The Economics Thread

[Dak]

I already answered it. I don't think the top 1% should get a tax cut and I don't think it will help the economy in any way. But in two years when(if) the economy is showing visible signs of recovery he'll be able to use their repeal as something to campaign on.

Im going on record right now that the US economy will never "recover", since nothing has been done to recreate our manufacturing base.

Tax cuts for the top earners are just as fair as tax cuts for everyone else, but they won't "fix" the economy. It also doesn't help to have tax cuts while still spending into oblivion. We need spending cuts to go along with the tax cuts.

 

[Death Aflame]

In principle you are right about tax cuts for top earners, Dakryn. However, given an economic precondition that already is enormously in favor of the societal elite, further tax cuts for the rich in such a system just results in increased exploitation of the majority of tax payers.

 

[Cythraul]

For Capitalism to effectively thrive the way it does in first world countries, it REQUIRES outsourcing. There is no other explanation for the super-profits the US rakes in. Once again, while China isn't one hundred percent Capitalist or Socialist, they have a Capitalist market economy and gather their resources internally. As such, there is a shit-ton of ass-breaking labor and shitty working conditions for its people. Capitalism without Imperialism doesn't gain the same results.

Okay, in order for your conclusion (that capitalism without imperialism doesn't gain the same results) to actually be supported by what you've said above, it needs to be the case that outsourcing requires imperialism. Imperialism, as I understand it, is an activity of states, whereas outsourcing is not necessarily a state activity. So you need to show that private business outsourcing could not occur to any significant degree without the state subjugating other nations in certain ways. Maybe it couldn't, but I don't see it. Explain.

Also, in another post you said, "third world countries contain an inordinate amount of poverty from falling victim to first world Imperialism."

I don't think this is quite right. Third World poverty is largely the result of ineffective property regimes that prevent the full utilization of capital in those countries, and that is a problem that is internal to Third World countries.

 

[Manic Ferocity]

I'm a little late to see your post, Cythraul, but it doesn't matter because I have recently dropped my Marxist views. My views when it came to imperialism were based on the presupposition that the Third World was a result of prolonged capitalism and heavy industry moved across seas allowed the First World to directly or indirectly exploit the Third World.

I have to admit that I was playing devil's advocate up until a couple of months ago when I started looking into the other side. At this point, it seems to me that nations, the Third World or otherwise, involved in free trade are better off than they otherwise would be. In other words, the more productive a country is, the better off the economy. Previously, I used to combat this notion with "well, capitalism still allows for the Third World to remain a Third World" but when looking at places like South Korea, it becomes clear that capitalism has lifted boats in the past but at a slower pace than may be desired by socialists.

After hearing several arguments from libertarians and coming to the realization that I was looking at things from a black and white perspective, I changed my views. Socialism is too idealistic as an actual system and everything that I believed and learned from it can be allowed through free trade and the gradual progress of the Third World as a result.

 

[Dak]

Relevant.

 

[zabu of nΩd]

I'm moving this over from the social thread just so i know i'm not helping that thread become overrun by the next Pat/Dakryn symposium:

Let me just say that we can argue specifically about these two historically opposed systems (i.e. capitalism and slave-based economy); but let's also keep in mind the possibility that these aren't, or shouldn't be, our only two choices.

I know that Dak's theory basically holds that anything other than free-market economics is slavery, because it relies on some kind of centralized political machine to guarantee it. The problem with politically guaranteed economics is that there will undoubtedly be some form of dehumanization/exploitation/manipulation in order to ensure some kind of status quo. In the minds of the free-marketeers, any bondage at all constitutes a flaw in the system, and thus it deserves to be done away with.

So to address those two points, Grant, I think a radical free-marketeer would say: "Capitalism may result in dehumanization committed by individuals against each other. Any politically-organized system will inevitably result in dehumanization in order to prevent the possibility of dehumanization by individuals. This is a double-standard."

My question would be: is the enslavement of vast quantities of individuals even possible without some kind of strong, centrally organized political structure? Free-marketeers would argue that it is not, or at least not for an extended period of time. They would claim that if individuals in a free-market attempted to exploit the labor of others for their own economic gain, their venture would soon collapse due to either the impossibility to sustain a slave base without a politico-military establishment, or would face rebellion when its slave base grew too large.

