Sunday, 15. June 2008, 16:30:30
The following is an ongoing debate between two members of Amazon.com (Bezukhov is me) over the book Economics in One Lesson, it is interesting and I believe much benefit can be derived from reading it. Tell me what you think of the discussion, what they are missing and what could be improved.
-----------Bezukhov says:Funny you cite lower crime rates (a cultural phenomena rather than a government phenomena in most cases); education (which has much to do with how much government controls education, which the United States is a leader in, as the government has a near monopoly there, while many western European countries have voucher programs, a capitalistic, market based approach leading to better education due to competition, etc); and health care (which is only better if you have not been to the United States and experienced health care that is responsive to you, treats you as the number one customer rather than another statistic that must be dealt with and satisfied (by some 'caring' and 'responsible' politician or bureaucrat), the market approach, though hobbled by endless regulations, still succeeds in this case).
Better TV programs is debatable, that is purely based on what you consider 'good' television, not objective like who is getting a surgery faster, with less risk and at a lower cost. Plus, in most of the western European countries, the government has minimal, if no, involvement in the development of television programs.
Explain to me why you feel that regulation (coercion) is the answer to problems rather than allowing people to come to voluntary agreements on a deal? If I do not feel that a producer is giving me enough information about their product, I won't buy from them or will negotiate with them until they concede more information. I need no government to force that, and other, producers to provide me information that I am not entitled to.
But I will stop before I get side-tracked. The free market works, only the world has rarely had true free markets, even in the United States.
p.s. could you give examples as to why this book deserves a 1-star rating, political views aside can you rate the book based on how informative it is.
-----C. M. Struik says: OK, it's a political review. I can't see how this can be avoided when the book itself is so blatantly political. I agree that the market economy works; it's very efficient at producing more unnecessary goods for people who already have everything, and at unbalancing society in general as it takes account only of what people will buy. It also succeeds at reducing the salaries of government workers and thereby causing a decline in public services and promoting corruption. I'm not pleading for socialism, but I get worked up when serious economists like Keynes etc. are made fun of.
-----Bezukhov says: Do you realize that the market economy is only an extension of allowing people the freedom to go about their lives without the fear of some other person or government entity using force to make them do something they do not want to do. Public service is alive and well, the government is not needed to promote such actions. Charities are alive and well, children's clinics, such as St. Andrew's Church in Nogales, are operating, where professional doctors volunteer their time to help those in need.
Have you researched the fact that in Soviet Russia, the farmers who were allowed the freedom to grow their own crops and reap the rewards of their hard work, produced 25% of the country's crop output on only 3% of its land.
Keynes was only a serious economist if you consider economic theories that are based on coercion, massive debt build up and the idea that the only method of people making income and producing growth is through consumption.
Read this article for some reasons why Keynes and his theories have caused nothing but trouble:
http://mises.org/story/2950Realize that much of what the government does right now, from education to social welfare, was done through private action through much of the 19th century before the rise of the welfare state during the 20th century. Government rarely creates wealth, more over its chief method of making money is by legally stealing, plainly theft, of its subjects property.
I will leave you with two quotes, both counters to your arguments.
"Underlying most arguments against the free market is a lack of belief in freedom itself."
"A major source of objection to a free economy is precisely that it [...] gives people what they want instead of what a particular group thinks they ought to want."
-----C. M. Struik says: Belief in freedom is a faith, which you're welcome to, but I can't see how you can manage to overlook the downsides of untrammeld capitalism and individualism. (Enron comes to mind?)
I already said I'm not a socialist or communist, but my belief is that people should take government seriously so that their money is spent wisely. The freedoms that America is so proud of were brought about by wise government, and I can't understand why so few Americans are interested in politics, an interest which might bring about some improvement.
I guess you are aware of the percentage of underfed children in the richest country in the world?
-----Bezukhov says: You bring up one downside to 'untrammeld' corporatism (not capitalism) and greed (not individualism).
To make a side note, individualism does not mean greed, egotism and selfishness, it means the recognition of the individual's views and tastes as supreme in his own sphere, however narrowly that may be circumscribed, and the belief that it is desirable that men should develop their own individual gifts and bents. From this an individualist can be a charity donator, a non-for-profit operator and many other things that are no for profit or greed.
