Stimulating Ourselves to Death

They might sound great, but do stimulus packages work?

Barack Obama says his “unprecedented” economic stimulus package will not merely be “a short-term program to boost employment.” No, it “will invest in our most important priorities like energy and education; health care; and a new infrastructure that are necessary to keep us strong and competitive in the 21st century.”

The massive cost of the stimulus doubled even before any legislation was written, much less approved. Originally tagged at $400 billion, the proposal quickly jumped to $825 billion, and latest estimates at press time have it costing north of $1 trillion (comprised of 60 percent spending and 40 percent tax cuts).

Given the size, will the stimulus work as advertised? Will the goods and services—be they concrete for new highway projects or groceries for hungry families—pump up flagging demand and boost stalled economic activity?

If so, it will be the first time in modern recorded history.

Take the New Deal. According to the economists Christina Romer—chair of Obama’s Council of Economic Advisers—and David Romer, New Deal spending did not pull the economy out of recession. In a 1992 Journal of Economic History paper, the Romers examined the role that aggregate demand stimulus played in ending the Great Depression. They concluded: “A simple calculation indicates that nearly all of the observed recovery of the U.S. economy prior to 1942 was due to monetary expansion. Huge gold inflows in the mid- and late-1930s swelled the U.S. money stock and appear to have stimulated the economy by lowering real interest rates and encouraging investment spending and purchases of durable goods.”

Even the massive spending during World War II, long touted as pulling America out of the Depression, didn’t necessarily help. In a 2006 paper for the National Bureau of Economic Research, the economists Joseph Cullen and Price V. Fisher asked whether the local economies that were the biggest beneficiaries of federal spending on military mobilization during World War II experienced more rapid growth in consumer economic activity than others. Their finding: Military spending had virtually no effect on consumption.

Another economist, Robert Higgs, offered an even more thoroughgoing critique in an excellent 1992 Journal of Economic History paper. After challenging the conventional portrayal of economic performance during the 1940s, Higgs concluded that “the war itself did not get the economy out of the Depression. The economy produced neither a ‘carnival of consumption’ nor an investment boom, however successfully it overwhelmed the nation’s enemies with bombs, shells, and bullets.” Breaking windows in France and Germany didn’t bring prosperity in America.

In his 2008 book Macroeconomics: A Modern Approach, Harvard economist Robert Barro shows that $1 of government spending in wartime produces less than $1 in GDP—80 cents, to be exact. Stanford economist Bob Hall and Sand Hill Econometrics chief Susan Woodward, neither particularly pro-market, argued recently that each dollar of government spending during World War II and the Korean War produced about $1 of GDP. In other words, the economy is not stimulated by war spending.

The example of 1990s Japan, with its collapsed housing and stock markets, is also relevant. Between 1992 and 1999, Japan passed eight stimulus packages totaling roughly $840 billion in today’s dollars. During that time, the debt-to-GDP ratio skyrocketed, the country was rocked by massive corruption scandals, and the economy never did recover. All Japan had to show for it was some public works projects and a mountain of debt.

Finally, the Bush administration passed the Tax Relief Act of 2001 and the Economic Stimulus Act of 2008, two similar packages with similar effects on the economy. Which is to say, not much. In 2008 the major component was sending $100 billion in cash to Americans so they would have more to spend and thus jumpstart the economy. It failed. People spent little if anything of the temporary rebate, and consumption did not recover.

The chart shows how personal disposable income jumped at the time of the rebate while personal consumption did not increase noticeably. Formal statistical work by Joel Slemrod, a professor of tax policy at the University of Michigan, has shown that rebates generally produce no statistically significant increase in consumption.

The theory of economic stimuli suffers from several serious problems. First, it assumes people are stupid. Tax rebates, for example, presume that if people get some money to increase their consumption, businesses will expand their production and hire more workers. Not true. Even if producers notice an upward blip in sales after the rebate checks go out, they will know it’s temporary. Companies won’t hire more employees or build new factories in response to a temporary increase in sales. Those who do will go out of business.

Second, the thinking behind stimulus legislation assumes that the government is better at spending $825 billion than the private sector. When Obama says, “We’ll invest in what works,” he means, “unlike you bozos.” The president’s faith in Washington is sweet, but politics rather than sound economics guide government spending. Politicians rely on lobbyists from unions, corporations, pressure groups, and state and local governments when they decide how to spend other people’s money. By contrast, entrepreneurs’ decisions to spend their own cash are guided by monetary profit and loss. That’s likely to work better and certain to produce more innovation.

The biggest problem is that the government can’t inject money into the economy without first taking money out of the economy. Where does the government get that money? It can a) borrow it or b) collect it from taxes. There is no aggregate increase in demand. Government borrowing and spending doesn’t boost national income or standard of living; it merely redistributes it. The pie is sliced differently, but it’s not any bigger.

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  • Reinmoose||

    Stimulating Ourselves to Death

    What!? Jane Fonda broke our stimulus?! But how!?

  • TofuSushi w/O\'ganicWasabi||

    Reinmoose,

    I was thinking of the Russian lady in Golden Eye

  • LoneWacko||

    What!? You mean engaging in my FavoriteActivity can kill me!!!!?

  • Reinmoose||

    My movie is better.

    "I don't believe it! Wretched, wretched girl! What have you done to my Exsexive Machine?! You've undone it! You've undone me! Look! The energy cables senators are shrinking! You've turned them into faggots! You've- you've burned out the Exsexive Machine! You've blown all its fuses! "

  • Vlad||

    "I was thinking of the Russian lady in Golden Eye"

    Whoa!

  • Lester Hunt||

    The big issue about stimuli is not "do they work?" but "since it is so clear they do not work, why do people persist in acting as if they do?"

  • Winthorpw||

    This article made my head hurt.

    Ladies and Gents, I don't think I understand economics.

    If anyone wants me, I'll be in the shed, drinking moonshine and listening to my Steely Dan LPs.

  • ||

    Lester,

    Because we are collectively so easy to deceive in matters of politics and economics. The fact that socialism-lite and Keynesian policies have any traction whatsoever today demonstrates that.

  • economist||

    You're all wrong. The main question with all stimuli is not "do they work" but "How effective will it be in buying support when I run for re-election, and how can I blame any failure of it on my political opponents?"

  • TofuSushi w/O\'ganicWasabi||

    Of course they will work. Well, the ones O'bama came up with.

    He is right to berate those takers of the Bush corporate welfare.

  • economist||

    TofuSushi,
    It should be "Bush/Pelosi/Reid" corporate welfare.

  • economist||

    Barry O'bama.

    Now that does sound Irish.

  • ||

    The biggest problem is that the government can't inject money into the economy without first taking money out of the economy. Where does the government get that money? It can a) borrow it or b) collect it from taxes.

    Or c) debase the currency.

  • O\'Taktix®||

    Take the New Deal.

    Did anyone see that asshole from the New Republic on Colbert last night claiming the repeal of some New Deal programs in 1936 is the cause of the prolonged depression?

    I understand it's just the New Republic, but really, how can one be so blind to obvious history? He must have had Obama jism in his eyes...

  • McLefty||

    O'Taktix,
    Everybody knows that if government action fails, it was because there wasn't enough of it, you free-market fundamentalist asshole.

  • Seward||

    Wage and price controls as a fiscal policy tool went into the dustbin of history (at least in the U.S.) largely because they failed to work as advertised in the 1970s. I'm hoping we see a similar result re: the countercylical government spending this time around.

  • O\'jism ||

    "Or c) debase the currency."

    So when do you expect that will happen?

  • economist||

    O'Taktix,
    I think their argument is that the unemployment rate went down from 1933 to 1936, but after the government cut spending, the unemployment rate went back up.

    Which I tend to interpret as being an indictment of the New Deal. After all, if after 3+ years of your policies, lowering the deficit somewhat leaves you almost as bad off as before, doesn't that sort of suggest that it was a false recovery in the first place?

  • economist||

    Seward,
    You apparently have a more optimistic view of the intelligence of the average voter than I do.

  • joe\'z mind||

    Any problem caused by government intervention can be solved by more government intervention.

  • Seward||

    economist,

    I think that there is a "resevoir" of a gut sense that there is something problematic about this sort of spending amongst a lot of people, even if they cannot quite put their finger on it. I think this feeling cuts across party lines, BTW.

  • TofuSushi w/O\'ganicWasabi||

    Nice to see some rason coming to this O'blog.

  • ||

    I don't need no stinkin' O' preceding my name. I have eyes the hue of which are a thousand shades of green and a full head of wavy auburn hair. Okay, yeah, the preceding sentence is an exception to my antipathy for group think/identity.

  • O\'jism ||

    A question was raised yesterday as to how someone could post without a date/time stamp appearing.

    Anyone?

  • ||

    Paul Krugman's gonna be sooooo pissed at you, Veronique.

  • ||

    Like this?

  • ||

    Damn, it was worth a shot.

  • ||

    Totally off topic, but Veronique de Rugy is a really sexy name.

  • TofuSushi w/O\'ganicWasabi||

    | March 17, 2009, 1:34pm

    Like this?


    Not really. Lacks content.

  • O\'jism ||

    "Totally off topic, but Veronique de Rugy is a really sexy name."

    I believe de Rugy means battered/bruised in French

  • ||

    Any problem caused by government intervention can be solved by more government intervention.

    I had a discussion yesterday with a self-proclaimed socialist who said "government is the solution to itself." This same person uses a quote about being patriotic is questioning the president yet he parroted every Obama statement since the inauguration. Must have used that signature when Bush was prez and forgot to change it when the right people took over. Needless to say, irony is lost on this tool.

  • ||

    The stimulus is just the government version of the desire to get something for nothing. As pointed out above, the government can only get money in three ways; take it from someone else through taxes, take it from someone else through borrowing, or take it from everyone by devaluing the currency.

    Back in the 1970s leftists would routinely point to the "full employment" of communist countries. They would go on junkets to communist countries and be amazed at how everyone had a job unlike the evil capitalist West. The reality was few of those people were actually employed in any real sense. Yes they showed up at something called work every day and collected a paycheck. But, since they produced less value than what they were paid, everyone got poorer every year.

    At the macro level you can't get around the fact that long term productivity must equal wages in the aggregate. It is very true that government jobs can be real jobs. Government can through building needed roads, providing needed services like law enforcement or effective courts of law to enforce obligations and contracts, national defense and so forth produce value. Not all government jobs are "fake jobs". But many of them are. If the government project does not produce equal value of the imputs into it, the project might as well be welfare.

    For the last 9 years we tried to get something for nothing by flipping our houses. Now we are trying to get something for nothing by having the government provide makework jobs. Welcome to the Obama created government bubble.

  • ||

    "I had a discussion yesterday with a self-proclaimed socialist who said "government is the solution to itself."

    If stimulus packages worked, centrally planned economies would have worked. The problem is that government cannot decide what actually produces value the way the market does. Government spending after you get past the obvious and essential government functions like LE and basic infrustructure, is always of less value than the money it took to build it.

  • TofuSushi w/O\'ganicWasabi||

    If stimulus packages worked, centrally planned economies would have worked.

    They still work in Cuba and North Kirea!

  • ||

    The problem is that government cannot decide what actually produces value the way the market does.

    This was von Mises point in his book "Socialism". Central planning cannot work because, a) bureaucrats cannot KNOW all that happens in the market, or to put ir more succinctly, bureaucrats cannot read minds; and b) the Economic Calculation problem, because without taking into account prices and the profit-loss test, the central planners have no indication of effectiveness other than polls and newspaper headlines.

  • ||


    They still work in Cuba and North K[o]rea!



    Depends on what do you mean by "work".

  • TofuSushi w/O\'ganicWasabi||

    Full literacy and universal healthcare is no mirage my friend.

  • ||

    "Full literacy and universal healthcare is no mirage my friend."

    Neither are gulags, millions of people starving and risking their lives to leave the country. Cuba and North Korea are two of the poorest most repressive and awful places on earth. You really can't be serious. Not even a troll defends North Korea and Cuba.

  • TofuSushi w/O\'ganicWasabi||

    John,

    You call them gulags, but reasonable people call them education centers.

  • ||

    Full literacy and universal health care is no mirage my friend.

    Yes, it is a mirage, "my friend". Cubans already had the highest level of literacy of all Latin American during the Batista regime. And Universal Health Care is meaningless when you have no medicines and no beds.

  • ||

    They would go on junkets to communist countries and be amazed at how everyone had a job unlike the evil capitalist West.

    They're probably thinking the same thing now, forgetting that job websites still have available jobs, but the people that are unemployed right now either don't want those jobs, or can't do them (not trained for them, or not physically able even with training). I don't like the government involved at all, but if they insist on doing something, why not train people to do jobs for those that are hiring, and if they just don't show up for the training as some really just don't want to work, cut off their benefits. I'm sick of the mooching, even if it is just one person in the whole country mooching off everyone else, it's one too many.

  • TofuSushi w/O\'ganicWasabi||

    FTG,

    The only reason they do not have enough beds and medicine is because of the Imperialist American Embargo.

  • ||

    You call them gulags, but reasonable people call them education centers.

    Depends on what you mean by "reasonable people". Those that happen to agree with you, or those that actually reason?

  • ||

    The only reason they do not have enough beds and medicine is because of the Imperialist American Embargo.

    So what? Cubans don't have bed factories, or are you telling me that Socialism cannot be autarkic?

  • TofuSushi w/O\'ganicWasabi||

    Those that happen to agree with you, or those that actually reason?

    One in the same, when their minds are not poisoned with Imperialist Capitalistic thoughts.

  • TofuSushi w/O\'ganicWasabi||

    The American embargo prevents the Revolutionaries in Cuba from importing bed manufacturing technology.

  • ||

    I've said it here before, but for an administration that has proudly advertised itself as putting science before policy, Obama is certainly ignoring that precept when it comes to the dismal science.

  • ||

    The American embargo prevents the Revolutionaries in Cuba from importing bed manufacturing technology.

    I don't understand - why would a Socialist society need to import ANYTHING? If Central Planning works, it should be able to plan for the manufacture of the technology and the consumer goods themselves, would it not? And Cuba certainly has the raw materials, so what's stopping them?

  • TofuSushi w/O\'ganicWasabi||

    FTG,

    The USA created the vacume around Cuba, not the other way around. Stop apologising for the Impearilists, unless you are one.

  • ||

    One in the same, when their minds are not poisoned with Imperialist Capitalistic thoughts.

    Doesn't that beg the question? if the only way to detect a person who reasons is to see if he agrees with you, how can THAT mean that the person is using reason? That is circular thinking.

  • Reinmoose||

    FTG - seriously, stop before I get too drunk

  • TofuSushi w/O\'ganicWasabi||

    FTG,

    They can disagree, as long as it is disagreement furthering the Revolution.

    Sorry if this is too complicated for you. I wish O'bama would set up some education facilities for the unenlightned to assist them with their confused paths, but there are too many Corporate shills surrounding him in our government for his true policies to see full bloom.

  • ||

    The USA created the vacume [sic] around Cuba, not the other way around.

    I still don't get it - what relevance is that for Central Planning? If Central Planning *Works*, then by all means it can perfectly take into account an embargo (as if that made any difference). Why would that affect Cuba?

    Stop apologizing for the Imperi[a]lists, unless you are one.

    Just because you cannot answer questions does not mean ipso facto I am apologetic. You cannot argue with Ad Hominems

  • ||

    FTG, please tell me you're just goofing around with Tofu for lulz and don't think he's serious.

  • TofuSushi w/O\'ganicWasabi||

    FTG,

    You cannot argue with Ad Hominems

    Why don't you leave your Marketing goons out of this, ok?

  • ||

    Stop feeding the troll FTG

  • Lefiti||

    Here's a question for Veronique the Obscure: If neither the new Deal nor World War II got us out of the great Depression, what did?

  • ||

    They can disagree, as long as it is disagreement furthering the Revolution.

    Tofu, it's the same thing - you're begging the question again. Furthering the Revolution would be something YOU find agreeable, would it not? I say this because you brought it up. So we go back to the same problem - how can you know that a person that's agreeing with you EVEN if it is on a general topic is using reason? How can that be the test?

    Sorry if this is too complicated for you.

    No, I understand fallacies pretty well, which is why I am asking you to be more clear.

  • O\'jism ||

    "The USA created the vacume around Cuba, not the other way around. Stop apologising for the Impearilists, unless you are one."

    You grow most tiresome.

  • ||

    "Here's a question for Veronique the Obscure: If neither the new Deal nor World War II got us out of the great Depression, what did?"


    A couple of things. Think about what we did during World War II. First, we basically banned the production of commercial goods for four years. This created a huge backlog in demand. If you don't let people buy refrigerators or cars for four years, you are going to sell a lot of them when you finally let people buy it. Second, we put everyone to work in the military or military industries and gave out a lot of paychecks. Third, we made it everyone's patriotic duty to save their money through buying war bonds.

    At the end of the war, you have all these people who have done nothing but work and save and forgo consumption for four years. Once you lift the restrictions on consumption and there is no longer a patriotic reason to save, people are going to be buying a lot of shit. That amounted to an enormous stimulus to the economy which overwelmed the effects of ending the war and demobilizing the military and set the economy off into the post war boom.

    That is what got us out of the Depression.

  • ||

    Between 1992 and 1999, Japan passed eight stimulus packages totaling roughly $840 billion in today's dollars. During that time, the debt-to-GDP ratio skyrocketed, the country was rocked by massive corruption scandals, and the economy never did recover. All Japan had to show for it was some public works projects and a mountain of debt.

    Mission accomplished!

  • TofuSushi w/O\'ganicWasabi||

    How can that be the test?

    Usually by the way they say things and what they say.

  • ||

    Lefiti,
    If neither the new Deal nor World War II got us out of the great Depression, what did?

    I can answer that one for you, Lefiti.

    What got the US out of the Great Depression was the quick reduction of expenditures from the Government after the end of WWII. Private purchases of capital goods actually skyrocketed during 1965-1946 looking to boost productivity. Once the Government stopped crowding out private companies and individuals from capital and resources, the economy took a boost so that by 1947, the US was finally OUT of the Great Depression. It also helped that the Truman government canceled a few of the nastiest programs set up by the FDR administration.

    But the biggest contributor of the recovery was the final demise of FDR - the guy was a veritable cancer.

  • ||

    FTG, please tell me you're just goofing around with Tofu for lulz and don't think he's serious.

    Mostly for laughs. There is little difference between him as a jester and what some lefties *seriously* think, which is actually quite unsettling.

  • ||

    FTG,

    I think in reality World War II was just a government enforced reduction in consumption and increase in savings. That is what classical economics will tell you gets you out of a downturn. Sure enough, it got us out of a downturn.

  • TofuSushi w/O\'ganicWasabi||

    Private purchases of capital goods actually skyrocketed during 1965-1946 looking to boost productivity.

    And the Capitalists have been hording time travel technology all of this time too.

  • O\'jism ||

    "And the Capitalists have been hording time travel technology all of this time too."

    tiresome

  • alan||

    Episiarch | March 17, 2009, 2:27pm | #
    FTG, please tell me you're just goofing around with Tofu for lulz and don't think he's serious.