In short: government isn't justified to prevent slavery, because slavery prevents itself; and furthermore, government involvement necessarily involves slavery.

Do we agree with this? I'm not entirely sure. I think that prolonged slavery is possible in a free-market system, if the economic institutions grow large enough. In time, economic institutions may even take on the role of political ones. This is where the lines begin to blur for me, and I have some other ideas/theories on this, but I'm going to save them for later because I feel like we have enough to discuss already.

Well um, I guess you need some sort of regional police organization at least to deal with runaway slaves. I guess it's arguable how centralized the gov't would have to be, but i'm not really interested in getting into the whole issue of whether we should have a central gov't, how to keep it in check, etc. As far as all that goes, I don't think the structure of the gov't is the real issue as much as the systems of accountability that are in place. But whatever.

What do you mean by "government involvement necessarily involves slavery" though? Right now in the world we have a number of gov'ts falling within a certain range of authoritarian-ness. There's the brutal dictatorships, then the liberal democracies, then countries like China and Russia that are somewhere in-between (with America gradually slipping to their level). The more authoritarian the country, the more slave-like the average person's existence is. To me this mostly reflects (1) how advanced each country's political institutions are, and (2) how good their relationships are with other countries (i.e. "if international politics is dinner, you're either at the table or you're on the plate"). Personally I'm quite optimistic about a country's potential to improve its institutions, so to me the main limiting factor is the international climate (which doesn't really apply to our argument about whether any individual country's gov't "necessarily involves slavery".

Aside from all that, there are two economic factors that affect a person's level of freedom: the amount of scarcity in the economy, and how well the economy's resources are managed. And as much as libertarian nutbags like to bitch about how redistribution of wealth amounts to "stealing", I think it's pretty clear that if you take $10,000 from a rich guy with $1,000,000,000 and give it to a poor guy with $1,000, the poor guy will gain a whole lot more freedom (i.e. freedom to take a break from work, re-evaluate his life, and come up with a better career path to pursue) than the rich guy will lose. Redistribution of wealth just seems obviously necessary to me as long as we're living under an economy of scarcity where wealth tends to get concentrated into the hands of self-serving egomaniacs.

I haven't even gotten to the dehumanization issue, but i've got stuff to do today so i'll stop here. Don't expect another reply for a while

 

[Dak]

Aside from all that, there are two economic factors that affect a person's level of freedom: the amount of scarcity in the economy, and how well the economy's resources are managed. And as much as libertarian nutbags like to bitch about how redistribution of wealth amounts to "stealing", I think it's pretty clear that if you take $10,000 from a rich guy with $1,000,000,000 and give it to a poor guy with $1,000, the poor guy will gain a whole lot more freedom (i.e. freedom to take a break from work, re-evaluate his life, and come up with a better career path to pursue) than the rich guy will lose. Redistribution of wealth just seems obviously necessary to me as long as we're living under an economy of scarcity where wealth tends to get concentrated into the hands of self-serving egomaniacs.

The very institutions/apparatus that facilitates "redistribution" is what is fascilitating the barriers to movement to begin with, in general terms.

Instead of seeing gross disparities in income as a combination of differences in mankind compounded by societal structures based on legitimized oppression, the redistributionist seeks to treat effect over cause and increase the speed with which the "snake feeds on itself".

The purpose of welfare is to create psychological barriers to rising in "class ranks", a permanent underclass incapable of survival without it's masters, institutionalized in the same way animals in the zoo or industrial farm cannot survive without their caretakers. It is a mechanism of oppression, of both the working class and the "under-leechers".

The ultimate purpose is to push the middle class down into the same level as the underclass, which will completely incapable of revolt or competition, either economically or intellectually.

 

[zabu of nΩd]

I'm well aware of how welfare gets abused. That doesn't convince me that the abuse is inevitable, or that the income disparities are the result of oppression. Right now we have an outdated government with very weak accountability measures, and i think you're overreacting to the present conditions by suggesting that we do away with redistribution entirely.

