WatchI came across this excellent article:
http://www.capmag.com/article.asp?ID=4399
The only economic system logically correlative to such political liberty was and is a free market. If men have a right to their own lives – and are not the chattel of state or church – including the right to pursue their own happiness, then it follows that they must possess the right to own the product of their intellectual and bodily effort, and to exchange their work and its products voluntarily for whatever other goods they desire. Capitalism is freedom – and this involves freedom of the marketplace fully as much as freedom of the mind.
There are a lot of different emotions going on in the world: healthcare, recession, war, climate change, etc. We must not get lost in the chaos and we must not forget that economic freedom is the only true freedom. We must resolutely reject soft moralism and take a stand. The only real propellant of human societies is, has always been, and will always be economic prosperity.
Evolution favors strength. In societies, economy is the source of strength. The only system that puts Evolution in the context of economy is Capitalism. Please support Free Market wherever it is attacked.
Beware of the following concepts:
- Economic Justice - it leads to some form of communism
- A better world - the world has no good or bad, it is all relative
- Saving the planet - the planet will be here millions years after our extinction, people just want to save themselves
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If a market were truly free then it would be the wild east of Russia and gangsters would rule
bingo.
Help I’m confused.
You're not confused, Peter P is. Wealth concentrates over time while democratic power by definition does not. The Free Market is simply one-dollar one-vote. This is somewhat workable until feedback effects result in 51% of the wealth being controlled by 3% of the populace (like it is in the US right now).
Democratic governance, on the other hand, has built-in feedback such that 51% of the population will correct abuses, theoretically, though of course in the US we see Christianists (25~30% of the population ) aligned with the 10% nutball sociopaths (aka libertarians) and the 10% that actually own the 66% of the country, forming the current Republican power bloc that while fragile is oh-so entertaining.
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Here is a pretty good article on wealth distribution, although it is out of date. Things are actually much worse now. Curious how wealth inequality started to really change about 1980 or so. Wealth seems to have really trickled up. Also worth noting is that one of the defining characteristics of the third world is huge disparity in wealth with a very, very small part of the population controlling almost all the wealth.
Don't get me wrong, I think capitalism is great, I also think that giving capitalists a totally free hand is like giving teen age boys whiskey and car keys (thank you PJ O'Rouke for that wonderful quote) as our current economic state shows.
http://multinationalmonitor.org/mm2003/03may/may03interviewswolff.html
From the article.
MM: How does the U.S. wealth profile compare to other countries?
Wolff: We are much more unequal than any other advanced industrial country.
Perhaps our closest rival in terms of inequality is Great Britain. But where the top percent in this country own 38 percent of all wealth, in Great Britain it is more like 22 or 23 percent.
What is remarkable is that this was not always the case. Up until the early 1970s, the U.S. actually had lower wealth inequality than Great Britain, and even than a country like Sweden. But things have really turned around over the last 25 or 30 years. In fact, a lot of countries have experienced lessening wealth inequality over time. The U.S. is atypical in that inequality has risen so sharply over the last 25 or 30 years.
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So in a free market if I were a business owner and wanted to reduce my operating expenses through child labor, would that not count as corruption?
I do not see that as corruption. So long as the employment is at-will, there is no moral issue.
This will be corruption: In hypothetical country A, child labor is illegal, but the enforcement can be paid off to overlook the infraction.
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I do not understand the sentiment against "wealth inequality." If there is no wealth inequality I am going to sit on my hands and wait to be fed.
You think people work because they want a better world? I don't. There is no good or bad world. There is only a world better off or worse off for any given person.
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Like everything in life wealth inequality needs to be a balance. I think the advantages of wealth have accrued to the point of danger in America. The plutocracy has reached a point where the accumulated wealth is being used, especially through manipulation of government, to accumulate ever more wealth at an ever increasing rate. Like all increasing rates of change, at some point this will blow up.
The wealthy do owe a debt to the society that provides the vehicle to their wealth. People like Warren Buffet and Bill Gates, hardly communists, have openly said that they believe this is true.
The current tax structure is unfairly biased by the sheer volume of tax rules that makes avoidance of taxes possible for everyone but wage earners. These rules were of course promulgated by the very capitalists you defend. This was in order to firstly reduce the personal taxes on the wealthy in the guise of increased economic activity as in capital tax gains. Secondly to accrue competetive advantage without having to invest the resources to actually compete. This allows corporations to avoid taxation without an actual corporate tax cut which would be very politcally unpopular. It also allows politicians to maintain the fiction that corporations are paying high taxes while rewarding those very same corporations for bribes (sorry campaign contributions) to the politicians. Very convenient.
