F.A. Hayek

Where Free-Market Economists Go Wrong

Subsidies, stimulus, regulations, protectionism, trade restrictions, government-bank collusion, zoning, bailouts and more do not equal a "free" market.

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Rich Uncle Pennybags is celebrating the federal stimulus matching funds that the free market has added to his existing subsidy for using environmentally friendly humidors throughout his headquarters (which was built with enterprise zone tax credits).

Depressing as it is, politics usually trumps economics. There's nothing new in that, but free-market advocates ought to learn some lessons and adjust their strategy accordingly.

The politicians who run the government—and think they run the country—are afraid to appear as though they are doing nothing. We saw this when the recession hit. They were particularly worried about seeming to put party above the public good.

As the Wall Street Journal put it back then, "The speed with which Washington hashed out the [stimulus] plan was driven mostly by the drumbeat of bad economic news. Behind the scenes, it was greased by other powerful motivations. Congressional Democrats needed to demonstrate they were capable of results after a year of gridlock. Republican lawmakers, up for re-election, wanted to show sensitivity to voters' economic woes. And the White House didn't want 'recession' added to its legacy."

Political interest was universally aligned against good economic sense. The politicians could get away with this because most of the public is economically illiterate. The "seen" overshadows the "unseen." Such is how we get economic policy. It's happening now.

As free-market economists point out, government cannot affirmatively stimulate what we misleadingly call "the economy." (It's not a machine; it's people using their property to engage in transactions.) All government can do is move money around. To make some people able to spend more it must make other people spend less. Politicians imply that they know who ought to have more and who ought to have less, but beside the obvious injustice of the matter, they simply can't know.

Economists Fall Short

I said the government can't affirmatively stimulate the economy, but it can encourage productive activity. How? By not discouraging it. Here is where some free-market economists fall short in shaping the public debate. Too much of what they say is along these lines: "The economy is fundamentally healthy. Recessions are a necessary correction of errors. So just let the economy work through its current problems. The government need do nothing."

That message should make advocates of individual liberty squirm because it implies that the market today is essentially as free as it needs to be. For example, a few years ago the news media proclaimed that gasoline prices were at historic highs. In fact, when adjusted for inflation they were not. But the economists pointing this out sounded a little too defensive, as though they were the defending the free market's honor against its critics. What should we say if next week gasoline does hit a historic high and the anti-market folks blame the free market? I know what I'd say: What free market? (With all the subsidies and regulations on the books, can there possibly be a free market?)

Let 'em eat cake.

The same defensiveness can be seen whenever a left-statist charges that the gap between rich and nonrich has widened or income mobility has ceased. Whatever the truth of these charges, libertarians shouldn't react as though the free market's honor is being assaulted. The critics may think it's the free market they're attacking. But—I say again— we have no free market.

Similarly, if economic activity slows down, it can't be the free market's fault.

What we have—and have had for a long time—is corporatism, an interventionist system shot through with government-granted privileges mostly for the well-connected–who tend to be rich businesspeople. This system is maintained in a variety of ways: through taxes, subsidies, cartelizing regulations, intellectual "property" protections, trade restrictions, government-bank collusion, the military-industrial complex, land close-offs, zoning, building codes, restrictions on workers, and more. As a result, people can get rich at the expense of the government's victims. Even some who have prospered apparently by market means have actually done so through government intervention, such as transportation subsidies and eminent domain. Wealth can be transferred in many ways besides welfare and Medicaid, some of them quite subtle. Most transfers are upward.

Overlooked Facts

Free-market economists know this, but they often seem to forget it, such as when they indiscriminately defend firms (such as oil and pharmaceutical companies) in today's corporatist economy. These economists convey the message that since in a free market people get rich and companies get big only by serving consumers, anyone who is rich today and any company that is big today must have gotten that way by serving consumers. The flaw in the argument should be obvious.

Given the corporatist nature of the economy, it is a mistake—as well as strategically foolish—to say the government should do nothing when a recession might be coming on or when recovery is disappointingly sluggish. There's much it should do—or rather undo. Freedom's advocates must spell this out in detail, revealing how existing government privilege harms the mass of people who have no political connections. In contrast, when an economist who proclaims his support for the free market says the current economy will fix itself, he brands himself a defender of the statist quo and turns his back on the State's victims.

The freedom philosophy is a radical idea that looks ahead, rather than to some mythical golden era or Panglossian present. Every time we pass up an opportunity to make this point, we alienate potential allies who are concerned about those who are having a tough time of things. Yes, living standards have improved for decades and being poor in the United States is not what it used to be—thank goodness. That only shows that even a marketplace hampered by government privilege can produce astounding wealth. But to be satisfied with that is to be willing to trade freedom and justice for a mess of pottage.

F.A. Hayek never spoke more wisely than when he wrote, in The Intellectuals and Socialism:

What we lack is a liberal Utopia, a programme which seems neither a mere defence of things as they are nor a diluted kind of socialism, but a truly liberal radicalism which does not spare the susceptibilities of the mighty (including the trade unions), which is not too severely practical and which does not confine itself to what appears today as politically possible….Those who have concerned themselves exclusively with what seemed practicable in the existing state of opinion have constantly found that even this has rapidly become politically impossible as the result of changes in a public opinion which they have done nothing to guide. Unless we can make the philosophic foundations of a free society once more a living intellectual issue, and its implementation a task which challenges the ingenuity and imagination of our liveliest minds, the prospects of freedom are indeed dark. But if we can regain that belief in power of ideas which was the mark of liberalism at its best, the battle is not lost. [Emphasis added.]

Hayek wrote that over 60 years ago. We haven't progressed as much as we like to think.

NEXT: Assad Shows His Face

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  1. Political interest was universally aligned against good economic sense.

    Universally because the voting public was so blindly receptive to the assertions of our leaders that they centrally could restore economic growth. So this commenter puts the blame squarely on YOU, the people.

    1. isn’t that where the blame belongs? It’s not as if these politicians elect themselves.

      1. What the hell are y’all talking about? Shut the hell up so I can hear my Seinfeld re-runs and then I want to see the great escape….and jersey shore….and something something Pookie. My fat ass is Lovin’ it!

        /Citizen Dumbass

        1. Seriously though, the wife of a friend of mine recently said this to me;

          I walked into his kitchen and she was standing at the counter watching the tv in the living room. I said hello how are you?. She replied “Those girls are living their dream and I am stuck here!”. I looked at the tv and there were three girls in their mid-twenties jabbering. As usual the jabber from the tv sounded like Charlie Browns teacher to me (waah waah waah waah ) and as usual I made no effort to understand them. I asked her ” Yeah? What is their dream?”

          Before I tell you what she said, please sit down. I implore you not to read her answer standing up.

          She answered; ” They are working at Hooters!! And I am just stuck here!”

          Apparently there are enough brain-dead in this country to make an audience for some reality show about Hooters girls. I dare anyone to ask any member of that viewing audience about politics.