 

[Dak]

I'm well aware of how welfare gets abused. That doesn't convince me that the abuse is inevitable, or that the income disparities are the result of oppression. Right now we have an outdated government with very weak accountability measures, and i think you're overreacting to the present conditions by suggesting that we do away with redistribution entirely.

Hardly. "Welfare Abuse" is a desired outcome of the central agency. Again, it creates a subclass incapable of independence. Even a revolt when it breaks down is most likely to attempt to recreate the same system over again.

Obviously income disparities will persist even in an oppresionless existence. Some people will naturally be more skilled in things valued by the general population than others. Some people will be born more intelligent than others. Some will purely be more industrious. Some will be in a closer proximity to a valuable resource or route than others, etc.

None of this means involuntary redistribution is necessary, sustainable, or moral. The possibilities for voluntarily organized social improvements and charity are as endless as the prosperity and generosity of the population, but when it's forced, it is not generosity, and will kill the prosperity.

 

[Einherjar86]

Today's my "day of rest," so I have time to kill.

What do you mean by "government involvement necessarily involves slavery" though? Right now in the world we have a number of gov'ts falling within a certain range of authoritarian-ness. There's the brutal dictatorships, then the liberal democracies, then countries like China and Russia that are somewhere in-between (with America gradually slipping to their level). The more authoritarian the country, the more slave-like the average person's existence is. To me this mostly reflects (1) how advanced each country's political institutions are, and (2) how good their relationships are with other countries (i.e. "if international politics is dinner, you're either at the table or you're on the plate"). Personally I'm quite optimistic about a country's potential to improve its institutions, so to me the main limiting factor is the international climate (which doesn't really apply to our argument about whether any individual country's gov't "necessarily involves slavery".

That could use some clarification. The radical free-market view is that any centralized regime that imposes restrictions or even establishes itself as a kind of protector/preserver of the market must defer to its potential as a coercive institution. The relationship that develops between parties (i.e. the government and its subjects) is perceived, by those critical of this system, as one of subjugation, or slavery. That's all I meant.

I'm interested in your comment about how "slave-like" a person's existence is. "Slave" is really a term that is determined by very specific historical conditions; I think we could even say that "slave-like" relationships exist in nature. Predator-prey relationships are, structurally, very similar if much simpler (the exploitation of one party for the interests of another). Of course, we don't call these relationships slave-like because animals don't possess a value system that condemns the forced subjugation of another party. So, we can see how "slavery" only makes sense within economic/political systems that grounds that term in some kind of value.

That said, I think radical free-marketeers take an interesting approach, because in a sense they valorize what they perceive as a kind of "naturalism" of the market, which bears similarity to the natural relationship between predators and prey (i.e. "Yes, some will fail, some will make less than others; but in this way, the market regulates itself"). In a way, they attempt to circumvent the entire possibility of a system that can ground a term like "slavery" with any value, because they appeal to a naturalism that accepts the structure of slave-like relationships but that disposes of them without the intervention of governing suzerains.

 

[Dak]

The characterization of market actors as predator and prey are completely off base. The premise of market actions is the fact of mutual benefit. Voluntary transactions improve the position of both/all participants. Situations of "agreements" under duress is not an acceptable example. A modern example (in the US anyway) is the necessity of either finding a job or getting on the dole to live even remotely past hand to mouth, due to the ("artificial") monopolization of resources, and the tax system (to include inflation of fiat currency).

An example of how coercive government alters the landscape:

My grandfather was the recipient of large tracts of farmland on the east coast (which he grew up on of course) handed down through generations.
Without the government to ensure/protect these vast swaths for the family, it most likely would not have been able to hold such a large swath against an increase in population.

Now, decades/centuries later, it is slowly disappearing, as he must sell it off piece by piece to afford to pay the taxes on the rest/maintain his residence, etc., even though it is still in use as farmland. The property was already cut in half decades ago by the highway system (eminent domain).

The land does not look anything like it may have outside of the title/transportation/taxation systems.

He may complain about "his land being taxed", but at some point in the past,the benefit of the taxes/coercion was going in the other direction. Coercively maintained title systems, and then corresponding tax and transportation systems seem "natural" to those who grow up in them, but they are not natural or free. They divert the otherwise free actions of individuals into maintaining the corporate state/status quo, which rewards it's better "employees", and maintains a symbiotic relationship with the "private" corporate structure.

