Discussion2
This area is for general discussion on any topic. Commentators are free to start any conversation or comment on meta-issues here. The discussion forum will occasionally be archived.
Archived discussion is available for May.
This area is for general discussion on any topic. Commentators are free to start any conversation or comment on meta-issues here. The discussion forum will occasionally be archived.
Archived discussion is available for May.
Old discussion has been archived & quotes have been updated. If you see anything said by a libertarian blogger/commentator that is worthy, please nominate it for the ALS “quotable quotes”.
Someone recently sent me a list of humourous restroom signs from America. The most thoughtful one was-
IF VOTING COULD EVER CHANGE THINGS,
IT WOULD BE ILLEGAL!
Is it true? If so, the only way to a libertarian society will be through some illegal act, such as a revolution to change all of society, or a secession of a part of society. Someone wrote that all democracies are illegal at their start, because they are imposed on a monarchy- monarchs never willingly give up power. Either civil war curtails rampant monarchism, or invaders destroy their legitimacy. Are you prepared to commit acts of civil disobedience for Libertarianity?
As Thomas Jefferson said, “The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants”.
It’s a key rationale for disarming the civilian population.
The Quiggler & friends often link global warming skepticism with passive smoking skepticism and point out that people like Stephen Milloy was once skeptical of the health costs of passive smoking. I didn’t know anything about this old debate so I decided to take a look.
First… it seems that there was a legitimate debate at one point about the health consequences of passive smoking. Looking back with 20/20 hindsight it is easy to say “of course passive smoking is bad” but until the evidence was available it wasn’t that silly to be skeptical. We shouldn’t judge people in historical debates based on today’s knowledge.
Second… if I’m reading the evidence correctly there is about a 25% higher chance of getting lung cancer if you’re a passive smoker. The context is that actual smokers have a 2000% higher chance of getting lung cancer.
Given the chance of getting lung cancer without smoking is quite low, a 25% increase is not much. These stats mean that if a passive smoker gets lung cancer, it is 80% likely that it was not caused by passive smoking.
While it is normally necessary to have a 100% increase before you get worried… I accept that 25% increase in multiple studies suggests a real link and it is not good to increase lung cancer. However, the scare campaign seems to be out of proportion with the actual risk.
Or am I missing something?
For the moment, let’s assume that greenhouse gases impact negatively on our climate.
1) Should govts provide incentives for businesses to invest in specific alternative energies that produce less greenhouse gases, e.g. hot rocks?
2) Should govts provide incentives for consumers to buy specific ‘clean’ energy, e.g. subsidised solar hot water services?
The following might be worth adding to the blog list:-
http://www.free-europe.org
Although I do find it ironic that whilst the site mostly opposes the EU they are in fact fostering the notion of a stronger European identity merely by the way they identify themselves.
Terje, the world runs on the vitamin supplement, Irony! Our ‘Liberal’ Party is turning into a centralizing party, the Greens are turning into Reds, and we’re expanding laws, but losing sight of Justice! Perhaps we should simply accept that things will turn into their opposites over time?
Also my personal blog is listed under Libertarian blogs. Whilst I’m a libertarian and whilst I do blog there occassionally it is not really a libertarian blog. If I want to write about freedom I generally do it here on ALS.
Thanks Terje;
I am not sure yet how libertarian but definately worthwhile.
What I meant to say was that I think it should be listed under “Other Blogs” or else not at all.
You Economic Types
The following is from the Free Europe website, (Spain is in Big Trouble) and while I am not economically illiterate (all right, not completely) I could use your help and enlightenment.
“The euro is the problem. European interest-rate policy applies to every country that uses the euro as its currency. Problem is, the European countries are all different and their economies move at totally different speeds. Interest rates are the politicians’ most important tool for managing the economy. By joining the euro, you’re giving up that power.”
Is there any way around this? It seems incredible that nations would forgo the ability to take corrective measures in their local economies, or at least allow a form of free market corrections to occur.
I assume that selling gold and foreign currency reserves is probably the wrong way to go as that removes backing for their currency. Is this correct?
In the long run, monetary policy doesn’t effect the real economy (ie how much is produced). Attempts to stimulate the real economy through “expansionary monetary policy” (ie creating more money) will have some impact in the short term, but they ultimately lead to inflation and no higher production when the market sees through the “monetary illusion”.
Austrian economists go further and claim that the temporary monetary distortion creates a distortion in the credit markets that leads to a misallocation of resources (specifically, capital) which will ultimately come back to bite as a recession.
For these reasons and more (eg long & variable lags etc), good economists no longer promote active monetary policy aimed towards managing the real economy.
Therefore the only goal of monetary policy is to control the supply of money and therefore control inflation. As long as the euro has low inflation (and their reserve bank has been fairly good at targetting inflation — as they should) there is nothing to worry about by joining the Euro.
It is untrue to say (as your quote says) that interest rates are the politicians most important tool for managing the economy. First… most monetary economists now agree that monetary decisions should be taken away from politicians and given to an independent authority (eg the independent RBA in Australia). Second… as explained above, monetary policy should be aimed at monetary stability (ie low inflation) not at controlling the economy.
Inflation in Spain is 3.5%. Not a huge concern. And using the EURO they likely get that inflation outcome with lower rates of interest than they would with an independent floating currency. Fixing exchange rates or joining a currency block generally allows access to deeper financial markets.
Thanks, John and Terje.
Does no-one want to answer my questions at #5?
E.D. - no, government shouldn’t be picking winners.
ED - no, governments should remove any disincentives and then get out of the way.
ED - you could propose enough assumptions and build a hypothetical scenerios under which I would say yes. But given current levels of knowledge and the current level of certainty and the existing market distortions I agree with Brendan and David.
If govts do nothing, what makes you think the free market will respond to global warming? There’s no incentive (profit) for businesses to either cut back greenhouse gas emissions, nor is there an incentive (profit) to remove it from the atmosphere.
I don’t think governments should do nothing. I think they should stop subsidising coal.
ED; Suppose that the state was to intervene in a big way, what guarantee would you give that they will get it right? The incentive for private buisiness is efficiency - lowering the use of energy per unit of production, by better processes.
If the government were to get if wrong, first they would spemd years denying it, making it a matter of principle, and in the process skew the economics of the alternative energy industry away from other methods which may be on the right track.
In the Courier Mail today there is an article which shows that for the cost of the subsidy on a rail ticket from Brisbane to Cairns ($900) the Qld. government could fly seven passengers on budget air fairs. In reply the minister Paul Lucas said the government remained committed to keeping rail services operating regardless of costs.
Do these people sound like the gurus to solve the global warming problem?
But Terje — do you believe the government should continue to subsidise non-coal energy? If you believe in removing all energy subsidies (as I do) then you don’t believe in adjusting policy to a less coal friendly position.
E.D. — the question isn’t whether the private sector will create a perfect outcome. The question is whether the government will be able to make the situation better if you properly calculate all the benefits & costs.
The market is not really interested in global warming, except to a peripheral marketing extent. What the market will respond to is changes in the availability (scarcity) of resources. If industrialisation of China and India increases demand faster than supply for fossil fuels, price will rise. When price rises, alternatives (nuclear, wind, solar) and increased efficiency (lower emissions per kWh) will be sought, and once these alternatives have economies of scale, their price will drop, bringing us all cheaper energy while we have been increasing our demand.
There is an irony here for environmentalists that removing barriers to fossil fuel use now could well see it as the primary source of our energy and transportation end sooner, all through the actions of the market. So the market may inadvertently solve greenhouse gas emissions through the profit motive.