    I'm hoping TofuSushie is another irony troll guise of the great Caesar. Who sadly left before he got to witness joe's mental breakdown into a feces throwing and mouth foaming mental patient.

  • ||

    At the end of the war, you have all these people who have done nothing but work and save and forgo consumption for four years. Once you lift the restrictions on consumption and there is no longer a patriotic reason to save, people are going to be buying a lot of shit. That amounted to an enormous stimulus to the economy which overwelmed the effects of ending the war and demobilizing the military and set the economy off into the post war boom.

    First there needed to be investment. That happened first. Capital goods purchases actually made the same amount of the GDP as the drop of expenditures from the government, in 1946, except that the private investment was PRODUCTIVE. But you are right in that people worked and toiled to save and to wait until goods arrived at the shelf, again.

    Lefties and State worshipers do not have any idea of how deprived people were during the war years - it was actually WORSE than during the 30s. The quality of many goods suffered accordingly, when the State was simply taking all resources to feed the war machine. Meat was scarce and was not any good. Ladies painted their legs as if they were wearing stockings because there were none to find. Black markets appeared, and so were State stool pigeons and whistle-blowers to keep hoarders at bay ("hoarders" as in people that SAVED in order to trade). You can see just a glimpse of the awfulness of those years in animated cartoons, because regular movies just spewed patriotic propaganda, but cartoon producers had just a tad more leeway.

  • Lefiti||

    FTG,

    You mean there was no big corporate tax cut?

  • ||

    FTG,

    The war sucked on the homefront. It was aweful. Better than getting blown up on some Island in the Pacific or in Europe but it just sucked.

    Lefties also convienently ignore how unpopular FDR was becoming in 37 and 38. FDR himself admitted that he was elected in 1940 not as Dr. New Deal but as someone the public figured could steer the country through the coming war. His economic policies were never effective.

  • alan||

    I think in reality World War II was just a government enforced reduction in consumption and increase in savings. That is what classical economics will tell you gets you out of a downturn. Sure enough, it got us out of a downturn.

    Newsweek's latest cover has Uncle Sam saying, 'I want you, to start spending.'

    Sad these Keynesians can't grasp the elementary truths of economics. New wealth will not be created (especially on the back of new debt) until the old debt is paid down.

  • ||

    "FTG,

    You mean there was no big corporate tax cut?"

    Actually there was dumb ass. Most of the new deal and world war II big tax rates were repealed in 46.

  • phalkor||

    Windows need broken, Holes need dug, Trolls need food. Economics is a mysterious, imprecise, and hateful "science".

  • alan||

    Lefties and State worshipers do not have any idea of how deprived people were during the war years - it was actually WORSE than during the 30s.

    MNG once peddled that line that consumer spending rose during the war years as proof of improving economic conditions during war time. Think about it. Every decade since the 1920's to the present a huge chunk of consumer spending has been on automobiles. No autos were produced during the war years, so for those stats to be accurate, the difference of that subtraction would have to be more than made up for in other areas.

  • ||

    That is right phalkor. Few people realize that Katrina was just a giant economic growth package. Had the damn hurricane seasons not been so bad the last few years, we would not be in this mess and all be getting rich rebuilding the Southeast.

  • ||

    The problem with governmnet 'investment' in developing new technologies (i.e. "green energy"), is that the priorities driving it aren't to make it economically viable.

    If you're allocating money as part of "jobs" program, then technolgies that "produce" the largest number of jobs per "unit" are going to win the contracts. So you end up with this huge incentive to do things inefficiently, because, hey, more jobs that way, more money from the government, more influence.

    If you look at NASA, that's exactly what's happened. Rather than producing a cost-effective launch system, what you get is a massively inefficient piece of technology that seems explicitly designed to require as many workers as possible to maintain and operate.

    Any new solar or wind technology, or infrastructure built with the express purpose of "producing" jobs is going to result in the same problem. By focusing on maximizing the amount of labor involved, you're intentionally telling the market to make something expensive to build and inefficient to maintain. That ensures that the technology iwll never be able to compete in an open market, and hence never be profitable, and never rid itself of the need for government subsidies.

  • ||

    Lefiti,
    You mean there was no big corporate tax cut?

    The rate was cut from 94% for a $200,000 bracket to 86.45% for the same bracket. FDR wanted the rate to be 99%. Guess it was fortunate he died.

  • ||

    I'm hoping TofuSushie is another irony troll guise of the great Caesar.

    He obviously is, but I don't think Cesar is behind him.

    Who sadly left before he got to witness joe's mental breakdown into a feces throwing and mouth foaming mental patient.

    Who knows? Maybe he lurks? Maybe he's Lefiti?

  • ||

    "Who sadly left before he got to witness joe's mental breakdown into a feces throwing and mouth foaming mental patient."

    I smile everytime I think about Joe and all fo the shattered illusions he must be having right now over Obama.

  • ||

    Newsweek's latest cover has Uncle Sam saying, 'I want you, to start spending.'

    Sad these Keynesians can't grasp the elementary truths of economics. New wealth will not be created (especially on the back of new debt) until the old debt is paid down.



    There is an extensive discussion about that Newsweek issue at mises.org. When I was watching Bears & Bulls at Fox last Saturday, some liberal radio talk show host (an attractive chick, mind you) said that the Card Check proposal for unions would be great since getting people to receive higher wages would mean more money to spend, and that such was needed to get the economy going. I mean, you could not get MORE economic fallacy in a single pinhead (blond, to boot).

  • ||

    Memo to Reason copy editor:
    Cullen's co-author is Price Fishback, not Fisher!

  • ||

    FTG,

    It always seemed to me that most of the economic theory done in the last 100 years or so was really just high end ways to get around the cold hard facts of the old island analogy you learn in econ 101. In that one you imagine a person being stuck on a desert island. He does everything for himself. Then one day another guy is ship wrecked and you divide the labor, one of you fishes while the other one gets water. Then a third guy comes and you divide some more and so forth. The bottomline is that you only get better off is for the people who are there becoming more productive somehow. There is no way around it. Having a printing press and printing $100 bills doesn't help.

    In the end, we are all on one big island. The only way we are ever going to be better off is for people to produce more than what they are now. There is no way around that. Taxing, borrowing and printing money does nothing in itself to make us better off. The only thing that will do that is finding a way for people to be more productive. No amount of spending taxing or currency manipulation is going to change that fact.

  • Pedro||

    "But as Contributing Editor Veronique de Rugy explains, if the stimulus works as advertised, it will be the first time in modern recorded history."

    First off, I like your name. It's pleasantly exotic.

    Secondly, didn't World War Two military spending stimulate the global economy out of depression? Also, wasn't it the Central Bankers' old-timey free market fundamentalist views that greatly prolonged the Great Depression? It's what they teach you in school and seems plausible.

  • ||

    I think in reality World War II was just a government enforced reduction in consumption and increase in savings. That is what classical economics will tell you gets you out of a downturn. Sure enough, it got us out of a downturn.

    WWII was a massive spending program. Instead of digging holes and refilling them, we were building ships and throwing them to the bottom of the ocean.

    Hopefully this time around we can target the spending to more fruitful activities.

  • Lefiti||

    Paul Krugman, a rather better known economist than Veronique, argues that the New Deal wasn't bold enough. In another time, given the right balance of forces, you guys would have burnt Krugman at the stake. Alas, all you can do now is jerk each other of in your little libertarian cult.

  • ||

    "WWII was a massive spending program. Instead of digging holes and refilling them, we were building ships and throwing them to the bottom of the ocean.

    Hopefully this time around we can target the spending to more fruitful activities."

    It is pretty clear the spending is not what got us out of the depression. Most Keynesians predicted that the economy would slip back into depression once the war was over and we demobilized. It didn't and boomed instead for the reasons that FRG and I discussed above.

    Lefiti,

    Appealing to authority and invective is not argument. Please try again.

  • ||

    Secondly, didn't World War Two military spending stimulate the global economy out of depression?

    No. The people who believed that were convinced that when the spending ended the economy would slip back into recession. It didn't because it wasn't the spending that got us out of the depression. If spending did that, we would have gotten out of the depression in the 30s.

    Also, wasn't it the Central Bankers' old-timey free market fundamentalist views that greatly prolonged the Great Depression?

    No. No question the central bankers in the 1930s didn't know what they were dealing with. Friedman argues that the great depression was a monetary issue. The Austrians will say that is bunk and that it was a normal downturn that was exacerbated by crazy regulation policy. In the end they are both right in some ways. The Fed could have helped by having a less restrictive monetary policy and FDR could have helped a lot by not doing crazy regulations and taxes. But I don't think it is fair to say that old time capitalism caused the Great Depressions.


    It's what they teach you in school and seems plausible.

    Most history text books are bunk.

  • ||

    Pedro,
    [D]idn't World War Two military spending stimulate the global economy out of depression?

    No, it did not. The destruction it brought and the massive extermination of human life cannot be construed as a "stimulus". If that were the case, then just by leveling a few cities in the USA there would be massive rebuilding spending and a great boost to the economy - sounds reasonable?

    See The Broken Window Fallacy, by Frederic Bastiat.

    Also, wasn't it the Central Bankers' old-timey free market fundamentalist views that greatly prolonged the Great Depression? It's what they teach you in school and seems plausible.

    Central Bankers are NOT free market ideologues, quite the contrary. Central Banks only exist through government fiat, not the free market.

  • ||

    John,

    It always seemed to me that most of the economic theory done in the last 100 years or so was really just high end ways to get around the cold hard facts of the old island analogy you learn in econ 101.


    I totally agree. Nowadays, Neo-Classical economists (really, re-hashed Keynesians) scoff at the analogy as "simplistic", even though they rely on terribly simplistic mathematical models themselves. When the economy fails to work like their models, they have the chutzpa to come up with the greatest of all ad hoc explanations: Oh, it's Market Failure. Let's intervene!

    The irony is that they see a simple tool as "simplistic", when they assign powerful predictive properties to their simplistic models instead of looking at them as simple tools!

  • Neu Mejican||

    A list of opinions by cherry picked experts is not the same as empirical evidence.

    I realize this is a propoganda rag, but it seems the quality has dropped precipitously recently.

    I am guessing that this is due to a perception that those in power (dems) need to be opposed more vigorously as they believe that government action can have a positive effect.

    A circling of the wagons of sorts.

  • ||

    It is pretty clear the spending is not what got us out of the depression.

    I don't think this is pretty clear at all. But I do agree that WWII shouldn't be seen as anything but a delay in ending the depression, since it produced a lot of misery as it was transpiring. But the war qua spending was stimulative, just as the New Deal programs were. You just can't argue that one was and one wasn't (which you aren't). I don't think the Keynesian school argues that spending must be perpetual. Massive government spending is meant to jumpstart growth that will hopefully proceed on its own over time.

    Why is nobody mentioning the fact that postwar prosperity was coupled with the most progressive taxation we've ever had?

  • ||

    Because post-war prosperity was largely based on the US being the only industrialized economy left standing. We spent the next two decades with total dominance of manufacturing and technology. We were also climbing out of a really deep hole.

    Alternatively, one could easily point at Bretton Woods as the primary basis for post-war prosperity, which ensured a relatively liberal trade regime, in contrast to the damage wrought by Smoot-Hawley.

  • ||

    Neu,
    A list of opinions by cherry picked experts is not the same as empirical evidence.

    The empirical evidence is enough to make a couple of Berkeley professors (you cannot be more leftist than that!) to concede the Great Depression was made worse by FDR's programs.


    I realize this is a prop[a]ganda rag, but it seems the quality has dropped precipitously recently.

    Innuendo and poisoning of the well, Neu's newly found tactics - or maybe OLD tactics. Anyway, just because the ideas being talked about do not agree with you does not mean this is a "propaganda" mag. It MAY be, but your sensibilities are certainly NOT the reason.

    I am guessing that this is due to a perception that those in power (dems) need to be opposed more vigorously as they believe that government action can have a positive effect.

    A positive effect like, what? Because without having one, you cannot argue that Libertarians suspect there COULD be a positive effect and thus increase their opposition, because without PROOF, you're just begging the question.

    But I have found, Neu, is that this is what YOU do - indulge in question begging. Like Aesop's scorpion, you cannot avoid it.

  • Gilbert Martin||

    "What got the US out of the Great Depression was the quick reduction of expenditures from the Government after the end of WWII. Private purchases of capital goods actually skyrocketed during 1965-1946 looking to boost productivity. Once the Government stopped crowding out private companies and individuals from capital and resources, the economy took a boost so that by 1947, the US was finally OUT of the Great Depression. It also helped that the Truman government canceled a few of the nastiest programs set up by the FDR administration."

    It also helped that a large percentage of the productive capacity of most of the rest of the industrialized world had been destroyed by the war so we had virtually no competetion until that capacity was rebuilt.

  • ||

    Bridges. The interstate highway system. Financial aid to medicine and science students. ARPAnet. Capital spending does work, even when the government does it. As for all that gold pouring into the U.S. in the 30s and 40s, it doesn't take a big genius to figure out where it came from. Government consumption that produces nothing is the culprit, and Obama's ramp-up of middle class entitltlements guarantees that won't end anytime soon.

  • Beelzebud||

    It must be nice to be a libertarian. You can spew intellectual jargon that will never be practiced in reality, thus never have your beliefs challenged.

    Libertarians envision a perfect world where every individual will just magically do the right thing.

    We don't live in that world.

  • ||

    Libertarians envision a perfect world where every individual will just magically do the right thing.

    I nominate this for the stupidest comment of the day. 180 degrees exactly ass-backward.

  • Sean W. Malone||

    Beelzebud;

    I have yet to meet a libertarian who believes every individual will "magically do the right thing"...

    I think we tend to believe that the individual will do what is best for himself and his family - as he is in a position to know what that is, and you aren't.

    The "right" thing for society tends to be the aggregate of all those little "right things" for individuals.

    Add to the the limited, but important, purpose of government as policeman and protector of rights - keeping those individuals who want to get what is best for them by theft or force at bay, and you have a world where people are free and prosperous. Somehow I think you have no clue what basic libertarian philosophy entails, or the solid (non-contradictory) intellectual & historical foundation it rests upon.

  • ||

    Bagehot,
    Bridges. The interstate highway system. Financial aid to medicine and science students. ARPAnet.

    You can only say they bring a benefit because people are using the bridges and the interstate highway, but you cannot say just how effective that investment is compared to alternative investments forgone - there is no profit-loss test for those expenditures!

    As for financial aid for medical research and student aid, I can argue and show that those are more detrimental than helpful. Subsidies reward certain well connected or politically well regarded activities, at the expense of other endeavors. Financial aid to students has created a vast student-loan racket, high tuition costs and an expanded supply of graduates, lowering their market value and the students' expected return for their investment. ARPAnet is not that unique as an invention - networked computers were already being though of by engineers before the government created its own, and it does not require quantum physics to think about connecting computers together - IBM was already thinking about that for reservation booking databases for the airlines.

    Capital spending does work, even when the government does it.

    Government does not invest capital - it spends money it took from productive endeavors and people. There IS a big difference. The reason is that government bureaucrats do not have the incentive to do the risk management and financial forecasting and analysis needed for true investing - they just spend the money where it will have more political impact.

    As for all that gold pouring into the U.S. in the 30s and 40s, it doesn't take a big genius to figure out where it came from.

    What gold?

  • Sean W. Malone||

    *add to that...

  • alan||

    Beelzebud | March 17, 2009, 4:17pm | #
    It must be nice to be a libertarian. You can spew intellectual jargon that will never be practiced in reality, thus never have your beliefs challenged.

    Libertarians envision a perfect world where every individual will just magically do the right thing.

    We don't live in that world.


    The silliest shit I have seen yet today. No, the 'goodness of people' has nothing to with our thinking, in fact we assume everyone, including those who claim public spiritedness, are motivated by self interest.

  • ||

    Unproved assumption #1:

    the individual will do what is best for himself and his family - as he is in a position to know what that is, and you aren't.

    Unproved assumption #2:

    The "right" thing for society tends to be the aggregate of all those little "right things" for individuals.

    Cognitive science is rapidly doing away with #1. If #1 is untrue, #2 is as well. #2 is probably untrue even if #1 is true.

  • ||

    Beelzebud

    Libertarians envision a perfect world where every individual will just magically do the right thing.


    Uh, wouldn't that actually be communists?

  • ||

    Libertarians envision a perfect world where every individual will just magically do the right thing.

    Actually, that is what the "it-takes-a-village" crowd believes: That people will become this great altruistic society. progressives have tried to impose that "Paradise on Earth" even since the 1890s.

    Libertarians believe people are motivated by self interest.

  • Sean W. Malone||

    No Tony, Cognitive science isn't rapidly doing away with #1, but thanks for not bothering to provide any evidence of that. Some cognitive scientists a la Schwartz have made some conclusions based on their research which smack of old-man grumblings about people not really knowing what's best for them...

    But here's the irony.

    The alternative to individuals making their own decisions is for decisions to be made by someone else - or groups of "someone elses".

    Which, aside from being "Unproved assumption #1" for you... Also would be devastated by your claim that science is cutting away at the idea that individuals know best.

    But hey - let me ask you something Tony:

    If I, with my specific knowledge about my needs, skills, history & everything else, am not qualified to make decisions in my best interest - exactly who is? You?

  • ||

    Tony,
    Unproved assumption #1:

    the individual will do what is best for himself and his family - as he is in a position to know what that is, and you aren't.


    The assumption is incorrect, but I believe you just made it up. Individuals ACT with their best interests in mind, always.

  • ||

    Why is nobody mentioning the fact that postwar prosperity was coupled with the most progressive taxation we've ever had?

    "Correlation" not same as "causation".

    Next question?

  • Sean W. Malone||

    Yes, thank you FTG - i should have said they will "try" to do, or "act" in their best interest not necessarily that they will succeed. Sometimes they won't...

  • ||

    I realize this is a propoganda rag, but it seems the quality has dropped precipitously recently.

    *smacks lips, opens refrigerator*

  • ||

    Just to be clear, the problem with Tony's assumption 1 is that he adds the "and his family" conditional, which automatically makes the assumption false - one cannot KNOW what is best for your family if the family is composed of individuals, but one can certainly ASK them, or assume it in the case of children.

  • ||

    Sorry, Sean!

  • ||

    Sean,

    I think it's pretty established that not every action taken by an individual is necessarily in his best interests, especially long-term. At any rate, I'm sure you would agree that individual interests often come into conflict and thus necessitate external motivations to prevent or diffuse such conflicts and to disincentivize antisocial/criminal behavior. (This is intuitive even for libertarians--except when it comes to financial regulation for some reason.)

    As a liberal I believe in maximum individual liberty, with the proviso that maximum entails certain restrictions on trivial liberties to mitigate the natural spillover of one's sphere of liberty into others'.

    So yes you are or should be entitled to make personal decisions yourself, even self-destructive ones.

    It's assumption #2 above that I have the real problem with. It smacks of magical thinking, and even if true would in no way necessitate lax government control over the economy.

  • ||

    Tony, Cog Sci shows that individuals aren't perfectly rational. It doesn't show that governments are more rational or better at making decisions for individuals than the individuals themselves.