So how does one achieve this perfect world of economic freedom without the inevitable spiral of wealth upwards? This has been the pattern throughout history, almost always resulting in the destruction of the society involved. Which is why I find it so disturbing. Can you provide some real world examples of this kind of perfect capitalism for us to examine?
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Peter P says
From a practical point of view, a high level of wealth inequality hurts the economy. Someone in the middle or lower class will spend a much high % of a marginal $100 than will a member of the elite. Further, everyone here rails against welfare--the larger the inequality, the more people will be on public assistance. Ideally, you want a large middle class so there are lots of taxpayers and few people on public aid.
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I do not understand the sentiment against “wealth inequality.”
There are three main kinds of wealth. There is savings and consumer goods. These are the physical manifestations we are most familiar -- cash in the bank, food in the pantry, TVs, etc. Secondarily, there is capital wealth. This is the wealth that is used to create more wealth -- ownership of land, business equipment, shares in CAT. Third, there is societal capital -- the knowledge, experience, connections, and access that one uses to create more wealth or otherwise achieve an income through labor.
Disparity in the first category is of no great concern to me. People are free to bust their ass for this wealth to their heart's desire and there's generally no lack of opportunity on the individual level.
Disparity in the second -- capital -- is just the stacked deck nature that the poorer face in competition with the more wealth. The wealthy can afford to risk more since they can afford more failures, and furthermore with capital comes rentierism -- the rack rents and profits that the wealthy wring from those less well off. Everywhere the middle class and below turns they are gouged by wealth -- their monthly rent, the profit margins they pay for retail goods, the medicines they need, etc.
Disparity in the third -- societal capital -- is the most critical feedback nature -- and evil -- of capitalism. I don't know about you, but 3 of the 5 professional jobs I've had in my life have come from personal connections. Thanks to the non-free market UC system, I was able to affordably acquire job skills that enabled me to leverage these connections into useful employent, benefiting both society and myself. Left to its own devices, IMO, the free market serves to increase the disparity of societal capital over time. The history of the 20th century's middle-class was increasing access and acquisition of societal capital at the expense of the upper class, and this was a very good thing if you think meritocracy and maximal development of societal talent is important.
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Peter P says
Either way would you support a free market without regulation? Are you really ok with child slavery?
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Peter P says
Sir James Goldsmith said it best "the economy is here to serve the people, but we are setting up a situation where the people serve the economy (transnational companies)."
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Wealth inequality is fine. It inspires people to invent, take risks and succeed.
The problem is that it IS and always WILL be a zero sum game. Long term growth in the United States is INTENTIONALLY pegged at approximately the growth in population. Growth faster than that is INTENTIONALLY sqashed by the fed to limit inflation. Therefore a person accumulating $1 billion in wealth has no choice but to take it from other people.
At a low level, this is fine. There should be winners and losers in society, otherwise what's the point of working at all? Unfortunately there's a twisted and sick belief in this country that there should be no upper limit. If a single person ends up with enough money to decimate an entire city or even an entire state? Too bad, so sad, Darwinism don't ya know!
Everyone knows what happens in a game of Monopoly. One person ends up with all the money and everyone else ends up bankrupt. This is true for 5 players just as it's true for 300 million players. It is the true nature of an unregulated free market.
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Either way would you support a free market without regulation? Are you really ok with child slavery?
I am okay with child labor but NOT child slavery.
Slavery deprives a person of his properties and hence it is evil.
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Unfortunately there’s a twisted and sick belief in this country that there should be no upper limit. If a single person ends up with enough money to decimate an entire city or even an entire state? Too bad, so sad, Darwinism don’t ya know!
I still don't get what is wrong.
Money is simply a belief system. When it becomes completely out of whack, people lose faith in that system and there will be a new equilibrium point. It will all happen naturally.
Any attempt to hinder the natural flow of wealth will only create more hardship. For instance, any form of welfare beyond a basic safety net will only sustain poverty.
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Sir James Goldsmith said it best “the economy is here to serve the people, but we are setting up a situation where the people serve the economy (transnational companies).”
Both are undesirable.
IMO economy is here so that everybody serves himself. In the end, both the people and the economy will benefit. Humans are by nature self-serving. I think it is wise to have a system that reconcile this trait.
