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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Peter P says
Do you know why slavery was abolished? Because the government forced people to stop. Do you know what took children out of coal mines and sweatshops? The government. Do you know why seatbelts are in cars now? Because the government forced automakers to put them in even while the automakers were SUING the government in court to prevent it.
Your FREE MARKET decided that seperate drinking fountains for black people was more profitable, until the government made them stop.
Your FREE MARKET sent all of our jobs to China because Reagan destroyed a 200 year legacy of tariffs.
Your FREE MARKET caused the banking collapse. It never would have happened in 1946, or 1956, or 1966, or 1976 because New Deal government regulations would have prevented it.
The free market isn't natural, the free market is exploitation. The best representation of an unregulated free market I can come up with is slavery. After all, why should the government stop you from selling your kids into servitude? It's an unreasonable intrusion into privacy!!!
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Peter P says
It's not a myth, it's a historical fact. It seems to me that you're a big fan of theory, while I'm a big fan of history and WHAT ACTUALLY HAPPENS WHEN YOU APPLY YOUR SYSTEM TO A REAL COUNTRY!
What happens when you apply laissez faire capitalism to a country? Generally lots of misery and death and eventually war.
Why? Because that's what happens. I don't really care WHY it happens because I'm not advocating it. You are.
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iwog says
But exploitation is all natural.
Slavery is not the same because the property right of the slave is owned by the slave himself. Naturally, nobody should be able to sell him without his consent.
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The duck really has his A-game out today.
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Peter P says
Free markets don't respond to moral arguments. You are now arguing FOR regulation.
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Peter P says
You don't consider the aristocracy having their heads cut off in guillotines to be a failure?
Do you know what caused the communist revolution in Russia? Unregulated capitalism and an out of control aristocracy did. It's ENTIRELY accurate to say that laissez faire capitalism is responsible for ALL of the communist revolutions in history.
I believe in 100% economic freedom for the working class and a strongly progressive system of taxation. We could fix this country by turning the clock back to 1946 but unfortunately that's not going to happen. There are too many people pointing fingers at our modern unregulated clusterfuck and screaming COMMUNISM without the slightest idea what they are talking about.
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You don’t consider the aristocracy having their heads cut off in guillotines to be a failure?
No. Human history is full of disturbances. The French Revolution or 1917 are just some examples. We always revert to our natural tendencies.
We could fix this country by turning the clock back to 1946 but unfortunately that’s not going to happen.
We could fix this country by turning the clock back to 1912 but unfortunately that’s not going to happen.
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Free markets don’t respond to moral arguments. You are now arguing FOR regulation.
I was simply illustrating the moral paradox in case someone makes a moral argument. ;-)
I believe in 100% economic freedom for everybody and a strongly regressive system of taxation (e.g. poll tax) that encourages production.
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Peter P says
1912...when the average American lived in a shanty town, bought from a company store, worked 80 hour weeks, and gave his children up to the coal mines or the sweatshop factory.
You've got a very odd sense of what "fixes" a country.
We were never a superpower under the endless line of pro-business free-market Republicans which eventually brought us the Great Depression. We WERE a superpower after 12 years of FDR, and during the period from 1946 to 1980 the American standard of living was never higher.
Funny how your perfect world ends in the Great Depression while my perfect world ends with the United States being the richest and most powerful country in the world. I have an explanation, do you?
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America is now THE superpower after Ronald Reagan destroyed the Evil Empire. Enough said.
It was not a superpower in 1912 because there was no such thing.
Albert Einstein enabled the existence of superpowers.
Great Depression was an adjustment, not an end. The Panic of 1837 was arguably worse, but Andrew Jackson adhered to the laissez faire principles and the country emerged from the depression in a few short years.
Andrew Jackson allowed things to go their own ways and things improved by themselves.
FDR wanted his way forever if he could. But thank God.
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I think the real point of debate here is taxation. Some tax is necessary, but any tax necessarily takes away some freedom.
Peter P says
A poll tax prevents the poorest from keeping the fruit of their own labor, discouraging them the most.
A land-value tax would allow everyone to keep what they make. No one created land. All productive labor would be tax-free.
