Political and economic history

[Einherjar86]

Well they certainly don't hinder economic success for everyone directly.The very foundation of mercantilism and national protectionism is favored status for certain businesses, who in turn payback/payoff the politicians. So it's good for them. However, this does have a net effect of decreased wealth though, as innovation is stifled, and living standards stagnate or reverse for the general population.

Well, in his introduction, he claims that if you look at countries that feature different levels of living standards and economic strength, you can also detect differences in government size and involvement.

Specifically, wealthier and more stable countries unanimously feature larger governments, while countries with poorer living standards feature small governments.

Based off the reviews his entire focus is on how to keep nation states fed with power and money. That's not an economics book, that's political apologetics.

I think he's arguing that in the age of economic globalization, we can't separate markets and government in the traditional way that Austrian economics does. He's claiming that we need a "new narrative" of the global market.

Edit: Based on excerpts from the book, he already assumes there must be either a "decentralization of power" in the form of existing nation states, which "protect" themselves with protectionism, or we have a global technocracy. That's a false dichotomy.

If you're referring to his "trilemma," I don't think it's a false dichotomy. He says that regulations and government restrictions on national trade work, and are stable, because you have businesses within those national boundaries typically abiding by similar laws and ideological beliefs. As soon as you engage in trade in the international market, risk increases exponentially because, all of the sudden, you're trading across national boundaries, each of which features different controls and regulations.

Rodrik believes that government's responsibility in creating a stable environment for trade is inseparable from the actualization of market transactions; in every case where successful market transactions have occurred, government has provided a secure atmosphere.

I know traditionalists assume that market environments establish their own security; but Rodrik doesn't think you can make that assumption without also assuming some underlying force providing ideological and legal enforcement. People only enter into trade agreements when they feel secure, and if an agreement is broken, that dissuades participants from engaging in future deals.

In every case of successful market transactions, Rodrik claims that strong government has always been an accomplice.

 

[The Ozzman]

I started reading The Road to Serfdom but couldn't finish it. I need to re-read that soon.

I now expect Cythraul to rape me while I sleep

 

[Dak]

Well, in his introduction, he claims that if you look at countries that feature different levels of living standards and economic strength, you can also detect differences in government size and involvement.

Specifically, wealthier and more stable countries unanimously feature larger governments, while countries with poorer living standards feature small governments.

If you feed something, it gets larger. You can't tax what isn't there. Production proceeds consumption. Unless it's debt funded, which most likely all these large governments he is looking at are. Present consumption promised against future production. It's unsustainable.

I think he's arguing that in the age of economic globalization, we can't separate markets and government in the traditional way that Austrian economics does. He's claiming that we need a "new narrative" of the global market.

Having only read the reviews and excerpts, it doesn't look like a new narrative at all.

He lists China as an example of how to run an economy in global trade. China is highly protectionist. This has worked better than communism to be sure, and be the shear number of people, when unfettered, should be able to outproduce and outconsume any other country in the world. Yet they still aren't there yet, and on top of the protectionism, most of China's growth is still funded on debt(more in the forms of loans to it's consumers, but still debt based growth), and it's production numbers based on building bridges to nowhere. It is facing a real estate crash. It's also facing an upside down population in twenty years, similar to Japan.

If you're referring to his "trilemma," I don't think it's a false dichotomy. He says that regulations and government restrictions on national trade work, and are stable, because you have businesses within those national boundaries typically abiding by similar laws and ideological beliefs. As soon as you engage in trade in the international market, risk increases exponentially because, all of the sudden, you're trading across national boundaries, each of which features different controls and regulations.

Rodrik believes that government's responsibility in creating a stable environment for trade is inseparable from the actualization of market transactions; in every case where successful market transactions have occurred, government has provided a secure atmosphere.

I know traditionalists assume that market environments establish their own security; but Rodrik doesn't think you can make that assumption without also assuming some underlying force providing ideological and legal enforcement. People only enter into trade agreements when they feel secure, and if an agreement is broken, that dissuades participants from engaging in future deals.

In every case of successful market transactions, Rodrik claims that strong government has always been an accomplice.

Stability is in the eye of the beholder. Stability from a government perspective is that the proceeds of a transaction may be taxed, or in some other way beneficial.

You need to look no further than the drug market to see that markets establish their own security, and in the case of the Central and South American cartels, are growing stronger than the governments. Why? Because the government meddled in the market (making drugs illegal).

That governments provide stability in markets is a bald faced lie. In fact, you just pointed out that his reason for needing government is other governments interfering with trade between individuals.