          *triple headsmack*

          1. If that’s your wife’s friend, it doesn’t speak highly of her and inturn.. YOU. I would keep that to myself.

            1. My friend’s wife…ten years younger than he is and well qualified to work at Hooters. I am sure she has some talents that make her worth keeping around. I dont ask. My friend is quite bright, but I guess when the lights go out IQ doesnt mean much to him.

  2. So, there’s an article today in the Washington Post, entitled ‘What I built- with government help’ attempting to defend that ‘Yu didn’t build that’ meme.
    http://www.washingtonpost.com/…..story.html

    However, what the guy is talking about as having helped his firm is largely market stability and Pell grants. He doesn’t mention small business loans, or stimulus projects, or infrastructure spending, which is the kind of things that Democrats say government should spend money on. He talking about the legal underpinnings of the market being set and providing a stable environment for investment – an environment that applies equally to all participants in the market. He never mentions receiving a tax credit or a subsidy. This is a totally different kind of thing than what the left is actually advocating for – which ARE tax credits and special subsidies for favorite industries and direct government spending benefitting particular businesses.

    1. Wow, you read the Washington Post? Question: how long does it take to wash the stupid from your subconscious afterward?

      1. If you think the articles are dumb, you should try reading the comments.

      2. BTW, Sloop, I just saw my Reason newsletter. Congrats to you and Banjos on your nuptials and upcoming Blessed Event.

        1. BTW, Sloop, I just saw my Reason newsletter.

          ??? Was that on the society page?

          1. Is that what you get for actually buying a subscription?

            1. I give $10/mo. I started getting the newsletter (in reality, a lot of Reason articles and such plunked into a single publication, about 10 pages or so) right after that, and a subscription after a few months.

          2. Yes. It was debutantes, monocles and top hats as far as the eye could see.

            1. This actually sounds like an awesome idea for a party.

      3. What a wonderful quote! I’m going to steal this!

        Thanks!

    2. They should have a follow-up listing the percentage of those helpful things as a share of government spending, and do the same for war, Medicare, the war on drugs, cowboy poetry, etc.

    3. 1. Government services are available to everybody, so having used them doesn’t diminish your accomplishments.

      2. Since Obama’s comment was a thinly veiled class-based attack, it’s useful to point out that the vast majority of the tax burden falls on the wealthy, meaning yes, they did in fact build the roads, infrastructure, stimulus, etc since they payed for all those things.

      3. Most of that would be provided by private companies in a free market, so how does the fact that the government crowds out private enterprise in those industries mean that somehow “you didn’t build that.” Even if we take his comment at face value it’s a trivial and empty point.

    4. While his acolytes are still trying to defend that Maobama squeezed this one out too;

      “…a new vision of america where prosperity is shared…”

      Yeah, thats right. Pure communist rhetoric. I havent seen any defenses of that yet. I cant wait.

      1. As if prosperity isn’t already being “shared”.

        Problem is that the more prosperity is “shared” the more Obama thinks you owe the government for getting any of it.

        There’s virtualy no limit to the logic. In the gvernment owned the banking system, and doled out loans only to the people it liked, then everyone would owe the government even more, right? The more government doles out the more you owe them, the more it can take.
        And take, and take, and take, until you really gain no advantage at all from using your own initiative, and you may as well be a mindless drone who obeys the governments orders.

    5. Kind of like how corporate welfare is evil unless its Dems giving to GE or other energy companies. It all boils down to “it’s okay when we do it because our Team is lead by the ‘Right People'”.

        1. That’s: Top…..Men!!

  3. the legal underpinnings of the market being set and providing a stable environment for investment – an environment that applies equally to all participants in the market.

    How did that work out for the bondholders at GM and Chrysler? Or the salaried employees at Delphi?

  4. Nice. Obama “spokesperson” Stephanie Cutter is on ABC. Gadfrey, what an obnoxious little bitch.

    She should be on teevee every day from now until the election. To help demonstrate the awesomeness of the Hoper-and-Changer-in-Chief and his administration.

    1. Is she explaining why the FEC shouldn’t investigate her for coordinating with Priorities USA? Not that they would actually bother, of course.

      1. They don’t need to coordinate when it’s all the same people at both places, Fatty.

        1. We need an entirely independent apparatus for investigating and prosecuting political appointees.

          If we really wanted to throw a spanner into the works, we could staff it with people picked by the loser of the Presidential elections. Just think of how much fun THAT would be.

  5. OT: Humble prediction: the pics of Assange on the Ecuadorian balcony are destined to become iconic for decades to come.

    http://news.yahoo.com/photos/w…..tml?_esi=1

    1. Delusions of grandeur much? That creepy little bug is unknown to the huge majority now and will be forgotten by the rest in a year.

      1. Assange [greater than] Che Guavara

        1. Talk about a race to the bottom!!

    2. I always wondered what Caillou would look like when he grew up.

      1. Caillou doesn’t grow up. It’s obvious that he’s dying of cancer, which is why his parents allow him to be such a twat. There are subtle hints – like his lack of hair and his sickly demeanor.

    3. Is it just me, or is that guy more than a little bit swishy in a kind of metro-sexual, euro-trash kind of way?

      1. So you’re saying he didn’t “rape” those two women in Sweden?

      2. It’s not just you. He reminds me a bit of Anderson Cooper, actually. I think they are both kind of good-looking for extremely pale and washed-out guys.

  6. Freedom’s advocates must spell this out in detail

    But what if members of the audience don’t have time for detail, or at least in their judgment decide that the amount of detail you want to give them is not worth your att’n? In such a situation — which is the situation of everywhere at all times, considering that audiences are diverse — I don’t mind economists short cutting by portraying the world the way Sheldon criticizes them as portraying it, because they consider it the best approximation to the truth to convey the message they want to convey. Does that distort some facts? Convince some people of the wrong thing? Sure, just as map projections do — but they’re still useful.

  7. We need to educate the public is the libertarian mantra. As Sheldon points out, we’ve been chanting it for 60 years. Even such masterworks as Milton Friedman’s Free to Choose, had no impact. The public simply refuses to be educated as to freedoms’ desirability.

    We know our philosophy is routinely mischaracterized and libeled by the establishment. What we don’t know is how to change that.

    1. Our philosophy is extremely counterintuitive to human nature. There’s a reason free markets (as well as social liberty) are a rarity historically.

      We evolved to be absolute leaders and absolute followers, nothing else. That at sporadic times and places situations arose where there were neither is pure accident. Sad but true.

    2. Or it could be that the public, to the extent that they have been educated on our philosophy, simply don’t like it and think we’re a bunch of kooks. Hint: that’s exactly what happened.

      We always want to blame ignorance and stupidity for the fact that people don’t share our views. The fact of the matter is that if you spent the rest of eternity personally educating every single person in America on every minute facet of libertarian philosophy and political ideology, the libertarian ranks would be lucky to swell by 10%. Most people don’t like the concepts. They bitch about the status quo, but they created the status quo, and they do not want to change it one iota.