    If anything, there is evidence suggesting otherwise.
    Political dynamics are largely about social signaling - which is self-interested, just in a more round-about way than straight-forward economic self-interest.

    Moreover, there's not a lot of cog-sci research involving the use of state-sanctioned force in producing optimal decisions.
    Almost all of it involves emergent social mechanisms such as 'altruistic punishment' that many libertarians would be okay with, to a point.

    Just for example, an 'altruistic punishment' involves someone going out of their way to punish someone that has violated a social norm, such as fairness. That person is doing so voluntarily - he is not acting on behalf of a state or with the backing of law.

    However, we should add the caveat that the norm in question isn't always something fluffy and nice like fairness - it can be something oppressive like social stigma against homosexuals. (All those jocks in Texas beating up on teh gays are atruistic punishers too).

    In short, Cog Sci says a lot of interesting things about human behavior as individuals and their interactions with groups. Much of it entirely compatible with libertarianism.

    But it doesn't say anything about governments producing superior decisions. The intersection of Cog Sci and economics has been partially explored. The intersection of cog sci and public choice theory, not so much.

  • Pedro||

    Thanks for anwering my queries about WWII although I still don't buy you're answers. My view is that Central Bankers circa 1920s and 30s was pretty free-market and conservative even though they were free bankers, America's was elected by the banks, not the govenment. Women just got the vote, blacks still lived under segration, and conservatives were pretty conservative, with old-timey views on economics. The sixties hadn't happened.

    Oh, and St. Paul got punked by that "queer" Bruno.

    http://www.slate.com/id/2213882/

  • ||

    It also helped that a large percentage of the productive capacity of most of the rest of the industrialized world had been destroyed by the war so we had virtually no competetion until that capacity was rebuilt.

    The fact that most of the rest of the world was in industrial ruin could only have slowed US recovery after World War II.

    After all, would the US be helped today if Europe were a wasteland? Or would California be better off if New York were a wasteland? Of course not. The US is better off with a wealthy Europe than a poor Europe because their productive capacity offers greater opportunities for comparative advantage.

    That's as true today as it was in 1945. If you doubt it, note that you can simulate a destroyed rest of the world by forbidding imports to the US. Would that make the US richer? No.

  • ||

    "Correlation" not same as "causation".

    Perhaps, but it's better than what you are stuck with arguing given the history of tax rates in the 20th century, which is that anticorrelation is the same as causation.

  • ||

    Tony,


    I don't think this is pretty clear at all. But I do agree that WWII shouldn't be seen as anything but a delay in ending the depression, since it produced a lot of misery as it was transpiring. But the war qua spending was stimulative, just as the New Deal programs were.


    The problem here is with the use of the concept "stimulus". What is being stimulated, anyway? The economy is NOT like an amoeba that requires stimulus to move or do something. This is the biggest conceptual mistake made by many. What generates economic activity is productivity, fueled by savings, with a goal to reach, which is consumption. People that think that spending programs or "stimulus" spending drives the economy have everything exactly BACKWARDS.

    You just can't argue that one was and one wasn't (which you aren't). I don't think the Keynesian school argues that spending must be perpetual.

    They have argued different things, sufficient to believe Keynesians are clueless. You have those that believe deficit spending should be done only during downturns, and none during upturns. Krugmanites believe in massive spending and high taxes all the time, preferably when everybody is on their knees, prostrated.

    Massive government spending is meant to jumpstart growth that will hopefully proceed on its own over time.

    This is a bad assumption. You cannot simply get production going on the mere expectation of consumption - you need CAPITAL, and capital comes from savings. Giving away money is just going to bid prices up for the few goods available right now (after the deleveraging process the World is undergoing).

    Why is nobody mentioning the fact that postwar prosperity was coupled with the most progressive taxation we've ever had?

  • Sean W. Malone||

    FTG - my comment, which Tony used, was in response to the thing up there by Beelzebud about "magically doing what's best".

    My point on a more specific level is absolutely that I can't know what's truly best for my brother or my parents, but that when I act and plan for my future, I also take into consideration my friends and family as well...

    I just don't like to ignore the fact that people's interests aren't only material goods, but other people as well. I always think it's sort of unfair to suggest that people are self-interested in the sense that people like Tony always mean. In the sense that I might shove you under the bus if it meant I get a better seat.

    I think almost no one acts that way, while still being entirely self-interested. That is entirely a side point though...

    With regard to Tony, he's trying to take down the very notion that people would either be self interested, or be the most effective decision makers with respect to their own lives - as opposed to, I have to assume based on his earlier statements on Reason, some forceful state/collective entity.

  • ||

    Why is nobody mentioning the fact that postwar prosperity was coupled with the most progressive taxation we've ever had?

    Because one thing does not fuel the other. It would only mean that people were better at hiding their assets from the IRS at that time, that's all.

  • ||

    FTG - my comment, which Tony used, was in response to the thing up there by Beelzebud about "magically doing what's best".

    Yes, sorry about that - I though it was a strawman created by Tony.

  • ||

    It's assumption #2 above that I have the real problem with. It smacks of magical thinking, and even if true would in no way necessitate lax government control over the economy.

    "Assumption" #2 is not an assumption at all. It is actually the conclusion of pretty much all of economic theory.

    Those corner cases where the trade and actions of free individuals are on net detrimental to society -- that is, market failures -- are few and far between.

    And for economic theory to come to that conclusion, it does, in fact, "necessitate lax government control over the economy."

  • ||

    Pedro,
    Thanks for an[s]wering my queries about WWII although I still don't buy your answers. My view is that Central Bankers circa 1920s and 30s [were] pretty free-market and conservative

    There was nothing "free market" about having a Federal Reserve. Think about it.


    [E]ven though they were free bankers,

    They were not, Pedro. A bank that falls back on a lender of last resort that simply creates money out of thin air cannot be in principle and practice a "free market" bank.

    America's was elected by the banks, not the gove[r]nment.

    Huh? What? Where are you getting this from?

    Women just got the vote, blacks still lived under segr[eg]ation, and conservatives were pretty conservative, with old-timey views on economics.

    AND? What's supposed to be the point of all this? What is an "old-timey" view of economics? What is THAT supposed to mean?


    The sixties hadn't happened.

    And so . . . what?

  • ||

    he's trying to take down the very notion that people would either be self interested, or be the most effective decision makers with respect to their own lives - as opposed to, I have to assume based on his earlier statements on Reason, some forceful state/collective entity.

    Really my point about cogsci is a minor one. You don't need cutting edge science to make that point. There are people who are more or less unable to act in their own best interests or others. The elderly and infirm, the insane, the young. Without resorting to a brutal Darwinian conception of society (which I would reject out of hand but which it seems some libertarians champion as a logical conclusion), these people must be dealt with in some way.

    As a liberal I'm not trying to argue that the state should nanny perfectly capable people and dictate their private lives (that's conservatives). I'm just saying that rational self-interest doesn't apply to everyone all the time. Even if you're a perfectly capable adult, you will get sick, or robbed, or need to cross an intersection, or need to have your savings insured. That the government acts in these matters is in no way restricting anyone's meaningful liberty.

    Government is a means at arriving at (arguably) necessary ends without relying on the machinations of the marketplace. You can say that the market would have eventually produced the Internet, but the government did it faster. And when Pearl Harbor was bombed nobody was arguing for us to wait around for the market to generate a counteroffensive.

    So I don't even get what you guys are arguing other than relaying a bias about government inefficiency that is belied by the facts and reacting against a Red Scare strawman.

  • ||

    You can say that the market would have eventually produced the Internet, but the government did it faster.

    Exactly what evidence do you have for this statement?

    Are you seriously suggesting that in the 25 years between first execution of the ARPANET and the time the Internet became a household word, zero people would have come up with something like it? Even considering that its entire history was fostered by universities?

  • ||

    That the government acts in these matters is in no way restricting anyone's meaningful liberty.

    Well yes, actually if you take away someone's earning in order to "act" on those matters you are restricting their liberty.

    Money is the means to an end, you take it away from someone, they have less means to pursue their own ends.

  • Sean W. Malone||

    Tony, you're kind of backtracking there aren't you?

    You can't say that I'm making an "unproven assumption" which was obviously a generalization and then cite reasons for that being the outliers of a population (the mentally infirm, sick, etc.) who can't take care of themselves directly and who never would have been expected to.

    And I'm sorry, but how exactly does your example of Pearl Harbor fit in here? Defense is the one thing I listed as in the government's purview.

    We could get into David Friedman, Robert Murphy & other anarcho-capitalist means of defense but I already established that that was something the government should be doing... so who's arguing strawmen here?

    As far as government inefficiency... deductive logic, history, masses of evidence and every day common sense isn't enough for you?

  • ||

    Hazel,

    I suppose the liberal would argue that taxes should not burden anyone (Jefferson said this), but the return on taxes is at least equal to what you put in, and in many cases multiplied by the when they're put to use in ways that generate a society in which individual liberty and prosperity potential is enhanced.

    But this relies on the idea of democracy--simplistically, that no action taken by government is one that isn't sanctioned by the people.

  • ||

    Defense is the one thing I listed as in the government's purview.

    I know. I'm just saying there are other things that are in its purview that are no more restrictive of liberty than defense.

    As far as government inefficiency... deductive logic, history, masses of evidence and every day common sense isn't enough for you?

    Another way of saying "my personal bias." For every instance you can cite of government waste or inefficiency, I can cite one that shows the government working more cheaply and more efficiently than private enterprise possibly could. Just to stick with defense, which has proven to be more efficient, our armed forces or Blackwater?

    If you allow that the government can provide an efficient and functioning defense apparatus, then you can't just dismiss the possibility that it can do other things well too. This is assuming those in power aren't wedded to the idea and are intent on proving themselves right.

  • ||

    I suppose the liberal would argue that taxes should not burden anyone (Jefferson said this), but the return on taxes is at least equal to what you put in, and in many cases multiplied by the when they're put to use in ways that generate a society in which individual liberty and prosperity potential is enhanced.

    How about the government taking 15% of an 18-year-old janitor's wage and mailing it to millionaires as Social Security and Medicare?

    How about the marginal tax rate of 50% (50%!) that millions of dual-earning households pay between federal tax, state tax, and payroll tax?

    You think either of them are getting their money's worth for the tax they pay?

  • Gilbert Martin||

    "The fact that most of the rest of the world was in industrial ruin could only have slowed US recovery after World War II.

    After all, would the US be helped today if Europe were a wasteland? Or would California be better off if New York were a wasteland? Of course not. The US is better off with a wealthy Europe than a poor Europe because their productive capacity offers greater opportunities for comparative advantage.

    That's as true today as it was in 1945. If you doubt it, note that you can simulate a destroyed rest of the world by forbidding imports to the US. Would that make the US richer? No."

    I would say it helped our export market. The rest of the world had to get the tools and equipment to rebuild their industrial base and a lot of that stuff came from the U.S.

  • Sean W. Malone||

    "I suppose the liberal would argue that taxes should not burden anyone (Jefferson said this), but the return on taxes is at least equal to what you put in, and in many cases multiplied by the when they're put to use in ways that generate a society in which individual liberty and prosperity potential is enhanced.

    But this relies on the idea of democracy--simplistically, that no action taken by government is one that isn't sanctioned by the people."



    In what world are you living Tony?


    Benefits equal to taxes put in? Cause no one is skimming funds off the top, or using it to fund unpopular wars, pork projects or just to give themselves raises?


    You have GOT to be kidding...

  • ||

    And, Tony, since you brought up Jefferson...

    From his First Inaugural Address:

    with all these blessings, what more is necessary to make us a happy and a prosperous people? Still one thing more, fellow-citizens--a wise and frugal Government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government, and this is necessary to close the circle of our felicities.



    And from his Second:

    At home, fellow-citizens, you best know whether we have done well or ill. The suppression of unnecessary offices, of useless establishments and expenses, enabled us to discontinue our internal taxes. These, covering our land with officers and opening our doors to their intrusions, had already begun that process of domiciliary vexation which once entered is scarcely to be restrained from reaching successively every article of property and produce.

  • ||

    "Even if you are a perfectly able adult, you will get sick...."

    If I get sick, I want the healers of my choice, not some national health insurance bureaucrat.

    "Even if you are a perfectly able adult, you will get sick......"

    If I get sick, I want the treatment modialities of my choice, not some tired allopathic quackery the state mandates.

    "Even if you are a perfectly able adult, you will get sick..."

    If I get sick, I want to be treated on my timetable, not 18 months later.

    "Even if you are a perfectly able adult, you will get sick....."

    AND TIRED OF SOCIALISM.

  • ||

    You think either of them are getting their money's worth for the tax they pay?

    I'm in no way arguing for the status quo.

    Social security is a social insurance program with the ultimate goal of not letting the elderly starve to death in the streets. Of course I feel the related taxation should be more progressive.

    Ideally taxes should present no burden to anyone. But that entails strongly progressive taxation since what is a pittance to a wealthy person (who arguably draws much more benefit from his society than a poor person) can be a great burden to a non-wealthy person.

    And since we the people decide what kinds of programs we want, taxation should ideally meet those demands.

  • ||

    but the return on taxes is at least equal to what you put in

    No it isn't. Administrative overhead alone slices 30% off of any government program. That money is unproductive - the guys doling out the cash aren't building anything that is useful to anyone else. All they are is middle-management.

    that no action taken by government is one that isn't sanctioned by the people.

    Democracy is a clumsy and primitive method of making decisions. Lots of decisions get taken that aren't sanctioned by the vast majority of the population. Witness earmarks. That alone should demonstrate that the number of decisions made that actual enjoy majority popular support is a minority.

    We frequently compare it to the 'marketplace' but what we really mean is the complex distributed decision making processes that occur from the low-level decisions of millions of individuals and their direct interactions with one-another.

    I commented elsewhere that progressives ought to be in favor of local government and decentalization of power, because local governments are the ones where an individuals vote has the most effect and the representatives are most easily held accountable.

    But the most decentralized decision making of all is individual decision making. Not voting once or twice a year, but every day with your personal choices.

  • ||

    In what world are you living Tony?

    One in which an informed people can choose not to reelect people who mismanage our government.

  • ||

    More resources are devoted to the avoidance, collection, elimination and minimization of the income tax than the revenues generated by it.

    Doubters and deniers of this reality are the true flat earthers.

  • Chad||

    You sad, sad fools. It must be painful to cling to an ideology that has been refuted so strongly.

    We gave tax cut after tax cut after tax cut. All us private sector "entrepreneurs" invested McMansions, SUVs, Credit Default Swaps, Indian Call Centers and Cheap Chinese Crap....

    The government could dole out cash by hanging a dartboard on the wall and training a blind monkey to chose by tossing darts, and still do better than your beloved private sector did. Indeed, I can hardly imagine doing worse.


    I am sorry. It is simply a fact that the private sector does not allocate capital wisely. This is in part because people are demonstratably stupid and focus on the short term. It is in larger part due to the many aggregious market failures that exist in the real world. The private sector is good enough when it comes down to getting the details of how to make a widget, but it is useless for determining an overall scheme that makes any sense whatsoever.

  • Sean W. Malone||

    Tony - I don't argue that government is responsible for defense because it can be done more "cheaply" than private enterprise - I don't believe that to be true even slightly.

    The defense budget is one of the most overbloated, wasteful ones imaginable...

    That would be absurd. I argue that government needs to be in charge of defense and police because that is the *one* area where the use of physical force is appropriate, but which needs to be controlled by the people being defended en masse in order for defense to be distorted into tribal military juntas a la Congo.


    It has NOTHING to do with efficiency and everything to do with principle.

    Between the federal government & Blackwater - if Blackwater was running defense for private contractors and not milking the infinite Federal teat - I'd go with Blackwater any day of the week. However, I want anyone who is granted the right to kill in the name of defense to be directly responsible to the people they are supposed to be defending.

    Do you see the difference?

  • ||

    Tony, to address your points:

    Really my point about cog sci is a minor one. You don't need cutting edge science to make that point. There are people who are more or less unable to act in their own best interests or others. The elderly and infirm, the insane, the young.

    This is why there are family members, support groups, charities, churches, you name it. People can be charitable even if they do it out of self interest (the profit they get from feeling good about their goodness).

    Without resorting to a brutal Darwinian conception of society (which I would reject out of hand but which it seems some libertarians champion as a logical conclusion), [Strawman Alert!] these people must be dealt with in some way.

    There is no Darwinian concept of society, Tony, under libertarian theory. The libertarian contention is that people cannot be made charitable by force, by coercion, because that is an immoral act in itself. The way people "deal" with the elderly, the insane, the young, is through the extended family, charity, churches, support groups, services, whatever people come up with.


    As a liberal I'm not trying to argue that the state should nanny perfectly capable people and dictate their private lives (that's conservatives).

    You miss the point - the State will ALWAYS seek to control people's lives, no matter what the people in power call themselves.

    I'm just saying that rational self-interest doesn't apply to everyone all the time.

    Why not?

    Even if you're a perfectly capable adult, you will get sick, or robbed, or need to cross an intersection, or need to have your savings insured. That the government acts in these matters is in no way restricting anyone's meaningful liberty.

    How so? Because if I cross an intersection on my own, outside the artificial boundaries placed by the State, I get ticketed. How is that NOT a restriction in my freedom, even when I am perfectly capable of crossing the intersection safely? If I get sick, I cannot simply go to the pharmacy and get the medicine I KNOW will cure me - I need a 'prescription', written by a doctor who will charge me $100.00 at least for the bother. This is how the government wants it. How is that NOT a restriction of my freedom?


    Government is a means at arriving at (arguably) necessary ends without relying on the machinations of the marketplace.

    You know what "machinations" means, don't you? The Market does not scheme or harm people, nor do people rely on what is the network of people's trades and exchanges of goods, services and ideas to improve their well being. How can that be part of a "machination"?


    You can say that the market would have eventually produced the Internet, but the government did it faster.

    No, I say that the government did not do it, period. Somebody already thought of it before, but did not implement because it was not needed, and when the government implemented its own network, people still did not NEED an internet. Just as people don't need trips to the moon, or $1,000.00 toilets. Just because the State purchases something new does not mean it was a good purchase, or needed. it can still be a WASTE of resources.


    And when Pearl Harbor was bombed nobody was arguing for us to wait around for the market to generate a counteroffensive.

    Ah, finally, some intellectual dishonesty and disingenuity! Pearl Harbor was attacked by the Japanese after that illustrious gangster, FDR, got into a trading war with them, to provoke them to attack. Market-driven policies would NOT have originated the need to attack the US at all. The US would have traded with Japan freely, and thus a war averted.

  • ||

    I would say it helped our export market. The rest of the world had to get the tools and equipment to rebuild their industrial base and a lot of that stuff came from the U.S.

    I would say it helped the US export market too. But it absolutely killed the US import market as well as US opportunities for comparative leverage due to outsourcing parts of the industrial supply chain.

    If the US has to make everything, then the US can not focus on those things it makes more better than anyone else makes. That means less productive capacity is focused on the highest value production, and the country is less wealthy than it would otherwise be.