As soon as you engage in trade in the international market, risk increases exponentially because, all of the sudden, you're trading across national boundaries, each of which features different controls and regulations.

So you need your own low brow thug to make sure the other low brow thugs don't take you out. Protection rackets provide "stability" to inner city neighborhoods, but stability from what?

 

[Einherjar86]

He lists China as an example of how to run an economy in global trade. China is highly protectionist. This has worked better than communism to be sure, and be the shear number of people, when unfettered, should be able to outproduce and outconsume any other country in the world. Yet they still aren't there yet, and on top of the protectionism, most of China's growth is still funded on debt(more in the forms of loans to it's consumers, but still debt based growth), and it's production numbers based on building bridges to nowhere. It is facing a real estate crash. It's also facing an upside down population in twenty years, similar to Japan.

You've read excerpts that I haven't; but I do know that he advocates democratic processes and national determination over globalization, and China is clearly an example of where globalization/self-determination has trumped democracy.

His exact quote is: "If we want to push globalization further, we have to give up either the nation state or democratic politics. If we want to maintain and deepen democracy, we have to choose between the nation state and international economic integration. And if we want to keep the nation state and self-determination, we have to choose between deepening democracy and deepening globalization. Our troubles have their roots in our reluctance to face up to these ineluctable choices."

I agree with that "trilemma."

Stability is in the eye of the beholder. Stability from a government perspective is that the proceeds of a transaction may be taxed, or in some other way beneficial.

You need to look no further than the drug market to see that markets establish their own security, and in the case of the Central and South American cartels, are growing stronger than the governments. Why? Because the government meddled in the market (making drugs illegal).

That governments provide stability in markets is a bald faced lie. In fact, you just pointed out that his reason for needing government is other governments interfering with trade between individuals.

I don't think I made that point. I think that parties involved in a transaction seek the insurance of being imbursed should their partner fail to fulfil its end of the bargain. That has nothing to do with government involvement, and is a scenario that can be easily imagined in an environment where no governmental processes are in place.

Furthermore, I don't think that economic stability necessitates less government; historically, I don't see the evidence for it. You're suggesting that stability means different things depending on whether we're discussing government or business entities. But if you look at the strength of national governments compared to the strength of the national economy, they seem to share a direct correlation.

So you need your own low brow thug to make sure the other low brow thugs don't take you out. Protection rackets provide "stability" to inner city neighborhoods, but stability from what?

I don't see how this makes any sense. You're making it sound as though people hire their own good squads to protect transactions; but isn't that the ideal anarcho-capitalist economic environment? Individual parties paying for their own financial protection? The presence of a central government is a single entity that protects both parties involved in a transaction.

Maybe the description of governmental role in the economy as "thugs" is a misleading one...

 

[Dak]

You've read excerpts that I haven't; but I do know that he advocates democratic processes and national determination over globalization, and China is clearly an example of where globalization/self-determination has trumped democracy.

His exact quote is: "If we want to push globalization further, we have to give up either the nation state or democratic politics. If we want to maintain and deepen democracy, we have to choose between the nation state and international economic integration. And if we want to keep the nation state and self-determination, we have to choose between deepening democracy and deepening globalization. Our troubles have their roots in our reluctance to face up to these ineluctable choices."

I agree with that "trilemma."

First, I don't see democracy as anything special. It's an illusion. People don't like being manipulated so democracy is a way for them to think they aren't being manipulated. The same people are in charge regardless.

Giving up the current nation states would be a good thing, unless it's replaced by a global technocracy, which would certainly be worse. Really, we pretty much already have a global technocracy. If you don't believe me, look at what happens when people don't pay their debts. The technocrats must rule openly, instead of in secret. (Greece, Italy). This will only get worse.

Globalization, as defined by "borderless trade between individuals" is a great thing. As Stossel likes to say "ideas have sex". The more individuals involved, the more ideas, the more "idea sex", and even more ideas come about. Ideas turn into products and services, and the market mechanisms find the ones people want/need.

I don't think I made that point. I think that parties involved in a transaction seek the insurance of being imbursed should their partner fail to fulfil its end of the bargain. That has nothing to do with government involvement, and is a scenario that can be easily imagined in an environment where no governmental processes are in place.

First, we have to dispense with the idea that government actually solves that problem. That scenario happens daily with all these expensive bureaucracies in place.

I like to refer to bureaucracy/laws as "Wall-building", pulled from the calls of people to "build a wall along the border with Mexico". It's a low brow "solution" which is not only incapable of fixing the "problem", but creates an array of new problems.