The freedoms that America enjoys are brought about by wise government, capitalism (or more accurately the free market), need a wise - and limited - government to operate smoothly. But a wise government does not mean an interventionist, welfare state type government. It means a government that creates rules for the game and officiate those rules (referee) them impartially. In soccer the referee can not change the rules on a dime without notifying players in advance (even then under most games he can not once the game has begun), neither can he interfere in the game, try to make the players 'better', he merely makes sure the players follow the predetermined rules. This is the same purpose of a wise government.
Your 'wise' government seems to be one that decides what is best for others, a collectivist focused government rather than an individualist (which is no synonymous with selfishness and greed) focused government. Hayek in 'The Road to Serfdom' already broke down in great detail and highlighted the failures of collectivist thought and governance, so I won't repeat it here.
The number of underfed children is not a fault of capitalism but a fault of government subsidies and control of the agriculture business. There are times when tons of wheat are sitting in storage containers because the structure of the government rules surrounding the sale and trade of produce makes it more profitable for the farmer to hold onto the produce than sell it, hardly a feature that would occur under an unfettered free market. Government interference into industries brings misallocation, witness the disaster of the government trying to allocate gasoline during the 1970s. It causes people to have nothing rather than have something at a price. Lastly, why do people who attack capitalism always bring up some 'oh but the children' argument? Here is a nice article to think about:
http://mises.org/story/2967.I will give you a list of the upsides to unhindered capitalism and individualism. James J Hill (built a rail road faster, more efficient and better than government run and subsidized ones); Bill Gates (took the money he earned by voluntarily trading with others to help those in need, witness the Gates Millennium Scholarship and so much more); automakers (the competition for customers and the warranties that would make it costly to have a defective car ensured cheaper and more reliable cars for the average person); software programmers (they make leaps and strides each month improving the usability of software and allowing people to get things done faster, better or easier than before); Eli Whitney (the invention of the cotton gin to improve the removal of seeds, helping make cotton cheaper); and the list could go on and on.
And lastly, the Enron problem was not a fault of the market, but one of violating the rules of the market. There will always be those who try to defraud others. That is why we need laws against theft and fraud. The Enron debacle is the fault of government for not having a clear Law of the Market so that the auditing conflicts would have been illegal unless the company charter had stated that it would engage in such practices, which would have warned everybody.
Once again, government, not the market, failed.
-----C. M. Struik says: I seem to read the wrong books. In "Confessions of an Economic Hitman" one finds corporate practices that are less uplifting than the ones you mention. As Enron was only one example of violation. Not everybody is enthousiastic about Bill Gates' business practises either.
Our basic disagreement seems to be faith in human beings with lots of freedom. I think they need more checks and balances than you do, and that as a result we should care about how we are governed, so that the kind of mistakes you mention are avoided.
With regard to your football metaphor; the government should be a coach: love and support all his players, but some have to be on the bench at times. He should also have an eye for the weaker players and find decent alternatives for them.
So far in Hazlitt's book I have found no objections to large sums being allocated to war by the government, where not only the precious tax-payers dollar is used for actions that violate international agreements, but also human lives are sacrificed. It seems to be of no consequence that large companies benefit from war through the taxpayer's dollar. It's only an example to illustrate how important government is and that not all forms of production are necessarily beneficial, no matter how efficient they are.
-----Bezukhov says: It seems that you do not want to address the points I brought up directly, but you seem to desire to restrict the actions of rational people like me because you feel you know better than us how we should live our lives. People who support regulations are people who think they know how to run others lives better than they themselves do. Also, many of the 'mistakes' you and I cite would happen regardless of whether there are 'check and balances' in place, humans will always make errors of judgment. Under a free market (with a clear Rule of Law) those people would be punished financially and reputationally. Under a semi-free market with a labyrinth of rules and regulations, the type of actions you cite happen more often, because those violating the rules are able to confuse and mislead the regulators who have to watch over a complex and contradictory set of rules that at times defy logic.
The Government should not be a coach, because the coach is biased toward his team and certain players, and does not officiate the game. The coach interprets no rules by which the different players shall follow. The referee on the other hand, is impartial, helps out the players who gets knocked down (allows for assistance by others) and does not limit which players are allowed on the field of play, as long as they are registered (aka citizens) and haven't abused the rules of the game in any way (aka no red cards, etc).