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Thanks to the non-free market UC system, I was able to affordably acquire job skills that enabled me to leverage these connections into useful employent, benefiting both society and myself.
Or... thanks to the semi-free market university education system, some other people were not able to afford a degree so you had an edge. :-)
A few questions:
Won't your degree lose value in the context of a competitive job market if more people have it?
How come many self-made billionaires do not have a degree?
Does a university education provide job skills or does it merely validate the acquisition of such?
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Peter P says
Really? You mean a top tax rate of 90% in 1946 decimated the United States caused a systemic loss of faith which resulted in massive poverty?? A strong policy of anti-trust during the same period turned us into a 3rd world nation??? I think my history teachers must have been drunk or something.
Look bub, I don't care if you worship the free-market religion or not, but to deny the period between 1946 and 1980 is no less absurd than denying the Holocaust.
Do you know what happened to poverty after FDR? It FELL. Do you know what happened to poverty after Reagan took office? It INCREASED. Here's your graph: (numbers come from the census)
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iwog says
To be fair, the US emerged with the world's largest economy going full steam with all its competitors having bashed in each other by bomb, shell, and rifle butt.
The 1950s and 1960s were a golden gift to the American people. We did OK I guess, with the interstates, Apollo, and the basis of the internet. Pity wasting all the blood and treasure in 'Nam for nothing, tho.
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Won’t your degree lose value in the context of a competitive job market if more people have it?
On the personal level, yes. On the societal level, may the best man win. SInce I am 40 now, if I were a purely rational operator maximizing self-benefit I'd want to bring the ladder with me. Being a left-libertarian and not a right-libertarian, I don't roll that way. I recognize glibertarians are incapable of thinking on scales larger than their own self-interest, that's cool, if a tad sociopathic.
How come many self-made billionaires do not have a degree?
The skills to be a worker bee are much different than the skills to be a billionaire. The fetishizing of billionaires by glibertarians is quite humorous to me, as if we all can be a nation of billionaires.
Le secret des grandes fortunes sans cause apparente est un crime oublié, parce qu'il a été proprement fait.
Does a university education provide job skills or does it merely validate the acquisition of such?
Depends on the person and the field. For CS, self-study is the way to go. Same thing for starting your own business, day-trading, real estate, etc etc. Other fields with greater capital minimums and higher skillsets benefit from time in academia.
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as if we all can be a nation of billionaires.
In Zimbabwe, everyone is a multi-trillionaire. LOL!
I think most work requires more art than science. In that case, self-study is important. To be fair, college education ensures that one look beyond his field and broadens his world view.
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I tell college grads how to fix the crap they design on paper, when it does not work in the field. I graduated from the school of work-faster and smarter-stay employed-get food. It was great fun. No bongs, no beer games, no co-eds, just lots of ass busting.
Mexifornia needs trade schools .... not welfare qualification junior colleges .. but, real trade schools.
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iwog says
This is so wrong I have to wonder if you've been bluffing all this time about your economics credibility.
Wealth is absolutely not a zero sum game. Today the world posesses billions upon billions of times more wealth as it did a thousand years ago.
Productivity and efficiency produce wealth.
Wealth is simply a function of resource availability over demand. If we increase resources (new discovery or extraction technology) or decrease demand (improve efficiency), we create wealth. If we decrease resources (consume or destroy what exists) or increase demand (reduce efficiency or increase population), we become less wealthy.
So, no, wealth is not a zero-sum game. Money supply is -- sure. But money supply is not wealth.
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Peter P says
Really? Shouldnt children be taken care of and not taken advantage of for cheap labor?
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Peter P says
So, we should not show compassion or concern for those that are left out of the profits?....your statements are starting to sound really creepy like a business person with no moral concern for the effect of their actions. I agree, everyone is self serving however, we need to prevent that nature from dominating the compassion we should have as moral individuals, the need for compassion should outweigh the need for profits. Your thoughts?
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Kevin says
You're contradicting yourself. Money is a representation of national wealth and the value of money (inflation or deflation) is simply money divided by products and services with an adjustment for velocity. If you were correct, and wealth was being created much faster than the money supply, then the money supply would year after year be less adequate to handle the available wealth and the value of the dollar would INCREASE.