If people are seriously concerned about insurance on transactions, it is entirely possible to provide that on an "as needed", voluntary basis.

What sort of insurance does government actually provide on transactions though? People buy and sell on the internet all the time, with no government interference or involvement. Government doesn't like this though, as it cuts them out of the revenue flow.

I attempted to purchase an item directly from China once, through the ebay clone dhgate.com. It was roughly a third of the normal US retail price, quite a steal. I paid, but going on a year now, never received the item. The website offered no assistance, and the seller said it was tied up in local customs.

I did a little research on the area it was supposed to be shipping out of. China has been cracking down on it for two+ years because of "smuggling". So as far as I know one of two things happened:

1. The seller stiffed me. Being as they are on the opposite side of the globe, my retaliations are basically limited to doing no more business with the seller/website, and informing others to not do so as well (which are very effective market based non-violent retaliatory measures). Trying to chase down the loss would not be worth the actual loss itself. In this case neither government offers a reasonable resolution to the problem.

2. The seller attempted to ship me the item, but not through officially approved Chinese channels(the ones they profit from, hence the extreme discount in cost), got caught, and my item is sitting in a Chinese customs warehouse somewhere. In this case government specifically interfered with a voluntary transaction between two people/entities, providing no service to either of us, only to itself.

The overwhelming amount of government bureaucracy is self-perpetuating, in a broad government sense. How many bureaucracies exist for tax/resource collection and management? All those exist to fund the rest of the bureaucracies, some of which protect the tax/resource collection bureacracies.

Leviathan(or in the case of democracy, I prefer "the Golem") exists for itself.

Furthermore, I don't think that economic stability necessitates less government; historically, I don't see the evidence for it. You're suggesting that stability means different things depending on whether we're discussing government or business entities. But if you look at the strength of national governments compared to the strength of the national economy, they seem to share a direct correlation.

You need to read different versions of history then. All history books are written with a slant. Even right now the US and Afghanistan government is working on re-writing the history books of Afghanistan so children won't find out their history and get mad about it. Turkey is supposed to be helping Libya do the same. Victors write the history books. You don't think the same thing hasn't happened in the West?

I don't see how this makes any sense. You're making it sound as though people hire their own good squads to protect transactions; but isn't that the ideal anarcho-capitalist economic environment? Individual parties paying for their own financial protection? The presence of a central government is a single entity that protects both parties involved in a transaction.

Maybe the description of governmental role in the economy as "thugs" is a misleading one...

Not hiring. Forced to use. At a unilaterally agreed price. Government does not provide any protection for transactions, just as car insurance does not provide protection from car wrecks, life insurance doesn't keep you from dying, and health insurance doesn't keep you healthy.

All of those insurance products can have a free market use, but in many cases people won't buy them without being forced to, so just like government itself, insurance as we know it is more of a bureaucracy than a product.

Insurance can alleviate the costs from accidents or unexpected events, but at what cost?

I've paid somewhere in the neighborhood of $25,000 in car insurance over the last 12 years in car insurance. That's essentially one year of my productivity gone for nothing. No ROI.

Government likes to project itself like All-State vs "the big bad world" with it's "Mayhem" commercials, but you don't have a choice, and most of the "mayhem" is actually caused by government itself. "Problem"-"solution"-new problems-more solutions-etc etc.

Look at the entire fiasco around immigration. Why does it matter that people are moving from one area to another "without documentation"? That's an government created artificial problem itself.

Separately, why are many coming? Either they are coming for work (why is this a bad thing?) or they are coming to leech on government handouts, another government created problem. So now we need DHS and ICE and BP and the NG to moniter an arbitrary line in the desert. Build a fence. National IDs for everyone. Expand the government to fix the problems government causes. It's a self-feeding monster.

People are smuggling!!! This means people are moving goods across borders without paying the highwaymen, excuse me, government officials. So we need to spend more money on the CG, Navy, FBI, CIA, Customs, BP, etc. to stop the government from not getting it's money......

 

[Dak]

 

[Dak]

http://mises.org/media/6554/Prediction-and-the-Business-Cycle

 

[Einherjar86]

First, I don't see democracy as anything special. It's an illusion. People don't like being manipulated so democracy is a way for them to think they aren't being manipulated. The same people are in charge regardless.