I wasn’t aware that the coal industry is subsidised (though I should not be surprised). Nonetheless, even without the subsidy it would remain a cheaper option than the environmentally friendly alternatives (solar, hot rocks, etc.).
John - so what you are saying is that it boils down to two imperfect alternatives and govt is the worse of the two. I am struggling with this since it seems to me the other way around. Perhaps it is because I see it as a choice between (a) do nothing or (b) do something.
Brendan - I can see how rising prices would create incentives for producers of alternative fuels. But could this not also work in favour of the producers of fossil fuels? Surely they would not want to lose their market share.
BTW, does anyone know how much the govt (State and/or federal) subsidies the fossil fuel industry in Australia?
E.D. — it always boils down to two imperfect alternatives. Both the market and the government relies on humans and humans always have imperfect information.
You are correct that one choice for the government is (a) do nothing; or (b) do something. To answer this question you need to know — if they do something what are the likely benefits and costs? If the benefits of action exceed the costs then the government should act. If the costs of action exceed the benefits then the government shouldn’t act.
There is another question for the government: if they are going to act, what should they do? Given the goal is to encourage a shift away from carbon-heavy energy and towards alternatives (clean coal, nuclear, wind, hot rock etc) there are three general ways to do this: (1) regulate & mandate; (2) pick winners; or (3) introduce a price adjustment.
In your original question you suggested option 2. However history and economics indicate that the government is generally not very good at picking winners and those sort of long-term strategic decisions are best left to the market. The option of regulate & mandate is even worse as it requires the government to pick winners and pick market structures. If the government is going to act — they should introduce a price adjustment and allow the market to adjust to the new price signals.
There are two ways of adjusting the price of carbon — either introduce a “cap & trade” system with scarcity (ie carbon trading), or introduce a carbon tax. At the moment the cap & trade system seems to be the most popular and most likely, though personally I prefer the idea of a carbon tax, offset with other tax cuts.
I should add the reminder that the second question is based on the original assumption that the government should act. Of course, if the costs of government action exceed the benefits (even for a carbon tax) then it still shouldn’t be introduced.
In discussing a price for carbon emissions it is worth clarifying whether you mean a price on fossil fuel based emissions or on all gas emissions. The first entails the transport sector and electricity and is pretty straight forward. The later is greater in breadth and entails complex audits of every detail of very many businesses. The later concerns me far more than the former, but the later is probably notionally more true to market principles.
The pommygranate blog expounds an interesting new idea called the T3 carbon tax. It is not without some issues but it’s a neat concept and worth getting your head around. It is quite different to a flat tax on emissions.
To answer my own question at #25:
According to the Productivity Commission report “Trade and Assistance Review 2005-06″ (Table 2.7) total industry net assistance for petroleum, coal, chemical and associated products manufacture increased from $864.8m in 2004-05 to $917.9m in 2005-06. Table A.3 provides a more detailed breakdown.
Across all industries (Table 2.6) net assistance has grown from $6.8b in 2004-05 to $7.5b in 2005-06.
Admittedly, I haven’t studied the report in detail, but I suspect these figures don’t count State govt assistance.
There has to be a blog piece in this bit of tripe:
http://www.news.com.au/story/0,23599,21938229-1702,00.html
The WA government is making it a crime to build a nuclear power station in the state, attracting a fine of $500,000.
Do these guys sit around in parliament trying to come up with fun new ways to justify their existence?
It probably keepe their minds off the Commission into Burke’s activities- they might not have jobs soon!
Market Failure.
As someone relatively new to libertarianism, I imagine that critics are likely to point to market failures as demonstration that free markets do not always work. Therefore, I would be interested in reading the libertarian view of ‘market failure.’ I did some basic research and identified the following categories of market failure (there may be more):
(1) Public Good (e.g. education, public transport, etc.)
(2) Market power (e.g. monopoly, cartel, oligopoly, e.g. price gouging, predatory pricing, etc.)
(3) Negative Externalities (e.g. pollution)
(4) Inequities (e.g. income, health, education, housing)
(5) Information Asymmetry (not sure what this is!).
Can anyone point me to a book/article or any good resource that explains the libertarian perspective on this issue?
Thanks
The economists can point you to a book. Why don’t you discuss your points here. That’s better than a book/article! I’ll start.
Negative externalities may require government intervention, but also can often be solved through increased privatisation. Inequality usually doesn’t matter.
OK, why do you think inequality usually does not matter?
When do you think it does matter?
Equality before the law is the only equality that matters.
Come on lurkers, throw your 2c in!
In a nutshell: as Brendan says, the only equality that matters is equality under law. 99% of all other calls for equality are motivated by negative emotions such as envy and greed, and have no moral or rational basis behind them i.e. it’s unfair has so much money, I want some and I’ll vote for the government that gets it for me. Or it’s unfair that I live in the country and don’t have the same access to broadband internet as city folk without having to pay extra for it. Every one of these type of calls for equality impose an obligaton on someone else to provide it. An obligation that is not morally right.
In terms of financial equality, a vibrant market place will have some people making more money than others all the time. If it’s a free market, the person making more money is doing so because they are working harder or providing more or better services to others, which means they are doing more good in the community. A rising tide raises all ships, so as the economy grows from these business people doing well, then the people at the bottom end of the scale end up earning more and having access to more opportunity. This is a positive system. The emotions that motivate the call for equality are negative ones, and the actions that government’s take to enforce this equality end up destroying this production that raises everyones quality of life.
The 1% of the calls for equality that are ‘reasonable’ aren’t really calls for equality. Like the disabled person who may need some special assistance. This is not the same issue as the other 99%, and for a lot of libertarians and free marketeers support a form of wealth redistribution to these people.
Civil society means equality under law. That, and not pandering to negative emotions in some people, is the way forward for a better life for all.
This is pretty basic as I don’t know where you are at. You might have a PhD in economics. Feel free to disagree, it’s often the best way to work through the issues.
I most definitely do not have a PhD or any other qualifications in economics. My questions are based on genuine curiosity.
If my understanding of the ‘rising tide’ analogy is correct, what you are saying is that in a growing economy, everyone gets richer. There will always be some poor and some rich. But what some people worry about is the growing gap between rich and poor, especially as the rich have more resources, power and information at their disposal to become richer. Whereas the poor don’t.
If the libertarian view is that only a small fraction of the population really need assistance, under a libertarian govt, what would happen to welfare payments (disability, Newstart, old age pension, sole parents, veterans, etc.), Medicare, PBS, Family Tax Benefit, etc.?
I disagree with Michael that anyone needs state assistance, even disabled people. Disabled people are definitely unfortunate and would be at the top of my list of those worthy OF CHARITY, but I can’t see any benefit to paying them sit down money and giving them state housing modified to accomodate their needs. Providing for current welfare of disabled should be down to the individual, if they are unable, then charity should step in.
Legislative protection of disabled results in companies being forced to provide access for a tiny segment of the population. Under current conditions, companies cannot derive any commercial benefit out of providing for the disabled, since it is mandated by law. However if the electorate feels disabled people should be catered for, then presumably they’ll see companies that do in a better light than those that don’t. Competitive pressures would result in most* companies providing access for disabled people, without need for extra bureaucrats hunting down non-compliant organisations.
*I say most, because for some there won’t be the same competitive pressures to confirm, but neither will there the demand form the community. Resources allocated efficiently, job done.
If my understanding of the ‘rising tide’ analogy is correct, what you are saying is that in a growing economy, everyone gets richer. There will always be some poor and some rich.