  • Sean W. Malone||

    Also... not to quibble here, but... prove it:

    I can cite one that shows the government working more cheaply and more efficiently than private enterprise possibly could.



    I don't think you can cite any example of that at all, but then, since you can't do a 1:1 comparison against a government monopoly of services I guess you're off the hook.

  • ||

    Private insurance spends about 15% on administrative costs. Medicare spends 2%. A government health care system would simply be more efficient. I know that doesn't comport with one of your central dogmas--that government, since it's not trimmed by the workings of the market is always less efficient--but it is one of the facts to which I was referring earlier.

  • ||

    Chad,
    We gave tax cut after tax cut after tax cut. All us private sector "entrepreneurs" invested McMansions, SUVs, Credit Default Swaps, Indian Call Centers and Cheap Chinese Crap....

    Tax cuts without spending cuts do not help. What do tax cuts have to do with Hindu Call centers, or "cheap Chinese crap"?


    The government could dole out cash by hanging a dartboard on the wall and training a blind monkey to chose by tossing darts, and still do better than your beloved private sector did. Indeed, I can hardly imagine doing worse.

    Where would the money come from? Because it seems ironic that you say that the government can "dole money" better than the private sector, when not one in the private sector (that means, everyone of us) do not go around "doling" money.


    I am sorry. It is simply a fact that the private sector does not allocate capital wisely. This is in part because people are demonstratably stupid and focus on the short term.

    And the government is populated by long-term seeking super humans, right? Right? Right?


    It is in larger part due to the many aggregious [I think you mean egregious] market failures that exist in the real world.

    Ahhh, "market failures", the often-used canard by the economics illiterate. Sort of like saying "evolutionary failure" because nature failed to give us dragons.

    The private sector is good enough when it comes down to getting the details of how to make a widget, but it is useless for determining an overall scheme that makes any sense whatsoever.

    Like, for example, selling the widget? Or what overall scheme are you talking about?

  • Sean W. Malone||

    "Without resorting to a brutal Darwinian conception of society (which I would reject out of hand but which it seems some libertarians champion as a logical conclusion)"


    Not only is it a Strawman, FTG - it's also demonstrative of a complete lack of historical knowledge on the topic of Social Darwinism...

    Which arose not from advocates of freedom or classical liberalism (to which libertarians owe their roots) but to "Progressivism" of the early 20th C.

  • Sean W. Malone||

    Are you really that daft Tony?

    "Private insurance spends about 15% on administrative costs. Medicare spends 2%. A government health care system would simply be more efficient."


    First off, I doubt your numbers in the extreme... see various sources on why most of Medicare's administrative costs are vastly higher than those of private insurance, but merely more hidden and dispersed through the magic of government accounting:

    http://alankatz.wordpress.com/2007/10/08/medicare-administrative-expense-reality-check/

    But also, I have to point out that private insurance administrative costs have to factor in doing all of Medicaid & Medicare's paperwork.

    Your red-herring assumes that there is actually a free-market in healthcare. Which is asinine on its face.

  • MNG||

    "Ahhh, "market failures", the often-used canard by the economics illiterate."

    Yeah, because if you search through academic economics journals, the term "market failure" only comes up as a source of derision...

  • ||

    Private insurance spends about 15% on administrative costs. Medicare spends 2%.

    You know why the big difference in reported costs? Because the former spends money in order to prevent fraud, while the latter allows, in 2007, $60 billion of fraud out of a budget of $426 billion.

    Let's see. That's... 14%. Plus 2%. Equals 16%.

  • MNG||

    "have to factor in doing all of Medicaid & Medicare's paperwork."

    Yeah, no paperwork with private insurance!

  • ||

    Tony,
    Private insurance spends about 15% on administrative costs. Medicare spends 2%. A government health care system would simply be more efficient.

    Do you know how much is there in unfunded liabilities from Medicare? Medicare's unfunded liability is $61.6 trillion - six times greater than Social Security's. Doesn't matter if the administrative cost is lower than private insurance (a fact that could speak rather of unreported costs by Medicare). There are no unfunded liabilities in the private sector for Health Care.


    I know that doesn't comport with one of your central dogmas--that government, since it's not trimmed by the workings of the market is always less efficient--but it is one of the facts to which I was referring earlier.

    You are relying on iffy arguments, Tony.

  • MNG||

    So MikeP, the private sector is 1% better?

    Shibby!

  • ||

    Does Tony really believe that the income tax racket represents a very efficient use of our abilities, resources and talents? He must think that the brainpower of CPAs and learned tax counsel are best utilized mastering the details of the contested liability doctrine relative to the discharge of indebtedness a/k/a forgiveness of debt income.

  • MNG||

    "The US would have traded with Japan freely, and thus a war averted."

    And we would have all taken Japanese wives, because the only thing keeping us apart back then was FDR's stupid trade policy!

  • Herbert Spencer & William G. S||

    "Which arose not from advocates of freedom or classical liberalism (to which libertarians owe their roots) but to "Progressivism" of the early 20th C."

    WTF?

  • Sean W. Malone||

    MNG... that was kind of my point... they have to do paperwork for their own business, their own accounting, plus an astronomical amount of paperwork that needs to be sent to the government as well, since quite a lot of treatments are paid or partially paid through that system.

    Not even getting into what that does to the overall cost of healthcare.

  • MNG||

    In fact, you could say that the government program was still better, because giving someone who did not "deserve" treatment a treatment is less bad than denying someone who did deserve treatment a treatment, something the private sector would be bound to do more than the government program you mention...

  • ||

    Yeah, because if you search through academic economics journals, the term "market failure" only comes up as a source of derision...

    Actual, real, honest-to-goodness market failures are few and far between. ...and getting fewer all the time with the advance of technology.

    For example, two classic market failures of the textbooks are no longer market failures. Through transponder, roads can now be priced perfectly by usage. And through encrypted digital broadcast, radio stations can now be fully privately funded.

    Don't hold your breath waiting for the government to extricate itself from these market failures of the past...

  • ||

    MNG,
    Yeah, because if you search through academic economics journals, the term "market failure" only comes up as a source of derision...


    Ahh, MNG, long time no see. Yes, it comes as a source of derision, even if not by intention.

    Are you going to argue the term and the concept, or just rely on appeals to authority?

    People who espouse this ad hoc explanation usually do it to explain away the problems with mathematical economic models like the Perfect Competition model, for instance. Market Failure has been debunked as a concept many times. Look here:

    http://mises.org/article.aspx?Id=1035

  • ||

    So MikeP, the private sector is 1% better?

    Maybe. But at least people don't choose it first for their fraud schemes. It seems that when people are spending their own money, they are more careful about who they give it to.

  • MNG||

    Sean
    Well of course the government, like private enterprises, when they do business with a doctor like that, is going to require some paperwork. I'm not sure what the big deal is.

    It's like shaking your fist at State Farm because they ask those guys to do paperwork, in addition to having to do the paperwork for Anthem!

  • MNG||

    No, no, FTG, I'm just going to argue that for you to make the point you did, that use of the term market failure is relegated for the economically illiterate, you're going to have to argue that most economics experts are, well, economically illiterate...

  • MNG||

    FTG
    For any person to invoke Mises (or Rockwell's outfit) and then accuse someone else of ad hoc reasoning is quite the feat in chutzpah!

  • Sean W. Malone||

    "Mr. Spencer"... if that is your real name...


    I don't mean to disparage your hand in creating the theory of Social Darwinism, but merely wanted to point out that the leading supporters of eugenics in the US were the leaders of modern "progressivism"... for example, courtesy Wikipedia:

    From its inception eugenics was supported by prominent people, including H. G. Wells, Woodrow Wilson, Theodore Roosevelt, Emile Zola, George Bernard Shaw, John Maynard Keynes, William Keith Kellogg, Margaret Sanger, Winston Churchill, and Sidney Webb.[10][11][12



    Hmm... Keynes you say?

  • MNG||

    "It seems that when people are spending their own money, they are more careful about who they give it to."

    Mike, I don't think it follows that the amount of fraudulent claims under medicare/caid being higher than the private sector means that people spend their money better when it is theirs. It probably has more to do with the higher administrative costs the private sector had mentioned upthread, in other words they just catch frauds better because THEIR ( the insurance company, not the customers) money is at stake.

  • Herbert Spencer||

    Eugenics=Social Darwinism?

  • ||

    in other words they just catch frauds better because THEIR ( the insurance company, not the customers) money is at stake.

    I thought I just said that.

  • ||

    Chad and Tony don't seem to understand that the government is already 70% of the health care market as it is.

    Chad and Tony don't seem to understand that in 1964, the year before Medicaid was created and enacted into law, the average wage earner could afford, out of his pocket, to pay for the vast majority of health care for sale. Do they know what percentage of the health care market government occupied in 1964? Take a wild fabian induced brain fog bleepin guess.

    However, the medical establishment actually embraced the socialism for it proved to be a goldmine. The medical establishment does not practice free enterprise. The medical establishment is very much part of the problem and its rent seeking greed will seal its death.

  • Winston Churchill||

    I'm a progressive?

    WTF?

  • Sean W. Malone||

    MNG:

    1. My point was that the private insurance companies have government paperwork to do as well, which increases their cost and reduces government costs...

    2. "In fact, you could say that the government program was still better, because giving someone who did not "deserve" treatment a treatment is less bad than denying someone who did deserve treatment a treatment, something the private sector would be bound to do more than the government program you mention..."


    WTF? In a world with NHS & people in endless waiting lines in Canada which deny or postpone treatment (until in some cases people have died or become terminal as a result) all the time, your comment baffles me.

    Apparently rationing of medical care is better than free-price allocation?


    Not to go all John Stossel on ya here, but why don't you look at what some freedom in medical care a la Lasik does to price & mass availability.

  • ||

    I'm just going to argue that for you to make the point you did, that use of the term market failure is relegated for the economically illiterate, you're going to have to argue that most economics experts are, well, economically illiterate...

    The fact that there are actual market failures does not mean that every use of the term actually represents a market failure.

    In fact, if you were to integrate over all people over all time, I would wager that the number of uses of the term "market failure" to describe something that is not a market failure according to literate economists would outnumber the number of uses that were market failures by at least a factor of 3.

  • MNG||

    OK, MikeP, I understand that's what you were saying there.

  • ||

    No, no, FTG, I'm just going to argue that for you to make the point you did, that use of the term market failure is relegated for the economically illiterate, you're going to have to argue that most economics experts are, well, economically illiterate...

    I cam do that, MNG - most economists are actually illiterate in economics. And logic. Most espouse a Keynesian model of economics, ironic if you consider that Keynes was not an economist.

    The problem starts with their assumptions - based again on the Perfect Competition model or Market Efficiency model. These models pretend conditions that cannot exist in the real world: Perfect and instant information, uniform goods, "natural" prices. Any deviation from this model must be an example of market failure. However, the assumptions that lead to the model are wrong, and just wrong - they are OBVIOUSLY wrong. So either the economists that espouse these concepts are illiterate, or they depend on them for their job.

  • MNG||

    Oh, MikeP, I would agree. People toss it out there pretty stupidly.

    But that's not what FTG said. He said there is no such thing (or no such coherent concept, hard to tell) but even more funny that only the economic illiterate use the term.
    Which means you and I are economically illiterate...

  • Sean W. Malone||

    Oh I'm sorry Churchill... sorry you got mixed in there with all the actual progressive leaders like Teddy R., Sanger, Shaw & such... Must have been on account of you holding some idiotic ideas.

  • MNG||

    "These models pretend conditions that cannot exist in the real world"

    Again, for an Austrian to say this is even MORE chutzpah!

  • ||

    MNG-

    As I have mentioned to you in the past, a big part of the problem is:

    Why do people need, or at least should have, health insurance? Answer me that.

  • ||

    MNG,

    For any person to invoke Mises (or Rockwell's outfit) and then accuse someone else of ad hoc reasoning is quite the feat in chutzpah!

    Ah, I could not expect less from you than an absurd non sequitur as a cop out, MNG. You will never disappoint me.

  • Winston Churchill||

    My point is that eugenics had prominent supporters along a pretty wide spectrum. A good reason why folks should beware of anybody saying they have a "purely scientific" solution to human problems...

    Now off to my Tory meeting in Hell. Howdy Disreali! Howdy Satan!

  • ||

    In a truly free market, the medical establishment would never be able to command prices such that the average joe boyle would be forced to buy "health" insurance

  • MNG||

    Austrians are famous for not putting forward hypotheses which can then be tested against future results but instead look back on past events and come up with "just so" ad hoc stories to explain why things really worked out according to their basic assumptions and question begging. And their assumptions are the kind of things that behavioral economics is proving more un-empirical daily.

  • ||

    MNG,

    But that's not what FTG said. He said there is no such thing (or no such coherent concept, hard to tell) but even more funny that only the economic illiterate use the term.
    Which means you and I are economically illiterate...


    MNG, that does not make MikeP illiterate. And there is no such thing as a Market Failure.

    You just say it exists because you read it in journals. I say it because, apart from the fact that it has been debunked as a concept, it is irrational - how can the market, a spontaneous network made by the decisions of all humans, present "failures"? Compared to WHAT? From the standpoint of WHOM? Who is to play the God here to decide what result is a failure and what is not, outside the market? It IS absurd - it is like pretending to go out the Universe to find examples of Nature Failures.

    Market Failure is pure fantasy, an ad hoc explanation of why pet mathematical models do not work.

  • Sean W. Malone||

    "My point is that eugenics had prominent supporters along a pretty wide spectrum. A good reason why folks should beware of anybody saying they have a "purely scientific" solution to human problems..."

    Wide supporters indeed - but it would not be fair to argue that anyone who held a pro-freedom, classically liberal stance would fit into that category, as we have long been uniquely opposed to government initiation of force. And most certainly in situations where people are claiming that it's in the interest of those being oppressed.

    Thus the overall point.

    Libertarian ideology embodies the antithesis of eugenics - which is really just the most forceful end result of social engineering, still widely practiced.

  • MNG||

    LM
    I don't know about that. People will pay a lot for their health. It strikes me that kind of thing is a bit "inelastic."
    It's just that until recently "health care" was known for not being that helpful. Now it is.

  • Sean W. Malone||

    But FTG... The market hasn't produced anti-gravity boots. Isn't that a failure? :P

  • ||

    Austrians are famous for not putting forward hypotheses which can then be tested against future results

    That's because it is a DEDUCTIVE science, nitwit. It is not INDUCTIVE. How many hypothesis have the Marxists put forward for testing, or the Neo-classists, or the Monetarists, or the Keynesians, that have actually worked?

    I can tell you: Zero have been shown to work. The Austrians KNOW that hypotheses cannot be tested when it comes to human action, because humans always change their minds.

  • MNG||

    "Libertarian ideology embodies the antithesis of eugenics - which is really just the most forceful end result of social engineering, still widely practiced."

    I agree with you actually. I don't think Social Darwinism=Eugenics though. And the former informs libertarianism. The latter, I agree is 180 degrees opposite to libertarianism.
    Of course, were there any libertarians around beack then? So we dont know where they would have stood. That's the nice thing about not having a movement until the 1940's...

  • Neu Mejican||

    FTG,

    Thanks for the spell check.

    prop⋅a⋅gan⋅da
       /ˌprɒpəˈgændə/ -noun
    1. information, ideas, or rumors deliberately spread widely to help or harm a person, group, movement, institution, nation, etc.


    You don't think that is an accurate description of what Reason does?

    Odd.

    I think Reason wears this role on their sleeve. Nothing wrong with that.

    I just think the quality has diminished lately...just my opinion.

  • MNG||

    "It is not INDUCTIVE."

    Or a science.

    Or very helpful.

  • ||

    But FTG... The market hasn't produced anti-gravity boots. Isn't that a failure? :P

    Ha ha ha!

    You got me there!! ;-)

  • Sean W. Malone||

    Math & formal logic aren't deductive either MNG... therefor they're not real sciences or helpful either?

  • Sean W. Malone||

    grr... *ARE* deductive

  • ||

    Neu,

    You don't think that is an accurate description of what Reason does?


    No, and I read the definition twice.

    " information, ideas, or rumors deliberately spread widely to help or harm a person, group, movement, institution, nation, etc."

    So who are they set to destroy or harm? Or help, for that matter? Because if mere opinion is now to be propaganda, then ANYTHING is propaganda.

  • ||

    how can the market, a spontaneous network made by the decisions of all humans, present "failures"? Compared to WHAT? From the standpoint of WHOM? Who is to play the God here to decide what result is a failure and what is not, outside the market?

    A market failure occurs when the market arrives at a result that the participants of the market would not have chosen.

    That may be because a good, such as radio broadcasting or roads, is undersupplied or because a bad, such as pollution, is oversupplied. It happens because property is sufficiently unclear that benefits cannot be priced into the market or costs cannot be priced into the market.

    The overgrazed sheep commons was a market failure. The subdivision into separate parcels of property was the cure for that market failure.

    As I noted above, many if not most classic market failures are no longer market failures. And most if not virtually all so-called market failures are not and never were market failures.

  • ||

    This is why there are family members, support groups, charities, churches, you name it. People can be charitable even if they do it out of self interest (the profit they get from feeling good about their goodness).

    You'd have to prove that such willy-nilly private activity makes up for the social problem of people being aged and infirm. There will always be a sizable portion of people who aren't able to rely on these things, and short of just letting them die you have to be in favor of some collective action.

    There is no Darwinian concept of society, Tony, under libertarian theory. The libertarian contention is that people cannot be made charitable by force, by coercion, because that is an immoral act in itself. The way people "deal" with the elderly, the insane, the young, is through the extended family, charity, churches, support groups, services, whatever people come up with.

    ...

    You miss the point - the State will ALWAYS seek to control people's lives, no matter what the people in power call themselves.


    We may always run up against this intellectual roadblock--I just don't feel that in a properly functioning democracy that anything the government does is by tyrannical coercion. Call me an old softie but I believe in Jefferson's conception of rule by the people.

    How so? Because if I cross an intersection on my own, outside the artificial boundaries placed by the State, I get ticketed. How is that NOT a restriction in my freedom, even when I am perfectly capable of crossing the intersection safely? If I get sick, I cannot simply go to the pharmacy and get the medicine I KNOW will cure me - I need a 'prescription', written by a doctor who will charge me $100.00 at least for the bother. This is how the government wants it. How is that NOT a restriction of my freedom?

    You being able to cross a street without any restrictions whatsoever impedes on the liberties of others. The chaos of an unregulated intersection creates less overall individual freedom than the act of placing restrictions on your movement.

    I'm not sure what point you're making about prescriptions. To the extent that unfettered access to drugs creates problems in society I can understand the necessity of prescriptions. Once we get universal healthcare you hopefully won't have to have your liberty assaulted by exorbitant costs.

    You know what "machinations" means, don't you? The Market does not scheme or harm people, nor do people rely on what is the network of people's trades and exchanges of goods, services and ideas to improve their well being. How can that be part of a "machination"?

    I believe that in the modern world human beings can and should manage society in ways that maximize liberty and happiness.