I can agree with that; but democracy, as a system that at least acknowledges individual rights, is a significant improvement on previous political forms (the most immediately previous being authoritarianism and the influence of feudalism). That said, I agree that, rather than truly solve the problem of individual autonomy, it merely masks the problem. What changed though between feudalism and democracy is the cognitive actualization of the modern, liberal-minded individualist. So this is the objective position we need to working with in our current situation (and by "working with," I mean critiquing).

Giving up the current nation states would be a good thing, unless it's replaced by a global technocracy, which would certainly be worse. Really, we pretty much already have a global technocracy. If you don't believe me, look at what happens when people don't pay their debts. The technocrats must rule openly, instead of in secret. (Greece, Italy). This will only get worse.

Globalization, as defined by "borderless trade between individuals" is a great thing. As Stossel likes to say "ideas have sex". The more individuals involved, the more ideas, the more "idea sex", and even more ideas come about. Ideas turn into products and services, and the market mechanisms find the ones people want/need.

I think the global freedom and interaction we have in today's society is a great thing. I don't think, unfortunately, that we'll see it flourish alongside democratic processes or a complete lack of any political processes whatsoever. The risk is simply too great. Open trade and markets across national boundaries can exist at the same time that governments do; but those governments need to reassess their goals.

First, we have to dispense with the idea that government actually solves that problem. That scenario happens daily with all these expensive bureaucracies in place.

In contemporary politics and media, we are constantly bombarded with the argument that government doesn't solve the problem. You're not preaching some elusive, esoteric principle.

What sort of insurance does government actually provide on transactions though? People buy and sell on the internet all the time, with no government interference or involvement. Government doesn't like this though, as it cuts them out of the revenue flow.

I attempted to purchase an item directly from China once, through the ebay clone dhgate.com. It was roughly a third of the normal US retail price, quite a steal. I paid, but going on a year now, never received the item. The website offered no assistance, and the seller said it was tied up in local customs.

The company I used to work for is a local label company. They mostly did business in the Buffalo and great NY-area, as well as some trade with companies from Pennsylvania, Illinois, Ohio, and even further south. They also at one point attempted a trade with a Chinese-based company. This deal also fell through, and they lost several thousand dollars in the process.

A lack of government bureaucracy in all sectors/countries would provide a homogenous economic environment across the globe (that of the open, free, deregulated market), but would do nothing to decrease risk. An absence of some regulatory system would scare people from participating in transnational exchanges, in my opinion. I don't think that governments have any interest in stifling international transactions of this sort, since the success of those transactions is beneficial to the national economy; so what do they have to gain by purposefully obstructing them, as you seem to be suggesting they do?

You need to read different versions of history then. All history books are written with a slant. Even right now the US and Afghanistan government is working on re-writing the history books of Afghanistan so children won't find out their history and get mad about it. Turkey is supposed to be helping Libya do the same. Victors write the history books. You don't think the same thing hasn't happened in the West?

Of course I do, and I think you should try reading a different version of history! The ceaseless outpouring of deregulated, turn-of-the-century capitalism from the Mises Institute is by no means the authoritative text on world trade agreements and the future of the economy.

As far as the rest of your rant goes, I think we can focus on the previous material for now.

 

[Dak]

I can agree with that; but democracy, as a system that at least acknowledges individual rights, is a significant improvement on previous political forms (the most immediately previous being authoritarianism and the influence of feudalism). That said, I agree that, rather than truly solve the problem of individual autonomy, it merely masks the problem. What changed though between feudalism and democracy is the cognitive actualization of the modern, liberal-minded individualist. So this is the objective position we need to working with in our current situation (and by "working with," I mean critiquing).

It can be viewed as either a step in the right direction, or an act of desperation, or both.

One major difference in our views is highlighted by

the problem of individual autonomy

This is not a problem. Humans are not the enemy by default, and if they were, you certainly couldn't use the problem for the solution. It's this kind of thinking that leads to piling up more debt to fix a debt problem, or making a new bureaucracy to fix the problems with the old one, because it isn't fixing the problems it was supposed to.

More of the same and expecting a different result is insanity.

I think the global freedom and interaction we have in today's society is a great thing. I don't think, unfortunately, that we'll see it flourish alongside democratic processes or a complete lack of any political processes whatsoever. The risk is simply too great. Open trade and markets across national boundaries can exist at the same time that governments do; but those governments need to reassess their goals.

"The risk is too great". Can you define or quantify what risk you are referring too?

In contemporary politics and media, we are constantly bombarded with the argument that government doesn't solve the problem. You're not preaching some elusive, esoteric principle.