    3. We know our philosophy is routinely mischaracterized and libeled by the establishment. What we don’t know is how to change that.

      Nothing is going to change that significantly.

      Talk to any status-quo’er about the evil that is routinely perpetuated by the state and you get blank stares and cocker spaniel head tilts back. They’ve already accepted that as normal. Oh and “everyone else did it too!”

      We’re fucked.

  8. What we have?and have had for a long time?is corporatism, an interventionist system shot through with government-granted privileges mostly for the well-connected?who tend to be rich businesspeople and politicians.

    FIFY

  9. We know our philosophy is routinely mischaracterized and libeled by the establishment.

    By “establishment” I presume you mean “public schools”.

    1. Right, because before the public schools came along the world was a libertarian paradise.

      1. Right, and it’s not like you need to actually UNDERSTAND a comment in order to respond to it intelligently.

      2. Let me guess, reading comprehension wasn’t one of your strong suits when you went to public school.

  10. Sheldon Richman gives the opponents of capitalism too much credit. They know that we don’t live in a free-market, but they make that claim so they can blame whatever bad shit happens on the market, then they exaggerate the bad shit to amplify the accusation. That way they can “fix” it with socialism.

    The truth is that “cronyism” isn’t even a major problem with the American economy, good ol’ central planning is. The bailouts weren’t cronyism, neither were the subsidies that led to them. Both were examples of interventionist economic policies created by socialist academics, not by the businesses that happened to benefit from them. Pointing out that crony capitalism isn’t capitalism only legitimizes the fabricated accusation. What we live in is a mixed economy, built by leftist economists with fucked up value systems. It isn’t cronyism, it’s EXACTLY what they wanted and what they created.

    1. Anybody notice how their trying to blame rising costs of college tuitions on the market? As if it was the administrators at the colleges lobbying for favors that led to all these subsidized loans? They want to make it seem like it’s the profit motive that led to all this.

      Fuck that. It’s bullshit. Socialism is the problem and always has been. Egalitarianism is the evil that infects our society and has to be exterminated.

      1. Tuition may have gone up at private schools like Harvard and Yale, but it’s also gone up at Arizona State, Colorado State, California State, Ohio State… Apparently the profit motive has even infected “The Right People” running all those state schools.

        1. I don’t think it’s profit so much as empire-building. Schools payrolls are swelling with administrators and lavish facilities.

    2. Re: KPres,

      The bailouts weren’t cronyism, neither were the subsidies that led to them. Both were examples of interventionist economic policies created by socialist academics[…]

      The justification for the bailouts may stem from academic socialism, but central planners are not soothsayers to know which one industry to bailout – someone comes with open hand for Money-In-Palm Sunday.

    3. The bailouts weren’t cronyism? Really?

      I suppose if your standard is that all banks got bailed out equally, maybe not (although even that isn’t true). But if you mean people with political connections got bailed out, that is the literal definition of cronyism, and that is what happened.

      The banks got bailed out because banks have more political clout than automakers, who have more political clout than homeowners, who have more political clout than the holders of GMs bonds. See the distribution?

      1. And of course, the bankers had no hand in designing the system that they then benefited from, at everyone else’s expense. No, no insiders in DC at all.

        1. There was a system? I thought they just started shouting “holy fuck do something” in unison and the government answered their prayers and invented on on the spot.

  11. What we have?and have had for a long time?is corporatism, an interventionist system shot through with government-granted privileges mostly for the well-connected?who tend to be rich businesspeople and politicians.

    FIFY

    Oh, and a suggestion – how about displaying or allowing editing of a comment that was rejected for SPAM instead of sending it deep into ampersand hell, never to return? I know Reason can only afford retarded three-legged squirrels, but how hard could it really be?

  12. What we have?and have had for a long time?is corporatism, an interventionist system shot through with government-granted privileges mostly for the well-connected?who tend to be rich businesspeople and politicians.

    Fixed it for you.

    Oh, and a suggestion – how about displaying or allowing editing of a comment that was rejected for SPAM instead of sending it deep into ampersand hell, never to return? I know Reason can only afford retarded three-legged squirrels, but how hard could it really be?

  13. What we have-and have had for a long time-is corporatism, an interventionist system shot through with government-granted privileges mostly for the well-connected-who tend to be rich businesspeople and politicians.

    FIFY

    Oh, and a suggestion – how about displaying or allowing editing of a comment that was rejected for SPAM instead of sending it deep into ampersand hell, never to return? I know Reason can only afford retarded three-legged squirrels, but how hard could it really be?

  14. What we have?and have had for a long time?is corporatism, an interventionist system shot through with government-granted privileges mostly for the well-connected?who tend to be rich businesspeople and politicians.

    FIFY

    Oh, and a suggestion – how about displaying or allowing editing of a comment that was rejected instead of sending it deep into ampersand hell, never to return? I know Reason can only afford retarded three-legged squirrels, but how hard could it really be?

  15. Frank Bruni is concerned.

    Nothing ? nothing ? is more important than the education of our children, and while various interests will make competing claims about whether it’s improving or slipping and how best to measure that, education certainly isn’t at the level we want or need it to be. Public education, that is.

    ——-

    Over the years, the teachers’ unions have indeed guarded tenure protections and last-in-first-out layoff practices to a zealous degree that could at times seem indifferent to the welfare of schoolchildren. “We bear a lot of responsibility for this,” Weingarten told me in a phone interview on Friday. “We were focused ? as unions are ? on fairness and not as much on quality.” And they’ve sometimes shown a spectacular blindness to public sensitivities in their apparent protection of certain embattled teachers in given instances.

    “…that could at times seem indifferent to the welfare of schoolchildren.”

    You don’t say. But without a union stranglehold on education….

    SOMALIA!

    1. Fuck teachers.

      They’re nowhere near as important as everyone pretends.

      1. Fuck teachers.

        They’re nowhere near as important as everyone pretends.

        THIS.

  16. The bailouts weren’t cronyism

    You don’t think Hank Paulson was getting panic-stricken phone calls nonstop from his buddies in New York?

    1. Sometimes I think that the Federal government’s relationship to Wall Street has gotten so incestuous they can’t even tell where one ends and the other begins. How can it be cronyism, if you conceive of your job entirely in terms of making sure that certain business entities remain immune from failure? It’s Hank Paulsons job to stabilize the economy, and damnit, that’s synonymous with keeping Goldman Sach’s profitable.

  17. Being in KY and also DVRing 95% of what I watch of TV, I dont see many presidential commercials. But sometimes one slips thru…I saw the one on Obama criticizing Romney for paying ONLY a 14% tax rate and Obama saying a majority of YOU (referring to us, tv watching Americans, I guess) pay a higher rate than that.