Say I earn $100/week working for you, and your business pays you $1000/week. Through hard work on both our parts the business is doubled. I get $200/week. You get $2000/week. The business can now employ someone else at $100/week. The earnings gap between us increased, but is anyone worse off?
We also have a funny idea on what is poor. When someone here has access to health, education, justice, housing and is richer than 90% of the people on earth, I think it’s a bit much to say they are ‘poor’ because someone else here earns more than them, or they don’t have access to at least 40 Foxtel channels.
what some people worry about is the growing gap between rich and poor, especially as the rich have more resources, power and information at their disposal to become richer. Whereas the poor don’t.
I’m certainly not arguing against the fact that wealth begets wealth. What matters here is primarily two things. First is rule of law (and equality under law) such that everyone has their freedom and property protected. Second is access to opportunity. If people have access to these things then they can advance themselves and the poor can rise out of poverty. Free markets produce both rich people and opportunities.
Consider this: in most countries where the gap between rich and ‘poor’ is large, the poor people have access to internet, own cars and houses, see doctors, send their kids to uni, have protection under law etc. In most countries where the gap between rich and poor is small, the poor really live like shit! And often in these places the rich do have the power to abuse and exploit the poor.
If the libertarian view is that only a small fraction of the population really need assistance, under a libertarian govt, what would happen to welfare payments (disability, Newstart, old age pension, sole parents, veterans, etc.), Medicare, PBS, Family Tax Benefit, etc.?
Consider this: http://ldp.org.au/federal/policies/tax.html
Another point is that under free market conditions, being rich isn’t a guarantee of staying rich, whereas the power to continue to be rich under a regulated economy is higher for the wealthy (this is called rent seeking), and there will be some distortions in the transition between a regulated economy and a deregulated one whereby the wealthy can improve on their situation because of the residual effects of wealth and connections, in the long run the market will reward the better abled, not the better connected.
Wages don’t rise because some people get rich, they rise because rich people have more demand for services. If Rupert Murdoch or Bill Gates simply rested on their laurels and put their cash under a mattress, that would be bad for the economy as a whole. But they don’t. They buy products and services and invest in new ventures. Cash under the mattress is lost, consumption and investment begets consumption and investment and wealth creation and employment etc. etc.
Why would Bill Gates putting his cash under a mattress be a bad thing? The economy’s then handing him pieces of paper at no expense to itself in exchange for his labour, and he’s not consuming so the rest of the goods produced are then split up between less people (i.e. the rest of society) who are therefore better off.
wealth outside of the banking system is dead money. Unless GMB gets his way on fractional reserve banking, if Gates simply deposited his wealth in a bank, they’d lend out a significant proportion of it to others who would invest it or consume with it, thus leading to wealth/capital creation. Bank notes in mattresses is not capital. Capital is investment in real things that can produce other things.
You may be getting Gates input into the economy essentially for free, but you are not leveraging his wealth to create more wealth for people other than Gates. Gates’ value to America isn’t just his bottom line, but the wealth and employment that he knowingly or unknowingly enables others to create through consumption and investment of his vast wealth.
Suppose someone says to you “your belief in free markets is based on faith.” How would you respond?
I’d say my belief in free markets is based on empirical evidence and reason.
What empirical evidence?
If Bill Gates was to keep his money under the bed the result would be a trend, however small towards deflation, as this action would reduce the money in circulation in relation to the available goods and services.
Prices would tend to fall as less money would be out in the market to chase goods and producers and sellers would have to reduce prices in order to compensate.
Of course the real reason is that the value of the money would escalate in response to the reduction in supply. Wealth outside the banking system is not strictly dead money, it does good by its absence.
The emperical evidence that countries with free markets have a high standard of living, while countries with controlled economies don’t. The empirical evidence that free people will, on the whole, work to improve their own situations. The emperical evidence that government programs which are justified as reducing poverty generally have worse results than free people voluntarily cooperating for mutual benefit.
If you have issues with any of these we can discuss examples. Or you provide an example of where it is failed and we’ll discuss that.
Where is the hard evidence to back this up?
Whilst far from conclusive the following example is not a bad place to start. It is an index of the worlds nations ranked according the economic freedom. The free countries tend to be the ones that are also rich and nice to live in.
http://www.heritage.org/research/features/index/countries.cfm
Start with Terje’s list above. Have a look around the world? Do you want to argue that Cuba is a communist paradise? What about that life in China for the average person is actually getting worse now that their economy is freeing up? How about that the unregulated ecomony of Hong Kong has actually made people poorer? Your question is pretty broad.
If you want to do a serious study, read Adam Smith’s ‘Nature and Causes of the Wealth of Nations’. If you want other web sites that discuss economics from the free market perspective look at the links on this page under ‘Aust Libertarian Blogs’.
Do you believe that people are unable to live freely and cooperate voluntarily to mutual benefit?
No no no — don’t read Wealth of Nations. While a hugely important book, it’s a painful read. For a great beginners guide to the virtues of the free-market I can’t go past Milton Friedman’s classic 1980 book “Free to Choose”. It was also made into a TV series, available on DVD. Strongly recommended.
Also try Henry Hazlett’s “Economics in One Lesson” which is a short book, easy to understand and has lots of good examples.
If the debate is free market v planned economy the best examples are East v West Germany and Nth v Sth Korea because there were few differences between those countries until they chose opposing political structures.
If the debate is totally free market v welfare state then the debate becomes more nuanced, but ultimately the free-market still leads to a stronger economy. Of course, there are some winners in a welfare state — but in the long run I don’t believe the welfare state helps poor people or the economy or society as a whole.
A really interesting book that touches on some of the consequences of the welfare state is “Banker to the Poor” by Muhammad Yunus — the guy that started the Grameen Bank. He tells of how the welfare system in developed countries undermines his otherwise successful efforts at helping poor people help themselves.
ED; If you are serious about this Johns advice is very good. Michael made a good suggestion however it is very dry.
Try Johns lighter selections, then if you want to follow it up you can go for the deeper stuff. I would add, Understanding Personal and Economic Liberty” by Ron Kitching, but after Economics in one Lesson.
If you wish to get a better understanding of the basic philosophy behind us, try “Libertarianism in one Lesson” by David Bergland.
Thanks for the tips, I will follow them up. If you know of any good books that address the specific issue of market failure, that would also be helpful.
I guess it is pretty obvious that communist regimes result in worse outcomes than democratic/liberal ones. But that is rarely in dispute (though a friend once remarked something like “communism is OK in principle, just hard to implement in practice”).
Most developed economies are democratic and have free markets, but also have subsidised health, welfare, education, transport, utilities, industry protection, etc. So I think many people feel that we currently have the balance about right, and see no need for further liberalisation.
My understanding is that Australia is already among the top freest economies in the world. So what evidence is there that further liberalisation will make us even more prosperous, or are we approaching the point where costs begin to outweigh benefits?
Subsidies and industry protection are in direct contradiction to free markets. But you’re right; we do have them.
If you want to see a social democracy in action have a look at France. Lots of regulation, getting by OK but also with lots of problems. I’s say the free market alternative is the better choice. I’d also say unequivocally that a free market system is more robust, whereas the regulated system requires extremely careful management that will get screwed at some point and leave the most vulnerable people in our society in a bad way. I’m not saying a free market alternative never has any losers at any time. There is realistically no system at our current time that can achieve this. But the free market alternative will elevate the quality of life for those at the bottom of the scale better than any of the alternatives. Human development and our level of sophistication will need to increase substantially before this will change (if ever). (And the best way to encourage that type of progress is through the creativity achieved through a free market!).
or are we approaching the point where cost begin to outweight the benefits?