    No, I say that the government did not do it, period. Somebody already thought of it before, but did not implement because it was not needed, and when the government implemented its own network, people still did not NEED an internet. Just as people don't need trips to the moon, or $1,000.00 toilets. Just because the State purchases something new does not mean it was a good purchase, or needed. it can still be a WASTE of resources.

    Fine, forget bare necessity. But that the government can and did produce spectacular innovations makes a mockery of the libertarian's assertion that it just can't do anything well. It can do things well because it has lots of capital and talent at its disposal. If the people decide they want something that may never be feasible in the marketplace, I don't see what's wrong with them achieving it via directed government action. It's not either/or for me either. The market took the Internet innovation and created whole new avenues of competition and wealth generation.

    Ah, finally, some intellectual dishonesty and disingenuity! Pearl Harbor , etc...

    I totally agree. =)

  • ||

    MNG,

    Your second whopper:

    [B]ut instead [Austrians] look back on past events and come up with "just so" ad hoc stories to explain why things really worked out according to their basic assumptions and question begging.

    Please provide proof that any Austrian economist have used past experiences (empiricism) to generate the assumptions and axioms of economics.

    And their assumptions are the kind of things that behavioral economics is proving more un-empirical daily.

    Oh, man, here we go again. Behavioral Economics? MNG, did you buy Peter A. Ubel's book and now try to not look silly for doing so?

    I read some excerpts of his book as an example of so-called behavioral economics and guess what? The conclusion is that people are somewhat "irrational", thus we need government (!!) I kid you now! Would seem like working for government makes one shed one's irrationality and become super human, able to regulate markets, eat kryptonite and move planets . . . I don't know.

  • ||

    As I noted above, many if not most classic market failures are no longer market failures. And most if not virtually all so-called market failures are not and never were market failures.

    Oh, and I should have added...

    Not only should any presumed government solution to a presumed market failure prove that it actually is a market failure, but it should prove that the much, much more likely political failure of the government solution is not more harmful than the market failure.

  • ||

    Call me an old softie but I believe in Jefferson's conception of rule by the people.

    Are you talking about the same Jefferson I quoted above?

  • Sean W. Malone||

    Ok... Tony, I've refrained from getting annoyed at you so far, but you had to defile one of my favorite people and for that you must pay...

    Call me an old softie but I believe in Jefferson's conception of rule by the people.



    God damn it you dumbass.

    Jefferson did NOT invent Democracy, and by and large he abhorred it - most of our founding fathers did, which is why they created a representative Constitutional Republic.

    And Jefferson's main concern was never that the people get to vote on which minority to oppress and call it "moral" because "the will of the people" had spoken - but instead created the goddamn Bill of Rights to PROTECT INDIVIDUAL LIBERTY.

    Jefferson... if you feel so inclined to reference him in the future... Despised the idea of unfettered democracy and mistrusted government to a very large degree. The idea that he'd have somehow come down on the side of the modern liberal is absurd and licentious... Take it, the fuck, back.

  • MNG||

    It's a science that doesn't care how empirically verifiable it's ideas are?

    Yeah, I'll admit that does seem like a good way to talk about Austrian economics ;)

  • MNG||

    FTG
    You don't think the findings of some of behavioral economics calls into question some of the assumptions about how people act in economic transactions that the Austrians make?

    Really?

  • ||

    But that the government can and did produce spectacular innovations makes a mockery of the libertarian's assertion that it just can't do anything well.

    What innovations? Really.

  • Neu Mejican||

    FTG,

    Reason publishes for the expressed purpose of promoting libertarian ideas. Their propaganda is aimed at helping that movement. It is stated in their mission statement and in the mission statement of their parent organization.

    This means that they do not publish materials that would harm this position.

    This also means that they do publish materials aimed at harming other positions that could be viewed as a threat to that their position.

    To be propaganda, it seems, requires this expressed purposeful filtering of information.

    This is distinct, I think, from a bias in reporting that would be more typical of a publication whose purpose is not promotion of a position, but dissemination of information more generally.

  • ||

    MikeP,
    A market failure occurs when the market arrives at a result that the participants of the market would not have chosen.

    If the result arrived, then they chose it. It certainly wasn't somebody else. That's the point.

    That may be because a good, such as radio broadcasting or roads, is undersupplied or because a bad, such as pollution, is oversupplied.

    Mike, by saying "undersupplied" you beg the question. Undersuppled compared to what? What would be the benchmark? "Undersupplied" presupposes a known, correct supply, but once the market clears, people are supplied with the EXACT amount they expected, so where does ONE get the correct value to benchmark?

    Same with pollution - pollution is not a good, it is a by-product of a process. Again, unless there is known benchmark for the correct supply of "pollution", you cannot say it is being "oversupplied". Also, since pollution is NOT A GOOD, then it does not make sense to mention it in economic terms, since economics only deals with scarce goods.

    It happens because property is sufficiently unclear that benefits cannot be priced into the market or costs cannot be priced into the market.

    But that can be explained perfectly by not clearly defined property rights, not because of the market.

    The overgrazed sheep commons was a market failure.

    Nope. Again, the problem is property rights. The commons in the example cannot be part of the market, because the market is a network of people's trades and exchanges, and people only trade and exchange what they possess. A commons is not possessed by anyone.

  • Sean W. Malone||

    C'mon Neu...

    "This means that they do not publish materials that would harm this position.

    This also means that they do publish materials aimed at harming other positions that could be viewed as a threat to that their position."


    These conclusions really don't follow at all... Besides which, wouldn't it be better to cite articles showing Reason unfairly attacking someone? You know, something that's not like say, the stories they do over there at the Huffington Post, where all they ever do is run nice pieces advancing their ideas.

  • Neu Mejican||

    FTG,

    Just to be sure I am following you...

    Your definition of economics excludes non-scare goods?

    Really?

    Odd.

  • ||

    You don't think the findings of some of behavioral economics calls into question some of the assumptions about how people act in economic transactions that the Austrians make?

    You mean how they interpreted the data on their experiments call into question how people make decisions? Because that is what's going on: The so-called experts make experiments, expecting one result, and when people act differently they say "Aha! People are NOT rational!" Which is kind of funny, how they can detect irrationality in people without questioning their own purported irrationality - meaning, they assume THEY are being rational in their findings. How can they know this?

  • MNG||

    "The Austrians KNOW that hypotheses cannot be tested when it comes to human action, because humans always change their minds."

    Wow, this is some dumb shit.

    I'm a social scientist by trade and making hypotheses about human action and testing them against what humans actually do when they act is what social science is all about.

    For example, behavioral economics postulates that people will underestimate certain risks. And they find that people, in actual scenarios, actually tend to do this.

  • Neu Mejican||

    SWM,

    Huffington post is also a propaganda rag, for the most part.

  • ||

    Neu,
    Your definition of economics excludes non-scare goods?

    Of course it does. By the way, if it is non-scarce, it is NOT a good. Only goods are scarce.

    Air, not being scarce, is not a good. Economic behavior does not manifest with atmospheric air. Nor with water in the ocean.

  • ||

    MNG,
    I'm a social scientist by trade [Suprise!] and making hypotheses about human action and testing them against what humans actually do when they act is what social science is all about.

    You're then wasting your time.


    For example, behavioral economics postulates that people will underestimate certain risks. And they find that people, in actual scenarios, actually tend to do this.

    And . . . what?

  • Neu Mejican||

    You mean how they interpreted the data on their experiments call into question how people make decisions? Because that is what's going on: The so-called experts make experiments, expecting one result, and when people act differently they say "Aha! People are NOT rational!" Which is kind of funny, how they can detect irrationality in people without questioning their own purported irrationality - meaning, they assume THEY are being rational in their findings. How can they know this?

    This is one of the best tail-chasing arguments I have seen in weeks.

    I picture a 19 year old in a dorm room, black light poster in the background...

    "But DUDE, check this, how do you KNOW that you KNOW something?"

  • ||

    Re: Jefferson,

    Without getting into a debate about every aspect of Jefferson's philosophy, my only point was to counter the notion that a democratic (or republican--whatever) government does things tyranny. If it does, via will of the majority or whatever, then it's not properly set up.

    I just disagree that one of the individual freedoms meant to be protected is total economic freedom. Taxes were not disparaged by the original government; the constitution expressly allows them. So our disagreement is on what they should be spent on.

  • Chad||

    Tony | March 17, 2009, 5:56pm | #

    Private insurance spends about 15% on administrative costs. Medicare spends 2%. A government health care system would simply be more efficient. I know that doesn't comport with one of your central dogmas--that government, since it's not trimmed by the workings of the market is always less efficient--but it is one of the facts to which I was referring earlier.


    I disagree, Tony. Medicare spends a lot more on overhead, but your statistic doesn't count it. For example, Medicare is about 10% of the federal budget. Why don't you assign 10% of federal overhead to Medicare? For example, 10% of the cost of federal elections should fairly represent the cost of choosing Medicare's CEO and board, and 10% of the cost of congress's and the president's salaries should count as well. Your statistic simply doesn't include the top layer of Medicare management as "overhead".

    A bigger flaw in your number, though, is its failure to account for the overhead related to the dead-weight and compliance losses associated with taxes. These typically run around 20% and 1%, respectively. The dead-weight alone pushes the total "overhead" for Medicare above that of the private sector.

    That being said, we should go to the purely public model. Libertarians just need to accept that we will never have a purely private model, whether one would work or not. Our choice is between purely public and the hybrid monstrosity that we have now. Any rational person would admit the former is better.

  • MNG||

    It's astonishing to see the guy who ultimately holds that human behavior is rational argue against these experiments because the experimenters can never know what is rational...

    You know, we just have to assume that after all the humans did do the rational thing.

    Which we can't know.

    Which is why we must assume...

    Hilarious.

  • Neu Mejican||

    FTG,

    I think you don't know much about economics.

    A good is something with positive utility.
    It's scarcity is an independent feature of it.

    Surely.

  • ||

    Neu,
    Reason publishes for the expressed purpose of promoting libertarian ideas. Their propaganda is aimed at helping that movement.

    And biology books are published for the expressed purpose of promoting biology. Are these books pro-biology propaganda?

    . . . Or just being informative?

    I am getting sick and tired of discussing these simple concepts with little children, or with people that think like little children. My kid tends to be smarter than you - at least he does not confuse being informed with receiving propaganda.

  • MNG||

    "Any rational person would admit the former is better."

    But Chad, how do you KNOW what it would be rational for a person to assume?

  • Sean W. Malone||

    Neu:

    Glad you agree about the HuPo, but I've never seen an article in Reason that remotely comes close to the stuff I see over there in terms of either playing fast and loose with the facts (except the occasional Chapman article) and in terms of vilifying or attacking certain people unfairly and deliberately.

  • Chad||

    Libertymike | March 17, 2009, 6:22pm | #

    Chad and Tony don't seem to understand that in 1964, the year before Medicaid was created and enacted into law, the average wage earner could afford, out of his pocket, to pay for the vast majority of health care for sale.


    I understand that very well. In 1964, if you got cancer, you were handed some morphine and given a comfortable bed for your last few months. Now we spend hundreds of thousands of dollars and very well might save you. Whether we want to or not, we are not going back to 1964.

  • ||

    New,
    A good is something with positive utility.

    Oh, wow! You left me dumbfounded!

    What's "positive utility"? What is that?


    It's scarcity is an independent feature of it.


    Really, is that so? Please, explain.

  • Chad||

    MNG | March 17, 2009, 7:13pm | #

    But Chad, how do you KNOW what it would be rational for a person to assume?


    You will be as wise as me someday, when your childish libertarianism finally fades away.

  • Neu Mejican||

    SWM,

    You must skip Jacob Sullum's articles...

    Or KMW, or...

    I mean, come on...I don't have time to list them all.

    Here's a topic you can research on the site.

    Look for "Fair Trade" and see if you get an accurate picture of it from the articles that Reason has published.

  • MNG||

    I mean, wouldn't it be better to, whatever a person does, conclude he did the rational thing because we assumed before the choice that humans are rational?

    I mean, if it strikes us as irrational we just haven't thought about it long enough to come up with some way of seeing it as rational after all.

    And if anyone disagrees we can criticize their ad hoc reasoning!

  • Neu Mejican||

    FTG,

    Utility...a fancy word for usefulness.

    Some useful things are plentiful.
    Some are scarce.
    Their usefulness does not depend upon their scarcity.

  • Sean W. Malone||

    Psh... I don't think I've seen a KMW article that was ever particularly malicious, and certainly not willfully wrong about something so as to achieve some sort of ad hom or well-poisoning effect.

  • MNG||

    Neu Mejican
    Please, FTG is a practicioner of a DEDUCTIVE science not an...

    Oh, wait.

  • Sean W. Malone||

    Also - on the propaganda note, having a periodical tell me in advance their stance on issues (eg. "Free Minds & Free Markets"), is vastly preferable to the way the general news industry has gone out of its way over the last 50 years or so to pretend it's completely objective, which frankly - I don't think is even possible, and if it was most CERTAINLY is not what I've gotten from most media.

  • ||

    MNG,
    It's astonishing to see the guy who ultimately holds that human behavior is rational argue against these experiments because the experimenters can never know what is rational...


    You haven't grasped the implications here, MNG.

    What I am arguing is that the assumptions taken by the experimenters are not logical, fallacious. They want to find if people are irrational, so they have to assume people ARE irrational in order to expect an irrational result (it would not make sense to think otherwise). Problem is, if their findings are correct, how would they know if they are NOT being irrational as well? They are certainly AS human as their test subjects, so how can they evaluate irrationality without being irrational themselves? They certainly cannot be super humans.

  • ||

    Chad,

    On overhead: You're surely right that the numbers I cited underestimate the true overhead of a Medicare, but the very fact that the government is centralized removes the need for multiple, ground-up management systems for the services it provides.

  • MNG||

    Oh you slay me FTG.

    They do not assume, or have to assume, that human beings are irrational all the time!

    And they don't have to "assume people are irrational to find they are so" but they do, unlike you, have to assume that it's POSSIBLE for them to act irrational or rational, hence their claim can be tested and falsified and does not beg the question.

    Unlike your idea on this.

  • Neu Mejican||

    What I am arguing is that the assumptions taken by the experimenters are not logical, fallacious. They want to find if people are irrational, so they have to assume people ARE irrational in order to expect an irrational result (it would not make sense to think otherwise). Problem is, if their findings are correct, how would they know if they are NOT being irrational as well? They are certainly AS human as their test subjects, so how can they evaluate irrationality without being irrational themselves? They certainly cannot be super humans.

    You need to go back to basics.
    Start, methinks, with Popper.

    SWM,
    KMW may be more willfully ignorant than a well poisoner, I'll give you that.

    As for the "announcing your bias" thing...I have already said I don't have a problem with it. But it should factor into how you interpret the information you are being provided with. Makes it easier to spot the cherry picking for sure.

  • ||

    Neu,

    Utility...a fancy word for usefulness.


    Uh, no, Neu... no.

    "Utility" is the psychic gain a person perceives from an activity or the use or holding of a good. It is not inherent in goods, it is entirely a human perception.

    Some useful things are plentiful.

    Being plentiful and being scarce are not mutually exclusive, Neu. Scarcity does not pertain to the number, Neu, but how people VALUE something. Clean water can be PLENTIFUL, and yet SCARCE. Sunlight is plentiful, but it is NOT scarce, nor is it a good. And yet no one can deny the usefulness of sunlight.

    Their usefulness does not depend upon their scarcity.

    Since "utility" is not the same as "usefulness", your concept is incorrect.

    A thing or anything is useful if the person holding it FINDS it useful (i.e. valuable). But that depends entirely on the person's subjective valuation.

  • ||

    FTG,

    Most people would find the private provision of national defense to be a market failure. If it were privately supplied, then my paying for it protects my neighbor who doesn't pay for it. Therefore, why should I pay for it? The unprotected nation is attacked. Everyone wishes in hindsight that they had been taxed to pay for defense. Defense was undersupplied.

    As I said, I don't have many market failure examples to draw upon because it becomes easier and easier to assign private property rights as technology improves. But that doesn't mean the concept is useless, nor does it mean that even those who believe that there are no actual cases of market failure shouldn't be able to pull out the actual definition against someone who uses a bogus definition such as, "The market didn't do what I wanted it to."

  • ||

    And biology books are published for the expressed purpose of promoting biology. Are these books pro-biology propaganda?

    Biology is a science. It is subject to rigorous reexamination and doesn't have a policy agenda.

    This place comes from an a priori stance on how policy should be and then picks data and arguments that further this interest.

    Because surely you're not implying that this is a site entirely devoted to reason.

  • Sean W. Malone||

    Yeah - but NEU; almost no one else does announce their biases directly.

    And Reason, unlike HuPo and others is actually backed by a research foundation. That is in contrast to having actors pretend to be reporters.

  • MNG||

    I mean, think about all the things psychology tells us about how human cognition actually works.

    For example, take the idea that people prefer smaller, sooner payoffs to larger, later payoffs when the former would be imminent, but when both are distant and time, though with an identical interval between them, they prefer the latter.

    We know this because people have actually put people in these situations and observed how they acted.

    Imagine how stupid it would have been to say "well, we can safely assume human beings are x, y and z, and we can therefore deduce that their behavior in this circumstance will be a."

    Or much worse, we assume x, y and z, make no prediction about what will occur, but after the fact keep working until we "show" that it was in keeping with x, y and z. And if it doesn't seem to be in keeping we just needed to think about it until we come up with an explanation that is in keeping.

  • ||

    But that depends entirely on the person's subjective valuation.

    No, not entirely. Whatever words you use to describe the availability of water (or any other basic necessity), there is still a black & white mathematical relationship between how much water there is and how much is needed. People don't merely find water useful; it is useful in an objective sense.

    I think liberals would disagree on precisely what other human needs are analogous to water, and thus require collective management to ensure universality, but the difference between need and want is a useful starting point.

  • ||

    backed by a research foundation

    Ah yes the big irony. You guys wouldn't even muster the puny numbers you have, in the competitive marketplace of ideas, without affirmative action by political and corporate interests and their oh-so-objective think tanks.

  • ||

    MNG,
    They do not assume, or have to assume, that human beings are irrational all the time!

    Really? Why not?


    And they don't have to "assume people are irrational to find they are so" but they do, unlike you, have to assume that it's POSSIBLE for them to act irrational or rational, hence their claim can be tested and falsified and does not beg the question.

    MNG, you crack me up. You cannot FALSIFY a hypothesis if the finding can be an either-or. Or is A, or it is NOT A. This is why falsifiability is a concept that only pertains to INDUCTIVE sciences (i.e. natural sciences) because you cannot have TWO results that are equally valid - nature, is assumed, follows defined laws.

    In the case of humans, however, you cannot say "Humans Are Rational" and then expect your result to show they are irrational - either your results are incorrect, or your assumption is incorrect. But if your assumption is incorrect, then you can fall into a performative contradiction by stating that "people are irrational", because what applies to people applies to YOU, too.