Also, a "slave-like relationship" is almost useless as a label, since it is inherently subjective. A truly voluntary hierarchy has similarities to slavery, but they could not be farther apart. Relatively modern marriage can be used as a more traditional example here, or any other cooperative endeavor where actors were not forced together due to external actors.

 

[Einherjar86]

The characterization of market actors as predator and prey are completely off base. The premise of market actions is the fact of mutual benefit. Voluntary transactions improve the position of both/all participants. Situations of "agreements" under duress is not an acceptable example. A modern example (in the US anyway) is the necessity of either finding a job or getting on the dole to live even remotely past hand to mouth, due to the ("artificial") monopolization of resources, and the tax system (to include inflation of fiat currency).

I disagree that the comparison is off-base. Mutually beneficial relationships also occur in nature, thus furthering my point.

Also, in a free-market system you will, inevitably, have parties providing similar services that are competing for success. This is necessary for free markets to thrive. This is what I was comparing to predator-prey relationships; not business transactions in which one party forces another to participate. Those types of transactions should be, as you said, mutually beneficial.

 

[Dak]

I disagree that the comparison is off-base. Mutually beneficial relationships also occur in nature, thus furthering my point.

Also, in a free-market system you will, inevitably, have parties providing similar services that are competing for success. This is necessary for free markets to thrive. This is what I was comparing to predator-prey relationships; not business transactions in which one party forces another to participate. Those types of transactions should be, as you said, mutually beneficial.

In this case then , continuing to use predator/prey semantics for the sake of simplicity, this is not predator and prey but competing predators, in the same way wolves and mountain lions may both compete over herbivores.

However, unlike this scenario, the "prey" benefits when it picks a "predator", and even benefits from an increase in "predators".

However, as incompetent entrepreneurs ("predators") are realized by losses in the market in a particular facet, this does not mean they need to crawl into a hole and die, but merely that they should apply themselves elsewhere, whether as entrepreneurs in another sector, or in some other manner entirely.

The video I posted in the other thread pre-migration covers this.

 

[Einherjar86]

In this case then , continuing to use predator/prey semantics for the sake of simplicity, this is not predator and prey but competing predators, in the same way wolves and mountain lions may both compete over herbivores.

That's fine though; that kind of competition occurs in nature as well.

However, unlike this scenario, the "prey" benefits when it picks a "predator", and even benefits from an increase in "predators".

And when predators pick off prey in the wild, it benefits other potential prey by allowing those parties to reproduce and propagate their genes. They're still providing a service, it merely works in a slightly different way.

However, as incompetent entrepreneurs ("predators") are realized by losses in the market in a particular facet, this does not mean they need to crawl into a hole and die, but merely that they should apply themselves elsewhere, whether as entrepreneurs in another sector, or in some other manner entirely.

Or adapt, or evolve, you mean?

 

[Dak]

That's fine though; that kind of competition occurs in nature as well.

And when predators pick off prey in the wild, it benefits other potential prey by allowing those parties to reproduce and propagate their genes. They're still providing a service, it merely works in a slightly different way.

The major difference between the scenario you describe and the market scenario is the mutual benefit of participating parties vs the benefit of non actors in the natural "culling the of the herd".

Or adapt, or evolve, you mean?

That's one way to look at it from a general perspective. Lifeforms are constantly adapting and changing in some ways, while simultaneously fighting change on other ways. There is no stasis or vacuum.

Wagon makers and horse dealers first derided and then decried the invention of the automobile, so what? When demand shifts away from a product or service, this is not a bad thing. However, for those in that industry to demand protectionism is.

In a capitalistic environment, businesses/entrepreneurs serve the public need/demand. When a product or service is not or is no longer desired, then the business must find a new way to serve. The public demand does not exist to provide a particular entrepreneur a job (IE "new technology/competition is costing [x group] their jobs!) In actuality, any attempts at protectionism is costing the public the realization of a preferred alternative. More bluntly put, any "protected jobs" are another form of theft/welfare.