A land-value tax would have prevented both the Russian and French revolutions, IMHO.
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Land-value tax is an interesting concept. It is indeed much more fair than progressive taxation (which is progressive only for wage-earners anyway). I do not oppose this idea.
Patrick may want to have a new thread about land-tax again.
Poll tax discourages the poor only if it is unaffordable. So long as it is practical to earn disposable income above and beyond the fixed amount of taxation, everyone should be adequately incentivized.
It is noteworthy that under ANY system of taxation the poorest will not have disposable income (beyond necessities of living) at all. On the other hand, under any system the equilibrium labor _price_ will allow the even the poorest productive workers to live productively.
It is hard to fathom a fixed or regressive system of taxation with the current level of public spending. But that spending can be replaced with a user-fee system. I think many middle class families would not object to paying $10K per child per year for education if they pay 4% instead of 40% of their income in tax.
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Example of a user-fee road system:
* Every vehicle contains a tracking device or GPS receiver/transmitter.
* If the vehicle stops, it gets charged for parking
* If the vehicle moves, it gets charged for using the roads
The fee schedule is determined based on supply and demand. Each segment of roadway can charge different prices based on weekly electronic auction results. Motorists can buy blocks of units for present and/or future use.
This system will be superior to gasoline tax because it also ensures that resource allocation is optimized. For example, more heavily utilized highways will become more expensive, incentivizing motorists to use less congested routes.
I am not making a value judgment here but this system will _naturally_ lead to better public transportation infrastructure (which can finally compete with automobiles). And it will be more "green". :-)
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BTW, I heard that Hong Kong has a land-value tax, and because of this, they can have very low income taxes and high prosperity. But I also heard that it's a very political issue there, with the Hong Kong gov't preventing public land from development because that would increase the land supply and lower tax revenue in the short run.
Re highways, it already is more "expensive" to use the congested ones, if you count your time as a cost. Yet people often do not make the rational decision to use cheaper and more timely public transit (like Caltrain) because they prefer their iron bubble, where they do not have to interact with fellow citizens.
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In many countries, most land cannot be owned. Rather, parcels of land are leased for 99 (or more) years. When the lease is up, the user may have to return the land or pay some fee.
So I guess it is a form of land tax in some ways.
I heard Hong Kong is having another housing bubble right now.
http://www.ft.com/cms/s/0/2f1ddc6a-b941-11de-98ee-00144feab49a.html
Close to $10K per square foot??? Come on, it is not Monte Carlo. ;-)
I believe Hong Kong is very conscious about having a small government in relation to the size of the market.
It has an interesting property tax system though:
http://en.wikipedia.org/wiki/Property_tax#Hong_Kong
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I take Caltrain and I do not have to "interact" with fellow rage-filled road users. ;-)
We have to take our car to the train station though. Buses are so unreliable.
People should really pay the real price of driving.
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I read the wikipedia entry on the Hong Kong property tax and don't get it exactly. Sounds like it's just a tax on rents, which I guess is similar, but not the same.
A tax on rents is limited by the rent people pay, and would not stop a bubble.
A tax on land values is not limited by rents, and would stop a bubble through high taxes.
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Very interesting...
It seems prosperity follows when the majority of the population aspire to prosperity as opposed to economic equalization.
When prosperity does arrive, all "justifications" for economic equalization become null and void.
I guess Adam Smith was right:
“The real tragedy of the poor is the poverty of their aspirations”
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Patrick, I don't know... but whatever it is, they cannot stop the housing bubble in Hong Kong.
But of course all "good" bubbles must come to an end.
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Peter P says
Ronald Reagan didn't do anything to bring down the USSR. It ran out of wealth and could no longer sustain a military.
You realize you have yet to contradict one thing I've said? You dismiss the Great Depression as an "adjustment", then you totally ignore the huge prosperity from 1946 to 1980 then you redefine "superpower" in a way that I've never seen before. Rome wasn't a superpower? England wasn't a superpower? Seriously?