    So lets go to the numbers. According to the CBO from 2009 (most recent numbers available) the total federal tax rate for all federal taxes (they combine income, fica, corporate income and excise taxes) for each quintile:

    Lowest: 1.0%
    Second: 6.8%
    Middle: 11.1%

    There is 60% of America…and we are still below Romney’s rate.

    Fourth: 15.1%
    Highest: 23.4%

    So it looks like Romney’s rate matches up with the lower part of the fourth quintile. Pretty good for a 1percenter (they normally pay 28.9%).

    So how does that 28.9% break down:
    Income: 21.0%
    FICA: 2.5%
    Corp: 5.2%
    Excise: 0.2%

    Anyone wanna bet that Obama’s numbers dont include all 4 categories? I bet Romney is more like 22% than 14%. Still below the norm for his bracket, but thats just smart accounting.

    BTW, the excise tax is horribly regressive. FICA is slightly so, but it bounces all over the place (the fourth quintile actually gets hit the hardest by it).

    1. No romney only pays 13% because his income comes from dividends and capital gains (15% tax rate) rather than from wages and salary.

      That’s the problem with the idea of raising the top income tax rate. It STILL would affect the income taxes of the richest, because they don’t make their money from their salary. They get it from investments, stock options and bonuses (which are often taxed as if they were investment income).

      This is why Warren Buffet pays a smaller percentage than his secretary. Ironically, letting the Bush tax cuts exppire would only force his secrtary to pay more, not him.

      1. I think robc’s point at the end is that Romney’s income tax return does not include the corporate income tax paid by the companies that hes invested in, not does it include excise taxes that he’s paid.

        1. The double taxation only applies to dividends though, not capital gains. If a business reinvests in expasion, it doesn’t get taxed on an increase in the stock price. And it can pay executives in stock options, which they then sell and get taxed at a 15% rate, while offsetting the amount of profit on it’s balance sheet.

          This is why the corporate income tax discourages companies from paying dividends. It’s cheaper to “pay” investors by driving up the stock price and letting them extract the income via options and derivatives. Instead of turning a “profit” on paper, you buy up other business and expand. Stock price goes up and your investors only pay 15% instead of a net of 50%.

          It would make sense to eliminate the corporate income tax and put all investment income in the same category as wages.
          This would have the side benefit of encouraging companies to [ay dividends against instead of trying to generate stock price bubbles.

          1. Presumably the tax paid on retained earnings negatively effects the value of the company.

            To your last point, I think that all income should be taxed at the same rate.

            Dividends should be expensed from the corporate income, thereby eliminating the double taxation effect.

            And capital gains should be taxed as regular income but the basis should be adjusted by the cpi which will eliminate taxing phantom gains.

            1. Hmm, I admit I’m not all that well versed in corporate tax law.

              Wouldn’t spending money on acquisitions count as an expense? It seems to me that if you manage to expense all your earnings, you can avoid paying corporate income taxes. Which means shovel earnings back into growth, or anything that can count against your earnings so that you turn as small a “profit” as technically possible. I assume this is why so few companies pay dividends. They have to pay them out of “profit”, but any kind of profit they turn is going to get taxed.

              I can see why allowing dividends to be expensed would solve the problem, but now that you mention it, it seems crazy to me that it isn’t that way already.
              WTF?

      2. Of course that’s why they’re trying to disincentivize saving even more by slapping on a punitive capital gains tax.

        Apparently the DoubleTax is DoublePlusGood in Team BLUE land. Let’s just forget that it amounts to a double taxation for most of us who receive capital gains.

  18. Resistance is futile.

    There is no such thing as a discrete individual, Spinoza points out. This is a fiction. The boundaries of ‘me’ are fluid and blurred. We are all profoundly linked in countless ways we can hardly perceive. My decisions, choices, actions are inspired and motivated by others to no small extent. The passions, Spinoza argued, derive from seeing people as autonomous individuals responsible for all the objectionable actions that issue from them. Understanding the interrelated nature of everyone and everything is the key to diminishing the passions and the havoc they wreak.

    In this, Spinoza and President Obama seem to concur: we’re all in this together. We are not the sole authors of our destiny, each of us; our destinies are entangled ? messily, unpredictably. Our cultural demands of individualism are too extreme. They are constitutionally irrational, Spinoza and Freud tell us, and their potential consequences are disastrous. Thanks to our safety net, we live in a society that affirms the dependence and interdependence of all. To that extent, it affirms a basic truth of our nature. We forsake it at our own peril.

    1. There is no such thing as a discrete individual, Spinoza points out.

      He also said that no one is truly free except to see that we’re slaves of destiny. Among other highly questionable things.

      Thanks to our safety net, we live in a society that affirms the dependence and interdependence of all.

      We need to affirm our interdependence by the point of a gun, otherwise all those greedy bastards are bound to forsake it!

      1. It’s interesting that the author refers to Spinoza’s argument as justification for robbery. Spinoza was an extremely flawed philosopher, case in point:

        The natural world is infinite. This is one postulate.
        Human life and behavior is determined. This is another postulate.

        These two are contradictory, however. The reason being that you cannot have a deterministic element in the universe if the universe is infinite. Determinism entails a finite set of events, so these two postulates cancel each other out.

        The fact that he did not see this error in his thinking indicates he was not a careful thinker, which is why I believe he is so popular with Marxists and socialists.

        1. I am xenocles: Fuck Spinoza.

          1. What’s that now?

    2. We are all profoundly linked in countless ways we can hardly perceive. My decisions, choices, actions are inspired and motivated by others to no small extent.

      Therefore…. Society Owns you and the State may order you to do what it wills in the services of the Greater Good.

      QED.

    3. Here’s an alternative take on this..

      The boundaries of ‘me’ are fluid and blurred. We are all profoundly linked in countless ways we can hardly perceive. My decisions, choices, actions are inspired and motivated by others to no small extent.

      In a sense, but that is a self-organizing system which, fundmanetally, DEPENDS upon the freedom of the individual to act into order to create that system which interlinks us all. If you attempt to impose a centralized force upon that system, to force individuals to act in a prescribed manner, you will inevitably destroy it.

      The interdependent nature of the market emerges from the volunary choice of individuals to engage in trade. If you interject force, people are no longer dependent upon one another, but upon the centralized force. They become detached from real social exchange, and attached to the subsidy derived by force instead. They no longer depend upon the goodwill of their customers or those they derive their welfare from, since it is now acheive by force instead of trade.

      You can see this, easily in the social dysfunction that the welfare state has created. People depend upon the state instead of eachother. Breakdown in social cohesion. Single parent families. Dependence. Lack of basic skills to hold down a job.

      1. Exactly. What “affirms our interdependence” is people trading with each other out of their own free will and volition. Force is not affirmation.

  19. These economists convey the message that since in a free market people get rich and companies get big only by serving consumers, anyone who is rich today and any company that is big today must have gotten that way by serving consumers. By claiming the contemporary market is free, we alienate potential allies who are concerned about those who are having a tough time of things.

    Before we waste any effort trying to get people to appreciate the nuances, maybe we should concentrate on making sure they get the basics first.