I don't see that in mainstream news. I see the charges that particular brands of political orthodoxy have failed, from both ends of the false left-ring wing spectrum, and the solution is always the unicorn of "smarter government/regulation/bureaucracy", or "corruption free government". Rejecting those things as ridiculous is most certainly not in vogue in mainstream media, and certainly not within government.

The EU is in the process of converting into an openly technocratic authority as a result of previous government/centralization failures. More of the same. One level of control isn't working as desired by the controllers, ratchet up the control level. We are seeing this in the US as well.

The company I used to work for is a local label company. They mostly did business in the Buffalo and great NY-area, as well as some trade with companies from Pennsylvania, Illinois, Ohio, and even further south. They also at one point attempted a trade with a Chinese-based company. This deal also fell through, and they lost several thousand dollars in the process.

Did you have a point related to government you wanted to make with this anecdote?

A lack of government bureaucracy in all sectors/countries would provide a homogenous economic environment across the globe (that of the open, free, deregulated market), but would do nothing to decrease risk. An absence of some regulatory system would scare people from participating in transnational exchanges, in my opinion. I don't think that governments have any interest in stifling international transactions of this sort, since the success of those transactions is beneficial to the national economy; so what do they have to gain by purposefully obstructing them, as you seem to be suggesting they do?

On the contrary. Regulations/politics/policies/international intergovernmental relations are constantly in flux, introducing and inducing an unnecessary over-riding layer of risk and uncertainty.

Governments have an interest in stifling international trade they cannot control and profit from, and also stifling trade that works against political interests. Look at ongoing international sanctions by the US.

Of course I do, and I think you should try reading a different version of history! The ceaseless outpouring of deregulated, turn-of-the-century capitalism from the Mises Institute is by no means the authoritative text on world trade agreements and the future of the economy.

As far as the rest of your rant goes, I think we can focus on the previous material for now.

I read mainstream news on a daily basis, and I aced my history classes in college, so it's not as if I haven't "heard the other side". The charge of "turn of the century capitalism" is certainly a mis-characterization.

Austrian economists routinely predict the booms/busts/depressions caused by the ever-present meddling by national regulatory/monetary entities, yet are regularly dismissed. We get more of the same, and wind up with more of the same. More booms/busts, more debt, more wars, larger bureaucracy, etc.

As I stated before, government is self serving, and creates an inherent conflict of interest on every front, most particularly economics.

 

[Einherjar86]

This is not a problem. Humans are not the enemy by default, and if they were, you certainly couldn't use the problem for the solution. It's this kind of thinking that leads to piling up more debt to fix a debt problem, or making a new bureaucracy to fix the problems with the old one, because it isn't fixing the problems it was supposed to.

More of the same and expecting a different result is insanity.

Individual autonomy is a problem if you're working within a feudal framework; a problem is presented when the human psyche begins conceiving of itself as an independent, nuclear subject under a regime that depends upon a hierarchical doctrine. This is the "problem" that democracy purports to solve.

I don't believe that the doctrine of human beings as independent, autonomous subjects is something we can consider a universal truth; I think that's the conception of the human subject that we possess in modernity.

"The risk is too great". Can you define or quantify what risk you are referring too?

Any risk at all that international/overseas transactions involve: loss of payload, one party reneges, miscommunication resulting in incorrect quantity, etc. Any or all of these things might result from numerous causes; honest mistakes, ideological differences, intentional sabotage. It's extremely difficult for national companies to protect themselves in cases such as this; what a consistent regulatory force provides is an environment of security for businesses to trade comfortably in.

I don't see that in mainstream news. I see the charges that particular brands of political orthodoxy have failed, from both ends of the false left-ring wing spectrum, and the solution is always the unicorn of "smarter government/regulation/bureaucracy", or "corruption free government". Rejecting those things as ridiculous is most certainly not in vogue in mainstream media, and certainly not within government.

The ideas of degerulation and "hands-off" economics are implicit in much of what we hear said, even if it isn't what is actually practiced. Ron Paul has, of course, been one of the primary advocates of this, but I agree that his opinion shouldn't be considered "popular."

I also agree that in popular news and media we're bombarded with opinions concerning the importance of government intervention in economic processes; what we're not bombarded with is any kind of intellectual approach to the integration of government and economy. All the justification we are given, on the receiving end of social media, is ideological in nature (i.e. ideological in the negative sense of persuasion/coercion). This, of course, results in a natural backlash from traditional Austrian, libertarian, individualist promoters of deregulation, and this backlash also naturally assumes a kind of logical, positivist, intellectual (even pseudo-academic) form; it's a very strong, smart, and intellectual response to the irrational, ideological advocation of government involvement in all aspects of social and economic life.