If you have rule of law (in a liberal democratic context) it is unlikely that the costs will outweight the benefits from liberalising your markets. If you have civil society (i.e. rule of law with a solid social structure with things like shared values, family structures, charitable organisations etc) it will definitely be beneficial to further free up your economy. I would say Australia is in this situation.
Terje,
Thank you for the link, I downloaded the Executive Summary and chapters. Though I have not read them in detail yet, a quick skim revealed that this is an extremely valuable source of information.
Thanks again!
I read from time to time that the US Health Care System is inequitable. If you have money it is probably the best in the world. But if you don’t, it is close to the worst. Since the US does not have universal health care cover, is this an example of market failure?
E.D. — the lack of government-provided universal health care is not a market failure.
The US does have some level of universal cover because hospitals are required to treat any patient that comes through their doors without checking their capacity to pay. But I presume you’re talking about universal health insurance, which America (unlike Australia & Britain) does not have.
Better health care for everybody is a good thing. But it is important to remember that perfection or utopia are not viable options and so it is not necessarily a market failure if the system is imperfect.
Market failure is when the outcome is different to the abstract notion of the perfectly competitive equilibrium position, which is the most efficient. But efficiency doesn’t mean perfection. Efficiency just means that resources are being used in the best possible way — but there will still be suffering, death, murder, accidents, shortages, unhappiness etc.
Consider this as a useful generalisation: There is an efficient amount of everything that is non-zero and non-infinite.
Standard market failure arguments are (1) externalities; (2) public good; and (3) natural monopolies. Economic liberals & libertarians would argue that you can tackle most public goods by good property allocation, natural monopolies are extremely rare and externality arguments are generally too vague and manufactured to be taken seriously. And Austrian economists would question whether a perfectly competitive equilibrium is the correct benchmark anyway given constantly changing preferences & knowledge.
I am not trying to defend the American health system here. I’m just trying to answer your question. The question of appropriate health policy is too complex for me to tackle this morning.
I think such clarity about the term “market failure” is important. A lot of people use the term “market failure” to mean “an outcome I don’t personally like”. Using the latter definition I could name a sqillion market failures. For example the nearest swimming pool open to the public is about 35 minutes walk from my house and I would prefer that there was one that was closer.
Ok, i just tried to post this but it didnt come up so.
I just had the pleasure of watcing a news article about some anti war protestors on the Australian mainland who stopped a military convoy, laid down underneath it and chained themselves to it.
These people’s appearance was quite disgusting, dirty dreads, half shaved heads, piercings, generally dirty and pretty unintelligent looking.
After being asked to get off/out from under, the trucks by the military, 2 males chained themselves to the underside of the truck with a chain that was surrounded by a water pipe with their hands chained tightly together making it difficult for the chain to be cut.
Shortly afterwards, the 2 males under the truck asked to have water be poured on them because the truck’s exhaust was burning them. The anti war protestor filming them then said, These two people are getting burned because the military refuses to turn off their truck.
Then my tv screen was filled with dirty people yelling things such as, Australia doesnt support a war, get out of Iraq, etc etc.
Eventually the police were called and the protestors were arrested.
However, my question is, What do these people hope to achieve with action like this? Personally i hope more of this happens and it gets greater media coverage, because honestly, it is only showing the general intelligence level of people those people, And the kind of behaviours that they engage in.
I believe acts like this do more harm than good.
Perry, the worrying point is that the antiglobalists might be back! Years ago, these militant anarchists tried to disrupt international meetings, and had thousands of people clogging up the streets. I hope that the crowds stay small, and the event is relatively unreported. They thrive on publicity.
Terje, you’re the monetary man around these parts, is hoarded money (eg. wealth stored in mattresses) a good or a bad thing? I agree with Jim’s point that it has a deflationary impact, but without being all Keynesian and banging on about multiplier effects, is non-consumption and saving outside of the banking system an inefficient allocation of resources as well? I guess it keeps the central banks’ printing presses in business.
Perry,
As for the US health system, there are a number of issues that are entirely down to regulation that prevents ordinary Americans getting healthcare they’d otherwise be able to afford.
A primary one is the monopoly of the American Medical Association, an organisation that severely limits who can practise healthcare. It does this by controlling who can get training, who can become a doctor and where they can offer their services.
Think of it this way, you can hire an accountant that is neither a CPA or Chartered accountant, but you’d expect to pay less because they are not certified by a professional body. However, you can’t hire a doctor who doesn’t have a medical license. Doctors will argue that this is to maintain levels of professional healthcare, but its effect is to limit the availability of healthcare and artificially increase price.
If you can’t afford a licensed doctor, who can you use? Pharmacists? No, because they can only sell you non-prescription drugs. Nurses? Same reason. You end up having going to see a doctor to look after common colds, influenza and other diseases and common ailments that are well understood and whose treatment are known.
This is one of the reasons for the growth of pseudo-medical professions such as chiropractors, who are also trying to legitimise their profession following the medical doctors tried and tested professional license scam. If medical practices weren’t as regulated and there was a more gradual scale of doctor or health care provider, the market for chiropractors may decrease (as it would for full general practitioners), and people may be able to access better healthcare. Not only that, but GPs would be freed up from dealing with routine medical procedures and be able to apply their knowledge to more difficult cases (and charge more to do so).
Another reason why American health insurance costs are high is because of a consumer demand for the latest and best treatment. Latest and best tends to cost more than tried and testest procedures. So the US health consumer is demanding coverage for expensive treatments and paying high insurance costs. Who are you to tell them that they can’t have coverage for the latest and best? Perhaps they could save themselves some money by opting to have less coverage, but when it comes to health, people do make many irrational decisions.
I have a very good cartoon on the subject out of ‘Defending The Undefendable’ featuring a guy reveling in a large pile of money with his wife looking on disapprovingly, saying ‘lip up Edith, you knew I wasn’t a Keynesian when you married me. Unfortunately I can’t upload it.
Brendan - hoarding cash would tend to be deflationary although other dynamics need to be considered also.
If people demand currency for the purpose of hoarding then that demand drives up the value of the currency (deflation). Or looking at it another way if people retain currency (ie hoard it) rather than spending it the supply of currency to those that want it is limited and it’s value rises (ie deflation).
The value of a currency (ie the goods people will trade for it) is always dependent on both supply and demand. In turn the value of debt and many commercial contracts are generally dependent on the unit of account (ie value of currency) and the credibility of the counter party. The only reason that the value of currency really matters much is that it is typically also the most common unit of account. If this were not the case inflation and/or deflation would be largely irrelevant.
In the old gold standard days you generally saw people hoarding gold coin when the banks were considered to be creating credit (in the form of promisory notes or demand deposits) too liberally. As such it generally occured at a time when things were tending towards inflation and operated as a form of automatic distributed tightening. Much as the central bank would do today under such a situation. The correct response under such a situation would have been for private banks to then entice people to give then more gold coin by offering a higher rate of interest and to likewise slow down borrowing. Unfortunately during the gold standard era it was also common to see interest rates regulated and so proper price adjustments in credit markets did not always occur in a timely fashion. A lot of this regulation of usury stemed from old christian moral superstition.
When the USA left the Brenton Woods gold standard in the 1970s the high inflation should have seen high nominal interest rates to ensure a continuing rate of real interest. However interest rate regulation was the norm in many US states and banking was essentially shut down in many places as negative real interest rates were mandated by the perverse intersection of high inflation and interest rate regulation.