    The problem with Behavioral Economics is that the pundits want to have their cake and eat it, too. They tell us that people behave irrationally SOME TIMES, and that they can indicate this in tests. Problem is, how can they KNOW people acted irrationally, without knowing first what IRRATIONAL would look like? Reading the book "Free Market Madness: Why Human Nature Is At Odds With Economics - And Why It Matters", the author clearly shows many experiments where people chose different answers to tests than what the researchers [the psychologists Daniel Kahneman and Amos Tversky] expected, but rather to find explanations for this within human reason, they simply jumped to the conclusion that people behaved irrationally (!)

    This arrogance permeates the book, and I believe, the researchers as well. Their conclusions are astonishing - they indicate that people do not make the rational choice within a market, and thus, cannot be trusted to make rational decisions. They need help, and (guess who?) that's what the government is for. Whoopee.

  • ||

    Tony,
    No, not entirely. Whatever words you use to describe the availability of water (or any other basic necessity), there is still a black & white mathematical relationship between how much water there is and how much is needed.

    What is it?

    People don't merely find water useful; it is useful in an objective sense.

    Tony, let's do an experiment: How useful do people find water in an objective way near a lake? And how, in an objective way, in a desert? If there is an equation, you can show this.

  • ||

    MNG,
    I mean, think about all the things psychology tells us about how human cognition actually works.

    No questions about it. Psychology COULD one day how people value things. Economics does not dedicate itself to that, because it is irrelevant HOW people value things. The important thing for economics is how people decide in the face of alternatives and scarcity.

    For example, take the idea that people prefer smaller, sooner payoffs to larger, later payoffs when the former would be imminent, but when both are distant and time, though with an identical interval between them, they prefer the latter.

    That's called in economics "Time Preference".

    We know this because people have actually put people in these situations and observed how they acted.

    Oh, Wow. They actually did that, did they? Instead of simply looking at the current LIBOR rate, which could have told them the very same thing. Imagine that. Wow.

    Imagine how stupid it would have been to say "well, we can safely assume human beings are x, y and z, and we can therefore deduce that their behavior in this circumstance will be a."

    You don't understand. The two bozos [the psychologists Daniel Kahneman and Amos Tversky] did not start believing this. They made the tests to look at behavior but they ASSUMED that different results from what they expected have to be indicators of irrationality - that is absurd. I can also state that THEIR assumption about THEIR expected results are equally irrational.

  • ||

    What is it?

    Mathematically inclined people can figure it out. People need water pretty much constantly. It is a limited resource that, in order to achieve a society in which people don't die of thirst every day, must be allocated so that people have constant access to it.

    Tony, let's do an experiment: How useful do people find water in an objective way near a lake? And how, in an objective way, in a desert? If there is an equation, you can show this.

    Every individual person regards water as exactly as useful as everyone else. You need it to survive in certain amounts and cannot ever go without it.

  • Neu Mejican||

    FTG,

    Scarcity does not pertain to the number, Neu, but how people VALUE something.

    Really? Do tell.

    I always thought it had more to do with the relationship between demand and supply.

    But, either way, scarcity is independent of utility.

    I will also quibble with how you characterize "utility." Utility is not "entirely" in the head of the person...it really describes a relationship between the objects features and the person's perception of those features in the context of their desires.

  • ||

    Whatever words you use to describe the availability of water (or any other basic necessity), there is still a black & white mathematical relationship between how much water there is and how much is needed.

    It is an extraordinarily complex "black and white mathematical relationship" that depends enormously on individuals' subjective preferences. "Need" turns to "want" very rapidly and very subjectively and depends on all sorts of external factors including substitutability.

  • Neu Mejican||

    Oh, Wow. They actually did that, did they? Instead of simply looking at the current LIBOR rate, which could have told them the very same thing. Imagine that. Wow.

    That sounds very inductive.

  • MNG||

    Why in the world would one have to assume that human beings are incapable of being rational to assume that they are capable of being irrational?

    "You cannot FALSIFY a hypothesis if the finding can be an either-or."

    Why not? I mean, here is a common social scientific research hypothesis:

    The mean number of hours of television watched a day by men will be higher than the mean number of hours of television watched by women.

    And you simply find some way of measuring that for both groups and work out the means (testing the hypothesis against empirical reality). And it's either true or the null hypothesis (there there is no difference between the means) is true.

    "how can they KNOW people acted irrationally, without knowing first what IRRATIONAL would look like"

    Wow FTG, couldn't you say the same thing about one who claimed to know that people acted rationally?

    But better than that, we can know whether something is more rational or not, that is actually the field of deduction and such that we call logic. And we can then empirically observe humans behaving and see if they act that way.

    Surely if you assume that people act rationally then you must know what "rationally" looks like. So you should be able to say how they will act. And if they don't act that way...

  • ||

    Neu,
    That sounds very inductive.

    The psychologists in MNG example were conducting an inductive experiment, so why not?

  • MNG||

    It's called hyperbolic discounting.

  • Neu Mejican||

    An adult human needs, on average, between 3.5 and 4 liters of water (from all sources) a day to maintain healthy organ functioning.

    Contextual factors can increase this need significantly...but you won't reduce it much.

  • ||

    How is it evident that the unfettered marketplace will only produce net social benefits anyway? Is it not equally likely to produce net harm? Why shouldn't government mitigate that any less than it works to mitigate other social harms such as being attacked by another state?

  • ||

    MNG,
    Wow FTG, couldn't you say the same thing about one who claimed to know that people acted rationally?

    No, MNG, because claiming the contrary leads one to a performative contradiction - If I say that people do NOT ACT rationally, how can anyone then accept what I am saying except as the ramblings of an irrational man? So people must ACT rationally.

    (Don't get me started with comatose people or shit like that. Comatose people do not ACT. We're talking about human action, which is what these so-called "Behavioral Economists" are purportedly studying.

  • Neu Mejican||

    BTW, that figure is for an adult male...body mass matters.

    FTG, checking the LIBOR sounds inductive, no?

  • Sean W. Malone||

    I don't really want to jump into this too much, but I would contend the following.

    1. Most people attempt to act rationally, typically in their self-interest
    2. People are not perfectly rational, nor do they have perfect information, and often times can get caught up in logical fallacies
    3. The balance between acting based on consistent reasoning vs. inconsistent fallacies determines (imo) whether a person is primarily rational or irrational
    4. Politicians are people

    CONCLUSION:

    Politicians are neither more rational or less rational than most people, neither are they more or less self-interested.

    I might additionally contend that politicians tend to also be the people who want to assert their self-interest through controlling others (hence why they go into politics).

    None of that makes them more qualified to make decisions for me, and the fact that I at least know my immediate needs and they do not is a pretty compelling reason for them to butt out.

  • ||

    Neu,
    An adult human needs, on average, between 3.5 and 4 liters of water (from all sources) a day to maintain healthy organ functioning.

    Glad you made it, Neu - what does this represent in economic terms? Is 3.5 liters of water the same for a person if they are 10 inches away, or 1 mile away? Would YOU value it the same if given to you near a stream of clear water, or in the middle of the desert?

  • ||

    Neu,
    FTG, checking the LIBOR sounds inductive, no?

    MNG's example of psychologists finding out about people's Time Preference was inductive, so I gave him an inductive solution that was easier.

    So?

  • MNG||

    "No, MNG, because claiming the contrary leads one to a performative contradiction - If I say that people do NOT ACT rationally, how can anyone then accept what I am saying except as the ramblings of an irrational man? So people must ACT rationally."


    HAHAHAHAHAH!

    Holy shit you are a trip!

  • ||

    An adult human needs, on average, between 3.5 and 4 liters of water (from all sources) a day to maintain healthy organ functioning.

    And with the daily per capita use in the US at 69 gallons, that means that the average American uses 70 or 80 times more water than he needs. And we haven't even begun to talk about outdoor, industrial, or agricultural use.

    Plainly, the "need" for water is far below 1% of the "want" for water. "Need" is utter noise in any "black and white mathematical relationship". Subjective want is far, far more important.

  • MNG||

    You're saying that we have to conclude, as an empirical matter, that human beings act rationally because if a human being saying otherwise would be true, that would itself be irrational?

    Hilarious!

  • ||

    How is it evident that the unfettered marketplace will only produce net social benefits anyway?

    I suggest an intermediate price theory book. David Friedman has one on line. Or you can get his Hidden Order: The Economics of Everyday Life for a more accessible take.

  • Neu Mejican||

    FTG,

    Why have we moved from utility to value?

    The value will be largely dependent upon the context.

    Of course, if I walked into the desert to kill myself, I may place no value on the water.

    If, on the other hand it is a good day for drowning, the lake may be valuable, but the 3.5 liters is not.

    Independent of that, however, is the fact that the lake is useful for drowning, while the 3.5 liters is not.

  • ||

    Politicians are neither more rational or less rational than most people, neither are they more or less self-interested.

    Agreed.

    I might additionally contend that politicians tend to also be the people who want to assert their self-interest through controlling others (hence why they go into politics).

    Speculation.

    None of that makes them more qualified to make decisions for me, and the fact that I at least know my immediate needs and they do not is a pretty compelling reason for them to butt out.

    Many decisions you already cede to your elected representatives, willingly unless you're an anarchist. Ideally they are constrained by universally applicable restrictions on their powerlust (law) and their accountability to the electorate. Any other power besides government is not so constrained.

  • ||

    Tony,

    How is it evident that the unfettered marketplace will only produce net social benefits anyway?

    Because the market is made of people's trades and exchanges. People trade because they seek to improve their well being, and they trade if they expect to gain from their trades. If people trade, then they must have improved their well being, which means an unfettered market MUST improve the participants well being. The market is not a zero-sum game.


    Is it not equally likely to produce net harm?

    No, people would NOT trade if they do not expect to GAIN.

    Why shouldn't government mitigate that any less than it works to mitigate other social harms such as being attacked by another state?

    Uh, you beg the question. An unfettered market excludes the existence of a State, so how can a State be there to attack or protect this non existent state?.

  • MNG||

    Uhh, my sides actually hurt after that one...

    Whew...

    First FTG, irrational does not mean incorrect (so the irrational man could correctly state that humans, he included, are irrational), but second, and most important, is that the person would not have to say that all human behavior is irrational (therefore including my saying it is irrational), but just that humans are capable of irrational behavior (or better, the way science works, to specify certain areas in which humans tend [probablistically] to act in irrational ways). This is falsifiable and don't worry, it doesn't lead to the "what I am now saying is a lie" type of conundrum you hilariously raise, as you can see (?).

    Jesus you are living proof that a little bit of knowledge is FAR worse than none at all!

  • Neu Mejican||

    MikeP,

    I know you know this...but the "needs to maintain organ functioning" is not exhaustive of "needs water."

  • ||

    Plainly, the "need" for water is far below 1% of the "want" for water. "Need" is utter noise in any "black and white mathematical relationship". Subjective want is far, far more important.

    But who cares about some abstract moral distinction between the amount of water needed for organ function, and the demand of civilized people to have constant access to water? If you accept that people can collectively control a resource in a certain necessary amount, why is it wrong to increase that amount to some arbitrary, widely-desirable, figure?

  • MNG||

    "People trade because they seek to improve their well being, and they trade if they expect to gain from their trades"

    How in the world would you know that, without assuming it?

    Oh man, look at who I'm asking this question to!

  • ||

    Neu,
    Why have we moved from utility to value?

    We haven't. They are BOTH interconnected. The problem is with how YOU define utility.


    The value will be largely dependent upon the context.

    Of course it will.


    Of course, if I walked into the desert to kill myself, I may place no value on the water.


    Of course, so, what utility did you obtain from me giving it to you?

    If, on the other hand it is a good day for drowning, the lake may be valuable, but the 3.5 liters is not.

    Ergo, value is subjective. Utility IS subjective.


    Independent of that, however, is the fact that the lake is useful for drowning, while the 3.5 liters is not.

    That's your take. For me, the lake may be more valuable for fishing, and that is just me. There is NO objective value on the water on the lake, or the gallon with water.

  • ||

    No, people would NOT trade if they do not expect to GAIN.

    All you're saying is that unfettered trade produces benefits for individual participants. Agreed. But how is it evident that all those individual self-interests accumulate into a net benefit? Just take pollution... a net harm not accounted for by the mathematics of trade.

  • ||

    MNG,
    How in the world would you know that [people trade to improve their well being], without assuming it?

    You assume it, MNG, because it is logical - otherwise, people would NOT trade.

  • MNG||

    Uhh, because your assuming that what they did must be logical.

    Another word for rational.


    You can see where this going, right?

  • ||

    I don't think even a liberal would argue in favor of equitable distribution of lakefront property. But drinking water is a different matter.

  • ||

    Tony
    But how is it evident that all those individual self-interests accumulate into a net benefit?

    Why are you talking about a "net benefit"? If all the participants gained in the trade, then the overall well being of the population GAINED. If none trades, there is no gain, but no loss.

  • MNG||

    I can assume that when people trade they must be acting rationally because otherwise they would not trade, because it would be irrational of them to trade if it were not rational for them to do so.

    That's called begging the question.

    Big time.

  • ||

    Why are you talking about a "net benefit"? If all the participants gained in the trade, then the overall well being of the population GAINED. If none trades, there is no gain, but no loss.

    But no man is an island. Even if everyone participating in exchanging petroleum products benefits personally, everyone, including them and people not involved, is harmed by carbon dioxide in the atmosphere.

  • Sean W. Malone||

    "I might additionally contend that politicians tend to also be the people who want to assert their self-interest through controlling others (hence why they go into politics).

    Speculation."


    It sure is... That said, just as a thought experiment, if you had an overwhelming powerlust and desire to influence people - would you prefer to become a composer (like me) who spends most of his time alone with headphones on or in recording studios, or would you try to become a senator?


    Also...

    "Many decisions you already cede to your elected representatives, willingly unless you're an anarchist."

    Again, you live in a dream world Tony... "Willingly"?

    How do you figure? Speaking as a libertarian, and probably for most libertarians, I don't agree with a solid 85%+ of what the government currently does. However, I pay my taxes because if I don't I get thrown in jail by force.

    How exactly do you conflate "compulsory" with no decent means of effecting realistic change with "willing participant"?

  • MNG||

    "If all the participants gained in the trade, then the overall well being of the population GAINED."

    I have a place on the river. But I don't live there.

    You pay me to dump toxic waste in the river. I want the money more than I want a clean river on my property, you want to dump the waste more than the money you gave me.

    We both benefited.

    But the town downstream...

  • ||

    MNG,

    First FTG, irrational does not mean incorrect

    You have missed the point. The researchers cannot conclude irrational behavior because the test results were different than what they expected. They cannot conclude that people have behaved irrationally because that would not preclude them from being just as irrational in their interpretation. The explanation must be something other than irrationality, which I interpret as a mere cop out from their part.

    Falsifiability cannot be applied here because human behavior does not follow a deterministic pattern as with particles and physical bodies. We can find these patterns by inference, but for human behavior, we must use deductive reasoning and assumptions, because nobody can read minds.

  • MNG||

    Here there was a totally voluntary trade between two parties, and there was some benefit (the parties) and some harm (those downriver).

    But the harm to those downriver may outwiegh the benefit to the parties. Hence what Tony is talking about. A "net loss" to society.

  • Sean W. Malone||

    "is harmed by carbon dioxide in the atmosphere."

    Now I really don't want to turn this into an AGW thread - but c'mon man...

    CO2 is plant fuel, which converts into clean, fresh, delicious smelling oxygen for me to breathe, and is a relatively minor component in the earth's atmosphere which - incidentally - is also keeping me warm and generally safe from the scary harmful properties of space.


    If you're going to pick a pollution example, pick a real one.

    Likewise - as was already hashed out, pollution is more a problem of hard-to-define property rights than anything else. Note that the WORST places to live, from a pollution standpoint are the places which are the most socialist. You would not, for example, enjoy living in the major cities of China or India.

  • MNG||

    Because human beings are not determined in their behavior we must use deductive principles to make conclusions about their behavior?

    Did you say that? Really?

  • ||

    just as a thought experiment, if you had an overwhelming powerlust and desire to influence people - would you prefer to become a composer (like me) who spends most of his time alone with headphones on or in recording studios, or would you try to become a senator?

    A senator. The constructors of our government were wise to this tendency as well, which is why they provided for rigorous checks. But on second thought, if I had powerlust and an ego I might just as well become a CEO.

    Again, you live in a dream world Tony... "Willingly"?

    How do you figure? Speaking as a libertarian, and probably for most libertarians, I don't agree with a solid 85%+ of what the government currently does. However, I pay my taxes because if I don't I get thrown in jail by force.

    How exactly do you conflate "compulsory" with no decent means of effecting realistic change with "willing participant"?


    No representative democracy can attend to every one of the wishes of every single person. But by maintaining your citizenship you agree to the terms. By doing so you enjoy all the benefits of the society you live in. I suppose you could discard all of that and find an island to live on somewhere, but one assumes most people would elect to enjoy the safety net a government provides.

  • Sean W. Malone||

    MNG:

    "Here there was a totally voluntary trade between two parties, and there was some benefit (the parties) and some harm (those downriver)."

    As I mentioned in the last post - that's a problem of property rights and a problem of contract.

    First off, just because you and I have the right to contract with each other as far as whether or not you allow me to dump something on your property - we *did not* get the consent of the other parties whom that dumping is affecting downstream. This is a clear violation of their rights to life (including the right to be free from someone else doing something that would deliberately & adversely harm your health) and their right to property - as you are affecting their property against their consent.

    The problem here stems from poorly-defined property rights, and the fact that we'd be engaged in a contract that we (and any court) would recognize as being not nearly inclusive enough to cover the damage we are both doing to other people.


    That said, you still could not possibly cite enough similar examples, compared to the billions of voluntary, mutually beneficial market transactions which take place every day all over the world to make a "net loss".

  • ||

    MNG,
    I can assume that when people trade they must be acting rationally because otherwise they would not trade

    Ah, nice guess, but no prize.

    People ACT rationally (ACTING being doing things with a purpose). Trading is a manifestation of ACTION. So implicitly, the ACT of trading MUST be rational. It does not beg the question - you are simply confusing reasons.

    WHY people trade? Because they expect to improve their well being. THAT is a rational act. People don't trade just because it is rational to do so - there MUST be expected GAIN in order to trade.

  • MNG||

    "They cannot conclude that people have behaved irrationally because that would not preclude them from being just as irrational in their interpretation"

    Aargh, you're making the same mistake. Saying a person has acted irrationally doesn't imply that the sayer is therefore always irrational and must therefore have his saying be discounted as irrational. And we can measure who is being irrational through an understanding of logic. If the experimenters have made an illogical assumption then they are wrong to say the subjects acted illogically by acting the way they did, but if their assumption is actually logical, then they were right about the subjects.

    Your relativism about this is breathtaking...

    Interestingly, your argument rests on SOMEONE being irrational (the experimenters).

  • Sean W. Malone||

    "No representative democracy can attend to every one of the wishes of every single person. But by maintaining your citizenship you agree to the terms."

    I had no choice in the matter Tony. I was born where I was born - and I'm thankful I was born in the US where the idea of institutionalized liberty was at least present, but to leap from that to "if you don't like it just leave" is retarded.

    Do you support the Iraq War, Tony?

    Do you think it's a legitimate function of government to roll into foreign lands more or less unprovoked and start bombing shit?

