
by Space on Thu Nov 06, 2003 at 02:49:41 AM EST

The free-market appears to be more greared towards supply driven creation of wealth and relatively unconcerned with how it is distributed.

The same criticisms leveled at free market economics can be leveled at any economic system in a country where the government prioritises economic goals over social goals.

There never will be a silver bullet economic system that can cure all social ills but so long as government exists; it should justify it's self on terms that aid  humanity and social goals rather than aid the creation of wealth and economic goals.

<recycle your pets>

You fell for it! (none / 0) (#116)
by Daelin on Thu Nov 06, 2003 at 04:08:39 PM EST

The free-market […] more greared towards supply driven creation of wealth […].

The same criticisms leveled at free market economics […] where the government prioritises economic goals […].

Here, you see the government is driving and guiding economic goals. We've got a hodge-podge of band-aids that restrict some to the benefit of others to artificially correct a problem durring an electorate term. It's a less than free market.



[ Parent ]
righteousness vs. depraved (none / 2) (#108)
by Fallen on Thu Nov 06, 2003 at 05:09:31 AM EST

My reaction on the first proposition: The most dangerous thing in this world is rampant idealism. When righteousness, even well-informed and well-meaning righteousness, gets out of control it can do infinitely more damage than the most depraved or bacchanalian acts performed by a cynic or moderate. For me 'infinitely more damage' is overstated and 'similar damage' is more apropriated. Is it because value pairs, like in this example righteousness vs. depraved, are never wel defined. Or rather that extremes tend to regroup making the relation circular.

Mediocre idealism (none / 1) (#111)
by shokk on Thu Nov 06, 2003 at 10:32:36 AM EST

So this guy is basically all for mediocre idealism? Yeah, that'll make the world spin round. Evolution in human ideology has always been accompanied by some fanaticism. Just as you have to accept the good that comes of it, you have to accept the bad that drives it as an evolutionary force with which the good contends. So long as you don't despair, the sane will always triumph in the end.
"Beware of he who would deny you access to information, for in his heart, he dreams himself your master."
[ Parent ]
Far, far worse than the idealist... (2.25 / 4) (#114)
by nowan on Thu Nov 06, 2003 at 02:53:16 PM EST

Radical moderatism.

Often overlooked because it's adherents claim to reject -isms, it is in fact probably one of the most common and destructive -isms around. Radical Moderates (Moderatists?) support an ideology that rejects ideologies; they are radical in their moderation, and absolutist in their relativism. Is it any wonder that theirs is a singularly destructive world-view?

At its core Radical Moderatism seeks to tear down any theoretical structure by which we understand and react to the world we live in. Often they do this with the help of empiricism. Few thoughtful discussions can survive the onslaught of a Radical Moderate wielding the club of Empiricism.

Note: I'm only commenting on the first half of the article, as the second half seemed entirely irrelevant to what was apparently the authors main point.


What is the actual point, here ? (none / 2) (#117)
by Simon Kinahan on Thu Nov 06, 2003 at 06:45:45 PM EST

The first part of the article talks about the need for mechanisms to "sanity check" any particular practice, and how this is generally the opposite of idealism. I very much agree with this. The second part produces the usual supposed problems with capitalism and says "look, ideology gone mad !". As far as it says anything, I don't agree with this.

To say anything sensible about this, we need to recognise that the problems usually peddled as problems with "capitalism", "globalisation" or "free markets" do not all have the same simple cause, and are not failures that can be pinned of some specific ideological program that someone has been implementing.

While there is a political program, which some people have made into an ideology, that wants to remove obstacles to trade as far as possible, most of the problems mentioned in the article are not consequences of the implementation of that program. Instead they are a mixture of erroneous beliefs (the poor are getting richer, and the income gap is narrowing), concerns about the appropriate scope of intellectual property rights (in GM and drugs, to which I don't think anyone knows the right answer) and institutional capture (the WIPO treaty abomination), unease at benefitting from other's poverty (sweatshops), and stupid regulatory regimes (all the others - perversely this is exactly the opposite of what free-market ideology would recomment).