Hoarding is a natural process but it’s effect can be dire if the market is not free to adjust.
Sorry. I know that is more than you asked for.
I had a book called ‘Cliches of Socialism’ and it has gone astray in one of my moves over the years and I wish to replace it. I can’t find another, and I would like anyone who knows if it is available or where, to let me know.
Terje;
I once heard that during the treasure ship era, gold and silver in Spain suffered from heavy inflation owing to the huge quantities brought in with no corrosponding increase in goods available. Can you tell me if this was the case.
Terje, you explained why it is deflationary, and I agree.
It doesn’t really answer my question on whether hoarding has a negative impact outside of its deflationary aspects. If say an individual (or group of individuals) irrationally witheld their hoard of cash (as a store of wealth, much like gold) even in response to high interest rates, what would its economic effect be? Say the market was self correcting and other people (not the hoarders) saved more (in banks) in response to the high interest rates.
Although I am skeptical regarding the multiplier effect of consumption/saving ratio as a response to government spending, does it not have an effect on the spending or saving of private wealth?
If I bought up a pile of office space in Sydney’s CBD and witheld it from the market, the value of real estate in the CBD would appreciate, meaning people would have to spend more to access available space or build additional space. The idle office space would still exist, but just have no economic use. It would be a kind of fallacy of the broken window in that other people’s assets increase in value, more office space is built to compensate, but essentially it is destructive in that I am withdrawing an asset permanently from economic use.
This is why I suggest that hoarding is destructive to the economy. You are withdrawing wealth from the economy and thus reducing the available capital from which to grow the economy. Everyone else’s money increases in value (deflation) and people are able to attract higher interest rates for their savings (scarcity of available savings), but the net impact is a loss of wealth and a diversion of capital from other uses to fill the gap created by hoarding.
Brendan,
In a gold base economy such action would increase the real yield on marginal gold mines and quite quickly lift production as labour and capital was brought to bear on these activities. Gold importation would also become more profitable.
In a fiat economy a central bank would generally respond by producing more currency in line with it’s target for the value of currency (set by CPI, exchange rate or otherwise).
Ultimately nobody has the market power to deliberately manipulate the value of a nations currency. The exception being a central bank under a fiat system. And in rational nations central banks are at least notional meant to pursue the common good, not narrow self interest.
Regards,
Terje.
p.s. Hoading may notionally create deflation but de-hoarding will be notionally inflationary. Neither outcome is good but generally the two balance out if normal price adjustments are permitted. Ultimately successful speculation is always a good thing as it moves resources across temporal boundaries in the same way that trade moves resources across physical boundaries.
Before i had the ingeneous idea of looking for an Australian Libertarian site, i had to settle with ones that came up from google, the main one i looked at was http://www.thedissidentfrogman.com Which is probably more rightwing than you guys seem to be.
But after the Denmark stuff involving the Allah comics, they started hosting these pictures i thought you guys might like if you havent seen them yet.
http://www.thedissidentfrogman.com/dacha/001580.html
Terje,
I’m not talking about people deliberately trying to influence the market, or people speculating. I’m trying to say that it is not an efficient allocation of resources to store wealth as “out of circulation” cash and is harmful because it reduces the available wealth with which to invest or consume which means that other cash becomes more scarce and effort and wealth is consumed to fill the gap unneccessarily.
I guess my question wasn’t monetary at all, but a general economics one.
This leads me to other hoarding, this time down to artificially created scarcity, that of housing. Housing is scarce because state planning authorities are reluctant to release land. This artificially increases the price of existing houses, leading people to commit excessive resources to housing that could be better invested or spent elsewhere. The state is a hoarder of land which results in a less than efficient market allocation of resources regarding housing.
If individuals want to spend their money buying office space and leaving it vacant, then that is an efficient use of the office space. It is the use that gives those individuals the most utility. And those individuals individual preferences go to make up the market demand for office space. No problem. If the government artificially restricts the supply, however, not so much good.
John,
Your response (#5
suggests that you would support a free market based health care system on the basis that it is economically more efficient (though not perfect) compared to a govt run system. Am I right in assuming that in such a system the level of health care received would correspond to the capacity to pay for it. In other words, the market for health care is no different to any other market.
If so, what if a person’s capacity to pay is very nearly zero? Surely, not being able to afford a life-saving medical treatment is different to being unable to afford an ipod?
BTW, I notice that the LDP web page does not have a detailed health policy.
Tim, you certainly know how to shoot down a hypothetical. My office space example was an attempt at showing something that *most* people would agree would be a stupid thing to do and relating it to the same princple of hoarding cash in your mattress. Unless you got some sort of utility out of hoarding itself that exceeded a desire to maximise returns, hoarding is a poor policy for yourself and for the economy as a whole. Hoarding is a natural tendency, but it is not entirely rational.
ED - ever heard of charity, or what about pro bono work by medical practitioners? The philanthropy of people should not be under-estimated.
Yeah, but no-one said everyone has to be entirely rational, the market still acts as if they were. If you are free, you are free to act in fashions that other people don’t agree with, whether for reasons of religion or rational analysis or anything else.
Plus, perhaps the hoarders don’t trust the banking system - my wife used to keep her collected savings in US dollars hidden around her apartment when she was living in Moscow. Having lived through several banking collapses and seen her mother lose her life savings it was an entirely rational response. (Though she doesn’t mind the bank in Australia and is even on the board of directors of our community bank…
Short answer, if you get some sort of utility out of it, go for it, and the rest of the economy is just a collection of individuals maximising their utility, and people who moralise about what other individuals should so with their money can sod off.
E.D. — I wasn’t endorsing any particular sort of health policy in my last comment.
In a free-market system then the quality of health care would be unequal. In a government system the quality of health care is unequal. In any world without infinite resources the quality of health care will be unequal.
I agree that most people value health more highly than an ipod. Though it is wrong to think of health as a qualitatively different thing that cannot be compared with other consumption goods. People regularly make trade-offs between their health and other goods. Smokers. Drinkers. Drug-users. Fatty-food-eaters. People who play dangerous sports. People who accept dangerous jobs. All these people are accepting some sort of health (or life-expectancy) trade-off.
I think you are concerned about the quality of health care for the poorest people in society. The most obvious solution to this isn’t nationalising something — but increasing their wealth and decreasing poverty. This is best achieved through economic growth.
I also note that government regulation increases the cost of health care. Restrictions on drugs, licencing laws for doctors and pharmacists, tax etc all drive up the price of health care. In a free-market system we would likely end up with more & cheaper health providers of varying quality.
Combined with higher incomes, this will make decent health care easily affordable for the vaste majority of people in the developed world. The remainder could easily be assisted through private charity — which is already around $10 billion in Australia and would be significantly higher if there was no (or little) tax.
If you want to consider government assistance, it would be better to consider a simple transfer scheme to the poor (such as a negative income tax — check the LDP’s 30/30 policy) rather than government control of an industry. This ensures that production remains efficient while directly helping the people you want to help.
It is worth having some perspective with regards to health care. If you really want to get health care to the most needy, it isn’t the unemployed auto-worker in Detroit that you should be worrying about. He has savings, family, friends, charity, loans, basic welfare, clean water etc available to him. Instead, consider the plight of those starving and dying from easily preventable diseases in the 3rd world. The west doesn’t have real poverty-related health problems any more — and the reason is economic growth, not government schemes.
The most dramatic way you could improve health outcomes in the world is by bringing secure property rights and trade to the 3rd world — and thereby increase their wealth. Instead, we export our bureaucracies.