    Do you think it's a legitimate function of government to hand over billions of dollars to private companies who made bad decisions?


    How's the "representative democracy" working for ya on those?

    I think you will find that the more power you concentrate in the hands of those "representatives" the less representative they will inevitably be.

    And for the record, if I could afford to set up a sizable island nation on my own I would do it today.

  • ||

    MNG,
    Because human beings are not determined in their behavior we must use deductive principles to make conclusions about their behavior?

    Did you say that? Really?


    I said humans do not follow a deterministic pattern. If we did, there would not be any economic activity, just humans moving around in mathematically perfect patterns.

  • MNG||

    "WHY people trade? Because they expect to improve their well being. THAT is a rational act."

    Lord have mercy you are terrible at this, you just undercut your own post!

    You say you can assume people act rationally when they trade because they wouldn't trade if the trade were not benefifical to them and other characteristics of...acting rationally...

  • ||

    But who cares about some abstract moral distinction between the amount of water needed for organ function, and the demand of civilized people to have constant access to water? If you accept that people can collectively control a resource in a certain necessary amount, why is it wrong to increase that amount to some arbitrary, widely-desirable, figure?

    Dude, you are the person who introduced need into the problem. Now you are talking about arbitrary widely desirable figures -- i.e., wants.

    Why is it wrong? Because it underallocates to some and overallocates to others -- all under the threat of force -- while a free market would allocate according to each recipients subjective demands.

  • MNG||

    I mean, you just said that acting to your gain is to act rationally.

    And you said that we can assume that when people trade they act to their gain. Because if it were not to their gain they would not have traded.

    You can't see how you keep begging the question there?

  • MNG||

    "FTG | March 17, 2009, 8:19pm | #

    MNG,
    How in the world would you know that [people trade to improve their well being], without assuming it?

    You assume it, MNG, because it is logical - otherwise, people would NOT trade."

    How do you know people trade to improve their well being?
    Because if it did not improve their well being people would not trade.

    That's why another phrase for "begging the question" is circular thinking. Can you see the circle?

  • Sean W. Malone||

    Ugh... The rational vs. irrational thing is starting to annoy me as a semantic game.

    1. Rationality is subjectively defined for the most part, as is irrationality.

    People act in both ways quite often.

    2. Scientists cannot simply claim that someone is acting irrationally for the sole reason that they didn't behave "as expected".

    Especially with respect to economic decision making, there is a tremendous problem of knowledge which the researchers are highly unlikely to surmount.

    Example: I might walk up to the counter at a grocery store and see an impulse-buy item like a Pez Dispenser with a Yoda head on it. I might buy that even though "rationally" speaking, I do not need to be eating candy, I don't even like Pez much to begin with, I shouldn't be wasting disposable income on stuff like that AND i'll probably just throw it away in a few weeks when I realize it was dumb.

    BUT... I might buy it anyway because of the momentary nostalgia I feel from seeing Yoda's head and remembering having Pez when I was little.


    Is that an irrational act? In a laboratory setting - it just might be. But what you wouldn't know as a researcher, is the combined sense of childish nostalgia and joy that brought me to see. And thus I did *benefit* from the transaction, regardless of whether or not it was an entirely rational choice.


    Bah.

    That said, as FTG is trying to say (I believe) researchers simply cannot claim that all people are irrational or mostly irrational without suffering from the crushing problem of their own conclusion:

    That is to say, the researchers, BEING HUMAN, would also then be mostly irrational - which would necessarily invalidate their conclusions.

    It's a damned paradox right out.

  • ||

    I had no choice in the matter Tony. I was born where I was born - and I'm thankful I was born in the US where the idea of institutionalized liberty was at least present, but to leap from that to "if you don't like it just leave" is retarded.

    That's why the terms should be fair. The whole point of some of the liberties we are guaranteed is so that a marketplace of ideas is allowed to function freely--a truly free market only marginally obstructed by government--so that, pragmatically, you can attempt to influence popular opinion in favor of your ideas, thus eventually gaining representation in our shared government.

    But if your ideas are and continue to be fringe, you cannot possibly be surprised if they are untended to in policy.

    If you don't like those terms, then what option do you have? Your only alternative is to embrace anarchism.

  • MNG||

    Underlying it all is this bigger circle:

    Why do people do what they do?
    Because it's rational.
    How do you know it's rational?
    Because they did it. (They wouldn't do unless it was rational).
    But why did they do it?
    Because it's rational?
    But how do you know that?
    Because otherwise they wouldn't have done it....

    Dude, FTG, I gotta go, but get help man. Quick. Logic textbook or shrink...

  • Sean W. Malone||

    And AT ANY RATE - as I have alluded to earlier.

    IF all people were irrational, politicians are STILL people.

    So no matter how you slice it, giving some people power over other people still makes no sense if your goal is aggregate benefit. Even if I make entirely irrational decisions, my decisions are at least based on intimate knowledge of my needs.

    That is STILL a far cry better from an irrational person making decisions *for* me, by force, with no clue what my needs (or wants) are.

  • Sean W. Malone||

    Tony,

    I think you're missing both the point and the central thrust of history.

    First off, the market *isn't* free, which leads to an overall destruction of possibilities - especially for people on the "fringe" who might not fit in to the majority-defined box.

    As such, the more the majority solidifies a codified set of rules and a legal structure which benefits the majority through the use of force - the less voice the minority has.

    Take for example the campaign finance laws which basically make it impossible for a 3rd party to get ballot access or a national platform. This is greatly to the majority parties' benefit - and also incredibly anti-freedom.


    In my world view, the majority is *NOT* simply granted whatever powers they vote themselves. Slavery is a violation of people's rights regardless of whether or not a majority approves of it. Likewise, I don't need a vote, to assert my right to life, or to protect myself & my property from theft.

    INCLUDING theft via government action.

    I can't go to your house with a gun and demand to take all of your stuff.

    Neither can I call up 5 buddies with funny hats called "lords" or "governors" or "senators" and have them take your stuff for me.

    EITHER way it is theft. EVEN if there is majority support for it. Somehow I think you don't fully grasp that this isn't just a pragmatic point, but rather an intrinsically moral one. You don't have the right to initiate force against people, regardless of how many people believe it's a good idea.

  • Chad||

    Even if I make entirely irrational decisions, my decisions are at least based on intimate knowledge of my needs

    And very little knowledge or concern with how those decisions affect others. THAT is why your libertarian utopia falls flat on its face every time we go within a hundred miles of it.

  • ||

    Dude, you are the person who introduced need into the problem. Now you are talking about arbitrary widely desirable figures -- i.e., wants.

    I'm saying we can define for the sake of convenience the difference between what government should provide and what should be a matter of the market as "need" and "want." But the people are also free to determine what a need is and what a want is. As technology advances these things might alter subjectively.

    Why is it wrong? Because it underallocates to some and overallocates to others -- all under the threat of force -- while a free market would allocate according to each recipients subjective demands.

    Again, I don't agree it's under the threat of force. And a free market does no such thing. You may have demands (even needs) you can't afford.

  • MNG||

    Sean
    Quickly, because I do have to go, you're really misunderstanding here.

    1. As I said, a researcher, or any one can say "humans often act irrationally" without it meaning their conclusion must therefore be irrational, this could easily be one of the times when people are not being irrational. There's simply no paradox here.
    2. Rational is not some limitless concept, for it to have meaning to the Austrian, or anyone it must have some coherence and cannot be limitless. There must be some acts that are not rational that are conceptually possible. If you take people and observe them and they do those things then you can conclude they acted did not act rationally with no problem. For example, take the gambler's fallacy, a psychological tendency of humans that has been shown over and over to be how humans think. We can either, a la the Austrian, try to pummel the concept of rationality until people engaging in the gambler's fallacy are being rational, or we can acknowledge that people in this case act irrationally.

    It's irrational because the field of logic can demonstrate that an unwarranted conclusion is being drawn. If "being rational" or "logical" means anyting, if it's not totally malleable, then certainly the gambler's fallacy is a violation of being rational.

    And humans do it. A lot.

  • Chad||

    Neither can I call up 5 buddies with funny hats called "lords" or "governors" or "senators" and have them take your stuff for me

    I highlighted the word that is clouding your thinking. Very little of what you have come to possess is solely yours. Rather, almost everything you own was created by the vast network of humanity we call civilization, and you managed to capture it. The distribution system is far from perfect or fair. It clusters wealth into the hands of a few, and rewards with only minor concern for hard work or intelligence. There is no reason that we must or should accept this distribution.

  • Neu Mejican||

    FTG,

    You are a very sloppy thinker.

    I say: If, on the other hand it is a good day for drowning, the lake may be valuable, but the 3.5 liters is not.

    You respond: "Ergo, value is subjective. Utility IS subjective."

    No, but, yes, value is subjective.


    I said: Independent of that, however, is the fact that the lake is useful for drowning, while the 3.5 liters is not.

    That's your take. For me, the lake may be more valuable for fishing, and that is just me. There is NO objective value on the water on the lake, or the gallon with water.


    The point is that the lake is objectively useful for certain goals that the 3.5 liters would not be useful. It does not matter how much usefulness I think I will get out of my ice-knife in cooking challenge, the steel knife in the drawer has more utility for my goal of cutting the roast.

    The short version: utility is context dependent, while value is subjective.

    And yes, these concepts interact with each other...but the relationship is not balanced. Utility has more of an influence on value than the other way around.

  • Sean W. Malone||

    "And very little knowledge or concern with how those decisions affect others. THAT is why your libertarian utopia falls flat on its face every time we go within a hundred miles of it."


    Umm... Chad, you're an idiot.

    Yes, I have little knowledge about how my decision affects everyone, except that I benefit from my purchase, as does the grocery store.

    Likewise... to get the pez dispenser, I know that the grocery store paid the supplier - both mutually benefited again.

    Back down that chain, the supplier paid the manufacturer, again... mutual benefit.

    The manufacturer paid both its raw-materials suppliers and it's workers... all of whom benefited from those exchanges.



    ALL THIS was done spontaneously and *WITHOUT* force at any step of the way.

    If force was interjected - say the manufacturer is using actual honest to goodness slaves to make it, that is illegal - a violation of rights, needs to be thoroughly policed by the limited government system and is expressly *not* part of the libertarian universe (which no libertarian I've met and certainly not me would claim is "utopia" which is an idiotic idea by itself).


    Thus I can be sure that while, no I don't know how my decision affects *EVERYONE* on the planet, I can rest assured that virtually no one along the line was involved who did not benefit in some way.



    Contrast that with the alternative: Someone else makes all purchasing decisions for me.

    Right from the get go, I'm getting things that I don't necessarily need or want and not at all by choice. Starts off bad... gets worse.

  • ||

    Er. I think FTG is "Fernando Torres"

    FTG, there are far more sophisticated cases for libertarianism than the one you are making.

    People do behave in ways that are not rational - from a certain standpoint.

    For example, there's a game theoretic construct called the 'Ultimatum Game'. One player gets to make the decision on how to divide some resource, and the other can either accept or reject the offer. If he rejects it neither player gets anything. The problem is that the 'rational' thing to do is always to accept the offer - getting something is always better than getting nothing.

    But in reality, most people will reject an uneven split. People have emotional mechanisms that short circuit their logical-utilitarian (i.e. "rational") calculating mechanisms.

    See, the thing with these constructs is that they are set up as one-shot deals - but if you play them in an interated model, you can influence the behavior of the other player by retaliating even at a short-term cost to yourself.

    If people play the ultimatum game repeatedly, rejecting unfair offers early in the game will induce the other player to make even splits, and hence your long-term payoff is bigger.

    Thus, it seems like certain emotional responses are actually designed to make us irrational in ways that actually benefit us self-interestedly.

    In other words, the fact that humans aren't perfectly rational isn't a strike against markets, it's the reason why markets work even in situations where rational choices would result in a sub-optimal outcome.

  • Neu Mejican||

    I, on the other hand, am sloppy with my tags.

  • Sean W. Malone||

    MNG - I know you don't mean all the time, and I know that some people act irrationally some of the time (which is why I made that point).

    That said, I think that a few behavioral studies certainly can't show that people are generally irrational actors in the realm of economics when you can't have the internal knowledge of all the various reasons why a person makes specific choices. AND furthermore, having established that some people are irrational some of the time, you still can't conclude that a system where goods are allocated by force makes life better for anyone.

    PLUS, you do run into the same knowledge problem that lack of freely determined price structures presents. Basically - you have no way to gather information you'd need to do the distribution.


    And Chad, no overt offense intended here, but you've shown through countless posts on here that you have nothing of intellectual merit to offer me... So instead of get into an embroiled debate about the tragedy of the commons, "public" ownership, "ownership" as a concept, or natural rights - all of which you desperately need to think through a little more - I'm going to go home.

  • Neu Mejican||

    Regarding the "propaganda" discussion.

    Reason the magazine is engaged in propaganda.

    Reason the foundation engages in the academic correlate.

    If you are engaged in finding evidence for your position, rather than finding answers to your questions, you are not doing science.

    From my reading of their output, the Reason foundation is engaged in finding evidence to support their positions...not finding answers to questions.

  • ||

    Addendum to above:
    To sum it up with more simplicity, human irrationality appears designed to help us overcome situations where the Nash equilibrium is not Pareto Optimal.

  • Neu Mejican||

    Hazel Meade,

    Designed?

    ;^)

  • ||

    Evolved. :)
    Figure of speech.

  • Sean W. Malone||

    Neu - how would your statement:

    "If you are engaged in finding evidence for your position, rather than finding answers to your questions, you are not doing science."


    ...NOT apply to every single political policy research organization on the planet?


    I think you're stretching terms pretty far. Basically to the extent that if you agree with something, then it's mostly not going to be "propaganda", but if you disagree with it, than it is. Which I think is legitimately poisoning the well.

    I've yet to see a research organization which has a policy focus not actively engaged in researching primarily only those things that apply to their express policy-goals.


    However, in the same way, I have yet to see a marine biologist studying particle physics.


    Mostly I think your characterization is unfair - but also I don't think it can be consistently applied.

  • Chad||

    Sean W. Malone | March 17, 2009, 9:10pm | #

    Umm... Chad, you're an idiot.

    Yes, I have little knowledge about how my decision affects everyone, except that I benefit from my purchase, as does the grocery store. Likewise... to get the pez dispenser, I know that the grocery store paid the supplier - both mutually benefited again. Back down that chain, the supplier paid the manufacturer, again... mutual benefit.


    And as for the Appalachian farmer whose well is poisoned by heavy metal contamination due to fly ash sludge that was injected into the mine shaft from which the coal that was used to produce the energy that produced the polyethylene that was used to make your PEZ dispensor was taken....what about him?

    Or what about your cousin's college roommate's uncle's best friend's great great great grand-daughter, who finds a dead bird in her yard one day because it injested a bit of rubber that fell off your tire on your way to by the PEZ. Any concern for her?

    Or what about the little Bangladeshi boy working in the sweat shop that produced the shirt that the scientist who invented the pigment that colored your PEZ was wearing on the fourth day he was writing the technical report concerning his amazing PEZ-coloring abilities? What about that boy? Was he included in your calculations?

    Thanks for proving my point, idiot. You are being willfully blind to all the unfairness in the vast supply chain that brings you consumer goods, you cannot see the vast harm you bring upon present and future generations with every economic action you undertake, and you are incapable of understanding the vast number of ways in which self-interest does not lead to optimal solutions, despite how numerous examples are taught to every Econ 101 student.

    There is only so much I can do to help the willfully stupid. At some point, you have to help yourself.

  • Sean W. Malone||

    Chad. OFFER A BETTER SOLUTION!

    It's very simple.

    IF you are going to broaden your definition of cause and effect to that extreme, then you have to apply it to any sort of socialist systems as well.

    Why is it easier for a dictator to include all of those possible problems in his calculations of how to most effectively "allocate" resources (and how exactly does he manage to do this without any way of collecting knowledge)?


    The answer is... it isn't. All of the problems that you claim are a result of a voluntary system of self-interest DON'T GO ANYWHERE in your system.


    Your dichotomy is "real world" vs. "magic world where all of the productive needs of the world are met with no cost".


    Thanks.

    Remember when I said you weren't going to provide anything of intellectual value? Yeah... This is what I meant.

  • Sean W. Malone||

    I suppose Chad's world where no negative effects of say a bird choking on a piece of rubber fallen off my car's tires could exist....

    ...if only there weren't any humans on the planet.


    But, *gasp!* what if the bird chokes and dies on a stick left in place by a beaver who didn't quite get it over to the dam he made, should the beaver community manage all beaver dam decisions to make sure that they don't ever unintentionally harm other birds?

  • economist||

    Dammit, now I'm pissed off! This thread was up for an hour before I left and there were only twenty or so comments. Then I leave, and everyone decides to have a marathon thread without me.

    Ah, to hell with it.

  • economist||

    "Or what about your cousin's college roommate's uncle's best friend's great great great grand-daughter, who finds a dead bird in her yard one day because it injested a bit of rubber that fell off your tire on your way to by the PEZ. Any concern for her?"

    If Chad didn't exist, I would have to invent him. Actually, concerned observer was a lot like Chad, so I guess I invented his look-a-like.

  • economist||

    Apart from the fact that Chad seems to be pulling one example out of his ass (the poor poisoned Appalachian farmer scenario, which is already illegal) and one is ridiculous (girl traumatized by dead bird that ate a piece of tire), I would say that it's fairly obvious that Chad's been up way too far past his bedtime, and failed to take his meds today. Remember, Chad, take the pills and get plenty of sleep.

  • economist||

    Chad is of course referring to externalities in most of his examples, which tend to make up a relatively small part of the economy. Granted, reducing these externalities can make the economy more efficient, but it is a true mark of hopelessly sloppy thinking to claim that they therefore make all transactions in the free market "unfair" (as if there were any way to quantify the concept in the first place). For someone who claims to be a scientist, Chad seems to place an awful lot of his analyses on his emotional assessments, or on snapshot oversimplifications and generalizations that are little better.

  • economist||

    "And since we the people decide what kinds of programs we want, taxation should ideally meet those demands."
    Amazing. I remember saying that the bailouts were a really bad idea. I remember a lot of people saying they were a really bad idea. I noticed recently that many people are pissed off by the consequences of the hastily passed bailouts. And yet I've noticed that the bailouts still got passed. "We the people" only works if you're in Congress and by "people" you're referring to other members.

  • economist||

    The funny thing is that "The People" re-elected the pols who passed the rather unpopular bailout that has reared its ugly head again this week almost to a man.

  • Sean W. Malone||

    Yeah...

    I have a feeling most people fall into the same category as my parents, in that they:

    A. don't really care to spend hours researching economics or thinking about these issues - so they generally trust that their representatives know what they're doing

    and

    B. don't really believe that even if they wanted to fight the system, that they'd make much of a difference anyway.


    So..... They both just vote for whatever has been packaged in a way that appeals directly to them. The vast majority of people I've ever known seem to vote in this way.

    Chad or MNG might suggest this as proof of how irrational some people are... and maybe it is - but I suppose that sort of begs the point that, seeing as that is the case, I'd rather most people's decisions really only affected themselves directly.