So you're unhappy with FDR. Tell us one of the detrimental effects to the nation or the economy from the policies of FDR? You seem unimpressed with squalor, child labor, shanty towns, workmen falling from buildings or dying from black lung, and seperate drinking fountains for African Americans. Tell me the horrors of FDR's world? I'm dying to know.
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Tell me the horrors of FDR’s world?
Very high tax rate. Social Security. Need I say more?
FDR bankrupted this country with his New Deal. We are going to see more and more of the effects.
The prosperity after WW2 was great. Let's review the facts again after all the Baby Boomers have retired.
(Was the prosperity a mirage? Or was it a natural result of the demographic hump? What will happen when there are not enough workers to support the system?)
Europe has even more social programs, and they are seeing more ill effects earlier.
I know I will not be productive if I get fed anyway and I cannot get rich by being productive.
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I define "Superpower" as a nation who can win a war that ends all wars.
Ronald Reagan's SDI (real or not) could have been the tipping point of the Soviet collapse.
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Peter P says
Well, actually IT jobs are the #1 positions being offshored right now so I dont necessarily see a lack of regulation as being complimentary. At the root of this is NAFTA, GATT and WTO....these programs favor wages 40 times less in India, Mexico etc.
Fair trade is needed, and that involves tax incentives and some regulation.
YES, I am a FAIR trader.
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4X, we are living in interesting times...
Perhaps we can use this SDI-derived technology at home now:
http://www.youtube.com/watch?v=wSIWpFPkYrk
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Peter P says
Very high tax rate was horrible for WHO??? 5% of the population? Meanwhile 95% of American citizens enjoyed more wealth than any previous period in world history.
Social security is a horror? Really? Funny how no politician alive DARES challenge the SSI program lest he be tar and feathered and run out of politics FOREVER. Doesn't sound like a horror to me, it sounds like a valued institution that Americans say "DON'T TOUCH IT!"
FDR bankrupted this country? That has got to be the most ridiculous assertion I've ever heard in my life. It flies in the face of EVER FACT I could possibly present. Do you know what bankrupted this country? RONALD REAGAN! How do I know? Because I've got a chart of the national debt and there's a very clear inflection point in 1981. Our federal debt DROPPED every single year from the end of World War II onward. Then all of a sudden in 1981 it started climbing again. The trade deficit did the exact same thing in 1983.
Who bankrupted the United States????? FDR's legacy from the day he died until 1980 was PAYING DOWN THE DEBT. I suggest you stop with the rhetoric and start presenting some examples.
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National Debt is not a simple number. There is also the hidden "debt" of generational shifts. If you see the nation as a business, the future loss of earning power would be a lot worse than the accumulation of debt. There is no denying that taxation reduces productivity.
Also, do not forget that US owes debt in its own currency.
Do not trust simple statistics.
Remember:
There are lies, damned lies, and statistics.
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Another example, retirements for the commoners.
Regular people are not supposed to have decades of retirement from work. When we get to the wrong side of the demographic hump, we will see much turmoil from people's misplaced expectation of retiring at 65 and the reality.
Who is going to pay for all that?
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Peter P says
With all due respect, I have yet to see you post ANY statistic on ANYTHING.
You claim that FDR bankrupted the country, so I provided the most common measure of bankrupcy: DEBT. The federal DEBT does not support your assert that FDR bankrupted the country, in fact the federal DEBT directly contradicts your claim.
Furthermore the federal DEBT actually shows just how reckless and irresponsible Reagan's free market actions were because there is absolutey NO DOUBT when our climb to $12 trillion really started. It was 1981.
Now you don't seem to like DEBT, so lets talk about the future loss of earning power. Funny you should bring that up, because economists generally measure earning power by calculating imports versus exports. If a nation is creating great wealth, it has a trade surplus. If a nation is creating little wealth, it has a trade deficit. Well guess what!!!! The United States had huge earning power........until around 1983, when it sent all its industry overseas. Why did the United States do that? Because Ronald Reagan blew up the tariffs and quotas and opened our borders to 3rd world competition. Our loss of earning power after 1983 was MASSIVE:
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Peter P says
Ever heard of Germany? It's a very successful capitalist country (the most successful in Europe)with strong government controls on wages, vacation, and retirement. Unions are powerful and benefits are large. The entire society shares in the fruits of a capitalist economic system. There isn't a German Bill Gates or Warren Buffett, but everyone has health care and everyone retires at age 67.