It is probably also worth mentioning a popular “half way” measure regarding health care — health vouchers. The important element here is that the health industry is not nationalised or controlled by the government… but the government provides people with a “voucher” worth $x that must be spent on health.
This is similar to the suggestion above of directly help to the poor, but it has the added paternalistic element of saying that they must spend $x on health. The rationale behind this is presumably that poor people are too stupid to spend their money correctly. I don’t like this assumption, but many people with a more pro-government attitude do.
I should also point out that I am not outlining LDP policy here. I personally support a purely free-market system, but the LDP is more moderate & pragmatic than me.
Happy to have you in the discussion E.D. and please feel free to continue asking question and/or challenging us.
I am currently trying wordpress for my blog RWL,For a while I will maintain both while I decide the relative advantages. I am still building it but anyone who wishes to see it in the new format can go to : -
http://jimfryar.wordpress.com/
Maccas hatred: http://www.smh.com.au/news/tv–radio/nandos-ad-stays/2007/06/26/1182623906748.html
The Advertising Standards Bureau cleared 28 of 31 ads that had complaints attached to them, including an ad depicting a Pole Dancing Stripper Mum. Maccas was pinged for 2 of the 3 of the complaints that were upheld.
One was an ad depecting a child getting into a space ship with aliens. This was considered a dangerous activity because our kids are apparently too stupid to diffentiate between a space ship full of aliens and a human stranger in a car.
Far be it for me to judge a book by it’s cover (well I actually do it all the time) but a cursory glance at the list of members (http://www.adstandards.com.au/pages/page15.asp) of the ASB board tells me that maccas doesn’t have too many buddies on the board. It also tells me that there are people on that board who would use any niggling excuse to dump on the big M.
Thanks for all the useful information to date. Since I’ve been invited to continue asking questions, I shall do so.
Is there a difference between “trickle down economics” and “a rising tide lifts all boats”? And is there a less clumsy terminology?
Jim — you stole the ALS format! You cheeky bastard.
But seriously, I think you should downgrade your blog and join the ALS team full-time.
E.D. — what does E.D. stand for anyway? Trickle-down & rising tide refer to the same concept. I’m not sure whether the following is less clumsy, but the idea is simply that economic growth ends up benefiting everybody.
Despite the protestations of social democrats & others, it is a fairly unremarkable truism. For evidence, compare the poor people in Hong Kong with the poor people in Bangladesh.
John,
Some would argue that Hong Kong’s success is more due to it being an Entrepot for the massive mainland Market. Any thoughts on this?
Aw shucks, John, I didn’t know you cared. I just love being flattered.
The format may change, its very much experimental at the moment. I am not very good with the process yet and I think I may be able to do more on WordPress.
Ben — I’m sure there were many reasons for the success of Hong Kong. I doubt closeness to China is the main reason. Singapore & Dubai are also successful and Laos & Nth Korea are close to China. The point shared by the success stories is a healthy respect for private property and trade.
But this is besides the point. The issue was whether economic growth helps poor people. As Hong Kong shows, clearly it does.
Excellent, a science program which examined the Tipton Three!
The comments below the article appear to be amazingly ignorant/unintelligent.
http://blogs.news.com.au/heraldsun/andrewbolt/index.php/heraldsun/comments/oops_guess_the_evil_americans_had_the_right_guys_after_all/
Currently, Australia is experiencing a shortage of tradespeople. The PM has said this is largely due to demand being in excess of supply.
While this may be so, it is also the case that many employers are not interested in training apprentices. The return on the invesment is too high relative to the costs, especially when apprentices or newly trained workers can simply walk out the door and get a better paid job elsewhere.
Is this an example of market failure?
Oops, should have read “the return on the investment is too *low* relative to the costs…”
One might try and meaningfully say that demand is in excess of supply with regards to a good that can be stored in inventory and such inventories are declining. However in such instances the reality is that demand is in excess of production not in excess of supply.
With a good that can be imported one might say that domestic demand is in excess of domestic supply and such a statement would make sence.
However within any closed economic system one can not meaningfully talk of demand exceeding supply. If 5000 eggs were sold last week then 5000 eggs were bought last week. There can be no imbalance because one is the flip side of the other.
There is no such thing as “demand” being in excess of “supply” in a free market. Demand is a relationship between price and quantity demanded. Supply is a relationship between price and quantity supplied. At the point where quantity demanded equals quantity supplied there will be a market-clearing (ie equilibrium) price.
When you hear the words “demand exceeded supply” or “supply exceeded demand” on TV, the only thing you learn is that the speaker doesn’t understand economics.
This is most certainly not an example of a market failure. I have already mentioned what constitutes a market failure — externality, public good & natural monopoly. And even those are often questionable.
There is little value in running around looking for something to call a failure. At best, market failure is only half the story. You would be better advised to comparing the consequences of competing institutional arrangements — ie voluntary trade v involuntary re-allocation of resources.
Further, with the apprentice example, if there is a failure it is a non-market failure. By setting mandatory minimum wages and controlling what contracts the employer can enter into with the trainee employee, the government sets the cost of employment above the market rate. Responding reasonably, the employers employ less. The only failure is that of Government intervention. What a suprise!
There is no such thing as “demand” being in excess of “supply” in a free market.
True enough, but when the market is not free it occurs. An example is the taxi market in Sydney, where the number of taxis is limited because of government licensing and control over fares. Thus the number of taxis cannot rise to meet demand and fares cannot rise to limit demand.
Try catching a taxi at Sydney airport late on a Friday afternoon to see a demand-supply imbalance in action.
This is not market failure though. It is government intervention preventing the market from functioning properly - a remarkably common occurrence.
John,
You mention externalities as a cause of market failure. My point was that perhaps such a problem exists with the training of tradespeople, i.e. an employer who does not train can avoid the cost of training by poaching from an employer that does.
I’m not suggesting this is the *only* cause of shortages, but if this does happen, then there is a strong disincentive to invest in training.
Do you have a view on why there are shortages of tradepeople?
According to a recent report by Peter Martin in the Canberra Times, there are currently more vacancies in the ACT than unemployed. To the layperson like me, this seems a lot like demand exceeding supply. If this interpretation is incorrect, then what is the correct one?
E.D. — I fear I am not being clear enough and I don’t really have the time to start again. Please re-read what Terje & I wrote about “demand exceeding supply”. There is no such thing.
In one sense demand always exceeds supply (I would like a few jets and a couple of tropical islands among other things — but nobody has supplied them to me) but in reality we have to allocate scarce resources towards unlimited wants and the best allocation of these resources occurs at a theoretical equilibrium. The equilibrium doesn’t create utopia or give everybody what they want. It simply puts resources to their best use so that we can get the best possible outcome. The fact that person X says they want more resources (eg labour) means nothing. What matters is whether those resources (eg labour) are going to the correct place.
There is absolutely nothing wrong with having more vacancies than unemployed people. Employers don’t have a god-given right to have whatever they want. They can compete on an open market and if they are the most efficient then they will get the resources. Reports in the Canberra Times (let alone a real newspaper) have little to do with economic reality.
Poaching an employee is not an externality. Indeed, it is nothing like an externality. Perhaps consider an economics course or find those books we referenced earlier. I don’t mean this to be rude.
ED
To get away from the theoretical aspects of this subject let me just relate how things work in my industry, exploration/mining. Both sides of the industry tend to be very transient – people move around a lot.