    Market forces are people making choices. Hammer that fact into people’s heads, and maybe they’ll stop obsessing over how free markets are the problem…

    Try to explain the nuance about how corporatism isn’t free markets? That isn’t just putting the cart before the horse. Jesus called that throwing pearls before swine.

    It’s often counterproductive.

    1. Tony is an excellent example of what I’m talking about…

      Why waste any breath trying to differentiate corporatism from free markets when there are tons of people out there like Tony who refuse to accept that free markets–like really free markets–are better than democratic socialism?

      Has anyone ever witnessed a democratic socialist try to distinguish democratic socialism from the standard version?
      ’cause I never see that. I just see a lot of people claiming that when Obama nationalizes two-thirds of the American auto industry, it isn’t really socialist.

      …since us rednecks are too stupid to know what socialism is.

      1. The difference is that the Swedes wouldn’t touch State ownership of a car company with a 10-foot pole.

        1. Oh, I know there’s a difference.

          Have you ever heard a democratic socialist here in the United States explain the difference to you?

          Or do they just call you a stupid redneck for calling what Obama did socialist?

          1. I’m called a stupid redneck all of the fucking time, and that is by people who know full well that I have the same fucking fancy education that they have.

          2. I think it’s all a matter of velocity, not destination, Ken.

            And, like MLG, I’ve got the same fancy-schmancy ejumakashun, but I have the wrong politics, so I’m just a stump-toothed redneck.

  20. Another point to consider…

    Because the government has infiltrated essentially every aspect of every sector of the economy, it is increasingly difficult to find an example of anyone getting wealthy without some form of “assistance” from the government.

    To take an extreme example… If we were living under the USSR circa 1984, should we have refrained from defending the behavior of what few, bold entrepreneurs there were–just because they got assistance from the government?

    Fact is that capitalism is massively beneficial to average people–even when ALL the players are getting assistance from the government. There’s no reason to pretend otherwise just because we’d be better off if the government weren’t a player at all.

    Does the average Russian citizen have more opportunities and a better shot at a higher standard of living now than they did under over communism circa 1984?

    The correct answer is “yes”.

    When we have a president out there who is out there nationalizing two-thirds of the American auto industry, taking direct federal control of the financial industry, and all but nationalizing the healthcare industry–and he has millions of Americans egging him on from the sidelines?

    It’s probably time to forget about the nuances of why corporatism isn’t really free markets and time to start speaking up about how much better imperfect capitalism is when compared to what the left is selling.

    1. Ah the unspoken libertarian compromise: better to give government loot to corporations and the wealthy who at least know what to do with it. The most important thing of all is making sure the poor stay in their place.

      I’ve never seen such a combination of redneck demeanor and insufferable elitism.

      1. Re: Tony,

        Ah the unspoken libertarian compromise:

        You must also pick up personal insults in Morse code from woodpeckers.

        better to give government loot to corporations and the wealthy who at least know what to do with it.

        That’s what Obama is doing. *cough* Solyndra! *cough*

        1. Yet the entire libertarian movement by all appearances seems to be the intellectual lobby for the oil industry. We’ll just sweep that under the rug while we bitch about Solyndra like a good Drudge zombie.

          1. Yet the entire libertarian movement by all appearances seems to be the intellectual lobby for the oil industry

            Uh, proof?

            1. I trust you’re not holding your breath.

          2. Re: Tony,

            Yet the entire libertarian movement by all appearances seems to be the intellectual lobby for the oil industry.

            Seems to whom? YOU?

            We’ll just sweep that under the rug while we bitch about Solyndra like a good Drudge zombie.

            Who is bitching? YOU posited the proposition that libertarianism means “giving loot to corporations that know better.” I pointed out that Obama does that, so he must be a libertarian if one goes by your proposition. So which is it? Don’t be dishonest.

            1. I am not an antigovernment zealot, so I don’t have a problem with part of GDP being taken up by government spending, which necessarily entails payments to some corporations for services.

              It’s blindingly obvious that the actual result of government cutting zealotry means, first and foremost, cutting off those at the bottom first and those at the top… when we get around to it, in theory, someday.

              1. “…which necessarily entails payments to some corporations for services.”

                Yes, because that’s what govt. subsidies are… ‘payments for services’.

                1. Yes, because that’s what govt. subsidies are… ‘payments for services’.

                  Like George Kaiser’s bundling for the Obama campaign.

              2. Re: Tony,

                I am not an antigovernment zealot, so I don’t have a problem with part of GDP being taken up by government spending which necessarily entails payments to some corporations for services.[…]

                Then I don’t understand – your criticism of libertarianism is the transfer of moneys from government to corporations. Now you say you favor that. So are you saying you’re suddenly a libertarian, if one goes by your original proposition?

                You’re tying yourself in knots the further you advance, Tony.

                1. Then I don’t understand – your criticism of libertarianism is the transfer of moneys from government to corporations. Now you say you favor that.

                  Tony only favors the government stealing from citizens and handing that loot to corporations that do things which he favors.

                  It’s the whole “the right people” argument. Government is awesome when The Right People? are stealing our hard earned cash and giving it to a different subset of The Right People? who say they will do things he likes. Whether they actually get done is immaterial. WHat matters is that rich people who don’t do/say/create things he likes have been looted and that money given to rich people who do do/say/create things he likes.

                  Money stolen and given to oil companies that then use that money to provide us with reasonably priced energy? BAD!! Money stolen and given to “green” energy companies that will go out of business while the “investors” get rich off of graft? Fucking great!!

                  Tony is the biggest kind of hypocrite.

            2. Don’t be dishonest.

              You might as well demand that water not be wet.

      2. If the fact is that Russian corporatism gets better results than Soviet communism did, then facts are facts.

        Anybody else ever notice that the Obamabots are always straining to tell everyone that private enterprise can’t do anything without the government?

        And yet the fact that the government can’t do anything unless it parasites resources off of a healthy private sector is so obvious that no one ever bothers to even say it?

        Maybe it’s time to start pointing out the obvious. ’cause there are ton of people out there who don’t seem to understand those basic facts.

        1. And yet the fact that the government can’t do anything unless it parasites resources off of a healthy private sector is so obvious that no one ever bothers to even say it?

          But most rich people got their money from stealing and oppression and stuff!!
          /Team BLUE tard

      3. Ah the unspoken libertarian compromise: better to give government loot to corporations and the wealthy who at least know what to do with it.

        Is this dishonest or merely stupid?

        You’ll find plenty in the archives here pillorying corporate welfare, Tony, as you will at Cato, Heartland and other libertarian organizations. To pretend otherwise is completely false, and you know it.

        You decry CW, yet excuse Obama when he lavishes billions on connected companies and unions. How can you live with yourself?

        1. Is this dishonest or merely stupid?

          Yes.

