HI John, Just a quick comment... I know you say there is a difference between capitalism and free market... but aside from that...
there is the over-riding process of global industrialization... whether this process is under capitalism or free market, you still end up with family and community disintegration through urbanization and labor mobility...
***Back up, we cannot ascribe the negative rsults to free markets, because that would be ahistorical; we know the dislocations that cause the stress you are about to detail comes form communism and capitalis, this is historical... the over riding process of global industrialization (as I am guessing you see it) cannot come from free markets. It can only come from power aggregated in a few hands. Human rights, one of which is property rights, has to be violated to achieve these deleterious results. ***
Are you saying that a free market would maintain family and community support systems irregardless of industrialization and global wide urbanization???
***I am saying we would have something different, not industrialization as we know it today. Hong Kong, Singapore, Andorra, Monaco, Lichtenstein, and countless other modern places have seen family and community support systems and modernity.***
How would it do that without govt programs, like medicare, meals-on-wheels, job training, food stamps, temporary unemployment benefits, disability support...?
***Yikes, what a litany of evil? Who needs any of the above? Whatever problems the above are supposed to solve, mere freedom would do the trick. Freedom to contract, freedom from interference.***
A responsible society does not let these needs go unmet...
***Free markets do not let these needs go unmet.***
About mobility... many desired the mobility... that is why you see massive urbanization for over 100 years... and you see lots of immigration
***People leave when the greener grass is more alluring than the present misery. It takes a lot of pain to make people move. People do not flee free markets.***
The book has a clear definition of capitalism..."Capitalism is an economic system in which employers, using privately owned capital goods, hire wage labor to produce commodities for the purpose of making a profit."
*** As good as any. Of course, it is a silly definition since it describes only one part of human action that makes up an economy.***
How is the idea of Free Market different?
***We have an inalienable right to freedom. “Employer” and “employee” means both sides of the transaction have violated inalienable human rights. Let me exagerate to make the point: a human has an inalienable right to freedom - he can neither sell himself into slavery nor be sold into slavery. In a free market there is division of labor, but power cannot be aggregated since there is no sanction if someone declines to continue with an “employment” contract. In a free market sanctions are limited to how people react ot you and your repuation.***
I hear what you are saying about suffering the consequences of a recession to purge the rottenness, but my point is that social support systems have been eroded over the past 100 years in the US, and currently so in emerging markets...
***Indeed, I condemn it and the capitlism behind it. But the solution is freedom, not more programs. Take section 8 housing. landlords love packing empty apartments with poor people subsidized by the taxpayers, becuase the poor paying what was standard a few yeas ago keeps the rents high when they should be falling fast after this construction boom. By eliminating Section 8 immediately, the rent of apartments and houses would drop to where the poor could pay their own money for rent.***
If you let people suffer from the collapse of an economic system that actually eroded the social supports over time leading up to that collapse, you continue to do damage to society...
***The only people who would suffer are the landlords ripping off the taxpayers...***
My question is if govt´s role of social services is more important because workers are expected to get and go where the work is...
*** this “government” that gets nothign right, as far as I can see, somehow matches workers to work well enough?***
Have you seen the recent articles showing that worker mobility is limited now because of the problems with mortgages, foreclosures, refinancing and housing sales...?
***I would think it is limited by lack of imagination. People are so indoctrinated to “get a job” their ability to innovate and provide for themselves in a free market has atrophied. There is plenty of gainful work to be done, there are just no jobs out there.***
People are left stranded, tied to a house, and can´t go to where the work is... this is a consequence of the economics...
***Please! Anyone can walk away from any house with no more than 3 years before they can buy again. Even the wealthy are doing it as “strategic default.”***
The role of govt is to support the vulnerable part of the population...
*** I cannot think of anything more miserable than to be vulnerable and supported by the government. Of course the rich are supported by the government, and how! ***
Because of Germany´s workshare program unemployment did not rise there...
***Well, that may be tendentious, there are many factors in Germanies economy, and what we call unemployed and what the Germans call unemployed are very different.***
This maintains a strong and active work force...
***But free markets do, undeniably.. why not cut out the middleman?**
Centuries ago, the unemployed could always find support within the community, but not now...
***Decades ago people could depend on their families, let alone centuries... but with capitalism and communism, utilitarianism moved to the fore.***
3 comments:
John, you are between the *** ***
***Back up, we cannot ascribe the negative results to free markets, because that would be ahistorical; the over riding process of global industrialization (as I am guessing you see it) cannot come from free markets. It can only come from power aggregated in a few hands. Human rights, one of which is property rights, has to be violated to achieve these deleterious results. ***
Actually in geographical economics, Paul Krugman won a nobel prize for this, you see how people end up moving to centers of economic activity...
Now, before we continue, the question I have about your idea of free markets is this...
How do you create investment in free markets? Is it through banks, stocks, bonds, loans, or just regular people giving money to businesses???
Krugman won a nobel for showing people take their goods and services to the marketplace?! Sheesh.. you've ruined the prize for me.
As to your question, wealth is savings, wealth is not debt. Customers create the business, it is their savings traded for goods and services that make a market, or as you put it "regular people giving money to businesses." Banks stocks bonds loans are neither necessary nor sufficient to make an economy. They are certainly a feature of a modern economy, and in and of themselves they are morally neutral accommodations. Problems arise with the moral hazard of a system in which either party can oblige a 3rd party (taxpayers) to pay to have a fourth party (govt) enforce contract terms. Then it becomes a game of scamming the little guy, which of course we see under the democrats and republicans.
Krugman didn´t show that people take goods and services to the market... he showed where people take themselves to the market... the mobility thing... voluntarily or involuntarily...
You don´t discount bank loans and stocks... you don´t put much emphasis on them either... the core of capitalism is the general access to credit/capital within a free market... So as I see it, your free market has to have an element of capitalization...
How do you separate free markets from capitalism then???
And on the subject of government intervention... let´s look at the work of the economist Amartya Sen... He explored inequality, freedom and poverty among other things...
In a paper once, he asked... Why do famines occur?... Most people say, "not enough food for everybody"... but he saw that the 1974 famine in Bangladesh occured despite there being more food per person that year than the two years prior and the following year... the cause of the famine was unemployment of the very poor caused by weather that didn´t allow them to work in the farms that year... Thus, the very poor could not buy food... as a result, thousands died... then as people starting dying, the affluent stockpiled food, raising the prices even more, causing more people to die...
He also wrote about the famine in 1943 in Bengal... 2 to 3 million people perished... but he saw that no one in the middle class, nor upper class felt any of the effects of the famine... only landless rural laborers died... Why?
His work went on to teach governments how to provide programs to keep these things from happening... He pointed out the government´s indifference to the dying...
Many governments since his work now know how to prevent famines... it is through government intervention... his work has saved millions of lives...
Sen once wrote, "Economics is not solely concerned with income and wealth but also with using these resources as means to significant ends..."
So if government can use resources to significant ends, this is good...
He also talks about how the poor in countries like China and Sri Lanka are healthier than the poor in Brazil and South Africa... First, income is unequally distributed in Brazil and South Africa, even to this day... Second, China and Sri lanka have public health policies that address the most vulnerable...
Here again we see the word... vulnerable... this is a role of government... to support the most vulnerable in society...
Again ... how does the free market take care of the most vulnerable???
The answer is not simply through freedom...
Post a Comment