Some companies tend to want only experienced people, this mainly applies to outside hiring, to get a core of solid highly qualified men to form the backbone of the workforce, miners, drillers, machine operators, trades people, etc, then top up from the local community for the less specialised labouring jobs. The latter is where the former start.
Advancement here tends to be through picking up skills along the way through their work with experienced people. These companies pay top money for top people.
Others have a different approach, and like to get new people in and train them to the standards that they require, so that they can get a workforce with a uniform training culture and standards. These companies put a lot of effort into training and get a workforce culture that suits them, bringing on the best of their trainees to higher quality positions.
Advancement here tends to be a more deliberate process, and when a skilled position is available they are most likely to promote an existing member of their own workforce into it. Of course these companies pay lower, but have to remain reasonably competitive with others.
When an employee gets to the stage of highly trained, he is open to approaches from the former group, at higher rates. Surprisingly quite a few prefer to remain where they are through, loyalty, lack of the wish to change environment, or any number of reasons.
‘Poaching’ is false terminology, as it tends to assume an employer ownership aspect to the employee. This is not the case. ‘Poaching’ allows the employee to get the best dollar available for his capabilities.
If in fact there are more jobs than vacancies in the ACT, then I would expect people would move to them from areas of higher unemployment unless other factors such as the welfare system, or possibly the pay offered is not sufficient to draw the right people, are militating against this.
Terje;
I have tried 3 times to put a comment on your new post,and it wont go through, you may find it on a spam filter somewhere.
People seem to be indicating that in a free market, trade shortages would not arise. But how would such a market actually operate? Who would provide the training and who pays?
Ask who benefits from training and to what degree they can get a return from money invested in it, and that will be who pays. Almost certainly the costs will be split between employers and employees.
ED — what is a “trade shortage”? Is it when you have fewer cars than you would like? The concept simply doesn’t make sense in a free market.
Trainers provide training. Whoever is demanding the training will pay. Discussion of markets will make a lot more sense if you read “Free to Choose” by Milton Friedman. It’s cheap and easy to find and an easy and interesting read.
Trade shortages do occur though, because markets are not free. Invariably this is because of government intervention, such as a licence being required to work in the trade accompanied by government-imposed constraints on training. The latter may include high minimum wages for trainees as well as limited places in government regulated training facilities.
No shortage would occur if the licensing requirement was removed or the limits on training abolished, or both.
Nowhere have I said that trade shortages can occur in a free market. I would just be interested in knowing how a free market might supply tradespeople (and I see that currently, the LDP has no vocational education or higher education policies).
There is no doubt in my mind that the current apprenticeship system is not working properly so I’d be interested in practical solutions.
What is a trade shortages (in a non-free market)? One possible definition is the difference between all available positions (filled and unfilled) and all available labour (employed and unemployed).
Obviously I have not included wages in this definition. My experience with employers is that most would rather lose business by having fewer staff than loss customers by paying higher wages. This is less of a problem for larger companies (e.g. miners) with deeper pockets.
I am unconvinced by the ‘limited training’ and ‘minimum wage’ argument.
E.D.
Your argument contradicts itself. “..most would rather lose business.. than loss customers…”
Customers ARE business! Hanging on to customers means hanging on to business. How can you have a business without customers? And what does that fact do to your argument?
Regarding #94.
I believe this is a serious mix up of our language. The word “demand” has multiple usages all of which have different meanings. It is the dreaded polysemy.
1. COMMAND. Mother demanded that the children tidy their room. This form of demand has little to do with economics. All though the notion of a COMMAND economy does confuse things.
2. DESIRE. John Humphreys would like a few private jets and tropical islands. This is desire. He currently lacks the means to realise his desire through trade.
3. ECONOMICS. We agree that I will now hand over my three pumpkins in exchange for your one bag of potatoes.
Properly understood DEMAND in the economic context is a willingness and an ability to SUPPLY something in exchange for something else that meets with corresponding willingness and ability of the counter party. Most typically it is understood as a willingness and ability to supply money for some good that meets up with the willingness and ability of the counter party to supply.
Part of the problem that arises in understanding this is that economists are accustomed to drawing supply and demand curves that consider hypothetical action of market participants under alternate hypothetical prices (terms of trade). If jets and tropical islands were on sale for a dollars per dozen then hypothetically John Humphreys would realise his desire many times over.
In essence DEMAND is a microeconomic concept. In order for demand to make sence you must temporarily assume the identity of a market participant. So a manufacturer of tennis balls can say that he can’t keep up with demand. Or a worker can say that there is not enough demand for his labour. Such assertions are based on the situation relative to the current price and they are easily corrected (change output or change price).
However at a macroeconomic level the concept of DEMAND has little utility. An economy produces a certain amount, some of which is traded to other parties for other products, some of which is stored for later trade and some of which is consumed by the producer. Some will also get lost or spoilt. There is no way that DEMAND at a macroeconomic level can not match SUPPLY as all that is happening is that products are being traded for other products according to some given terms of trade (price ratio).
This concept was all famously articulated by Baptise Say in what is now known as Says law.
Regarding #96.
Jim I have manually searched all comments after 25 June and I can’t find any of yours in moderation. Perhaps someone such as John Humphreys who has more site privaledges can find it, however I suspect that it is lost.
Not a problem Terje, I dont think it was important anyway.
Re: #102
Actually, it is not my argument but I explained myself poorly so let me try again.
Some employers who are short staffed will say they can’t offer a higher rate of pay to attract skilled staff because of tight margins. An increase in wages means an increase in prices to the customer. And if prices go up, sales go down. Rather than have this occur, they put up with being short-staffed.
ED,
I run a service business in a sector that has high and variable demand. The situation you describe has been the norm for us for about 9 years (as long as we have been in business). I also get to see inside many other businesses and talk with business managers in both small and large enterprises. Most seem to run on fairly tight margins. This is obviously an issue for business managers but it is not a market failure. It typically means that the consumer at the end of the supply chain is getting a good deal and skilled workers have an abundance of jobs to choose from.
If things were different a given business might be able to increase output and satisfy more customers. But in practice that would mean attracting resources away from other sectors in the economy and producing less of something else. Consumers indicate what they want not just by what they are willing to pay for your product but also by what they are willing to pay for some other product from some other producer that attracts resources away from your outfit. An economomy is essentially a process of allocating scarce resources and choosing between alternative goods.
Regards,
Terje.
A few months ago, there was a discussion where bloggers identified what types of libertarians they were ie: minarchists, paleo-libertarian, consequentialists or rights theorists etc.
I’d like to see a discussion on how people came to be libertarian in the first place. eg/ family or friend influence growing up or later in life, through own research, or through debating with libertarians. It’s this last reason I’m most interested in.
I’m interested to know generally how effective blogging debates are at persuading people to take on or at least understand libertarian principles. I realise this is dependent on a lot of factors and could vary from case to case. However perhaps in general, there’s not that much point in blogging with people with vastly different opinions. I definitely think discussions between exisiting libertarians are valuable. But currently I’m actually quite interested in discussions with non-libertarians. Obviously some people will never be persuaded to see your point of view, afterall there’s still a flat earth society on the internet. So I was wondering if there’s a way to get a general idea on how much blogging affects people’s ideas. And I thought this could start by asking are there any regulars on Thoughts of Freedom that became libertarian because of this blog.
I think this topic would make for an interesting post.
It was recently put to me that Japan would not have benefitted from the post-war reconstruction period if not for govt planning. A similar view was expressed in relation to Silicon Valley and its close connection with the US military. Are these claims justified?