However we both know this is not the case. The value of the dollar has been decreasing steadily since we abandoned gold and silver backing. Therefore the money supply is increasing FASTER than available wealth. Furthermore the United States now measures a much larger share of its "wealth" as services instead of products or capital assets. It's not only a zero-sum game but it might well be a negative sum game.
Unlimited wealth creation is one of those Reagan era lies (along with trickle down economics) that has been TOTALLY discredited in academic circles but is still believed by some people for political reasons. It has no merit at all. When a CEO of a company pays himself $100 million dollars, he is taking it away from other people including those people who were vital in the creation of that wealth in the first place.
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Kevin says
At any given time capital stock and savings is a zero sum game, but over time it is true that capital can accrete more than consumption, increasing the wealth in the system.
Also, technology can advance, increasing output per unit of labor/capital, or increasing the utility of the goods that are produced (eg. electronics now vs. 20 years ago).
But within this system I see landlords and other rentiers sucking the wealth out of the productive sector. 20% or so our GDP ends up the pockets of landlords, much of that income not due to their capital improvements but the naked ground rents they've captured.
So in this light, I do see wealth as something of a zero-sum game between the producers and the consumers. Capitalists play both sides, positively on the producing side and negatively on the consumption (where they are rightfully called rentiers and not capitalists per se).
Bill Gates's billions were largely a result of successful rentierism, enabled by successfully securing monopoly profits on software for much of the 80s and 90s. While it's inarguable that Microsoft created useful capital goods (their software) that greatly assisted others in the production of wealth, their products were not that superior to the non-monopoly alternatives and their pricing was far, far above the true cost of production. To that extent there was (and is) wealth-transfer from productive enterprise to MS.
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Mexifornia needs trade schools …. not welfare qualification junior colleges .. but, real trade schools.
Yep. If we care about job skills and global competitiveness, we really need to replace junior colleges with trade schools.
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4x...
Really? Shouldnt children be taken care of and not taken advantage of for cheap labor?
Children should never be forced to work against their will, but in many parts of the world, taking care of children means providing them with employment opportunities.
So, we should not show compassion or concern for those that are left out of the profits?
I think Free Market Utilitarianism is a viable moral system. It may not display much compassion, but I believe the end result will have exactly the same qualities and values that compassion strives for.
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Whether wealth is a zero-sum game depends on your perspective and your value system.
Today the world posesses billions upon billions of times more wealth as it did a thousand years ago.
Then Zimbabwe must be the fastest growing economy in the world.
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Peter P says
No, it's not actually. The world is undeniably wealthier now than it was 20, 50 or 100 years ago. You can't even argue it. Factories are more efficient, farmers are more efficient, technology has improved many, many fold...
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iwog says
No, money is a means for processing transactions. It's value is based on the perceived strength of an economy, NOT an economy's total wealth. Do you think Japan is 1% as wealthy as the US, or that the UK is twice as wealthy? Of course not. There is FAR more wealth in the US than there is money, regardless of which number you're using for the money supply.
Also note that I never said that wealth was being created much faster than the money supply -- I simply said that wealth is not a zero-sum game. For all I know we may actually be LOSING wealth. That doesn't change the basic issue at hand though.
The total wealth of the country is the total amount of resources (land, buildings, factories, food, etc.) that we possess. You then have to divide that wealth up amongst the people to figure out how good you're doing overall (for instance, China is nearly as wealthy as the US, but given that they have 5x as many people , individuals are FAR less wealthy).
iwog says
In some instances -- yes, absolutely. But what if that CEO made his money by discovering a billion dollars worth of oil? That is absolutely creating wealth.
Conversely, if the CEO made his $100m by burning down forests that were worth a billion dollars, he has effectively destroyed wealth.
But it's not zero sum.
To take this to an extreme, lets say that we had unlimited free energy. Cost to produce all goods is at or near zero, and everyone can have everything that they desire.
Society as a whole would be far, far wealthier than it is today, but money would become largely meaningless.
Peter P says
Again, money != wealth.
tatupu70 says
Exactly. 50 years ago we were worried that the world didn't posses the resources to sustain a population of 4 billion people. Today, thanks to technology (and the green revolution) we're handling 7+ billion better than we were handling those 4 billion 50 years ago.
This is exactly what wealth creation is -- in this case the wealth coming in the form of food. There is far more food in the world today than there was 50 years ago, and far fewer people starving (note that there are still lots of starving people, so obviously we still have more work to do).
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The world is undeniably wealthier now than it was 20, 50 or 100 years ago.