      4. And he arises. Jjust as the prophecies had fortold.

    2. Russia may be marginally more capitalist today, and Russians marginally better off, but Russia is nowhere near a capitalist society. I daresay the Russian economy is less free than the Chinese one.

      WHat happened in Russia is that they started privatizing the public sector without first establishing the rule of law. There were no private property rights, no enforcable contracts, and no courts that weren’t horrifyingly corrupt.
      That is how the “oligarchs” – people who were really the mafiosos of the old Soviet black market – managed to rapidly seize most of the property that had been privatized via “vouchers” .

      Anyone can tell you that without property rights, courts, or contract enforcement, the market is going to collapse into kleptocracy.
      Which is what happened under Yeltsin.

      A few years later Putin came to power. But does anyone seriously think that Russia under Putin is a place where property rights are respected, contracts are enforced, and the courts enforce the laws equally? Putin merely replaced the corrupt “oligarchy” with an authoritarian security state. A transition that better resembles the collapse of the Roman Republic than anything else in modern history.

      The only advantage economically speaking that Putin’s Russia has over Yeltsin’s is that at least now the laws are predictable. There’s only one gang in town and it’s run by the FSB.

      1. My point wasn’t that Russia is capitalist.

        My point was that as corporatist as Russia is, it’s still vastly superior to what it was before–to precisely the same extent that it is more capitalist than it was in 1984.

        The wall came down in 1989, and here’s a chart showing Russia’s GDP per capita from 1992:

        http://tinyurl.com/8fgpa4r

        In 1992, Russians were making $7859.12 per capita.

        In 2010, Russian made $15,611.99 per capita.

        Purchasing Power Parity has it:

        http://tinyurl.com/8buoxn9

        1992 was an index of 1169.43.

        And 2010 was at 2230.954

        Russians are much better off for having gone with whatever amount of capitalism they have–and they would continue to do better with more capitalism.

        That’s my point. It’s the same thing here in the U.S. The amount of wealth, GDP per capita, we have is a result of the amount of free markets and capitalism we have–and if we want more wealth here in the U.S.? It’s the same here as it is in Russia.

        More free market capitalism is always better over the long term. There is NEVER a situation in which more capitalism is a bad thing over the long term–because it isn’t perfect capitalism.

        Imperfect capitalism is vastly superior to the socialist alternative. And before we start making nuanced arguments about how perfect capitalism is better than imperfect capitalism, we better make sure people are square on the fact that imperfect capitalism is vastly superior to socialism, be it democratic or otherwise.

        1. I’ll grant you that, although I think Russia is an excellent case in point about how half-capitalism results in vast wealth inequality. In Russia, this is CLEARLY because of the corruption and the way the state is controlled by and for a few very rich powerful interests. In America, this is less apparent, which is why people on the left attribute the disparity to capitalism, when it’s actually the way the government uses it’s power to benefit the politically connected that is the problem.

          And more so on the state and local level even than on the federal one.

  21. I just skimmed the article but I didn’t see anything backing up this statement:’

    ” Wealth can be transferred in many ways besides welfare and Medicaid, some of them quite subtle. Most transfers are upward.”

    If the so-called richest 10% (or top 10% earners) pay 75% of the Fed taxes, seems unlikely much wealth is moving upward.
    If 50% of the masses pay no taxes, yet use many services, seems very likely significant transfer is going downward.

    1. I’m not sure if the overall drift of $ is upward or downward. However, years ago I saw 3 separate analysis that $ y favors move upward from the bottom y downward from the top to the middle. At least one analysis was a priori (i.e. taking the form of prediction), and at least one was empiric (actual data). Of course the data may be out of date by now.

    2. Regulations benefit those at top by minimizing competition and creating barriers to market entry.

      Tariffs do the same thing.

      Government subsidies help providers, not consumers, by driving up costs.

      The bidding process for government contracts is notoriously byzantine, effectively limiting bidders to large firms and the politically connected.

      1. That’s when they even bother to have a bidding process…

    3. If the so-called richest 10% (or top 10% earners) pay 75% of the Fed taxes, seems unlikely much wealth is moving upward.
      If 50% of the masses pay no taxes, yet use many services, seems very likely significant transfer is going downward.

      Not all graft is in the form of direct subsidies.

      Regulations transfer massive amounts of wealth, much of it upwards (the bureaucrat tax leeches who make $120K per + bennies comes to mind as a segment who profits from regulations paid for by customers who have had regulatory costs shifted to them). Then there are byzantine tax loops and other exercises that don’t involve a direct transfer of $ from party A to party B.

    4. You’re forgetting that social security and medicare consume close to 50% of federal outlays.

      Both of those programs transfer wealth upwards, as wealthier people tend to live longer. Which in turn results in wealth transfers to their heirs, disproportionately to children of two parent families. (Again skewed against the poor because the poor disproportionately come from single-parent families).

  22. they don’t make their money from their salary. They get it from investments, stock options and bonuses (which are often taxed as if they were investment income).

    I will say again, I do not believe buying and selling money (or little pieces of paper representing money) should be treated any differently than buying and selling canned dog food.

    1. Investment isn’t really that much different from labor or anything else.

      You can apply your labor to less profitable activity, or you can apply labor to more profitable activity.

      Why being profitable activity means the government should get to tax it is beyond me, but some forms of profitable activity–like labor–should be taxed differently from other forms of profitable activity–like investment…

      And that makes sense when you think of it in terms of making taxation levels as low as possible.

      If the ignoramuses out there have a higher tolerance for taxation of one form of profitable activity rather than another, for whatever reason, we sure as hell shouldn’t equalize the taxation level up–just to make it all the same?

      The goal should be to make taxation levels as low as possible–even if that means we tax different things at different rates.

      1. I really don’t see why investments should be taxed at a lower rate.

        1. I don’t see why everything shouldn’t be taxed at as low a rate as possible.

          I don’t see why income or labor or investment activity should be taxed at all!

          But since they are taxing those things, I don’t see why they all shouldn’t be taxed at the lowest possible rates…

          If the idiot masses will tolerate a lower rate of on one thing than another, then by all means, let’s keep the rate on some things lower–so long as things are taxed at their lowest possible rate.

          Whatever problems the difference in taxation rates cause, it certainly isn’t a bigger problem than the total rate of taxation being too high.

          I’d love to lay off half the federal government payroll tomorrow, and I certainly wouldn’t back off from slashing spending and taxes like that just because it might mean that some tax rates would be cut lower than others.

          I’ve got big plans, but on the way there? Whatever rates Congress comes up with are fine with me–so long as the tax rates go lower.

          1. Right, but there is something to be said for rules that are *uniform* as well as minimal.

            Is it really a “free market” if nuclear is taxed at 50% and solar is taxed at 5%?

            Similarly is it really a free market if investment bankers pay 15% while salaried professionals are paying 35% ?

            To me, part of what counts as a “free market” are that the rules have to be uniform for everyone. If they are tweaked in favor of some people, that’s not a free market.