  • Sean W. Malone||

    Woah... Chad claims to be a scientist??? Did I know that?


    Has he ever published a study with a valid conclusion?

  • Paul||

    the central planners have no indication of effectiveness other than polls and newspaper headlines.

    Politics. When you're a politician, these are the only things that matter. Hence politics preternatural way of moving forward with bad ideas.

  • Chad||

    economist | March 18, 2009, 12:37am | #

    Apart from the fact that Chad seems to be pulling one example out of his ass (the poor poisoned Appalachian farmer scenario, which is already illegal)


    Really? Coal companies regularly stuff fly ash back into mines. It regularly makes a mess. And do you think those poor, uneducated farmers have much luck getting compensation, or get compensated even remotely fairly if they do? What's it like to live in a delusion?

  • Chad||

    Chad. OFFER A BETTER SOLUTION!

    Sweden.

    Got any other questions?

  • Gilbert Martin||

    "I highlighted the word that is clouding your thinking. Very little of what you have come to possess is solely yours. Rather, almost everything you own was created by the vast network of humanity we call civilization, and you managed to capture it. The distribution system is far from perfect or fair. It clusters wealth into the hands of a few, and rewards with only minor concern for hard work or intelligence. There is no reason that we must or should accept this distribution."

    A USDA prime example of socialist drivel.

  • Sean W. Malone||

    Chad,

    Sweden primarily only succeeds right now because of it's liberalized market roots and is living off of that past.

    It hasn't and doesn't solve the problems you mentioned above of people getting compensation for pollution AND it benefits enormously from American technological innovations... Not to mention they have a population of what 8 million people total? And in spite of all that, their health care system is already falling apart and going bankrupt.

    OH... And, I've been to Sweden, several times actually, and it's simply nothing to write home about with respect to standard of living. Most of Scandinavia feels pretty run down in my book in fact.


    So... Try again buddy. If your goal was to provide an example where the nonsense you attributed to capitalism is *solved* by socialism, you failed miserably. Swedes drive cars, and ride bicycles and take trains - all of which could kill some precious little bird, which could traumatize some little girl just like the "example" of harm you said free-market transactions cause.

  • Sean W. Malone||

    Why am I bothering with Chad? I already knew he wasn't going to provide anything worth talking about... and he delivered that in spades. Ugh... I gotta get better at ignoring idiots.

  • Neu Mejican||

    SWM,

    "If you are engaged in finding evidence for your position, rather than finding answers to your questions, you are not doing science."


    ...NOT apply to every single political policy research organization on the planet?


    I would say the majority fall into this camp...not all, but most.


    I think you're stretching terms pretty far. Basically to the extent that if you agree with something, then it's mostly not going to be "propaganda", but if you disagree with it, than it is. Which I think is legitimately poisoning the well.

    Since I have only talked about Reason, I am not sure how you get this from what I posted. I am defining things based on process, not specific goals. Reason is clearly an example of an organization that engages in finding evidence for a predetermined outcome rather than finding the best solution to particular problems. This also occurs in organizations with diametrically opposed views, of course.

    I've yet to see a research organization which has a policy focus not actively engaged in researching primarily only those things that apply to their express policy-goals.

    Some places are topic oriented, some are goal oriented. Reason is goal oriented.

    However, in the same way, I have yet to see a marine biologist studying particle physics.

    This is an inapt analogy.

    Mostly I think your characterization is unfair - but also I don't think it can be consistently applied.

    I have only applied it to one case...Reason.
    Where are you seeing inconsistency?

  • Gilbert Martin||

    "Sweden primarily only succeeds right now because of it's liberalized market roots and is living off of that past."

    Not to mention the fact that Sweden, just like just about every other Western nation has been getting a free ride off of U.S. Military protection/deterrence for about 60 years or so.

    If there had been no U.S. military to offset the Communist block , not a one of those countries would exist as an independent nation state today.

  • Sean W. Malone||

    Neu, my point is simply that you're stretching the bounds of the term "propaganda", which generally is assumed to include lies and spin, to such an extent that the truth is extremely distorted.

    Policy research centers are almost always "goal-oriented", and as such research the topics that are relative to their overall philosophy, whether that is overt & spelled out in their mission statement or it's just done unconsciously - I have yet to see a counter example.

    For instance, I worked for a policy research center with no explicitly stated mission, but which was created and run by lawyers and their consultants were all politicians. As such, their research (unsurprising to me) focused almost entirely on how to write *new* laws to solve the problems they perceived - but not once in the year I worked for them did they ever research the historical impact of previous laws. Their inherent mode of thinking was present->future oriented, and paid little attention to the effects of previous legislation.

    In addition, the fundamental proposition was that every problem had a government-based solution. Again, not too surprising when your research center is run entirely by lawyers, government agents & politicians.


    My marine biologist example was kind of a joke, but it's not an entirely inapt analogy. People study things in ways that are relevant to their interests. As they say, if you are feeling ill and you go to an oncologist and he thinks it's cancer, go to a neurologist and he thinks it's a brain disorder, go to an immunologist and he sees it as an allergy.


    YES> Good researchers are going to be able to view problems & solutions more broadly than bad researchers - but to assume that a person's core values, life-experiences and philosophical position don't come into play would be silly.

    Anyway - as I said, I just think it's generally unfair. I get news from a very wide array of sources and I've generally found Reason to be one of the more in-depth and factually consistent.

  • Sean W. Malone||

    "Not to mention the fact that Sweden, just like just about every other Western nation has been getting a free ride off of U.S. Military protection/deterrence for about 60 years or so."

    That's very true... But it's only part of a larger point I think.

    If you travel around the world, it becomes very clear rather quickly exactly how much the technology, the culture, transportation, everything has been influenced by American innovation.

    The thing that worries me the most actually about the US going to a fully socialized health-care system isn't even the expense. I already know it's going to be absurd and the only way I'll be able to do anything about that is by becoming insanely rich and either finding tax shelters, or just putting up with it. But what worries me, is that the rest of the world has been benefiting greatly for half a century on the back of our innovations in medical technology. That will come to a screeching halt if we ditch the system that makes those innovations desirable and start dictating price & wage controls and such.

    That's something that at some point, very little amount of just "being rich" will solve.

  • ||

    everything has been influenced by American innovation.

    Almost every such American innovation you can name is a product of some amount of direct government involvement.

    I would not count the cancerous spread of McDonald's to be a positive influence on the world, either.

  • Gilbert Martin||

    "If you travel around the world, it becomes very clear rather quickly exactly how much the technology, the culture, transportation, everything has been influenced by American innovation."

    Indeed.

    As terrible as the Canadian health care system is (and it is indeed terrible) it would be even worse if they weren't getting the benefit of U.S. drug company's innovation in creating new drugs.

  • ||

    Or what about your cousin's college roommate's uncle's best friend's great great great grand-daughter, who finds a dead bird in her yard one day because it injested a bit of rubber that fell off your tire on your way to by the PEZ. Any concern for her?


    When Chad got to this point he acheived self-parody.


    Oh the interconnectedness of it all! We're all interconnected! I have no fucking clue whats going on, all I know is that shit happens and causes other shit to happen and it's confusing, therefore everything is related to everything else in an undifferentiated mass. Therefore I must meditate on the evils of doing shit because everything I do affects everything else in uncontrollable ways that I don't understand, because I'm too dumb to take Econ 101, so I guess I'll just stop breathing now, lest that gust of wind from my mouth cause a hurricane in Florida that kills some poor kid's grandma.

  • Neu Mejican||

    SWM,

    Anyway - as I said, I just think it's generally unfair. I get news from a very wide array of sources and I've generally found Reason to be one of the more in-depth and factually consistent.

    Above you implied that I was just ragging on Reason because their views are different than mine. I wonder if you gloss over their weaknesses because you generally agree with their perspective.

    The examples in Reason of hyperbole, burning strawmen, and down-right misrepresentation are numerous...but they are always used to make the point that the libertarian world view is the correct view. If you agree with that general conceit, you are likely to give them more slack for how they go about presenting their case. My view is that the rate at which these bad behaviors are appearing on here (at least in the on-line version of the mag and h&r) has increased dramatically of late.

    When those bad behaviors are in a minority of stories, Reason is a good source for information from a particular perspective because you can filter out the junk. These days I find myself faced with more junk than information.

    That is why I made my original comment.

  • Neu Mejican||

    SWM,

    To clarify a bit.
    Reason's interest in libertarian ideas focuses their coverage on topics that I care about. Usually there was enough information on those topics to make it worth the work to filter out the propaganda halo that surrounded the reporting. These days the halo is obscuring the information. I would say it has taken about 18 months of decline to get here.

  • Neu Mejican||

    SWM,

    One last point:
    Neu, my point is simply that you're stretching the bounds of the term "propaganda", which generally is assumed to include lies and spin, to such an extent that the truth is extremely distorted.

    Effective propaganda does not require extreme distortion, just a mild filtering, some rose colored shades, and a few flashy distractions.

    So, for instance, when Ron Bailey discusses "environmentalists" he will frequently drop in a ridiculous claim about the number of malaria deaths caused by Rachel Carson's followers. He knows, or should know, that the number is bullshit, but he drops it in anyway. He does this to help paint a picture of the "opposition" as unreasoning, unscientific, and uncaring. He will, of course, hedge his claim with "someone estimates that 1 billion lives could have been saved, but of course that number is certainly too large." So, he distracts with the whopper, but remains credible by pointing out that it is a whopper. Examples of this style of argumentation at Reason are too common to list, and their numbers are increasing.

  • ||

    Almost every such American innovation you can name is a product of some amount of direct government involvement.

    And the more the government gets its paws into the workings of private industry, the more this statement will be true. Yay.

    But seriously, name some such innovations.

  • Chad||

    Sean W. Malone | March 18, 2009, 10:31am | #

    Why am I bothering with Chad? I already knew he wasn't going to provide anything worth talking about... and he delivered that in spades. Ugh... I gotta get better at ignoring idiots.


    There's nothing I could provide you that isn't already floating about the internet a thousand times over. I am sure you have seen it and ignored it many times. No reason to bother writing it out for you again.

    The facts are the facts. Your ideology has self-destructed before your very eyes, and we are all having fun watching you squirm and whine and pretend it ain't so, or that somehow somewhere through eighteen degrees of seperation some bureaucrat somewhere caused the problems.

    Libertarianism JUST DOESNT WORK. Never has, never will. That's not to say that free markets cannot be harnessed in a useful but limited manner. They can. But the key words are "harnessed" and "limited".

  • Douglas Gray||

    Libertarianism and free markets don't create a perfect world. If that is what you expect, you're right, they don't work. However, they work better than any statist alternatives, as we will soon discover.

  • Chad||

    Douglas Gray | March 18, 2009, 8:41pm | #

    Libertarianism and free markets don't create a perfect world. If that is what you expect, you're right, they don't work. However, they work better than any statist alternatives, as we will soon discover.


    Having lived in some of the "statist alternatives" you so loathe, I can say that the people are every bit as wealthy and every bit as free, with more security, more fairness, and use far less resources than Americans do.

  • Sean W. Malone||

    The facts are the facts. Your ideology has self-destructed before your very eyes, and we are all having fun watching you squirm and whine and pretend it ain't so, or that somehow somewhere through eighteen degrees of seperation some bureaucrat somewhere caused the problems.


    Have you *EVER* read anything on libertarian or free-market philosphy Chad?

    Ever?

    I mean... Even once? What is it about the Federal Reserve, not to mention the countless agencies like the SEC, that you are confused about?

    .....and as for you living in the "statist alternatives". I don't believe you. Oh and, I've done the goddamn math Chad - for example the AVERAGE net monthly salary of people in Sweden as of 2005 was 19,237 Kronas, which translates to about $1,810 a month...

    Now, not only is that less than the average salary in the US for that period of time, the real shitty thing is that due to 25% VAT, it buys you exactly jack-shit. Oh but hey, you get crappy healthcare lines and medicine that's produced by (mostly private) American drug companies & researchers.

    Your "facts" floating around the internet haven't been ignored Chad, they're just bullshit.

  • Chad||



    Have you *EVER* read anything on libertarian or free-market philosphy Chad?


    Likely more than you. And certainly more than the amount of leftist philosophy that you have read. Remember, I used to be one of you before I grew up. Libertarianism's logical purity is fun for kids, I know. But it just doesn't work, like far too many other theories.

    You are too stuck on measuring in terms of GDP, which I find a nigh-worthless measure of anything. GDP counts waste as a positive, which makes American look great.

  • ||

    Examples of this style of argumentation at Reason are too common to list, and their numbers are increasing.

    Desperate times...

  • ||

    But the key words are "harnessed" and "limited".


    Your language betrays your longing for control and discipline. Not freedom.

    IOW, You enjoy seeing yourself and others "harnessed" and "limited". Interesting.

    That's really your vision of the ideal society, eh? One where the unruly masses are controlled, and limited, and their energies "harnessed" for someone else's use.

    What a wonderful vision. Can't see why anyone wouldn't eagerly jump on board with that one.

  • Sean W. Malone||

    "Likely more than you. And certainly more than the amount of leftist philosophy that you have read."


    Yeah, I doubt that Chad.

    The reason I asked was because if you're blaming *any* of the current financial mess on libertarian ideas, then I have ample proof that you have either not read, or simply were incapable of understanding even the most basic aspects of them.

    That or... you are simply the most dishonest, ignorant hack on the planet.

    Either way seems plausible.

  • Sean W. Malone||

    By the way - I wasn't comparing GDP... just monthly salaries of different places. I know from personal experience what different things cost in various places around the world, having traveled quite a lot.

    For example, I know that what I would consider a relatively mediocre/cheap hamburger in America which I might pay $5 or less for costs $16 in Copenhagen. Most consumer goods are far more expensive.

    Add to that that monthly salaries are on average higher in the US than Denmark, and that $16 starts to come as a higher chunk of monthly income (and thus the real cost is harder to bear).

    Perhaps you'll say "who cares? you didn't need to eat a hamburger anyway", well... aside from the fact that what I eat is none of your goddamn business (even though it is clearly believed to be the business of the nanny states all over Europe), I would like to point out that virtually EVERYTHING is more expensive.

    So your claims that these places are somehow more wealthy than the bulk of the US, simply can't stand up to any measurement at all.


    Unless, of course, you measure "wealth" in terms of the spiritual purity one gets from renouncing all worldly possessions and taking a vow of poverty and "simplicity". In which case... Put your money in your mouth and ditch the computer.

  • Sean W. Malone||

    And finally... Chad...


    Since the definitions of words are a struggle for you sometimes...


    Let me clue you in.

    Here's the relevant definition of the word "Free":

    not subject to restriction or official control



    and here... is the definition of "harness":

    gear for controlling (an animal)




    Do you see how those ideas conflict there Chad? You would like to "control" a "free" market?


    You. Twat.

  • Chad||

    By the way - I wasn't comparing GDP... just monthly salaries of different places. I know from personal experience what different things cost in various places around the world, having traveled quite a lot.

    Apparently you didn't stay long enough to figure out how to live like a local and quit eating expensive imported foods. That's your problem, not a problem for the citizens of the place you visited. Food is not three times more expensive in Denmark, nor anywhere for that matter. They fact that you are trying to claim it is by using such an obviously-flawed analogy is proof that you are being dishonest.

  • Sean W. Malone||

    Chad... Food isn't the only thing I'm talking about, and I said a burger at a restaurant was 3x expensive.

    But consumer goods are WAY more expensive as well, all over Europe. This isn't news.


    And no, I didn't take the time to "live like a local", by which you mean, reduce my expectations of standard of living that I take for granted in the US. Thanks for proving my point.

    Look man, you may *like* living in Sweden or wherever better than the US... if you do, I encourage you to move there. But to suggest that you'd be more wealthy over there is just bullshit.

  • Sean W. Malone||

    What exactly do you have against basic math Chad?


    Surely this is a waste of time, but let me try one last time before I abandon this thread:

    If the bottom-line, base cost of producing a radio is $100. including labor,facilities & raw materials. The price of that radio, assuming competition with other radio makers, at a market level will be,$100 + profit + tax (which does not come out of profit, but rather is reflected in price).

    Say a company plans a profit margin of 10% and has 0% sales tax.

    Price of Radio = $110.00

    Now, say we add a sales tax (VAT) of 25%...

    Price of Radio = $137.50


    ...applies this across the board and suddenly, you start to realize the basics of the problem. But of course, value added tax rates, tariffs & other government imposed costs compound by being applied to every raw material that went into the production of the radio to begin with, making the bottom-line cost for production higher. Then maybe you add in the higher cost of a unionized workforce and wage limitations.

    And... Shazam.

  • Chad||

    I agree, they pay higher taxes than us. I welcome higher taxes. I need no more cheap Chinese crap, and have no desire for an SUV or McMansion. I want more of the things that governments provide, such as clean air and public transportation. I am willing to pay for them, as they are great deals.

    You are simply exaggerating about the price of burgers. I have lived in Japan, where burgers are as expensive as anywhere, and you might pay 50% more than in the US. Maybe. Food overall is probably 20% more expensive, but the quality is higher and you probably end up spending 30-40% more on average. On the other hand, health care is largely paid for by the government, and public transportation saves you tons of money. If you are single, you likely don't need a car, and families often only have one.

  • Sean W. Malone||

    On the other hand, health care is largely paid for by the government taxes & borrowing, and public tax-payer funded transportation saves costs you tons of money but since the costs are much more dispersed you aren't aware of the added expense or the high levels of inefficiency or waste. If you are single, you likely don't need (according to Chad, dictatorial arbiter of all people's "needs") a car, and families often only have can only afford one.


    FTFY


    Jesus man, you really don't have the first clue about how to identify real cost, do you?

    And no, I wasn't exaggerating about the burger - I didn't even pick the most expensive one I've had on my travels (which was approximately $22.00 US - with no fries or side-items, but at an airport in Helsinki, so I didn't think that should count)

    Your rosie-eyed view of costs being only what you pay directly is cute and all but exposes your complete lack of thought on the topic otherwise... You seem completely unaware that if government doesn't actually produce anything on it's own and has to take money from productive people to pay for things like healthcare... meaning... *Gasp!* If you pay taxes, YOU are paying for your own healthcare too!!

    Except... You know... with dozens of middlemen, lack of personal choice or decision-making power and with the added bonus of no incentives for innovation & long waiting lines. You can have it...

    If you liked it better in Japan, go on back, just quit trying to force your bullshit on those of us who aren't interested in your idiocy.

  • Sean W. Malone||

    I want more of the things that governments provide, such as clean air...




    HAAAAAHHAHAHAHAHAHAHAHAhahahahaha

    OHHHH ahhaha :) OHHHEhehehehehehehe...

    Thanks Chad.

  • ||

    If tax cuts are the cure all for economic woes -- your conclusion in the end of the article. Why did the Bush tax cuts not result in the developments you seem to anticipate. The economic expansion which began in November 2001 and lasted until December 2007 has recorded the smallest increase in employment on record. Economic data donot support your conclusion.

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    krfh

  • Scarpe Nike||

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