What Rodrik is part of (I believe) is a counter-response; an intellectual, intelligent critique of the Austrian position, which is entirely absent in today's popular media.

Did you have a point related to government you wanted to make with this anecdote?

That company will likely never attempt trade with China again, or not for a long time; unless, of course, some form of secure economic environment could be assured.

On the contrary. Regulations/politics/policies/international intergovernmental relations are constantly in flux, introducing and inducing an unnecessary over-riding layer of risk and uncertainty.

Governments have an interest in stifling international trade they cannot control and profit from, and also stifling trade that works against political interests. Look at ongoing international sanctions by the US.

I agree that government stifles economic processes, but I also think government stifles numerous social/economic freedoms; we definitely don't have any ideal form of political machine. Government has much to gain from economic parties engaging in successful trade and making money, and it can serve an operational role in such transactions without being the authoritarian empire it currently is.

I read mainstream news on a daily basis, and I aced my history classes in college, so it's not as if I haven't "heard the other side". The charge of "turn of the century capitalism" is certainly a mis-characterization.

Perhaps you're right; a strong economic base and a strong political regime seem to have always existed side by side...

Austrian economists routinely predict the booms/busts/depressions caused by the ever-present meddling by national regulatory/monetary entities, yet are regularly dismissed. We get more of the same, and wind up with more of the same. More booms/busts, more debt, more wars, larger bureaucracy, etc.

As I stated before, government is self serving, and creates an inherent conflict of interest on every front, most particularly economics.

Of course government is self-serving, to a certain extent; so is the economy. What people don't seem to realize is that government can suit its own needs by emboldening economic processes. This means, absolutely, that it shouldn't be doing some of the things that it is; but it also means that it has a role to play in securing a safe global economic environment.

 

[Dak]

Individual autonomy is a problem if you're working within a feudal framework; a problem is presented when the human psyche begins conceiving of itself as an independent, nuclear subject under a regime that depends upon a hierarchical doctrine. This is the "problem" that democracy purports to solve.

I don't believe that the doctrine of human beings as independent, autonomous subjects is something we can consider a universal truth; I think that's the conception of the human subject that we possess in modernity.

I know you believe everything is inherently bendable in whatever way is desired, with no negative ramifications. I do not share that belief.

I believe that all things have a proper order, and the purpose of science and philosophy is to find that proper order. Humans constantly try to bend the rules, and eventually the tension builds to a breaking point. Then the process starts over. It's obvious humans have been fairly slow to learn, given what we know of our history.

Any risk at all that international/overseas transactions involve: loss of payload, one party reneges, miscommunication resulting in incorrect quantity, etc. Any or all of these things might result from numerous causes; honest mistakes, ideological differences, intentional sabotage. It's extremely difficult for national companies to protect themselves in cases such as this; what a consistent regulatory force provides is an environment of security for businesses to trade comfortably in.

These risks are inherent in many transactions, and very often the already existing over-expansive government agencies do not or cannot do anything about them, or at least not in a manner that makes it worth pursuing.

Even your personal example bears this out. We do more trade with China than basically anyone else all things considered, yet your deal fell through. Deals fall through even within borders as well. There is always risk in business, and any idea that it can be eliminated is folly.

The ideas of degerulation and "hands-off" economics are implicit in much of what we hear said, even if it isn't what is actually practiced. Ron Paul has, of course, been one of the primary advocates of this, but I agree that his opinion shouldn't be considered "popular."

I think we have different understanding of what "hands off is". "The Repeal of Glass-Steagall" gets thrown around as "the reason for the economic crisis". That is misleading for numerous reasons.

Since the Treasury/Fed is already a revolving door between private interests and the violence of the state, any removal of regulations on this setup IS asking for more problems, although it only delays the inevitable.

Regulations or the lack thereof are not the problems. They are a the magician tricks to keep the eyes of the audience off whats really going on.

RP supports ending the private-public "partnerships", which is really just private interests wielding the violence of the state for their own ends. Which what the state always has been. Even the US Declaration/War for Independence was pushed by the local monied interests. The original Tea Party was an act of vandalism from one merchant against another merchant who currently held favored status from the existing government (the kind of thing being pushed in that book).