        2. There are a few justifications for it. You may or may not find them persuasive:

          (1) Double-taxation. Most investment income derives from dividends or appreciated equities. In the former case, dividends are paid out of corporate income that has been taxed at a 35% nominal rate. In the latter case, the valuation of the equities is driven in significant part by corporate performance, i.e., profits on revenues that are taxed at the 35% nominal rate.

          (2) Incentives. Investment drives economic growth. We want more of that. So we give investment favorable treatment in the tax code.

          (3) Inflation. Because of the time factor involved in investment, investment income is more likely to lose value due to inflation than wages.

    2. Why not? Please cite examples of the similarity between the dog food and this money or paper representing money you speak and why they deserve similar treatment.

      1. Read Murray Rothbard; either The Mystery of Banking or What Has Government Done to Our Money?

    3. The justification for a lower dividend/capital gains rate was the pound of flesh already extracted by the corporate income tax. The only sense in which such income is treated differently from the profits of a (for the purposes of your example) sole proprietor dog food supply company is that they get taxed twice instead of once. Taking the corporate income tax a given and thinking of investment income as somehow divorced from its source is what gives you the illusion of something untoward.

      1. Yeah, we were discussing this upthread. That could be solved by a simple rule change: allow corporations to expense dividends. And tax capital gains at the regular income rate.

  23. Yes, living standards have improved for decades and being poor in the United States is not what it used to be?thank goodness. That only shows that even a marketplace hampered by government privilege can produce astounding wealth.

    But the most important thing to consider is the fact that, even if the depredations against private property are outrageous and destructive, they’re still in a small and contained enough state to make investments and savings a winning proposition rather than a losing one. Instead, other countries much poorer than the US or Canada suffer from a systemic and systematic form of property depredation, starting from government-sanctioned squatting by politically-favored groups, to currency debasement and forfeiture of savings through inflation, to just plain expropriation of property, especially land. Investments under such environment are considered a losing proposition unless you happen to be very well connected with the political class.

    And this is not something that’s new: These poor countries have suffered under such conditions for, let’s say it: centuries. Starting from the chieftain cultures of the native populations to the strong vestiges of medieval societies that conquered them, the culture is still not friendly to property rights.

  24. we sure as hell shouldn’t equalize the taxation level up–just to make it all the same?

    I did not say we should “equalize up”.

    And- If I buy little scraps of paper (stock certificates, we’ll say), in order to sell them later at a profit, how is that different from buying cans of dog food or toy wooden trains made in China for the same reason?

    1. Who says that they aren’t treated the same? Both would be subject to the capital gains tax, not the income tax.

      The real question is why sell your labor is taxed at a higher rate than selling your property. From a personal ownership POV, selling your labor should not be taxed at all.

      1. ^This guy.

        Not to mention dog food, being a tangible and inanimate product, does not pay taxes before you profit from its sale. The analogy is poor because it substitutes a philosophical non-distinction for a practical distinction that, like it or not, actually does exist.

  25. another thing about buying and selling money (capital gains, etc.) that people (especially libs) fail to acknowledge is that, for example, most hedge funds go broke

    they report on the success of the top 10 hedge funds from the previous year. well, duh

    the successful ones are successful. and survivor bias means that the ones that failed WON’T EVEN BE AROUND to see how terribly they did

    i’ve done a LOT of day trading (mostly futures) as well as swing trading and longterm investing

    it IS work . a lot of due diligence, research, etc.

    plus, with investing/trading, you are putting your capital AT RISk, unlike working at a job where you get paid hourly. you aren’t putting your capital at risk there.

    see: risk/reward

    market players help add liquidity. they help ensure the market flows in an orderly manner, and with the help of market makers, they esnure there will be a smaller spread (hint: not only have commissions gotten MUCH smaller over the years. i can trade 100 shares on my IB account for $1 and unliminted on my apex account for $3), but so has the spread – see decimalization

    these all benefit the little guy.

    1. there is nothing more american than OWNING a piece of a great company, and that’s what capital markets allow you to do. it’s a wonderful thing.

      and if the progs could see all the washed out hedge fund managers or the # of successful ones that literally lost hundreds of thousands before they “got it”, they wouldn’;t think (or maybe they would), that the markets are just a way for the privileged few to extract freee money by pressing buttons and taking it away from the working stiff

  26. some forms of profitable activity–like labor–should be taxed differently from other forms of profitable activity–like investment…

    Why? Unless, of course, you are a big fan of taxation as a means of social engineering.

    1. Wierdly, labor is taxed MORE right now.
      Personally, I think that we should stop treating investment income differently from wage income, though that requires cutting the corporate tax rate.

      1. Wierdly, labor is taxed MORE right now.

        The top marginal personal income tax rate is 35% right now. The top corporate income tax rate is… 35% right now. The tax rate on long-term capital gains (those held for more than 1 year) and dividends is 15%. Note that this rate applies ONLY to long-term capital gains and to dividends because the underlying entity in which the equity is held has presumably paid income tax. But here’s the real kicker. Do you know what the tax rate is on short-term capital gains? Those that have been held for less than 1 year? Don’t worry, it was a rhetorical question. The answer is 35%. Because short term capital gains are treated as ordinary income.

        1. Okay, but I can still see how long-term capital gains being taxed at 15% would skew the market. And that would also, incidentally, make it beneficial to people who are making money off of long-term capital gains to keep inflation low, so they don’t get taxed on phantom gains.

          I happen to think keeping inflation low is good for entirely different reasons, but Romney paid a 13% tax rate for a reason, and I assume it has a lot to do with long-term capital gains.

  27. “Most transfers are upward…Free-market economists know this, but they often seem to forget it, such as when they indiscriminately defend firms (such as oil and pharmaceutical companies) in today’s corporatist economy.”

    Yeah the reason they “often seem to forget” is because most free-market economists are not actually free-market economists. They are no more than conscious frauds, using their academic credentials to legitimize corporate subsidies and handouts. They paper over corporate theft, and are well-paid for their services.

    1. Always keep this quote in mind wrt professional economists:

      It is difficult to get a man to understand something when his job depends on not understanding it.

  28. The problem with designing a pure “liberal Utopia” is that one must begin by imagining an alternative race of human beings. Libertarianism first requires a broad consensus among its constituents, not just locally, but worldwide. Otherwise, it will lose out to representative democracy domestically–or even to autocracy from abroad.

    http://whatdirectdemocracymightbe.wordpress.com/

    1. Libertarianism first requires a broad consensus among its constituents, not just locally, but worldwide. Otherwise, it will lose out to representative democracy domestically–or even to autocracy from abroad.

      Baloney!

      If you don’t think life in Russia is better than it was under Soviet communism circa 1984, then you don’t know what you’re talking about.

      The extent to which life is better in Russia now than it was under the communists in 1984 is the extent to which the Russian people have embraced capitalism and libertarian ideas. If they wish for their lives to get even better still, then they need to continue to embrace even more capitalism and even more libertarian ideas.