Companies that benefit from war are a direct result of people wanting to expand government, if the government was small and limited, it would not have the ability to wage offensive wars and thereby permit an industry that piggybacks on wars and other conflicts. Also, the military industrial complex is not efficient, it just has large government contracts to keep it continuously humming along.
Read 'The Road to Serfdom' and see whether your support for a more socialistic government (to even a minor degree beyond protecting the very small percentage of people who actually need assistance) almost always leads to problems down the road.
-----Ian says: "OK, it's a political review. I can't see how this can be avoided when the book itself is so blatantly political."
How is it political? It's straight, basic economics. It's only political if one reads with one's politics. In that light, any book can be political.
"<The market economy> also succeeds at reducing the salaries of government workers and thereby causing a decline in public services and promoting corruption."
Not necessarily true on any count. A healthy market economy can fund a robust government (unfortunately). Public services can be provided by private enterprise, and in a way obedient to actual market demands and needs. Nor is there an inverse relationship between government funding and corruption. Unaccountability is a prime reason for corruption, and that is found in any government.
There is an alternative: an honest, cost-benefit analysis of how much government is actually needed, as opposed to a pure benefit analysis, a ubiquitous fallacy of pro-government thinking that is a major theme of Hazlitt's book.
-----Ian says: "Our basic disagreement seems to be faith in human beings with lots of freedom. I think they need more checks and balances than you do, and that as a result we should care about how we are governed, so that the kind of mistakes you mention are avoided."
What checks man best is his fellow man. The American founders identified proper government as that which checks the passions of man: his aggressive, bullying instincts. It does this through law and force. But it is not proper government to check man's lawful interests. They identified "the pursuit of happiness" as an inalienable right because government ends freedom when it begins to decide what's best to make a man whole and happy.
Let culture, which has the force of persuasion, deal as best it can with the man with an unsavory idea of happiness. But let goverment, which has the force of arms, deal with him, and we give government permission to becomes man's providence. What then?
-----C. M. Struik says: I'm afraid there is no end to this discussion. I feel the pursuit of happiness has led to more greed and selfishness, a decline in respect for culture and learning. More children grow too fat (if they're not underfed) than are challenged by education. They follow shallow dreams fed to them by advertising, Hollywood movies, in short everything producers can throw at them to tempt them to find temporary, but unhealthy bliss. I am not telling you or them how to lead your lives, but I do wish there was an alternative to a system that can only survive on more consumption. In this system people are seduced to make unhealthy choices, that affect themselves and untimately the planet.
The reason I call the book political is that it's basic choice is to produce more and more efficiently, and though the book says time and time again that it looks beyond immediate results it doesn't take into account the consequences. If you've seen Chaplin's modern times, you must have realised that many jobs will becomes pointless and repetitive. If you have read any literature, starting with eg The Great Gatsby, you can't have missed the point that individual lives are nothing but show. Keep up with and impress the Joneses.
Maybe the book isn't bad economics, it's blind to the consequences of capitalist production.
-----Bezukhov says: You seem to miss the whole point of my posts. You have a stereotyped view of today's children, fed probably by the same media that you criticize for cheapening their lives and dreams. You should give children more credit than that, I know several children naught yet out of elementary school who are dreaming of how hard they need to work to attend MIT, Harvard or another top school and help make the world better, yet they are awash as any in the media blitz of our times.
I am not advocating a production of just the best goods at the best price, but the freedom for people to engage in whatever voluntary actions they please, as long as they do not infringe upon others ability to do the same. You believe that freedom leads to just more consumption, unhealthy choices, a decline in the respect for culture and learning and lives that are pointless and repetitive. The Great Gatsby, while a great book, was a period piece and an individuals story. It illustrates the pointless pursuit of a substanceless dream, that once attain, leaves the person empty. That was Gatsby. Other characters are flawed because they are trying to revisit the highs of their youth (Tom, trying to find the high of his footballing days) but are never able to attain them. The book is about flawed characters, and the flaws of the rich at the time, not necessarily an assault of modern times or modern humans.