I also agree that in popular news and media we're bombarded with opinions concerning the importance of government intervention in economic processes; what we're not bombarded with is any kind of intellectual approach to the integration of government and economy. All the justification we are given, on the receiving end of social media, is ideological in nature (i.e. ideological in the negative sense of persuasion/coercion). This, of course, results in a natural backlash from traditional Austrian, libertarian, individualist promoters of deregulation, and this backlash also naturally assumes a kind of logical, positivist, intellectual (even pseudo-academic) form; it's a very strong, smart, and intellectual response to the irrational, ideological advocation of government involvement in all aspects of social and economic life.

What Rodrik is part of (I believe) is a counter-response; an intellectual, intelligent critique of the Austrian position, which is entirely absent in today's popular media.

The Austrian school does have some variance from libertarianism to anarcho-capitalism, but the general gist is that there can be no "intellectual integration" of violence and voluntaryism. They are distinctly at odds.

We assume that not only is violence wrong, it doesn't work. It is the "bending" to an eventual break. Violence is a short term "fix", creating it's own host of new problems and falling to outside violence or imploding because of it's own unsustainability, or both.

The rise and fall of empires and civilizations follow almost identical patterns. The US and Rome are moving almost in lockstep, except the US is on a comparatively accelerated timeline, yet the ideas put forth to "fix the problem" have already been tried numerous times in the past and didn't fix them then, and "this time it's not different".

That company will likely never attempt trade with China again, or not for a long time; unless, of course, some form of secure economic environment could be assured.

http://en.wikipedia.org/wiki/Dispute_resolution_organization

I agree that government stifles economic processes, but I also think government stifles numerous social/economic freedoms; we definitely don't have any ideal form of political machine. Government has much to gain from economic parties engaging in successful trade and making money, and it can serve an operational role in such transactions without being the authoritarian empire it currently is.

Why is it not possible to do things in a voluntary manner? As I stated before, Government has zero interest in economic success and productivity it can't profit from. So it will attempt to stifle anything it can't leech from, because if it didn't, all business would seek the unleeched alternative.

Of course government is self-serving, to a certain extent; so is the economy. What people don't seem to realize is that government can suit its own needs by emboldening economic processes. This means, absolutely, that it shouldn't be doing some of the things that it is; but it also means that it has a role to play in securing a safe global economic environment.

The difference is that the market, as in voluntary transactions amongst individuals, is voluntary. Government only provides for itself through violence, to a more or less degree depending on the situation. We don't approve of that route for individuals, why is the situation suddenly reversed for "government"?

As Molyneux says "What is universally preferable behavior amongst individuals, is suddenly turned on it's head in the "public sphere". Up is down, black is white, etc.

Separately, it is completely against the interest of the state for the "world" to be safe. This is politics 101. There must ALWAYS be a danger. Otherwise it has "worked itself out of a job". The US has been very good at manufacturing enemies for the last 150 years to ensure national cohesion in the face of ever-expanding government.

 

[Einherjar86]

http://en.wikipedia.org/wiki/Dispute_resolution_organization

This is very interesting to me. I want to see more examples of merchants obeying dispute resolutions before enforcement by government; because I believe those early examples are universally parties located within the United States. The International Center for Dispute Resolution wasn't founded until 1996, well after the Federal Arbitration Act had been passed. I think there's no way to test the validity of organizations like this because the possibility of political persuasion has always been present, even if it wasn't always invoked.

 

[Dak]

This is very interesting to me. I want to see more examples of merchants obeying dispute resolutions before enforcement by government; because I believe those early examples are universally parties located within the United States. The International Center for Dispute Resolution wasn't founded until 1996, well after the Federal Arbitration Act had been passed. I think there's no way to test the validity of organizations like this because the possibility of political persuasion has always been present, even if it wasn't always invoked.

Ebay is an excellent voluntary market example. From user feedback to it's internal DRO.

Most transactions on Ebay are in small enough nominal amount that even the possible presence of "small claims court" isn't really a factor because of the distance and time/effort involved in pursuing legal action. It's simply not worth it. But, enter customer feedback.

The possibility of accruing negative public customer feedback is a strong incentive to "behave". Failing to satisfy customers means less chance of future business. It is how the market punishes those who defraud.



http://en.wikipedia.org/wiki/Online_dispute_resolution

 

[Einherjar86]

The possibility of accruing negative public customer feedback is a strong incentive to "behave". Failing to satisfy customers means less chance of future business. It is how the market punishes those who defraud.

See, I don't think this provides the same security that you claim it does. While I agree that the market would provide a kind of long-term security, it doesn't prevent individuals from acting unethically; and we've seen this time and time again.

While the market reacts violently to those who "misbehave," it takes too long for it to recuperate and regain its balance to properly punish the individuals responsible for the upset. Other parties might not choose to do business with the entity for which those individuals worked, but the punishment isn't being delivered to those individuals.