      It’s an incremental approach.

      Incidentally, that’s the way it works here in the U.S. as well. Life is much better today here in the U.S. than it was back in the 19th century. This is due to the extent the American people embraced libertarian ideas and rejected things that were incompatible with libertarian ideas–such as slavery, the disenfranchisement of women, communistic labor unions, etc.

      If the American people wish to continue to make their lives better, they should continue to embrace libertarian solutions to their problems. The more they embrace, the better off they’ll be…

      Libertarianism is not an all or nothing proposition. Libertarianism is an incremental, pragmatic approach to solving our problems, and anyone who says otherwise doesn’t know what they’re talking about.

      1. The betterment of life since the 1800s has been only minorly related to libertarian reform of govt. Govt had to be dragged kicking and screaming into ending slavery and the oppression of women; it was a change that occurred in society. And most of the progress has been due to technology, not libertarian reform.

        I don’t think you can seriously look at the state of the law now vs. the state of the law in the 1880s and say the state has less power over random individuals now. Sure, the tent of people having freedom has gotten bigger, but the amount of freedom has shrunk dramatically.

        1. The betterment of life since the 1800s has been only minorly related to libertarian reform of govt. Govt had to be dragged kicking and screaming into ending slavery and the oppression of women; it was a change that occurred in society. And most of the progress has been due to technology, not libertarian reform.

          Most of the progress due to changes in technology were a result of discoveries that were–diffused through society, implemented, and made available at an affordable price–by rabid capitalists.

          Capitalism making technology available to us all–that’s the kind of libertarian idea I’m talking about.

          And as far as changes happening in society are concerned? Libertarianism isn’t about seizing the levers of government power and using the power of the state to force libertarianism down everybody’s throat whether they want it or not…

          Real change comes through appealing to society’s attitudes. As Brian Doherty once wrote–and I’m paraphrasing–the real purpose of libertarianism is to create more libertarians. When we get ideas like abolition, etc. in people’s heads, we’ve done our job. When we get enough people to start thinking about ending the Drug War (for instance)–that’s when the Drug War will end.

        2. It almost never happens that the government thinks of a big change–and then society suddenly warms up to the idea. It almost always happens the other way around. The government is almost always the last one to the party.

          Abolitionism existed for a long time before the government finally conceded to the abolitionists. The same thing happened with Jim Crow. MLK didn’t wait around for the government to figure out what the right thing to do with Jim Crow was–he took his message straight to the people, and society changed…

          So, if enough people embrace libertarian solutions to problems, to the point that government finally–after trying desperately to avoid libertarian solutions–concedes the point? That doesn’t show that libertarianism wasn’t victorious. That’s just the way things work.

          First comes the changes in society’s attitudes–last comes the change in government. Despite what you hear, despite what the Ron Paul campaign might say, change happens in society’s attitudes–not in Washington DC. Washington DC is the last thing to change. Always has been, always will be.

          1. First comes the changes in society’s attitudes–last comes the change in government.

            Incidentally, this is why dictators everywhere, all throughout history, have been scared to death of what people say to each other.

            The Arab Spring didn’t happen all in one night. People talked to each and changed their minds, and once that happened, there wasn’t anything Gaddafi, Mubarak, et. al., could do to make it stop. And they tried everything.

  29. Both would be subject to the capital gains tax, not the income tax.

    Sales of retail inventory are taxed at the capital gains rate?

    (I’m thinking in terms of Sched C)

    1. Your not taxed on the gross profit from their sale if it is part of your business income.

      You do illustrate the point that differential tax rates increase complexity and create an incentive to shift income from one arbitrary type to another.

    2. Capital gains on assets held for less than a year aren’t either – a point you deftly managed to avoid in your previous post. Also, as I mentioned previously, retail inventory doesn’t pay tax separately from the income you generate from selling it. So the comparison is retarded.

  30. Most transfers are upward.

    Great line.

    It’s important to add that some of the upwards is agreed upon by everyone’s representatives, who are elected by cirizens, who are informed by media outlets, if any, of dubious accuracy.

    If the Libertarians want to be serious, they are going to need a television station.

    1. If the Libertarians want to be serious, they are going to need a television station.

      Not a bad idea.

      Could we get Peter Thiel or Elon Musk to fund one?

      I actually think that a new cable news outlet with a libertarian perspective would be a smash hit right now. The “independents” are craving an alternative to the MSNBC/Fox News dichotomy, and we’d probably peels off and convert a significant slice of the Fox audience as well.

      1. “We” had one show on Fox Bidness and it didn’t last more than a year. The LP convention is still held in hotel ballrooms. I can’t see a tee-vee station even getting off the ground, without pure, money losing funding from the Kochs or some other filthy rich funding source.

        What we lovingly call independents are likely no more than centrists who can’t decide if they’re eviler or stupider. They’re just as bought as the other 99% of the country.

        1. Fox Business might not be the best place to look for an audience. Nobody watches business news, except people who are serious about business, and then they aren’t looking for a Libertarianism 101 class.

          Stossel survived for decades on ABC.

          Remember that the entire FOX television network was assembled from whole cloth by Rupert Murdoch at a time when NOBODY thought that anyone could challenge ABC CBS and NBC in the broadcast network market.
          And FOX News caught on specifically because it catered to a slice of the electorate whose views were not being represented in the media.

      2. HazelMeade| 8.19.12 @ 9:59PM |#
        …”Could we get […] Elon Musk to fund one?”

        Elon Musk? He of the rent-seeking Tesla hobby-shop?
        While ‘pure’ libertarianism is a subject for others, I’m pretty sure he isn’t within shouting distance.

        1. Sorry, somehow I assumed that a Paypal founder with an interest in Space had to be a libertarian.

          Maybe Bezos?

  31. The freedom philosophy is a radical idea that looks ahead, rather than to some mythical golden era

    Erm isn’t Sheldon a left-libertarian? Isn’t that an appeal to some mythical 19th century past that never really existed?

  32. Whether you believe in free economics or any other plan something has to change.

    1. Change for change’s sake will accomplish nothing. Such change is more often a result of panic than logic, and leads to hazardous results.

  33. Tony, the fact that after hanging out long enough on Hit and Run you continue to resort to straw man attacks instead of comprehending the complexity and reality of libertarianism and the diversity of libertarians in general indicates you’re not nearly as intelligent as you claim to be.

    Some of us here fundamentally disagree with even the concept of limited liability incorporation, so how can we possibly be shills for corporate industry? And even those here who fail to address the basic moral hazards of capitalism understand well enough that corporatism is corrupt and unlibertarian.

    1. That, and he can’t use words like “redneck” properly.

    2. Why do you object to limited liability incorporation?

  34. Excellent article! It’s nice to read something touting free-market virtues in the morning.

  35. I think the author is a bit harsh on the economists. Their admonition that it would be better to do nothing was likely premised on their belief that anything done would be worse than nothing. Always remember, first do no harm.

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