Now I realise that all these things are often defended on the basis that they are "free markets". What we need to recognise is that this is something politicians say when they are trying to find an excuse not to act against their chums in industry, and something businessmen say when they are trying to sqeeze favourable regulations and subsidies out of politicians. Neither act has anything to with freeing markets in the sense that, say, the Libertarian Party, the Cato Institute, or the WTO (WIPO aside) would favour.

We also need to recognise that one of the benefits of markets is that they are, more-or-less, self-correcting. They contain their own sanity checks. I can't make money making widgets if nobody wants them. Whenever anyone speaks in favour of free markets, we need to ask first whether that is really what they are talking about, or whether they are just pushing some business interest, and second whether the "market failure" they are pointing to is real, and whether any *real* (as opposed to ideal) regulatory structure could actually fix the problem.

Simon

If you disagree, post, don't moderate

Oh, bullshit (none / 1) (#128)
by trhurler on Fri Nov 07, 2003 at 05:26:32 PM EST

First of all, if you find a flaw in an ideal, then it isn't an ideal you should hold. Or, maybe the flaw isn't really a flaw. (For instance, I've never seen a restraint on speech that I thought was appropriate. Living with and paying the consequences of your speech is one thing; being disallowed from speaking for fear of those consequences is entirely another.)

Second, in case you haven't noticed, free markets are the most pragmaticly worthwhile invention of man. To the extent that we are not living as savages, thank free markets.

--
'God dammit, your posts make me hard.' --LilDebbie

Restraint on speech that's appropiate? (none / 0) (#144)
by partykidd on Wed Nov 19, 2003 at 01:51:45 AM EST

For instance, I've never seen a restraint on speech that I thought was appropriate.
How about yelling "Fire!" in a movie theater? How about a bomb threat? How about slander and libel?

Don't kid yourself. There's plenty of restraints on speech that make perfect sense.

First of all, if you find a flaw in an ideal, then it isn't an ideal you should hold. Or, maybe the flaw isn't really a flaw.
Ideal doesn't mean perfect. For example: my ideal woman has plenty of flaws.

"It is the mark of an educated mind to be able to entertain a thought without accepting it." - Aristotle


[ Parent ]

Bit of a flaw in your article (none / 1) (#133)
by melia on Sun Nov 09, 2003 at 07:37:47 PM EST

There's a lot to say about economics in this argument, mainly the fact that the concept of a free market exists nowhere but people's minds, which rather invalidates your examples. Anyway, I gave up because...

Consider the case of the ownership of engineered genes... no-one has stepped in to sanity check.

Wow, look at all these "Sanity Checks!"

Likewise, the peoples of many African nations are being denied access to drugs which could help solve major health issues in order to protect U.S. patents.

I wish I had a "cheque" (check?) for all these "Sanity Checks" (geddit?)

Other such examples of the free market run amok include third world sweatshops being used to make shoes and bottle cola for first world consumers,

Nooooo! Not more "sanity checks!"

etc. etc.

It's a common misconception held by a lot of people that everyone else is a free-marketeer just because they drink a bit of Coke and like watching the ads on telly. There's not a lot of people who actually think the current (not even close, by the way) approximations to "free markets" are perfect. So you know, people are actually thinking about this stuff already. It's nice to know you've joined them.
Disclaimer: All of the above is probably wrong

What a pessimist (none / 0) (#150)
by weirdling on Wed Jun 23, 2004 at 04:39:23 PM EST

You assert that the disparity between the 'haves' and 'have-nots' is widening.  Prove this.
  1. prove that there is a large disparity by defining clearly what you mean.
  2. prove that this disparity is increasing.
  3. prove that the solution is working.
Anyway, this disparity has been allegedly increasing since the intervention of government in the 30s.  Perhaps it's time to decide that intervention isn't working?

As to the idea that people are held in their class, it's pure bollocks.  I'm from lower-middle-class stock and clawed my way into upper-middle-class.  It's not hard.  Sure, I'm paying a lot on student loans, but it was a worthwhile investment in my own future.  It has paid back way better than any other investment I could have made.

Quit telling people they can't and start telling them they can.  This is one reason I hate Kerry.  The economy is improving.  People are better off.  But Kerry insists it is not so for purely political reasons.
I'm not doing this again; last time no one believed it.

Sanity Checking the Free Market | 150 comments (116 topical, 34 editorial, 0 hidden)
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