Your concept of the market would work if individuals were engaged in one-to-one transactions; but in our current global economy of massive corporations and abstract investments, individuals can get away with unethical action while the entire company suffers. So while the market might adjust to compensate for unethical action by individuals in the future, it does nothing to dissuade those individuals from actually misbehaving.

 

[Dak]

See, I don't think this provides the same security that you claim it does. While I agree that the market would provide a kind of long-term security, it doesn't prevent individuals from acting unethically; and we've seen this time and time again.

While the market reacts violently to those who "misbehave," it takes too long for it to recuperate and regain its balance to properly punish the individuals responsible for the upset. Other parties might not choose to do business with the entity for which those individuals worked, but the punishment isn't being delivered to those individuals.

Your concept of the market would work if individuals were engaged in one-to-one transactions; but in our current global economy of massive corporations and abstract investments, individuals can get away with unethical action while the entire company suffers. So while the market might adjust to compensate for unethical action by individuals in the future, it does nothing to dissuade those individuals from actually misbehaving.

Well obviously thousands of years of government hasn't either.

Corporations (corporate personhood, etc.) is a legal fiction created under the umbrella of government enforcement. Individuals being shielded from responsibility of their actions through the umbrellas of government/corporate legal structures is definitely a problem, and not a "market" caused problem.

 

[Einherjar86]

But there remains some skepticism as to whether any kind of global market would have ever risen in the first place had it not been for governmental encouragement and protection of market transactions.

I'm not promoting protectionism, but merely stating the historical fact that strong markets and strong governments have often appeared side by side, with each complementing the other.

The reason I'm open to your strategy is that it's never actually been tried before (there has never been a truly deregulated market environment); the reason I'm skeptical of it is that I don't see an unregulated market as providing the kind of secure and balanced environment that you think it will (unless we forcefully wipe out all such politico-economic entities like massive corporations in the process of moving to an unregulated economy, which has a whole slew of its own ethical implications).

 

[Dak]

But there remains some skepticism as to whether any kind of global market would have ever risen in the first place had it not been for governmental encouragement and protection of market transactions.

I'm not promoting protectionism, but merely stating the historical fact that strong markets and strong governments have often appeared side by side, with each complementing the other.

Well from a historical aspect that is somewhat true, although you run into not only a chicken-egg issue, but also the fact that "wealth is not a zero sum game", yet it has been treated as such for thousands of years. Fighting over control of trade routes and newly discovered resources had nothing to do with trade for the sake of it, but control to grow government power, through it's preferred state businessmen/mechanisms. This does not often lead to actual wealth.

An example of high production output with little real value created was US wartime production in the world wars, especially WWII. You can make bombs all day, drop them all over the world, and in the end, everyone is worse off for it.

It turned out to be a swell deal in the short run economically for the US. That war time production aided gaining control of international trade ("routes") through the use of the USD as the world currency. Also, as Europe's industrial capabilities were bombed out of operation, we got to export dollars and pick up the slack in manufacturing. This created a distortion which we are now beginning to pay for.

Rome had the same problem. Military expansion, controlled trade routes, devaluing currency to pay for the expansion, and eventually it collapses under it's own weight.

The reason I'm open to your strategy is that it's never actually been tried before (there has never been a truly deregulated market environment); the reason I'm skeptical of it is that I don't see an unregulated market as providing the kind of secure and balanced environment that you think it will (unless we forcefully wipe out all such politico-economic entities like massive corporations in the process of moving to an unregulated economy, which has a whole slew of its own ethical implications).

THIS is the problem. Transition. I certainly don't currently have an answer besides "educate people", and I don't think anyone else does either at the moment. Now is definitely a interesting time in history though, with the rapid collapse of systems/power structures combined with an unprecedented availability of data and ability to communicate.

People are more open to questioning the status quo, etc. but I think we are rapidly getting herded off the proverbial cliff into severe repression in the West before people have time to "question their masters". China is getting praised as a "model society" now by many figures in the West, even though China is rife with many of the same problems, and their brutality in dealing with dissent is not a secret.

Transitioning to a peaceful/non-violent system has many unique challenges compared to transition to any other system, most specifically because to use standard methods (political/military) would ultimately be self defeating.

Edit: I don't think a "Free market" environment is going to be "secure", as in risk gets entirely removed. Just that government/regulations don't remove that risk uniformly, instead creating artificial "winners and losers", and in turn creating new problems.