On the other hand, a lack of freedom illustrates a declining respect for culture (look at the Nazi book burning, the Soviet destruction of other cultures monuments, other regimes who want to tell people what 'proper' culture is, etc.) while freedom breeds a respect for other people and their cultures (witness the diversity of cultures in just one city in America, such as New York, and that view will change, unless you find other people's cultures 'cheap' and superficial). What makes you think that forcing children to have 'substantive' dreams will actually make them want to pursue those dreams, and who is to decide what a 'shallow' dream is? A lack of freedom or private property breeds a lack of respect for the land, look at private land compared to public land, people like to conserve their property, make it look the best it can, as that is what gives it the most value, not barren, destructive land. Plus, socialism gives no incentive for people to save and conserve, while capitalism gives incentive to produce something with the least cost (ie resources) in order to make a larger profit.
Furthermore, are you implying that we should design jobs that are not pointless and repetitive, that is just the nature of many occupations. You may find it hard to believe, but some people like that, they do not have to think, get paid then can entertain themselves elsewhere. You seems to associate freedom with capitalism, even though capitalism is only one part of a free society. Freedom includes the ability to form charities, volunteer organizations, associations, clubs, etc. This is what leads to a more wholesome community, not people controlling and telling people that they are living 'shallow' lives.
Lastly, greed and selfishness are the only human qualities that are universal, animals (which we are) are inherently greedy (how else would they survive if they did not want resources for themselves) and selfish (they want the best for them, their family and species). Why not create a system that harnesses these qualities for good, ie the free market, and tames them rather than a system that attempts to deny they exist, ie collectivist doctrines, and gives them more power to harm others.
Go to an elementary school and talk to some children, it might change your mind on the state of freedom, what those children dream of becoming and the future of the planet, people are selfish and greedy, but are not love and compassion made up of both?
-----C. M. Struik says: I'm really glad you're taking so much time to educate me. I can assure you I do read your posts carefully, and the reasoning is not without its merit, I just don´t share your optimism. If human beings are still largely controlled by their ids I see no reason to trust most of them with unlimited freedoms, not do I see the system harnessing the id for good.
And as for missing the point, I have more than once written I´m neither a socialist nor a communist, and I resent being grouped with Nazi´s or Soviets. As for contact with kids, I´m afraid I am in daily contact with adolescents, whose increasing immersion in useless pastimes may one day be replaced by greater things, but whose lack of interest in cultural development is sometimes frightening. Nevertheless I enjoy their passion and optimism.
I´m surprised that you don´t recognise Gatsbies all around you, and I suppose that the gruesome future depicted in Brave New World has no validity for present developments either. I´m sorry to be such a dim and stubborn pupil; it makes further discussion useless. I thank you for your time.
-----B Bezukhov says: I am sorry if I sounded a bit harsh, I did not mean in any way to group you with the Nazi's or Soviet's (to do so would end discussion and devolve it into name calling). It was a general statement of the progression of lack of freedom, more appropriate example would be the FCC and its fines for things such as nudity and language which are a part of every day life and definitive features of some cultures, yet are subdued by a government body that restricts people's freedom to communicate ideas with one another.
I realized early on that you were not a socialist, communist or any type of collectivist, just a person who believes some more controls are necessary to ensure people do not harm each other. A lot of this comes down to the community ones lives in as well, if you see more of the vices than the virtues of man, it would lead you to want to control him more than a person who saw the reverse.
While I see Gatsbies all around me, I do not take that as a reason to restrict what those people can do, most choose freely to live such a life, some enjoy it while others do not. But it is not up to me to decide whether I think their lives are substantive or whether they should pursue better aims, that is up to them. My only aim in interacting with them would be to cooperate with them for my own, their own or some third party's own benefit. When controls are put in place, it is usually for one person's benefit (maybe their piece of mind, ie gun controls) at the expense of somebody else (ie someone not being able to freely go out and buy a gun, possibly for a collection).
I take the view that if I can talk to one mind and influence it even slightly toward the concept of more freedom for all, then it is worth it, because as they spread their ideas to others, and more people will be influenced than just them directly. Plus, discussions illustrate the weaknesses in my ideas, which I can then start find out ways to fix. Thank you for taking the time to read my posts, it has been most enjoyable.
WIDGETIZE