These are more or less agglomeration effects rather than proof of any real impact.
http://www.mises.org/story/1374
Slaves to the Marshall Myth
By DW MacKenzie
“Of all the myths that persist concerning economic history, the myth that the United States rebuilt Europe and Japan following the Second World War is among the most popular. While there is considerable disagreement concerning other myths, like the notion that FDR saved us all during the Great Depression, the myth of the Marshall Plan enjoys wide support.”
http://www.econlib.org/library/Enc/JapanandtheMythofMITI.html
Japan and the Myth of MITI
by David R. Henderson
“Many people believe that Japan’s outstanding growth is due in large part to MITI. They believe that MITI has decided what industries the Japanese should invest in, and that MITI persuaded other Japanese government agencies to use their coercive power to get companies to go along. But the evidence goes against this view. Although MITI plans for industry growth, and sometimes gets other agencies to use their powers to carry out the plans, the extent of MITI’s control, and of government control generally, has been greatly exaggerated. Between December 1955 and February 1973, crucial years in Japan’s growth, the government had six different National Economic Plans for economic growth. But without exception actual growth rates exceeded those required to fulfill the plan’s targets. This is evidence that the plans themselves were not responsible. Moreover, had MITI succeeded in preventing Sony from developing the transistor radio, and in coercively limiting the auto industry, two of Japan’s most successful industries would probably have been much less successful.”
http://www.mises.org/story/626
What Happened to Japan?
By William Anderson
“What these folks won’t say, however, is that the problem lies with government itself. Japan has large numbers of top-quality manufacturers; there is no doubt about that. But the Japanese government also inappropriately interferes with the economy at every level. By keeping retailers from enjoying large economies of scale, the government manages to try to make a First World manufacturing regime co-exist with a Third World retail sector. The legendary Japanese protectionism means that the Japanese will pay larger shares of their income for consumer goods and food than they would otherwise, and the emphasis of exports uber alles means that Japanese workers might as well be engaging in charitable operations for Western consumers.”
“I’d like to see a discussion on how people came to be libertarian in the first place. eg/ family or friend influence growing up or later in life, through own research, or through debating with libertarians. It’s this last reason I’m most interested in.”
I have friend who is from a Labour family, who harbours anarcho capitalist beliefs and works the Federal Government. He got me onto the libertarian mindset. I basically thought it was all mumbo jumbo until one day I was mocking the idea of privatised infrastructure and bam, I saw that it could work.
Thanks for the reply.
So when you say you were mocking privitisation, do you mean you were engaged in a discussion at that time with a group of people? Were the people like minded, ie: also against privitisation?
In some ways, I embraced libertarianism because I saw it as a challenge. I had read Rand, and some Objectivist books (”Capitalism, the unknown Ideal” was one of them) and I thought- ‘Well, they couldn’t imagine a state without some taxation- but maybe I can do better!’ I thought of my old ties to the RSL club, and realised that I had a viable metaphor- both guests and members could use the facilities, but you had to choose to be a member before you could vote, or have a right to use the facilities. That’s where my love of voluntary citizenship came from. Since then, I’ve read other philosophies and books (The Probability Broach) which are like my beliefs, but I thought of them myself first. So I have to stick to them, don’t I?
So for you Nicholas it was mainly through private reading and then over time seeing how the concepts applied so well and consistently to the real world?
That was my experience as well. More of a private reflection on the ideas over time until one day you can’t deny the concepts any more.
Also for me, there was a motivational factor ie: I thought knowing libertarian/economic and philosophical principles would help me out in life generally.
It also helps if you can see something like your ideas in action- my idea of citizenship as an insurance policy was inspired by the real-life example of the St. John’s Ambulance service, which advertised how much cheaper it would be to insure with them just in case, because if you called them and you weren’t a member, they would charge you at a high rate. I realised you could extend this existing principle to lots of other areas.
And there is a certain ironic intellectual frisson in belonging to a collective mob of rugged individualists. It’s always best to stand out from the crowd if you have other people to join you, whilst still being a heroic non-conformist.
I was pushed to libertarianism by the inanity of the nanny state in Australia as compared to living in the UK and travelling in Western Europe and the US. Petty policing and micromanaging the citizenry is much less prevalent in Europe, although by no means is the UK a den of liberty, but the differential is blatantly obvious.
For example, in most parts of London, the cops are hardly likely to pull you up for drinking a beer or jaywalking. Cyclists aren’t forced to wear helmets. These things may seem minor, but I saw them as symptomatic of a wider malaise in civil society.
The economics stuff sucked me after coming from the personal liberty side. To paraphrase Frank Sinatra, “You can’t have one without the other”, although it seems to me to be one way street, economic freedom is a prerequisite for individual liberty, but it won’t necessarily follow that economic freedom will lead to individual liberty.
Yeah, genuine individual liberty would include economic liberty.
New York has just banned trans fats and they have no smoking in any clubs/pubs I think. From what I can tell, erosion civil liberties is occuring everywhere around the world.
Has anyone thought about making a libertarian newspaper/magazine?
In terms of material, it would be easy. The main libertarian bloggers could contribute articles and there are so many postings stored on this site already.
I was thinking of something in the style of the street press mags that are available for free in pubs across the Australian cities. It would also be great to get into the universities. Might be a way to expose people to libertarian ideas.
I imagine the publication would run at a loss initially. And after being out for a few issues, the organiser could determine whether it’s possible to attract any advertising dollars or not. Anyone think it’s a good way to spread the libertarian word? Or can think of any other applications for a group libertarian publication?
Tim, I made that suggestion a while back, and I suggested that the magazine could have a picture of a pretty girl who was having her clothes ripped off her on the cover, with hands reaching in to rip more off, and the general tagline of- ‘Governments, always taking more, leaving us less and less!’
We have a few magazines along the lines that you have suggested, such as IPA Review and Policy, but they have always seemed a bit dry to me, lacking personal case histories. Justin once mentioned people he knew who couldn’t find work because of the OHS regulations. I hope that any such magazine as you propose would have some real histories amongst the general theories, which we also need.
I agree- I also belong to a Toastmasters club, and I often leave the club magazine around in odd places so as to generate interest in the club, and the concept of Toastmasters. good thinking!
Yeah, I was thinking of something at street level rather than having to subscribe over the internet. But my idea might not be realistic.
Tim, they still produce ‘Policy’, and ‘IPA Review’, and those are pro-libertarian in outlook, but suffer from a certain cerebral dryness. A glossy mag, with pictures, might be better for publicizing the ideas! (I’m assuming the those magazines are profitable- can you help us here, John Humphries?)
Nicholas - are you keen to alienate women from the libertarian cause? You seem to be pitching a rather smutty and pointless association with female nudity.
Terje, the only women I have encountered here are called ‘Trinifar’ and ‘Verdurous’, and both are anti-libertarian already!
Nicholas - are you keen to alienate women from the libertarian cause? You seem to be pitching a rather smutty and pointless association with female nudity.
Nicholas’ comment was not pointless. He was arguing that a picture would make a compelling point about government interference. As for smutty, that’s all relative. One person’s smut is another’s fashion statement.
I like the notion of being a bit evangelical about libertarianism. However, the economics of publishing and distributing a paper-based magazine are against it. The internet is the way to go. In the US, the Advocates for Self Government teach libertarians how to promote the cause. Their monthly newsletters even contain little tips on how to handle certain objections. More details here: http://www.theadvocates.org/
Cheers for the link
The internet offers orders of magnitude more good to the libertarian cause than print ever can.
(I’m assuming the those magazines are profitable- can you help us here, John Humphries?)
I don’t think nude pictures of John in a magazine would do much for me.