100 ago, it was men exploiting men. Now, it is just the opposite, but it is the same thing.
Wealth is really about control. No amount of efficiency or productivity can change the dynamics of human societies.
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I much rather be a medieval king than a Star Trek peon.
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Peter P says
To the extent that wealth controls natural resources, I agree 100%. This is why I'd like to see very high unimproved commercial land value taxation and severance taxes on natural resources, to level the playing field for the less well off. This idea comes from Henry George, who over 100 years ago detested the (real) Socialists of his day.
I'd like to think the libertopian minarchy would actually work under this tax regime, since wealth would have to be put to actual work, not just engaged in naked rentierism as it is now.
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Peter P says
That *really* fails Raws' "Veil of Ignorance" test LOL
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Peter P says
Are you kidding me? You don't think human societies, as a whole, aren't better off than they were hundreds of years ago?
Yeah, most of Africa still sucks, but in most of the world we've eliminated slavery (real slavery, not the bullshit people are complaining about on this forum), democracy exists in more places than it does not, and on and on.
It's no coincidence that the poorest societies are the ones where you most commonly find despots. Whether freer societies create more wealth or more wealth creates freer societies is irrelevant, what's important is that the two go hand in hand.
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Troy, I agree that land tax is much more fair and much less damaging than income tax.
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You don’t think human societies, as a whole, aren’t better off than they were hundreds of years ago?
We have made a few superficial improvements but we are still human.
It’s no coincidence that the poorest societies are the ones where you most commonly find despots.
I think the poorest societies are also the least capitalistic. China is far from democratic but since its experiment with capitalism the people have become much wealthier.
I agree that economic freedom is very important, because a market must be given breathing room. Political "freedom" can become despotic without adequate regulation of democracy. This is why the Constitution was draft to protect the people from the people.
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Real slavery? I guess people used to be literally eaten alive by cannibals. Now, they are merely figuratively eaten alive by banksters. Progress huh?
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Here's an article all the freedom lovers (tm) may find interesting:
"In Search of Morale, Are Americans Too Broken for the Truth to Set Us Free?"
http://www.informationclearinghouse.info/article24126.htm
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"It’s no coincidence that the poorest societies are the ones where you most commonly find despots. Whether freer societies create more wealth or more wealth creates freer societies is irrelevant, what’s important is that the two go hand in hand."
Kevin, its no coincidence that the poorest societies, the ones where you most commonly find despots, are almost universally the ones who are suffering under having to recover from being systematically destroyed by the 'freer' societies in search of wealth, and you'll usually find that many of the despots have been set up and supported by outside societies in order to continue the pillaging. You should read a bit about what the Dutch did for gems in africa, or what the Spanish did to South America, and there are many examples closer to home if you care to look. The thing that tweaks me about your line of thinking is how conveniently bereft of context and history it is. There is no cause and effect, there's only what we have currently. Its basically the FYIGM argument.
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kentm says
Not every despotic regime is the result of first-world plundering, nor is every country that is the product of first-world plundering a despotic regime.
...but that's not even the point I was making. I know it's fun to throw our hands in the air and pretend like we can ignore real solutions to poverty by complaining about how europe screwed up so much of the world, but it has very little to do with the simple correlation of which I spoke.
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Peter P says
Superficial improvements? Are you fucking kidding me? It used to be the *NORM* for powerful people in a society to be allowed to murder, rape, and otherwise injure the lower classes with impunity. We used to allow human beings to be bought and sold as property. Most people lived in a constant state of warfare (think Afghanistan or sub-saharan africa today -- only everywhere).
Yes, we've come a long way. As good as it makes people feel to bitch about whatever petty problems that they face today ("oh no taxes" "oh no unemployment" "oh no my 401kaaaaaay"), it's immeasurably better today.
Could we still use improving? Absolutely, and we always will. If you honestly think things are bad as long as we're human, you may as well just kill yourself now.
Peter P says
One has little to do with the other. India and China are comparably wealthy (with china perhaps slightly ahead), but they have very different levels of capitalism. There aren't a whole lot of "capitalistic" third word cesspools because those places tend to not have any economy at all. You can't have capitalism without a strong, stable government to protect it.
Peter P says
Anyone who refers to taxation as slavery is being just as stupid as people who compare health care to genocide.
No, comparing anything that we have to deal with today to the hardships endured by slaves is so far from being a rational argument that it's not even really worth debating.