Strange.......Germany in 2009 reminds me of the United States in the 1950's. Things are falling apart in YOUR world, not mine. This is YOUR economic system not mine. We're currently in 1912, we're not in 1946.
Don't mind me, I'm just presenting another actual example to support my point with............
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With all due respect, I have yet to see you post ANY statistic on ANYTHING.
I did:
There are lies, damned lies, and statistics. :-)
I also asserted that national debt is not necessarily a measure of solvency, in the post gold standard era. Future assets (productivity) vs. liabilities (entitlements) is arguably a better measure.
Because Ronald Reagan blew up the tariffs and quotas and opened our borders to 3rd world competition.
That was simply an unavoidable consequence of globalization, another unavoidable consequence of history. To keep productivity here, we need to lower corporate tax rate (which is one of the highest in the world), eliminate minimum wage (a cause of inflation and unemployment), and relax certain regulations.
I heard that a golf manufacturer needs to outsource the manufacturing of titanium parts to China because of environmental regulations here.
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Peter P says
I don't agree with you that Reagan's actions were unavoidable. Reagan PRECEEDED the multiple disasters, he wasn't reacting to them. The ONLY arguable crisis when Reagan took office was inflation, and that problem was solved by Carter's pick for Fed chair: Paul Volker.
Saying that statistics can't be trusted isn't a statistic, it's a denial of fact. If you don't trust the national debt, if you don't trust the trade deficit, then you have something to replace them with. Right? I'll look forward to hearing you support your position with historical facts and contemporary data.
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There isn’t a German Bill Gates or Warren Buffett, but everyone has health care and everyone retires at age 67.
I don't know... but I am sure US has a higher number of private aircraft per capita than Germany. :-)
Remember that you need not be everyone. Why should you care about that mythical "everyone"?
I used to like Star Trek but now I think the idealistic future it portrays is nothing short of naive. I think the Firefly future is more likely. Brace.
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Statistics and data (and the insistence of using nothing but numbers and mathematical models) led to the great crash of 2008. Common sense would have easily prevented that.
Numbers are just what they are - meaningless factoid without adequate interpretation.
Economics was invented to make Astrology look respectable. (I do believe in Astrology.)
Yet when things are up for interpretation, they are up for manipulation. It is useless to argue with statistics because each side can always find numbers that favor his position.
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Peter P says
So you're going to give us nothing? Take your word for it, everything was great after FDR but it was all just an illusion that fell apart 30 years after Reagan took office?
Sorry, I don't buy it. Everything was fine until Reagan took office, and then all of our industry left and the national debt skyrocketed and the trade deficit blew up and people started losing their homes and banks started failing. I'm not twisting statistics here, I'm just naming events.
You're basically admitting here that everything you've said is a blind assertion. IF you can find numbers that favor your position, I challenge you to do so. You might find it more difficult than you think.
Understand that it's not enough to simply say "You can't trust numbers." No one should listen to that unless you explain WHY the numbers can't be trusted. So tell us Peter......why can't the trade deficit numbers be trusted? Why can't the national debt numbers be trusted? It's odd you'd take this position since YOU insisted that FDR lead to bankrupty. Explain please.
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It is what it is. Buy it or not. :-)
There are many explanations to the trade deficit, like there are many variables in a equation.
Blaming it on Reagan is no better than me blaming all the ills on FDR.
At least Reagan gave us a tax cut.
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Peter P says
No offense, but you got spanked hard.
I think this thread was very instructive. Iwog did an excellent job explaining why vibrant, sustainable free markets can only exist with judicious regulation, all the while backing up his argument with indisputable historical facts and figures. Very nice.
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Nomograph says
Your check is in the mail. ; )
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Nomograph says
....and you never resorted to name calling like some of the others on this thread.
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@IWOG
My readings have been focused around NAFTA, GATT and WTO being responsible for the loss of industries here in the US. Specifically, how did Reagan send various industries overseas?
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It has been a great discussion. Thanks!