Conversely, there must be production before there is consumption, so you cannot have a "consumption based economy", which is parroted in the MSM and by MSEconomists. Pumping pieces of paper into an economy doesn't facilitate the creation of physical (actual) wealth aka production (specifically, production that meets need/demand).

 

[Dak]

http://mises.org/daily/5980/Plenty-by-Competition

Relevant to the last few posts.

 

[Einherjar86]

^That's an interesting article.

I have something I want to discuss.

In the past Dak, you've said how businesses/enterprises/what-have-you in an unregulated economic environment wouldn't (in fact, couldn't) become powerful enough to exert significant coercion upon others around them. In other words, economic institutions couldn't ideally become militaristically powerful enough to influence buyers and competitors through coercive means, or, essentially, come to fill the role of political institutions.

In my opinion, current economic institutions that might potentially achieve such power in an unregulated society would be globally influential corporations. However, these corporations have achieved the status they hold largely because of prior government intervention and a legacy of mercantilism.

So the question I have is this: could these corporations have achieved the extent of economic influence and penetration that they currently wield without any kind of political intervention? The reason I'm curious is because we're obviously concerned about businesses becoming so enormous that they achieve the capability to wield political power; but could they ever achieve the same level of economic enormity without any intervention from political institutions?

This is important to me because I'd like to think that the technological developments and advancements made in the past century would still have been possible without a corporatist system, and that pure, unregulated capitalism wouldn't result in technological abandonment and Luddism.

 

[Dak]

Well discussing possibilities does come with the limitations of it being limited to some degree to biased conjecture, but I think that the world would be more advanced in society-improving technology, and much further behind militaristically in a society that eschewed violence as a means of problem solving, to include a coercive regulatory body.

If you look at consumer spending, although people may purchase a weapon and/or security system, and a business may add a security guard, for "local crime" this is all that is necessary.

Armies are needed to fight armies or subjugate populations, and in history, these always require massive debt and potentially the draft, and the benefits of victory are limited to the handful at the top of the power structure. These are simply methods that are not sustainable in the long run in any society due to natural laws of economics, and not even initiable in a voluntary society.

In a worst case scenario, an organized crime unit forms/a firm "goes rogue" and unilaterally forgoes voluntary association and transactions, and begans to levy taxes and conscript people as soldiers. Not only would this meet with the same resistance any other organized crime action meets with, it also lacks the "propaganda and pomp" that a government uses to inspire people to joined the armed forces and pay taxes to a more or less voluntary degree. The US government could not handle a majority of people just walking away from the system. It doesn't have the manpower or the resources. This is what would naturally constrain any coercive organization, a lack of compliance (in the same way any militaristic occupation is doomed to failure).

Currently, somewhere in the vicinity of a trillion dollars a year is funneled into the US military industrial complex for the specific purpose of anti-humanistic endeavors.

If, for the last 100 years, the blood and treasure spent in war fighting and war machine development/purchase had instead been spent improving life-improving technologies, where would we be today? Also, in a non-corporatist society, there is an increase in competition and entrepreneurship, which further spurs innovation.

In short, a society that embraced voluntarism would be further along than a militaristic/corporatist society, because those societies are inherently about maintaining the status quo/squelching competition, which is an anti-society-improving-innovation position.

 

[viewerfromnihil]

I'm about to start writing a paper on this article.

http://www.mises.org/daily/5978/The-Libertarian-Manifesto-on-Pollution

I'm curious Einherjar, what do you think of the article? The information is a bit dated, but it answered some of the questions that I had pertaining to the topic of environmental protection in a truly Libertarian society. I discussed this topic with a few of my friends, and they became very interested in the concept; however, in class, people were kind of laughing at me when I delved into the topic a bit, but I think that is more related to the fact that, during any class discussion, I always correlate problems in society with government interventionism/coercion. Also, all of my classmates are also freshman at a community college, so many of them think of nothing else but drinking the Kool-Aid.

 

[Dak]

I'm about to find myself in the same situation B.O.

I'm going back to school and starting from scratch, and plan to make the subject of my papers and speeches a free market/voluntarist approach. Will see what kind of looks/responses I get lol. I imagine it will be similar to what you are experiencing.